Trends in investor-state dispute settlement

We analyze the 2016 ICSID case statistics to identify recent trends in investor-state dispute settlement, including the state parties and economic sectors involved, success rates of states versus investors and changes to the composition and diversity of ICSID tribunals.

The International Centre for Settlement of Investment Disputes (ICSID) is an intergovernmental organization established by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. ICSID offers a specialised arbitration forum for international investor-state dispute settlement (ISDS). 2016 marked ICSID’s 50th anniversary.

According to ICSID’s 2016 annual report, it has administered approximately 70 per cent of all known investor-state cases and in the past 50 years 570 cases have been registered at ICSID, 265 awards have been rendered by ICSID tribunals and 52 decisions on annulments have been issued by ad hoc committees. As can be seen from the statistics below, in 2016, ICSID remains an important institution for settlement of investor-state disputes. A review of ICSID’s case statistics is therefore a useful indicator of recent trends in ISDS.

45 new ICSID cases were registered in 2016. Whilst this is slightly less than the record high of 2015, it is a return to the historical average. ICSID administered 247 cases in 2016, the largest number of cases ever administered by ICSID in a single year. This is clear evidence that foreign investors continue to pursue the resolution of disputes with host states through international arbitration.

Interestingly, 2016 saw a very slight shift away from the trend that states have proved successful in the majority of cases brought against them. In 2016, tribunals upheld investors’ claims (in part or in full) in 56 per cent of cases.

The trend of cases being brought against developed countries continued in 2016, with the greatest number of newly registered cases brought against Western European states.

Spain was involved in the largest number of disputes (with ten new cases registered), followed by Italy (with four new cases registered). Egypt (with three new cases registered) was the only other country involved in more than two new cases.

The number of cases registered against South American states more than doubled in 2016, perhaps reflecting increasing instability in the region.

The cases involved a broad spread of economic sectors. The highest number of cases involved the electric power and other energy sector, representing 35 per cent of cases. This reflects the continued reliance by foreign investors on protections under the Energy Charter Treaty. The next most common sector involved in investment disputes was the oil, gas and mining sector, which was involved in 20 per cent of cases. Other sectors included construction, which was involved in nine per cent of cases, and information and communication, finance and transportation, which were each involved in seven per cent of cases.

Bilateral investment treaties (BITs) remained the most common basis of consent used to establish ICSID jurisdiction, representing 51 per cent of cases. This was followed by the Energy Charter Treaty, which represented 31 per cent of cases.

There was a marked increase in the diversity of appointees in terms of nationality. 119 individuals from 40 different countries of origin were appointed to tribunals which, according to ICSID, represented the most diverse spread of nationalities in its history. However, despite progress, the fact remains that 61 per cent of appointees were from a Western European or North American origin.

In terms of gender diversity of arbitral appointments, 23 per cent of first time appointees were woman, which at first blush suggests that gender diversity may be improving. However, only 13 per cent of those appointments involved first time appointees. Extrapolating these figures, the total number of female appointees is only about three per cent which shows that ICSID has a long way to go before gender parity is achieved.