ICSID’s Annual Report 2022
The International Centre for Settlement of Investment Disputes (“ICSID”) recently published its Annual Report providing insight into ICSID’s activities during its fiscal year from 1 July 2021 to 30 June 2022 (“FY2022”).The Report is available here. The key highlights from this year’s Report are discussed below.
Despite the continuing, but staggered impact of Covid-19, robust demand for ICSID’s services continued in FY2022. There were a record number of cases and concluded. FY2022 also had the second highest number of hearings & sessions held in a single financial year (the record being held by FY2021). To summarise the 2022 casework trends, there were:
- 50 new cases registered under the ICISD Convention or Additional Facility Rules
- 77 proceedings concluded
- 346 cases administered by ICSID (eclipsing 332 in FY21)
- 204 hearings and sessions held
- 11 annulment applications registered, constituting a 42% decrease from the number of annulment applications registered in FY2021 and FY2020
The Report notes that, like previous years, a majority of cases were brought under BITs (56%) and various multilateral treaties (31%). 13% of the claims were brought under investment contracts between the investor and host-state.
Historically, the extractives and energy sectors have accounted for the largest share of cases. This trend continued in FY2022. 24% of new cases involved electric power and other energy sources and 22% related to the oil, gas, and mining industries. The construction sector also remained prominent, accounting for 12% of disputes.
Geographical distribution of claims
Geographically, the largest share of cases registered in FY2022 involved States in South America (22%) followed by Eastern Europe and Central Asia (20%). These regions were followed by Central America and the Caribbean, the Middle East and North Africa, and the Sub-Saharan Africa regions (12% each). South and East Asia and the Pacific, and Western Europe each accounted for 8% of the cases, followed by North America (Canada, Mexico, and the US) which cumulatively accounted for 6% of the cases.
Diversity in arbitrator appointments remains a key area of focus for all arbitral institutions, including ICSID. The Report notes that individuals of 42 nationalities were represented amongst the appointments made in FY2022, which constitutes the second largest number of different nationalities appointed in a single year at ICSID. However, arbitrators from Western Europe continue to dominate arbitrator appointments (41%). North America (21%) and South America (17%) follow.
In terms of nationality, highest number of arbitrators, conciliators and ad hoc committee members appointed in FY2022 were nationals of USA (15%), followed by UK (12%), France (11%) and Spain (10%).
Notably, 45% of first-time appointees in FY2022 were women and 25% involved nationals of low or middle-income economies. Overall, women accounted for 24% of all appointments made to ICSID cases in FY2022, compared to 31% in FY2021 and 14% in FY2020. These figures demonstrate that, while the current efforts are laudable, and continue to make a difference, more concerted action is required to further boost diversity in arbitrator appointments.
Use of remote hearings
The use of remote hearings, first adopted widely due to the global pandemic continued. The Report observes that 91% of the hearings or sessions were held remotely. However, in the last half of the fiscal year there was a gradual return to in-person hearings and some use of hybrid hearings combining remote and in-person features.
The Report provides the following breakdown of the outcome of cases:
- 25% resulted in award upholding claims in part or in full.
- 14% resulted in award dismissing all claims.
- 11% resulted in award declining jurisdiction.
- 2% resulted in award deciding that the claims are manifestly without legal merit.
- 2% of proceedings resulted in settlement agreements reflected in an award at the parties’ request.
- 23% were discontinued at the request of both parties.
- 14% were discontinued at the request of one party.
- 9% discontinued for lack of payment of the required advances.
The Report notes that by the end of FY2022 ICSID Convention had 164 signatories, of which 157 had ratified the treaty. Ecuador and the Kyrgyz Republic were the most recent states to deposit their instruments of ratification. This highlights the ever-expanding membership of ICSID and also lends testimony to the almost global mandate of ICSID.
Akshay Sewlikar would like to thank Sai Anukaran for his assistance in preparing this article.