Seminar 3 ICSID I History, Overview and Jurisdiction Consent Learning objectives At the end of the session you should Appreciate the limited scope of jurisdiction of national courts in investment disputes Have an overview of ICSID and the relevant legal instruments (Washington Convention, ICSID Rules and ICSID Additional Facility Rules) Be familiar with the various dispute settlement mechanisms available under ICSID as well as the various functions the ICSID has Delineate ICSID arbitration and conciliation Understand the function of Additional Facility Topic outline: International Centre for the Settlement of Investment Disputes Historic Overview Convention on the Settlement of Investment Disputes between the States and Nationals of Other States (Washington Convention 1965) Administrative Counsel Secretariat ICSID Arbitration Rules and Procedure Additional Facility Rules 1978 April 2006 Revision of both sets of ICSID Arbitration Rules Diplomatic protection Implications and drawbacks for investor ICSID as Appointing Authority Secretary General can appoint arbitrators in ad hoc arbitrations Conciliation Available option only nine cases todate Lecture and study notes: The UNCTAD documents referred to provide an excellent study guide. Essential Reading - Lew Mistelis and Kröll, Chapter 28 [Available in QMplus] - Paulsson, Arbitration Without Privity, 10 ICSID Rev FILJ 232, 232241 (1995). [Available in QMplus] - Sornarajah, THE INTERNATIONAL LAW ON FOREIGN INVESTMENT 114115; 413417 (Cambridge, 2d. ed. 2004). [Available in QMplus] - Bjorklund, Reconciling State Sovereignty and Investor Protection in Denial of Justice Claims, 45 VA. J. INT L L. 809, 820 (2005). [Available in QMplus] Consent UNCTAD http://unctad.org/en/docs/edmmisc232add2_en.pdf Ucheora Onwuamaegbu, International Dispute Settlement Mechanisms Choosing Between Institutionally Supported and Ad Hoc; and Between Institutions, in 1
ARBITRATION UNDER INTERNATIONAL INVESTMENT AGREEMENTS: A GUIDETO THE KEY ISSUES 63. 7475; 8385 (Katia YannacaSmall ed., Oxford 2010) Sykes, Public Versus Private Enforcement of International Economic Law: Standing and Remedy, 34 J. LEGAL STUDIES 63142 (2005). [Available in QMplus] Petrobart Limited v. Kyrgyz Republic, SCC Arb. No. 126/2003 (Award) (29 March 2005, pages 415; 2224; 4142; 6063 (arguments about the applicability of the treaty). Further (recommended) reading: - UNCTAD Dispute Settlement ICSID 2.1. (Overview) http://www.unctad.org/en/docs/edmmisc232_en.pdf - UNCTAD Dispute Settlement ICSID 2.2. (Selecting the Appropriate Forum) http://www.unctad.org/en/docs/edmmisc232add1_en.pdf Optional reading: - Schreuer, C with Malintoppi L, Reinisch A, Sinclair A, The ICSID Convention: A Commentary (2nd Ed, CUP 2009). - Broches, A., The Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 136 Recueil des Cours 331, 351364 (1972II). - Broches, A., Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965, Explanatory Notes and Survey of its Application, XVIII YBCA 627, 641647 (1993). - Delaume, G. R., ICSID Arbitration, in: Contemporary Problems in International Arbitration (Lew, J. ed.) 23 (1987). - Parra, A. R., The Role of the ICSID Secretariat in the Administration of Arbitration Proceedings under the ICSID Convention, 13 ICSID Review Foreign Investment Law Journal 85 (1998). - Shihata, I. F. I./Parra, A. R., The Experience of the International Centre for Settlement of Investment Disputes, 14 ICSID Rev FILJ 299 (1999). - Muchlinski, P. The Diplomatic Protection of Foreign Investors: A Tale of Judicial Caution in Binder C, Kriebaum U, Reinisch A & Wittich S (Eds) International Investment Law for the 21 st Century Essays in Honour of Christoph Schreuer (2009) p. 341 - NEW: The History of the ICSID Convention, 2015 (available online free of charge: https://icsid.worldbank.org/apps/icsidweb/resources/pages/thehistoryofthe ICSIDConvention.aspx ) Relevant Documents - Convention on the Settlement of Investment Disputes between States and Nationals of Other States: http://www.worldbank.org/icsid/basicdoc/9.htm - List of Contracting States and other Signatories of the Convention: http://www.worldbank.org/icsid/constate/cstatesen.htm - Contracting States and Measures Taken by them for the Purpose of the Convention: http://www.worldbank.org/icsid/pubs/icsid8/maineng.htm - Bilateral Investment Treaties, 19591996, Chronological and Country Data: http://www.worldbank.org/icsid/treaties/treaties.htm - ICSID Model Clauses: http://www.worldbank.org/icsid/modelclausesen/main.htm - ICSID Cases: http://www.worldbank.org/icsid/cases/cases.htm - ICSID Additional Facility: http://www.worldbank.org/icsid/facility/facility.htm 2
