Changes to ICSID’s administrative and financial regulations

On 1 July 2022, the International Centre for Settlement of Investment Disputes ('ICSID') published the fourth amendment to its rules and regulations. The amendment sought to 'modernize, simplify and streamline the rules, while also leveraging information technology to reduce the environmental footprint of ICSID proceedings'.[1] This involved a total overhaul of the Arbitration Rules[2] and the Conciliation Rules[3] applicable under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States[4] ('ICSID Convention') and under those carried out under the Additional Facility Rules and Regulations[5], which are available for certain disputes that fall outside the scope of the ICSID Convention.

This amendment of rules also encompassed the Administrative and Financial Regulations ('AFR'). While the changes to the AFR have to some degree affected the way ICSID carries out arbitral and conciliation proceedings, they have been subject to significantly less scrutiny than the other rules and regulations mentioned. This article addresses the main changes made to the AFR, which affect financial provisions, the general functions of the Secretariat and the Additional Facility Rules, and compares the 2006[6] version to the 2022[7] version.

Provisions on the cost of proceedings

The 2006 AFR dealt with direct costs of proceedings under a single provision (Regulation 14). In contrast, three provisions of the 2022 AFR refer to these matters: Regulation 14 addresses fees, allowances and charges; Regulation 15 addresses payments to ICSID; and Regulation 16 addresses the consequences of payment defaults.

There has been a change in the parameters pursuant to which the fees paid to each member of a commission, tribunal or committee (Regulation 14) are calculated. Under the 2006 AFR, the fee structure was foreseen on a daily basis, which was then prorated to an hourly fee by the Secretariat depending on the kind of work performed by the members of the tribunal, panel or committee. The 2022 AFR directly establish a fee for each hour of work on a unified fee structure that seeks to simplify accounting.

Another significant change can be found in Regulation 15 of the 2022 AFR concerning payments to ICSID. Regulation 14 of the 2006 AFR did not provide for any payment upon registration and instead required payment upon constitution of the commission, tribunal or committee. Under the 2022 AFR, the claimant must make an advance payment of the estimated costs for the period from the date when a request for arbitration or conciliation is registered until the first session of the tribunal or committee is held,[8] which is followed by a second payment that the parties make upon constitution of the commission, tribunal or committee.

Additionally, the 2022 AFR extend this provision to requests for supplementary decisions on, or rectification of, an award,[9] and to applications for the interpretation or revision of an award[10] or to resubmission of a dispute after an award has been annulled pursuant to Article 52(6) of the ICSID Convention.

Regulation 16 of the 2022 AFR has incorporated a few changes as well. While the 2022 AFR specify that the advance payments referred to in Regulation 15 shall be payable on the date of the ICSID request for payment, Regulation 14 of the 2006 AFR required payment 'as soon as' a request for payment was made by ICSID.

Finally, another important change has been made to Regulation 16 with regard to the period after which a proceeding may be discontinued following a suspension for non-payment. As opposed to the 180 days previously required, the 2022 AFR refers to 90 consecutive days.

Provisions on the administration of proceedings

Regulation 22 of the 2022 AFR incorporates a new provision pursuant to which the ICSID Secretariat is the only body authorised to administer proceedings conducted under the ICSID Convention. This is in line with similar rules of the ICC.[11] The legal consequences of this provision remain to be seen, as the legal value and the direct execution of ICSID awards stems from Section 6 of the ICSID Convention.

List of Contracting States

The list of Contracting States was addressed in Regulation 23 of the 2006 AFR. Under the 2022 AFR, this has been moved to Regulation 20 of the 2022 AFR, which provides for an additional element to be incorporated in the list of Contracting States maintained and published by the Secretariat. Under the new rule, service to States is more transparent, as the list of Contracting States published by the Secretariat must now indicate the name, address and contact details of the authority designated by each State to which documents should be served.

Publication of case-related documents

The rules regarding publication, formerly addressed by Regulation 22 of the 2006 AFR, have been simplified and are now covered in Regulation 25 of the 2022 AFR. However, the publication of documents generated in proceedings is no longer regulated by the AFR. Instead, Regulation 25 states that these documents are to be published in accordance with the rules applicable to the individual proceedings. Chapter X of the 2022 Arbitration Rules and Rule 9 of the 2022 Conciliation Rules address this issue.

Case registers

Registers were regulated by Regulation 23 of the 2006 AFR. Now, they are addressed under Regulation 26 of the 2022 AFR, which is also much simpler than its predecessor. For instance, while in the past separate registers had to be kept for conciliation and arbitration, under the new rules a register for each case is to be published under the new rules and no difference is made between conciliation an arbitration proceedings. Under the new rule, the register for each case shall contain all significant data concerning the institution, conduct and disposition of the proceeding, including the economic sector involved, the names of the parties and their representatives, and the method of constituting and determining the membership of each commission, tribunal and committee. The mandate to include data with respect to the awards has been suppressed.

Means of communication in proceedings

Regulation 24 of the 2006 AFR set out a specific rule on means of communication between the parties and the tribunal, committee or the Chairman of the Administrative Council.

This rule no longer exists in the 2022 AFR and communications are addressed in Rules 4 to 6 of the 2022 Arbitration Rules.

Tribunal secretaries

Regulation 25 of the 2006 AFR regulated the role of secretaries. Regulation 28 of the 2022 AFR contains a simplified version of that provision, reflecting the reduction in the secretaries' functions from four to two.

