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An Introduction to ICSID Process
Meg Kinnear, ICSID Secretary-GeneralNovember 19, 2015
CIL Investment Law & Practice Conferences Singapore
Unpublished work © 2015 by International Centre for Settlement
of Investment Disputes. For Official Use Only – This material may
not be reproduced, cited, displayed, shared, transferred or
disseminated in any other manner without the prior written
permission of ICSID.
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Part I:Introduction to ICSID
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The World Bank Group
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ICSIDInternational
Centre for Settlement of Investment Disputes
IBRDInternational
Bank for Reconstruction
and Development
IDAInternational Development Association
IFCInternational
Financial Corporation
MIGAMultilateral Investment Guarantee
Agency
MISSION:
Providesfacilities for conciliation and arbitration of
international investment disputes
Lends funds to governmentsof middle and low-income countries
Provides interest-freeloans and grants to governments of poorest
countries
Provides loans, equity and technical assistance to stimulate
private sector investment in developing countries
Providesguarantees for investors in developing countries against
non-commercial risk
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50 Years of ICSID
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See Annex 1 – “50 Years of ICSID”
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151 ICSID Members
See Annex 2 – List of ICSID Member States
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ICSID Governance Structure
ADMINISTRATIVE COUNCIL SECRETARIAT
One representative of each Member State
One vote per Member State
Chaired by President of the World Bank (has no vote)
Secretary-General
Staff
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Functions of the Administrative Council
Adopt ICSID rules on arbitration and conciliation
proceedings
Adopt annual budget & Annual Report
Elect the Secretary-General and any Deputy Secretary-General
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Functions of the Secretariat Case Administration
Technical Assistance & Training
Publications
8
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ICSID Caseload(By Fiscal Year)
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9
1 0
4
0 0 13
0 02 1
3 2 2 13 2 1 0 0 1
2 1 25
7 811 12 12
16
26
30
25 26 26
32
2427
32
39
4340
52
0
10
20
30
40
50
60
FY1
97
2
FY1
97
3
FY1
97
4
FY1
97
5
FY1
97
6
FY1
97
7
FY1
97
8
FY1
97
9
FY1
98
0
FY1
98
1
FY1
98
2
FY1
98
3
FY1
98
4
FY1
98
5
FY1
98
6
FY1
98
7
FY1
98
8
FY1
98
9
FY1
99
0
FY1
99
1
FY1
99
2
FY1
99
3
FY1
99
4
FY1
99
5
FY1
99
6
FY1
99
7
FY1
99
8
FY1
99
9
FY2
00
0
FY2
00
1
FY2
00
2
FY2
00
3
FY2
00
4
FY2
00
5
FY2
00
6
FY2
00
7
FY2
00
8
FY2
00
9
FY2
01
0
FY2
01
1
FY2
01
2
FY2
01
3
FY2
01
4
FY2
01
5
Cases Registered under the ICSID Convention and Additional
Facility Rules by Fiscal Year
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Increase in FDI
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Source: UNCTAD, FDI/MNE database
(www.unctad.org/fdistatistics)
http://www.unctad.org/fdistatistics
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More Investment Treaties
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Source: UNCTAD, IIA database
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ICSID Cases by State Party – June 30, 2015
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South America25%
Central America & the Caribbean
7%
North America (Canada, Mexico & U.S.)
4% Eastern Europe & Central Asia…
Western Europe5%
Sub-Saharan Africa16%
Middle East & North Africa…South & East Asia &
the
Pacific…
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ICSID Cases by Sector – June 30, 2015
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Finance7%
Information & Communication
6%
Agriculture, Fishing & Forestry
4% Oil, Gas & Mining26%
Electric Power & Other Energy
15%
Water, Sanitation & Flood Protection
6%Construction
7%Tourism4%
Other Industry13%
Transportation9%
Services & Trade…
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ICSID Proceedings
14
ConventionBoth disputing
parties from ICSID Member States
Conciliation
Arbitration
Additional FacilityOne disputing party from Member State
Conciliation
Arbitration
Fact-finding
OtherNeed not be from
Member State
Case administration under other Rules or
Treaties (e.g.: UNCITRAL or other
investment cases; FTA cases; State-to-State
cases)
Other functions on consent of parties
(e.g.: Appointing Authority, Mediation;
act as Registry for other treaties)
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• Impartial and delocalized facility
• Cost-effective fee structure
• Access to facilities internationally
• Secretariat expertise
• Transparency
• Only institution that can administer ISDS under the three main
set of rules (ICSID Convention, Additional Facility and
UNCITRAL)
Features of ICSID
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See Annex 3 – Special Features of ICSID
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Pre-Arbitration Considerations
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16
PREVENTION
PREPARATION
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Part II: ICSID Jurisdiction
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Relevant Provisions
• ICSID Convention, Articles 25 & 36
• ICSID Institution Rules
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Conditions for ICSID Jurisdiction -Article 25(1) of the ICSID
Convention
• Legal Dispute• Arising Directly out of an Investment• Between
a Member State• And National of Another Member State• Consent in
Writing
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See Annex 4 – Article 25 of the ICSID Convention
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Consent is the Cornerstone of Jurisdiction
Sources of Consent:
• Contracts• Investment Laws• Bilateral Investment Treaties•
Multilateral Agreements
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21
Basis of Jurisdiction Invoked in ICSID Cases –(to June 30,
2015)
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ASEAN Agreement for the Promotion and Protection of
Investments
0.2%
Bilateral Investment Treaty (BIT)
61.0%
Dominican Republic-United States-Central America Free Trade
Agreement (DR-CAFTA)0.8%
Investment Contract between the Investor and
the Host-State17.7%
Investment Law of the Host-State
9.5%
North American Free Trade Agreement (NAFTA)
2.9%
Energy Charter Treaty (ECT)7.5%
Oman-U.S. Free Trade Agreement (Oman-U.S. FTA)
0.2%
Canada-Peru Free Trade Agreement (Canada-Peru FTA)
0.2% Central America-Panama Free Trade Agreement
0.2%
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Scope of Consent
• Parties may limit the scope of consent – e.g.:
o Requirement to exhaust local remedies
o Types of dispute covered
o Investors covered (denial of benefits)
o Time limitations
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What is a “Legal Dispute”?
