Author

Mr Ruslan Mirzayev

International Arbitration Attorney, Mediator - Adrem Attorneys Law Firm

Editors
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Mediation in Investment Disputes

I. Introduction

1.

This note discusses the use of mediation in the settlement of disputes between investors and States.

2.

Mediation may be defined as a structured negotiation process assisted by a neutral person.1 While mediation and conciliation may be defined differently due to the role of the neutral, they are both assisted negotiations in essence and in practice the line between these two concepts may be blurred. Although ICSID has a set of conciliation rules and will soon have a set of mediation rules, in this note, the terms mediation and conciliation have been used as equivalents.

II. Overview of mediation in investor-State dispute settlement (ISDS)

3.

Mediation has been stipulated in investment treaties at least for more than 55 years.2 However, most investment treaties still do not include any mediation clause.3

4.

None of the investment treaties includes any mediation provisions mandatory for both parties.4 Some investment treaties permit States5 or investors6 to unilaterally invoke a given mediation clause.

5.

In addition to numerous bilateral and multilateral7 investment treaties, the International Centre for Settlement of Investment Disputes (ICSID) Convention also authorizes conciliation.8

6.

A growing number of model investment treaties include mediation.9 

7.

Some countries have made it mandatory for investors to go through mediation before applying to arbitration.10

III. Current situation in practice

8.

Mediation has not become a widely applied dispute resolution mechanism for investor-State disputes. For instance, at time of writing only 12 cases out of 745 cases, i.e. 1.6% of the cases received by ICSID, were conciliation cases.11

9.

In addition, some other investor-State disputes have been referred to mediation outside of the ICSID Conciliation Rules.12 There is not much information available relating to these cases. It is reported that these cases include mediation procedures conducted before arbitration, in parallel with arbitration and as an alternative to arbitration.13 

10.

At time of writing, there are several initiatives by intergovernmental, public and private institutions to promote and reform investor-State mediation. The United Nations Commission on International Trade Law (UNCITRAL) Working Group III (Investor-State Dispute Settlement Reform) is also exploring mediation as a method of resolving investor-State disputes.14 The adoption of the United Nations Convention on International Settlement Agreements Resulting from Mediation in 2019, known as the Singapore Convention, may also be viewed as an endorsement of mediation by a number of states.15

IV. Mediation rules

11.

While investor-State disputes may also be mediated under regular mediation rules, there are also some mediation rules specifically designed for investor-State dispute settlements.

12.

ICSID has rules on ICSID Convention Conciliation and Additional Facility Conciliation, regulating voluntary conciliation. Currently, ICSID is developing new mediation rules in conjunction with its existing arbitration and conciliation rules.16

13.

The Permanent Court of Arbitration (PCA) Optional Rules for Conciliation on Disputes Relating to Natural Resources and/or the Environment “reflect the public international law element” pertaining to disputes with States.17

14.

The International Bar Association (IBA) Rules for Investor-State Mediation are “designed for the mediation of investment–related differences or disputes involving States and State entities”.

15.

While not specifically designed for investor-State disputes, the International Chamber of Commerce (ICC),18 Stockholm Chamber of Commerce (SCC),19 PCA,20 and UNCITRAL21 also have mediation rules.

V. Mediation guidelines

16.

There are some non-binding documents prepared by different institutions to assist parties in relation to investor-State mediation.

17.

For example, the aim of the International Mediation Institution (IMI) Competency Criteria for Investor-State Mediators is to help with the selection of competent and suitable mediators for investor-State disputes.22

18.

Another example is the Energy Charter Treaty (ECT) Guide on Investment Mediation, which is “an explanatory document that could be voluntarily used by governments and companies to take the decision on whether to go for mediation and how to prepare for it.”23

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