Meg Kinnear became Secretary-General of the International Centre for the Settlement of Investment Disputes (ICSID) in June of this year, prior to which she served as Senior General Counsel and Director General of Canada’s Trade Law Bureau and in other Canadian government positions. We invited Ms. Kinnear, an expert in international investment law and procedure, to respond to some questions about ICSID’s role, its legal impact, and its future.

Q1: The volume of ICSID awards and decisions has grown dramatically in recent years, but the accompanying opinions and interpretations occasionally diverge. Will ICSID awards produce a coherent body of international law? To what extent do ICSID arbitrators regard other ICSID panels’ decisions as precedential, or at least to be taken into consideration?

As you know, ICSID tribunals are not bound by the principle of stare decisis and there is no formal system of precedent as in a Common Law legal system. That said, the well accepted practice is for tribunals to consider relevant awards and decisions issued by other tribunals and to take these into account when coming to a determination. Perhaps the best statement of this position is by the ICSID tribunal in Saipem v. Bangladesh, at paragraph 90 of the award: “The Tribunal considers that it is not bound by previous decisions. At the same time, it is of the opinion that it must pay due consideration to earlier decisions of international tribunals. It believes that, subject to compelling contrary grounds, it has a duty to adopt solutions established in a series of consistent cases. It also believes that, subject to the specifics of a given treaty and of the circumstances of the actual case, it has a duty to seek to contribute to the harmonious development of investment law and thereby to meet the legitimate expectations of the community of States and investors towards certainty of the rule of law.”

This practice certainly leads to the development of a coherent body of law over time. This evolution can be seen from interpretation of various investment standards of treatment such as expropriation and national treatment, which have been considered extensively in awards over the past 10 to 15 years. Tribunals and parties are clearly aware of the importance of a coherent and clear jurisprudence which enables claimants and respondents to evaluate the strength of their legal position realistically and also allows states to better assess whether proposed measures might be viewed as contrary to a legal obligation undertaken in a bilateral investment treaty.

Q2: For investors who have relied on ICSID provisions when they invested in Bolivia and Ecuador, what are the legal consequences of the withdrawal of those countries from the ICSID Convention? What are the practical consequences?

From a legal perspective, two articles in the ICSID Convention address this point directly and should be recalled. Article 71 of the ICSID Convention provides that a denunciation of the ICSID Convention “shall take effect” six months after receipt of a written denunciation notice. Article 72 of the Convention continues to elaborate that a denunciation notice under Article 71 “shall not affect the rights or obligations under the Convention” of that state, of its constituent subdivisions or agencies or of any national of the state arising out of the consent to the jurisdiction of the Centre given by one of them before such notice was received. From a practical perspective, there may be various consequences. However, at the most fundamental level, a denunciation deprives the withdrawing state and its investors of the benefits of the ICSID Convention and investment arbitration pursuant to the Convention.

Q3: Are you concerned that more sovereigns will be tempted to leave (or simply ignore) the ICSID Convention as the volume of claims and awards against them (or the prospect of such claims and awards) increases?

I very much hope that member states will not be tempted to leave ICSID and I welcome new member states that have recently ratified the ICSID Convention or intend to do so in the near future. The role of ICSID is to provide the most efficient, effective and well-informed service to all facility users, and I trust that doing so will discourage states from considering leaving ICSID.

It is also worth noting that the increase in the volume of claims is not an ICSID-specific phenomenon. Rather, the increase in claims reflects the increase in the number of investment promotion and protection treaties concluded by states in the last two decades. This increase has been experienced equally by other arbitral institutions with investor-state cases. It is also worth noting that while the volume of claims has increased, the assumption that the number of awards adverse to states has increased is a misperception. In fact, empirical studies on investor-state awards suggest that the number of awards against states has not increased and that states win (or lose) in roughly half the cases.

Q4: To what extent can investors expect the World Bank Group to exert influence over member governments to honor their obligations to the ICSID Convention and ICSID awards?

Signatories to the ICSID Convention undertake to recognize awards rendered as binding and to enforce the obligations imposed by the award as if it were a final judgment of a court in that state. In the vast majority of cases there is no question about the payment of awards and states honour their obligations under the Convention. In a very few cases ICSID has reminded states of their obligation to fulfill the terms of a final award, and ultimately this has been resolved.

Q5: Arbitration was intended (in part) as a definitive mechanism to resolve disputes more expeditiously and less expensively than the courts, but the process appears to grow more protracted and cumbersome over time. What can be done about this?

The time it takes for an arbitration to conclude, and the associated costs of investment arbitration, are a concern for all users of ICSID as well as for the ICSID Secretariat. It is a question that is increasingly discussed, and I believe this dialogue will result in various new mechanisms that can help mitigate the cost and time taken for proceedings. For our part, ICSID has taken various internal steps to ensure that the process is a timely and cost efficient one. For example, the time to register a request for arbitration has been substantially reduced in the past few years, and currently takes an average of 29 days. Similarly, we have made a concerted effort to appoint panels quickly. We routinely suggest that materials be exchanged electronically rather than in numerous hard copies, are developing an electronic case management system that will enhance efficiency of proceedings, and we follow up with tribunals to ensure that awards are rendered within a reasonable time frame. We continue to look for other opportunities to ensure the process is a timely and cost-efficient one. At the same time, we recognize that the issues and facts in many investment cases can be complex and that efficiency and speed should not be at the expense of a fair and thorough process. ■