• Concerns the existence or scope of a legal right or
obligation
• Cannot be a mere conflict of interest
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What is an “Investment”?
24
Significant undertakingDurationRiskRegularity of profits
Contribution to development of
host State
Apply the definition in the instrument of
consent
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Objective Approach Subjective Approach
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CSOB v. Slovak Republic (ARB/97/4)Decision on Jurisdiction dated
May 24, 1999
“[…] A two-fold test must therefore be applied indetermining
whether this Tribunal has the competence toconsider the merits of
the claim: whether the dispute arisesout of an investment within
the meaning of theConvention, and, if so, whether the dispute
relates to aninvestment as defined in the Parties’ consent to
ICSIDarbitration, in their reference to the BIT and the
pertinentdefinitions contained in Article 1 of the BIT.”
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Philip Morris Brands Sàrl v. Uruguay (ARB/10/7)
Decision on Jurisdiction dated July 2, 2013
“…the four constitutive elements of the Salini list do
notconstitute jurisdictional requirements to the effect that
theabsence of one or the other of these elements would imply alack
of jurisdiction…[T]hey may assist in identifying orexcluding in
extreme cases the presence of an investment butthey cannot defeat
the broad and flexible concept ofinvestment under the ICSID
Convention to the extent it is notlimited by the relevant
treaty…”
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Examples of Investments
• Exploration and exploitation of natural resources (mining, oil
and gas)
• Rights under concession agreements• Building and operation of
infrastructure
projects • Shareholding in a local subsidiary
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A Member State
• Must have ratified the ICSID Convention• A subdivision or
agency of a Member State
may be a party if:o It has been designated to ICSID (Article
25(1)), ando The State has approved its consent to
arbitration (Article 25(3))
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See Annex 5 – ICSID/8
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A National of Another Member State -Article 25(2)(a) of the
ICSID Convention
• An individual:
o must be a national of another Member State at the time of
consent and at the date of registration of the Request, and
o cannot have the same nationality as the host State
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A National of Another Member State -Article 25(2)(b) of the
ICSID Convention
• A company must be a national of another Member State at the
date of consent
• Exception: a company may have the same nationality as the host
State if:o it is under foreign control, and o the parties agree to
treat it as a foreign
national
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Corporate Nationality Rule Example
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Host State: SenegalHome State: USA
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Example of ICSID JurisdictionTokios Tokeles v. Ukraine (ICSID
Case No. ARB/02/18)
National of Another
Member StateClaimant was a Lithuanian publishing company
Contracting State
Respondent was Ukraine
Investment The investment was the Claimant’s subsidiary company
in Ukraine, a publishing enterprise
Legal DisputeThe dispute concerned an alleged political
repression campaign by Ukrainian authorities claimed to have
breached the investment protection provisions of the BIT
Consent Consent to ICSID arbitration was found in the
Lithuania-Ukraine BIT
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Tokios Tokelés v. Ukraine (2004)
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Home State: Lithuania Host State: Ukraine
Tokios
Tokelés
Taki
Spravy
(1994)
Ukrainian
nationals99%
100%
BIT
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Part III: Institution of Arbitration
Proceedings
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Procedural FrameworkICSID Convention
Framework
Provisions of the applicableinvestment treaty,
contract or law
Provisions of the ICSID Convention
ICSID Arbitration Rules in effect at the time of consent to
arbitration
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36
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The Request for Arbitration
• The process of filing a request is governed bythe Institution
Rules
• May be filed by the investor or the State (or insome
circumstances, a subdivision or agency ofa State)
• A non-refundable lodging fee of 25,000 USD ispaid by the
requesting party (claimant)
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See Annex 6 – How to file a Request for Arbitration
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Review of the Request
38
• ICSID reviews the request in light of the Convention and the
instrument of consent
• The request is registered unless it is “manifestly outside the
jurisdiction of the Centre” (Article 36(3) ICSID Convention)
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Examples of Requests Manifestly Outside Jurisdiction
• Investor has the same nationality as host State• A State
agency was not designated to ICSID by
the Member State• Investor is not a national of an ICSID
Member
State• The BIT has not entered into force
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Registration of a Request
• The Secretary-General must issue a notice of registration or
refuse to register
• Registration process takes 18 days on average
• No appeal against the registration decision
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See Annex 7 – Notice of Registration
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Part IV:Constitution
of the Tribunal
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Relevant Provisions
• ICSID Convention, Articles 12-16, 37- 40, 56-58
• ICSID Arbitration Rules 1-12
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Constitution of the Tribunal - Process
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Step 1• Determination of the number of arbitrators
and the method of their appointment
Step 2• Selection and appointment of Tribunal
members
Step 3• Acceptance of appointment and
constitution of the Tribunal
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How Many Arbitrators
on a Tribunal?
