ATTY. WARREN WNYDELL D.

SARSAGAT
 WHAT IS
 The world’s leading institution devoted to international
investment dispute settlement. It has extensive experience
in this field, having administered the majority of all
international investment cases.
 Stateshave agreed on ICSID as a forum for Investor-State
dispute settlement in most international investment treaties
and in numerous investment laws and contracts.
 ICSID was established in 1966 by the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States (the ICSID
Convention).

 The ICSID Convention is a multilateral treaty formulated by the Executive

Directors of the World Bank to further the Bank’s objective of promoting
international investment.

 ICSID is an independent, depoliticized and effective dispute-settlement

institution. Its availability to investors and States helps to promote international
investment by providing confidence in the dispute resolution process. It is also
available for state-state disputes under investment treaties and free trade
agreements, and as an administrative registry.
 ICSID provides for settlement of disputes by conciliation, arbitration or
fact-finding.
 The ICSID process is designed to take account of the special
characteristics of international investment disputes and the parties
involved, maintaining a careful balance between the interests of
investors and host States. Each case is considered by an independent
Conciliation Commission or Arbitral Tribunal, after hearing evidence
and legal arguments from the parties.
 A dedicated ICSID case team is assigned to each case and provides
expert assistance throughout the process. More than 600
such cases have been administered by ICSID to date.
 ICSID also promotes greater awareness of international law on foreign investment and
the ICSID process.
 It has an extensive program of publications, including the leading ICSID Review-Foreign
Investment Law Journal and it regularly publishes information about its activities and
cases.
 ICSID staff organize events, give numerous presentations and participate in conferences
on international investment dispute settlement worldwide.
 Structure

Administrative Council

 The ICSID Administrative Council is the governing

body of ICSID. Its composition, functions and
decision-making procedure are provided for in
the ICSID Convention (Articles 4 to 8 of the
Convention).
 Composition
 Each Member State has one representative on the Administrative
Council. States may designate any official as their representative on
the Council and may designate an alternate representative to act
when the designee is unable to act. If a State does not designate a
representative or alternate, the World Bank Governor and Alternate
Governor for that State are its representatives on the ICSID
Administrative Council.

 The President of the World Bank Group is the Chairman of the

Administrative Council (Article 5 of the ICSID Convention). The
Chairman has no vote on matters before the Administrative Council,
but convenes and presides over its meetings.
 Functions
The Administrative Council plays no role in the administration of
individual cases. Its main functions are:

 adopting administrative and financial regulations for the Centre;

 passing rules of procedure for ICSID cases;
 approving arrangements for use of World Bank facilities and
services;
 electing the ICSID Secretary-General and Deputy Secretary-
General;
 approving the annual reports and budget of the Centre.
 Functions
The functions of the Chairman of the Administrative Council include:

 designating ten individuals to each of the ICSID Panels of Arbitrators and of Conciliators (Article 14 of the
ICSID Convention);

 constituting conciliation commissions and arbitral tribunals in certain circumstances (Article 30 and
Article 38 of the ICSID Convention, Article 6 of the Arbitration (Additional Facility) Rules and Article 10 of
the Conciliation (Additional Facility) Rules);

 appointing ad hoc Committees for annulment proceedings (Article 52 of the ICSID Convention);

 deciding proposals to disqualify a sole arbitrator, a majority of a tribunal, or a single member of a

tribunal or commission where the other members are equally divided (Article 58 of the ICSID
Convention, Article 15 of the Arbitration (Additional Facility) Rules and Article 15 of the Conciliation
(Additional Facility) Rules).
 Functions

