ICSID’s Annual Report for FY2019

The International Centre for Settlement of Investment Disputes (“ICSID”) has published its 2019 Annual Report. The Report provides an interesting overview of ICSID’s activities during its last financial year from 1 July 2018 to 30 June 2019 (“FY2019”). Broadly speaking, it focuses on three key areas in which ICSID has seen important improvements with respect to its regulatory framework, governance and work output.

ICSID Rule Amendments

First, the Report highlights the progress that has been made over the course of FY2019 in updating ICSID’s procedural rules as part of ICSID’s rule amendment project. This project was formally launched in 2016 with the aim of modernising the ICSID rules and making the dispute resolution process more time and cost effective and less paper-intensive.

After having published its first working paper on the proposed amendments in August 2018, ICSID subsequently held over 75 consultations with ICSID Members States and the public and processed around 115 written submissions. Based on the input received, ICSID published two more reiterations of the proposed rule amendments in its March and August 2019 working papers. The ICSID Secretariat is now in the process of updating the amendments in advance of the third consultation meeting with the ICSID Member States later this month.

Membership and Diversity

Second, the Report provides updates as to ICSID’s membership. In FY2019, the United Mexican States became ICSID’s newest Contracting State and the Republic of Djibouti its latest Signatory State. Overall, this brings the number of States that have signed the ICSID Convention to 163. Of those, 154 have ratified the Convention.

However, despite ICSID’s increasingly diverse membership, there remains a lack of diversity in the selection of ICSID panels. Individuals of only 36 nationalities were represented amongst the 171 appointments made to ICSID tribunals, commissions and ad hoc committees in FY2019, most of which come from either North America or Western Europe. Further, only 24% of the appointments in FY2019 were women. These figures do not show any significant improvements from previous financial years. In fact, the percentage of female appointments remained the same as in FY2018 and the representation of different nationalities on ICSID panels reduced by six.

ICSID Caseload Trend

Third, the Report presents an upward trend in ICSID’s caseload over the past financial year, which has been ICSID’s busiest to date. Thus, a record 306 ICSID cases were administered in FY2019, compared to 279 in the previous year. A total of 52 new ICSID cases were registered, the majority of which were arbitrations instituted under the ICSID Convention (47 cases). One Conciliation under the ICSID Convention was also registered. As in previous years, bilateral investment treaties continue to provide the majority of bases for establishing consent to ICSID jurisdiction under the ICSID Convention.  

Moreover, a record number of 59 proceedings were resolved in FY2019, including 34 arbitrations, which constitutes important gain over the 46 concluded proceedings in FY2018. Of the 34 arbitration cases, 66% were decided by a tribunal and 34% were settled or discontinued. Of the cases decided by a tribunal, four awards declined jurisdiction, eight awards rejected all the investors’ claims and 11 upheld the investors’ claims in part or in full.

In addition, the Report highlights a wide range of economic sectors involved in new claims, including construction (15%), transportation (6%), water, sanitation & food protection (4%) and agriculture, fishing & forestry (4%). While the oil, gas and mining sector remains a strong source for new claims, it is now on par with the electric power & other energy sector, both of which accounted for 21% of new cases in FY2019. For the latter sector, this constitutes an increase of 5% since FY2018. 

Moreover, while FY2018 saw a decrease of cases being registered against States from South America (12%) and an increase of cases against from States from Eastern Europe and Central Asia (40%), this development has now been largely reversed. Accordingly, in FY2019, 21% cases were registered against South American States and 25% against States from Eastern Europe and Central Asia. As with previous years, the majority of new cases were registered against Spain.

Overall, these trends are a clear sign of the increasing popularity of ICSID as a dispute resolution forum for investment claims. At the same time, the user experience looks set to improve; the newly renovated ICSID hearing centre in Washington DC and new cooperation agreements with international dispute settlement systems will better facilitate convenience in hearings, likewise ICSID’s new state-of-the-art video conferencing system.

Finally, beyond the themes set out above, the Report also covers designations and re-designations to the ICSID panels of arbitrators and conciliators, updates on ICSID’s outreach and training activities and financial statements for the FY2019.

The Report is available from the ICSID website, click here.

Sadie Buls would like to thank Natalia Kubesch for her contribution to the preparation of this article.