The International Centre for Settlement of Investment Disputes (ICSID) adopted amendments to its rules on 21 March 2022. They are set to come into force on 1 July 2022 and will apply to proceedings commenced after that date. The amendments are the culmination of a consultative process that was launched in 2016, comprised six working papers, and involved extensive consultations with ICSID Member States and stakeholders.[i]
With its amended rules, ICSID aims to “modernize, simplify, and streamline the rules, while also leveraging information technology to reduce the environmental footprint of ICSID proceedings.”[ii] In addition to amending the Regulations and Rules for ICSID Convention Proceedings – including the Administrative and Financial Regulations, Institution Rules, Arbitration Rules, and Conciliation Rules – as well as the ICSID Additional Facility Rules, entirely new procedural rules for mediation and fact-finding have been introduced.
In this article, the most notable amendments to the Regulations and Rules for ICSID Convention Proceedings and the ICSID Additional Facility Rules are introduced.
Expedited arbitration rules
Rules on expedited arbitral proceedings have been adopted in Chapter XII of the ICSID Arbitration Rules. Consent of the parties to expedite the proceedings is required and may be offered at any time.[iii] The parties may opt out of an expedited arbitration at any time by jointly notifying the Tribunal and Secretary-General in writing.[iv]
The tribunal shall hold a first session within 30 days after its constitution.[v] This shall be done remotely unless the parties and the tribunal agree otherwise.[vi] Arbitration Rule 81(1) provides a procedural schedule for expedited proceedings after the first session:
- the claimant files a memorial within 60 days after the first session;
- the respondent’s counter-memorial is filed within 60 days after the date of the filing of the claimant’s memorial:
- neither the memorial nor the counter-memorial shall be longer than 200 pages;
- the claimant files its reply within 40 days after the filing of the respondent’s counter-memorial;
- the respondent’s rejoinder is filed within 40 days after the filing of the claimant’s reply;
- neither the reply nor the rejoinder shall be longer than 100 pages;
- within 60 days after the last written submission is filed, the hearing is held;
- statements of the parties’ costs and written submissions on costs are filed within 10 days after the last day of the hearing;
- the tribunal renders its award as soon as possible and no later than 120 days after the hearing.
The Request for Arbitration, as well as other documents, shall be filed electronically. However, exceptions are provided. The Secretary-General may require the filing of the Request for Arbitration in an alternative format if necessary. As regards other documents, the tribunal has the discretion to order that documents be filed in a different format in special circumstances.[vii]
Third-party is addressed in the new rules for the first time. While third-party funding has been viewed somewhat critically by some in recent years,[viii] the new rules reflect a consensus by adopting a measured approach. Upon registration of the request for arbitration, or immediately upon concluding a third-party funding arrangement after registration, a party is required to file a written notice disclosing the name and address of the third-party funder, who are defined as “any non-party from which the party, directly or indirectly, has received funds for the pursuit or defense of the proceeding through a donation or grant, or in return for remuneration dependent on the outcome of the proceeding.”[ix]
Where the funder is a juridical person, the rules require the notice to include the names of the persons and entities that own and control that juridical person.[x]
Chapter X of the Arbitration Rules, titled “Publication, Access to Proceedings and Non-Disputing Party Submissions” aims to increase transparency in ICSID arbitration proceedings. With the consent of the parties, the Centre shall publish every award, supplementary decision on an award, rectification, interpretation, and revision of an award, and decision on annulment either in full text or in a jointly redacted version.[xi] Notably, the parties are deemed to have consented to publication if neither party objects within 60 days of the award or decision being rendered.[xii] Absent consent of the parties, the Centre may still publish excerpts of the documents, subject to a set procedure being followed that includes the possibility of the parties to object and send comments.[xiii]
Arbitration Rule 65 provides that tribunals shall allow persons in addition to the parties, their representatives, witnesses and experts during their testimony, and persons assisting the tribunal, to observe hearings, unless either party objects. A presumption in favor of open hearings has thus been created.
Non-disputing parties, i.e. any person or entity that is not a party to the dispute, may apply for permission to file a written submission in the proceedings.[xiv] In determining whether to permit a non-disputing party submission, the rules list various factors for the tribunal to consider, including the identity, activities, organization and ownership of the non-disputing party, as well as whether any person or entity will provide the non-disputing party with financial or other assistance to file the submission.[xv]
In addition, the right of non-disputing treaty parties, i.e. a party to a treaty that is not a party to the dispute, to make a submission on the interpretation of the treaty at issue is now explicitly recognized.[xvi]
Award of costs
The amended rules contain a non-exhaustive list of factors for tribunals to consider when making an award on costs. The tribunal shall consider all relevant circumstances, including (a) the outcome of the proceedings; (b) the conduct of the parties during the proceeding; (c) the complexity of the issue; and (d) the reasonableness of the costs claimed.[xvii]
The tribunal does not have to wait until the final award to make an award of costs; an interim decision on costs may be made at any time by the tribunal, on its own initiative or upon a party’s request.[xviii]
Mandatory time limits for the tribunal
In an effort to respond to concerns over the duration of investment arbitrations, the new rules impose mandatory time limits for tribunals to render orders, decisions, and the award.