 Members of the ICSID Administrative Council

and its Chairman receive no remuneration
from ICSID in respect of their role on the
Council. All of these individuals enjoy
immunity from legal process with respect to
their functions on the Council (Article 21 of
the ICSID Convention).
 Voting
 Each State has one vote on the Administrative Council, and there is no weighted
voting on any matter. Most decisions of the Administrative Council are taken by a
simple majority, although the adoption of procedural rules and the annual budget
requires a two-thirds majority approval of the Council (Article 6 of the ICSID
Convention). Amendments to the ICSID Convention require the approval of all
Member States (Article 66 of the ICSID Convention). Resolutions of the Administrative
Council are published in the Annual Report of ICSID.
 The Administrative Council must meet at least once a year, and usually does so
during the autumn Annual Meetings of the World Bank Group. The Council may
convene in person more often if necessary, and may also vote on issues by
correspondence (Article 7 of the ICSID Convention).
 Secretariat

 The ICSID Secretariat carries out the daily

operations of ICSID. Its composition and
principal functions are set out in the ICSID
Convention(Articles 9 to 11 of ICSID
Convention and the Administrative and
Financial Regulations).
 Composition
 The Secretariat consists of approximately 70 staff of diverse backgrounds and
nationalities. It is led by the Secretary-General, who is the legal representative of
ICSID, the registrar of ICSID proceedings, and the principal officer of the Centre. The
current Secretary-General, Meg Kinnear, was elected by resolution of the
Administrative Council pursuant to Article 10 of the ICSID Convention in 2009 and
re-elected in 2015.

 The Secretary-General is assisted by two Deputy Secretaries-General, Gonzalo

Flores and Martina Polasek. The staff are organized into four case management
teams, a general administration and financial management team, and a front
office.

 English, French and Spanish are the official languages of ICSID. The case
management teams are chiefly organized by these languages, but the Secretariat
has capacity to communicate in over 25 languages. Each case management team
has experienced legal counsel acting as Secretaries to Tribunals, Commissions
and ad hoc Committees under the ICSID Convention, ICSID Additional
 Composition
 The general administration and financial
management team oversees all financial
aspects of case management and the ICSID
budget. It also handles ICSID’s archives, human
resources and information technology.

 The front office deals with all matters relating to

participation as ICSID Member States, maintains
the ICSID Panels of Conciliators and of
Arbitrators, and manages ICSID’s publications.
 Composition
 The general administration and financial
management team oversees all financial aspects of
case management and the ICSID budget. It also
handles ICSID’s archives, human resources and
information technology.

 The front office deals with all matters relating to

participation as ICSID Member States, maintains
the ICSID Panels of Conciliators and of Arbitrators,
and manages ICSID’s publications.
Support in Dispute Settlement

ICSID Cases
 The Secretariat’s main role is to provide support in investor-State dispute settlement.
It is involved in all aspects of the process, including:

 acting as registrar in proceedings (for example, receiving, reviewing and

registering requests for arbitration and conciliation and authenticating awards);

 assisting in the constitution of Conciliation Commissions, Arbitral Tribunals and ad

hoc Committees;
Support in Dispute Settlement

 assisting parties and Commissions, Tribunals and Committees with all

aspects of case procedure;

 organizing and assisting at hearings;

 administering the finances of each case; and

 providing other administrative support as requested by

Commissions, Tribunals and Committees.
Support in Dispute Settlement

Non-ICSID Cases
 The Secretariat also supports dispute settlement in State-State or
investor-State proceedings under rules other than the ICSID Rules. This
includes cases under the UNCITRAL Arbitration Rules and other ad
hocdispute settlement provisions. The Secretariat’s services in these
proceedings range from support with the organization of hearings to full
administrative services comparable to those provided in ICSID cases.
Parties are free to elect the extent of the services desired in these cases.

 ICSID also assists regularly with the organization of hearings in

arbitration proceedings conducted under the auspices of the ICC, LCIA,
PCA, and other institutions
Support in Dispute Settlement

