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Assignment: Raj Vardhan Agarwal Bba. LLB (H) ENROLMENT: A90821517066 Semester:9 2017-2022

Raj Vardhan Agarwal's 9th semester assignment discusses the International Centre for Settlement of Investment Disputes (ICSID). ICSID was established in 1966 through the ICSID Convention to facilitate arbitration and conciliation of international investment disputes between states and nationals of other states. It seeks to promote transparency and an investment-friendly environment. ICSID has settled numerous disputes between investors and states involving issues such as contract breaches, taxation, and health regulations related to investments. As the primary forum for investor-state dispute settlement, ICSID plays a key role in international investment law.

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Assignment: Raj Vardhan Agarwal Bba. LLB (H) ENROLMENT: A90821517066 Semester:9 2017-2022

Raj Vardhan Agarwal's 9th semester assignment discusses the International Centre for Settlement of Investment Disputes (ICSID). ICSID was established in 1966 through the ICSID Convention to facilitate arbitration and conciliation of international investment disputes between states and nationals of other states. It seeks to promote transparency and an investment-friendly environment. ICSID has settled numerous disputes between investors and states involving issues such as contract breaches, taxation, and health regulations related to investments. As the primary forum for investor-state dispute settlement, ICSID plays a key role in international investment law.

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raj vardhan agarwal
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RAJ VARDHAN AGARWAL

BBA. LLB(H)

ENROLMENT : A90821517066

SEMESTER:9TH

2017-2022

ASSIGNMENT

Introduction

International Centre for Settlement of Investment Disputes formally established in 1986 via the
Convention on the settlement of Investment Disputes between states and Nationals of other states
or popularly termed as ICSID Convention. It has 161 member nations. Headquartered in Washington
D C, the United States, it is one of the five organisations of the World Bank group along with IBRD
(International Bank for Reconstruction and Development), MIGA (Multilateral Investment Guarantee
Agency), IDA (International Development Association) as well as IFC (International Finance
Corporation).
Though the much-generalised objective of World Bank is Poverty Reduction, the five organisations
particularly ICSID contributes towards the same via facilitation of conciliation as well as Arbitration
of International Investment related disputes.
History

In the 1950s and 1960s, the Organization for European Economic Cooperation (now the Organisation
for Economic Co-operation and Development) had made several attempts to create a framework to
protect international investments, but its efforts revealed conflicting views on how to provide
compensation for the expropriation of foreign direct investment.

Creation

In 1961, Aron Broches, then-General Counsel of the International Bank for Reconstruction and
Development (IBRD), developed the idea for a multilateral agreement on a process for resolving
individual investment disputes on a case-by-case basis as opposed to imposing outcomes based on
standards. Broches held conferences to consult legal experts from all parts of the world, including
Europe, Africa, and Asia, to discuss and compose a preliminary agreement. The IBRD staff wrote an
official draft of the agreement and consulted with legal representatives of the IBRD's board of
directors to finalize the draft and have it approved.

The board of directors approved the final draft of the agreement, titled Convention on the
Settlement of Investment Disputes between States and Nationals of Other States, and the Bank
president disseminated the convention to its member states for signature on 18 March 1965.
Twenty states immediately ratified the convention. The convention established the ICSID would
become officially active on 14 October 1966.

Disputes settled
The Indonesian government was sued in June 2012 by a London-based mining company Churchill
Mining after the local government revoked the concession rights held by a local company in which
the firm had invested. The government is countering the Churchill case, claiming that Churchill did
not have the correct type of mining licenses.

In October 2012, an ICSID tribunal awarded a judgment of $1.8 billion for Occidental Petroleum
against the government of Ecuador. Additionally, Ecuador had to pay $589 million in backdated
compound interest and half of the costs of the tribunal, making its total penalty around $2.4 billion.
The South American country annulled a contract with the oil firm on the grounds that it violated a
clause that the company would not sell its rights to another firm without permission. The tribunal
agreed the violation took place but judged that the annulment was not fair and equitable treatment
to the company.

Irish oil firm Tullow Oil took the Ugandan government to court in November 2012 after value-added
tax (VAT) was placed on goods and services the firm purchased for its operations in the country. The
Ugandan government responded that the company had no right to claim tax on such goods prior to
commencement of drilling.

Tobacco major Philip Morris sued Uruguay for alleged breaches to the Uruguay-Swiss BIT for
requiring cigarette packs to display graphic health warnings and sued Australia under the Australia-
Hong Kong BITS for requiring plain packaging for its cigarettes. The company claimed that the
packaging requirements in both countries violate its investment.

In the context of nuclear power phase-out in Germany, Swedish Energy company Vattenfall sought
compensation from the German government for the premature shut-down of nuclear plants.

Functions

o Forum for Investor-State dispute settlement in International Investment Treaties,


Investment laws and contracts. 

o Promotion of International investment environment as envisaged in the ICSID Convention


formulated by the World Bank. 

o Facilitator of dispute resolution in state-state disputes under the ambit of investment


treaties as well as free trade agreements. 

o Acts as an administrative regulatory to take control of and to regulate investment relations. 

o Settlement of disputes via conciliations, arbitrations or fact finding. 

o Promotion of awareness with regard to the international law on foreign investment as well
as the ICSID process. 

o Promotion of transparency in international investment decision-making process. 

o Effective application of detailed rules and regulations to ensure that there are efficiency and
transparency in investment decision-making process. 

o Appointment of Independent conciliation commission or arbitration tribunal to oversee and


rules on issues as well as disputes. 
o Provision of immunity from legal process for the participants in cases which are governed by
the ICSID Convention. 

The three main instruments or better put facilities that enable resolution of International
Investment disputes are: -

o The ICSID Convention that laid down the foundations of International Centre for Settlement
of Investment disputes, 

o ICSID additional facility which provides the procedural framework for arbitration,
conciliation and fact-finding proceedings, 

o Detailed rules and regulations pertaining to the arbitration process. 

Conclusion

Being the forerunner of World Bank group as an investment related settlement authority,
International Centre for Settlement of Investment Disputes fosters the objective of monitoring an
investment friendly atmosphere in the International Investment scenario. ICSID is performing the
function of offering an undaunted investment environment to foreign, individual as well as
governmental entities as an independent depoliticized entity, though emerging economic giants like
India, Brazil and South Africa continues to elude the folds of ICSID.

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