On July 1, 2022, changes to the rules and regulations of the International Center for Settlement of Investment Disputes (ICSID) came into effect.
ICSID, one of the organizations of the World Bank Group, is an institution responsible for resolving disputes between investors and States. A number of states, including Canada, are parties to the international convention that established ICSID, and many international investment treaties provide that ICSID is a forum for the settlement of disputes between investors and states.
The changes 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 cost 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 undisputed facts and rationalize issues. Previously, such a case management conference was not mandatory under the Arbitration Rules and had to be held at the request of the Secretary-General of ICSID or at the discretion of the President of the tribunal. The Arbitration Rules also create a procedure for quickly determining that a claim is manifestly without legal merit, with the aim of quickly dismissing unfounded proceedings and reducing costs.
The updated Arbitration Rules also allow parties to request that a matter be dealt with separately or at a later stage of the proceedings without the need for a full hearing, and parties may agree to consolidate or coordinate multiple arbitrations. ICSID to avoid duplication of effort where there is considerable overlap of issues between parties in different arbitrations.
The updated arbitration rules allow the parties to agree to an expedited procedure with much shorter deadlines 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 obligation of disclosure continues throughout the procedure.
At the request of a party, the court may order any party asserting a claim or counterclaim to post security for costs. If a party fails to comply with an order for security for costs, the court may stay or discontinue the proceeding.
In the absence of objection within 60 days of the issuance of an award, the parties are now deemed to consent to its publication. Even in the absence of consent, 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 persons other than the parties to observe the hearings.
PARTICIPATION OF THIRD PARTIES
There are now detailed arbitration rules on how third parties to the dispute or treaty can make representations to the court. These procedures reflect the precedent effect that ICSID awards can have on third parties.
MEDIATION AND FACT-FINDING RULES
ICSID has also introduced updated mediation rules, which can be used independently or in conjunction with arbitration proceedings. Mediation remains voluntary and may be terminated at any time by consent of the parties or withdrawal of either 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 ask a neutral party to determine the facts, allowing them to assess the merits of their positions before embarking on an expensive dispute resolution process.
EXPANDED ACCESS TO ICSID
The ICSID Additional Facility Arbitration Rules are now available even when neither party to the dispute is an ICSID Contracting State or national. 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 thereof. They are also available for regional economic integration organizations such as the European Union.
The Amendments are the result of a years-long process that has involved input from States, lawyers and business representatives, among others, and are a welcome step in the ongoing modernization of arbitration processes.