The ICSID Convention: Unsettled Issues After 50 Years

For over half a century, the International Centre for Settlement of Investment Disputes (ICSID) has been at the forefront of international investment law, providing a platform for resolving disputes between investors and host states. Since its establishment in 1966, the ICSID Convention has served as the backbone of this institution, shaping the rules and procedures governing the settlement of investment disputes. However, despite its success, the Convention has faced its fair share of challenges, leaving several issues unresolved.

What is the ICSID Convention?

The ICSID Convention is an international treaty that established the ICSID as an autonomous institution linked to the World Bank. It sets out the framework for the resolution of investment disputes between states and foreign investors. The Convention created a legal regime that provides a neutral and efficient mechanism for settling disputes, enhancing the stability and predictability of international investments.

With 163 contracting states, the ICSID Convention is the most endorsed treaty in the field of investment arbitration. Its wide acceptance by states demonstrates the significance placed on the ICSID system in promoting international investment and ensuring a fair and balanced approach to dispute resolution.

ICSID Convention after 50 Years: Unsettled Issues: Unsettled Issues

by Crina Baltag (Kindle Edition)

5 out of 5

Language	:	English
File size	:	5932 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	933 pages

FREE

Unsettled Issues

Despite its remarkable success, the ICSID Convention has left certain issues unresolved, which have become subject to ongoing discussions and debates. These unsettled issues continue to shape the landscape of international investment law and contribute to the evolution of the ICSID system.

1. Definition of Investment

One of the key concerns regarding the ICSID Convention is the ambiguous definition of investment. The Convention neither provides a clear definition of investment nor outlines comprehensive guidelines to determine what constitutes an investment. This lack of clarity has led to heated debates and inconsistent decisions among tribunals, resulting in uncertainty for investors and states alike.

While some tribunals have adopted a broad approach, considering any economic activity with a certain duration, commitment, or risk as an investment, others have taken a more restrictive approach, requiring a significant commitment of capital or resources. The absence of a well-defined investment criterion has resulted in divergent interpretations and unpredictable outcomes in ICSID cases.

2. Transparency and Third-Party Participation

Transparency and third-party participation in investment arbitration have emerged as critical issues in recent years. Critics argue that the ICSID Convention lacks transparency, as most arbitral hearings are held behind closed doors, and awards are often confidential. The limited access to information raises concerns about accountability and legitimacy.

Moreover, there is a growing demand for more extensive participation of third parties, such as non-governmental organizations, in the investment arbitration process. Proponents argue that involving diverse stakeholders can enhance the legitimacy and credibility of the system. However, the ICSID Convention does not provide clear guidelines on third-party participation, leaving this issue open to interpretation and resulting in different practices across cases.

3. Enforcement of Awards

The enforceability of ICSID awards has been a subject of debate, particularly in cases where the losing party challenges the legitimacy of the arbitral tribunal or the arbitral process. While the ICSID Convention provides a robust framework for enforcement, challenges can arise when it comes to resisting enforcement on grounds such as public policy or lack of due process.

Some argue that the ICSID system lacks a robust mechanism to handle challenges to enforcement, leading to inconsistent outcomes and undermining the finality and effectiveness of awards. This issue has gained attention as more states face enforcement challenges, raising questions about the efficacy of the current enforcement framework.

The Future of the ICSID Convention

Recognizing the importance of addressing these unsettled issues, efforts have been made to enhance the effectiveness and transparency of the ICSID Convention. Various proposals have been put forward to clarify the definition of investment, increase transparency, and allow for third-party participation in ICSID proceedings.

Additionally, revisions to the enforcement mechanism have been suggested to provide a more robust framework to handle challenges. These debates and discussions highlight the dynamic nature of the ICSID Convention, as it adapts to emerging challenges and strives to remain relevant in an ever-evolving global investment landscape.

The ICSID Convention has played a pivotal role in the protection of foreign investments and the resolution of investment disputes over the past 50 years. However, unresolved issues persist, influencing the interpretation and application of the Convention. As the international investment regime continues to evolve, it is crucial to address these unsettled issues to ensure the consistency and effectiveness of the ICSID system. By embracing these challenges, the ICSID Convention can further strengthen its position as a leading institution in the field of international investment law.

ICSID Convention after 50 Years: Unsettled Issues: Unsettled Issues

by Crina Baltag (Kindle Edition)

5 out of 5

Language	:	English
File size	:	5932 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	933 pages

FREE

The International Centre for Settlement of Investment Disputes (ICSID) has played a leading role in establishing the field of foreign investment law. It is primarily due to the ICSID that it is no longer peculiar for individuals and corporations to have legal standing in claims against governments — probably the most notable development of international law of the last half century. Now, in its fiftieth year and ratified by more than 150 states, the ICSID received in 2015 its 500th case. This book celebrates this anniversary with an overview and analysis of ICSID case law to date and, focusing particularly on unsettled issues, assesses possible developments in the institution’s next phase.

This volume collects twenty-two essays by prominent practitioners with substantial experience in investment arbitration law. The topics they cover encompass such issues as the following:

• • the political and economic reasons behind the creation of the ICSID;

• • admissibility and jurisdiction;

• • ICSID vis-à-vis bilateral investment treaties;

• • States’ concerns about the ‘partiality’ of arbitrators in favour of investors;

• • applicable laws under the ICSID Convention;

• • fact-finding rules;

• • conflicting interpretations of ICSID Convention provisions;

• • interaction of foreign investment and economic development;

• • value of ICSID awards in the light of EU law;

• • annulment of ICSID awards;

• • effects of denunciation (Bolivia, Ecuador, Venezuela) and non-contracting States (Russia, Brazil, India);

• • attribution of conduct of State-owned enterprises (SOEs);

• • counterclaims;

• • guarantees against political risk; and

• • allocation of costs.

As a detailed response to the question whether ICSID has contributed as promised to an improvement in the investment climate and promoted the flow of private foreign capital — and as an assessment of the present and future feasibility of the ICSID system for the resolution of investment disputes by arbitration and conciliation — this book has no peers. Considering the current crisis of investment law, the book’s immediate value not only to investors and their counsel but also to practitioners and academics in the field of investment law and arbitration and public international law cannot be overstated.

Dr Crina Baltag is the author of Kluwer’s 2012 book The Energy Charter Treaty: The Notion of Investor and the Associate Editor of Kluwer Arbitration Blog.