What’s in a Rule? – The International Centre for Settlement of Investment Disputes (ICSID) Proposal for Amendment of the ICSID Rules [Part 1 of 2]

On August 2, 2018, the ICSID released their most comprehensive overhaul of the ICSID Rules in its history (the “Working Paper #1”).[1] The proposal for amendment of the ICSID Rules contained within Working Paper #1 cover the arbitration rules under the ICSID Convention (the “Arbitration Rules”) and conciliation rules under the ICSID Convention, the initiation of Convention arbitration and conciliation proceedings, and administrative and financial rules for Convention arbitration and conciliation. It also addresses the additional facility rules and all proceedings under those rules, including arbitration, conciliation, fact-finding, and a brand new set of rules dealing with mediation.

On March 14, 2019, the ICSID released an update to the proposal for amendment of the ICSID Rules contained within Working Paper #1, building on the original amendments (the “Working Paper #2”). The Working Paper #2 contains a complete redrafting of the Rules (the “Proposed Rules”), along with an explanation of the changes that were accepted and rejected by the ICSID following more than 50 public consultations and 100 written submissions from Member States, legal professionals, and other stakeholders. [2]

The ICSID consulted with Member States on Working Paper #2 during the April 7-9, 2019 meetings and remain hopeful that the vote to adopt the Proposed Rules will take place in October 2019 (or at latest, October 2020).

The Goal of the Proposed Rules

The Proposed Rules have been redrafted using plain, modern, gender-neutral language and reorganized to ensure ease of use. The Proposed Rules have attempted to correct for any and all translation issues between the ICSID official languages, being, English, French, and Spanish. As explained by the ICSID Secretary-General Meg Kinnear, the Proposed Rules seek to address concerns around cost and efficiency of proceedings, transparency of awards, conflict of interest issues and concerns with arbitrators, and the development of a new mediation process in response to requests for greater mediation abilities.

In the first installment of this two part series, we will discuss the significant changes made to the Arbitration Rules to increase efficiency and the development of the Expedited Arbitration procedure. In the second installment, we will discuss the Proposed Rules surrounding disqualification of arbitrators, transparency of decisions, and the development of the mediation rules.[3]

Highlighting Efficiency in the Proposed Rules

Under the Proposed Rules the Tribunal and the Parties have a general duty to conduct the proceeding in an expeditious and cost-effective manner[4] and to that end, file all documents electronically, unless the Tribunal orders otherwise in “special circumstances”.[5] Working Paper #2 highlighted that filing electronically received tremendous support as an effort to expedite the process, reduce the environmental impacts of proceedings, and save significant costs.

The Proposed Rules strive to improve efficiency of proceedings by imposing time limits on parties for various steps within the proceedings, outline how those timelines can be extended by the parties, and stipulate consequences for missing timelines, thereby encouraging compliance.[6] Specifically, the Tribunal (or in some situations the Secretary–General) will set the timelines in accordance with the Convention or the Arbitration Rules, and Parties can agree to extend as appropriate,[7] or before the expiry of the timeline, make a reasoned application for extension before the Tribunal.[8]

Where steps are taken or documents filed after the expiry of a time limit, the Tribunal will ignore the materials unless the other party does not object to the late filing (where the Convention allows for extensions to take place), or in some cases, where there are circumstances that justify the failure to meet the time limit that was set.[9]

Under the Proposed Rules, Tribunals shall use “best efforts” to meet all applicable time limits and notify parties of special circumstances that delay order, decision, or award.[10] The Proposed Rule encourages Tribunal members to accept positions with timelines they can meet, while acknowledging the need for flexibility.[11]

In the name of efficiency, Working Paper #1 outlined that reply and rejoinder filings would only be made where the parties or the Tribunal agreed that same were necessary.[12] However, after consultation with the Member States, the ICSID changed the Proposed Rules to allow reply and rejoinder filings as the default, in keeping with the standard practice of two filings.[13]

The Proposed Rules set definitive timelines for Tribunals to render Awards, being “as soon as possible” and no later than 60 days after the last written or oral submission, or the Tribunal constitution whichever is later (for an application of manifest lack of legal merit), 180 days after last written or oral submission (for preliminary objections) and 240 days after the last written or oral submissions on all other matters.[14]

To ensure the parties and Tribunal expedite the process, the Proposed Rules encourage case management conferences to identify uncontested facts, and narrow issues in advance of a hearing[15] and stipulates that Tribunals must deliberate immediately following the last written or oral submission on matters requiring decisions.[16]

Highlighting Expedited Arbitration in the Proposed Rules

In keeping with the goal of expediting proceedings, the ICSID has introduced Rules 73-84 of the Proposed Rules to deal with Expedited Arbitrations. This section of the Arbitration Rules allows parties to an arbitration under the Convention to consent “at any time” to expedite the arbitration through a joint written notification to the Secretary-General.[17] The Proposed Rules clearly set out which rules apply to the Expedited Arbitration and which do not (to allow for the altered timelines).[18]

The Proposed Rules set out the process for selecting a sole arbitrator, or a three member panel as well as all timelines for filing of materials, and issuance of decisions.[19] The Secretary-General can appoint the arbitrator where the parties fail to agree within the time limit (30 days).[20] The Proposed Rules outline that Parties shall file their arguments on strict and short timelines, and with restricted page limits.[21]

The ICSID has also created an opt-out clause which can be utilized by agreement between the parties at any time. This would move the arbitration back to the regular path and set out new timelines in accordance with the rules. Currently, the average length of cases run at 3 years and 7 months. With Expedited Arbitrations, the ICSID is expecting that parties will reach a hearing by 17 months and an Award in 21 months (on the outside).[22]

Until Next Time

Many of the Proposed Rules not discussed in this first installment also deal with the efficiency of proceedings and the need for expedited procedures. Specifically, in the next installment we will discuss the development of the mediation rules which stem from the many complaints and suggestions from Member States that greater mediation abilities were required for the ICSID. Further, the second installment will deal with disqualification of arbitrators, and transparency of Awards which have been hot topics of debate and discussion for years within ICSID.

 

 

[1]Working Paper #1.

[2] A compendium of written comments received by the ICSID until March 15, 2019 is available on the website here. The ICSID further consulted with Member States on Working Paper #2 during the April 7-9, 2019 meetings and remain hopeful that the vote to adopt the Proposed Rules will take place in October 2019.

[3] The Proposed Rules are extensive and cover several distinct areas which are new or heavily revamped. Therefore, coverage of each rule and its development extends beyond the mandate of this blog. The two part series is designed to highlight and showcase some of the significant changes For a fulsome review of the Proposed Rules, please see Working Paper #2.

[4] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 2.

[5] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 4.

[6] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 10.

[7] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 10.

[8] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 10.

[9] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 10.

[10] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 11.

[11] Working Paper #2.

[12] Working Paper #1.

[13] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 29; the parties can agree that reply and rejoinder filings are not required to further expedite the process.

[14] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 57.

[15] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 30.

[16] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 33.

[17] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 73.

[18] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 73.

[19] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rules 75, 76, and 79.

[20] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rules 78 and 79.

[21] III. Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rule 83.

[22] Working Paper #2.

 

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