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International Centre for Settlement of Investment Disputes - Description [2004] PICTRes 2 (26 February 2004)

International Centre for Settlement of Investment Disputes

The International Centre for Settlement of Investment Disputes (ICSID) was established in 1965 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (which has been ratified to date by 136 states), to facilitate the settlement of disputes arising between states and foreign private investors by way of arbitration and conciliation.

Moreover, since 1978, ICSID's reach has been extended by the Additional Facility for the Administration of Conciliation, Arbitration and Fact-Finding Procedures (Additional Facility). The Additional Facility enables utilization of ICSID arbitration and conciliation facilities by states not parties to the ICSID Convention (or nationals of such states) and in regard to disputes other than investment disputes. The Additional Facility also provides interested parties with the ability to engage in fact-finding.

ICSID operates under the institutional framework of the World Bank group in Washington, D.C. Like the Permanent Court of Arbitration or the International Chamber of Commerce, ICSID is not a standing court, but rather a permanent administrative structure supporting and facilitating ad hoc dispute settlement procedures. The Centre maintains a list of potential arbitrators and conciliators for parties to choose from; and provides a host of registry and secretariat services.

Provisions on ICSID arbitration  are commonly found in investment contracts between governments of member countries and investors from other member countries. Advance consent by governments to submit investment disputes to ICSID arbitration can also be found in about twenty investment laws, and in over 900 bilateral investment treaties. Until the mid-1980s, jurisdiction of ICSID's arbitrations was mostly founded upon a compromissory clause contained in an investment contract or similar instrument. Since then, an increasing number of cases have been arbitrated under ICSID's aegis, on the basis of consents to ICSID arbitration contained in investment laws and treaties.

Recourse to conciliation and arbitration under the ICSID Convention is entirely voluntary. No contracting state or national of such a state is obliged to resort to conciliation or arbitration without having consented to do so. However, once the parties have consented, they are bound to carry out their undertaking and, in the case of arbitration, to abide by the award. Moreover, all contracting states, whether or not parties to the dispute, are required to recognize awards rendered pursuant to the ICSID Convention as binding and to enforce the pecuniary obligations imposed thereby. Such awards are not subject to any appeal or to any other remedy except those that, like the remedy of annulment, are provided for in the Convention itself.

In recent years the number of cases submitted to ICSID, both under the Convention and cases brought under the Additional Facility, has increased significantly. To date, more than 60 cases have been submitted to ICSID (mostly for arbitration), involving more than 30 different governments. Almost invariably the plaintiff is a foreign private investor, and the defendant a state, very often a developing country. While in the early years, most cases concerned performance of investment contracts by the state, nowadays, most concern claims over such events as civil strife, alleged expropriation or denials of justice, and actions of the state political subdivisions (e.g., regions or federated states).

PICT Data obtained from the Project on International Courts and Tribunals (PICT)

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