International Centre For Settlement Of Investment Disputes Research Articles

Indonesia Sebagai Anggota International Centre For Settlement Of Investment Disputes

International Centre For Settlement Of Investment Disputes (ICSID) is an effort to settle investment disputes by means of arbitration. This institution aim to create a just, effective, and fair treatment towards both contracting parties which are (a) investor from another state and (b) host state. As dispute might rise within an investment contract, Indonesia believes that by joining ICSID, the investors will be given the ultimate protection of unfair treatment from Indonesia. This is due to the fact that investors are allowed to bring such dispute into the arbitration of ICSID, should a violation is being conducted. Even if the intention of Indonesia to join ICSID was made in good faith, many violations of the investor’s responsibility result in many cases of ICSID. Moreover, ICSID’s claim to solve a dispute with effective, and fair treatment towards both contracting parties are at stake, considering there are a lot of cases that require more than 10 (ten) years to be settled. Therefore, many people are expressing their concern of Indonesia’s status as one of the ICSID member. The method of this research is based on a Case Based Approach and considered as a normative legal research as it’s type in order to answer the research question regarding Indonesia’s status as an ICSID member.

Article: A Case Note on the ICSID Tribunal’s Decision in Hydro and Others v. Albania: Indirect Expropriation and Proportionality

This case note delves into the complexities of balancing state regulatory authority and investor protections in the context of indirect expropriation, as exemplified in Hydro and Others v. Albania. The commentary scrutinizes the inherent structural bias of the Tribunal, which favoured the sole effects doctrine over the police powers doctrine, thereby slanting the scale towards investor interests. This focus often leaves states defending not just the merits of their regulations but also the extent to which these regulations impact the investor, shifting the tribunal’s attention from regulatory intent to merely quantifying investor detriment. Building on the notion of managerialism, the note argues that this bias makes it challenging for the Tribunal to shift away from its initial pro-investor stance. To restore balance, the commentary advocates for a framework guided by the police powers doctrine, enriched by the principle of proportionality. The note concludes by discussing the ramifications of continued bias, including the erosion of the regime’s legitimacy, evidenced by several countries, including Albania, reconsidering or severing their affiliations with the International Centre for Settlement of Investment Dispute (ICSID), thus signaling an urgent need for recalibration to preserve the legitimacy of the international arbitration regime. Indirect Expropriation, Legitimacy Crisis in Investment Arbitration, Sole Effects Doctrine, Police Powers Doctrine, Structural Bias, Principle of Proportionality, Host State Sovereignty, Investor Protection, Balkans in International Investment Arbitration, Managerialism

The International Court System: A Solution to the Crisis in Investor-State Arbitration?

Most known investor-state disputes are referred to a form of international arbitration known as investor-state arbitration (ISA) or investor-state dispute settlement (ISDS). The rest are referred to domestic arbitration or litigation before the courts of host states. The International Centre for Settlement of Investment Disputes (ICSID) is the largest ISDS institution, having handled 829 out of 1190 cases by December 2021. However, in recent years the ISDS regime has faced challenges that have reached crisis proportions. States have responded to these challenges in different ways. For example, during 2014 the European Union (EU) intended to provide for ISDS in its anticipated trade agreements with the United States of America and Canada. In preparation the EU held public consultations wherein the public was invited to comment on whether ISDS could be used in these agreements. Over 90 per cent of the voters rejected the inclusion of ISDS therein. In response the EU abandoned ISDS and created a bilateral Investment Court System (ICS). The final death knell for ISDS in the EU came in 2018 and 2021 when the Court of Justice of the European Union (CJEU) ruled that ISDS among EU states is unlawful and incompatible with its legal order. This paper aims to assess the legal nature of the ICS, as well as whether the ICS can resolve the challenges that face ISDS worldwide. The paper concludes that firstly, the ICS is a hybrid of a court and a tribunal; secondly, that the ICS fails to fully address all the challenges faced by ISDS. It is a work in progress that must be interrogated further and be improved upon over time.

Digital Evidence in Disputes Involving States

The use of digital evidence increases concurrently with increased digitalization of the larger world and of justice processes. This essay aims to address the use of digital evidence in interstate disputes and other disputes involving states. It focuses on the case law of two international arbitral bodies—the Permanent Court of Arbitration (PCA) and the International Centre for Settlement of Investment Disputes (ICSID)—and of the International Court of Justice (ICJ). The analysis discloses three main concerns when dealing with digital evidence: authorship, authenticity, and chain of custody. We propose that courts create permanent and ad hoc digital forensic expert committees to draft guidelines and perform a preliminary admissibility evaluation of digital evidence.

