Article 30
SPIL Notes – Modes of Settlement of Investment Disputes (Class 11)
ICSID CONVENTION
Chapter III - Conciliation
Section 1 - Request for Conciliation
Article 28
(1) Any Contracting State or any national of a Contracting State wishing to institute
conciliation proceedings shall address a request to that effect in writing to the Secretary-
General who shall send a copy of the request to the other party.
(2) The request shall contain information concerning the issues in dispute, the identity of
the parties and their consent to conciliation in accordance with the rules of procedure for
the institution of conciliation and arbitration proceedings.
(3) The Secretary-General shall register the request unless he finds, on the basis of the
information contained in the request, that the dispute is manifestly outside the jurisdiction
of the Centre. He shall forthwith notify the parties of registration or refusal to register.
Section 2 - Constitution of the Conciliation Commission
Article 29
(1) The Conciliation Commission (hereinafter called the Commission) shall be constituted as
soon as possible after registration of a request pursuant to Article 28.
(2a) The Commission shall consist of a sole conciliator or any uneven number of conciliators
appointed as the parties shall agree.
(2b) Where the parties do not agree upon the number of conciliators and the method of
their appointment, the Commission shall consist of three conciliators, one conciliator
appointed by each party and the third, who shall be the president of the Commission,
appointed by agreement of the parties.
If the Commission shall not have been constituted within 90 days after notice of registration
of the request has been dispatched by the Secretary-General in accordance with paragraph
(3) of Article 28, or such other period as the parties may agree, the Chairman shall, at the
request of either party and after consulting both parties as far as possible, appoint the
conciliator or conciliators not yet appointed.
Article 31
(1) Conciliators may be appointed from outside the Panel of Conciliators, except in the case
of appointments by the Chairman pursuant to Article 30.
(2) Conciliators appointed from outside the Panel of Conciliators shall possess the qualities
stated in paragraph (1) of Article 14.
Section 3 - Conciliation Proceedings
Article 32
(1) The Commission shall be the judge of its own competence.
(2) Any objection by a party to the dispute that that dispute is not within the jurisdiction of
the Centre, or for other reasons is not within the competence of the Commission, shall be
considered by the Commission which shall determine whether to deal with it as a
preliminary question or to join it to the merits of the dispute.
Article 33
Any conciliation proceeding shall be conducted in accordance with the provisions of this
Section and, except as the parties otherwise agree, in accordance with the Conciliation
Rules in effect on the date on which the parties consented to conciliation. If any question
of procedure arises which is not covered by this Section or the Conciliation Rules or any
rules agreed by the parties, the Commission shall decide the question.
Article 34
(1) It shall be the duty of the Commission to clarify the issues in dispute between the parties
and to endeavour to bring about agreement between them upon mutually acceptable
terms. To that end, the Commission may at any stage of the proceedings and from time to
time recommend terms of settlement to the parties. The parties shall cooperate in good
faith with the Commission in order to enable the Commission to carry out its functions, and
shall give their most serious consideration to its recommendations.
(2) If the parties reach agreement, the Commission shall draw up a report noting the issues
in dispute and recording that the parties have reached agreement. If, at any stage of the
proceedings, it appears to the Commission that there is no likelihood of agreement
between the parties, it shall close the proceedings and shall draw up a report noting the
submission of the dispute and recording the failure of the parties to reach agreement. If
one party fails to appear or participate in the proceedings, the Commission shall close the
proceedings and shall draw up a report noting that party’s failure to appear or participate.
Article 35
Except as the parties to the dispute shall otherwise agree, neither party to a conciliation
proceeding shall be entitled in any other proceeding, whether before arbitrators or in a
court of law or otherwise, to invoke or rely on any views expressed or statements or
admissions or offers of settlement made by the other party in the conciliation proceedings,
or the report or any recommendations made by the Commission.
Chapter IV - Arbitration
Section 1 - Request for Arbitration
Article 36
(1) Any Contracting State or any national of a Contracting State wishing to institute
arbitration proceedings shall address a request to that effect in writing to the Secretary-
General who shall send a copy of the request to the other party.
(2) The request shall contain information concerning the issues in dispute, the identity of
the parties and their consent to arbitration in accordance with the rules of procedure for
the institution of conciliation and arbitration proceedings.
(3) The Secretary-General shall register the request unless he finds, on the basis of the
information contained in the request, that the dispute is manifestly outside the jurisdiction
of the Centre. He shall forthwith notify the parties of registration or refusal to register.
Section 2 - Constitution of the Tribunal
Article 37
(1) The Arbitral Tribunal (hereinafter called the Tribunal) shall be constituted as soon as
possible after registration of a request pursuant to Article 36.
(2a) The Tribunal shall consist of a sole arbitrator or any uneven number of arbitrators
appointed as the parties shall agree.
(2b) Where the parties do not agree upon the number of arbitrators and the method of
their appointment, the Tribunal shall consist of three arbitrators, one arbitrator appointed
by each party and the third, who shall be the president of the Tribunal, appointed by
agreement of the parties.
Article 38
If the Tribunal shall not have been constituted within 90 days after notice of registration of
the request has been dispatched by the Secretary-General in accordance with paragraph
(3) of Article 36, or such other period as the parties may agree, the Chairman shall, at the
request of either party and after consulting both parties as far as possible, appoint the
arbitrator or arbitrators not yet appointed. Arbitrators appointed by the Chairman pursuant
to this Article shall not be nationals of the Contracting State party to the dispute or of the
Contracting State whose national is a party to the dispute.