 Appointing Authority/Deciding Challenges

 The Secretary-General acts as appointing

authority in proceedings not conducted under
the ICSID Convention or the Additional Facility
Rules, and decides proposals for disqualification
of arbitrators, upon request.
Support in Dispute Settlement
 Inaddition to its case administration, the
Secretariat undertakes a number of tasks
relating to institutional matters and
knowledge dissemination. It promotes
greater awareness of the ICSID dispute
settlement process and the development
of international law on foreign investment.
As part of these tasks, the Secretariat:
Support in Dispute Settlement

 keeps a list of Member States;

 maintains the Panels of Arbitrators and of
Conciliators;
 maintains other official ICSID Documents;
 publishes information about its activities, for
example in its Annual Report and ICSID Caseload
– Statistics;
 publishes decisions, orders and awards on its
website;
Support to Member States and the Public

 organizes and participates in events and training;

 publishes background papers, bibliographies, lists of
investment treaties and other resources on its
website; and
 publishes the ICSID Review – Foreign Investment Law
Journaland the hard cover multi-volume collections
of Investment Laws of the World and Investment
Treaties.
Careers at the Secretariat

 The Secretariat hires lawyers, paralegals,

legal assistants and financial officers for
vacant positions on its case management,
institutional and finance teams. The positions,
including information concerning the hiring
process and the selection criteria, are
announced on the homepage of the ICSID
website and the World Bank’s Jobs site.
ICSID and the World Bank Group

 ICSID is one of the five organizations of the World Bank Group, along
with the International Bank for Reconstruction and Development
(IBRD), the International Development Association (IDA),
the International Finance Corporation (IFC), and the Multilateral
Investment Guarantee Agency (MIGA). The goal of the World Bank
Group is to end extreme poverty within a generation and to boost
shared prosperity.

 Each of the five World Bank Group organizations contributes to the

overall goal of poverty reduction through its particular work.
 Mandates of the World Bank Group

ICSID IBRD IDA IFC MIGA

Provides facilities for Lends to Provides interest-free Helps developing Promotes foreign direct
conciliation and governments of loans, called credits, countries achieve investment into
arbitration of middle-income and and grants to sustainable growth developing countries to
international creditworthy low- governments of the by financing support economic
investment disputes. income countries. poorest countries. investment, growth, reduce poverty,
mobilizing capital in and improve people's
international financial lives by offering political
markets, and risk insurance
providing advisory (guarantees) to investors
services to and lenders.
businesses and
governments.
Issues involving ICSID

Article: ICSID problems in the spotlight

20 JUNE 2014
Civil society challenged ICSID role in El Salvador mining dispute, as an
international lawyer accused the arbitration forum of being “seriously flawed”
A series of further judgements against developing countries has put the
International Centre for the Settlement of Investment Disputes (ICSID)
increasingly in the spotlight. ICSID, an arm of the World Bank Group, is an
arbitration forum between governments and foreign investors to settle
investment disputes (see Bulletin Dec 2013).
Issues involving ICSID
In April, a letter from 303 civil society
organisations urged World Bank president Jim
Yong Kim to “review the role of the International
Centre for the Settlement of Investment Disputes
(ICSID)” because mining corporation “Pacific Rim
is using ICSID to subvert a democratic national
debate over mining and environmental health in El
Salvador.” The company is asking for $300 million,
2 percent of El Salvador’s GDP.
Issues involving ICSID
In addition, ICSID recently accepted a request for
arbitration against Venezuela by mining giant Anglo
American for $600 million in relation to breaching the UK-
Venezuela Bilateral Investment Treaty, and
against Uruguay by tobacco company Philip Morris for $25
million in relation to cigarette packaging regulations,
igniting debates about whether disputes should be
handled by ICSID or national courts.
Issues involving ICSID

George Kahale, an international lawyer, criticised ICSID in

a keynote speech at the eighth annual juris investment
treaty arbitration conference held in Washington in May.
He said ICSID is “seriously flawed” with a “perceived bias
against states,” that calls into question “the legitimacy of
the entire system”.
Three problem areas with ICSID's current
practice by Christoph Schreuer
 1. Annulment.
Annulment was designed to be an exceptional remedy to deal with
extraordinary emergency situations. And yet, if we look at recent
developments we see that there has been an unusual level of activity in this
area.
The activity stems from ever more requests for annulment but also from an
increased readiness of ad hoc committees to annul. The once extraordinary
remedy is in danger of becoming a routine feature of many ICSID cases. This
is likely to set the stage for ever more requests triggering a kind of
bandwagon effect. There will be growing pressure on counsel for losing
parties, governments and investors alike, to try this remedy as part of their due
diligence. The consequences will be increasing problems for the Secretary
General to find suitable appointees and a general prolongation of
proceedings coupled with increased costs. This is likely to affect confidence
in the system’s ability to reach final decisions in an efficient and economical
way.
Three problem areas with ICSID's current
practice by Christoph Schreuer
 2. Compliance with awards (by one State in particular)

