Flagship Rules of International Centre for the Settlement of Investment Disputes Rules to come into effect on 1 July 2022: What does it mean for states and investors?

On 21 March 2022 the member states of the International Centre for Settlement of Investment Disputes (ICSID) approved a comprehensive set of amendments to ICSID’s flagship rules for resolving disputes between foreign investors and their host states. 

22 Jun 2022 2 min read Article

At a glance

  • The member states of the International Centre for Settlement of Investment Disputes (ICSID) have approved comprehensive amendments to ICSID's rules for resolving disputes between foreign investors and host states.
  • The amendments, the most extensive in ICSID's history, were developed through a transparent and collaborative process involving six working papers released over five years.
  • The amended ICSID rules provide broader access to dispute resolution services, enhance transparency, introduce a disclosure requirement for third-party funding, reduce time and cost, and include new rules for expedited arbitration, mediation, and fact-finding. Guidance notes will be published to assist users in applying the amended rules.

The amendments are the most wide-ranging in ICSID’s 55-year history, and are a culmination of extensive dialogue in a series of six working papers released over five years. The process leading up to the adoption of the amended ICSID rules is considered to be the most transparent and collaborative process in ICSID’s history.

ICSID is currently the only multilateral institution with a specific mandate to facilitate the peaceful resolution of international investment disputes under treaties, contracts and investment laws. The ICSID Convention Rules and Regulations were adopted in 1967 and the Additional Facility Rules were adopted in 1978.

The ICSID rules establish procedures for arbitration, conciliation, fact-finding and mediation. These are the only rules of procedure that have been specifically designed for disputes between foreign investors and their host states.

The key attributes of the ICSID amended rules are outlined below.

Broader access to ICSID’s dispute resolution rules and services

The jurisdictional requirements under ICSID’s Additional Facility Rules have been modified, providing states and investors access to Additional Facility arbitration and conciliation where one or both disputing parties are not an ICSID contracting state. In addition, regional economic integration organisations may also be a party to proceedings under the amended Additional Facility Rules.

This is a material change, as it now extends access to ICSID arbitration and conciliation to non-ICSID state such as Namibia and South Africa and their national, regional or continental organisations such as the African Union. These parties may now choose ICSID arbitration as the primary dispute resolution mechanism in investment laws, investment agreements or treaties.

Transparency enhancement

The updated ICSID arbitration rules will further enhance public access to ICSID orders and awards, which benefits legal consistency in tribunal decision making. At the same time, the rules assist parties in identifying confidential information and specify that protected personal information cannot be publicly disclosed.

Third-party funding disclosure requirement

Disputing parties now, for the first time, have an ongoing obligation to disclose third-party funding, including the name and address of the funder, to avoid conflicts of interest that may arise out of such financing arrangements.

Time and cost benefits

The ICSID rules for arbitration and conciliation have been updated to further reduce the time and cost of cases, including mandatory timeframes for rendering orders and awards.

Expedited arbitration rules

There are new, expedited arbitration rules, which aim to cut case times in half when adopted by parties.

New procedural rules for mediation and fact-finding

New procedural rules were developed for mediation and fact-finding. The mediation rules offer a process to support a negotiated resolution of a dispute between parties, while fact-finding provides an impartial and targeted assessment of facts related to an investment.

Look out for the guidance notes that will be published by ICSID in the coming months to assist users in applying the amended ICSID rules.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2024 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com.