The time limit for the tribunal to render its final award is 240 days from the date of the last submission in the proceedings.[xix] In case of a preliminary objection for manifest lack of legal merit (Arbitration Rule 41(3)), the award shall be rendered within 60 days after the date of the constitution of the tribunal or the last submission, whichever is later.[xx] The time limit is 180 days after the last submission if the award is rendered on a preliminary objection for lack of jurisdiction (Arbitration Rule 44(3)(c)).[xxi]
The tribunal shall use its best efforts to meet the specified time limits. If the tribunal is not able to comply with the applicable time limit, it shall advise the parties of the special circumstances justifying the delay and the date when it anticipates rendering the order, decision or award.[xxii]
Access to Additional Facility Rules
The scope of ICSID’s Additional Facility Rules has been extended to apply to disputes where the state party and/or the state of the foreign investor is not an ICSID Contracting State.[xxiii] Previously, either the state party or the state whose national was a party to the dispute had to be members of the ICSID Convention.
In addition, regional economic integration organizations (“REIO”) are now able to access the Additional Facility Rules,[xxiv] allowing groups of states like the European Union to be parties to proceedings under the Additional Facility Rules.
ICSID appears to have crafted a well-rounded set of rules and amendments to meet its goals and the needs of users and stakeholders. Time and cost concerns are addressed with various changes that promise to make proceedings more efficient, including mandatory time limits for arbitrators to render awards and orders, as well as the introduction of expedited arbitration rules, which ICSID expects will cut case times in half when adopted by the parties.[xxv] The transparency of proceedings should increase through presumed consent of the parties to the publication of the award after 60 days, as well as provisions on third-party participation. The disclosure requirements of third-party funders will allow tribunals to identify conflicts of interest while maintaining access to justice for investors who would otherwise not be able to bring a claim. The extension of the Additional Facility Rules to REIOs reflects the larger role that these organizations play in investment disputes and the recent trend for states to negotiate investment agreements as part of a regional entity.[xxvi] All in all, the amended rules reflect a commendable attempt to address the criticism that investment arbitration has faced.
[i] ICSID, “About the ICSID Rule Amendments”
[ii] ICSID, “ICSID Rules and Regulations Amendment”
[iii] ICSID Arbitration Rules, Rule 75(1).
[iv] Id., Rule 86(1).
[v] Id., Rule 80(1).
[vi] I Id., Rule 80(2).
[vii] Id., Rule 4(2); ICSID Institution Rules, Rules 4(1).
[viii] See, for example, ICSID, “Proposals for Amendment of the ICSID Rules — Working Paper #1 (Annotated Version)” (ICSID Secretariat, Volume 3, 2 August 2018) p. 131.
[ix] ICSID Arbitration Rules, Rule 14(1) and (2).
[x] Id., Rule 14(1).
[xi] Id., Rule 62(1) and (2).
[xii] Id., Rule 62(3).
[xiii] Id., Rule 62(4).
[xiv] Id., Rule 67(1).
[xv] Id., Rule 67(2).
[xvi] Id., Rule 68(1).
[xvii] Id., Rule 52(1).
[xviii] Id., Rule 52(1).
[xix] Id., Rule 58(1)(c).
[xx] Id., Rule 58(1)(a).
[xxi] Id., Rule 58(1)(b).
[xxii] Id., Rule 12.
[xxiii] ICSID Additional Facility Rules, Rule 2(1)(a).
[xxiv] ICSID Additional Facility Rules, Rule 2(1)(c).
[xxv] ICSID, “ICSID Administrative Council Approves Amendment of ICSID Rules” (News Releases, 21 March 2022) <https://icsid.worldbank.org/news-and-events/communiques/icsid-administrative-council-approves-amendment-icsid-rules>.
[xxvi] Maria José Alarcon and Esmé Shirlow, “Interview with Meg Kinnear, Secretary-General of ICSID” (Kluwer Arbitration Blog, 22 March 2022) <http://arbitrationblog.kluwerarbitration.com/2022/03/22/interview-with-meg-kinnear-secretary-general-of-icsid/>.