International Center for Settlement of Investment Dispute

1. International Center for Settlement of Investment Dispute

2. Issues Covered • Introduction • Regulatory and institutional framework • Dispute resolution options • CME/Lauder v Czech Republic • Maffezini v Spain; Salini v Morocco • Himpurna v Indonesia • Way forward

3. Foreign Direct Investment

4. Infrastructure • International instruments • Multilateral Treaties, e.g. ICSID, NAFTA, Energy Charter • Bilateral Treaties, e.g. BITS; FTA • Instruments, e.g. UNCITRAL Rules, ICSID Additional Facility, ICC Rules • National laws • Investment protection laws • Trade policy documents • Constitutional law implication

5. ICSID

6. ICSID general • Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965 • ICSID Convention • Washington Convention • Entered into force 14 October 1966 • Large international membership, including several “rogue states” • 139 members / 154 signatories

7. Ratifications • After 20 ratifications • Benin, Burkina Faso, Central African Republic, Chad, Congo, Cote d’Ivoire, Gabon, Ghana, Iceland, Jamaica, Madagascar, Malawi, Malaysia, Mauritania, Netherlands, Nigeria, Sierra Leone, Tunisia, Uganda and USA • Status of ICSID Convention • Ratification 139 – Afghanistan to Zimbabwe • Signature 154

8. Qualification • Arbitration only available if • DISPUTE INVOLVES A STATE PARTY OR • A STATE DESIGNATED AGENCY • Only investors of Member States can use ICSID Mechanism • Public International Law of State Responsibility

9. Increased case load • Marked increase in number of cases • Even current figures do not fully reflect the significant number of States that have included reference to the ICSID mechanism • in Bilateral Investment Treaties or • National legislation • What of the future?

10. Cases pending before ICSID • More than 82 cases • 33 cases against Argentina • 50 cases against other states • Recent European aationalities • European parties (respondent) include Slovenia, Hungary, Albania, Poland, Estonia, Bulgaria, Ukraine • Claimants are Italian, Finish, German, Greek, French, Dutch companies

11. Conciliation Option • ICSID Convention Chapter III • Parties can apply to Secretary-General seeking conciliation proceedings • Include nature of dispute and consent or parties • Conciliation Commission • One or three or uneven number • Absent any agreement three members shall be appointed • Not final and binding and information cannot be used in any subsequent arbitration/litigation

12. Additional Facility • Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes (Additional Facility Rules) 27 September 1978 • www.worldbank.org/icsid/facility-archive/1.htm • Initially introduced for a temporary period of 5 years • Updated and revised 1 January 2003

13. Scope of additional facility • conciliation or arbitration proceedings for the settlement of investment disputes arising between parties one of which is not a Contracting State or a national of a Contracting State; • conciliation or arbitration proceedings between parties at least one of which is a Contracting State or a national of a Contracting State for the settlement of disputes that do not directly arise out of an investment; and • fact-finding proceedings

14. ICSID Jurisdiction • Article 25 Washington Convention “…any legal dispute arising directly out of an investment, between a Contracting State…and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre.” • Legal Dispute and Investment not defined in Convention

15. Consent • ARTICLE 25 When the parties have given their consent, no party may withdraw its consent unilaterally • CONSENT is cornerstone of ICSID jurisdiction • It must be in writing • It must exist at time Centre receives request • It may be included in concession agreement, a compromis or national legislation • CONSENT of both parties do not have to be in a single instrument

16. Autonomous regime • Article 53 Washington Convention “(1) The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each partyshall abide by and comply with the terms of the award…” • Article 54 Washington Convention • Contracting States will recognise an award as if it was a final judgment of a court in that State

17. No recourse to courts

18. Investment – typical features • The project should have a certain duration • There should be a certain regularity of profit and return • There is typically an element of risk for both sides • The commitment involved would have to be substantial • The operation should be significant for the host State’s development