The International Centre for Settlement of Investment Disputes (ICSID) published a proposal for extensive changes to its rules for resolving disputes between foreign investors and states. Despite ICSID being one of the most utilised investment arbitration facilities, it takes on average three or more years for an award to be issued in an ICSID arbitration. The comprehensive set of reforms is aimed at modernising and enhancing the efficiency of ICSID's dispute settlement mechanism. These propose an entirely new set of mediation rules as well as updating the existing arbitration, conciliation and fact-finding rules.
Similar attempts were undertaken by other international arbitration institutions. For instance, the International Court of Arbitration of the International Chamber of Commerce (ICC) updated its rules already in December 2016. The revised rules came into force in March 2017 and – as described by Claire Stockford, partner at S + W, back in January 20171 – were also designed to increase the efficiency and transparency of the dispute settlement mechanism in question.
Case filing and timetables
At a technical level, under the proposed rules all filing would be electronic. This will significantly reduce both the time and costs of arbitration proceedings. The proposals also contain detailed requirements on the contents of requests to initiate arbitration and conciliation proceedings. In addition, parties will have the opportunity to consent to an expedited arbitration. In such case the tribunal would have to be elected within 30 days post registration. The first session would then have to be held within 30 days of the tribunal's constitution. Claire Stockford noted that any measures to improve efficiency are likely to be welcomed by ICSID users. Often both claimants and respondents suffer from the uncertainty caused by an ongoing claim.
Funding Arrangements
The proposed revisions require parties to disclose any third-party funding, including the funder's name, as soon as a case is registered. Following the initial disclosure, parties have a continuing obligation to disclose any subsequent changes to the funding arrangement. Arbitrators would be obliged to disclose any relationship with the funder/s. They would also have to provide a declaration of independence, impartiality and commitment to maintain confidentiality of the proceedings. This proposal is likely to prove controversial. With one eminent investor state arbitrator describing third party funders as "mercantile adventurers" many parties are unlikely to be eager to disclose their use of funds.
Challenges to arbitrators
The proposed rules introduce an expedited schedule for parties to file any challenges to arbitrators. These must be raised within 20 days of constitution of the tribunal, or the date on which the party first knew or should have known of the facts on which the challenge is based. The proceedings will then continue while the challenge is pending unless otherwise agreed by the parties.
Security for costs
Under the proposed rules parties seeking security for costs will not be bound by the current standard requiring exceptional circumstances before security for costs is granted. Instead tribunals will consider parties' ability to comply with an adverse decision on costs and any other relevant circumstances. In the event that the required security is not provided the tribunals may suspend or even discontinue the proceedings. This should discourage frivolous claims.
Written comments on the proposals can be submitted by ICSID Member States and the public until 28 December 2018. Subsequently the amendments will be voted on by the Administrative Council in 2019 or 2020. Approvals by two-thirds of ICSID Member States are required for their adoption.
Footnote
[1] https://shepwedd.com/knowledge/new-icc-expedited-procedure-balancing-efficiency-party-autonomy
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