Article 39
The majority of the arbitrators shall be nationals of States other than the Contracting State
party to the dispute and the Contracting State whose national is a party to the dispute;
provided, however, that the foregoing provisions of this Article shall not apply if the sole
arbitrator or each individual member of the Tribunal has been appointed by agreement of
the parties.
Article 40
(1) Arbitrators may be appointed from outside the Panel of Arbitrators, except in the case
of appointments by the Chairman pursuant to Article 38.
(2) Arbitrators appointed from outside the Panel of Arbitrators shall possess the qualities
stated in paragraph (1) of Article 14.
Section 3 - Powers and Functions of the Tribunal
Article 41
(1) The Tribunal shall be the judge of its own competence.
(2) Any objection by a party to the dispute that that dispute is not within the jurisdiction of
the Centre, or for other reasons is not within the competence of the Tribunal, shall be
considered by the Tribunal which shall determine whether to deal with it as a preliminary
question or to join it to the merits of the dispute.
Article 42
(1) The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed
by the parties. In the absence of such agreement, the Tribunal shall apply the law of the
Contracting State party to the dispute (including its rules on the conflict of laws) and such
rules of international law as may be applicable.
(2) The Tribunal may not bring in a finding of non liquet on the ground of silence or obscurity
of the law.
(3) The provisions of paragraphs (1) and (2) shall not prejudice the power of the Tribunal to
decide a dispute ex aequo et bono if the parties so agree.
Article 43
Except as the parties otherwise agree, the Tribunal may, if it deems it necessary at any stage
of the proceedings,
(a) call upon the parties to produce documents or other evidence, and
(b) visit the scene connected with the dispute and conduct such inquiries there as it may
deem appropriate.
Article 44
Any arbitration proceeding shall be conducted in accordance with the provisions of this
Section and, except as the parties otherwise agree, in accordance with the Arbitration Rules
in effect on the date on which the parties consented to arbitration. If any question of
procedure arises which is not covered by this Section or the Arbitration Rules or any rules
agreed by the parties, the Tribunal shall decide the question.
Article 45
(1) Failure of a party to appear or to present his case shall not be deemed an admission of
the other party’s assertions.
(2) If a party fails to appear or to present his case at any stage of the proceedings the other
party may request the Tribunal to deal with the questions submitted to it and to render an
award. Before rendering an award, the Tribunal shall notify, and grant a period of grace to,
the party failing to appear or to present its case, unless it is satisfied that that party does
not intend to do so.
Article 46
Except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine
any incidental or additional claims or counterclaims arising directly out of the subject-
matter of the dispute provided that they are within the scope of the consent of the parties
and are otherwise within the jurisdiction of the Centre.
Article 47
Except as the parties otherwise agree, the Tribunal may, if it considers that the
circumstances so require, recommend any provisional measures which should be taken to
preserve the respective rights of either party.
BELGIUM VS. SPAIN
CASE CONCERNING THE BARCELONA TRACTION, LIGHT AND POWER COMPANY, LIMITED
(SECOND PHASE) Judgment of 5 February 1970
SUMMARY:
The claim, which was brought before the Court on 19 June 1962, arose out of the
adjudication in bankruptcy in Spain of Barcelona Traction, a company incorporated in
Canada. Its object was to seek reparation for damage alleged by Belgium to have been
sustained by Belgian nationals, shareholders in the company, as a result of acts said to be
contrary to international law committed towards the company by organs of the Spanish
State.
The Court found that Belgium lacked jus standi to exercise diplomatic protection of
shareholders in a Canadian company with respect to measures taken against that company
in Spain.
FACTS:
• The Barcelona Traction, Light and Power Company, Limited, was incorporated in
1911 in Toronto (Canada), where it has its head office. For the purpose of creating
and developing an electric power production and distribution system in Catalonia
(Spain) it formed a number of subsidiary companies, of which some had their
registered offices in Canada and the others in Spain. In 1936 the subsidiary
companies supplied the major part of Catalonia’s electricity requirements.
According to the Belgian Government some years after the first world war
Barcelona Traction’s share capital came to be very largely held by Belgian
nationals but this contention was denied by the Spanish Government.
• Barcelona Traction issued several series of bonds, principally in sterling. The
sterling bonds were serviced out of transfers to Barcelona Traction effected by
the subsidiary companies operating in Spain. In 1936 the servicing of the
Barcelona traction bonds was suspended on account of the Spanish civil war.
After that war, the Spanish exchange control authorities refused to authorize the
transfer of the foreign currency necessary for the resumption of the servicing of
the sterling bonds. Subsequently, when the Belgian Government complained of
this, the Spanish Government stated that the transfers could not be authorized
unless it, were shown that the foreign currency was to be used to repay debts
arising from the genuine importation of foreign capital into Spain, and that this
had not been established.
• In 1948 three Spanish holders of recently acquired Barcelona Traction sterling
bonds petitioned that court of Reus (Province of Tarragona) for a declaration
adjudging the company bankrupt, on account of failure to pay the interest on the
bonds. On 12 February 1948, a judgment was given declaring the company
bankrupt and ordering the seizure of the assets of Barcelona Traction and of two
of its subsidiary companies.
