The Expansion of Jurisdiction by Icsid Tribunal: Approaches, Reasons and Damages
Pages: 33 (8084 words) /
Published: Jun 21st, 2013
In recent years, the investor-state dispute settlement mechanism (sometimes it is referred to as international investment arbitration) has received extensive critique from developing countries, scholars and civil society. Its legitimacy is challenged or questioned due to various reasons including the inconsistency of arbitral awards, lack of transparency, etc. In my opinion, the practice of expansion of jurisdiction by some ICSID tribunals also contributes to the critiques and challenges, because some cases which did not fall into the jurisdiction of arbitral tribunals were improperly or wrongfully arbitrated by the tribunals. This article examines the various approaches used by ICSID tribunals in practice to expand their jurisdiction, the possible reasons for such expansion, and the potential damages caused thereby.
2. The Legal Basis for ICSID Tribunal’s Jurisdiction
That a tribunal has jurisdiction over a dispute is the premise and condition for the tribunal to hear and decide the case. In other words, only after the tribunal determines that it has jurisdiction over a dispute can it hear and decide the merits of the dispute. Therefore, the respondent of a case will normally challenge the tribunal’s jurisdiction as a first step and a procedural issue before it defends for the merits of the case.
According to Article 25 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “Washington Convention” or “ICSID Convention” or “Convention”), for a dispute to fall into the jurisdiction of an ICSID tribunal, it has to meet three requirements. Firstly, the dispute must be a "legal" one, arising "directly out of an investment." Secondly, the parties to the dispute must be, on the one side, a contracting state or a designated constituent subdivision or agency thereof and, on the other