*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
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G20's Investment Agenda Forward", "Emerging Markets and the International
Investment Law and Policy Regime", "Sustainable FDI for Sustainable
Development", "Towards an Investment Facilitation Framework: Why? What?
When?", "Beware of FDI Statistics!", "Towards an Indicative List of FDI
Sustainability Characteristics", “The Importance of Negotiating Good
Contracts", "A New Challenge for Emerging Markets: the Need to Develop an
Outward FDI Policy”, "China Moves the G20 toward an International
Investment Framework and Investment Facilitation", "The Next Step in
Governance: The Need for Global Micro-regulatory Frameworks", and "The
Evolving International Investment Law and Policy Regime: Ways Forward"
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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 233  August 27, 2018
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Marion A. Creach ([log in to unmask])
*Moving with the times: amending the ICSID rules*
* <#m_-764415541552267997__edn1>
Meg Kinnear** <#m_-764415541552267997__edn2>

One important contribution to the evolution of investor-state dispute
settlement (ISDS) has been the periodic updates of the procedural rules of
the International Centre for Settlement of Investment Disputes (ICSID). To
date, ICSID’s rules have been amended three times. The most recent
amendment in 2006 included strengthened disclosure requirements for
arbitrators,[1] <#m_-764415541552267997__edn3> enhanced transparency,
third-party participation,[2] <#m_-764415541552267997__edn4> and the
potential for respondents to obtain early dismissals of cases manifestly
lacking legal merit.[3] <#m_-764415541552267997__edn5> These innovations
have been emulated in the rules of several other arbitral institutions.

ICSID is working on the fourth update to its procedural rules, and the
changes envisioned are the most extensive to date. They cover arbitration,
conciliation, fact-finding, and mediation under the Convention and the
Additional Facility, the Administrative and Financial Regulations and the
Institution Rules. It is no exaggeration to say that every word, comma and
period has been scrutinized.

On August 3, 2018, ICSID released the Working Paper on “Proposals for
amendment of the ICSID rules
The Working Paper proposes specific textual changes to the rules with
commentary on the rationale for each proposal. It is the product of a
tremendous amount of time and thought from the ICSID Secretariat, and
extensive input from states and the public.

The Working Paper unveils a proposed set of rules that are improved in form
and function. Provisions have been re-drafted using plain, gender-neutral
language, and their sequencing better reflects the chronology of an ICSID
case. It also includes mechanisms to reduce the time and cost of
proceedings. For example, all filing would be electronic, and the request
for arbitration could serve as the first memorial, thus decreasing the time
for briefing in the early stages of a case. “Fast-track” provisions are
also suggested, which could be applied by consent of the parties.

Additionally, several states raised issues related to third-party funding.
Currently, the ICSID rules do not contain provisions that expressly address
third-party funding. However, the issue has been dealt with by tribunals,
usually involving applications for disclosure of information about
third-party funding in the context of requests for security for costs.
States also noted that disclosure is important to avoid conflicts of
interest that may arise with third-party funders. Therefore, under the
proposed rules, both parties must advise whether a claim or defense is
being funded by a third party as soon as the claim is registered, and
arbitrators must disclose whether they have any relationship to that funder.

Transparency was another topic that was raised by states and the public.
Particularly prominent was an interest in making case-related materials
public, which is critical for consistency and coherence in ISDS
decision-making. As a result, the Working Paper suggests mandatory
publication of awards or extracts of awards, decisions and orders, with a
process to redact confidential or protected information. It is also
important to note that states may further enhance the transparency of ICSID
proceedings through their treaties or by ratifying the Mauritius
Convention. Thus, the ICSID rules provide only the baseline for
transparency in ICSID arbitration proceedings.

New provisions have also been drafted on the disqualification of
arbitrators, security for costs, allocation of costs, tribunal appointed
experts, and consolidation of cases. Throughout the Working Paper, care has
been taken to balance the interests of states and investors. This balance
was a fundamental principle for the original drafters of the ICSID rules
and has underpinned the success of the rules in practice.

The Working Paper is intended to generate discussion, and ultimately
consensus, on the next generation of ICSID rules. To that end, ICSID is
holding a two-day consultation with its 154 members in late September,
providing an opportunity for states to reflect and comment on the proposed
rules. A series of regional and online consultations is also planned for
the fall. States and the public are encouraged to submit written comments
until December 28, 2018.

