BACKGROUND INFORMATION ON THE INTERNATIONAL CENTRE FOR

SETTLEMENT OF INVESTMENT DISPUTES (ICSID)

1. What is ICSID?

ICSID is the leading institution for the resolution of international investment disputes. It
was established under the Convention on the Settlement of Investment Disputes between
States and Nationals of Other States (the ICSID Convention), which is a multilateral
international treaty. The ICSID Convention entered into force on October 14, 1966. There
are currently 158 signatory States, and 147 Contracting States have ratified the Convention.

The primary purpose of ICSID is to provide facilities for the conciliation and arbitration of
international investment disputes. Arbitration and conciliation under the Convention are
entirely voluntary and require consent of both the investor and State concerned. Once such
consent is given, it cannot be withdrawn unilaterally and it becomes a binding undertaking.

ICSID is a neutral facility and it does not decide the cases. The independent arbitrators and
conciliators appointed to each case hear the evidence and determine the outcome of the
dispute before them.

2. What is Investor-State Dispute Settlement?

Investor-State dispute settlement (ISDS) is a form of resolution of disputes between foreign

investors and the State that hosts their investment. ISDS allows foreign investors to initiate
dispute settlement proceedings against a host State. Both the foreign investor and the host
State must consent to ISDS before a proceeding may commence. Usually, the consent of the
State is contained in international investment agreements between States. These
agreements can be bilateral (between 2 countries), or multilateral (between more than 2
countries). In many cases, free trade agreements contain investment chapters that provide
for ISDS in the event of an investment-related dispute. There are currently more than 2,700
international agreements providing for ISDS. Consent to ISDS can also be found in the
domestic investment laws of some States and in specific contracts between a foreign
investor and a State (or a State-affiliated agency).

As the chart below shows, the majority of ICSID cases to date have been initiated on the
basis of ISDS provisions in an investment treaty. The remainder have been based on ISDS
provisions in domestic investment legislation or contracts.
 BASIS OF CONSENT INVOKED TO ESTABLISH ICSID JURISDICTION IN CASES
REGISTERED UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY
RULES (TO JUNE 30, 2012)

Agreement between
the United States of ASEAN Agreement for
America and the the Promotion and
Sultanate of Oman on Energy Charter Treaty Protection of
the Establishment of a (ECT) Investments
Free Trade Area 4% 1%
(Oman-U.S. FTA)
1%

North American Free

Trade Agreement
(NAFTA)
4%
Investment Law of the
Host-State Bilateral Investment
6% Treaty (BIT)
63%

Investment Contract
between the Investor
and the Host-State
20%

Dominican Republic-
United States-Central
America Free Trade
Agreement (DR-CAFTA)
1%

3. How is ICSID Connected to the World Bank?

ICSID is an independent international institution and is one of the five organizations that
make up the World Bank Group.

The governing body of ICSID is the ICSID Administrative Council. Each Member State has
one seat on the ICSID Administrative Council and each Member State has one vote. The
Administrative Council plays no role in individual cases.

The ICSID Secretariat is separate from the ICSID Administrative Council and administers
individual disputes on a day-to-day basis. It consists of roughly 45 staff members from

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more than 29 different countries. The ICSID staff are expert in ICSID procedure and assist
the parties and tribunals to ensure an expeditious and cost-effective process.

ICSID cases are decided by neutral, expert arbitrators on the basis of the facts and law
presented by each of the parties. These proceedings are separate and independent from the
work of the World Bank Group.

4. How Does ICSID Facilitate the Settlement of Investment Disputes?

ICSID does not conciliate or arbitrate the disputes. Rather, it provides the institutional
facility and procedural rules for independent conciliation commissions and arbitral
tribunals constituted in each case.

The ISDS provisions in international agreements usually allow the investor to select the
applicable procedural rules. These may include the ICSID Convention and Rules, the ICSID
Additional Facility Rules, the rules of the United Nations Commission on International
Trade Law (UNCITRAL), or other arbitration rules.

ICSID has two sets of procedural rules that may govern the initiation and conduct of
proceedings under its auspices. These are: (i) the ICSID Convention, Regulations and Rules;
and (ii) the ICSID Additional Facility Rules. ICSID also administers investment cases under
other rules such as the UNCITRAL rules.

5. Who Decides ICSID Arbitrations?

ICSID arbitration proceedings are decided by independent and impartial tribunals. ICSID
arbitrators are esteemed international jurists from all over the world. In most instances,
the tribunals consist of three arbitrators: one arbitrator appointed by the investor, one
arbitrator appointed by the State, and the third, presiding arbitrator appointed by
agreement of both parties. When a party fails to make an appointment or when the parties
do not agree on a tribunal president, ICSID may be asked to make the missing
appointments.

