Environmental Engineering Reference
In-Depth Information
Unlike other arbitration frameworks, the ICSID Convention was especially
designed to solely host international investment disputes. The growing amount of
cases pending at ICSID tribunals also highlights the wide acceptance of these
investment institutions. The two main facts supporting this are the enforceability
of awards and the option of annulments. Unlike others, the ICSID Convention does
not leave enforcement to the NY Convention. Second, there is a high voluntary
execution rate of ICSID awards in almost every ICSID member state. In addition,
the ICSID Convention offers special provisions dealing with interpretation, revi-
sion and annulment of awards (Art. 50 to 52 ICSID Convention). Art. 54(1) of the
ICSID Convention is the great benefit of the ICSID Convention compared to other
arbitration facilities, because it leads to a direct enforceability of ICSID awards.
However, Art. 55 of the ICSID Convention limits its application, as it excludes
immunity of execution. This is a general problem which all international arbitration
institutions face and nothing specific to the ICSID Convention. It is almost remark-
able that the ICSID Convention limits execution problems.
There are other options concerning international investments, as the ICC or
UNCITRAL offer ways to arbitrate investment disputes. Nevertheless, only the
ICSID Convention offers this unparalleled system of enforcement, award accep-
tance and annulment, which makes it unique. The fact that the ICSID is part of the
World Bank also underlines the relevance of the ICSID Convention. States face
more repressions in cases of non-compliance than in the case of ICC or CAM
arbitrations. Disobeying an ICSID award might automatically lead to problems with
the World Bank. Acceptances of ICSID awards serve to some extent as a reputation
indicator of the respective state for the World Bank. A state constantly refusing to
implement ICSID awards runs the risk of losing World Bank trust and support.
Although many authors complain about the ICSID system, it is the best investment
arbitration system at the moment.
4.7 Domestic Law Should Be the Applicable Law
Combined with a Stabilization Clause
International law only has a gap filling or corrective function. This is mainly due to
its insufficient regulatory density compared to national legal systems. Thus, the
contracts should not include an internationalization clause which regulates that
international law is the applicable law of the contract. A comparable clause leaves a
great interpretation possibility for any arbitration court dealing with the issue. This
creates a tremendous risk for both parties because the outcome is highly
unpredictable. Arbitration courts might be completely free to decide due to missing
regulations or guidelines. The risk is outweighs any positive effect for the investor
or the host state.
This is different if it comes down to a stabilization clause, which “freezes” the
status quo concerning the project. In this case, the investor has a certain guarantee
