ICSID System Research Articles

The ICS vs. the ICSID system: a possible compromise in the light of the sustainable development

The current inclination to direct investment efforts towards sustainable development, coupled with the 2030 Agenda for Sustainable Development, unveiled in 2015, which included the 16th goal of granting equal access to justice and reinforcing the rule of law on a universal level, has brought investor-state dispute settlement (ISDS) mechanisms to the forefront of global investment discussions. The ICSID has carried out a crucial role in overseeing the ISDS system, offering arbitration facilities for disputes between investors and states for over six decades. However, the ISDS system has faced criticism in recent years. In response, a new Investment Court System (ICS) implemented by the EU that aims to address these concerns by establishing a permanent court formed with judges who have been appointed by member states in advance and are distributed to disputes in a rotating and random manner. It also limits the parties’ freedom to opt the applicable law and considers that the substantive provisions in investment agreements are the applicable law to the raised disputes and inserts an appellate mechanism review for law and fact matters as well. The paper discusses the relationship between the ICS and the ICSID system in the light of sustainable development and examines a possible compromise between both systems by considering the ICS as inter se modification of the ICSID convention based on investigation of its compatibility with requirements of the VCLT. Ultimately, the paper finds that recognizing the ICS as an amendment between some parties to the ICSID convention does not conflict with the VCLT.

The possibility of creating an ICSID protocol for the establishment of a multilateral investment tribunal: A flexible or complex process.

The 2030 Agenda for Sustainable Development was introduced in 2015 with its 16th goal which has targeted enhancing the concepts of the rule of law and universal access to justice. This goal, along with the current trend of directing investment projects towards sustainable development, has brought the mechanisms for investor-state dispute settlement (ISDS) into the spotlight in the realm of global investment.Recently, based on a different vision that was supported, especially by the European Union, a new approach to ISDS emerged that is characterized by fundamental differences from the well-known approach represented in the ICSID system. Whereas providing facilities to settle and arbitrate the investment disputes between a state member and investors belonging to another state member over several decades by the ICSID system made it a key player in the administration of the ISDS system. The fundamental differences adopted by the new EU’s model represent a serious challenge to the ICSID system. Especially if this new system proves to be effective and widely used and inserted in future international investment agreements (IIAs), the ICSID will be required to make adjustments that are compatible with this new system.Due to the complexity of the process of amendment to the ICSID convention, as it requires unanimous consent by all member states, the present paper, by analysing some historical stations of the functional and administrative context of the ICSID, examines the flexibility of the ICSID convention to establish a protocol that includes the features of the new system without resorting to amending the convention. The paper concludes that the ICSID enjoys the flexibility necessary to establish this protocol. Finally, the paper presents the motives and benefits envisioned for the establishment of this protocol.

ARBITRATION PROCEDURE FOR RESOLVING INVESTMENT DISPUTES IN ACCORDANCE WITH THE ICSID CONVENTION (THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES)

The ICSID Convention provides a well-established arbitration system that has been utilized by both states and investors for over 50 years. To date, ICSID arbitration has considered 19 lawsuits filed against Kazakhstan, with the number expected to rise in the future. The aim of this paper is to uncover the content of the ICSID arbitration process. The article examines the jurisdiction of the ICSID, including the criteria for a dispute to be considered for resolution. The paper provides an example of a case in which Kazakhstan challenged the ICSID's jurisdiction. The procedure for ICSID arbitration, starting with the request for arbitration and culminating in a binding arbitral award, is outlined. The study concludes by emphasizing the importance of the ICSID system for resolving investment disputes fairly and impartially, and the significance of the binding nature of the arbitral award. The methodology is based on legal literature analysis and a comprehensive literature review of Convention, including its rules and jurisdiction, with a focus on relevant legal precedents and cases involving Kazakhstan. The author emphasizes that the future of global arbitration is facing scrutiny due to the challenges in enforcing ICSID arbitration awards and suggests that reforms are imperative. Additionally, the author notes that arbitration law in Kazakhstan is under-researched and emphasizes the importance of increasing research in this field, as it will assist the country in cultivating its own arbitration lawyers and enhancing the judiciary's understanding of the subject. This will certainly improve the country's image as a place for conducting business and increase its attractiveness for foreign investments.

