Our interview series on the Practical Law Arbitration blog continues with part 4 of my interview with Meg Kinnear, who since 2008, has been the Secretary General of the International Centre for Settlement of Investment Disputes (ICSID) at the World Bank.
In part 1 of the interview, Meg talked about her background and role at ICSID. In part 2, she focused on elements of ICSID procedure and in part 3 she considered changes to ICSID arbitration procedure. Finally, in part 4 Meg considers current topical issues in ICSID arbitration, such as the EU proposal for reformed ISDS provisions, transparency rules and third party funding.
EU trade agreements
What are your thoughts generally on the EU proposal for reformed ISDS provisions and the creation of an Investment Court System? In particular, do you think a tribunal made up of judges rather than arbitrators would be a good thing? And what are your views on the proposed appeal process?
We have not taken a position on these proposals because they are clearly matters that need to be determined among our member states. However, we have made it clear that we will support our member states should they want to make adjustments to the dispute settlement system, and so we follow these discussions carefully. In many respects the changes proposed by the EU and others model changes already made by ICSID, for example summary dismissal for want of legal merit. Similarly, the EU proposals build on the annulment remedy of ICSID, and so there is a very logical progression should states wish to pursue a more substantive standard of review.
With respect to an appellate body, this is something ICSID has been thinking about since 2004. ICSID issued a discussion paper on such a body in that period and began consultations on the matter. At the time member states found the proposal premature, however we remain ready and able to have such a discussion when our member states would like to do so. With 152 member states, ICSID is effectively a global investment court system and provides an excellent forum for further reflection if states would like to pursue the idea.
How would such proposals impact ICSID? Will there be a decrease in ICSID arbitration for disputes involving the EU? Do you envisage a shift in ICSID arbitration to the East, in particular to Singapore and Malaysia in light of the proposed new SIAC Investment Arbitration Rules on investment arbitration and the Kuala Lumpur cooperation agreement with ICSID?
It remains to be seen how such changes will affect ICSID and other institutions offering investment dispute settlement. In terms of the impact of such proposals, I think ICSID would be the logical place to house such mechanisms given its near universal membership, its experience and expertise, and the special features of the ICSID Convention.
Certainly there might be fewer cases if inter-EU disputes are diverted from arbitration, but that will ultimately depend on how jurisdictional matters are framed in those agreements.
In terms of regional origin of cases, we have witnessed an increase in cases from Eastern Europe and Central Asia and from Western Europe in the last few years (see ICSID statistics). Our goal is to provide service anywhere in the world that the parties wish, and we are able to do so through our network of over 120 World Bank offices plus our 14 facilities cooperation agreements. These include agreements with arbitration centres in Beijing, Hong Kong, Kuala Lumpur, Seoul, and Singapore, so there is no question that we can meet any requests for service in those (and other regions) if parties wish.
The ICSID Rules make some provision for transparency. Are you anticipating greater use of the UNCITRAL Rules on Transparency in the future?
ICSID has been a strong supporter of transparent proceedings since its creation. The ICSID Rules also provide for certain mandatory provisions on transparency such as publication of awards. In addition, they are permissive in that parties can agree to higher transparency standards that meet or exceed the standards in the UNCITRAL Transparency Rules. My sense is that we will increasingly see consensual agreement to increased transparency at ICSID and we will increasingly see individual investment treaties explicitly requiring an enhanced level of transparency.
Third party funding
Given recent cases on disclosure of third party funding agreements and security for costs, do you think guidelines are needed?
I have been involved in several committees on third party funding and I am still pondering whether any particular disclosure is required, and if so, what level and form of disclosure. Certainly if the funding affects the integrity of the process, disclosure should be required, but it is a difficult question. With respect to security for costs, I think the present rules allow sufficient flexibility to order appropriate security for costs, but I do think we will increasingly see requests for such orders in the future. It is a matter which several ICSID states have raised with the Centre, and it may be an apt issue for our Administrative Council to consider.
Fair and Equitable Treatment and Most Favoured Nation clauses
Even if the EU Trade Agreement proposals do not go ahead, do you think there should be some codification of case law in relation to the Fair and Equitable Treatment and Most Favoured Nation standards to improve consistency between ICSID decisions?
ICSID does not take a position on the elaboration of substantive standards as this is usually at issue between the parties in each case.
What percentage of awards are not translated into English? Why are some translated and others not?
I don’t know the percentage of awards published in each language, however this is a decision made by the parties. At the start of each case the parties agree on the official language or languages of each case, and the awards are issued in those language(s) (see Rule 22, ICSID Arbitration Rules). As a result, awards are issued in the languages decided by the parties, and if two or more languages are selected, the awards are issued in those languages and each language version is equally authentic. Translation of awards is a very precise task, and ICSID is lucky to have many multi-lingual tribunal secretaries as well as access to superb translators to assist with this task.
Enforcement of awards
What can ICSID do about states that don’t pay awards rendered against them? Has the provision for state to state arbitration in those circumstances ever been used?
From the information available to us, ICSID awards have a very high rate of compliance. The provisions of the ICSID Convention making awards final and binding on states and with regard to enforcement are generally respected by states. Where an award is not paid and this is brought to the attention of ICSID, we will write to state officials and ask them to inform us concerning the measures taken to comply with an award. Similarly, the World Bank endorses the importance of compliance with ICSID awards and encourages member States to comply with outstanding awards. The state to state provisions have not been used in this context to date. An equally important issue that has been raised in recent empirical surveys and raised by some states is to ensure compliance with awards of costs in favour of states. This can be addressed in appropriate cases through orders of security for costs, but it is certainly of concern to member states.