On January 1, 2019, ICSID should be able to assess which proposals are
widely endorsed, which are largely supported but would benefit from a
further re-draft and which are best shelved for another day. The goal is to
submit a package of amendments in 2019 or 2020 to the ICSID Administrative
Council. Approval will require a two-thirds vote for ICSID Convention rules
and a majority vote for ICSID Additional Facility rules.

Once adopted, the amended rules will apply to all cases based on consent
given after the new rules are brought into force. Given that ICSID
administers over 70% of all international investment disputes, the
amendment process offers a significant opportunity to introduce practical
improvements to ISDS that will have an impact in the near term. Thanks to
the collective efforts of states, the public and the ICSID Secretariat, the
changes made today will help ensure that the ICSID rules remain “state of
the art” well into the future.

* <#m_-764415541552267997__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_-764415541552267997__ednref2> Meg Kinnear ([log in to unmask])
is Secretary-General of the International Centre for Settlement of
Investment Disputes. The author is grateful to Claudia Frutos-Peterson,
Loretta Malintoppi, Antonio R. Parra, and Catharine Titi for their helpful
peer reviews.
[1] <#m_-764415541552267997__ednref3> ICSID Arbitration Rule
6(2) and Arbitration (Additional Facility) Rule
[2] <#m_-764415541552267997__ednref4>  ICSID Arbitration Rule 32(2) and
Arbitration (Additional Facility) Rule 39(2).
[3] <#m_-764415541552267997__ednref5> ICSID Arbitration Rule 41(5) and
Arbitration (Additional Facility) Rule 45(6).
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Meg Kinnear, ‘Moving with the times: amending
the ICSID rules,’ Columbia FDI Perspectives, No. 233, August 27, 2018.
Reprinted with permission from the Columbia Center on Sustainable
Investment (** <>**).” A
copy should kindly be sent to the Columbia Center on Sustainable Investment
at **[log in to unmask]* <[log in to unmask]>*. *

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Marion A. Creach, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No 232, Kavaljit Singh, “Investment facilitation: Another fad in the
   offing?” August 13, 2018
   - No. 231, Theodore H. Moran, “CFIUS reforms must be reformed,” July 30,
   - No. 230, Carlos A. Primo Braga, “Foreign direct investment and ‘peak
   globalization’,” July 16, 2018

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *On September 27-28, 2018*, CCSI will hold its 13th Annual Columbia
   International Investment Conference (CIIC) on “Rethinking International
   Investment Governance: Principles for the 21st Century.” This conference
   seeks to elaborate principles of a progressive investment agenda. It will
   reflect on the current investment regime – of the network of over 3,000
   investment agreements – and the extent to which the regime aligns with or
   undermines the principles. We will then re-imagine investment governance,
   and consider the role that international cooperation could play to advance
   sustainable, development-oriented investment. *Registration is free but
   required...for more information, and to register, please visit our
   website here
   - *On September 26, 2018*, CCSI and the UN Sustainable Development
   Solutions Network (SDSN), under the guidance of Prof. Jeffrey Sachs,
   Special Advisor to the UN Secretary-General on the SDGs, and
   Laurent Fabius, President of the Constitutional Council of the French
   Republic, will host a conference to discuss the Global Pact for the
   The Global Pact for the Environment aims to unify international
   environmental governance and codify a human right to the environment in
   international law. *For more information, and to register, please see
   our website here
   - *On September 26, 2018*, CCSI and the Sabin Center for Climate Change
   Law will host a conference on "Climate Change, the Courts, and the Paris
   Agreement." In recent years citizens, sub-national governments and NGOs
   have turned to litigation to hold governments and corporations accountable
   for their contributions to climate change. *For more information about
   this event, including registration, please see our website here
   - *On September 24, 2018*, CCSI, the UN Sustainable Development
   Solutions Network’s Thematic Network on Good Governance of Extractive and
   Land Resources (“SDSN Thematic Network”), and other partners will host
   "Renewable Energy and the SDGs: Exploring Links with Extractives,
   Agriculture, and Land Use." *For more information, please see our
   website here
   interested in attending, contact [log in to unmask]
   <[log in to unmask]>.*

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2018 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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Columbia Center on Sustainable Investment (CCSI)
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