ICSID maintains a list of individuals who may be named as arbitrators in ICSID proceedings.
This list is known as the ICSID Panel of Arbitrators. Each ICSID Member State may
designate four arbitrators to the Panel. The ICSID Panel provides a source from which the
parties to ICSID arbitrations may select conciliators and arbitrators, but parties may select
any person they wish.

7. What are the Usual Steps in an ICSID Arbitration Proceeding?

An ICSID Convention arbitration is initiated by submitting a Request for Arbitration to the

Secretary-General of ICSID. The Request outlines the facts and legal issues to be addressed.

The next procedural step is constitution of the arbitral tribunal. Proceedings are deemed to
have begun once the tribunal is constituted. The tribunal holds a first session, typically
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within 60 days of its constitution. Preliminary questions of procedure are dealt with by the
tribunal at the first session.

Subsequently, the proceeding usually comprises two distinct phases: a written procedure
followed by in-person hearings. After the parties present their case, the tribunal
deliberates and renders its award.

Once an ICSID Convention award is rendered, it is binding and not subject to any appeal or
other remedy except those provided by the Convention. The Convention allows the parties
to request a supplementary decision or rectification of the award, or to seek the post-
award remedies of annulment, interpretation or revision.

STEPS IN AN ICSID CONVENTION ARBITRATION

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8. How Many Cases Are At ICSID?

The ICSID caseload has increased in the last 15 years. This reflects the substantial growth
in cross-border investment in the last two decades and the increased number of
international investment agreements offering ISDS. The graph below shows the ICSID
caseload from 1972 to June 30, 2012.

NUMBER OF CASES REGISTERED UNDER THE ICSID CONVENTION AND ADDITIONAL

FACILITY RULES BY CALENDAR YEAR (1972 – JUNE 30, 2012)
40
4 4
35
1 1 1
30
2 1
25 2
6 1 2 1
20 1 2
4
32 33
15 30

2 3 2 3
21
24
21 23 25
10 18 20
14 15
5 1 1 8 8 8 9
1
4 2 2 2 4 4 2 2 3 3
0 1 1 1 1 1 1 1

to June 30, 2012

1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
ICSID Convention Arbitration Cases ICSID Convention Conciliation Cases

ICSID Additional Facility Arbitration Cases ICSID Additional Facility Conciliation Cases

9. What are the Outcomes of ICSID Arbitration Cases?

Roughly 40% of ICSID cases are settled or discontinued before a final ruling is made.
In addition, where tribunals made final awards, they partially or fully upheld the investors’
claims in roughly 50% of the cases to date. These outcomes are shown in the chart below.

OUTCOMES IN DISPUTES DECIDED BY ARBITRAL TRIBUNALS IN ICSID

CONVENTION AND ADDITIONAL FACILITY CASES (TO JUNE 30, 2012)

Award declining Award dismissing

jurisdiction all claims
22% 29%
Award deciding
that the claims are
manifestly without
legal merit
1%

Award upholding
claims in part or in
full
48%

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10. Where are ICSID Proceedings Held?

Parties may agree to hold an ICSID proceeding in any location. To date, most ICSID hearings
have been held at World Bank facilities in Washington, D.C. or Paris, France. ICSID also has
standing arrangements to hold hearings at the following arbitration centres:

 Australian Centre for International Commercial Arbitration at Melbourne;

 Australian Commercial Disputes Centre at Sydney;
 Centre for Arbitration and Conciliation at the Chamber of Commerce of Bogota;
 German Institution of Arbitration;
 Gulf Cooperation Council Commercial Arbitration Centre at Bahrain;
 Hong Kong International Arbitration Centre;
 Maxwell Chambers, Singapore;
 Permanent Court of Arbitration at The Hague;
 Regional Arbitration Centres of the Asian-African Legal Consultative Committee at
Cairo, at Kuala Lumpur and at Lagos;
 Singapore International Arbitration Centre;

Where suitable, hearings and sessions are conducted by telephone or video conference,
reflecting the Centre’s continuing efforts to reduce the cost and increase the efficiency of
proceedings. About 40% of all sessions and hearings in the last year were conducted in this
manner.

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11. Where can Further Information about ICSID be Found?

General and statistical information about ICSID can be found on its website at
http://www.worldbank.org/icsid. In addition, ICSID is unique in making caseload
information widely available. Under the ICSID Convention, Rules and Regulations, the
Centre publishes information on the registration and termination of cases, along with the
procedural details of cases, the subject matter of the dispute, the names of the arbitrators
determining the dispute, which party appointed them, the names of counsel for the parties,
and the awards or excerpts of awards issued in each case. This information can also be
found on the ICSID website.

Updated to June 30, 2012