• A sole arbitrator or any uneven number of arbitrators if the
parties so agree (Art. 37)
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Method of Appointment of Tribunal
45
Parties do not agree on a method -
Art. 37(2)(b)
Parties agree on a method -Art. 37(2)(a)
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Parties Agree on a Method
46
Subsequent agreement of
the parties
Agreement exists at the time
of request(see treaty, law or
contract)
OR
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Example of Agreement on Method
“Each party appoints one co-arbitrator, and the co-arbitrators
appoint the third arbitrator, the President of the Tribunal. If the
co-arbitrators fail to agree on a presiding arbitrator within 30
days, the Secretary-General of ICSID appoints the President.”
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Parties Do Not Agree On a Method
• If no agreement on a method within 60 days of registration,
either party may select the “Default Mechanism” under Article
37(2)(b) of the ICSID Convention– One arbitrator appointed by each
Party– President of Tribunal appointed by agreement
of the parties
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49
Party A• appoints an arbitrator, and • proposes a President
Party B• appoints an arbitrator, and • concurs in A’s proposal
of President OR proposes a different President
Party A• concurs in B’s proposal of President OR refuses to
concur on President
If no President in 90 days...• Either party may request that
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No Agreement (“Default Mechanism”)Article 37(2)(b) of the ICSID
Convention
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Selection and Appointment of Tribunal Members
• Parties are free to select anyone who meets the requirements
under the ICSID Convention
• ICSID Chairman must appoint from the Panel of Arbitrators
unless the parties agree otherwise
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Requirements for Appointees
Qualifications:(Art. 14)
• Majority shall be nationals of States other than the State
party to dispute and State of investors’ nationality
• Where the Tribunal consists of 3 members, a national of either
of these States may not be appointed as an arbitrator by a party
without the agreement of the other party to the dispute
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Nationality:(Art. 39, Rule 1(3))
• High moral character• Recognized competence• Independent
judgment
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Cannot have:
2 Czech arbitrators2 Japanese arbitrators1 Czech arbitrator
& 1 Japanese arbitrator
…unless parties agree Can have:
2 or 3 Swiss arbitrators (or any nationality other than Czech or
Japanese)
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Example: Dispute between a Czech company and Japan
Nationality of Arbitrators Article 39 of the ICSID
Convention
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53
Ballot (5 or more candidates)
If ballot is unsuccessful, appointment is made under
Article 38 of the ICSID Convention from the Panel of
Arbitrators
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Appointment of Missing Arbitrators
If parties agree on a ballot candidate the
appointment is made by agreement of the parties
See Annex 8 – Sample ballot
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ICSID Panel of Arbitrators
• Each Member State may designate 4 persons to the Panel
• The Chairman may designate 10 persons to the Panel
• Panel members serve for renewable, 6 year terms
• Most relevant to appointment under Articles 38 and 52 of the
ICSID Convention
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Acceptance of Appointment & Declaration – Constitution of
the Tribunal
• ICSID seeks acceptance from each appointee (Arbitration Rule
5(2))
• Declaration of Arbitrator (Arbitration Rule 6):o To keep
information confidential o To judge fairly as between the partieso
Statement of relationship with parties or other
circumstance if neededo Continuing obligation to disclose any
such relationship
or circumstance that arises subsequently
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See Annex 9 – Declaration – Arb. Rule 6(2)
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Constitution of Tribunal
The Tribunal is constituted when all arbitrators have accepted
their
appointments
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Arbitrators, Conciliators and ad hoc CommitteeMembers Appointed
in ICSID Cases – June 30, 2015
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57 5222 28 21
72
14
223
316
127
1645
16
101
17
596
0
100
200
300
400
500
600
700
North America(Canada, Mexico &
U.S.)
