International Investor-State Arbitration: An Empirical Analysis of ICSID Decisions on Jurisdiction

Article excerpt

I. INTRODUCTION

The International Centre for Settlement of Investment Disputes (ICSID) was established as a division of the World Bank in 1966 as a neutral forum for the direct adjudication of investmentrelated disputes between foreign nationals and host-country1 sovereigns.2 For centuries, the framework for resolution of international investment disputes left investors to rely on their home country governments for enforcement of the investors' claims against a foreign government.3 In part, the establishment of ICSID represented an attempt to "depoliticize" investment disputes by empowering investors to pursue directly their claims against the governments that hosted (and then took) foreign investments.4

After a slow start, ICSID has grown increasingly prominent in the last decade, in large part due to a symbiotic relationship with rapidly proliferating bilateral investment treaties (BITs).5 Today, ICSID is the leading forum for the adjudication of disputes between private international investors and the sovereigns that play host to their investments,6 and the number of claims filed annually at ICSID has increased dramatically in the last two decades.7 As ICSID continues to gain prominence as a forum for resolving investor-state disputes, an increased focus on the institution itself is warranted, including an assessment of the efficacy, neutrality, and consistency of ICSID arbitral tribunals.8 This Article takes a step in that direction by providing an empirical analysis of ICSID decisions on jurisdiction.

To date, ICSID-related literature has been written primarily for a practitioner authence;9 most of the relevant academic literature addresses ICSID and its jurisprudence only tangentially.10 Within the small subset of academic literature that does focus directly on ICSID as an institution, scholars have expressed concern for the consistency of substantive decision-making by ICSID tribunals' ' and asked whether an appellate body is needed, both questions which could benefit from the development of a comprehensive empirical study of ICSID.12 Few such studies have been conducted in the realm of international arbitration,13 although notable examples exist in the field of commercial arbitration. And, after 40 years, there is still no comprehensive empirical assessment of ICSID - the premiere arbitral forum for the resolution of investor-state disputes.14

This Article serves as a first step toward the development of a comprehensive empirical literature addressing the settlement of investor-state disputes through ICSID arbitration. It does so by exploring the correlation of several legal and non-legal factors with the outcome of jurisdictional challenges at ICSID. The factors explored in this study include: (i) the legal basis for establishing the host country's consent to jurisdiction; (ii) the quality of the hostcountry government's domestic institutions; and (iii) relative wealth differences between the host country and the investor home country. The results and findings presented herein are based on our original database which includes every publicly available decision on jurisdiction by ICSID tribunals.15

Our analyses led to a number of findings, and we consider three, in particular, to be the most provocative. First, our data reveal that ICSID tribunals have rarely declined to hear the claims submitted to them on jurisdictional challenges. Arbitrators seldom turn away investors seeking resolution of their claims before ICSID, although investors may be approaching the end of the era of nearabsolute acceptance of jurisdiction. Second, investors who carefully negotiated host-country consent to ICSID jurisdiction on their own initiative - rather than rely on host-country consent manifested in an investment treaty independently negotiated by their government hurt their claims' ability to withstand objections for lack of jurisdiction. Third, our analyses showed that investors from the richest countries have experienced the greatest success in securing ICSID jurisdiction for the resolution of their claims. …

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