In ICSID arbitration, discontinuance is one of the ways for terminating proceedings. Different from an award, which contains a final and binding decision based on the facts and applicable law, discontinuance can be caused by an agreement of the parties to terminate the proceedings or by the parties’ failure to abide by the procedural rules. According to ICSID, 35% of the cases are settled or otherwise discontinued.1 This matter is not regulated in the ICSID Convention, but in the ICSID Arbitration Rules and the ICSID Administrative and Financial Regulations. When the tribunal is not constituted, the ICSID Secretary-General decides on the issue.
A. Discontinuance under Rule 43
Under Rule 43 of the ICSID Arbitration Rules the parties to the proceedings may jointly request its discontinuance. The tribunal can issue an order taking note of the discontinuance2 or, if both parties ask and the tribunal agrees, embody the parties’ settlement in an award.3
B. Discontinuance under Rule 44
Under Rule 44 of the ICSID Arbitration Rules a party may request unilaterally the discontinuance of the proceedings. If the other agrees or does not answer the request within the time limits fixed by the tribunal or the Secretary-General, the tribunal4 or, if the tribunal is not yet constituted, the Secretary-General5 takes note of the discontinuance by an order. If the other party opposes the discontinuance, the proceedings continue.6
C. Discontinuance under Rule 45
D. Discontinuance under Administrative and Financial Regulation 14(3)(d)
II. Discontinuance under ICSID Additional Facilities’ Rules
The same rules and principles concerning the discontinuance of ICSID arbitration proceedings apply mutatis mutandis to ICSID Additional Facilities arbitration proceedings. The ICSID Arbitration Rules 43, 44 and 45 are reproduced in Articles 49, 50 and 51 of the Additional Facilities Arbitration Rules, respectively. Furthermore, pursuant to Article 5 of the Additional Facilities Rules, the ICSID Administrative and Financial Regulations apply, including Regulation 14 concerning the discontinuance of proceedings in case of failure of a party to pay the advance on costs.
III. Effects of discontinuance
An order discontinuing the proceeding is not an award and lacks res judicata effect. Hence, a discontinued case, although it cannot be resumed, has not been decided with res judicata effect. However, it can be resubmitted to new ICSID arbitration proceedings.
There are two caveats to this rule. One is the tribunal’s decision on costs: although orders discontinuing proceedings usually do not contain decisions concerning costs and their apportionment, they are binding upon the parties when they do. However, tribunals diverge on their power to render a decision on costs in a discontinuance order. Some tribunals rejected it, since they considered that this decision can only take place in a final award.10 Others considered it part of their inherent powers.11
The second caveat concerns the possibility under ICSID Arbitration Rule 43(2) for a tribunal to discontinue the proceeding by embodying the parties’ settlement in an award. Such an award has the same legal effects as any other final decision of a tribunal.12 (See Section I.A. above). Decisions on costs included in these awards are usually agreed by the parties.13
Kalderimis, D.R., and Others, ICSID Arbitration Rules, Chapter V, in Mistelis, L.A. (ed.), Concise International Arbitration, 2nd ed., 2015, pp. 328—330.
Bluebook 20th ed., ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), 4 International Tax & Business Lawyer 362, 1986, pp. 399-401.
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