The International Centre for Settlement of Investment Disputes

Author:Anthony Connerty
Profession:Barrister and member of WIPO arbitration panel

1) Introduction. -2) Historical Overview. -3) The ICSID Institution of Arbitration and Conciliation Procedures. -4) The ICSID Rules of Procedure for Arbitration Proceedings: Introduction. Chapter 1: Establishment of the Tribunal. Chapter II: Procedure of the Tribunal. Chapter III: General Procedural Provisions - Pre-hearing Conferences, Documents, etc. Chapter IV: Written and Oral Procedures.... (see full summary)


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1) Introduction

The International Centre for Settlement of Investment Disputes (the ICSID Centre) was created by the International Convention on the Settlement of Investment Disputes (also known as the Washington Convention). The Centre was briefly mentioned in Chapter 9 of the Manual, which dealt with investor-State disputes and which considered, among other things, the ICSID Convention.

This chapter now looks at the Centre in more detail, and also considers the ICSID Arbitration Rules, Conciliation Rules, Additional Facility Rules and fact-finding procedure, and the ICSID caseload.

Brief mention will be made again of some of the problems arising in investor-State disputes, referred to earlier in Chapter 9.

2) Historical Overview

The Centre states that on a number of occasions in the past, the World Bank as an institution and the President of the Bank in his personal capacity have participated in the mediation or conciliation of investment disputes between governments and private foreign investors. The creation of ICSID in 1966 was thus "in part intended to relieve the President and the staff of the burden of becoming involved in such disputes. But the Bank's overriding consideration in creating ICSID was the belief that an institution specially designed to facilitate the settlement of investment disputes between governments and foreign investors could help to promote increased flows of international investment."

The Centre goes on to say that ICSID was established

"... under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Convention) which came into force on October 14, 1966. ICSID has an Administrative Council and a Secretariat. The Administrative Council is chaired by the World Bank's President and consists of one representative of each State which has ratified the Convention. Annual meetings of the Council are held in conjunction with the joint Bank / Fund annual meetings.

"ICSID is an autonomous international organization. However, it has close links with the World Bank. All of ICSID's members are also members of the Bank. Unless a government makes a contrary designation, its Governor for the Bank sits ex officio on ICSID's Administrative Council. The expenses of the ICSID Secretariat are financed out of the Bank's budget, although the costs of individual proceedings are borne by the parties involved.

"Pursuant to the Convention, ICSID provides facilities for the conciliation and arbitration of disputes between member countries and investors who qualify as nationals of other member countries. Recourse to ICSID conciliation and arbitration isPage 156 entirely voluntary. However, once the parties have consented to arbitration under the ICSID Convention, neither can unilaterally withdraw its consent. Moreover, all ICSID Contracting States, whether or not parties to the dispute, are required by the Convention to recognize and enforce ICSID arbitral awards."

Besides providing facilities for conciliation and arbitration under the ICSID Convention, since 1978 the Centre has had a set of Additional Facility Rules authorising the ICSID Secretariat to administer certain types of proceedings between States and foreign nationals that fall outside the scope of the Convention.

"These include conciliation and arbitration proceedings where either the State party or the home State of the foreign national is not a member of ICSID. Additional Facility conciliation and arbitration are also available for cases where the dispute is not an investment dispute, provided it relates to a transaction which has 'features that distinguishes it from an ordinary commercial transaction.' The Additional Facility Rules further allow ICSID to administer a type of proceedings not provided for in the Convention, namely fact-finding proceedings to which any State and foreign national may have recourse if they wish to institute an inquiry ' to examine and report on facts.'"

The Centre goes on to say that the third activity of ICSID in the field of dispute settlement "has consisted in the Secretary-General of ICSID accepting to act as the appointing authority of arbitrators for ad hoc (i.e., non-institutional) arbitration proceedings. This is most commonly done in the context of arrangements for arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), which are specially designed for ad hoc proceedings."

Provisions on ICSID arbitration are a common feature of investment contracts between governments of member countries and investors from other member countries, and the Centre notes that advance consents by governments to submit investment disputes to ICSID arbitration can be found in about 20 investment laws and in over 900 bilateral investment treaties (BITS). In addition, "Arbitration under the auspices of ICSID is similarly one of the main mechanisms for the settlement of investment disputes under four recent multilateral trade and investment treaties (the North American Free Trade Agreement, the Energy Charter Treaty, the Cartagena Free Trade Agreement and the Colonia Investment Protocol of Mercosur)."

Under the ICSID Convention, proceedings need not be held at the Centre's headquarters in Washington, DC, as the parties to an ICSID proceeding are free to agree to conduct their proceeding at any other place. The Convention's provisions "facilitate advance stipulations for such other venues when the place chosen is the seat of an institution with which the Centre has an arrangement for this purpose. ICSID has to date entered in such arrangements with the Permanent Court of Arbitration at The Hague, the Regional Arbitration Centres of the Asian-African Legal Consultative Committee at Cairo and Kuala Lumpur, the Australian Centre for International Commercial Arbitration at Melbourne, the Australian Commercial Disputes Centre at Sydney, the Singapore International Arbitration Centre and the GCC Commercial Arbitration Centre at Bahrain. These arrangements have proved their usefulness in many ICSID cases and have helped to promote cooperation between ICSID and these institutions in several other respects."

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As at January 2006, 155 States had signed the ICSID Convention. The Centre states that the number of cases submitted to it - under the ICSID Convention and under the ICSID Additional Facility Rules - has increased significantly in recent years. The full text of ICSID's statement is available on its website.60

3) The ICSID Institution of Arbitration and Conciliation Proceedings

The Institution Rules of ICSID set out the process to be used for the commencement of an ICSID arbitration or conciliation. These Rules relate to the time from the filing of a request for arbitration or conciliation to the time of the dispatch of a notice of registration. Transactions after that stage are regulated in accordance with the Arbitration Rules or the Conciliation Rules, as the case may be (these Rules are considered in sections 4 and 5 of this chapter).

Rule 1 of the Institution Rules provides that any Contracting State or any national of a Contracting State wishing to institute arbitration or conciliation proceedings under the ICSID Convention is to do so by means of a written request to the Secretary-General at the Centre. The request may be made jointly by the parties to the dispute.

Rule 2 sets out the detailed information that is to be included in the request. The request is to:

"(a) designate precisely each party to the dispute and state the address of each;

(b) state, if one of the parties is a constituent subdivision or agency of a Contracting State, that it has been designated to the Centre by that State pursuant to Article 25(1) of the Convention;

(c) indicate the date of consent and the instruments in which it is recorded, including, if one party is a constituent subdivision or agency of a Contracting State, similar data on the approval of such consent by that State unless it had notified the Centre that no such approval is required;

(d) indicate with respect to the party that is a national of a Contracting State:

(i) its nationality on the date of consent; and

(ii) if the party is a natural person:

(A) his nationality on the date of the request; and

(B) that he did not have the nationality of the Contracting State party to the dispute either on the date of consent or on the date of the request; or

(iii) if the party is a juridical person which on the date of consent had the nationality of the Contracting State party to the dispute, the agreement of the parties that it should be treated as a national of another Contracting State for the purposes of the Convention;


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