The International Centre for Settlement of Investment Disputes (ICSID) as the name suggests is a dispute resolution centre for international investments. It operates through a specific set of rules, which are known as the ICSID Convention Rules and Regulations. These rules have been in effect since 1967 and have been amended through four rounds of rule changing, last of which was in April, 2016. Now, twelve years after its last major amendment, on 3rd August of 2018, the ICSID has put forth a proposal for an extensive revision to its rules.
ICSID member states and the public have been invited by it to submit their comments on the proposal until December 28, 2018. For this proposal to be put in effect as an amendment, two-third of the ICSID member states need to approve them. Below we have provided a brief of what is expected to be changed through this proposal and in what manner. Regardless of whether the proposal is approved, it could prove to be helpful to understand the current scenario of the sector of investment arbitrations.
- Arbitrator Appointment and Challenges
Unless the parties specifically advise the Secretary on the constitution of the tribunal, the default rule of two arbitrators and a president would apply after 60 days of registration of the dispute. Further, an enhanced and a much more elaborate arbitrator declaration form has been provided through the proposal to identify any potential conflict that might be occur. The process for challenging the arbitrators has been modified as well providing an expedited schedule for the challenge.
- Timeline for Award
The timeline for producing the arbitral award has been changed to better suit the practices of the sector. The proposal requires the award to be rendered within 60 days of the last submission on an application for manifest lack of legal merit, within 180 days of the last submission on a preliminary objection and within 240 days of the last submission on all matters.
- Electronic Filing
The rules go on to provide for complete electronic filing of all the documents unless there is a specific reason for filing the same on paper.
- Increased Transparency
The awards are published with the consent of the parties but if the parties have failed to object to such publication within 60 days, then the consent is deemed to have been given. However, if a party objects, the rule permits publication of legal excerpts of the award with whatever redaction the parties agree on.
- Security for Costs
The tribunals are now empowered to order security for costs through the proposed rules. It goes on to state that the tribunal must consider the relevant party’s ability to comply with an adverse decision on costs and any other relevant circumstances. A party’s failure to comply with an order compelling security for costs could lead to a tribunal suspending the arbitration for 90 days and, subsequently ending the arbitration.
- Third-Party Funding
This change was predictable considering how the arbitration sector was progressing and how third-party funding was heavily under-regulated. The proposal puts forth an obligation of the parties to disclose whether they are being funded by a third party and what the source of that funding is. This obligation is valid throughout the proceedings, no matter when the third-party funder is sought. Further, the arbitrators would be required to disclose any relation they might have with the third-party funders.
The above changes display one thing, that ICSID is engaging in an extensive rule-revision process to try and address a number of pressing issues in the investor-state arbitrations. The proposal simplifies the language of the rules and aims to enhance efficiency while resolving contentious issues. The vote on the proposal is expected to be in 2019 or 2020, so until then we cannot truly know the impact of this on the sector. But, practitioners would probably show a positive approach to the proposal due to the much needed changes that are sought through it.