South America Central America &the Caribbean
Middle East &North Africa
Sub-Saharan Africa South & East Asia &the Pacific
Eastern Europe &Central Asia
Western Europe
Appointments by ICSID Appointments by the Parties (or
Party-appointed Arbitrators)
-
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Relevant Provisions
• ICSID Convention, Articles 57 & 58• ICSID Arbitration
Rules 8 - 12
Disqualification of Arbitrators
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Grounds for Disqualification - Article 57
• Manifest lack of the qualities in Article 14(1)o High moral
charactero Recognized competence in law,
commerce, industry or financeo Reliability to exercise
independent
judgment
• Nationality requirements not met
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Who Decides the Proposal for Disqualification? Article 58 of the
ICSID Convention
• The other members of the Tribunal in the absence of the
arbitrator concerned (Arbitration Rule 9(4))
• The Chairman of the Administrative Council decides wheno
Members are equally divided o Proposal to disqualify a sole
arbitratoro Proposal to disqualify majority of arbitrators
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See Annex 10 – Decisions on Disqualification
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Challenge – Procedure TRIBUNAL IS CONSTITUTED
PROPOSAL TO DISQUALIFY FILED WITH ICSID SECRETARY-GENERAL
PROCEEDING SUSPENDED
PARTIES AND ARBITRATOR(S) CHALLENGED SUBMIT OBSERVATIONS
DECISION TAKEN
- By other Tribunal members in challenge to a minority of the
Tribunal
- By Chairman of ICSID Administrative Council if Tribunal
members are equally divided, or if challenge is to a sole
arbitrator or majority of Tribunal
REJECT PROPOSAL
- Resume proceeding immediately
DISQUALIFY ARBITRATOR(S)
- Vacancy filled by same method as original appointment
- Resume proceeding after new arbitrator(s) accept their
appointment
-
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Part V:Commencement of Proceedings, First Session and
Procedural Order No. 1
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Commencement of Arbitration
ICSID notifies parties of
arbitrators’ acceptance
Once Tribunal is constituted:
First advance payment
First Session held within 60 days
30-day limit to file Preliminary Objection
under Rule 41(5)
Tribunal is constituted
and proceeding
begins
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Requests for Advances
• Advance payments requested periodically o Initial advance
payment to be paid before
the First Session• Each party normally pays ½ of each
advance
(Admin. & Fin. Reg. 14 (3)(d))• Put in a separate case fund•
Used to pay the arbitrators fees and
expenses, ICSID Administrative fee, and other costs
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Non-Payment of Advances Admin. & Fin. Reg. 14 (3)(d)
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Either party should make required payment
within 30 days after request
After 15 more days: Secretary-General may move that Tribunal
stay
the proceeding
6 months after stay: Secretary-General may
move that Tribunal discontinue the
proceeding
-
First Session of the Tribunal -Practical Considerations
To be held within 60 days from Tribunal constitution (unless
otherwise agreed)
Date fixed by Tribunal in consultation with the parties and
Secretary-General
Held in venue agreed by parties – (Washington, D.C. as
default)
ICSID encourages parties to consider video or teleconference to
reduce costs
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First Session Considers Procedural Matters
• Parties are provided agenda and draft Procedural Order No. 1
for comments ahead of the session
• Main items discussed include: o Applicable arbitration ruleso
Place of proceedingo Procedural calendaro Details concerning the
written process
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See Annex 11 - Draft Agenda and Annex 12 – Draft P.O.
-
Written Pleadings
• Normally two rounds of pleadings:Claimant’s
MemorialRespondent’s Counter-memorial
Claimant’s ReplyRespondent’s Rejoinder
• Same structure for jurisdiction, merits and quantum phases
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69
MERITS JURISDICTION
Possible Sequences
-
Memorial• Statement of the relevant facts• Statement of the law•
Argument• All evidence a party plans to rely upon:
o Exhibitso Legal Authorities
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Procedural Order No. 1
• Contains the parties’ agreements and the Tribunal’s
decisions
• Point of reference throughout the proceeding
• May also include provisions on transparency and non-disputing
party submissions
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See Annex 12 - Draft Procedural Order No. 1
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Transparency
Relevant Provisions
• ICSID Arbitration Rules 6(2), 15, 32(2), 37(2), 48(4)
• Administrative and Financial Regulations 22-23
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Transparency
• Different provisions apply to:
oThe Centre
oTribunal Members
oParties
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• Publish information on cases (Administrative and Financial
Regulations 22 & 23)
• Must publish excerpts of awards (Article 48, ICSID
Convention)
• Seek consent of the parties to publish records of proceedings,
decisions, and the full award of concluded cases
74
Rules Applicable to the Centre
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Snapshot of Case Details – ProceedingPoštová banka, a.s. and
ISTROKAPITAL SE v. Hellenic Republic (ICSID Case No. ARB/13/8)
75
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Snapshot of Case Details – MaterialsPoštová banka, a.s. and
ISTROKAPITAL SE v. Hellenic Republic (ICSID Case No. ARB/13/8)
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76
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Snapshot of Case Details – Procedural DetailsPoštová banka, a.s.
and ISTROKAPITAL SE v. Hellenic Republic (ICSID Case No.