• Pursuant to this judgment, the principal management personnel of the two
companies were dismissed and Spanish directors appointed. Shortly afterward,
these measures were extended to the other subsidiary companies. New shares of
the subsidiary companies were created, which were sold by public auction in 1952
to a newly-formed company, Fuerzas Electricas ~de Cataluina, S.A. (Fecsa), which
thereupon acquired complete control of the undertaking in Spain.
• Proceedings were brought without success in the Spanish courts by various
companies or persons. According to the Spanish Government, 2,736 orders were
made in the case and 494 judgments given by lower and 37 by higher courts
before it was submitted to the International Court of Justice. The Court found that
in 1948 Barcelona Traction, which had not received a judicial notice of the
bankruptcy proceedings, and was not represented before the Reus court, took no
proceedings in the Spanish courts until 18th June and thus did not enter a plea of
opposition against the bankruptcy judgment within the time-limit of eight days
from the date of publication of the judgment laid down in Spanish legislation. The
Belgian Government contends, however, that the notification and publication did
not comply with the relevant legal requirements and that the eight-day time-limit
never began to run.
• Representations were made to the Spanish Government by the British, Canadian,
United States and Belgian Governments as from 19481 or 1949. The interposition
of the Canadian Government ceased entirely in 1955.
• In 1958 the Belgian Government filed with the International Court of Justice an
Application against the Spanish Government seeking reparation for damage
allegedly caused to the Barcelona Traction, Light and Power Company, Limited,
on account of acts said to be contrary to international law committed by organs
of the Spanish State.
 • On 19 June 1962, the negotiations having failed, the Belgian Government
submitted to the court a new application, claiming reparation for the damage
allegedly sustained by Belgian nationals, shareholders in the Barcelona Traction
company. The Spanish Government raised four preliminary objections to the
Belgian Application:
• The Belgian Government was disentitled from bringing the present proceedings
because of the discontinuance of previous proceedings relative to the same
events in Spain;
• The Court does not have basis for its jurisdiction;
• The Belgian Government lacks jus standi to intervene in behalf of Belgian interests
in a Canadian company;
• The claim is inadmissible because local remedies were not exhausted.
• In its first phase of Judgment in 24 July 1964, the Court rejected the first two
preliminary objections.
ISSUE: Whether or not the Belgian Government has jus standi to intervene in behalf of the
Belgian shareholders.
RULING: No.
• The Court first addressed itself to the questioned raised by the third preliminary
objection, of the right of Belgium to exercise diplomatic protection of Belgian
shareholders in a company incorporated in Canada, the measures complained of
having been taken in relation not to any Belgian national but to the company
itself.
• The Court observed that when a State admitted into its territory foreign
investments or foreign nationals it was bound to extend to them the protection
of the law and assumed obligations concerning the treatment to be afforded
them. But such obligations were not absolute. In order to bring a claim in respect
of the breach of such an obligation, a State must first establish its right to do so.
• In the field of diplomatic protection, international law was in continuous
evolution and was called upon to recognize institutions of municipal law. In
municipal law, the concept of the company was founded on a firm distinction
between the rights of the company and those of the shareholder. Only the
company, which was endowed with legal personality, could take action in respect
of matters that were of a corporate character. A wrong done to the company
frequently caused prejudice to its shareholders, but this did not imply that both
were entitled to claim compensation. Whenever a shareholder's interests were
harmed by an act done to the company, it was to the latter that he had to look to
institute appropriate action. An act infringing only the company's rights did not
involve responsibility towards the shareholders, even if their interests were
affected. In for the situation to be different, the act complained of must be aimed
at the direct rights of the shareholders (which was not the case here since the
Belgian Government had itself admitted that it had not based its claims on an
infringement of the direct rights of the shareholders).
• International law had to refer to those rules generally accepted by municipal legal
systems. An injury to the shareholder's interests resulting from an injury to the
rights of the company was insufficient to found a claim. Where it was a question
of an unlawful act committed against a company representing foreign capital, the
general rule of international law authorized the national State of the company
alone to exercise diplomatic protection for the purpose of seeking redress. No
rule of international law expressly conferred such a right on the shareholder's
national State.
• The Court considered whether there might not be, in the present case, special
circumstances for which the general rule might not take effect. Two situations
needed to be studied: (a) the case of the company having ceased to exist, and (b)
the case of the protecting State of the company lacking capacity to take action.
As regards the first of these possibilities, the Court observed that whilst Barcelona
Traction had lost its assets in Spain and been placed in receivership in Canada, it
could not be contended that the corporate entity of the company had ceased to
exist or that it had lost its capacity to take corporate action. So far as the second
possibility was concerned, it was not disputed that the company had been
incorporated in Canada and had its registered office in that country, and its
Canadian nationality had received general recognition. The Canadian
Government had exercised the protection of Barcelona Traction for a number of
years. If at a certain point the Canadian Government ceased to act on behalf of
Barcelona Traction, it nonetheless retained its capacity to do so, which the
Spanish Government had not questioned. Whatever the reasons for the Canadian
Government's change of attitude, that fact could not constitute a justification for
the exercise of diplomatic protection by another government.