Modernization and Reform of the ICSID Mechanism: Based on New ICSID Rules for 2022

The Investor-State Dispute Settlement (ISDS) mechanism plays a significant role in international investment governance. Recent years, this mechanism has faced increasing criticism and reform pressures. In order to establish procedures that are more transparent, efficient, cost-effective, and environmentally friendly, the International Centre for Settlement of Investment Disputes (ICSID) initiated a modernization reform of its rules in 2016, and the new rules came into effect on July 1, 2022. This reform marks an important milestone. This article primarily employs methods of literature review, inductive analysis, and case study analysis. This reform improves procedural efficiency, reduces costs, and enhances the transparency of arbitration proceedings. This reform has also driven the modernization of ICSID rules, furthered the deepening of ISDS mechanism reform, and had a significant impact on the practices of relevant countries and stakeholders.

Eligible Juridical Person Investors in ICSID Arbitration

An investors eligibility is a prerequisite for International Centre for Settlement of Investment Disputes (ICSID) tribunal to acquire jurisdiction over a case. There is no definite conclusion on whether an entity is an eligible investor, often leading to disagreement. In current international investment practice, arbitration tribunals usually consider the definition of investor in the bilateral investment treaties concluded by the parties to the dispute and use it as one of the bases for determining the investors international status. Since the identification of juridical person investors is a controversial issue in practice, this essay will analyze the criteria for ICSIDs decision in the Tokios Tokels v. Ukraine as an example and examine the issue of pierce the corporate veil to explore the path to resolve related disputes.

The Effect of the Consortium Agreements on the Competence of the International Centre for Settlement of Investment Disputes (ICSID): Analytical Study of the Saudi Foreign Investment System and the Washington Agreement of 1965

This study determines the extent of the impact of the consortium agreements between commercial companies on the jurisdiction of the International Centre for Settlement of Investment Disputes (ICSID). For the settlement of foreign investment disputes, if the issue arises from the same dispute between foreign investors from several countries, who are linked to each other by a nodal group on the one hand, and with the Kingdom of Saudi Arabia as the host country for investment on the other hand. This study has shown that in some cases, consortium agreements have an indirect role in the emergence of several simultaneous judicial or arbitration procedures for the procedures of the center for settling foreign investment disputes in the Kingdom of Saudi Arabia, considering that the Kingdom of Saudi Arabia is a member of the Washington Agreement of 1965. In this study, we rely on the comparative analytical approach by studying the special nature of the consortium agreements that arise from the alliance of several companies or projects from different countries. These parties bring together an independent legal entity with an independent legal personality to explain that the consortium is considered one of the indirect reasons for the emergence of Simultaneous arbitration procedures for the ICSID. We also rely on the comparative approach between the Saudi Foreign Investment Law of 2000 and the Washington Agreement of 1965 to determine the extent of the impact of these agreements on attracting foreign investors in the Kingdom of Saudi Arabia. Additionally, we try to identify the legal means to prevent the occurrence of this phenomenon or control it if it occurs.
 
 Received: 16 November 2022 / Accepted: 27 December 2022 / Published: 5 January 2023

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).

Brazil’s New Investment Treaty Model: Why Now?

The investment treaty regime, unlike other economic regimes, lacks common substantive multilateral rules and depends on countries signing bilateral or plurilateral investment treaties. As the regime presented a pro-developed country bias, developing countries, especially in Latin America, avoided signing investment treaties up to the 1980s. Brazil followed this trend and did not start an investment treaty program until the late 1990s. However, the treaties never entered into force. The country also avoided acceding to the World Bank agency responsible for investment arbitration proceedings - the International Centre for Settlement of Investment Disputes (ICSID). In 2015, Brazil started a new investment treaty program. However, the timing seems counterintuitive. The investment treaty regime had already been criticized, including inefficiency in attracting foreign investment, the potential to encroach on countries’ regulatory sovereignty and the lack of legitimacy of its investor-state dispute settlement (ISDS) procedure. Furthermore, the favorable foreign economic scenario did not force the country to seek an inflow of foreign capital at that time. The new Cooperation and Facilitation Investment Agreement (CFIA) is presented as an investment treaty model for developing countries, since it responds to major criticisms to the investment treaty regime, and at the same time meets the demands of an important domestic interest group, the Brazilian industrial sector, for a legal framework that mitigates the political risk of its increasingly internationalized operations. Brazil’s CFIA may be viewed as a model that other developing countries could emulate in the face of the failure of the traditional paradigm of investment dispute settlement.