ARB/13/8)
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Rules Applicable to Arbitrators
• Duty to keep all information confidential, including the
contents of the award (Arbitration Rule 6(2))
• Deliberations take place in private and remain secret
(Arbitration Rule 15)
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Rules Applicable to the Parties
• No general requirement of confidentiality or transparency
under ICSID Convention and Rules
• Release of case documents must not exacerbate the dispute
• Parties sometimes conclude confidentiality agreements
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Open Hearings – Arbitration Rule 32(2)
• Unless either party objects, the Tribunal may allow third
parties to attend or observe all or part of the hearings
• Subject to appropriate logistical arrangements
• The Tribunal establishes procedures for the protection of
proprietary or privileged information
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Non-disputing Parties
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Relevant Provisions
• ICSID Arbitration Rule 37(2)
-
Who Can Be a Non-disputing Party?
• A person or entity that is not a party to thedispute – can
include:
o A natural or juridical person
o An NGO
o REIO
o A State
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Criteria to Allow a Non-disputing Party Submission (ICSID
Arbitration Rule 37(2))
• In discretion of Tribunal which considers whether:
o The submission will assist in determination of a factual or
legal issue by bringing a different perspective, particular
knowledge or insight
o The submission addresses a matter within the scope of the
dispute
o The non-disputing party has a significant interest in the
proceeding
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Procedure
• No timing specified in rules
• Tribunal must consult the parties on whether to allow
non-disputing party submissions
• Parties may present their observations on the non-disputing
party submission
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What Are the Rights of a Non-disputing Party?
• To file a written submission on a matter within the scope of
the dispute
• Submission may not disrupt the proceeding or unduly burden or
unfairly prejudice either party
• No access to non-public documents/case records without consent
of both parties
• Cannot attend closed hearing without party consent –
Arbitration Rule 32(2)
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Example of Non-Disputing Party Admission Philip Morris v.
Uruguay (ARB/10/7)
Procedural Order No. 4 dated March 24, 2015
NDP Applicant: Pan American Health Organization (PAHO)
“The Tribunal believes that the Submission may be beneficial
toits decision-making process in this case considering
thecontribution of the particular knowledge and expertise of
aqualified entity, such as PAHO, regarding the matters in
dispute.It considers that in view of the public interest involved
in thiscase, granting the Request would support the transparency
ofthe proceeding and its acceptability by users at large.”
See Annex 13 – NDP decisions
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Part VI:Other Procedures
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ICSID Arbitration Rule 41(5)
Expedited Preliminary Objections -Manifest Lack of Legal
Merit
Relevant Provisions
-
Manifest Lack of Legal Merit
• Allows early dismissal of claims that manifestly lack legal
merit
• Applies to jurisdiction and merits
• Standard is high – the lack of legal merit must be obvious
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See Annex 14– Decisions on Manifest Lack of Legal Merit
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Procedure – Rule 41(5)
Tribunal is Constituted
Objection that a Claim is Manifestly Without Legal Merit
Written [and Oral] Submissions on the Objection
Tribunal Decides at the First Session or Shortly Thereafter
Decision Rejecting Objection or Partially Upholding
Objection
Proceeding Continues to Hear Claims That Were Not
Dismissed
Award- Case is Dismissed for Manifest Lack of Legal Merit
60 days or Other Period Agreed by
the Parties
30 Days
-
Example of Decision on Manifest Lack of Legal MeritMOL Hungarian
Oil and Gas Company PLC v Croatia
(ARB/13/32) – Decision dated December 2, 2014
“Whatever the merits or demerits of the Respondent’ssubmissions
[…] it [is] impossible for the Tribunal to regardthe Respondent’s
objections as sufficiently ‘clear andcertain’ to justify passing
summary judgment on them now,at this preliminary stage, without
full opportunity to assessthe treaty, contractual and other legal
arguments, therelationship between this arbitration and the
UNCITRALRules arbitration, or to establish in full the facts that
arerelevant to a proper understanding of the acquisition
andoperation of the Claimant’s investments in Croatia.”© 2015 by
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Preliminary Objections Relevant Provisions
• ICSID Convention Article 41• ICSID Arbitration Rule 41
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Preliminary Objections
• Objection to the jurisdiction of the Tribunal• Must be made as
early as possible, but in any
event before the date of filing the Respondent’s
Counter-Memorial
• Can be made even if the same objection was dismissed under
Arbitration Rule 41(5)
• If the Tribunal finds that there is no jurisdiction, it
renders an award
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93
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Example of an Award on JurisdictionPing An v. Belgium
(ARB/12/29)
Award dated April 30, 2015• Two successive BITs between Belgium
and China: 1986