To my knowledge Argentina has never paid under any of the awards rendered
against it and is actively evading efforts at enforcement. The idea behind this
strategy appears to be discouraging potential claimants from even trying to
pursue their claims. There is a serious danger inherent in this situation. Once it
becomes apparent that an award debtor may disregard its obligations under
awards with impunity, the temptation for other States to follow this example is
considerable. The potential danger to the effectiveness of the entire system is
evident. Certain steps to persuade Argentina to honour its obligations are being
taken. The United States has begun voting against loans to Argentina from the
World Bank and IADB. The effectiveness of this step is still unclear and depends
not least on the position of other Members of these lending institutions.
Solutions to the first two problems:
Annulment and Compliance
 Introduction of the requirement for an award debtor seeking annulment to
deposit a security for compliance with the award.
The security could be given e.g. in the form of a bank guarantee.
This would not just be a condition for a stay of enforcement under Arbitration
Rule 54. (A guarantee of this kind has sometimes been required by ad hoc
committees).
The security would be a condition for the institution of annulment proceedings.
If the ad hoc committee declines to annul, the award would be paid under the
security.
If the award is annulled the security would be returned.
Solutions to the first two problems:
Annulment and Compliance
In other words, an unsuccessful attempt at annulment would lead to an
automatic and swift payment under the award.
An arrangement of this kind would have a dual effect. It would dampen the
desire of award debtors to seek annulment. It would also take care of the
problem of compliance and enforcement in cases involving annulments.
Obviously, such a step would not be an answer to all open questions
surrounding annulment and compliance. But it would go some way in
addressing the current problems.
Step would not require an amendment of the Convention which is close to
impossible. All it would take is an adjustment of the Arbitration Rules.
Last Problem Area: Conflicting
Decisions
 There has been extensive discussion on the subject of consistency or
lack thereof and on the related issue of the precedential value of
decisions.
 A number of suggestions have been made, notably the introduction
of an appeals procedure. In fact, ICSID at one time circulated a
discussion paper that canvassed the idea of an appeals facility. It
seems that the idea has been quietly laid to rest, presumably not
least because it is incompatible with the text of the ICSID
Convention. Article 53 provides that an award shall not be subject
to any appeal or to any other remedy except those provided for in
the Convention.
Last Problem Area: Conflicting
Decisions
 Also, the most effective way to achieve judicial coherence and
consistency is not to submit decisions to review and reversal. Appeal
presupposes a decision that has been made, that will be attacked
for a perceived flaw and that may be revised and repaired.
Solutions to the last problem:
Conflicting Decisions
 Rather than remedy the damage after it has occurred, it is more
sensible to address the problem of inconsistency through preventive
action.
 A method to secure the coherence of case law that has been
remarkably successful is to allow for preliminary rulings while the
original proceedings are still pending.
 The idea has been put forward before: see G. Kaufmann-Kohler,
Annulment of ICSID Awards in Contract and Treaty Arbitrations: Are
there Differences?, in in E. Gaillard/Y. Banifatemi (eds.), Annulment
of ICSID Awards 289 (2004). See also G. Kaufmann-Kohler, In search
of Transparency and Consistency: ICSID Reform Proposal, TDM, vol.
2, No. 5, p.8 (2005).
Solutions to the last problem:
Conflicting Decisions
 Under such a system, a tribunal would suspend proceedings
and request a ruling on a question of law from a permanent
body established for that purpose. This procedure has been
applied successfully in the framework of European Community
law. It effectively secures the uniform application of European
law by domestic courts in all member States through
preliminary rulings of the Court of Justice of the European
Communities.
Solutions to the last problem:
Conflicting Decisions
 Adapted to investment arbitration this method could provide for an
interim procedure whenever a tribunal is faced with an important
question. Such an important question could be described as a
fundamental issue of investment treaty application, a situation
where the tribunal wants to depart from a line of previous decisions
or where there are conflicting previous decisions. In such a situation
the tribunal would be required to suspend proceedings and request
a ruling. Once that ruling has been forthcoming, the original tribunal
would resume its proceedings and reach an award on the basis of
the guidance it has received through the preliminary ruling. This
method could become a successful means to ward off
inconsistency and fragmentation.
Solutions to the last problem:
Conflicting Decisions
 A mechanism of this kind would require the establishment of a
central and permanent or semi-permanent body that is charged
with the task of giving preliminary rulings. This would leave Article 53
of the ICSID Convention untouched.
 A preliminary rulings facility could be established either by ICSID's
Administrative Council or through a separate treaty. It would not
require an amendment of the Convention. A number of details
would have to be worked out. One is under what circumstances a
tribunal would request a preliminary ruling and whether it would be
under an obligation to do so. Another question would be whether
these rulings would be binding upon the tribunal. Not least, the
composition of a body charged with giving preliminary rulings would
require detailed discussion.
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 The scope of the Convention (its jurisdiction) is defined in article

