Rethinking the Salini Test: A Comprehensive Examination and Proposal for Improvement in Defining International Investment

Abstract

This dissertation critically examines the Salini test, a foundational tool in international investment law (IIL), with a specific focus on its fourth criterion: "Contribution to the Host State's Economic Development." Through an in-depth analysis of various case studies, the research highlights the inherent challenges and controversies surrounding the Salini test, particularly its potential rigidity and the subjectivity embedded in the economic contribution criterion. The study underscores the need for the Salini test to evolve in response to contemporary investment trends, such as green investments, social impact ventures, and the increasing importance of intangible assets. Drawing from past arbitration decisions, academic research, and expert opinions, the dissertation offers suggestions for refining the Salini test to make it more adaptable and relevant in the modern investment landscape. These recommendations encompass defining clear parameters for economic contribution, balancing economic inputs with other considerations, and introducing mechanisms for periodic review. Furthermore, the research forecasts the future of IIL with an improved Salini test, outlining both the opportunities, such as enhanced consistency and predictability, and challenges, including implementation hurdles and potential over-complexity. In conclusion, as the international investment domain continues to transform, the Salini test must be rethought and refined to remain a robust and pertinent instrument in this ever-evolving field.