 • It had been maintained that a State could make a claim when investments by its
nationals abroad, such investments being part of a national economic resources,
were prejudicially affected in violation of the right of the state itself to have its
nationals enjoy a certain treatment. But, in the present state of affairs, such a
right could only come from a treaty or special agreement. And no instrument of
such a kind was in force between Belgium and Spain.
• It had also been maintained that, for reasons of equity, a state should be able, in
certain cases, to take up the protection of its nationals, in a company which had
been the victim of a violation of international law. The Court considered that the
adoption of the theory of diplomatic protection of shareholders as such would
open the door to competing claims on the part of different States, which could
create an atmosphere of insecurity in international economic relations. In the
particular circumstances of the present case, where the company's national State
was able to act, the Court was not of the opinion that jus standi was conferred on
the Belgian Government by considerations of equity.
• The Court took cognizance of the great amount of documentary and other
evidence submitted by the Parties and fully appreciated the importance of the
legal problems raised by the allegation which was at the root of the Belgian claim
and which concerned denials of justice allegedly committed by organs of the
Spanish State. However, the possession by the Belgian Government of a right of
protection was a prerequisite for the examination of such problems. Since no jus
standi before the Court had been established, it was not for the Court to
pronounce upon any other aspect of the case.
THE ICSID CONCILIATION RULES IN PRACTICE FRAUKE NITSCHKE*
In 1966, the Convention on the Settlement of Investment Disputes Between States and
Nationals of Other States (the ICSID Convention) established an international forum for the
settlement of investment disputes through conciliation and arbitration
ICSID Jurisdiction: Extending ‘to any legal dispute arising directly out of an investment,
between a Contracting State (or any constituent subdivision or agency of a Contracting
State designated to the Centre by that State) and a national of another Contracting Sate,
which the parties to the dispute consent in writing to submit to the Centre.’
II. HISTORICAL CONTEXT AND DRAFTING HISTORY
Between 1949 and 1962, investors and governments requested the World Bank – or its
President Eugene R. Black in his personal capacity – to assist in the settlement of their
disputes either through full scale conciliation, the appointment of arbitrators or referees,
or by assisting parties in finding a mutually agreeable dispute settlement methodology.
Peaceful settlement of investment disputes was recognized as encouraging foreign
investment flows and considered part of the World Bank’s mandate.
President Black however noted that ‘the Bank is not really equipped to handle this sort of
business in the course of its regular routine’ and that ‘a very useful contribution could be
made by some sort of special forum for the conciliation or arbitration of these disputes
Preceding this speech was a note that the World Bank’s General Counsel, Aron Broches, had
sent to the Executive Directors in August 1961, which envisioned the creation of an
‘international machinery’ for the conduct of arbitration and conciliation proceedings
At the outset, conciliation was considered the preferred method for investment dispute
settlement. The drafters considered that the terms ‘conciliation’ and ‘mediation’ could be
used interchangeably, stating that ‘mediation recommends, arbitration decides’.
Ultimately, the term ‘conciliation’ was chosen, and defined as follows
Conciliation and arbitration were envisioned to be available on equal footing. The
relationship between the two led however to some discussion. It was ultimately decided to
give maximum flexibility to the disputing parties, allowing for a choice between arbitration
or conciliation or a combination of both.
Main Difference: A binding award by the arbitral tribunal and a non-binding report by the
conciliation commission.
It became clear that conciliation would be more acceptable than arbitration, especially for
Latin American countries, which considered that affording foreign investors the ‘right to sue
a sovereign state outside its national territory’ 27 would put domestic investors in a position
of inferiority and afford foreign investors greater rights.
III. SIMILARITIES BETWEEN ICSID ARBITRATION AND CONCILAITION
ICSID conciliation and arbitration have a number of similarities. First, consent to ICSID
conciliation or arbitration is binding upon the parties and may not be withdrawn
unilaterally.
The content requirements of such request are the same for conciliation and arbitration.
Conciliation commissions and arbitral tribunals are to be constituted ‘as soon as possible’
following registration of a request.
Parties to conciliations and arbitrations have ample flexibility regarding the method of
constitution and composition of commissions and tribunals. If the parties do not agree on
the number of conciliators or arbitrators and the method of their appointment, the
Convention provides for a default procedure that is identical in arbitration and conciliation
IV. DIFFERENCES BETWEEN ICSID ARBITRATION AND CONCILIATION
In contrast to an arbitral tribunal, which is empowered to decide a dispute in accordance
with the applicable law, the role of a conciliation commission is to clarify the disputed issues
and assist the parties in reaching a settlement.
In terms of outcomes, the Convention envisions that arbitral tribunals will render a final and
binding award dealing with every question submitted.45 Each party shall abide by and
comply with such award.46 By contrast, a conciliation commission is to issue a non-binding
report which may contain recommendations for settlement.
V. ICSID CONCILIATION IN PRACTICE
A. Institution of Conciliation Proceedings
ICSID conciliation is initiated by the filing of a request for conciliation with the Secretary
General. The request provides information concerning the issues in dispute, the parties and
their written consent to ICSID conciliation. A request must be registered by the Secretary-
General unless the dispute is manifestly outside the jurisdiction of ICSID.
B. Constitution of the Conciliation Commission
Conciliator Qualifications: Parties may agree on any candidate to serve as conciliator so
long as this person is ‘of high moral character and recognized competence in the field of
law, commerce, industry or finance, who may be relied upon to exercise independent
judgment.
