QLLM397 – Investment Treaty Arbitration- Session 7 – Jurisdiction IV Procedural Issues – R | Study Guides, Projects, Research Law

Session 7 – Jurisdiction IV Procedural Issues – Readings

UNCTAD Course – Procedure

Introduction

Chapter IV of the Convention (art 36-55) contains the framework of the arbitration

procedure. Key procedural provisions are contained in art 44. Parties have the option of

departing from the provisions of the convention and find alternatives to the provisions.

However, they are still bound by the mandatory provisions of the convention.

Initiation of arbitration proceedings

A claimant wishing to commence an ICSID arbitration must address its request for arbitration

to the ICSID secretary general. The request may come from either the host state or the

investor but it can also be filed jointly by both state parties. The request must be made in

writing, indicate that it relates to an arbitration/conciliation, dated and signed and drawn up in

an official language of the centre. The request should be accompanied by the lodging fee.

The request contains information concerning the issues in dispute, identity of the parties and

their consent to arbitration (art 36(2)). Failure to furnish information may prevent the

secretary general from being able to register the request. A claimant must provide sufficient

evidence if one of the parties has been designated by a contracting state.

The date of the consent must be detailed as well as the instruments where the consent is

evidenced. Details must also be provided with regards to the nationality of the investor and

any agreement where the investor is incorporated in the contracting state but is still regarded

as a foreigner.

The request must also provide details of the legal dispute arising out of an investment. The

request can also contain any procedural agreements between the parties. The claimant can

also provide a summary account of its case on the merits. The secretary general screens the

request and ensures that he does not allow a spurious claim through. The decision is made

primarily on the basis of the information contained in the request.

The secretary general will only refuse to register the request if it is manifestly outside the

jurisdiction of ICSID e.g. where a party is not a contracting state or a national of a

contracting state. A request cannot be unilaterally withdrawn once it has been registered and

notified to the parties.

The arbitral tribunal (art 37-40)

The tribunal must consist of a sole arbitrator/an uneven number of arbitrators which the

parties agree on. In practice, the vast number of tribunals have been constituted with three

arbitrators. The agreement on the tribunal must be finalised within 90 days. Only the

appointment of the president of the tribunal is subject to the agreement of the parties.

Once an arbitrator has been appointed by a party, they must notify this appointment to the

secretary general who needs to seek approval from the arbitrator concerned. Art 38 provides a

fall-back option which can be triggered by either party if one party is uncooperative, the

chairman of the administrative council can appoint any arbitrators that a party has failed to

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Session 7 – Jurisdiction IV Procedural Issues – Readings UNCTAD Course – Procedure Introduction Chapter IV of the Convention (art 36-55) contains the framework of the arbitration procedure. Key procedural provisions are contained in art 44. Parties have the option of departing from the provisions of the convention and find alternatives to the provisions. However, they are still bound by the mandatory provisions of the convention. Initiation of arbitration proceedings A claimant wishing to commence an ICSID arbitration must address its request for arbitration to the ICSID secretary general. The request may come from either the host state or the investor but it can also be filed jointly by both state parties. The request must be made in writing, indicate that it relates to an arbitration/conciliation, dated and signed and drawn up in an official language of the centre. The request should be accompanied by the lodging fee. The request contains information concerning the issues in dispute, identity of the parties and their consent to arbitration (art 36(2)). Failure to furnish information may prevent the secretary general from being able to register the request. A claimant must provide sufficient evidence if one of the parties has been designated by a contracting state. The date of the consent must be detailed as well as the instruments where the consent is evidenced. Details must also be provided with regards to the nationality of the investor and any agreement where the investor is incorporated in the contracting state but is still regarded as a foreigner. The request must also provide details of the legal dispute arising out of an investment. The request can also contain any procedural agreements between the parties. The claimant can also provide a summary account of its case on the merits. The secretary general screens the request and ensures that he does not allow a spurious claim through. The decision is made primarily on the basis of the information contained in the request. The secretary general will only refuse to register the request if it is manifestly outside the jurisdiction of ICSID e.g. where a party is not a contracting state or a national of a contracting state. A request cannot be unilaterally withdrawn once it has been registered and notified to the parties. The arbitral tribunal (art 37-40) The tribunal must consist of a sole arbitrator/an uneven number of arbitrators which the parties agree on. In practice, the vast number of tribunals have been constituted with three arbitrators. The agreement on the tribunal must be finalised within 90 days. Only the appointment of the president of the tribunal is subject to the agreement of the parties. Once an arbitrator has been appointed by a party, they must notify this appointment to the secretary general who needs to seek approval from the arbitrator concerned. Art 38 provides a fall-back option which can be triggered by either party if one party is uncooperative, the chairman of the administrative council can appoint any arbitrators that a party has failed to