BIT and 2009 BIT• Dispute crystallized while 1986 BIT was in
force• Tribunal constituted under 2009 BIT• 2009 BIT did not deal
with disputes arising before its
entry into force and notified under 1986 BIT• No express or
implied inference could be made from
2009 BIT that it applied to pre-existing disputes– No
Jurisdiction Ratione Temporis
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• ICSID Convention, Article 41• ICSID Arbitration Rule 41(3)
BifurcationRelevant Provisions
-
Bifurcation of Proceedings
• Tribunal decides whether to deal with a jurisdictional
objection:
oas a preliminary question, or
o joined to the merits of the dispute
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Criteria for Bifurcation
• Tribunal considers whether:
o The objection has substance (not frivolous)
o Bifurcation would materially reduce time & cost
o Bifurcation is impractical because jurisdiction and merits are
so intertwined
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Example of BifurcationTulip v. Turkey (ARB/11/28)
Decision on Bifurcation of November 2, 2012
Objection 3: The mandatory negotiation period was not
respected“a. Objection 3 is not intimately linked to the merits and
is capable of preliminary determination;b. if Objection 3 were
successful, it could have the effect of disrupting the entire case
[…]; andc. procedural economy would be served by dealing with this
objection prior to the merits, avoiding the possibility that the
entire case is heard and the Tribunal then finding that a
pre-condition to arbitration was not satisfied.”
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A Bifurcated Proceeding is Often Included as an Alternative in
the Procedural Calendar
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• ICSID Convention, Article 47• ICSID Arbitration Rule 39
Provisional MeasuresRelevant Provisions
-
What Measures Can Be Requested?
• Measures to preserve the rights of a party• Conditions for
granting measures:
oUrgencyoNecessity – Irreparable harmo Rights are in dispute
(can be procedural
rights)
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Who Can Request Provisional Measures?
• Either party or the Tribunal on its own initiative (Article 47
of ICSID Convention)
• Tribunal gives priority to consideration of request
(Arbitration Rule 39(2))
• Each party is entitled to present its observations
(Arbitration Rule 39(4))
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When to Request Provisional Measures?
• Any time after the institution of the proceeding (Arbitration
Rule 39(1))
• If request precedes tribunal constitution, the
Secretary-General fixes time limits for party observations on the
request, which are considered promptly by the Tribunal once
constituted (Arbitration Rule 39(5))
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Examples of Measures Granted
• Release of confidential information • Obtaining/preserving
evidence• Securing financial guarantees• Stay of parallel domestic
or arbitral
proceedings• Stay of execution of an administrative decision•
Preventing prejudicial interference by one
party • Security for Costs
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Production of Documents
Relevant Provisions
• ICSID Arbitration Rule 34
-
Timing• The Parties can request documents from each
other o Tribunal decides on contested requests for
documents
• Timing usually decided in Procedural Order No. 1
• The Tribunal may ask the parties to produce documents or other
evidence at any stage of the case
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How to Request Documents
• Include:o description of documents or categories of
documents requested o relevance and materiality to the caseo
indication that the requesting party does
not possess the documents requestedo the basis on which to
assert that the
other party has the documents
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Examples of Objections to Production of Documents
• The category of documents sought is too broad
• Document is not relevant to the dispute• Document is protected
by attorney-client
privilege• Document is in possession of third party
See Annex 15- IBA Rules on Taking of Evidence
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Part VII:Oral Process
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Oral ProcessRelevant Provisions
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• ICSID Convention, Articles 62,63
• ICSID Arbitration Rules 32-37
-
Before the Hearing• Pre-hearing organizational meeting deals
with
e.g.:o Daily Schedule, Order of proceedings and allocation
of timeo Procedure for open hearingso Sequestration of witnesses
and experts
• Checklist of Preparation for Hearing, e.g.Request
interpretation Request travel certificate from ICSID in support of
visa
applicationsPrepare hearing bundles
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The Hearing
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Opening by moving party
Examination of witnesses and experts:
- Direct- Cross- Re-direct
Opening by responding party
Moving party leads its witnesses
Responding party leads its witnesses
Closing by moving party
Closing by responding party
-
Commerce Group Corp. and San Sebastian Gold Mines Inc. v.
Republic of El Salvador (ARB/09/17), Hearing on Jurisdiction
(CAFTA)
Preliminary Matters
113
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The Renco Group, Inc. v. Republic of Peru (ICSID Case No.
UNCT/13/1), Hearing on Preliminary
Objection (US-Peru FTA), September 2015Respondent’s Opening
114
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The Renco Group, Inc. v. Republic of Peru (ICSID Case No.