The 2022 ICSID Rules: A Leap Toward Greater Transparency in ICSID Arbitration

The International Centre for Settlement of Investment Disputes (ICSID) recently issued an amended set of rules to govern its arbitration proceedings.2 One of the core topics addressed by the new Rules is transparency and the mechanisms by which ICSID arbitrations—traditionally confidential—may be ‘opened’ to the public. On this issue, the 2013 UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration played an influential role in shaping the new ICSID Rules.3 But ICSID took a slightly different approach by giving States more authority to decide which parts of the proceedings will be kept confidential. This note addresses ICSID’s new transparency regime and how it differs from UNCITRAL’s regime. The transparency movement began with the North American Free Trade Agreement (NAFTA) in 2001. The three NAFTA States—Canada, Mexico and the United States—agreed that ‘nothing in the NAFTA precludes [them] from providing public access to documents submitted to, or issued by, a [NAFTA] tribunal’.4 Two years later, they allowed non-disputing parties to comment on the proceedings.5 One year later, they opened NAFTA hearings to the public.6

An Analysis of Concurrent Proceedings under Chinese BITs

On 2 May 2017, Hela Schwarz GmbH, a German manufacturer of compound spices and food additives (Hela), filed a Request for Arbitration against China with the International Centre for Settlement of Investment Disputes (ICSID), alleging expropriation of its investment.123 Hela’s local subsidiary in China, Ji’nan Hela Schwarz Food Co Ltd (JHSF), had initiated proceedings in Chinese courts before the arbitration claim was filed with ICSID. Hela’s ICSID claim raises the issue of whether a foreign investor may concurrently initiate proceedings before an ICSID tribunal and domestic courts. Such concurrent proceedings not only raise concerns about treaty party expectations but also undermine the predictability of dispute resolution. Given the small number of international investment arbitration cases involving China and its bilateral investment treaties (BITs), the issue of concurrent proceedings in Chinese BIT law and practice is underinvestigated.4 Therefore, Hela’s ICSID arbitration case offers a welcome opportunity...

Investor–State Mediation and the Belt and Road Initiative: Examining the Conditions for Settlement

ABSTRACT Despite the dominance of arbitration in the realm of investor-state disputes, the variety of proposals for reform suggest considerable stakeholder discontent with the current framework. One suggested reform is the introduction of investor–state mediation, which has been supported by the conclusion of the Singapore Convention on Mediation and the proposal by the International Centre for Settlement of Investment Disputes (ICSID) of a set of mediation rules. This article examines the respective merits of arbitration and mediation to settle investment disputes related to the Belt and Road Initiative. Many of the principles underpinning the implementation of the Belt and Road Initiative sit uncomfortably alongside an adversarial adjudicative mechanism, and access to arbitration is limited in some investment treaties. It is argued that, in some instances, mediation may be more attuned to the unique conditions of the Belt and Road Initiative. Stakeholders have done considerable work to enhance the legitimacy of mediation within the field of investor–state dispute settlement, but it remains dormant in practice and comparatively rare within investment treaties. While a mediated settlement will remain elusive in many instances, it can be encouraged by a series of reforms to treaty drafting, the internal organization of government departments, and the actions of foreign investors.

Disrupt the Gambler’s Nirvana: Security for Costs in Investment Arbitration Supported by Third-Party Funding

ABSTRACT Third-party funding is a recent yet rapidly growing phenomenon in investment arbitration. While it enables investors lacking funds to pursue remedies against States, it exposes States to greater risk of inability to recover arbitration costs. Against this background, this article examines the legal principles on security for costs and, contrary to the view of several tribunals and commentators, it argues that in cases involving third-party funding and the funding agreement does not cover potential adverse costs, there is a presumption in favour of ordering security for costs. However, as revealed in recent decisions in Herzig, the current legal framework on security for costs, which is predicated on the bilateral investor–State relationship, is ill-suited to regulate the tripartite relationship involving third-party funders. Unfortunately, the discussions on Investor–State dispute settlement reform and the current proposal by the International Centre for Settlement of Investment Disputes (ICSID) on the ICSID Rules amendment have largely overlooked this problem. Thus, this article urges policy-makers to develop new rules to regulate the tripartite relationship involving third-party funders.

Who Wins in International Investment Arbitration Disputes? Evidence from Latin American and Caribbean Countries’ Cases under ICSID

During the nineties, an important group of Latin American and Caribbean (LAC) countries adhered to the International Center for Settlement of Investment Disputes (ICSID) as part of a programme of measures that sought to attract foreign investment to the region. With the aim of exploring the determinants of arbitration outcomes, I use a dataset of 161 concluded disputes until 2019 corresponding to investments in LAC countries, finding evidence on the influence of parties’ characteristics, the subject discussed in cases, and characteristics of the tribunal on the arbitration outcomes. I find that 50% of tribunal decisions have been favourable to either claimant investors or host countries. However, this result may be subject to sample bias if information of settlements and discontinued cases is not taken into consideration. I also find evidence in favour of selection and party capability theories that helps to explain the determinants of international investment arbitration dispute outcomes. In particular, the results reveal that disputes related to direct expropriations have a relatively higher probability of being considered founded by tribunals than other legal controversies. Likewise, the indicators of the relative strength of parties, such as experience in the international arbitration system, have an important influence on tribunal awards. Furthermore, country’s time of experience within ICSID is found to have an important influence on the selection of disputes.