THE ENFORCEMENT OF ARBITRAL AWARDS UNDER THE ICSID CONVENTION AND PUBLIC POLICY

International arbitration emerged as a response to cross-border trade and foreign investments. It is an instrument which enables the uninterrupted flow of foreign capital which has a significant impact on the national economy, particularly considering that arbitral awards are enforced in national jurisdictions. The profit-oriented economic trend and its impact on individual states is even more visible in international investments, given that the foreign investor who operates on the territory of a Host State is included not only in economic but also in social affairs of that State. This poses a challenge: how should a State preserve national interests? Referring to the relevant provisions of the New York Convention (1958) and the ICSID Convention (1965), the author elaborates on the idea that public policy may be used in the enforcement stage as justification for non-compliance with the rendered arbitral award. The author introduces relevant arbitration practice that has challenged the interpretation of Article 54 of the ICSID Convention, and analyzes the impact it has had on the ICSID system.

Revisiting the risk of undesired appeal in investment treaty arbitration: is deference to the tribunal’s award still less likely in the ICSID context?

Abstract Although they are generally not subject to appeal the way court decisions typically are, investor-State arbitration awards can be reviewed—and potentially set aside—in a number of ways and on various bases. In this respect, investor-State arbitration under the auspices of ICSID is notable in that it provides a self-contained system for the review of arbitral awards by ICSID-appointed ad hoc committees. In the period 2000–2010, this feature of the ICSID system attracted criticism as ad hoc committees appeared to be overreaching in their review of arbitral awards, exercising less deference to the tribunal’s decisions than what would be expected given the narrow bases for setting aside an award under the ICSID Convention. This article revisits the issue 10 years later, exploring whether ICSID practice has evolved in these areas and whether there remains a greater risk of unexpected de novo review by ICSID ad hoc committees. Looking at recent ICSID annulment decisions as well as the case law of arbitration-friendly jurisdictions, the article concludes that although the ICSID ad hoc committees have recently shown more restraint, they continue to interfere more with the tribunal’s reasoning and decisions than many courts exercising the same function.

State Compliance with Investment Awards

When the ICSID system was being set up, the matter of compliance with investment awards rendered against States was considered "academic". ICSID’s architects believed that as long as States would remain under an international obligation to comply with awards they would generally do so. Writing in the 2000s and early 2010s, commentators observed that States have generally complied with adverse investment awards. In the last two decades, the number of investor-State arbitrations has soared, and more and more damages awards have been rendered against States. This analysis seeks to contribute to a fact-based debate on the future of international investment law by addressing an under-examined but essential aspect of that regime, namely, compliance with investment awards. It assesses empirically the experience with investment arbitration of the thirty-two most sued States, covering approximately 70% of all cases initiated through to the end of 2019. The data examined indicates that the ICSID founders’ prognosis that compliance with investment awards would be a non-issue—framed as it was in such sweeping terms—has not held true. Whereas the majority of States have complied with adverse awards (usually after seeking annulment), the instances of non-compliance or significantly delayed compliance are important. A significant proportion of the cases where States have been ordered to pay damages have required enforcement proceedings. Instances of home State’s intervention--and inevitably re-politicization of the dispute--have resurged. There is thus a gap between the regime’s authority and effectiveness that needs to be addressed. Still, and regardless of its imperfections, it could be said that the modern investment dispute resolution system continues to be revolutionary, in particular when compared to the antecedent regime, which rested almost entirely on the inclination of the home State to espouse its nationals’ claims.

