ICSID recently amended its arbitration rules to mandate certain disclosures, increase transparency and reduce costs, among other things. The rules were negotiated over the past few years. They come into effect on July 1, 2022, which means that they will apply to ICSID arbitrations registered on or after that date.
Some of the notable changes include:
- Parties must disclose the identity of third-party funders. The amended rules oblige parties to disclose the identity of third-party funders up to the level of beneficial owners. The disclosure obligation applies throughout the proceeding. The Secretary-General will provide the name of an involved funder to arbitrators proposed for appointment to avoid conflicts of interest (Updated Backgrounder on Proposals for Amendment of the ICSID Rules). The arbitrators may order parties to provide additional information (Rule 14).
- The tribunal may order security for costs. Either party can request security for costs. In deciding such requests, the tribunal must consider whether a party has the ability and willingness to comply with an adverse decision on costs, the impact that providing security may have on a party’s ability to bring a claim or counterclaim, the conduct of the parties and any other relevant circumstances, including the existence of third-party funding (Rule 53).
- Expedited proceedings are now available. Parties may opt to use newly drafted rules for expedited proceedings featuring a shortened procedural calendar for the exchange of written submissions and a 120-day deadline from the end of the merits hearing to issue an award. Parties may also agree to opt out of an expedited proceeding. The expedited rules will be particularly helpful in providing access to investment arbitration for small- and medium-sized companies. Unlike the expedited procedures provided by other institutional rules, the ICSID procedure is available to claims of all sizes (Rules 75-86).
- The proceedings are more accessible to the public. Under the amended rules, ICSID will automatically publish all procedural decisions and orders. With the parties’ consent, ICSID will publish all party submissions, supporting documents and the final award. Regarding the final award, the parties will have 60 days to object to publication; otherwise, consent is deemed granted. Hearings will be open to the public unless a party objects (Rules 62-66).
- Non-disputing treaty parties can participate in the proceedings. The amended rules add a provision allowing for the participation of non-disputing treaty parties. It was inspired by recent investment treaties that confer this right to non-disputing state parties to the treaty, such as USMCA. Under the new rule, non-disputing treaty parties have the right to submit comments on the interpretation of the treaty. If the non-disputing party wants to comment on another topic, it must request permission from the tribunal. The tribunal shall ensure that the participation of a non-disputing party does not “unduly burden” or “unfairly prejudice” a party (Rule 68).
- The timeframe to issue an award is shortened. Under the amended rules, tribunals must issue awards as soon as possible and, in any event, within 180 days (six months) if the award is rendered pursuant to a preliminary objection or within 240 days (eight months) after the last written or oral submission on all other matters (e.g., hearing on the merits, post-hearing briefs, etc.). (Rule 58).
Separate from the convention-based rules, ICSID also amended its Additional Facility rules, which govern all non-convention-based arbitrations, such as those initiated against non-member states. The amendments closely follow the changes made to the convention-based rules, but there are several new features not addressed in the convention-based rules. These include:
- ICSID facilities are more widely available. The updated rules extend the availability of ICSID Additional Facility arbitration to cases where both the claimant and the respondent are not ICSID member states or nationals of a member state. This effectively means that all investor-state cases will be eligible for ICSID administration (AF, art. 2).
- Regional organizations are subject to ICSID jurisdiction. The new rules recognize regional organizations, such as the European Union, as potential disputing parties. The change reflects the fact that states are increasingly negotiating investment treaties as regional entities and may sign a treaty as a regional entity (AF, art. 2).
Finally, ICSID issued a stand-alone set of rules on mediation. The new mediation rules respond to requests from states and investors to provide greater mediation capacity. The new rules have a broad scope of application, allowing ICSID to administer any mediation proceeding that relates to an investment and involves a state, so long as the parties have given their consent.