International Centre For Settlement Of Investment Disputes Convention Research Articles

The 2022 Amendments of the Regulations and Rules of the International Centre for Settlement of Investment Disputes: Change and Continuity

Abstract This article examines the amendments of the Regulations and Rules of the International Centre for Settlement of Investment Disputes (ICSID) recently approved by the Administrative Council of ICSID. The amendments are of all regulations and rules for proceedings that ICSID has long been authorized to administer – ICSID Convention and Additional Facility conciliation and arbitration and fact-finding proceedings. As part of the amendments, ICSID has also issued a new set of mediation rules. For context, the article briefly recalls previous amendments of the Regulations and Rules before discussing highlights of the newly amended Regulations and Rules. A concluding section points out that the amendments, which respond to many criticisms of investor-State arbitration under investment treaties (ISDS), will generally apply to all ICSID ISDS arbitrations initiated on or after the effective date of the amendments (1 July 2022).

„Микула срещу Румъния между международното инвестиционно право и правото на ЕС“ – решението на Върховния съд на Обединеното кралство – последното или поредното парче от пъзела?

The Judgement of the United Kingdom’s Supreme Court in the long Micula v. Romania investment treaty dispute confirmed that the arbitral awards of the International Centre for Settlement of Investment Disputes (ICSID), rendered by tribunals established under intra-EU BITs, could be enforced in the UK. The Micula case concerns the interplay between the obligations under the ICSID Convention and EU law. In particular, it addresses the question of whether the award obtained by the Micula brothers against Romania constitutes state aid prohibited by EU law, as well as the enforcement obligations under the ICSID Convention in view of the EU duty of sincere cooperation.

The Problem of Execution Immunities and the ICSID Convention

Abstract The prevailing view in international practice is that, by consenting to arbitration, a State does not waive its immunity from execution. Yet, in the context of arbitration administered by the International Centre for Settlement of Investment Disputes (ICSID) – as in the context of arbitration between States and private parties more generally – the problem of execution immunities is a very significant obstacle to the effective implementation of arbitral awards. When immunity from execution allows States to escape obligations they have freely undertaken, and when it withholds from claimants the fruits of a favourable award, the benefits of arbitration become illusory. This article contends that the prevailing view is no longer compelling. We argue that domestic courts can and should uphold the rule-of-law objectives and benefits of the ICSID Convention by adjusting their approach to immunity claims in the arbitral context: consent to arbitration should be interpreted as an implied waiver of immunity from execution.

Portfolio Investment in ICSID Arbitration: Just a Matter of Consent?

The constant evolution of the ways in which foreign capital is invested in the marketplace has urged the need for defining the boundaries of the notion of investment, as Article 25 of the International Centre for Settlement of Investment Disputes (ICSID) Convention is silent on this point. Against this background, the question of whether the category of portfolio investment, which generally consists of intangible capital flows, can be classified as protected investment under the ICSID Convention has gained momentum due to some high-profile ICSID cases. This article examines to what extent portfolio investment can be included in the notion of investment under Article 25(1) of the ICSID Convention and, consequently, the substantive protections granted thereto can be enforced within the ICSID framework. It is argued that the increasing sophistication of financial instruments makes it difficult to find a one-size-fits-all solution, thereby requiring a case-by-case assessment of the relevant financial instrument vis-à-vis the typical characteristics of an investment identified by the case law. In this analysis, the requirement of the ‘contribution to the economic development of the host state’, which has often been overlooked, is subject to reconsideration. Portfolio Investment, ICSID Convention, Article 25, Jurisdiction, Economic Development

Amicable Investor-State Dispute Settlement at ICSID: Modernizing Conciliation and Introducing Mediation

The International Centre for Settlement of Investment Disputes (ICSID) has embarked on a comprehensive reform of its existing dispute settlement mechanism and also added a set of mediation rules to its service offerings. This article reviews the proposed amendments to the ICSID conciliation mechanism and ICSID’s proposed investment mediation framework. In relation to the proposed amendments to the ICSID conciliation mechanism, the article analyzes key differences and similarities between ICSID Convention arbitration and ICSID Convention conciliation, before providing an overview of the amendments proposed to the conciliation framework and offering some conclusions. Subsequently, the article reviews the background against which the ICSID Mediation Rules have been developed and sets out the key differences and similarities between ICSID’s existing conciliation process and the newly proposed mediation mechanism. The article then provides a comprehensive overview of the Mediation Rules before offering conclusions and a positive outlook for amicable investor-State Dispute Settlement.

