In Alasdair Ross Anderson and others v Republic of Costa Rica (ICSID Case No ARB(AF)/07/3), the tribunal considered whether it had jurisdiction over claims brought by 137 Canadian nationals against Costa Rica under the Canada-Costa Rica bilateral investment treaty (BIT). The claimants had all deposited funds in a scheme operated by two Costa Rican nationals, the Villalobos brothers, who also operated a currency exchange business licensed by the Costa Rican governmental financial regulatory agency. The Villalobos were later found to have been operating an illegal Ponzi scheme. One of them was convicted of fraud and sentenced to prison.

The claimants brought a claim against Costa Rica on the ground that they had suffered loss due to Costa Rica's failure to provide proper regulatory supervision, in breach of its obligations under the BIT. Costa Rica objected to the tribunal's jurisdiction on various grounds, including that the deposits made with the Villalobos did not constitute an "investment" as defined in Article I of the BIT.

The tribunal held that the claimants had not made an investment and therefore it had no jurisdiction over the dispute. Article I(g) of the BIT defined investment as "any kind of asset ... owned or controlled ... within the territory of [Costa Rica] in accordance with [Costa Rica's] laws". Article I(g) also stipulated certain types of asset which did not qualify as investments. The tribunal reasoned that the claimants had to demonstrate that:

Applying the dictionary meaning of the word "asset", the deposits of funds were assets, as they were things of value to the claimants. However, the transaction with the Villalobos was illegal, and therefore the acquisition by each claimant of the asset resulting from the transaction was not in accordance with Costa Rican law. It followed that the claimants had not made an investment within the meaning of the BIT.

The case adds to the growing body of guidance on the meaning of investment. For detailed discussion about the concept of investment in investment treaty arbitration, see Practice note, The definition of investment in international investment law.