The International Centre for Settlement of Investment Disputes

1) Introduction

The International Centre for Settlement of Investment Disputes (the ICSID Centre) was created by the International Convention on the Settlement of Investment Disputes (also known as the Washington Convention). The Centre was briefly mentioned in Chapter 9 of the Manual, which dealt with investor-State disputes and which considered, among other things, the ICSID Convention.

This chapter now looks at the Centre in more detail, and also considers the ICSID Arbitration Rules, Conciliation Rules, Additional Facility Rules and fact-finding procedure, and the ICSID caseload.

Brief mention will be made again of some of the problems arising in investor-State disputes, referred to earlier in Chapter 9.

2) Historical Overview

The Centre states that on a number of occasions in the past, the World Bank as an institution and the President of the Bank in his personal capacity have participated in the mediation or conciliation of investment disputes between governments and private foreign investors. The creation of ICSID in 1966 was thus "in part intended to relieve the President and the staff of the burden of becoming involved in such disputes. But the Bank's overriding consideration in creating ICSID was the belief that an institution specially designed to facilitate the settlement of investment disputes between governments and foreign investors could help to promote increased flows of international investment."

The Centre goes on to say that ICSID was established

"... under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Convention) which came into force on October 14, 1966. ICSID has an Administrative Council and a Secretariat. The Administrative Council is chaired by the World Bank's President and consists of one representative of each State which has ratified the Convention. Annual meetings of the Council are held in conjunction with the joint Bank / Fund annual meetings.

"ICSID is an autonomous international organization. However, it has close links with the World Bank. All of ICSID's members are also members of the Bank. Unless a government makes a contrary designation, its Governor for the Bank sits ex officio on ICSID's Administrative Council. The expenses of the ICSID Secretariat are financed out of the Bank's budget, although the costs of individual proceedings are borne by the parties involved.

"Pursuant to the Convention, ICSID provides facilities for the conciliation and arbitration of disputes between member countries and investors who qualify as nationals of other member countries. Recourse to ICSID conciliation and arbitration is entirely voluntary. However, once the parties have consented to arbitration under the ICSID Convention, neither can unilaterally withdraw its consent. Moreover, all ICSID Contracting States, whether or not parties to the dispute, are required by the Convention to recognize and enforce ICSID arbitral awards."

Besides providing facilities for conciliation and arbitration under the ICSID Convention, since 1978 the Centre has had a set of Additional Facility Rules authorising the ICSID Secretariat to administer certain types of proceedings between States and foreign nationals that fall outside the scope of the Convention.

"These include conciliation and arbitration proceedings where either the State party or the home State of the foreign national is not a member of ICSID. Additional Facility conciliation and arbitration are also available for cases where the dispute is not an investment dispute, provided it relates to a transaction which has 'features that distinguishes it from an ordinary commercial transaction.' The Additional Facility Rules further allow ICSID to administer a type of proceedings not provided for in th...

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