The ICSID conciliation framework does not exclude candidates with the same nationality as
the disputing parties, nor does it require a party agreement for such appointments.
Method of constitution: Unless the request for conciliation sets forth a party agreement
regarding the number of conciliators and the method of their appointment, the parties shall
communicate any such agreement in this regard to the Secretary-General.
If no agreement on another procedure for constituting the conciliation commission is
reached within 60 days following the registration of the request, either party may inform
the Secretary-General that it chooses the formula provided for in Article 29(2)(b) of the
ICSID Convention, i.e., that the commission shall consist of three conciliators, one appointed
by each party and the third presiding conciliator to be appointed by agreement of the
parties.
Default procedure: If the conciliation commission is not constituted within 90 days following
the registration of the request, or such other period as the parties may agree, either party
may request that the Chairman of the Administrative Council appoint the conciliator(s) not
yet appointed.
C. Function and Role of the Conciliation Commission
Article 34(2) of the Convention provides that the function of the commission is ‘to clarify
the issues in dispute between the parties and to endeavor to bring about agreement
between them upon mutually acceptable terms
The function of an international conciliation commission was further understood to
encompass the examination of ‘the entire dispute, including clarification of the facts and a
survey of both the applicable law and the non-juridical elements’. Any recommendations
by a commission ‘need not be based purely on the application of law’, and ‘relevant legal
principles may be supplementary grounds or may be absent altogether’. The conciliation
experiences of the World Bank in the 1950s, further suggests that the commission’s
function was indeed intended to go beyond a legal analysis when attempting to ‘bring about
amicable settlement on mutually acceptable terms’.
Article 34(1) of the ICSID Convention specifies that the conciliation commission may ‘at any
stage of the proceedings and from time to time’ recommend specific settlement terms to
the parties. Such recommendations may be made orally or in writing and shall set out the
underlying reasons.
Rule 22(2) of the ICSID Conciliation Rules further confers on the conciliation commission the
ability to recommend measures to preserve the status quo, i.e. the conciliation commission
may provide a reasoned recommendation to the parties that they refrain ‘from specific acts
that might aggravate the dispute
D. Parties’ Obligation to Cooperate
Article 34(1) sets out a legal obligation for the parties to ‘cooperate in good faith with the
commission and, in particular, at its request furnish all relevant documents, information
and explanations’.
E. The Conciliation Procedure
Upon the constitution of the conciliation commission, proceedings are deemed to have
begun. Rule 13(1) of the ICSID Conciliation Rules contemplates that the commission’s first
session be held within 60 days following its constitution, unless another period is agreed to
by the parties
The Conciliation Rules envision that the procedure commences with a written statement by
each party to be filed within 30 days of the commission’s constitution or such other timeline
as the president of the commission deems appropriate.
The Conciliation Rules offer ample flexibility to the parties regarding the information they
wish to provide to support their respective statements. Such supporting documentation
may include factual exhibits, legal authorities or written witness statements.
Hearings are expressly envisioned and ‘shall take place in private and, except as the parties
otherwise agree, shall remain secret’
Many alternative dispute resolution methods envision confidential meetings between the
third party neutral and one of the disputing parties
A conciliation commission may, at any stage of the proceeding, visit the place connected
with the dispute, provided that the parties may participate.
F. Objections to Jurisdiction
Pursuant to Article 32(1) of the ICSID Convention, the commission shall be the judge of its
own competence. Any objection by a party to the commission’s competence is to be ‘made
as early as possible’, and no later than the earlier of that party’s first written statement or
the first hearing.
It is clear from Rule 29(5) of the ICSID Conciliation Rules that a finding by the commission
that the dispute is not within the commission’s competence is to be rendered in the form
of a reasoned report
G. Outcomes
The ICSID Convention envisions a conciliation proceeding to conclude with a report by the
commission.
Rule 32 of the ICSID Conciliation Rules specifies the formal content of a conciliation report:
a precise designation of each party and its representatives, the names of the conciliator(s),
a statement regarding the commission’s constitution and the method of constitution
applied, the dates and place of sittings and a summary of the proceeding.
Conciliations may be discontinued pursuant to Regulation 14(3)(d) of the ICSID
Administrative and Financial Regulations for failure of the parties to pay the advances
required to defray the costs of the proceeding.
H. Confidentiality and Disclosure of Information
As noted, Article 35 of the ICSID Convention provides that neither disputing party may
‘invoke or rely on any views expressed or statements or admissions or offers of settlement
made’ in the course of the conciliation unless this is agreed to by the disputing parties
I. Representation, Procedural Languages, Duration and Costs
Parties to ICSID conciliations may be represented or assisted by agents, counsel or
advocates.138 Investors sought representation by external counsel in all conciliations
registered to date; whereas state parties relied on external counsel in all but two
conciliation proceedings.
J. Relationship between ICSID Conciliation and ICSID Arbitration
As mentioned above, ICSID conciliation and arbitration are provided on equal footing, and
it is left to the disputing parties to decide in their consent to ICSID dispute settlement which
of these procedures they wish to pursue, or whether they wish to combine both
Under the ICSID framework, parties could, should they so wish, commence an ICSID
conciliation while an ICSID arbitration is ongoing, and, should such conciliation be
unsuccessful, continue with the arbitration process
VI. AMICABLE DISPUTE SETTLEMENT – AN OUTLOOK
Some commentators have suggested that the ICSID conciliation framework is not
sufficiently flexible and too closely resembles the arbitration framework. 153 While it is true
that the institution of conciliation proceedings as well as the default procedure for the
constitution of the commission is almost identical to the Convention’s arbitration
provisions, the procedure before the conciliation commission is not, and it builds in ample
flexibility.
