Author

Mr Dmitry Bayandin

Associate in Litigation and Arbitration - Willkie, Farr & Gallagher LLP

Editors
See all

ICSID Annulment Procedure: Ad hoc Committees and their Powers

I. Introduction

1.

One of the most distinctive features of the ICSID arbitration system is its annulment mechanism. ICSID arbitral awards are binding on the disputing parties and are not subject to any remedies, except those provided for in the Convention.1 This is a testament to the delocalized and self-contained nature of ICSID arbitration system, which is autonomous from any domestic law.2

2.

Specifically, either disputing party may submit an application for annulment of the award before the ICSID Secretary-General under one of the grounds and within the time limits set out at Article 52(1) of the Convention.3

II. The ad hoc Committee: composition and appointment

3.

Upon registration of the application for annulment, the Chairman of the ICSID Administrative Council appoints a three-member ad hoc Committee from the ICSID Panel of Arbitrators in accordance with Article 52(3) of the ICSID Convention.4

4.

While the ICSID Convention imposes no obligation to consult the parties about the ad hoc Committee appointment, it is ICSID’s practice to inform the parties of the proposed appointees and to submit their curricula vitae for the parties’ comments.5 That being said, with rare exception,6 the ad hoc Committees do not usually acknowledge this consultation process in their decisions.

III. Challenges of ad hoc Committee members

5.

The ICSID Convention and ICSID Arbitration Rules do not explicitly provide for a possibility for the parties to challenge ad hoc Committee members. Article 52(4) of the ICSID Convention does not list Articles 57 and 58 (dealing with disqualification of arbitral tribunal members)7 as applicable to the annulment proceedings,8 while the ICSID Arbitration Rule 53 only generally states that the Rules apply mutatis mutandis to the annulment proceedings.9 This, however, was sufficient for the few ad hoc Committees that have faced a request for disqualification of their members to assume jurisdiction to rule on such a request.10

6.

In all of these cases, the challenge to ad hoc Committee members was rejected,11 with two ad hoc Committees noting the limited value of the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration for deciding challenges of ad hoc Committee members.12

IV. Nature and scope of the ICSID annulment review

7.

An ICSID arbitral award can be annulled by an ad hoc Committee on one of the following grounds:

  1. the underlying arbitral tribunal was improperly constituted;
  2. the tribunal manifestly exceeded its powers;
  3. there was corruption on the part of a member of the tribunal;
  4. there was a serious departure from a fundamental rule of procedure; or
  5. the award has failed to state the reasons on which it is based.13
8.

The practice of ICSID ad hoc Committees has emphasized the following principles, which today form a consensus as to the nature and scope of the ICSID annulment review:14

  1. the grounds listed in Article 52(1) are the only grounds on which an award may be annulled;15
  2. annulment is an exceptional and narrowly circumscribed remedy and the role of an ad hoc Committee is limited;16
  3. ad hoc Committees are not courts of appeal, annulment is not a remedy against an incorrect decision, and an ad hoc Committee cannot substitute the underlying arbitral tribunal’s determination on the merits for its own;17
  4. ad hoc Committees should exercise their discretion not to defeat the object and purpose of the remedy or erode the binding force and finality of awards;18
  5. Article 52 should be interpreted in accordance with its object and purpose, neither narrowly nor broadly;19 and
  6. an ad hoc Committee has an authority – not an obligation – to annul an award, even if an Article 52(1) ground is made out,20 and an ad hoc Committee has discretion with respect to the extent of an annulment, i.e., either partial or full.21

Bibliography

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Legum, B. and Cho, J., Annulment: International Centre for Settlement of Investment Disputes (ICSID), Max Planck Encyclopedia of International Law, 2018, pp. 1-22. 

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