The European Commission: Ami Fidèle or Faux Ami? Exploring the Commission’s Role as Amicus Curiae in ICSID Proceedings

ICSID’S Rule 37(2) introduced into the ICSID system a process by which a nondisputing party may make submissions as an amicus curiae. While amicus submissions have existed in the ICSID system for nearly 20 years, the majority of Rule 37(2) applications have been filed only recently by one party – the EU Commission – on one issue – the applicability of the arbitration agreements in intra- EU BIT S. In this article, we explore how tribunals and ad hoc committees have addressed these applications, which do not seek to provide insight on a particular issue in relation to the merits (as past amicus have), but to strip the ICSID process of jurisdiction over all intra- EU BIT disputes.

La reconsideración ante el CIADI: un mecanismo procesal para fomentar la corrección del laudo

En los últimos años varios tribunales arbitrales del CIADI se han pronunciado sobre una posible facultad de reconsideración de las decisiones preliminares dictadas en los procedimientos que se bifurcan o trifurcan (jurisdicción, fondo y determinación de la indemnización). La práctica arbi­tral más reciente, apartándose de la línea marcada en los primeros casos, se ha inclinado por reconocer esta facultad. Las diferentes interpretaciones que han realizado estos tribunales sobre el principio de cosa juzgada y sobre los poderes inherentes que puede poseer un órgano arbitral inducen a reflexionar sobre dos cuestiones principales; primera, las implicaciones que tiene la consolidación de una facultad de reconsideración para el actual sistema de recursos previstos en la normativa CIADI; y, segunda, con carácter más general, sobre los problemas de coherencia en el seno del sistema CIADI y las relaciones entre este y el DI general.

ICSID and Investor-State Petroleum Disputes in the MENA Region

MENA countries have long been important participants in the ICSID system. Several ICSID “firsts” are associated with MENA countries: the first signatory of the ICSID Convention, the first ICSID case, and the first “arbitration without privity.” This note examines the current (as of the end of 2020) ICSID caseload of MENA countries, including the sectoral distribution of the cases. Paradoxically, for a region so rich in petroleum resources, relatively few of the cases have involved oil and gas disputes.The note discusses possible reasons for this. It concludes by suggesting that in appropriate cases MENA countries might find ICSID’s proposed new mediation mechanism an attractive option for the settlement of petroleum investment disputes.

The European Commission: Ami Fidèle or Faux Ami? Exploring the Commission’s Role as Amicus Curiae in ICSID Proceedings

ICSID’s Rule 37(2) introduced into the ICSID system a process by which a non-disputing party may make submissions as an amicus curiae. While amicus submissions have existed in the ICSID system for nearly 20 years, the majority of Rule 37(2) applications have been filed only recently by one party – the EU Commission – on one issue – the applicability of the arbitration agreements in intra-EU BITs. In this article, we explore how tribunals and ad hoc committees have addressed these applications, which do not seek to provide insight on a particular issue in relation to the merits (as past amicus have), but to strip the ICSID process of jurisdiction over all intra-EU BIT disputes.

On judicial autonomy and the autonomy of the parties in international adjudication, with special regard to investment arbitration and ICSID annulment proceedings

AbstractThe article addresses the relationship between judicial autonomy and the autonomy of the parties principles. The issue is not addressed so much through the lens of the procedural rules on the conduct of the proceedings, as through the prism of the general principles of adjudication which dictate the boundaries of judicial, or arbitral, decision-making. The focus will be on the combination between the principles ne, ultra and infra, petita and non liquet as they flow from the consensual nature of international adjudication and arbitration, on the one hand, and the principle jura novit curia which mirrors the autonomy of the judicial function, on the other. The analysis does not draw from national legal systems, nor from commercial arbitration. Due to the significantly different configuration of the principles at issue in different jurisdictions, it will focus on international litigation as an autonomous phenomenon. It will address firstly inter-state adjudication and then international investment arbitration. Special attention will be given to the ICSID system in consideration of its unique annulment mechanism. The article draws from researched case law an encouragement, if not simply the need, for international adjudicative bodies to undertake a proactive attitude in the conduct of the proceedings. More generally potentials emerge from the analysis, to the effect that not only inter-state adjudication may impact on investor-state arbitration, but also vice versa.

