The International Centre for Settlement of Investment Disputes (ICSID) is an international entity tasked with resolving investment disputes in a manner insulated from the effects of sovereignty and intertwined diplomatic relations. Since its establishment under the auspices of the World Bank in 1966, pursuant to the Washington Convention of 1965, its role has not been confined to the mere settlement of disputes; it has extended further to creating an environment of mutual confidence between States and investors. The Centre has become a mirror reflecting the transformations and aspirations of the global economy. (1)
- The Centre’s Structure and Legal Nature:
The Centre consists of two principal organs: the Administrative Council and the Secretariat. (2)
1- The Administrative Council:
The Administrative Council consists of one representative of each Member State of the Centre, with each State having one vote in the Centre’s decision-making. (3)
The Council adopts the Centre’s rules of arbitration, conciliation, mediation, and fact-finding, approves the annual budget, adopts the Centre’s annual report, and elects the Secretary-General and Deputy Secretaries-General. Each State designates the persons it nominates for membership on the Panels of Arbitrators and Conciliators. (4)
2- The Secretariat:
This organ is headed by the Secretary-General of the Centre, assisted by one or more Deputy Secretaries-General, together with the Centre’s staff. (5)
The Secretary-General is the Centre’s legal representative and chief executive officer. The Secretary-General is responsible for the overall administration of the Centre, including the appointment of staff. The Secretary-General also performs the functions of the Centre’s Registrar and has the authority to certify arbitral awards issued under the Centre’s auspices. (6)
The Secretariat provides technical and administrative support for the Centre’s dispute settlement proceedings, delivers training and technical assistance to States and the public, and contributes to the development of investment law through publication and awareness-raising. (7)
- The Centre’s Jurisdiction:
The Washington Convention provides that the Centre’s jurisdiction extends to any legal dispute arising directly out of an investment between a Contracting State, or any constituent subdivision or agency of a Contracting State designated to the Centre by that State, and a national of another Contracting State, where the parties to the dispute consent to submit it to the Centre. (8)
The concept of a national includes natural persons holding the nationality of one of the States Parties to the Convention, as well as juridical persons, such as companies and entities holding the nationality of one of the States Parties. (9)
- Constitution of Arbitral Tribunals at the Centre:
A request for arbitration shall be submitted to the Secretary-General of the Centre. The request shall include the facts and legal submissions in the case, the issues in dispute, the identity of the parties, and consent to arbitration in accordance with the procedural rules governing the institution of conciliation and arbitration proceedings. (10)
Upon submission of the request, the case shall be registered unless the dispute falls outside the Centre’s jurisdiction. (11)
The arbitral tribunal shall be constituted as soon as possible after registration of the request for arbitration. The tribunal shall consist of a sole arbitrator or any odd number of arbitrators agreed upon by the parties. If the parties do not agree on the number of arbitrators and the method of their appointment, the tribunal shall consist of three arbitrators: each party shall appoint one arbitrator, and the presiding arbitrator shall be chosen by agreement of both parties. (12)
- The Centre’s Role in the Investment Dispute Settlement System:
Article 2 of the Washington Convention (ICSID) provides that the principal purpose of establishing the Centre is to provide facilities for conciliation and arbitration of investment disputes between Contracting States and nationals of other Contracting States. (13) Accordingly, the Centre’s primary purpose since its establishment has been to contribute effectively to the international investment dispute settlement system.
The Centre has contributed to the development of the investment dispute settlement system through three principal avenues:
1- Precedent:
Through the substantial body of arbitral awards issued by tribunals constituted under the Centre’s auspices, the Centre has contributed to the interpretation of concepts such as “investment”, “fair and equitable treatment”, and “expropriation”, thereby providing the investment dispute settlement system with increased flexibility and clarity.
2- Modernisation of Dispute Settlement Procedures:
The Centre has led the process of modernising dispute settlement procedures, particularly through the 2006 and 2022 amendments, which focused on enhancing transparency, publication of awards and decisions, participation of non-disputing parties, and reducing costs and the duration of proceedings through expedited procedures, effective case management, and the provision of diverse mechanisms such as mediation and conciliation.
3- Responding to Contemporary Challenges:
The Centre has contributed to responding to contemporary challenges, such as conflicts arising from third-party funding sources, ensuring a balance of interests between States and investors, and working to increase the diversity of arbitrators and to adopt professional codes of conduct.
The Centre is also active in technical training for States and investors and continues its role as an international legal reference, in light of the world’s increasing need for an independent investment environment to confront global challenges such as climate change and energy and food crises. (14)
Sources:
(1) Introduction to the International Centre for Settlement of Investment Disputes, the Centre’s official website, <About ICSID | ICSID>.
(2) Article (3) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), concluded in Washington in 1965.
(3) Paragraph (1) of Article (4) of the 1965 Washington Convention (ICSID).
(4) Paragraph (1) of Article (6) of the 1965 Washington Convention (ICSID).
(5) Article (9) of the 1965 Washington Convention (ICSID).
(6) Article (11) of the 1965 Washington Convention (ICSID).
(7) Introducing the International Centre for Settlement of Investment Disputes, 2023, published by Jus Mundi, <Introducing ICSID (International Centre for Settlement of Investment Disputes)>.
(8) Paragraph (1) of Article (25) of the 1965 Washington Convention (ICSID).
(9) Paragraph (2) of Article (25) of the 1965 Washington Convention (ICSID).
(10) Paragraphs (1) and (2) of Article (36) of the 1965 Washington Convention (ICSID).
(11) Introducing the International Centre for Settlement of Investment Disputes, 2023, p. 6.
(12) Paragraph (2) of Article (37) of the 1965 Washington Convention (ICSID).
(13) Paragraph (2) of Article (2) of the 1965 Washington Convention (ICSID).
(14) Meg Kinnear, The Role of ICSID in International Economic Law, research published in the Journal of International Economic Law, Volume (26), Issue (1), published on Oxford Academic, dated 12 January 2023, <Role of ICSID in International Economic Law | Journal of International Economic Law | Oxford Academic>.
