Introduction
Cases in 2016
State parties and economic sectors
Basis of consent
Constitution of tribunals
This update analyses the 2016 International Centre for Settlement of Investment Disputes (ICSID) case statistics to identify recent trends in investor-state dispute settlement, including:
- the state parties and economic sectors involved;
- success rates of states versus investors; and
- changes to the composition and diversity of ICSID tribunals.
The ICSID is an intergovernmental organisation established by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The ICSID offers a specialised arbitration forum for international investor-state dispute settlement. The year 2016 marked the ICSID's 50th anniversary.
According to the ICSID's 2016 annual report, it administered approximately 70% of all known investor-state cases and in the past 50 years 570 cases have been registered at the ICSID, 265 awards have been rendered by ICSID tribunals and 52 decisions on annulments have been issued by ad hoc committees. As can be seen from the statistics below, in 2016, the ICSID remains an important institution for the settlement of investor-state disputes. Therefore, a review of the ICSID's case statistics is a useful indicator of recent trends in international investor-state dispute settlement.
There were 45 new ICSID cases registered in 2016. While this is slightly less than the record high of 2015, it is a return to the historical average. The ICSID administered 247 cases in 2016, the largest number of cases ever administered by the organisation in a single year. This is clear evidence that foreign investors continue to pursue the resolution of disputes with host states through international arbitration.
Interestingly, 2016 saw a slight shift away from the trend that states have proved successful in the majority of cases brought against them. In 2016, tribunals upheld investors' claims (in part or in full) in 56% of cases.
State parties and economic sectors
The trend of cases being brought against developed countries continued in 2016, with the greatest number of newly registered cases brought against Western European states.
Spain was involved in the largest number of disputes (10 new cases registered), followed by Italy (four new cases registered). Egypt (three new cases registered) was the only other country involved in more than two new cases.
The number of cases registered against South American states more than doubled in 2016, perhaps reflecting increasing instability in the region.
The cases involved a broad spread of economic sectors. The highest number of cases involved the electric power and other energy sectors – representing 35% of cases. This reflects the continued reliance by foreign investors on protections under the Energy Charter Treaty. The next most common sector involved in investment disputes was the oil, gas and mining sector, which was involved in 20% of cases. Other sectors included construction, which was involved in 9% of cases, information and communication, finance and transportation, which were each involved in 7% of cases.
Bilateral investment treaties remained the most common basis of consent used to establish the ICSID jurisdiction, representing 51% of cases. This was followed by the Energy Charter Treaty, which represented 31% of cases.
There was a marked increase in the diversity of appointees in terms of nationality. There were 119 individuals from 40 different countries of origin appointed to tribunals which, according to the ICSID, represented the most diverse spread of nationalities in its history. However, despite this progress, the fact remains that 61% of appointees were of Western European or North American origin.
In terms of gender diversity of arbitral appointments, 23% of first time appointees were female, which suggests that gender diversity may be improving. However, only 13% of those appointments involved first time appointees. Extrapolating these figures, the total number of female appointees is only about 3%, which shows that the ICSID has a long way to go before gender parity is achieved.
For further information on this topic please contact Sherina Petit or Daniel Jacobs at Norton Rose Fulbright LLP by telephone (+44 20 7283 6000) or email ([email protected] or [email protected]). The Norton Rose Fulbright LLP website can be accessed at www.nortonrosefulbright.com