Academic journal article Texas International Law Journal

Responding to the Threat of Withdrawal: On the Importance of Emphasizing the Interests of States, Investors, and the Transnational Investment System in Bringing Resolution to Questions Surrounding the Future of Investments with States Denouncing the ICSID Convention

Academic journal article Texas International Law Journal

Responding to the Threat of Withdrawal: On the Importance of Emphasizing the Interests of States, Investors, and the Transnational Investment System in Bringing Resolution to Questions Surrounding the Future of Investments with States Denouncing the ICSID Convention

Article excerpt

SUMMARY

INTRODUCTION ....................602

I. INVESTMENT IN THE TWENTIETH CENTURY AND THE RISE OF THE ICSID.604

II. THE ICSID CONVENTION STRUCTURE AND THE FUNCTIONS OF THE CENTRE ....................8606

A. A rbitration by ICSID .................... 607

B. Consent or an Offer to Consent? .................... 610

C. BITs: An Offer to Consent .................... 610

D. BITs: Consent, Plain and Simple .................... 611

E. The Dilemma as It Relates to Withdrawal .................... 612

III. SOLVING WITHDRAWAL IN HOW WE TREAT DENOUNCERS .................... 615

CONCLUSION .................... 619

INTRODUCTION

The International Centre for Settlement of Investment Disputes (ICSID) has played an important role in the past several decades by way of bilateral and multilateral investment treaties (BITs and MITs, respectively).1 For a time, it seemed to be the ideal answer to the problems inherent in transnational investment, providing important additional protections for willing investors, most importantly in the form of an effective forum for resolving disputes that might otherwise be left to resolution in flawed judicial or administrative domestic proceedings or even left wholly unaddressed.2 In the past several years, however, the ICSID has come under fire, particularly from suspicious Latin American regimes.3 Bolivia,4 Ecuador,5 and Venezuela6 have all withdrawn from the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID Convention or Convention), the controlling treaty that established the ICSID.7 In January 2013 Argentina announced its intent to join the defectors.8

For a variety of reasons, these countries have shied away from the ICSID system.9 The withdrawal of these Contracting States from the jurisdiction of the ICSID Convention is a hugely controversial development, raising significant questions for scholars, statesmen, and investors alike.10 To name a few: What exactly does the withdrawal of these countries from the jurisdiction of the ICSID mean for each respective group? What will happen to an international investment if an investor wants to bring a claim like expropriation after the withdrawal has taken effect? Is the ideal of a world that is friendly to foreign direct investment (FDI) under the ICSID lost?

Though it has been several years since Bolivia, the first Contracting State to withdraw from the ICSID Convention, gave notice of its intent to leave the ICSID's jurisdiction in 2007," important policy questions remain. One such dilemma stems from the situation of countries like Argentina, currently tied to piles of unpaid damages from ICSID arbitral decisions in favor of its opponents, and the obligation such nations should face in regards to those awards after their withdrawal.12 Here, the typical response is that the ICSID Convention requires the continued recognition of such obligations.11 Consensus dwindles, however, when the conversation turns to potential disputes that investors, once relying on the protections of ICSID proceedings, might seek after the country has withdrawn.14

This Note takes a deeper look at the withdrawal disputes placing the ICSID's legitimacy in question in the eyes of the world's investors and statesmen. The Note will proceed in three parts. First, it will begin with a brief overview of the international investment system, focusing on the ICSID and the role the ICSID has come to play together with BITs. Second, the Note will offer a brief explanation of the ICSID's structure as outlined by the ICSID Convention, particularly as it relates to withdrawal of Contracting States, before turning to a brief outline of current scholars' views of BITs and how they function as a form of consent to ICSID jurisdiction. As the reader will discover, the understanding of the BIT as either consent to jurisdiction under the ICSID or an offer to consent to such jurisdiction creates important implications for those interested in the questions surrounding withdrawing parties. …

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