The Participation of African States in the Making of the ICSID Convention

This note examines the role of African States in the foundation of the International Centre for Settlement of Investment Disputes (ICSID). More specifically, it discusses their contributions to the formulation of the constituent treaty of ICSID, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States,2 and to its eventual finalization and entry into force. As detailed below, the process began in 1962 and was completed in 1966. In the immediately preceding years, rapid decolonization, particularly in Africa, had greatly increased the number of independent developing countries. Most of the newly independent countries quickly joined the International Bank for Reconstruction and Development (IBRD), raising by about 50 per cent the number of its developing country members. Promoting the creation of ICSID was one of a number of steps that the IBRD took to assist them with their economic development and need for outside capital. As the then President of the IBRD put it:

Summary Dismissal of ICSID Proceedings

In just 10 years since its inception, the new summary dismissal procedure under the ICSID regime has proven to be quite popular. Up until May 2016, 22 tribunals had already dealt with the new mechanism, with more than half of the proceedings instituted in the period between 2014 and 2016 alone. 2 Just like with transparency, 3 it seems that the summary dismissal procedure is becoming another procedural concept initially used by international courts and (investment) tribunals 4 with the potential to also influence the commercial arbitration world. 5 This merits a fresh look at the International Centre for Settlement of Investment Disputes (ICSID) summary dismissal procedure contained in Arbitration Rule 41(5), which however is best begun by briefly recalling the history of the rule. In October 2004, the ICSID Secretariat published a discussion paper on ‘Possible Improvements of the Framework for ICSID Arbitration’. 6 Under the heading ‘Preliminary Procedures’, the Secretariat suggested establishing a special procedure that allowed a tribunal to dismiss all or part of the claim at an early stage of the case on an expedited basis. 7 The suggestion was in part a reaction to the limited screening power of the Secretary-General of ICSID under Article 36(3) of the ICSID Convention. 8 Pursuant to Article 36(3), the Secretary-General of ICSID shall register a disputing party’s request for arbitration unless the Secretary-General finds on the basis of information contained in the request that the dispute is manifestly outside the jurisdiction of the Centre. However, the screening power of the Secretary-General does not extend to the merits of the dispute or to cases where jurisdiction is merely doubtful but not manifestly lacking. 9 As a consequence, the Secretary-General would have to register a request for arbitration even if he or she believed the claim to be unmeritorious or abusive. 10 The new procedure was intended to address concerns that the Secretary-General’s screening power was too limited, 11 and took into account complaints by some respondent governments that unmeritorious claims might only be fully addressed by a tribunal after spending considerable money and time on copious arbitral proceedings. 12

Introduction to the Special Focus Issue on State-Owned Enterprises

This first Special Focus Issue marks the 50th Anniversary of the International Centre for Settlement of Investment Disputes (ICSID). There has been significant development in investment treaty law since the ICSID Convention was signed in 1965. One such recent development is the increasing amount of investment being conducted by State-owned enterprises (SOEs). The scale of foreign investment by SOEs has attracted attention. As yet the commentary is limited. Auspiciously, the ICSID Review is celebrating 30 successful years in providing insightful and current commentary on investment evolution and important developments. It is for this reason that this Special Issue is focused on SOEs. State-owned enterprises are not a new phenomenon with in the landscape of world investment, but they have never attracted as much attention as they do today. The rapid increase of SOE investments from emerging economies, at a time of global economic downturn, has been met with mixed reactions. In some cases, it has been warmly welcomed while in others these large investments are viewed with deep suspicions and concerns, particularly national security and competition distortion concerns. Some States have strengthened their foreign investment review mechanism or have designed a policy framework of competitive neutrality in order to respond to the perceived challenges of SOE investments. Internationally, SOEs are increasingly becoming an important issue in major treaty negotiations, such as the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the China–US bilateral investment treaty (BIT) talks. Notably, the newly released TPP text includes an entire chapter on SOEs, which sets a blueprint for future BIT and free trade agreement negotiations. Nonetheless, the question of whether, and to what extent, SOE investments should be regulated by international investment treaties remain a real and challenging question of international law. The question touches upon the standing of SOEs in investment dispute resolution as well as substantive protections or regulations of SOEs in international investment treaties. Given the active role of SOEs in certain sectors (such as the energy sector) and the special concerns of SOEs from certain regions (such as China), it is hoped that a focused study will undoubtedly provide important insights on some of these SOE issues. The aim is to inform international and domestic policy design on SOE investment regulations in the future.