SelfStudy Questions After you have completed the required reading, attempt to answer the following selfstudy questions: 1. What is a mixed dispute and what is a mixed arbitration? 2. Does consent to ICSID arbitration exclude recourse to national courts? Is ICSID the ultimate delocalised arbitration? 3. In which situations may conciliation be preferred over arbitration? 4. What are the essential characteristics and main advantages of ICSID arbitration? 5. Is it legally possible for an investor to agree on ICSID arbitration with a host 6. State which is not a Contracting Party to the ICSID Convention? 7. Which types of cases may be settled under the ICSID Additional Facility? 8. Does the ICSID (Washington) Convention provide for the jurisdiction of the ICJ? CONSENT Learning objectives At the end of the session you should - Understand the significance and identify the forms of consent to jurisdiction under ICSID - Identify different forms of offer and acceptance of an agreement to arbitrate a dispute - Define conditions and limitation associated with consent - Understand the concept of nonrevocability of consent Topic outline: - Types of Consent o Consent through direct agreement between the parties o Consent through host state legislation o Consent through BITs o Consent through multilateral treaties - Characteristics of consent o Time of consent o Limitations of consent o Conditions of consent o Interpretation of consent o Irrevocability of consent o Consent by a constituent subdivision or agency Lecture and study notes: 1. This session examines a critical matter, the issue of consent to arbitration under the ICSID Convention 2. Although there is normally consent in the classical (New York Convention Article II) style, there is often no privity of arbitration agreement; the State signs an 3
agreement, the private party files a request for arbitration they have rarely specifically agreed to this particular arbitration 3. In this new type of consent the State makes an offer which can be accepted by any investor 4. There may be some limitations to the consent of specific conditions imposed, often relating to the authorisation of the state agency to sign an agreement Recommended Reading - Lew Mistelis and Kröll, Chapter 28 [Available in QMplus] - Bishop, Crawford and Reisman, 367384, 319346 Optional Reading: - Broches, A., Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965, Explanatory Notes and Survey of its Application, XVIII YBCA 627,641647 (1993). - Gaillard, E., Some Notes on the Drafting of ICSID Arbitration Clauses, 3 ICSID Rev FILJ 136 (1988). - Lalive, P., The First World Bank Arbitration (Holiday Inns v. Morocco) Some Legal Problems, 51 British Yb Int l L 123 (1980). - Lamm, C. B./Cohen Smutny, A., The Implementation of ICSID Arbitration Agreements, 11 ICSID Rev FILJ 64 (1996). - Paulsson J., Arbitration without Privity, 10 ICSID Rev FILJ 232 (1995) - Schreuer, C., The Interpretation of ICSID Arbitration Agreements, in: International Law: Theory and Practice, Essays in Honour of Eric Suy (Wellens, K. ed.) 719 (1998). - Shihata, I. F. I./Parra, A. R., The Experience of the International Centre for Settlement of Investment Disputes, 14 ICSID Rev FILJ 299 (1999). - Tupman, W. M., Case Studies in the Jurisdiction of the International Centre for Settlement of Investment Disputes, 35 ICLQ 813 (1986) - Schreuer, C. Consent to Arbitration Vol 2(5) Transnational Dispute Management (Updated to 02/2007) also appears in Muchlinski, P (ed) et al, The Oxford Handbook of International Investment Law (2008 OUP), p. 831 Cases - Amco v. Indonesia, Decision on Jurisdiction, 25 September 1983, 1 ICSID Rep 392. - AMT v. Zaire, Award, 21 February 1997, 36 ILM 1531, 1545/6 (1997). - Cable TV v. St. Kitts and Nevis, Award, 13 January 1997, 13 ICSID Rev FILJ 328, 35461 (1998). - CSOB v. Slovakia, Decision on Jurisdiction, 24 May 1999, 14 ICSID Rev FILJ 25 (1999) = http://www.worldbank.org/icsid/cases/csob_decision.pdf and see also http://www.worldbank.org/icsid/cases/csob.pdf - SPP v. Egypt, Decision on Jurisdiction I, 27 November 1985, 3 ICSID Reports 112, 16 ILM 1476 (1977). Decision on Jurisdiction II, 14 April 1988, 3 ICSID Reports 140, XVI YBCA 19 (1991)(excerpts) - Tradex v. Albania, Decision on Jurisdiction, 24 December 1996, 14 ICSID RevFILJ 161 (1999) = http://www.worldbank.org/icsid/cases/tradex_decision.pdf - Autopista Concesionada de Venezuela (Aucoven). v Venezuela (ICSID Case No. ARB/00/5) www.worldbank.org/icsid/cases/decjuris.pdf - Empresas Lucchetti, S.A. and Lucchetti Peru v Peru, ICSID Case No. ARB/03/4 http://ita.law.uvic.ca/documents/luchetti.pdf 4
- Duke Energy International Peru Investments No. 1, Ltd. v. Republic of Peru, ICSID Case No. ARB/03/28 - CMS Gas Transmission Company v Argentina ICSID Case No. ARB/01/8) - Toto Costruzioni Generali S.p.A. v. Republic of Lebanon, ICSID Case No. ARB/07/12 - Petrobart Ltd. v. Kyrgyz Republic, Award on Merits, 29 March 2005 SelfStudy Questions After you have completed your reading, attempt to answer the following selfstudy questions: 1. Does ratification of ICSID amount to an expression of consent to arbitrate by the host state? 2. Can ICSID jurisdiction be established through a unilateral act of the host State as an agreement in waiting? 3. Does every reference to ICSID arbitration in national legislation amount to an expression of consent to jurisdiction? 4. Is it possible for a host State to withdraw its expression of consent to ICSID jurisdiction contained in national legislation by repealing the legislation? What can an investor do to avoid such a problem? 5. What factors determine the time of consent? Why is the time of consent important? 6. Is it possible to give consent to jurisdiction after the institution of arbitration proceedings? Is it possible to give consent to jurisdiction of ICSID not in general terms but only in respect of certain types of issues? 7. Is it arguable that consent to jurisdiction of ICSID given by a State must be interpreted restrictively since such consent constitutes a derogation from that State s sovereignty? Is it possible for a province or municipality of a host State to become a party to ICSID arbitration? If yes, in what way does a host State control the giving of consent? 5