By: Carolyn A. Dubay, Associate Editor, International Judicial Monitor and Assistant Professor, Charlotte Law School
In
1966, the Convention on the Settlement of Investment Disputes between States
and Nationals of Other States entered into force and paved the way for the
orderly resolution of international investment disputes through the creation of
the International Centre for Settlement of Investment Disputes, commonly known
as ICSID. ICSID, which operates under the auspices of the World Bank, serves
as an independent international institution that provides support for the
private adjudication of international investment disputes.
One
of the major thrusts of the ICSID Convention was to improve the flow of
investment capital into foreign countries, allowing those countries to develop
while at the same time providing investors with a reliable means of resolving
any investment disputes. ICSID was thus created to serve as an impartial
international organization to support the private resolution of legal disputes
(through arbitration and conciliation) between investors and host States. As
such, ICSID has been integral in facilitating international investment in aid
of economic development. Reflective of its success, there are currently 158
signatory States to the ICSID Convention, including the United States.
While
ICSID was originally limited to disputes between signatory states and nationals
of other signatory states, in 1978, ICSID's mandate was supplemented through
the Additional Facility for the Administration of Conciliation, Arbitration and
Fact-Finding Procedures (known simply as the Additional Facility). The
Additional Facility Rules authorize ICSID to administer certain types of
proceedings outside the scope of the ICSID Convention, such as conciliation and
arbitration of disputes where one or both parties are not an ICSID signatory or
a national thereof, and where the subject matter of the dispute does not
directly arise out of an investment. Beyond the Additional Facility, the
Secretary-General of ICSID is also authorized to assist in the administration
of ad hoc international arbitration proceedings in other areas of
commercial law, such as arbitration pursuant to the Arbitration Rules of the
United Nations Commission on International Trade Law (UNCITRAL), or through
other international arbitration institutions such as the International Chamber
of Commerce (ICC) and the Permanent Court of Arbitration (PCA).
With
the popularity of international arbitration as a means of dispute settlement
and the expanded role of ICSID, its caseload has gradually grown. As of
December 31, 2012, and since its inception, ICSID has registered a total number
of 419 cases under the ICSID Convention and Additional Facility Rules.
Statistics also show a steady rise in the number of cases registered annually,
with the number more than doubling since 2008. According to ICSID’s
statistics, despite the growth of ICSID’s mandate and jurisdiction, however,
the vast majority of its cases (87%) have been core ICSID Convention
arbitration proceedings.
A
critical element of the ICSID structure is that it is not a standing court, but
instead offers administrative support to facilitate private dispute settlement
of matters within its jurisdiction. Jurisdiction is generally found where (1)
the dispute is between an ICSID Contracting State and national (usually a
corporation) of another ICSID Contracting State, (2) the dispute arises
directly out of the foreign investment at issue; and (3) the parties consented
in writing to the submission of their dispute to ICSID arbitration or
conciliation. Under the ICSID Convention, the Secretary-General may refuse
registration if the dispute is manifestly outside ICSID’s jurisdiction.
International
Judicial Monitor