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Author

Mr Giammarco Rao

Adjunct Lecturer - Queen Mary University of London

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ICSID and non-ICSID Awards

I. Introduction

1.

An arbitral award can be defined as a final de facto and de jure judgment having binding transnational effects and deriving from the parties’ consent as provided in the arbitration clause contained either in a contract or treaty.1 It should be noted that for definition purposes this note does not distinguish between commercial and investment arbitration awards.

2.

In the context of international investment law, one can distinguish between ICSID and non-ICSID awards. Such distinction is generally drawn by considering the different legal frameworks under which awards are rendered, recognised, and enforced.2 3 For these purposes, ICSID awards fall within the scope of the self-contained regime created by the ICSID Convention.4 Non-ICSID awards are subject to the relevant institution rules chosen by the parties, the New York Convention, and the law of the seat of arbitration. An example of non-ICSID award is a decision rendered by an arbitral tribunal under the UNCITRAL Arbitration Rules.5

II. Awards' requirements

A. Formal requirements of ICSID awards

3.

Defined by Schreuer as “the final decision of the tribunal by which it disposes of all questions before it”,6 an ICSID Award must be in line with the mandatory provisions of Article 48 of the ICSID Convention. In particular, an ICSID award must be the result of a majority vote of an ICSID tribunal, which will have to render an award in writing, signed, and dated.

4.

In terms of content,7 it should be noted that the award must address every question submitted to the tribunal which has to indicate in the award the reasons supporting its decision. Failure to state such reasons might result in the annulment of the award, according to Article 52 (1)(e) of the ICSID Convention. Further, concurring and dissenting opinions can be attached to the award,8 with a full dissenting opinion required when the dissenting member is in the majority of the tribunal. Finally, while the publication of the award by the Centre is subject to the consent of the parties,9 it should be noted that the ICSID Centre will include excerpts of the legal reasoning of the award in its published works.

B. Formal requirements of non-ICSID awards

5.

Despite not falling within the same framework, non-ICSID awards must meet requirements similar to the ones provided by the ICSID Convention. This is particularly true if one were to look, for example, at Articles 33 and 34 of the UNCITRAL Arbitration Rules. To begin with, Article 33(1) provides the traditional rule in arbitration, which is the majority rule.10 That is any decisions must be rendered by the majority of the tribunal. Further, Article 34 provides the possibility that arbitral tribunals could render separate awards on different issues at different times.11

6.

In terms of form and content of the award, Article 34 prescribes the written form of the award, the inclusion of the date of the award, the indication of the place of arbitration, and the signature of the arbitrators. In case any members of the tribunals fail to sign the award, Article 34 requires that the award will state the reason why such signature is absent. Also, it should be noted that the possibility of issuing and appending to the award dissenting or concurring opinions is not expressly provided by Article 34. However, such a possibility has been considered accepted practice.12

III. Difference between ICSID and non-ICSID awards

7.

As mentioned above, depending on whether an award is rendered under the ICSID Convention or other institution rules, it is possible to distinguish between ICSID and non-ICSID awards.

A. Impact of the law of the seat of arbitration

8.

ICSID awards are regulated by the ICSID Convention, which creates a self-contained regime. This self-contained regime is insulated from the law of the place of arbitration, which does not have ‘juridical relevance’13 to determine the procedural and substantial law applicable to ICSID proceedings. Accordingly, ICSID awards are subject only to the rules provided by the ICSID Convention.

9.

Unlike in the ICSID regime, the law of the seat of arbitration ("lex loci arbitri") plays an important role in non-ICSID arbitration proceedings. For example, in the context of the UNCITRAL Arbitration Rules, Article 18 provides that "[t]he award shall be deemed to have been made at the place of arbitration." This is particularly relevant, with respect to the enforcement of the award which is regulated by the New York Convention. Indeed, Article V(1)(e) of the New York Convention provides that the enforcement can be refused if "[t]he award is not binding, has been set aside or suspended by a competent court of the country where, or under the law of which, the award was rendered."14

B. Remedies under the ICSID Convention

10.

Article 53 of the ICSID Convention prescribes the binding character of ICSID awards, expressly excluding the possibility of subjecting them to remedies other than the ones provided by the ICSID Convention. In particular, they might be subject to supplementation and rectification (Art. 49), interpretation (Art. 50), revision (Art. 51), and annulment (Art. 52). See further Correction of mistakes in ICSID and UNCITRAL awards and Annulment of ICSID awards.

C. Recognition and enforcement of ICSID awards

11.

In case of non voluntarily compliance with the award, the enforcement system under Article 54 of the ICSID Convention will come into play. In particular, Article 54 provides a general obligation whereby all Contracting States shall recognise ICSID awards and enforce the pecuniary obligations imposed by them as if they were final judgments from their domestic courts. Recognition means confirmation of the authenticity of the award,15 implies a res judicata effect,16 and constitutes the first step before the enforcement,17 unless the award does not impose pecuniary obligations.18 As to the enforcement of the awards, Article 54 (3) prescribes that the domestic law of the State in which enforcement is sought will apply to the execution of the awards. See further Recognition and Enforcement of ICSID awards.

12.

Further, it should be noted that the refusal to recognise and enforce an ICSID award would result in the violation of Articles 53 and 54 by the refusing State.19 In this case, an investor would be left with the possibility of calling for diplomatic protection under Article 27 of the ICSID Convention. Also, such a violation might, in principle, allow the Responding State or the investor’s State to bring a claim before the International Court of Justice against the refusing State under Article 64 of the ICSID Convention.

13.

Parties can request the annulment of the award to an ad hoc committee rather than domestic courts,20 the interference of which is expressly excluded by Article 53. Further, such request is limited to the grounds provided by Article 52 of the ICSID Convention.

D. Recognition and enforcement of non-ICSID awards

14.

Non-ICSID awards fall within the scope of the institution rules chosen by the parties to govern the arbitration proceedings, the New York Convention, and the law of the seat of the arbitration.

15.

Non-ICSID awards are recognised and enforced under the New York Convention, which, under Article III, imposes an international treaty obligation on the Signatory States to ensure that their national courts recognise and enforce, in accordance with its terms, awards rendered by tribunals seated in other signatory States. In particular, courts will comply with such obligation when the parties provide them with the award and the arbitration agreement, as provided by Article IV. Further, unlike ICSID awards, non-ICSID awards enforcement is not limited to pecuniary obligations imposed by the award.21

16.

The parties to non-ICSID arbitration proceedings can challenge the award on the grounds provided by the New York Convention under Article V(1), and which are interpreted by domestic courts. Moreover, as provided by Article V(2), the domestic courts can refuse the enforcement of non-ICSID awards ex officio in two cases, namely: i) when the matter was not capable of settlement under the law of the country where the enforcement and recognition of the award are sought; or ii) when enforcement and recognition are contrary to the public policy of the country where they are sought. See further Recognition and Enforcement of non-ICSID awards.

17.

Moreover, it should be noted that the annulment, non-recognition and non-enforcement of non-ICSID awards have given rise to a number of ICSID arbitration cases.22

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