Time for review: what did 2012 mean for Investor State Arbitration? by Laura Lozano

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Following the ICSID Secretariat annual publication of “The ICSID Caseload Statistics Issue 2013-1[1]” covering data of the administered cases, FACES also wants to highlight the most relevant facts of the Investor State Arbitration community during the previous year in order to see whether Investor State Arbitration is still a growing ADR tendency or not. Therefore, this post briefly analyzes the ICSID caseload and significant events of 2012.

The ICSID Secretariat registered 50 cases during 2012, from which 40 were ICSID Convention Arbitration Cases, 8 ICSID Additional Facility[2] Arbitration Cases and 2 ICSID Additional Facility Conciliation. [3] Absolutely no ICSID Convention Conciliation Cases were registered (to date, only 7 cases in the history of ICSID have been conciliation cases) however for the first time, 2 ICSID Additional Facility Conciliation cases were registered. These figures might imply that member states that go to ICSID are starting to use conciliation which is good news for ADR professionals. Besides, the publication of the New IBA Rules for Investor State Mediation (http://www.faces-adr.org/adr-chatroom/new-iba-rules-for-investor.html) might imply a higher use of mediation for the current 2013.

The consent of arbitration invoked to establish ICSID jurisdiction, concept analyzed in the ICSID Caseload Statics Issue, is mainly based in Bilateral Investment Treaties (hereinafter BITs).[4] However, important successes along 2012 should be highlighted.  For instance, the Australian Government announced that it will no longer include investor–State dispute resolution provisions in future bilateral and regional trade agreements, choosing to rely instead on its domestic courts, in fact it seems more a Latin American policy than an Australian policy. Furthermore, the Republic of South Africa took steps to phase out a whole string of BITs with various European trading partners. By contrast, we heard that China and U.S. were negotiating BITs on multiple fronts. Additionally, the U.S. published a revised model U.S. BIT, not very different from the 2004 Model. Whereas no changes regarding the substantive investment law protections and the arbitration clauses were introduced, new transparency requirements for the publication of laws were added in the new 2012 model U.S. BIT. Nevertheless, whether BITs are invoked to establish ICSID jurisdiction or not, bearing in mind NAFTA, ECT, ASEAN Agreement for the Promotion and Protection of Investments and many other ways of invoking ICISD jurisdiction, the end of ICSID’s usefulness is still far away.

Most interesting, at the European level, was the decision of the Frankfurt Court of Appeals on 10 May 2012[5], in which for the first time it was stated that arbitration provisions contained in intra-EU BIT do not conflict with the EU law, therefore investors can bring claims against the host state on such provisions.  The controversial debate that arbitration clauses in BIT between EU Member states were in conflict with EU law and consequently inoperative, is finally over, not leaving room for further debates.

Once again, it was South America as a Party State that brought the largest amount of registered cases under the ICSID Convention and Additional Facility Rules.  Especially remarkable was the fact that Venezuela exited from ICSID [6]following other member states, Bolivia and Ecuador. Up until today there are 28 pending cases under ICSID and whether the Venezuela government will fulfill those awards is still an uncertainty.  Likewise, Argentina and Nicaragua are threatening to exit ICSID too. Additionally, and not very surprisingly the oil, gas and mining sector was the most represented sector.[7]

Regarding the appointment of arbitrators, the western European arbitrators were the ones most appointed. We could analyze ICSID caseload however this is not the purpose of the review. What we have seen from 2012 is that within the investor state community there is still room for ADR.  We wish that member states propose mediation, conciliation or any other ADR tools that might benefit the parties of investor state arbitration, and that even could avoid the departure of members from ICSID. We will see what 2013 brings to the investor state community…

 

 


[1] Statistics 2012 published January 25,https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=CaseLoadStatistics

[2] A case can be processed under the ICSID Additional Facility Rules if one of the parties to the dispute is either a non contracting state or a national of a contracting member state.

[3] See The ICSID  Caseload Statistics https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=CaseLoadStatistics

[4] According to ICSID Caseload Statistics, 63% of the cases invoked ICSID Jurisdiction under BITs.

[5] Eureko v. Slovakia (case no. 26 SchH 11/10 ). Slovakia applied to the Frankfurt court as the court at the seat of the arbitration to decide on the arbitral tribunal’s jurisdiction, however the Frankfurt Court of Appeals held that Slovakia’s challenge was unfounded.

[6] Venezuela Submits a Notice under Article 71 of the ICSID Convention, ICSID NEWS RELEASE, January 26, 2012

[7] According to ICSID Statistics the energy, gas and mining sector represented a 28% of the registered cases.


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