State-owned enterprises (SOEs) are, as the name suggests, companies that are partly or wholly owned by a sovereign state. In 2017, UNCTAD identified some 1,500 state-owned enterprises engaged in cross-border activities[1] and found that in 2014 they had $2 trillion in foreign assets. [2] It is therefore likely that these companies will take on some kind of investment protection. The aim of this article is to create a unique conceptual framework for state-owned enterprises in international investment law. I hope to give authors and negotiators the tools to define state-owned enterprises based on their political concerns. The central thesis is that there are five definition criteria to take into account: 1) separate legal personality 2) the scope and form of control 3) eligible government units 4) the commercial nature of the activity and 5) the purpose of the activity. While the differences within each criterion may reflect the political choices of the contracting parties, the insufficient delineation of the five arbitrators` limits will be measured. The application of this framework to existing international investment agreements shows that many bilateral investment agreements are not sufficiently precise in the definition of SOEs. However, the Trans-Pacific Partnership looks at all five criteria and limits the scope of the companies involved to those that are “primarily active in the business field” and have a “profitability orientation”.

China`s strategic initiatives may require a response that would further fragment the international investment regime. In addition, interpretation issues remain regarding the importance of “effective influence” and the determination of the purpose of the investment activity. It is unrealistic to try to regulate the ability of SOEs to protect investment contracts, many of which are mixed-economy enterprises and cross transnational business transactions. Moreover, it cannot be ruled out that they occupy a different position than other commercial vehicles, simply because it is easier to prove that their conduct can be attributed to the state under international state responsibility rules. It should be remembered that the behaviour of other private actors can also be attributed to the state. In general, states encourage foreign private investment through corporate vehicles or conglomerates, which are ultimately incorporated by state-owned enterprises. In the end, they may commit illegitimate acts that, in certain circumstances, should be blamed on the states. The allocation of the actions of state-owned enterprises to states allows foreign investors to determine the responsibility of the state and to access contract-based resolution mechanisms. The crown allocation thus becomes, to some extent, a transition to the settlement of investor-state disputes.

It is essentially a customary rule of international law8, but special rules (lex specialis) can also be found on the attribution of the state in investment contracts. For example, the Energy Charter Treaty contains state allocation rules when dealing with “state-owned enterprises and preferred enterprises” covered by Article 22; and the ICSID convention, when it is presented to “any constitution … the agency of a contracting state.”9 The assumption that both parties may depend on its activities leaves only a fundamentally simple question perplexing; if an SOE has made a legal “investment” in a foreign state and there is an international investment agreement for the protection of that investment, which provides for ICSID arbitration, SOE is entitled to sue in a court formed by ICSID. At the same time, THE COUNTRY can operate in their home country. This casts the hypothetical pendulum of SOEs as a potential complainant in the International Centre for Settlement of Investment Disputes (ICSID) arbitration as well as the instruments of the state able to assume international responsibility, thus respondents (so to speak) according to ICSID.