What is ICSID?
Established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), the International Centre for Settlement of Investment Disputes (“ICSID“) is the world’s leading institution for international investment dispute settlements. The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the World Bank to further the World Bank’s objective of promoting international investment.
ICSID is designed to consider the special characteristics of international investment disputes and the parties involved, and provides the institutional facility and procedural rules for independent conciliation commissions and arbitral tribunals constituted in each case.
According to 2019 ICSID Annual Report, in the 2019 fiscal year:
In overall, ICSID has administered 728 cases under the ICSID Convention and Additional Facility Rules since the first case was registered in 1972. According to the latest statistics, 25% of newly registered cases involved States in Eastern Europe and Central Asia, followed by 21% in South America, 17% in the Middle East and North Africa, 11% in Sub Saharan Africa, 10% in Western Europe, 8% in the Central America and Caribbean region, 6% in South and East Asia and the Pacific region, and 2% in North America. Only one case registered from Turkey in 2019.
The economic sectors involved in ICSID proceedings are diverse, however, the oil, gas and mining, and electric power and energy sectors have accounted for the largest share of cases whereas the agriculture, fishing and forestry, and water, sanitation and flood protection have accounted for the smallest share of cases.
In October 2016, ICSID started the process to amend its rules by conducting an initial survey of stakeholders on the topics subject to amendment. This is the fourth and most comprehensive review of the rules to date. After almost two years, the ICSID published its set of proposed changes to modernize and streamline its rules for resolving disputes between foreign investors and states. The proposed amendments concern arbitration and conciliation under the ICSID Convention and ICSID Additional Facility Rules, as well as new stand-alone rules for fact-finding and mediation in investment disputes.
Until today, three working papers were published on August 2018 (Working Paper #1), March 2019 (Working Paper #2) and August 2019 (Working Paper #3), respectively. These working papers explain the basis for the proposed changes and suggest a potential new wording or potential structure of amendments.
The ICSID’s overarching goals are to modernize, simplify, and streamline its rules while also leveraging information technology to reduce the environmental footprint of ICSID proceedings. In amending the current rules, the ICSID aims to ultimately make the procedure less paper-intensive by using technology for the digital transmission of documents and case procedures. In addition, the amendments are aimed at making the process increasingly time and cost effective while maintaining due process and the balance between investors and States. The amendment process draws on the lessons learned from hundreds of ICSID cases.
Current Proposed Amendments
In the Working Paper #3, ICSID has continued to address ongoing concerns about the lack of transparency in the investor-state disputes and proposed amendments to the rules in this regard. Introduction of open hearings and the publication of the full text of the awards upon parties’ approval are the most significant amendments for the time being.
Security for costs and third party funding
ICSID has agreed to include an express reference to third party funding as a factor that may affect tribunals’ decisions on whether or not to issue any order for security for costs. The proposed amendments require parties to disclose any third-party funding.
As investor-state disputes can be considerably lengthy, the proposed amendments encourage timely proceedings from beginning to end.
Representatives of ICSID Member States convened in Washington, D.C. from November 11 to 15, 2019, for a third consultation on the amendments to the ICSID rules for resolving international investment disputes. ICSID continues to fine-tune the proposals and as a next step, the ICSID Secretariat will prepare a fourth working paper that addresses the comments received during the consultation meeting and in writing, which proves that there is still time for ICSID to promulgate these revisions that will enhance ICSID proceedings.