„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 Invocation of State of Necessity Defense to justify Covid-related Measures Before International Centre for Settlement of Investment Dispute (ICSID)

The Invocation of State of Necessity Defense to justify Covid-related Measures Before International Centre for Settlement of Investment Dispute (ICSID)

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.

Jurisdiction of Tribunals to Settle Intra-EU Investment Treaty Disputes

Abstract The European Court of Justice (ECJ) made a ground-breaking shift away from the current system of investor–State dispute settlement (ISDS) by rendering its judgment in the matter of Achmea v Slovak Republic. However, since March 2018, a large and ever-growing number of investment tribunals have found that the Achmea judgment does not deprive them of arbitral jurisdiction. Against this background, the aim of the present article is to analyse the effects of the Achmea judgment on the jurisdiction of tribunals to settle intra-European Union (EU) investment treaty disputes. By taking due account of the reasoning conducted by the ECJ, the scope of the Achmea jurisprudence will be clarified. It is concluded that the incompatibility of intra-EU ISDS with EU law concerns all intra-EU investment treaties, including article 26 of the Energy Charter Treaty (ECT). On this basis, we ask whether, and to what extent, the applicability of the Achmea judgment is relevant to arbitral jurisdiction. Considering the law applicable to the arbitration agreement, we conclude that International Centre for Settlement of Investment Disputes (ICSID) tribunals and those seated outside the EU remain competent to settle intra-EU investment disputes. In contrast, the Achmea judgment renders ISDS clauses contained in intra-EU investment treaties inoperable if the tribunal is seated within the EU. The article closes with an outlook that puts these conclusions into perspective by considering recent developments such as the EU Member States’ ratification of a multilateral termination treaty.

Anti-corruption Coordinative Mechanism between the ICSID and Domestic Enforcement Authorities: A China’s Perspective

When confronted with the host states’ increasing enthusiasm of invoking the corruption defense as an arbitral strategy to frustrate foreign investors’ claims, the International Centre for Settlement of Investment Disputes (ICSID) tribunals encounter realistic difficulties in arbitration. The inherent insufficiency of anti-corruption investigative powers bestowed to ICSID tribunals highlights the importance of constructing a coordinative mechanism between the ICSID and any domestic enforcement authorities enlisted to repudiate corruption. The enacted International Criminal Judicial Assistance Law of the People’s Republic of China provides the domestic legal basis for establishing a coordinative international criminal judicial assistance mechanism between such international organizations as ICSID and China’s domestic anti-corruption enforcement authorities. Eventually, the proposed ICSID-China’s anti-corruption mechanism will help the global community fight against international investment corruption in a coordinated way, substantially enhancing any host state’s ability to confront the on-going difficulties also experienced by investment arbitral tribunals.

Application of the Salini test in determining investments in the practice of the International Center for Settlement of Investment Disputes

Determination of the existence of subject-matter jurisdiction is of practical importance for the entire dispute settlement process by the International Center for Settlement of Investment Disputes (ICSID), which was created for protection of the rights of foreign investors. The subject-matter jurisdiction of ICSID is conditioned by existence of an “investment”. Determination of existence of an investment in each particular dispute is attributed to the exclusive competence of the arbitral tribunal itself, since the concept of “investment” is not disclosed in the text of the Washington Convention. The authors assess the key features of the activity that is recognized as investment, used by the arbitrators conducting qualification of one or another transaction to establish whether or not they fall under requirements of the Article 25 of the Washington Convention. Special attention is turned to the methodology and practice of application of the aforementioned criteria. It is noted that in each criteria, the arbitrators determine their own structure. Detailed analysis is carried out on the issues of subject-matter jurisdiction in the decisions of ICSID , beginning with the Fedex case, in which the need to use objective criteria in determination of ICSID jurisdiction without their interpretation is pointed for the first time; and Salini case, in which the arbitrators disclosed the content of these criteria, as well as subsequent decisions that illustrated different approaches of the arbitrators towards interpreting the Salini test. The conclusion is made that despite the fact that the criteria used in modern arbitration practice developed in the Salini case do not possess regulatory characteristics, their presence allows making objective distinction between the investments protected on the level of international agreements and regular commercial transactions. The Salini test provides potential investors with the opportunity to assess risks prior to starting investment activity on the territory of a foreign country, as well as protect the parties to the investment relations from abuse.