Business disputes often arise between parties with varying interests. Resolving these disputes can make all the difference – especially when you have invested money or time. In the U.S., many people wish to avoid the costly and lengthy process of trial to resolve their issues. To do so, they may rely upon arbitration, a type of legal dispute resolution. But what happens when the parties who disagree are from different countries? In these cases, the ICSID can prove effective.
What is the Purpose of the ICSID?
ICSID, formally known as the International Centre for Settlement of Investment Disputes, is an autonomous, specialized international arbitration agency that is part of and funded by the World Bank Group. The ICSID is headquartered in Washington, D.C.
The ICSID was founded in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This was organized for the purpose of encouraging international investments, mitigating certain risks, and establishing an environment in which investment disputes between member states and foreign investors can be settled. The ICSID, which provides neutral and independent arbitration proceedings, is the leading institution for international investment dispute settlement. It is often used to help parties with disputes that revolve around contracts, investment agreements, and treaties.
Who Governs It?
The Administrative Council, which meets annually, is responsible for governing the ICSID. The Council, which consists of one representative from each member state and is chaired by the President of the World Bank Group, is responsible for a variety of things related to the operation, such as:
- Approval of rules and regulations;
- Electing the secretary-general and deputy secretary-general;
- Approval of the budget and annual report; and
- Conducting case proceedings.
There are 40 employees and the secretary-general of the ICSID who make up the Secretariat. The Secretariat is responsible for the normal operations.
According to caseload statistics published by the ICSID, as of December 31, 2022, 30 different states were named as respondents in 41 cases registered in 2022. Eastern Europe and Central Asia as well as South America make up nearly half of all cases (by state party involved). North America makes up only five percent of all cases.
Services Offered by the ICSID
There are three main services that the ICSID helps to provide. These services include the following.
1. Arbitration Proceedings
Obviously, one of the main (and most popular) services is arbitration. In fact, arbitrations make up almost 99% of the ICSID’s caseload. This arbitration occurs between investors and the ICSID has the job of facilitating it. Arbitration proceedings are conducted in accordance with the ICSID Convention and the ICSID Arbitration Rules.
2. Conciliation Proceedings
Sometimes the parties want non-binding resolutions for their investment disputes. In such cases the ICSID can provide conciliation services. This means that the ICSID helps to assist the parties in negotiations in order to reach a settlement.
3. Technical Assistance and Research
The third main service is technical assistance and research. The ICSID offers various resources to member states in order to help them develop the legal framework for investments. This ICSID also conducts research and provides the parties with materials related to the practice of international investment law.
While the ICSID’s awards and decisions are generally binding and enforceable under the ICSID Convention, it’s important to understand that the ICSID’s jurisdiction only includes disputes arising from treaties and/or investment contracts that transpire between member states and foreign investors who are nationals of other member states.
U.S. Counsel Services for Foreign Businesses
If your business is located outside of the United States but you engage in U.S.-based operations, it’s critical that you seek legal counsel from an attorney who understands the complex issues involved. Whether you have ongoing legal issues related to a business expansion or are simply engaged in a singular transaction, the lawyers at Transnational Matters can assist with all of your American and international endeavors.
When it comes to foreign and domestic businesses, we can assist with your transactions and general corporate needs. Contact our experienced transnational litigation and arbitration attorneys today!