ICSID is currently working on the amendment of its rules and regulations and has sought
public and state input on potential changes. In the upcoming rules amendment process,
one might envision adjustments to further enhance flexibility of the conciliation framework.
ICSID, with its considerable practical expertise in the administration of investor-state
dispute settlement procedures under its own and other procedural frameworks, appears to
be best suited to provide assistance to states and investors to amicably settle their disputes
– either through the well established arbitration or conciliation route or through investment
mediation or other procedures the parties consider most suitable.
2018 ICSID ANNUAL REPORT
In 2018, ICSID had accomplished;
• 143 individuals from 42 nationalities were appointed to serve as arbitrators,
conciliators or ad hoc committee members in ICSID cases
• The Centre’s flagship journal had published 33 articles by 50 authors
• ICSID administered 279 cases, the most ever in a single year
• Registered 57 new cases, concluded 46, and rendered 25 awards
• Mexico became the 162nd state to sign the ICSID convention
Chapter 1: Membership
• Joining ICSID signals a state’s intent to encourage foreign direct investment and
foster a stable investment climate
• Members have the right to propose and vote on amendments to the ICSID
Convention
• Members may designate the members of the ICSID Panels of Arbitrators
• Contribute to the Centre’s governance through equal representation on the
Administrative Council
• Develop expertise in international investment dispute settlement through
participation in presentations and training courses
Chapter2: Panel of Arbitrators and of Conciliators
• The ICSID Convention requires the Centre to maintain a Panel of Arbitrators and
a Panel of Conciliators
• Each contracting Sate is entitled to designate up to 4 persons to each Panel (Sec.
13)
• They may be nationals or non-nationals of the designating State, with a renewable
term of six years
• The Panels are an important component of dispute settlement
• When the Chairman of the Administrative Council is called upon to appoint
arbitrators, conciliators or ad hoc Committee members under Articles 30, 38 or
52 of the ICSID Convention, these appointees are drawn from the Panels
• In addition, parties often look to the list when making appointments. With a
growing ICSID caseload, it has become increasingly important for States to make
designations to the ICSID Panels
Chapter 3: Caseload Trends
• The primary mandate of ICSID is to provide facilities and services to support the
resolution of international investment disputes
• ICSID administers cases under the ICSID convention, and other rules
• ICID offers a full range of related services, including acting as an appointing
authority, naming consolidation tribunals, administering State-State disputes and
help resolve through mediation
• 2018 got 57 new ICSID cases, compared to 49 in the previous year, 56 of which
were arbitration cases
• The Centre administered a record of 279 ICSID cases, equal to 41% of ICSID’s
lifelong caseload at 676 cases as of June 30, 2018
• 249 were pending as of June 30, 2018, double the number of cases pending
compared to June 2010
• 158 were in English (66%), 12 in Spanish (5%) and 6 in French (2%)
• 65 were conducted in two languages, with English-Spanish the most common
• The most common source of which the parties come to the ICSID is based on BITS
which compromises 60% of arbitration claims with the ICSID
• Investment disputes involved a variety of economic sectors, where oil gas and
mining sectors increased from 10% in 2017 to 21% in 2018
• Electric power remained at 16%, finance at 12%, construction at 11%
• A record of 263 appointments were made to ICSID commissions, tribunals or ad
hoc committees, more than double the number of appointments 10 years ago
• 2/3 of appointments were made by party-appointed arbitrators, while 1/3 was by
the ICSID
• 18 proposals for disqualifications of arbitrators during the fiscal year were
resolved
• One arbitrator resigned, 16 were rejected and one challenge was upheld
• 46 proceedings were concluded in FY 2018, 37 were arbitrations, and 9 were post-
award proceedings
• Of the 37, 24 were decided by a tribunal, and 13 cases were settled or otherwise
discontinued
• Of the 24 cases decided by tribunals, 6 awards declined jurisdiction, 3 rejected all
of the investors’ claims, and 15 upheld investors’ claims in part or in full
• Of the 13 discontinued, 7 were discontinued following a request by both parties,
3 for lack of payment of the required advances, and 1 discontinued at the request
of 1 party, 1 for failure of the parties to act, and 1 the settlement agreement was
embodied in an award
• Generally, the rate of annulment remains low
• From 1971-2000, it was at 13, 2001-2010 at 8%, and since January 2011 is 3%
• 169 sessions or hearings were held in the cases administered by ICSID
• 25 awards and 454 decisions and procedural orders were issued by tribunals and
ad hoc committees.
• The Centre publishes these rulings on its website.
ICSID Rules Amendment Process
This is the fourth amendment to the ICSID rules and this is expected to be the most
comprehensive change. ICSID is then amending the following widely used procedural rules
in investor-state dispute settlement:
1. ICSID Convention Rules and Regulations
2. Additional Facility Rules
3. Administrative and Financial Regulations
4. Institution Rules
The amendment is expected to help in reducing the time and cost of proceedings under
ICSID, while parties would have the option to elect an expedited arbitration process.
