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ICSID’s Caseload Is Up, but Disappointingly the Number of Female Appointments Is Down

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The International Centre for Settlement of Investment Disputes (“ICSID) recently published its bi-annual report on its caseload statistics. The report covers ICSID’s fiscal year from July 1, 2019 to June 30, 2020, and it includes data on ICSID cases going back to the first case in 1972. ICSID is devoted to resolving disputes between states and foreign investors under bilateral and multilateral agreements on investment protection, as well as host-state investment laws. The latest report shows an increase in the number of cases concluded but a disappointing decline in the number of female arbitrator appointments.

Record Number of Cases Concluded

ICSID concluded 68 cases in FY2020 – the highest annual number in ICSID history, surpassing the previous record of 59 cases concluded in FY2019. This record reflects the continued impact of ICSID’s efforts to shorten the duration of cases.  Outcomes amongst states and investors remain balanced.

  • Seventy-four percent of cases were decided by a final award from an arbitral tribunal. Tribunals partly or fully upheld investors’ claims in 47% of cases, dismissed investors’ claims in 35% of cases, declined claims for lack of jurisdiction in 12% of cases, and dismissed claims for manifest lack of legal merit in 6% of cases.
  • Twenty-six percent of cases were settled or discontinued by the parties before final award. Of these cases, 62.5% were settled at the request of both parties, 12.5% were discontinued at the request of one party, 12.5% had a settlement agreement embodied in an award at the parties’ request, and 12.5% were discontinued for lack of payment of the required advances.

Year to year, demand continues to grow for ICSID’s services under other sets of arbitration rules, particularly those of the United Nations Commission on International Trade Law (“UNCITRAL”). In addition to administering UNCITRAL arbitrations, ICSID has also assisted with the organization of hearings in arbitration proceedings conducted under the auspices of the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the Permanent Court of Arbitration (PCA), the Stockholm Chamber of Commerce (SCC), and other institutions. View our recent client alert on the ICC and its released case statistics for 2019 to compare trends.

In FY2020, ICSID registered 40 new cases. This is lower than the number of cases registered in each of the last four years (which, together, average 54). Indeed, in FY2019, ICSID registered its highest number of new cases (56).

ICSID provided services for a record 21 cases governed by non-ICSID rules in FY2020. In most of these cases, the ICSID Secretariat provided full administrative services and hearing facilities to the arbitrators and parties, similar to its role with cases under the ICSID Rules. The majority (16) of these cases were investor-State arbitrations under the UNCITRAL Rules.

As in previous years, the majority of ICSID cases (57%) were brought under bilateral investment treaties, 16% were brought under the Energy Charter Treaty and 11% were brought under investment contracts between the investor and the host state.

Decline in Appointments of Women Arbitrators

The nationalities, geographic origins, and gender of arbitrators, conciliators and ad hoc committee members appointed in ICSID cases are also presented in the report.

In FY2020, 44 nationalities were represented in arbitrator, conciliator, and ad hoc committee member appointments – the greatest diversity of nationality in a single year at ICSID. Arbitrators from Western Europe were heavily represented (37%), similar to previous years, and disproportionately high in comparison to the number of cases involving Western European state respondents (8%). This was followed by arbitrators from North America (Canada, Mexico and the United States) (20%) and South America (16%). The remaining appointees were from South and East Asia and the Pacific (13%); the Middle East and North Africa (5%); Sub-Saharan Africa (4%); Central America and the Caribbean (3%); and Eastern Europe and Central Asia (2%).

Eighty-six percent of appointed arbitrators, conciliators, and ad hoc committee members were men and 14% were women. This is a step back from progress made in previous years: 24% of appointed arbitrators in FY2018 and FY2019 were women. ICSID’s performance on gender equity is markedly different from the trend observed at the ICC over a similar period, as discussed in our previous client alert. Over 21% of the arbitrators appointed by ICSID in FY2020 and 22% of respondent appointments were women, while only 2% of appointments were made by claimants.  Most disappointingly, none of the appointments made by co-arbitrators were women. In FY2019 (July 1, 2018 to June 30, 2019), ICSID appointed 29% of women appointees, respondents appointed 31%, and claimants appointed 10%. The remaining 32% of women appointments were made jointly by the parties or by the co-arbitrators. In FY2018 (July 1, 2017 to June 30, 2018), 30% of women were appointed by ICSID, 35% were appointed by respondents, and 6% by claimants.  The remaining women appointees were appointed by parties jointly (24%) or by co-arbitrators (8%).

As an institution, ICSID’s efforts are close to those of other institutions’ appointment of female arbitrators, such as the ICC. This confirms ICSID’s awareness of the problem of gender imbalance and its willingness to act to improve it, which can only serve to yield better results when there is gender parity in the pool of candidates from which the appointments are made. The onus is on claimants and their counsel to step up their efforts to appoint female arbitrators if we are to see a significant improvement in gender equity.

Energy Sector Dominates

As in previous years, cases involving energy sectors dominated. The majority of new cases involved the oil, gas and mining sector (30%) and electric power and other energy sources (20%); a trend similarly seen in the ICC. These were followed by disputes related to construction (17%), information and communication (10%), finance (7%), transportation (5%), agriculture, fishing and forestry (3%), and services and trade (3%). A mix of other industries accounted for the remaining 5% of cases registered in FY2020.

V&E’s International Dispute Resolution & Arbitration (IDR) practice assists clients in all aspects of dispute resolution, from drafting contractual arbitration clauses to resolving disputes through mediation, arbitration, and litigation. Consistently recognized in Global Arbitration Review’s GAR 100 (2008-2020), V&E’s IDR team of over 40 members located in Washington, Houston, London, and Dubai has handled disputes related to projects around the world in over 80 countries, in virtually every arbitral venue, and under all major international and regional rules systems.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.