Place of proceedings

Regulation 26 of the 2006 AFR provided rules on the place of proceedings and the corresponding obligations of the Secretary-General. These have been removed from the 2022 AFR.

However, Rule 32(3) of the Arbitration Rules does contain a provision on the place of the hearing and Article 63 of the ICSID Convention states that the arbitration may take place at the Seat of the Permanent Court of Arbitration or any other appropriate institution with which ICSID has arrangements for that purpose, or any other place approved by the tribunal after consulting with the Secretary-General.

Procedural time limits and supporting documentation

The 2006 AFR also dealt with procedural issues such as time limits (Regulation 29) and supporting documentation to parties' submissions (Regulation 30). These two rules, however, have also been removed from the 2022 AFR and the corresponding provisions can now be found in Rules 9 and 10 (for time limits) and Rules 4 and 5 (for supporting documentation) of the 2022 Arbitration Rules.

Administrative and Financial Regulations for the Additional Facility

Another important change relates to the Additional Facility. The 2006 Additional Facility Rules included an administrative and financial provision[12] pursuant to which specific rules of the 2006 AFR applied mutatis mutandis to conciliation and arbitration proceedings under the Additional Facility. As a result, until 2022 the responsibilities of the Secretariat and the financial provisions relating to the Additional Facility were the same as those provided for ICSID Convention.

However, the 2022 Additional Facility Rules do not include this provision. Instead, the Administrative and Financial Regulations specific to Additional Facility proceedings have been adopted and have been applicable since 1 July 2022.[13]

Of particular note is Regulation 13, which expressly prohibits members of a conciliation commission or an arbitral tribunal from giving testimony in any judicial, arbitral or similar proceeding with regard to any aspect of an arbitration or conciliation in which they are involved.[14] It also limits the liability of the members of these commissions and tribunals. The intention is that the same limitations imposed on conciliators and arbitrators under Article 21(a) of the ICSID Convention apply to Additional Facility proceedings.[15]

Concluding remarks

The 2022 AFR differ from the 2006 AFR in how they regulate the conduct of ICSID arbitration and conciliation proceedings. Most notably, there are changes in the provisions on the costs of proceedings that should be taken into account when budgeting an ICSID arbitration. The 2022 changes have also resulted in a more cohesive approach to the location of procedural rules on matters such as communications with Tribunals and supporting documentation, which are now dealt with under the Arbitration Rules. Finally, Additional Facility users should note that, unlike previous editions of the ICSID rules, a specific set of AFR now exists for these proceedings.

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[1] ICSID, 'ICSID Rules and Regulations Amendment' (1 July 2022) <https://icsid.worldbank.org/resources/rules-amendments>  accessed 29 March 2023.

[2] ICSID Arbitration Rules, 2022 <https://icsid.worldbank.org/sites/default/files/Arbitration_Rules.pdf> accessed 29 March 2023.

[3] ICSID Conciliation Rules, 2022 < https://icsid.worldbank.org/sites/default/files/Conciliation_Rules.pdf> accessed 29 March 2023.

[4] ICSID Convention, entered into force on October 14, 1966 <https://icsid.worldbank.org/sites/default/files/ICSID_Convention_EN.pdf> accessed 29 March 2023.

[5] ICSID Additional Facility Rules, 2022 <https://icsid.worldbank.org/sites/default/files/Additional_Facility_Rules.pdf> accessed 29 March 2023; ICSID Additional Facility Administrative and Financial Regulations, 2022 <https://icsid.worldbank.org/sites/default/files/Additional_Facility_Administrative_Financial_Regulations.pdf> accessed 29 March 2023.   

[6] ICSID Administrative and Financial Regulations, 2006 <http://icsidfiles.worldbank.org/icsid/icsid/staticfiles/basicdoc/partC.htm> accessed 29 March 2023.

[7] ICSID Administrative and Financial Regulations, 2022 <https://icsid.worldbank.org/sites/default/files/Administrative_and_Financial%20Regulations.pdf> accessed 29 March 2023.

[8] See Regulation 15(1), ICSID AFR, 2022, fn 5.

[9] As foreseen under the ICSID Convention, Art 49(2), fn 4, and Arbitration Rule 61, fn 2.

[10] As foreseen under the ICSID Convention, Arts 50-51, fn 4.

[11] See ICC 2021 Arbitration Rules, 1 January 2021, Art 1(2): 'The Court is the only body authorized to administer arbitrations under the Rules, including the scrutiny and approval of awards rendered in accordance with the Rules', <https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/2021-arbitration-rules/#:~:text=A%20party%20wishing%20to%20have,the%20date%20of%20such%20receipt.> accessed 29 March 2023.

[12] ICSID Additional Facility Rules, 2006, Art 5 <http://icsidfiles.worldbank.org/icsid/icsid/staticfiles/facility/partA.htm> accessed 29 March 2023.

[13] ICSID Additional Facility Administrative and Financial Regulations, 2022, fn 5.

[14] ICSID Additional Facility Administrative and Financial Regulations, 2022, Regulation 13, fn 5.

[15] ICSID Secretariat, Proposals for Amendment of the ICSID Rules—Working Paper, Vol 2, 2 August 2018, pp 457-458 < https://icsid.worldbank.org/sites/default/files/publications/WP1_Amendments_Vol_3_WP-updated-9.17.18.pdf> accessed 29 March 2023.