Changes are also proposed when it comes to the rules on the appointment and
disqualifications of arbitrators; third-party funding; security for costs; consolidation of
cases; transparency and non-disputing party participation.
Ultimately, this amendment will be presented to the ICSID Administrative Council in 2019
or 2020.
Chapter 4: Institutional Developments
ICSID’s primary mandate is to provide first-class services and facilities to support the
resolution of international investment disputes. To complement this, ICSID provides
capacity building to Member States, shares information with the public and private sector
to promote greater awareness of investor-State dispute settlement (ISDS), and collaborates
with a range of organization; hence, ICSID ensures that users have access to is facilities
around the world.
Membership of ICSID
The ICSID Secretariat maintains an ongoing dialogue with Member States on multiple
matters. Through trainings and meetings with State delegations, ICSID keeps Member
States informed of developments at the Centre and ensures that representatives on the
Administrative Council have the information needed to make governance decisions.
A Member State plays two important functions in ICSID:
1. Designates qualified candidates to the ICSID Panel of Arbitrators and of
Conciliators; and
2. Designates competent courts or authorities for recognition and enforcement of
ICSID Convention awards.
ICSID encourages Member States to designate their full complement of four arbitrators and
four conciliators and to fill vacancies as they arise. They base their designations on a
guidance note published by the Secretariat, which is known as “Considerations for States in
Designating Arbitrators and Conciliators to the ICSID Panels.”
The note addresses the qualifications that Member States may look for in their candidates
and how they can expand on the issue of diversity.
In relation to the actions taken by Member States, ICSID/8 is a document that shows the
different actions a Member State does in accordance with the ICSID Convention.
According to ICSID/8, as of 2018, 93 Contracting States have made such designation.
Cooperation with Other Intergovernmental Organizations
• Intergovernmental processes have been established to facilitate dialogue on ISDS.
These forums provide States and other stakeholders an opportunity to discuss the
effectiveness of dispute settlement mechanisms. Some of the intergovernmental
organizations that help ICSID are the following:
o Organisation for Economic Co-operation and Development (OECD):
ICSID contributed to an OECD consultation on appointing authorities in
investment arbitration.
o UN Commission on International Trade Law (UNCITRAL Working Group)
III: Works with ICSID on the arbitrator codes of conduct and the possible
reform of ISDS.
o UN Conference on Trade and Development (UNCTAD): Provides a forum
for a multi-stakeholder dialogue on international investment law and
policy. It forwards to ICSID the “Reform Package for the International
Investment Regime” which draws on global expertise to propose
systematic, sustainable development-oriented reforms to international
investment agreements (IIAs).
Institutional Cooperation Agreements
• ICSID offers disputing parties the option of holding hearings in any mutually-
agreed upon location and has developed partnerships with numerous arbitration
institutions to complement is ability to offer hearings in World Bank facilities
around the world.
• ICSID has 19 cooperation agreements with other arbitration institutions around
the world.
Training and Capacity Building
• ICSID has developed a variety of training courses to build capacity in and
awareness of investment dispute settlement, which are tailored to the needs of
the participants.
• ICSID also holds events online, which allows a greater number of participants from
around the world to participate for free.
Dialogue on Dispute Settlement Procedure
• International investment law and dispute settlement go hand and hand. It is an
ongoing topic of discussion; hence, the number of incoming reforms, which
includes the ICSID amendment to its institutional rules of procedure.
Discussing Diversity
• Improving diversity and gender balance in international investment dispute
settlement is a priority that ICSID staff spoke about on a number of occasions,
specifically in improving the representation of women in arbitration.
• ICSID, however, is taking steps to promote balanced representation of women
and men on its tribunals and committees.
• In FY18, 263 appointments were made to Commissions, Tribunals, and ad hoc
Committees in 91 cases. These appointments were the most diverse to date in
terms of nationality, gender, and first-time appointees.
• ICSID contributes to diversity by:
o Proposing qualified nominees from different States;
o Encouraging Member States to appoint qualified conciliators and
arbitrators with diversity in mind; and
o Publishing submissions by a variety of authors, with a focus on
expanding the field and showcasing new contributors in ICSID’s flagship
journal – the ICSID review.
Transparency Initiative
• ICSID published over 172 awards, decisions, and orders in 2017 and early 2018.
This initiative enhances public understanding of ICSID proceedings and
investment law.
Connecting with ICSID
• In FY2018, ICSID grew its social media following by launching social media
accounts as a mean to share information on trends and developments at ICSID
and engage with the public.
Publications:
• ICSID Review – A specialized legal periodical devoted exclusively to foreign
investment law and international investment dispute settlement. The ICSID
Review has three published issues and future issues will continue to provide
quality analysis for professions in the field.
• ICSID Caseload (Statistics) – Contains a profile of the ICSID caseload since the first
case in 1972. This is a valuable empirical reference about trends in international
dispute settlement in general and this is also updated every 6 months.
• Collections – Four supplements of its two loose-leaf collections, Investment Laws
of the World and Investment Treaties, which contained investment legislation
from Kosovo, Myanmar, Serbia, Seychelles, and Tunisia. It also has the texts of 58
BITs between 52 countries from 1974 to 2016.
• ICSID Primer – Offers a brief introduction to ICSID, which explains what it does,
how it is structured, and highlights of recent trends as well as its role as the global
leader in international investment disputes.
