A. Convention on the Settlement of Investment Disputes Between States
and Nationals of Other States (ICSID Convention), March 18, 1965
1. Provides for comprehensive, self-sufficient system of
international arbitration of investment disputes only between states and
2. Objective. Improve investment climate by creating facilities
for voluntary settlement of investment disputes through conciliation or
arbitration proceeding to which host country would be party on equal
procedural footing without requiring or permitting intervention of
investor's government; depoliticizes investment disputes.
a. Approximately 100 countries throughout world; except in Latin
America due largely to Calvo Doctrine.
b. Ratification only implies willingness to use ICSID machinery
on a case-by-case basis; can exclude certain classes of disputes.
c. Each State party agrees to enforce pecuniary award as a final
judgment of its courts. Contracting States cannot refuse to enforce
award; may not assert public policy defense.
B. International Center for Settlement of Investment Disputes (ICSID)
1. Created in 1966 by ICSID Convention as separate institution of
2. Administers ICSID arbitrations, solely on basis of Convention
and its Rules and Regulations; excludes application of national
3. ICSID provides facilities and rules for arbitrations; does not
engage in arbitration, conducted by separately constituted tribunals.
4. Jurisdiction of ICSID
a. Any legal dispute arising from an investment between a
contracting state and a national of another contracting state based on
mutual written consent, which once granted cannot be withdrawn.
b. It can only be used if host State is member of ICSID
Convention, or one of the parties to dispute is (or is from) a non-ICSID
member and non-member agrees to use of ICSID Additional Facility for
c. Consent usually given in investment or arbitration agreement,
but could also be provided in State's investment code or bilateral
investment treaty (over 150 treaties refer to ICSID arbitration).
d. ICSID clauses sometimes require exhaustion of local remedies.
e. Convention provides parties can agree that a local company is
treated as a foreign company for ICSID purposes if foreign-controlled.
C. Additional Facility
1. Established in 1978 to administer proceedings for settlement of
certain legal disputes between States and nationals of other States that
fall outside scope of ICSID Convention:
a. Investment disputes when one party is not contracting member
or national thereof; and
b. Disputes that do not directly arise out of an investment,
provided underlying transaction has features that distinguish it from
"ordinary commercial transaction."
2. Cannot rely on existing laws that provide for enforcement of
awards rendered pursuant to Convention to enforce awards rendered by
3. Additional Facility rules require that the arbitration be held
only in countries that are party to the New York Convention.
excerpted from information current as of mid '94
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