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Ms Laura Zinnerman

Associate - Dechamps International Law

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Grounds of Annulment in ICSID Awards

I. Grounds for annulment of ICSID awards

A. Exhaustive nature of Article 52(1) of the ICSID Convention

2.

Annulment proceedings are a limited and exceptional recourse,1 safeguarding against the violation of fundamental principles of law which govern the Tribunal’s proceedings.2 Therefore, the list of annulment grounds included in Article 52 is exhaustive.3 An ad hoc Committee may only annul an award based on one or more of such grounds, but not on any additional ones.4 

B. Interpretation of grounds for annulment

3.

The grounds listed in Article 52 shall be interpreted pursuant to Article 31 of the Vienna Convention on the Law of Treaties, e. in good faith, in accordance with the ordinary meaning of the ICSID Convention’s terms in their context and in light of its object and purpose,5 neither extensively nor restrictively.6

4.

Article 52 circumscribes the grounds for annulment by qualifying them with adjectives such as “manifest”, “serious” or “fundamental”.7 Consequently, only circumstances reaching such heightened thresholds may warrant the annulment of an award.8

5.

In practice, arbitral tribunals and other legal authorities have interpreted each of the annulment grounds as follows:

  1. improper constitution of the Tribunal: departure from the parties’ agreement9 or from the ICSID Convention’s procedure for appointing or challenging arbitrators;10
  2. manifest excess of powers by the Tribunal: deviation from the arbitration agreement11 or failure to apply the proper law;12
  3. corruption on the part of a Tribunal member: acceptance of undue instructions or compensation in connection with the arbitration;13
  4. a serious departure from a fundamental rule of procedure: breach of basic procedural principles related to the fairness and integrity of the proceedings;14 and
  5. failure to state reasons: lack of elements which allow to understand the tribunal’s reasoning in reaching its conclusion.15

II. Practical effects of Article 52 of the ICSID Convention

A. Use of several grounds

6.

Article 52(1) states that a request for annulment may be based “on one or more” grounds, thus allowing a party to invoke multiple grounds in a single annulment proceeding.16

B. Classification of grounds

7.

A party may invoke different grounds for annulment simultaneously to attack the same aspect of an award, as they tend to overlap.17 Nevertheless, it should identify separately how the different grounds involved are provoked by the same aspect of a challenged award.18 

8.

Three of the five grounds for annulment of Article 52(1) (manifest excess of powers, serious departure from a fundamental rule of procedure and failure to state reasons) are often invoked in requests for annulment.19

C. Burden of proof

9.

In an annulment proceeding, the applicant (that can be either the investor or the state) carries the burden of proof in establishing the existence of any of the annulment grounds it invokes.20

D. Scope of the annulment request

10.

A party may not submit new factual or legal arguments when invoking one or several annulment grounds.21 The submission of new evidence to support any of the annulment grounds is also not allowed.22 

E. Scope of the examination of grounds for annulment by an ad hoc Committee

11.

Each annulment request is decided by a three-member ad hoc Committee appointed for that purpose from the ICSID Panel of Arbitrators by the Chairman of the Administrative Council.23 

12.

Each ad hoc Committee has discretion regarding the extent of the annulment based on any of the grounds of Article 52.24 

13.

Ad hoc Committees are not bound to annul an award if one of the grounds for annulment is present.25 Rather, they may exercise their authority in weighing the gravity of the circumstances which constitute the ground for annulment and the materiality of their effect upon the outcome of the case.26

14.

An ad hoc Committee may examine the facts of the case, but only insofar as necessary to evaluate whether the invoked grounds of annulment have been substantiated.27

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