• ICSID Staff Publications
• ICSID Official Documents
• ICSID Online Database
Young ICSID
• Young ICSID is a network designed to encourage professional development for
young lawyers and to provide a forum to discuss ideas and meet other
professions.
• As of 2018, Young ICSID has over 1,000 members.
• Young ICSID holds events annually and members may participate online to ensure
that physical distance is not a barrier to participation.
Chapter 5: Fifty-first Annual Meeting of the Administrative Council
The ICSID Administrative Council is the governing body of ICSID. Its composition, functions,
and decision-making procedure are in the ICSID Convention, specifically Arts. 4-8.
Art. 4 of the ICSID Convention, however, provides that the ICSID Administrative Council is
composed of one representative for each Contracting State.
In the absence of a contrary designation, the World Bank governor appointed by that State
serves ex officio as its Council Representative.
Each member has one vote on the Administrative Council. By the end of FY2018, 153
Contracting States were represented on the ICSID Administrative Council.
Currently, the Chairman of the Council is Dr. Jim Yong Kim.
Chapter 6: Finance (ICSID Financial Statement)
ICSID’s administrative expenditures were covered by fee income and by the International
Bank for Reconstruction and Development (IBRD) pursuant to the Memorandum of
Administrative Arrangements concluded between the IBRD and ICSID.
Expenditures relating to pending arbitration proceedings are borne by the parties in
accordance with ICSID’s Administrative and Financial Regulations.
In 2018, ICSID has a total net asset of $62,200,949.
Note 1 – Organization
ICSID was established on October 14, 1966 by the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States. ICSID is a member of
the World Bank Group.
ICSID provides facilities for the conciliation and arbitration of investment disputes between
Member States and nationals of other Member States. It also administers certain types of
proceedings between governments and foreign nationals that fall outside the scope of the
ICSID Convention. These include conciliation and arbitration proceedings for the settlement
of investment disputes where either the home or the host country of the investor
concerned is not a Member State.
ICSID also administers investor-State proceedings under other sets of rules such as the
Arbitration Rules of UNCITRAL. Finally, the Centre also acts as appointing authority under
various arbitral rules and international treaties.
ICSID constitutes arbitral tribunals, conciliation commissions, and ad hoc committees as it
may deem fit.
IBRD and the Centre entered into Administrative Arrangements, which provides that except
to the extent that ICSID collects funds from the parties to the proceedings to cover its
administrative expenses, IBRD shall provide reasonable facilities and services to ICSID
without charge.
Note 2 – Significant Accounting Policies
Note 3 – Share of Cash and Investments in the Pool and Fair Value Measurement
Amounts paid to ICSID, but not yet disbursed, are managed by the IBRD, which maintains
an investment portfolio.
Fair value is based upon quoted market prices for the same or similar instruments.
Fair Value Hierarchy are the following:
• Level 1: Highest priority to quoted prices in active markets for identical assets or
liabilities.
• Level 2: Next highest priority to observable market-based inputs or inputs that
are corroborated by market data.
• Level 3: Lowest priority to unobservable inputs that are not corroborated by
market data.
IBRD categorizes overnight time deposits and government obligations as Level 1, while the
other market instruments, government, and agency obligations as Level 2.
Note 4 – Other Assets
Note 5 – Net Assets, Unrestricted
Note 6 – Risks Arising from Financial Instruments
• Credit Risk: The risk that one party to a financial instrument will fail to discharge
an obligation and cause the other party to incur a financial loss. ICSID does not
hold credit enhancements or collateral to mitigate credit risk, and believes that
its Pool, through IBRD, is managed properly.
• Liquidity Risk: The risk that an entity will encounter difficulty in raising liquid funds
to meet its commitments. ICSID regulations require parties to
arbitration/conciliation proceedings to make advance deposits with the Centre to
meet anticipated expenses of such proceedings.
Note 7 – Revenues/Fees from Arbitration/Conciliation Proceedings KPMG, in its opinion, states that the financial statements presented by ICSID are fair in all
material aspects.
ICSID’s total revenue in 2018 is at $50,271,305.

Note 8 – Expenses Related to Arbitration Conciliation Proceedings

ICSID’s total expenses in 2018 is at $38,894,210.

Note 9 – In Kind Contributions

Going back, it is stated that IBRD will provide facilities and services to ICSID without charge.
Therefore, in-kind contributions represent the value of services provided by the IBRD, which
in 2018 is valued at $943,803.

Note 10 – Authorization of Financial Statements

The financial statements studied here reflected the accounts subsequent to August 23,
2018 only.

Independent Auditors’ Report

• The report is simple. It talks about the following points:
o That an independent auditing firm, KPMG, audited ICSID’s financial
position as of June 30, 2018 and the entire year of 2017.
o That KPMG is independent and complies with the ethical requirements.
o That KPMG fulfilled its duties and requirements.
o That the Management of ICSID is responsible for the governance of its
financial statements.
o That KPMG, as the auditor, is responsible to express an opinion on
ICSID’s financial statement based on its audit. That it will exercise
professional judgment and maintain professional skepticism.
o Additionally, that KPMG will conclude on the appropriateness of the
audit’s result based on the audit evidence. That if material uncertainty
exists, KPMG will state it in its report and notify the authorities.
o That KPMG believes it has obtained sufficient and appropriate evidence
for its opinion.