25.
 Consequently, investment disputes fall within the ambit of the
ICSID Convention if the following requirements are met:
• It must be a legal dispute;
• the parties must have agreed to submit their dispute to ICSID (in writing);
• the dispute must be between a Contracting State or its subdivisions and a
foreign investor from another Contracting State;
• it must arise directly out of an investment.
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 An “investment” within the scope of Article 25 is not

defined in the ICSID Convention. The draftsmen wanted
to leave it primarily to the parties to decide what
constituted an investment. This omission, according to
Delaume, is intentional. It has been argued, he explains,
that such a definition would have been out of limited
interest as it would either have been too broad to serve
a useful purpose or too narrow for its intentions.
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 This intention is clearly what the text of the Report of the

Executive Directors shows:

No attempt was made to define the term "investment"

given the essential requirement of consent by the parties,
and the mechanism through which Contracting States can
make known in advance, if they so desire, the classes of
disputes which they would or would not consider
submitting to the Centre (Article 25(4))
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 The relevance of the issue –the concept of investment is

central to the Convention- lies in the fact that, if the
concept of “investment” has not been correctly,
thoroughly, or carefully tailored and agreed upon by the
Contracting States (involved in a conflict or dispute), it
builds a dangerous uncertainty which may lead (it
actually did) to -and constitute a ground for- a “lack of
jurisdiction” defence before ICSID.
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 But not only to disputes is the concept related to: uncertainty is

“the mother of all fears” when it comes to business –foreign
investment in particular-, and thus hinders any attempt by a
potential investor to choose a specific country to invest in. For
this reason, it is of the utmost importance for countries to make
the concept of investment as clear as possible, either in their
national investment legislation, in the Multilateral Treaties to
which they are party, and in the BITs they enter into. Otherwise,
it is likely that they are not going to be favourites for the
investors seeking for new horizons.
Jurisdictional Issues
by Ignacio D'Alessio Faculty of Law, University of Buenos Aires

 Disputes on jurisdiction are often not about interpreting a contract between

the parties. Rather, the Tribunal will interpret the statutes, treaties and
conventions, to see whether the disputes fall within the ambit of the State’s
obligation to arbitrate in these instruments.

 Notwithstanding all the aforementioned, it is to be borne in mind that article

25 (4) opens the possibility to Contracting States to notify the Centre of
classes of disputes that they would not consider submitting to the jurisdiction
of the Centre. Although these specific exclusions have no impact on the
general meaning of the term “investment” in the Convention, an investor
should be aware of their existence, to the extent that they could render a
given case to be outside the scope of the Convention, with all the
consequences thereof.