The term ‘investment’ is a gateway that limits access to the dispute resolution mechanism established by the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the ‘ICSID Convention’). If the term has a narrow and precise meaning, then a number of disputes that the parties have agreed to submit to ICSID may have no forum for resolution. If the term has a broad and flexible meaning, then the ICSID system will be poised to accept most, if not all, of the cases that the parties have consented to submit to ICSID arbitration.

A concrete example serves to illustrate the issue. A company organised under the law of an ICSID Contracting State holds a demand account with a bank in another Contracting State. A bilateral investment treaty is in force between the two countries that provides only for ICSID arbitration of disputes between investors and a State. The host country seizes the funds credited to the company's bank account without any offer of compensation.

Under the definition used in many investment treaties, the funds credited to the bank account could qualify as an ‘investment’ covered by the treaty. The credit is an asset of the company in the territory of the host country, a right conferred by the account agreement with the bank and a claim to money.