The International Center for the Settlement of Investment Disputes is an independent structure at the intercontinental level. Directly in his priorities is the procedure for resolving investment issues between a private investor of a foreign state and the government of a country. This service is included in the class of world bank institutions.
Structure
The center under consideration consists primarily of the secretariat, as well as the administrative council. The latter includes one representative from each country that has ratified a contractual agreement on joining ICSID. The secretariat of such an organization usually consists of a secretary general, as well as his deputies and staff. Next, let's talk about what this center does and what its main purpose is.
Secretariat Responsibilities
The International Center for Settlement of Investment Disputes has the following functions:
- Assistance in the creation of an arbitration committee and tribunal, and at the same time a conciliation commission.
- Production of support for organizations, processes, initiation, and hearings.
- Maintaining a list of conciliators and arbitrators.
- Support for the activities of the administrative council.
Any administrative expenses are financed from the budget of the World Bank.
The principle of the ICSID
The ICSID, or the International Center for the Settlement of Investment Disputes, is based on the Convention aimed at resolving investment disputes. According to this document, there are two methods for resolving investment disagreements: reconciliation of parties and arbitration.
Serving private foreign investors, as well as individual governments, is considered paid and voluntary. The Secretary General has the right to determine the amount of remuneration. To date, in many contract papers involving cross-border investment, a reference is necessarily made to the ICSID as an arbitrator if there is any kind of disagreement in terms of investment.
What does this center do?
The International Center for the Settlement of Investment Disputes is engaged in the settlement of such disputes:
- An investment disagreement, for example, regarding compensation for monetary loss in the event of an armed conflict, compliance with the conditions and procedure for payment of compensation against the backdrop of nationalization.
- Settlement of economic and property disputes (for example, between participants in a company with foreign investment and individuals or enterprises of another state).
- Disagreement in investment between government agencies of a particular state and investors.
After the registration of written requests for the desire to initiate the arbitration procedure as soon as possible, a special court is formed, which consists of an odd number of arbitrators appointed by agreement of the parties. Now we learn about the main areas of activity.
Main tasks
The objectives of the Center for Settlement of Investment Disputes under consideration are:
- Conducting the proper conditions for the organization of conciliation or arbitration negotiations between investors of different states and a particular government.
- The implementation of the removal of non-economic obstacles to private investment.
- Providing recommendations and publication of works on legislation on foreign investment.
The supranational arbitration of the ICSID today has become a very important and, one might say, an autonomous institution, due to which, today, the basis of independent international law is being created.
Where does the settlement of disputes begin?
Any contracting country or legal entity that is on the side of the state who wants to start the arbitration procedure, as a rule, makes a written request to the Secretary General of ICSID - the International Center for the Settlement of Investment Disputes. He sends a copy of the application to the opposite opponent.
Rules of appeal and order of consideration
ICSID offers the parties currently very effective means of resolving disputes that may arise in the process of cross-border investment, which makes international financial manipulation more predictable and safe. The procedural rules of the Center for Reconciliation and Arbitration are most often used in an international dispute over investment contracts. It is included by most countries in investment agreements.
The amendment to the rules (provided in 2018) of the ICSID is the most significant addition in the last fifty years. As noted, the development of the new regulation was carried out in collaboration with governments, the public and the private sector. The following changes were made to the rules of appeal and the procedure for considering cases:
- Reduced time with the cost of arbitration. From now on, mainly electronic documentation is valid. New timelines have been introduced for different procedural stages and additional expedited arbitration processes are proposed.
- Judicial practice is transparent, certain arbitral awards with decisions and rulings are published.
- Today, there is an improved practice of disclosing information about a potential conflict of interests of arbitrators.
- The disputing parties are required to declare the financing procedure as soon as the case is registered. Arbitrators are required to disclose all kinds of relationships with sources of cash security.
Rules of Procedure
The Convention considers two main ways to resolve disputes: arbitration and reconciliation of the parties. According to this, there are procedural rules for starting a case, for hearing on issues of reconciliation and arbitration. It is worth noting that servicing the parties at the International Center for the Settlement of Investment Disputes is paid and voluntary. The amount of payment is approved by the Secretary General. At present, many agreements that are concluded in the field of cross-border investment refer to ICSID as an arbitrator, subject to an investment dispute.
In the event that both parties express their consent to resolve the dispute according to the convention, neither of them can unilaterally cancel it. Moreover, consent to arbitration on the basis of the existing Convention completely excludes any alternative remedies. A contracting country may require that any administrative domestic and judicial remedies be fully exhausted before.
The role of the court
The arbitration court, as a rule, is formed as soon as possible after the registration of the request. This body usually consists of one arbitrator or any odd number of such persons who are appointed by agreement of both parties. In the event that for some reason they did not agree on the procedure for their appointment, the court is formed of three arbitrators. In this case, one of them appoints each of the participants, and the third, who acts as the chairman of the court, is determined on the basis of a collective agreement.
Most of them must be citizens of other disinterested states (rather than a contracting country). Against this background, however, this provision does not apply in cases where a single arbitrator or any other member of the court is appointed by agreement of the opponents.
The court resolves the dispute in accordance with the law. In the absence of an agreement, the court takes advantage of the additional opportunity to support a contracting state that is a party to the dispute (including its rules of conflict of laws), and such options of international law that can be applied. The court resolves the issue by a majority vote of all available members.
The arbitral award shall be made exclusively in writing; as a rule, it shall be signed by the voting members of the process. It must be relevant to all matters referred to the court and contain the consideration on which it is based.
Washington Convention
The Washington Convention on the Settlement of Investment Disputes was developed under the supervision of the International Bank for Development and Reconstruction (IBRD). On its basis, the International Center for Investment Disputes was established, the competence of which includes conflict resolution in the field of financial activities.
The mere factor of participation of a state in the Convention does not at all mean its automatic consent to the resolution of international investment disputes based on the provisions of the Convention. The condition for the implementation of the conciliation procedure, as well as the arbitral proceedings, is the existence of a written consent to this from the parties that disagree with each other. The Convention governs the resolution of investment disputes as an arbitration and conciliation procedure.
Under the Washington Convention, States Parties commit themselves to the recognition and enforcement of an arbitral award in accordance with the Convention. More than one hundred different states take part directly in the Washington Convention; Russia signed in 1992, but did not ratify it.
Conclusion
Direct arbitration between the state and the investor has been the subject of controversy for many years. Traditionally, the investment dispute was settled in the process of negotiations between the countries, sometimes during the interstate litigation. It is worth noting that the countries of Latin America did not recognize any foreign arbitration over acts of a sovereign government. Western countries did not differ in other behavior either. For example, their governments almost never agreed to send a concession agreement for the development of mineral resources to international arbitration.
An overly one-sided interpretation of national sovereignty has largely lost its strength over the past two decades due to the activities of the International Center for the Settlement of Investment Disputes. He prepared the legal basis (and at the same time confirmed the political acceptability) of the notions of investment disputes as part of the consideration of a specially developed arbitration international institution with specific rules of procedure.
It is worth noting that, in general, the ICSID, along with other international arbitrations, as a rule, makes a significant contribution to the peaceful settlement of investment disputes, and in addition, it effectively contributes to the progressive development of the intercontinental branch of investment law.