China as An Acceptor of, User of and Contributor to the Investment Treaty Regime

The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) entered into effect in October 1966 and gave rise to the International Centre for Settlement of Investment Disputes (ICSID). The aim of the ICSID Convention was to provide facilities for the settlement of investor–State disputes, including arbitration. The Convention facilitated the direct use of international means by foreign investors that was hardly available under traditional international law. It was assumed that the ICSID mechanism would increase the confidence of foreign investors, mainly those from developed States, about the investment climate of host States, developing States in particular, and further promote the flow of private investment to benefit the economic development of States. In February 1990, about 25 years after the coming into force of the ICSID Convention, China signed that Convention and it came into force in China in February 1993. China signed its first bilateral investment treaty (BIT) with Sweden in 1982, 10 years before joining the ICSID Convention.

HasAbaclat v Argentinaleft the ICSID with a ‘mass’ive problem?

This article seeks to analyse the impact of the award on jurisdiction in Abaclat v Argentine Republic . Specifically, the article discusses whether the tribunal’s decision to allow ‘mass arbitrations’ within the ICSID (International Centre for Settlement of Investment Disputes) framework withstands scrutiny. An attempt is made to define mass arbitrations as a form of multiparty arbitrations with two key features—the presence of a high number of claimants and issues that are ‘sufficiently similar’. On this foundation, the article first highlights that ‘mass arbitrations’, as understood in Abaclat , do not require claimants to obtain additional consent from a respondent state. This is because multiparty proceedings (of which ‘mass arbitrations’ are a form) are permitted under Article 25 of the ICSID Convention. The article then presents three possible challenges to admissibility—bifurcation of proceedings, appointment of experts, and collection of evidence—and argues that these are permitted in ICSID jurisprudence since they are procedural devices which a tribunal is qualified to adopt under Article 44 of the ICSID Convention. Finally, the article dismisses possible due process concerns that Abaclat -type ‘mass arbitrations’ could raise. The article concludes with a suggestion to adopt specific rules on ‘mass arbitrations’ in the form of Additional Facility Rules, given the growing examples of multiparty investment disputes. Abaclat and ors v Argentine Republic , ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility, IIC 504 (2011) Ambiente Ufficio S.p.A. and ors v Argentine Republic , ICSID Case No ARB/08/9, Decision on Jurisdiction and Admissibility, IIC 576 (2013) Guaracachi America, Inc & Rurelec plc v Plurinational State of Bolivia , PCA Case No 2011–17, Award, IIC 628 (2014)(ICSID) Convention on the Settlement of Investment Disputes between States and Nationals of other States (1965), arts 25, 43, 44ICSID Rules of Procedure for Arbitration Proceedings (2006), Rules 19, 34UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules (2010), art 17

The ICSID arbitration and its contribution to development in the light of direct investments in emerging markets

The international investment disputes between states and companies have a procedural framework of dispute resolution through arbitration. This is the service provided by the International Centre for Settlement of Investment Disputes (ICSID), which was established by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965. ICSID is a member of the World Bank Group, which also encompass the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), International Finance Corporation (IFC) and the Agency multilateral Investment Guarantee Agency (MIGA). The goal of the Center is to facilitate the settlement of disputes between foreign citizens and local authorities where the business is conducted through arbitration. To achieve this, all Bilateral Promotion and Reciprocal Protection of Investments Treaties (BITs) contain mechanisms for resolution of disputes between investors and States similar to the ICSID Convention or refer to it. The latter, joined to an efficient implementation of awards rendered in this context, should serve emerging markets to attract the capital required to contribute to their final expansion.

