On July 1, 2022, amendments to the International Centre for Settlement of Investment Disputes (ICSID) rules and regulations came into effect.
ICSID, one of the organizations of the World Bank Group, is an institution for resolving investor-state disputes. A number of states, including Canada, are parties to the international convention which established ICSID, and many international investment treaties provide for ICSID as a forum for investor-state dispute settlement.
The amendments aim to make dispute resolution more efficient, transparent and accessible, and include the notable changes below.
REDUCED TIME AND COSTS
The ICSID Arbitration Rules have been updated to reduce the time and costs of arbitrations, including making electronic filing of documents the default rule unless circumstances require otherwise.
The Arbitration Rules now also require an arbitral tribunal to hold at least one case management conference to identify uncontested facts and streamline the issues. Previously, such a case management conference was not mandatory under the Arbitration Rules, and was to be held at the request of the ICSID Secretary-General or at the discretion of the President of the tribunal. The Arbitration Rules also create a procedure for early determination that a claim is manifestly without legal merit, with the aim of dismissing unmerited proceedings early and reducing costs.
The updated Arbitration Rules also allow parties to request that a question be addressed separately or at a later phase of the proceeding without the need for a complete hearing, and parties may agree to consolidate or coordinate multiple ICSID arbitrations to avoid a duplication of efforts where there is considerable overlap of issues between parties in different arbitrations.
The updated Arbitration Rules allow parties to agree to an expedited procedure with significantly shorter timelines for key steps in the arbitration process.
DISCLOSURE OF THIRD-PARTY FUNDING
The updated Arbitration Rules now require parties to disclose any third-party litigation funding received, including the identity of the funder(s). This disclosure obligation continues throughout the proceedings.
SECURITY FOR COSTS
At the request of a party, the tribunal may order any party asserting a claim or counterclaim to provide security for costs. If a party fails to comply with an order for security for costs, the tribunal may suspend or discontinue the proceeding.
Absent an objection within 60 days of the issuance of an award, parties are now deemed to consent to its publication. Even where consent is not given, ICSID may publish excerpts of awards. There are also new Arbitration Rules relating to the publication of orders and documents filed in proceedings, as well as for persons other than parties to observe hearings.
There are now detailed Arbitration Rules on how third parties to the dispute or treaty may make submissions to the tribunal. These procedures reflect the precedential effect that ICSID awards may have on third parties.
MEDIATION AND FACT-FINDING RULES
ICSID also introduced updated mediation rules, which may be used independently of or in conjunction with arbitration proceedings. Mediation remains voluntary and may be terminated at any time by consent of the parties or the withdrawal of any party (unless the remaining parties agree to continue without the withdrawing party).
The 2022 amendments also saw the introduction of a new set of Fact-Finding Rules. These rules are designed to be a pre-dispute mechanism for parties to have a neutral party determine the facts, enabling them to assess the merits of their positions prior to commencing an expensive dispute resolution process.
BROADER ACCESS TO ICSID
The ICSID Additional Facility Arbitration Rules are now available even where none of the parties to the dispute is an ICSID contracting state or a national of one. Previously, these procedures were only available in situations where at least one of the parties to the dispute was an ICSID contracting state or a national of one. They are also available to regional economic integration organizations like the European Union.
The amendments are the result of a years-long process that involved input from states, lawyers and business representatives, among others, and are a welcome step in the continuing modernization of arbitration processes.
For more information, please contact:
Iris Antonios +1-416-863-3349
Imad Alame +1-416-863-2237
Sahil Kesar +1-416-863-2450
or any other member of our the Arbitration or Investment Treaty Arbitration groups.
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