appoint. The chairman is prohibited form appointing arbitrators of the same nationality as either party and he can only appoint arbitrators from the Panel of Arbitrators. When parties are appointing their own arbitrators, they must adhere to nationality rules, the arbitrator has to have qualities set out in art 39 and she must be independent of the parties. The arbitrators must be nationals of states outside of those of the two contracting parties, but this doesn’t apply if there’s been agreement between the two parties. The list of qualities required of arbitrators is set out in art 14(1). The panel of arbitrators provides parties with a list of arbitrators that they may select from but are not forced to. Once a tribunal has been constituted and the proceedings begun, the tribunal’s composition cannot be changed. This is to help avoid delay in the solving of the dispute. Where an arbitrator wants to resign, she must submit this to the other members of the tribunal who will consent or not. There is a sanction attached to a resignation of a party appointed arbitrator that is not accepted by the other arbitrators (vacancy is filled by the chairman and not the party). Art 57 & 58 deal with disqualification. Initiative must come from a party as soon as they have learnt of the grounds for possible disqualification. If the party doesn’t react promptly, they are taken to have waived their right to object. The burden of proof rests on the party proposing disqualification under the grounds of 14(1). Art 58 sets out the procedure of dealing with a proposal to disqualify. The unchallenged members of the tribunal will decide on this normally. Conducting the arbitration Neither the parties nor the tribunal are constrained by the arbitration legislation of any national legal system. Art 44 is the primary provision with respect to the procedural rules of arbitration. The arbitration rules in force at the time of consent become binding on the parties and on the tribunal. The preliminary procedural consultation is the first session where parties agree on matters of procedure and where orders are made by the tribunal on the conduct of the arbitration. The first session should be held within 60 days of its constitution or any other time period agreed on by the parties. Deliberations of the tribunal take place in private and are kept secret. There is a written procedure followed by an oral procedure. Pleadings in the written phase include the filing of a memorial by the requesting party and a counter-memorial by the other party. The memorial contains a statement of facts, a statement of law and the party’s submissions. A counter-memorial contains a denial/admission of the statement of facts, any additional facts, a response to the statement of law and submissions. A pre-hearing conference may be arranged by the secretary general or the parties themselves for an exchange of information between them. Parties are entitled to an oral hearing. The hearing is private and the tribunal can decide who can attend it. Parties may present witnesses of fact and experts who can only attend during their testimony. The tribunal may put questions to the parties as well as witnesses and experts. Once the presentation of the case is completed and the case fully submitted, the tribunal can make an order closing the proceedings.

The award is deemed to have been rendered on the date of its dispatch by the secretary general. An award must be drawn up and signed by the members within 60 days after the closure of the proceedings. Costs of the arbitration Art 59 – 61. There are charges for using the facilities of the centre which are determined by the secretary general. The centre may also provide translators or make copies or translations of proceedings at an extra charge. The tribunal also determines the fees and expenses of its members. In a majority of cases, tribunals have decided that the parties should equally bear the costs of the arbitration and that each party should bear its own legal costs.

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