I. INTRODUCTION
On 21 March 2022, a comprehensively updated set of rules and regulations for ICSID arbitration, conciliation, and mediation proceedings was approved.1 The new rules and regulations will go into effect on 1 July 2022. The amendments are noteworthy in several respects. The rules have been redrafted in plain, modern, gender-neutral language and have been structurally reorganized in a user-friendly way. The substantive changes to the rules are aimed at reducing the time and cost of proceedings, ensuring greater use of technology, and increasing transparency. There are also new stand-alone rules on mediation (for all or part of a dispute) and fact-finding.
In this client alert, we highlight the key amendments to ICSID's Institution Rules, Arbitration Rules, and the Additional Facility Rules and assess their likely impact on investor-State arbitrations. 2
II. MEASURES TO ENHANCE EFFICIENCY OF PROCEEDINGS
The amendments introduce new procedures within the ICSID framework that aim to streamline and enhance the efficiency of proceedings, many of which are contained in a new chapter entitled "Special Procedures." Most of these procedures were implied under the previous regime, but the new rules codify the process for parties to invoke these procedures. The rules also introduce timelines for several steps in the proceeding. The most important of these changes are outlined below:
- Expedited Arbitration: The new Arbitration Rules contain a new chapter on "Expedited Arbitration," designed for claims of smaller value and lesser complexity. The provisions require the consent of the parties to the dispute.3 Parties may also jointly opt out of the expedited procedure at any time.4 Under the new Expedited Arbitration chapter, proceedings are subject to shorter timelines and limitations on the length of submissions.5 The requirement for consent may limit the efficacy of these rules in circumstances where a party considers it advantageous to prolong proceedings. Nevertheless, it is likely to be a valuable tool for parties to consider when structuring proceedings.
- Other Timeline Changes: The amendments to the Arbitration Rules also introduce stricter timelines at various stages in the proceedings to reduce time and costs. Of particular interest to parties, the new Arbitration Rules set timelines for tribunals to render awards and decisions. Notably, however, the new Arbitration Rules only require tribunals to use "best efforts" to meet these time limits. ICSID expressly rejected proposals to make tribunal compliance with time limits an "absolute obligation."6 This ensures flexibility for tribunals to address special circumstances, but it is unclear what the practical impact of the new time limits on the length of proceedings will be.
- Bifurcation: The new Arbitration Rules confirm the ability of a tribunal to bifurcate proceedings and set out non-exhaustive criteria that tribunals should consider in deciding whether to bifurcate, including the extent to which bifurcation would: (i) materially reduce the time and cost of proceedings; (ii) dispose of all or a substantial part of the dispute; and (iii) address questions practically in separate phases. 7 The new rules also clarify the tribunal's authority to bifurcate proceedings on its own motion, empowering tribunals to take a more proactive approach to case management.8
- Consolidation and Coordination: Reflecting the practice of other leading arbitral rules, the new Arbitration Rules include a new stand-alone provision on consolidation and coordination, which provides that "[p]arties to two or more pending arbitrations administered by the Centre may agree to consolidate or coordinate these arbitrations."9 Notably, the provisions on consolidation and coordination are subject to party consent.10 Thus, a tribunal has limited recourse if a party opposes such measures for tactical reasons. It remains to be seen how frequently these provisions will be invoked.
III. PROVISIONAL MEASURES
Access to provisional measures is an essential feature of investor-State dispute settlement ("ISDS"), as in any other system of dispute resolution, to preserve the status quo or prevent an aggravation of the dispute. Although the previous iteration of the Arbitration Rules broadly recognized the power of tribunals to grant provisional measures,11 the new amendments provide more clarity on the scope and standard for the grant of provisional measures.
Specifically, tribunals are now expressly empowered to grant provisional measures to secure a "party's rights," including to "prevent action that is likely to cause current or imminent harm to that party or prejudice to the arbitral process," "maintain or restore the status quo pending determination of the dispute," and "preserve evidence that may be relevant to the resolution of the dispute."12 The new rules also provide that the tribunal should consider "all relevant circumstances" when assessing an application for provisional measures, including whether the measures are urgent and necessary and what effect the measures may have on the parties.
Footnotes
1 ICSID refers to the International Centre for Settlement of Investment Disputes. The amended rules were approved by a majority of ICSID's 156 Member States.
2 ICSID has different rules and regulations that govern different aspects of disputes and methods of dispute settlement: (i) Administrative and Financial Regulations (that govern, among other things, the procedures of the ICSID Administrative Council and the functions of the Secretariat); (ii) Institution Rules (that govern the initiation of arbitration and conciliation proceedings from the filing of a request through the dispatch of the notice of registration); (iii) Arbitration and Conciliation Rules under the ICSID Convention and the ICSID Additional Facility Rules (that govern the conduct of arbitration and conciliation proceedings); (iv) Fact-Finding Rules; and (v) Mediation Rules.
3 2022 ICSID Arbitration Rules, Rule 75(1); 2022 ICSID Additional Facility Arbitration Rules, Rule 79(1).
4 2022 ICSID Arbitration Rules, Rule 86(1); 2022 ICSID Additional Facility Arbitration Rules, Rule 88(1).
5 2022 ICSID Arbitration Rules, Rule 81(1); 2022 ICSID Additional Facility Arbitration Rules, Rule 85(1).
6 ICSID, Proposals for Amendment of the ICSID Rules – Working Paper, dated 15 June 2021, at para. 36, at p. 277.
7 2022 ICSID Arbitration Rules, Rule 42(4); 2022 ICSID Additional Facility Arbitration Rules, Rule 52(4).
8 2022 ICSID Arbitration Rules, Rule 42(6); 2022 ICSID Additional Facility Arbitration Rules, Rule 52(6).
9 2022 ICSID Arbitration Rules, Rule 46(1); 2022 ICSID Additional Facility Arbitration Rules, Rule 56(1).
10 See ICSID, Proposals for Amendment of the ICSID Rules – Working Paper, dated 2 August 2018, at paras. 406-407; ICSID, Rule Amendment Project – Member State & Public Comments on Working Paper 1 of August 3, 2018, at pp. 274-279.
11 See e.g., 2006 ICSID Arbitration Rules, Rule 39(1) ("At any time after the institution of the proceeding, a party may request that provisional measures for the preservation of its rights be recommended by the Tribunal. The request shall specify the rights to be preserved, the measures the recommendation of which is requested, and the circumstances that require such measures.").
12 2022 ICSID Arbitration Rules, Rule 47(1); 2022 ICSID Additional Facility Arbitration Rules, Rule 57(1).
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