Africa’s Voice in the Formation, Shaping and Redesign of International Investment Law

Abstract Africa has often been presented as an ‘investment rules taker’, despite its longstanding contribution to the formation and shaping of the international investment regime. The present contribution seeks to analyze why Africa has been perceived as such and attempts to shed light on the active role that African countries have played since their independence in the development of the investment regime and also in the promotion of the ICSID system. The contribution also explores new avenues that are provided through the ‘Africanization’ of international investment law and their impact on the current redesign of the investment regime. It finally suggests options regarding the current negotiations of an Investment Protocol at the level of the African Union and ways to reinforce synergies between ICSID and the African Union.

ICSID’s Relevance for Africa: A Symbiotic Bond Beyond Time

Abstract Africa's human, natural and legal diversity and wealth have always positioned the Continent as a desired investment destination. Historically, Africa contributed in shaping the ISDS system, and since the turn of the 21st Century, the Continent is witnessing considerable economic growth and is attracting many investors from around the world and especially China, which strengthens Africa's integration in the global economy. The past decade has also witnessed an increase in the number of BITs signed by African States, as well as in the number of investment legislations enacted and modernized. This article addresses the increase of investment in the African Continent, the new Belt and Road Initiative (BRI) and its potential for investments in the African Continent, sheds light on the status quo of the African arbitration landscape, provides an overview of the ICSID-Africa symbiotic relationship, emphasizes the uniqueness of the ICSID system in offering adequate dispute resolution schemes for investment disputes involving African parties and concludes by offering some concluding remarks and observations on the future of arbitration on the African Continent.

‘Somethin’ ELSE’:1 African Discourses on ICSID and on ISDS—An Introduction

Abstract This Special Issue of the ICSID Review offers for the first time in the history of the Review a comprehensive and complete overview of Africa's contribution to investor-State dispute settlement (ISDS), in general, and to the ICSID system, in particular. The present Introduction explores the various facets of Africa's contribution: Africa as a ‘catalyzer’ of the ICSID system; Africa as ‘crystallizer’ of investment jurisprudence; and, Africa as a ‘customizer’ of ISDS.

Compelling Parties to Mediate Investor-State Disputes: No Pressure, No Diamonds?

There was nothing preordained about arbitration becoming shorthand for investor-state dispute settlement. The ICSID system was built on the assumption that disputing parties would choose conciliation to settle their disputes. Those expectations went unrealized as arbitration rose to prominence, and since that time institutions, parties, and academics have observed that facilitated negotiation could play a greater role in resolving investor-state disputes. A number of domestic court systems have made mediation part of the fabric of dispute resolution through incentives and compulsions to mediate. Drawing on this experience, this manuscript considers how obstacles to the uptake of investor-state mediation might be overcome through “internal” measures in treaty practice and “external” measures by arbitrators and dispute-resolution institutions. The timing to adopt such measures is opportune. Mediation provisions are increasingly introduced into investment treaties, investor-state mediator trainings are spreading, the Singapore Convention is on the horizon, and recent pronouncements by the IBA and UNCITRAL encourage the use of mediation in place of arbitration to resolve investor-state disputes. Against this backdrop, the manuscript concludes with a package of proposed measures, engaging various stakeholders, that could be adopted to encourage the greater use of mediation and contribute to shifting a paradigm that has historically placed arbitration at the center of the investor-state dispute settlement system.

Evaluating Investor-State Dispute System under Ethiopia’s Bilateral Investment Treaties: Looking a Workable Roadmap

Despite Ethiopia did not yet ratify ICSID convention, many of the bilateral treaties which Ethiopia is a party point to International Centre for Settlement of Investment Disputes and The United Nations Commission on International Trade Law, the problem is how Ethiopia could be coup up with the ICSID community and the ICSID system without the knowledge of the system itself. And what would be the problem if it becomes a member? What does the country lose if it is not a party while it gives consent to the jurisdiction of the center is not clearly articulated? Thus, as investment whether from domestic or foreign sources, is crucial for prosperity, development and robust economies, this writing will scrutinize the bilateral investment treaties signed by Ethiopia and assess the ISDS and arbitral institutions which Ethiopia has consented to resolving investment dispute that may arise between it as a host state and investors of another state, and thereby recommend an arbitral institution which is less evil from the evils.