Metal-Tech Ltd. v. Republic of Uzbekistan (ICSID)

In Metal-Tech Ltd. v. Republic of Uzbekistan, an International Centre for Settlement of Investment Disputes (ICSID) panel unanimously dismissed an investment claim by an Israeli investor filed pursuant to the Israel-Uzbekistan Bilateral Investment Treaty (BIT) against Uzbekistan. The tribunal concluded that it lacked jurisdiction to hear the dispute because the investment was not “implemented,” i.e., “established” in accordance with the laws and regulations of Uzbekistan as it was the result of corrupt practices by the investor. To reach this conclusion, the tribunal relied, inter alia, on the requirement of consent as set forth in Article 46 of the ICSID Convention. Ultimately, the tribunal decided that as a consequence of having no jurisdiction over the claims, it had no jurisdiction over Uzbekistan’s counterclaims.

THE “UNEXPECTED” DEVELOPMENT-FRIENDLY DEFINITION OF INVESTMENT IN THE 2013 RESOLUTION OF THE INSTITUT DE DROIT INTERNATIONAL

The importance of the widespread reliance upon direct arbitration, particularly arbitration under the International Centre for Settlement of Investment Disputes (ICSID), and of the practice of “arbitration without privity” is at the root of the search for a definition of investment, as underlined by the 2013 Resolution of the Institut de droit international (IDI). The Resolution refers to a development-friendly definition of investment. This article aims to explain to what extent a definition based upon references to sustainable development would constitute an acceptable specification, albeit a partial one, of the term “development” used in the IDI Resolution, in light of the need of a reconciliation between private and public interests within current international investment law. The article also deals with the issue of whether the ICSID Convention provides for an autonomous definition of investment that cannot be overridden by the terms of a given international investment treaty, and if so, which criteria should be taken into consideration for the purposes of determining whether an investment exists within the meaning of Article 25(1) of the ICSID Convention.

The Rules of Procedure for Conciliation Proceedings in International Investment Law

This article examines conciliation as an alternative dispute resolution mechanism in resolving investment dispute. Conciliation being a highly flexible and an informal method of dispute settlement involves a third party that assists the disputants in reaching an agreed settlement. The Convention on the Settlement of Investment Dispute between States and Nationals of other States establishes a Centre known as the International Centre for Settlement of Investment Disputes (ICSID) which facilitates arbitration and conciliation proceedings for resolving investment disputes. This article reveals that irrespective of the fact that arbitration is largely patronized in the Centre, conciliation has being regarded as a highly flexible and less expensive process for resolving investment disputes. This article examines the rules of procedure for conciliation proceedings specifically under the ICSID Convention for resolving investment disputes.

The Sempra Annulment Decision of 29 June 2010 and Subsequent Developments in Investment Arbitration Dealing with the Necessity Defence

Abstract On 29 June 2010, an ad hoc International Centre for Settlement of Investment Disputes (ICSID) Annulment Committee annulled the 2007 Sempra Award for manifest excess of powers (within the meaning of the ICSID Convention), as it found that the Tribunal had failed to apply the correct law. The decision took into account the measures adopted by the Argentine Government to face the 2001 economic and political crisis and (like other previous awards and decisions on similar cases) raised the issue of the interpretation and application of the necessity defence in situations of economic emergencies. The approach of the ad hoc Committee on this particular point is the main focus of this note.

Defining Investors: Who Is Eligible To Claim?

This article sets out the basic concepts of investors in investment arbitration and analyses a selected number of decisions of arbitral tribunals in light of some objections to jurisdiction which are frequently raised by respondent States. More specifically, the article deals with the thorny legal question of the extent to which a national of a host State can sue its own State before an international tribunal, such as the International Centre for Settlement of Investment Disputes (ICSID)Tribunal. In particular, the article touches upon two recent cases in which the author was involved as co-counsel (in a team of several lawyers) for the States: a treaty-based case, Rompetrol v. Romania, on the issue of shell companies, and an unpublished contract-based case involving a West African State and a joint venture, on the issues of control and the interpretation of the term 'under foreign control' contained in Article 25(2)(b) of the ICSID Convention.

The Ad Hoc Committee Annulment Decision in Malaysian Historical Salvors: The Meaning of ‘Investment’ Re-established?

