The Convention on the Settlement of Investment Disputes between States and Nationals of Other States, commonly known as the ICSID Convention, is an international treaty established in 1965. It provides a framework for the settlement of investment disputes between states and private investors from other countries.
The ICSID Convention was created by the International Centre for Settlement of Investment Disputes (ICSID), which is an institution affiliated with the World Bank. The primary objective of the convention is to promote and protect foreign investment by providing a neutral and independent forum for the resolution of investment disputes.
Key features of the ICSID Convention include:
- Jurisdiction: The convention establishes ICSID as a forum for the resolution of investment disputes. It grants jurisdiction to ICSID to hear disputes arising directly out of an investment between a state (contracting party) and a national of another state (also a contracting party).
- Consent to Arbitration: By ratifying or acceding to the convention, states and nationals of other states consent to submit their investment disputes to ICSID arbitration. This consent is binding and enforceable.
- Arbitration Procedures: The convention sets out detailed procedures for the conduct of arbitration, including the selection of arbitrators, the conduct of proceedings, and the enforcement of arbitral awards. The arbitration is conducted in accordance with the ICSID Rules and is binding on the parties.
- Enforcement of Awards: The convention provides for the recognition and enforcement of ICSID arbitral awards in all contracting states. Such awards are treated as if they were final judgments of the courts of that state.
- Exclusivity: The ICSID Convention provides an exclusive mechanism for resolving investment disputes between states and nationals of other states. Once the parties have consented to ICSID arbitration, they cannot pursue the same dispute in any other forum unless the arbitration proceedings are terminated.
The ICSID Convention has been widely ratified, with over 160 contracting states. It has played a significant role in promoting international investment and providing a stable and predictable environment for investors.