Document Type : Original Article


University of Cologne


Central banks, traditionally focused on sovereign financial functions, now also engage in commercial activities reflecting international banking and investment ventures. This evolution raises crucial questions about their classification under international law, particularly regarding investment treaties, which only protect public entities engaged in commercial activities. Distinguishing sovereign from commercial roles typically involves purpose and nature tests, with the latter increasingly influential in jurisprudence. A salient example of this discourse is seen in the case concerning Certain Iranian Assets before the ICJ. In 2019, the Court acknowledged that Iran's Central Bank might qualify for treaty protections if its U.S.-based operations were commercial in nature. However, while the present research suggests those operations have a commercial character, the ICJ, in a divergent 2023 decision, declined to classify the bank as eligible for treaty protections. This shift underscores the need for a consistent application of international law and further examination of its evolving discourse.


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