International Center for Settlement of Investment Dispute

1
International Center for Settlement of
Investment Dispute
2
Issues Covered

• Introduction
• Regulatory and institutional framework
• Dispute resolution options
• CME/Lauder v Czech Republic
• Maffezini v Spain Salini v Morocco
• Himpurna v Indonesia
• Way forward

3
Foreign Direct Investment
4
Infrastructure

• International instruments
• Multilateral Treaties, e.g. ICSID, NAFTA, Energy
  Charter
• Bilateral Treaties, e.g. BITS FTA
• Instruments, e.g. UNCITRAL Rules, ICSID
  Additional Facility, ICC Rules
• National laws
• Investment protection laws
• Trade policy documents
• Constitutional law implication

5
ICSID
6
ICSID general

• Convention on the Settlement of Investment
  Disputes between States and Nationals of Other
  States, 18 March 1965
• ICSID Convention
• Washington Convention
• Entered into force 14 October 1966
• Large international membership, including several
  rogue states
• 139 members / 154 signatories

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Ratifications

• After 20 ratifications
• Benin, Burkina Faso, Central African Republic,
  Chad, Congo, Cote dIvoire, Gabon, Ghana,
  Iceland, Jamaica, Madagascar, Malawi, Malaysia,
  Mauritania, Netherlands, Nigeria, Sierra Leone,
  Tunisia, Uganda and USA
• Status of ICSID Convention
• Ratification 139 Afghanistan to Zimbabwe
• Signature 154

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Qualification

• Arbitration only available if
• DISPUTE INVOLVES A STATE PARTY
• OR
• A STATE DESIGNATED AGENCY
• Only investors of Member States can use ICSID
  Mechanism
• Public International Law of State Responsibility

9
Increased case load

• Marked increase in number of cases
• Even current figures do not fully reflect the
  significant number of States that have included
  reference to the ICSID mechanism
• in Bilateral Investment Treaties or
• National legislation
• What of the future?

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Cases pending before ICSID

• More than 82 cases
• 33 cases against Argentina
• 50 cases against other states
• Recent European aationalities
• European parties (respondent) include Slovenia,
  Hungary, Albania, Poland, Estonia, Bulgaria,
  Ukraine
• Claimants are Italian, Finish, German, Greek,
  French, Dutch companies

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Conciliation Option

• ICSID Convention Chapter III
• Parties can apply to Secretary-General seeking
  conciliation proceedings
• Include nature of dispute and consent or parties
• Conciliation Commission
• One or three or uneven number
• Absent any agreement three members shall be
  appointed
• Not final and binding and information cannot be
  used in any subsequent arbitration/litigation

12
Additional Facility

• Rules Governing the Additional Facility for the
  Administration of Proceedings by the Secretariat
  of the International Centre for Settlement of
  Investment Disputes (Additional Facility Rules)
  27 September 1978
• www.worldbank.org/icsid/facility-archive/1.htm
• Initially introduced for a temporary period of 5
  years
• Updated and revised 1 January 2003

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Scope of additional facility

1. conciliation or arbitration proceedings for the
   settlement of investment disputes arising between
   parties one of which is not a Contracting State
   or a national of a Contracting State
2. conciliation or arbitration proceedings between
   parties at least one of which is a Contracting
   State or a national of a Contracting State for
   the settlement of disputes that do not directly
   arise out of an investment and
3. fact-finding proceedings

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ICSID Jurisdiction

• Article 25 Washington Convention
• any legal dispute arising directly out of an
  investment, between a Contracting Stateand a
  national of another Contracting State, which the
  parties to the dispute consent in writing to
  submit to the Centre.
• Legal Dispute and Investment not defined in
  Convention

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Consent

• ARTICLE 25
• When the parties have given their consent, no
  party may withdraw its consent unilaterally
• CONSENT is cornerstone of ICSID jurisdiction
• It must be in writing
• It must exist at time Centre receives request
• It may be included in concession agreement, a
  compromis or national legislation
• CONSENT of both parties do not have to be in a
  single instrument

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Autonomous regime

• Article 53 Washington Convention
• (1) The award shall be binding on the parties
  and shall not be subject to any appeal or to any
  other remedy except those provided for in this
  Convention. Each party shall abide by and comply
  with the terms of the award
• Article 54 Washington Convention
• Contracting States will recognise an award as if
  it was a final judgment of a court in that State

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No recourse to courts
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Investment typical features

• The project should have a certain duration
• There should be a certain regularity of profit
  and return
• There is typically an element of risk for both
  sides
• The commitment involved would have to be
  substantial
• The operation should be significant for the host
  States development