The Expansion of Jurisdiction by Icsid Tribunal: Approaches, Reasons and Damages

Topics: Arbitration, Contract, International Centre for Settlement of Investment Disputes Pages: 24 (8084 words) Published: June 20, 2013
The Expansion of Jurisdiction by ICSID Tribunal: Approaches, Reasons and Damages

CHEN Huiping(

1. Introduction

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.[1] 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.[2] 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 side, the national of another contracting state. Thirdly, the parties to the dispute must have "consent in writing" to ICSID jurisdiction over their dispute.

For a dispute to be submitted to ICSID for resolution, the party to the dispute wishing to institute arbitration proceedings shall address a request to that effect in writing to the Secretary-General of ICSID. The Secretary-General has the power of preliminary examination to decide whether the dispute falls within the jurisdiction of ICSID. He shall register the request unless he finds that the dispute is manifestly outside the jurisdiction of the Centre.[3]However, the registration by the Secretary-General in itself does not demonstrate that ICSID has definite jurisdiction over the relevant case. The other party to the dispute at issue may still challenge the ICSID jurisdiction.

It is the tribunal who has final say as to the jurisdiction since the Convention confers the authority to the tribunal to judge its own competence and determine whether it has jurisdiction over a specific dispute.[4]

Since the tribunal has discretion to determine the jurisdiction, this leaves space for it to expand its jurisdiction, intentionally or unintentionally.

3. The Approaches the Tribunal Uses to Expand Its Jurisdiction in Practice

Since there are three requirements in Article 25 of the ICSID Convention for the tribunal to have jurisdiction over a specific dispute, to expand its jurisdiction, the tribunal will have to expand the interpretation or the scope of application of Article 25 to fit the above requirements, or to expand the interpretation or scope of application of relevant articles in a related bilateral investment agreement (BIT) that address the elements of the three requirements. The following will elaborate the approaches of expansion from the perspectives of both Article 25 and BITs.

3.1 Expanding jurisdiction by broadening interpretation of Article 25 of the ICSID Convention

As mentioned...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • icsid Essay
  • Essay on jurisdiction
  • Reasons for Expansion of the United States Research Paper
  • Jurisdiction of Selected Tribunals in Nigeria Essay
  • damages Essay
  • damage Essay
  • Universal jurisdiction Essay
  • Approaches Essay

Become a StudyMode Member

Sign Up - It's Free