Updated: Aug 26
A. About the Institution
ICSID is an international organization which is part of the World Bank Group. It was established in 1966 by international convention called as Washington (ICSID) Convention. ICSID is the only arbitration institution that was created by States for specific task of administrating arbitration and conciliation proceedings related to investments. In the sector of investment arbitration, ICSID gained huge experience by administrating %70 percent of known invest arbitration cases.
ICSID Convention (dated 1965), is the international law instrument behind the establishment of the Center. It also expresses States’ consent for arbitration as host state in investment disputes. Investment arbitration under ICSID Convention includes specific characteristics distinguishing ICSID Arbitration from other institutional arbitration rules, ad-hoc arbitration and commercial arbitration.
B. Lex Arbitri: ICSID Convention
One of the most effective concepts of arbitration law is lex arbitri which is defined as “the law applicable to the relationship between an arbitral tribunal and the courts of the jurisdiction”. Lex arbitri links private arbitration proceedings with the courts of jurisdiction established by sovereignty. In international arbitration proceedings, typical lex arbitri is the applicable international arbitration law of the place of arbitration. In these situations, lex arbitri is named as lex loci arbitri.
Lex arbitri is the law governing arbitration procedure and a guarantee of the application of international principles to arbitration proceedings; for example, parties right to present their case and equality of arms principle. Lex arbitri regulates the basis for annulment of arbitral awards so that awards which are in unconformity with the lex arbitri carry the risk of annulment by the courts of the place of arbitration.
In an arbitration procedure conducted under ICSID Convention, lex arbitri is the Convention itself. International law instrument that links arbitration with governance of international principles is a multinational convention rather than national arbitration law of a certain State. This makes ICSID Arbitration free from boundaries arising from national arbitration laws of different states. This also stabilizes the grounds for annulment of awards and refusal of enforcement requests. Under favor of ICSID Convention, ICSID arbitration procedure has the characteristic to be conducted without nationality and this brings out important characteristics of ICSID arbitration;
a) In an investment arbitration under ICSID Convention, parties can agree on not to apply ICSID Convention but agree on not to apply ICSID Arbitration Rules
In commercial arbitration and investment arbitration proceedings conducted by other institutions, parties are free to agree on the lex arbitri by implication of the choice for place of arbitration. In contrast, in Article 44 of ICSID Convention; it is clearly stated that parties cannot agree on not to apply ICSID Convention in arbitration proceedings but can agree on not to apply ICSID arbitration rules so that they can customize it where possible or decide on a different set of rules for arbitration proceedings. Therefore, in ICSID arbitration, the role of arbitration law of the place of arbitration is fulfilled by the Convention and mandatory rules of place of arbitration does not affect arbitration proceedings.
b) Application for review and annulment of the awards are made to ICSID Secretariat:
In most cases of commercial arbitration, request for annulment are made to courts of place of arbitration. This is considered as a general requirement of lex loci arbitri, since it is the governing law of arbitration proceedings. In contrast, in an investment arbitration procedure conducted under ICSID Convention, application for remedies against the award can be submitted exclusively to ICSID Secretariat and the Committee established upon the request. National courts are not competent to review or annul the award based on unconformity with national laws. Under ICSID Convention, proceedings for review of the award (Article 51) and the annulment of the award (Article 52) are conducted by an ad – hoc committee established by ICSID, which is consist of three members that are different from the arbitrators who rendered the award in the first place. This leads to the consequence that awards rendered under ICSID Convention can be reviewed by ICSID exclusively.
c) Interaction with local jurisdictions and awards on stay of execution:
In procedures governed by national arbitration laws, lex arbitri attributes certain supplementary roles for court of jurisdiction of the place of arbitration. Authority is given to courts of jurisdiction regarding collection of evidence, orders addressing third parties to the arbitration and requests made for stay of execution of tribunal awards. Request for stay of execution of awards made under ICSID Convention are made to a committee designated by ICSID. Also decision on stay of execution of an ICSID award stops the execution of the award in all member states that are party to the Convention without further recognition of the decision by local courts. Article 52/5 of the Convention enables ICSID to take action in an effective and timely manner without obstacles arising from national procedures for stay of proceedings of arbitral awards.
d) Recognition and Enforcement of the Award
Under ICSID Convention Article 54, awards rendered under ICSID Convention do not require to be submitted to local courts of member states for recognition and enforcement procedures. By virtue of this provision, awards under ICSID Convention are not submitted to local courts for examination under New York Convention that enables recognition and enforcement request to be rejected based on requirements of the law of the place of arbitration and public order. Considering that ICSID has 163 member states which are party to the Convention, Article 52 of ICSID Convention provides wider facility for recognition and enforcement of arbitral awards.
ICSID which is an institution dedicated to resolution of investment disputes between states and investors, conducts arbitration that governed under 1965 ICSID Convention. ICSID Convention, is one of the most effective instruments of international arbitration law with regard to its’ characteristic provisions minimizing the application of national arbitration rules and enhancing the efficient enforcement of arbitral awards.
Kaynakça ATAMAN FİGANMEŞE, İnci, Milletlerarası Tahkim ve Yatırım Tahkimi Arasındaki Farklar, Public and Private International Law Bulletin, Volume: 31, Issue: 1, 91-152
Mehmet Tuğberk DEKAK