Circular and Open Definitions of “Investment” in Investment Treaties: Limits of Protection and Interpretive Approaches

The article examines the notion of “investment” under bilateral investment treaties, focusing on treaty-based definitional models and their implications for the scope of protection and dispute-settlement mechanisms. Arbitral practice reveals two principal approaches: treating the treaty definition as exhaustive, and resorting to the ordinary meaning of the term by applying generally accepted characteristics. Building on common BIT formulations, the study analyzes two-step, incomplete, circular and open definitions. It argues that, for incomplete and circular clauses, the decisive indicia are the contribution of assets, a profit-seeking purpose, a certain duration, and the assumption of investment risk, whereas the “contribution to economic development” is not a universal requirement. These findings are aligned with Russian treaty practice and provide guidance for distinguishing protected projects and claims, including the qualification of property rights, supply contracts and financial undertakings.