Digital Assets in International Investment Arbitration: Potential Barriers to Qualifying Investments?

In the context of advancing technology and economic progress, data has emerged as a critical factor of production, characterized by its proprietary attributes and inherent investment value. Within the domain of international investment arbitration, the concept of qualifying investment assumes paramount importance, serving as a linchpin for delineating the scope of applicability of international investment agreements and establishing the jurisdiction of arbitral tribunals. Consequently, the question of whether data, in conjunction with other associated assets involved in data processing activities, can qualify as a qualifying investment and thereby warrant protection under international investment agreements, stands as a primary concern demanding precise explication within the purview of international investment law. Currently, the determination of the qualifying of digital investments predominantly follows two distinct paths: firstly, by interpreting the broad definition of investment and the non-exclusive enumerations contained in international investment agreements, thereby aligning digital assets with the applicable scope of such agreements; secondly, by adopting objective methodologies developed through arbitral practice, wherein digital assets, under specific circumstances, fulfill the criteria elucidated in the “Salini text”. Nevertheless, the significant disparities between digital assets and traditional forms of investment pose certain challenges for arbitral tribunals in determining the qualifying digital investments, which may result in uncertain arbitral awards in this area. Such uncertainty could hinder the process of digital transformation of economic and social life. To respond to this challenge, a potential solution is to stipulate in concluded and revised international investment agreements that digital assets can qualify as qualifying investments.