On 20 January 2022, the International Centre for the Settlement of Investment Disputes (“ICSID” or the “Centre”) announced that its amended rules and regulations, including ICSID Arbitration Rules (“Amended Arbitration Rules”), have been submitted for vote to ICSID’s governing body, the Administrative Council. This marks the fourth (and most comprehensive) update to ICSID’s rules and regulations. The amended rules are the culmination of a process of stakeholder consultation and negotiation that began in October 2016, pursuant to which ICSID issued six working papers detailing the proposed amendments.
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The Amended Arbitration Rules contain a mix of new rules and revisions to existing ones. The updates cover topics such as third-party funding, objections to claims with a “manifest lack of legal merit”, security for costs, publication of arbitration materials and confidential information, as well as expedited arbitration proceedings. Some highlights are below.
Third-Party Funding: Parties are required to notify the Centre if they have “directly or indirectly” received any funding from a third party. The notification must be made immediately after the arbitration request is registered or a third-party funding arrangement is in place. Parties are required to disclose the name and address of the funder or, if the funder is a juridical person, the names of the persons and entities that own it. The tribunal has discretion to order further disclosures at any stage of the proceedings.
Manifest Lack of Legal Merit: A new rule permits parties to object to a claim having a “manifest lack of legal merit” based on the substance of the claim, the jurisdiction of the Centre, or the competence of the tribunal. The objection must be filed no later than 45 days after the tribunal is constituted. This will supplement the existing provision of the Institution Rules enabling the Secretary-General to refuse registration on the basis that a dispute is manifestly outside the jurisdiction of the Centre.
Security for Costs: A specific provision permits any party to request that the tribunal make an order that a party bringing a claim or counterclaim provide security for costs. Such an order will be subject to the relevant party’s ability and willingness to comply with an adverse costs decision, the effect that providing security may have on the ability to pursue the claim, and the parties’ conduct. The existence of any third-party funding will factor into this determination.
Publication and Confidential Information: The Centre shall publish all tribunal orders and decisions, though the parties can agree redactions for any confidential information. With the consent of the parties, the Centre shall publish written submissions and any supporting documents, which are also subject to redactions. The Amended Rules identify the bases on which information is considered “confidential”.
Expedited Arbitration: The Amended Rules introduce an “Expedited Arbitration” procedure. At any point in a proceeding, parties may consent to expedite the arbitration by jointly notifying the Centre. Expedited time limits apply for appointing arbitrator(s), holding the first session, written submissions, and the hearing. There are also strict page limits on submissions. Significant changes to existing rules include amendments to arbitrator appointment and disqualification procedures, the tribunal’s first session and deliberations, filing methods and document production, decisions on costs, time limits for rendering an award, and the participation of non-disputing parties.
Arbitrator Appointment and Disqualification: The arbitrator appointment procedure has been streamlined, and a more detailed disqualification procedure has been introduced, with an expedited schedule for briefings.
First Session and Deliberations: The first arbitration session may be held solely between the president and the parties, or amongst the tribunal members, based on the parties’ written submissions. Only the tribunal secretary may assist in deliberations, unless the tribunal decides otherwise and notifies the parties accordingly.
Filing Methods and Document Production: Filings may be made electronically, unless specified otherwise. When deciding on disputes over document production requests, tribunals should consider, among other things, the relevance of the documents and timeliness of the request.
Decision on Costs: In allocating costs, the tribunal is required to consider the parties’ compliance with ICSID rules and the tribunal’s orders and decisions. A costs-follow-the-event approach applies to preliminary objections for “manifest lack of legal merit”, unless the circumstances justify a different allocation.
Time Limits for Award: Awards must be rendered within 60 days after the last submission on an application for “manifest lack of legal merit”, 180 days after the last submission on preliminary objections, and 240 days after the last submission on all other matters. This should avoid some of the delays that have arisen in respect of certain awards in the past.
Non-disputing Parties: The tribunal may place conditions on submissions by non-disputing parties and may provide them access to relevant documents, unless either party objects.
ICSID Member States are expected to vote on the amendments by 21 March 2022. If approved, the Amended Arbitration Rules will enter into effect on 1 July 2022.
ICSID’s Amended Arbitration Rules are available here.
Fietta’s previous posts on the subject are available here, here, here, and here.