International Centre For Settlement of Investment Disputes - History

History

In the 1950s and 1960s, the Organization for European Economic Cooperation (now the Organisation for Economic Co-operation and Development) had made several attempts to create a framework for protecting international investments, but its efforts revealed conflicting views on how to provide compensation for the expropriation of foreign direct investment. In 1961, then-General Counsel of the International Bank for Reconstruction and Development (IBRD) Aron Broches developed the idea for a multilateral agreement on a process for resolving individual investment disputes on a case by case basis as opposed to imposing outcomes based on standards. Broches held conferences to consult legal experts from all parts of the world, including Europe, Africa, and Asia, to discuss and compose a preliminary agreement. The IBRD staff wrote an official draft of the agreement and consulted with legal representatives of the IBRD's Board of Directors to finalize the draft and have it approved. The Board of Directors approved the final draft of the agreement, titled Convention on the Settlement of Investment Disputes between States and Nationals of Other States, and the Bank president disseminated the convention to its member states for signature on March 18, 1965. Twenty states immediately ratified the convention. The convention, establishing the International Centre for Settlement of Investment Disputes, entered into force on October 14, 1966.

Bilateral investment treaties proliferated during the first decade of the 21st century, reaching more than 2,500 by 2007. Many such treaties contain text that refers present and future investment disputes to the ICSID. From its launch to June 30, 2012, the ICSID has registered 390 investment dispute cases. Of the ICSID's caseload, 88% are convention arbitration cases, 2% are convention conciliation cases, 9% are additional facility arbitration cases, and 1% are additional facility conciliation cases. As of 30 June 2012 (2012 -06-30), the ICSID's registered cases are distributed across economic sectors accordingly: oil, gas, and mining (25%), electricity and other energy (13%), other industries (12%), transportation (11%), construction (7%), financial (7%), information and communication (6%), water, sanitation, and food protection (6%), agriculture, fishing, and forestry (5%), services and trade (4%), and tourism (4%). As of 27 July 2012 (2012 -07-27), 246 of the ICSID's registered cases have been concluded. Of the outcomes for arbitration proceedings as of 30 June 2012 (2012 -06-30), 62% of disputes have been resolved by the ICSID's tribunal, while 38% have been settled or discontinued. Of the conciliation proceedings, conciliation commission reports were issued for 67%, while 33% of proceedings were discontinued. For conciliation proceedings wherein a conciliation commission report was issued, 75% of the reports recorded failure to reach agreement while 25% recorded agreement among parties.