UNCT/13/1), Hearing on Preliminary
Objection (US-Peru FTA), September 2015Claimant’s Opening
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The Renco Group, Inc. v. Republic of Peru (ICSID Case No.
UNCT/13/1), Hearing on Preliminary
Objection (US-Peru FTA), September 2015Question from the
Tribunal
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116
-
Pac Rim Cayman LLC v. Republic of El Salvador (ARB/09/12),
Hearing on Jurisdiction (CAFTA), May 2011
Example of Procedural Issue
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117
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Spence International et al. v. Republic of Costa Rica,
(ARB/13/2), Hearing on Merits (CAFTA), April 2015
Direct Examination of Claimant’s Witness
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Spence International et al. v. Republic of Costa Rica,
(ARB/13/2), Hearing on Merits (CAFTA), April 2015
Cross-Examination of Claimant’s Witness
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119
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Spence International et al. v. Republic of Costa Rica,
(ARB/13/2), Hearing on Merits (CAFTA), April 2015
Non-Disputing Party Presentation (El Salvador)
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Spence International et al. v. Republic of Costa Rica,
(ARB/13/2), Hearing on Merits (CAFTA), April 2015
Claimant’s Closing
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Spence International et al. v. Republic of Costa Rica,
(ARB/13/2), Hearing on Merits (CAFTA), April 2015
Respondent’s Closing
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122
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Part VIII: The Award or
Termination of the Proceedings-Settlement/Discontinuance
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124
The Award
Relevant Provisions
• ICSID Convention, Article 48
• ICSID Arbitration Rules 46-48
-
Awards
• Three possible type of Awards:o Award declining jurisdictiono
Award on the meritso Award embodying settlement of parties
• No partial award in the ICSID system
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Preparation of the AwardArbitration Rules 46-47
• Rendered within 120 days after closing of the proceeding
o Possible 60-day extension • In writing • Signed by the members
of the Tribunal who
voted for it• Any member may attach a concurring or
dissenting opinion to award
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Content of the Award Arbitration Rule 47
• The dates and place of the sittings of the Tribunal• A summary
of the proceeding• A statement of the facts as found by the
Tribunal• The submissions of the parties• The decision of the
Tribunal on every question
submitted to it, together with the reasons upon which the
decision is based
• Any decision of the Tribunal regarding the cost of the
proceeding
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Rendering the Award Arbitration Rule 48
Upon signature by the last arbitrator, the
Secretary-General:
• Authenticates the original text of the award and deposits it
in the archives of the Centre
• Dispatches a certified copy of the award, indicating the date
of dispatch
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• Awards are final and binding
• Annulment – no appeal in local courts
• Member States must recognize monetary awards without further
process
• Monetary award enforceable as a final judgment in any Member
State
129
Features of ICSID Awards
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Outcomes of Tribunal Awards –June 30, 2015
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130
Award deciding that the claims are
manifestly without legal merit*
1%
Award declining jurisdiction
25%
Award dismissing all claims29%
Award upholding claims in part or in full
45%
-
Disputes Decided By Tribunals – June 30, 2015
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Dispute decided by Tribunal
64%Dispute settled or
proceeding otherwise
discontinued36%
-
Discontinuance of the Proceeding -Grounds and Relevant
Provisions
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• On settlement or agreement on discontinuance by the
parties
Arbitration Rule 43
• On request of a party if there is no objection by the other
party
Arbitration Rule 44
• For failure of the parties to actArbitration Rule
45
• For failure of the parties to pay advances
Regulation 14(3)(d) and (e)
-
Legal Effect of Discontinuance Order
• An order noting discontinuance is not an “award”
• The proceeding is no longer pending and cannot be
“resumed”
• No res judicata effect on the subject of the dispute
• Claimant may resubmit its claims to ICSID
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Part IX:Costs of Arbitration
-
Costs of ArbitrationRelevant Provisions
• ICSID Convention, Article 61
• ICSID Arbitration Rule 28
• Administrative and Financial Regulation 14
• ICSID Schedule of Fees
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Costs of Arbitration 3 Components
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Parties’ expenses
Arbitrators’ fees and expenses
Centre’s administrative
charges
-
Parties’ Expenses
• Costs of legal representation
• Witnesses
• Experts
• Any other cost relating to the presentation of a party’s
case
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Arbitrator Fees and Expenses
• Arbitrator fees: 3,000 USD per day of meeting or other work
performed in connection with proceeding
• Arbitrators also reimbursed for:o Direct expenses reasonably
incurredo Travel expenseso Subsistence allowances (when
traveling)
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• Administrative fee of 32,000 USD, charged on annual basis and
usually shared by parties (16,000 USD each)
• Includes:oHearing Facilities at the World BankoServices of the
Tribunal Secretary and
case teamoFinancial Administration of the case
139
ICSID Administrative Charges
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Tribunal has Discretion to Allocate Costs
24%
24%
52%
Costs Awards since 2009
Cost Awards in favor ofClaimant(s)
Cost Awards in favor ofRespondent
Each Party Bears Own Costs
-
Part X:Post-Award Remedies
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ICSID System is Self-Contained
• No domestic court review of decisions or awards
• Post-award remedies under the ICSID Convention:
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Article 49(2)
Rectification/ Supplementary
Decision
Article 50
Interpretation
Article 51
Revision
Article 52
Annulment
-
Rectification/Supplementary Decision of AwardsArticle 49(2) of
the ICSID Convention
143
• The Tribunal has omitted to decide a question• To rectify
clerical or arithmetic error
When?
