Abstract

 
 
 A unique feature of the ICSID framework is the built-in control mechanism that allows parties to seek annulment of an otherwise final award via Article 52 of the Convention. Unlike arbitration in other contexts, this mechanism is the exclusive means for review of an ICSID award. While scholars and practitioners regard this as one of the most innovative features of the ICSID regime, many of the grounds for annulment remain underdeveloped. In particular, annulment committees have applied the “serious departure from a fundamental rule of pro- cedure” ground inconsistently.
 Especially because challenges to arbitrators can occur dur- ing the appointment phase, during the arbitration itself, or during annulment proceedings, the proper standard for deter- mining bias remains convoluted. Accordingly, this Note exam- ines how different approaches to assessing arbitrator bias un- fold in annulment proceedings applying the “fundamental rule of procedure” ground. It argues that these differences have con- tributed to a greater number of unpredictable outcomes, under- mining a central purpose of ICSID. Two recent decisions—the Azurix and EDF annulments—highlight the divergent ap- proaches ad hoc committees have taken in addressing allegations of bias. This Note concludes by identifying the EDF approach as the most appropriate standard of review and dis- cusses possible routes for resolving differences in ICSID annul- ment decisions.
 
 
Highlights
Since its creation more than fifty years ago,[1] the International Centre for Settlement of Investment Disputes (“ICSID”) has grown from the brainchild of a group of World Bank economists to the dominant institution for investor-state arbitration.[2]
The UNCITRAL Model Law, which serves as a guide for states implementing rules for international commercial arbitration, includes provisions more specific than ICSID’s Article 52.67 The UNCITRAL Model Law’s provision most analogous to ICSID’s Article 52(1)(d) indicates an award may be set aside if “arbitral procedure was not in accordance with the agreement of the parties.”[68]. Like the UNCITRAL Arbitration Rules, the rules of other major international arbitration centers lack language similar to ICSID’s Article 52.69
The Convention allows for five grounds on which parties can seek annulment of an award: (a) the tribunal was improperly constituted; (b) the tribunal manifestly exceeded its powers; (c) there was corruption on the part of a member of the tribunal; (d) there was a serious departure from a fundamental rule of procedure; or (e) the tribunal failed to state the reasons for its award.[70]
Summary
Since its creation more than fifty years ago,[1] the International Centre for Settlement of Investment Disputes (“ICSID”) has grown from the brainchild of a group of World Bank economists to the dominant institution for investor-state arbitration.[2]. Part II of this Note examines the steps parties must take to initiate ICSID review proceedings and discusses the grounds for annulment, including a “serious departure from a fundamental rule of [arbitral] procedure,” as listed in Article 52 of the ICSID Convention.[13] Part III contextualizes the open questions relating to the appropriate ICSID standard of review in decades-old debates, and discusses several distinct approaches to determining what constitutes a “serious departure” with respect to arbitrator bias.[14] Part IV argues inconsistent standards of review undermine predictability and stability in investment arbitration and analyzes possible mechanisms for resolving the differences between the standards. This Section begins by reviewing the origins and purposes of the ICSID Convention It briefly traces the procedural mechanisms by which arbitration and annulment take place when conducted pursuant to ICSID rules. There are many procedural elements of arbitration for which these questions are relevant, this Note focuses only on arbitrator bias
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