Member States to the International Centre for Settlement of Investment Disputes (ICSID) Convention, as well as their companies and economic operators, are interested in guaranteeing meaningful protection for their investments. This is done by granting jurisdiction to ICSID arbitral tribunals to hear disputes between private persons and states party to the ICSID Convention in cases where a valid Bilateral Investment Treaty (BIT) is present. Because such tribunals’ jurisdiction is limited to investment disputes, the definition of ‘investment’ as embodied in Article 25 of the ICSID Convention and the relevant BIT is of paramount importance. In fact, the definition of investment will have a bearing on whether or not a given economic activity by a company or a private person can be protected via a so-called Investment Treaty Arbitration. In turn, this rather technical issue will have direct practical economic consequences for companies and investors. Unfortunately, both the meaning of investment and the manner in which the ICSID Convention and BITs have been interpreted have been addressed in contradictory manners by various ICSID tribunals, creating unpredictability and damaging the level playing field of investors’ protection. However, the ad hoc Committee’s Decision on the Application for Annulment in Malaysian Historical Salvors v. The Government of Malaysia (hereinafter ‘MHS Annulment Award’) appears to have re-established a proper meaning and method of interpreting the term investment, which, it is argued, should be followed by future tribunals. If this were to happen, companies and economic operators will be able to enjoy both predictability and full protection of their investments.

The Challenge of UNASUR Member Countries to Replace ICSID Arbitration

In the 2000s, the financial crisis in Argentina and several nationalizations carried out by governments in South America have spawned a large number of claims before International Centre for Settlement of Investment Disputes (ICSID). Latin Americans began to look at ICSID critically, there have been complaints about ICSID's connections with the World Bank; non-commercial interests, such as health or environmental protection, have not received adequate attention in the arbitration cases; a lack of transparency by arbitration panels; and the absence of an appeals process, but only a limited annulment procedure. This situation generates impacts upon the overall due process of ICSID arbitrations and Latin American hostility against ICSID, such the Bolivarian Alliance for the Peoples of our America Peoples'Trade Treaty (ALBA-TCP) Declaration to denounce ICSID Convention and the firm intention of Union of South American Nations (UNASUR) countries to create a regional arbitration centre to replace ICSID arbitration.

The International Centre for Settlement of Investment Disputes: Its Emerging Principles with Reference to Some Latest Cases

It’s an age of globalisation where trade and investment are no where concerned with international boundaries. Where there is trade, there is investment. Likewise, investments bring with them a room for disputes. International disputes are best resolved by Arbitration and Conciliation, i.e., Alternative Dispute Resolution system. In order to facilitate such a system of dispute resolution, the International Law provides for a Convention, known as the Convention for Settlement of Investment Disputes, much popularly as, the ‘Washington Convention’. The body established under this Convention, for the settlement of Investment Disputes, is the International Centre for Settlement of Investment Disputes (ICSID). The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). It was opened for signature on March 18, 1965 and entered into force on October 14, 1966. To date 143 countries have signed and ratified the Convention to become Contracting State. As evidenced by its large membership, considerable caseload, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development. This Paper aims at throwing light on the functioning of the Centre with the most recent principles laid down by the Centre in its awards, regarding Foreign Investments, and relations between the States and the Parties investing, along with a motive, as to why India should also be one of the signatories and ratifiers of the Convention.

Amco Asia Corp. v. Republic of Indonesia

This decision is the latest of several by arbitral bodies of the International Centre for Settlement of Investment Disputes (ICSID) addressing a claim by Amco Asia Corporation (Amco Asia) against respondent Republic of Indonesia. An ICSID tribunal (First Tribunal) in 1984 rendered an award on the merits in favor of claimant Amco Asia. In 1986 an “ad hoc committee” (Ad Hoc Committee) convened on Indonesia’s request pursuant to Article 52 of the ICSID Convention annulled the 1984 award on the grounds that, with respect to a principal holding, the tribunal had “manifestly exceeded its powers” and “failed to state reasons,” both being grounds for annulment specified in Article 52(1) of the Convention. The Ad Hoc Committee did not disturb certain other holdings of the tribunal. Claimant then resubmitted the dispute, and a second tribunal (Second Tribunal) was constituted pursuant to Article 52(6) of the Convention. The first task of the new tribunal was to determine which holdings of the previous bodies were res judicata and therefore could not be relitigated. The three-member ICSID Second Tribunal held: (1) that holdings of the First Tribunal that had not been annulled by the Ad Hoc Committee were res judicata; (2) that issues as to which the First Tribunal’s holdings had been annulled could be relitigated; and (3) that the Ad Hoc Committee’s reasoning, as distinct from its actual decision of annulment, was not binding on the Second Tribunal.