• No later than 45 days after the award is renderedTime
Limit
• The Tribunal that rendered the awardWho decides?
• No stay of enforcement during the rectification periodStay of
enforcement
• Rectified decision becomes part of the awardDecision
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InterpretationArticle 50 of the ICSID Convention
144
• When there is a dispute between the parties as to the meaning
or scope of the awardWhen?
• NoneTime Limits
• The Tribunal that rendered the award (or new Tribunal if it
cannot be reconstituted)Who decides?
• Stay of enforcement may be granted during the proceedingStay
of enforcement
• Interpretation decision becomes part of the awardDecision
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Revision Article 51 of the ICSID Convention
145
• On discovery of fact of such a nature as to decisively affect
the award, if it was unknown to the Tribunal and the applicant (who
was not negligent)
When?
• 90 days after the discovery of the fact• Must be within 3
years after rendering the award
Time limits
• The Tribunal that rendered the award (or new Tribunal if it
cannot be reconstituted)Who decides?
• Stay of enforcement may be granted during the proceedingStay
of enforcement
• Revision decision becomes part of the awardDecision
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Annulment Article 52 of the ICSID Convention
146
• 5 grounds for annulment, Article 52(1)(a) to (e)When?
• 120 days after the award is rendered• In case of corruption of
a Tribunal member, 120 days after
discovery and within 3 years of awardTime limits
• Ad hoc Committee of 3 members appointed from Panel of
Arbitrators
Who decides?
• Stay of enforcement may be granted during proceedingStay of
enforcement
• Decision on annulment can annul award in full or in
partDecision
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See Annex 17 – Decisions on Annulment
-
Annulment - Grounds
• The Tribunal was not properly constituted
• The Tribunal has manifestly exceeded its powers
• Corruption on the part of a Tribunal member
• A serious departure from a fundamental rule ofprocedure
• The award fails to state the reasons on which it isbased
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Annulment – Ad hoc Committee
• The Chairman of the Administrative Council appoints an ad hoc
Committee of 3 persons from the Panel of Arbitrators
• Nationality restrictions apply
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Stay of Enforcement in Annulment ProceedingsArticle 52(5) of the
ICSID Convention
149
• When a party wishes to stay the enforcement of an obligation
in the awardWhen?
• The Secretary General provisionally before ad hoc Committee is
constituted and ad hoc Committee during the proceeding
Who may stay enforcement?
• May be requested in Application or at any time during the
proceeding
Time limits
• Request must specify the circumstances that require the stay
of enforcement
• Each party is given the opportunity to file
observationsProcedure
• Stay of enforcement may be subject to bond or other
securityCondition
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Annulment is not AppealArticle 53 of the ICSID Convention
• Limited & extraordinary remedy
• Maintains integrity of the process
• Can annul the original award in its entirety orin part
• Either party may resubmit the dispute to a newTribunal
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See Annex 18 – Background Paper on Annulment
-
Annulment Outcomes (June 30, 2015)
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Part XI: Recognition and
Enforcement of Awards
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Recognition and Enforcement of Awards Articles 53 and 54 of the
ICSID Convention
• ICSID Awards are binding and parties must comply with them
• Awards are treated as final judgments of national courts of
Member States
• Pecuniary obligations can be enforced in any Member State
• National courts proceed on the basis of a certified copy of
the award and cannot review the award
• Limitation: Rules on State immunity from execution apply
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Compliance with ICSID Awards
• Compliance is important to maintain confidence in the
process
• Could be considered by providers of political risk
insurance
• Non-compliance is a breach of ICSID Convention and could lead
to a State-to-State dispute for treaty violation before the ICJ
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Features of the ICSID website www.worldbank.org/icsid
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http://www.worldbank.org/icsid
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Search ICSID Cases Database
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Search ICSID Arbitrators, Conciliators and Committee Members
(with curricula vitae)
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View Feature Videos of Arbitrators and Public Hearing Videos
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View Other Resources, e.g. ICSID Caseload Statistics
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Subscribe to Receive Alerts
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ICSID 1818 H Street, NW
Washington, DC 20433Tel: (202) 458-1534Fax: (202) 522-2615
Email: [email protected]/icsid
161
mailto:[email protected]://www.worldbank.org/icsid