An Exaggerated Account Of The ICSID? - A Reply To Professor Robin Broad

Professor Robin Broad in her article “Corporate Bias in the World Bank Groups ICSID: A Case Study of a Global Mining Corporation Suing El Salvador” uses the example of the pending arbitration dispute of Pac Rim Cayman LLC v Republic of El Salvador to make an increasingly compelling case for the imbalances in the current regime of the International Centre for the Settlement of Investment Disputes (“ICSID”). The aforementioned case arose out of a Canadian-based transnational mining corporation called Pacific Rim suing El Salvador for failing to authorize an extraction permit after the company allegedly invested millions in the exploration of the El Dorado mine in the northeastern province of Cabanas. While I do share some of Professor Broad’s skepticism and believe that the ICSID system needs reforms, I find her claims lacking a significant degree of merit both as they pertain to (a) pro-corporate bias in the ICSID system; and (b) the lack of consideration for public interests by the ICSID tribunal. In this short comment, I will try to offer a critical narrative of Professor Broad’s claims and in this process highlighting some of the genuine concerns of the ICSID system and suggest reforms wherever needed.

The Case Law of the ICJ in Investment Arbitration

The topic of this Lalive Lecture is austere. But it has the merit of opening wider perspectives than it seems at first glance. Through the prism that I have chosen, we can, I think, address interesting doctrinal issues which are not devoid of practical consequences: what is the nature of the ‘ICSID system’? A legal order? A ‘sub-system’ of general international law? A ‘sui generis’ Unidentified Juridical Object (UJO)—the refuge of doctrinal non possumus . . . ? And how, and to what extent, in this ‘system’ (a word to which I do not give any precise theoretical sense yet), does one use tools of general international law? Should we think in terms of relations between legal orders or legal systems? Or in terms of normative interactions? Although I do not pretend to give definitive answers to these broad questions, I will keep them in mind when trying to describe the areas in which ICSID tribunals resort to the jurisprudence of the World Court—a term which I take to include the International Court of Justice (ICJ) and its predecessor, the Permanent Court—and the way they do it. First, a preliminary question: why not ‘the ICSID jurisprudence in the decisions of the International Court of Justice’? The answer could simply be that it is not the topic of tonight’s conference. But there are also good reasons. First, there may be some doubt about the existence of ‘ICSID jurisprudence’; I do not get into the discussion of this vast issue, about which much has already been written. Let’s just say that I think

Recourse to the “Futility Exception” within the ICSID System: Reflections on Recent Developments of the Local Remedies Rule

Abstract This article addresses the controversial issue of investors’ non-compliance with the eighteen-month litigation prerequisite often included in investment treaties. In particular, it focuses on two recent decisions which inaugurated a different approach to the domestic remedies rule. It primarily analyzes the traditional method used by ICSID tribunals to tackle the domestic remedies rule, by making reference to the applicability of the MFN clause to dispute resolution provisions. It therefore focuses on the different reasoning followed by the Abaclat and the Ambiente Ufficio tribunals, underlining the shortcomings connected to that reasoning. Specifically, it demonstrates that the analogy with diplomatic protection made by the latter tribunal is questionable. Finally, it analyzes the policy rationale common to both the traditional approach and the one used in the Abaclat and Ambiente Ufficio cases, which seems to be aimed at extending the jurisdiction of the Centre.

The Representation of States before ICSID Tribunals

This article discusses different facets of the representation of States in investment arbitration with a focus on ICSID arbitrations. It reviews rules governing the determination of the representatives of a State, practical issues that arise with respect to such determination and the particulars of the ICSID system in appointing representatives of States. It then examines how problems relating to the representation of a State can be dealt with by curing the lack of authority of the person purporting to act on behalf of the State, by ratification of the acts in question, by reliance on the principles of estoppel and good faith and by invocation of the responsibility of the respondent State.