The World Bank arbitration system for foreign investment disputes continues to grow. On 1 November 2013, Canada deposited its instrument of ratification of the ICSID Convention with the World Bank. Almost seven years after signing the ICSID Convention on 15 December 2006, Canada will formally become a member after a 30-day notice period ends on 1 December 2013. Canada is the 150th State to ratify the ICSID Convention, a development that reinforces the continued growth of ICSID membership, alongside continued growth of the number of investment protection treaties worldwide.
The ICSID Convention has achieved global prominence by providing a self-contained system for investor-state dispute settlement, including standard clauses, detailed procedural rules, and institutional support. The ICSID Convention’s most significant feature is that it provides a binding agreement that Contracting States will comply with an arbitral award rendered in a dispute as if it were a final judgment of a court in that State. ICSID awards are not open to appeal and are only subject to limited review by an ICSID annulment committee. Therefore, ICSID awards cannot be reviewed by, or appealed to, any country’s national courts.
Although Canada is already an attractive venue for foreign investment due to its vast natural resources, the availability of binding ICSID arbitration will increase foreign investor confidence in Canada by reducing investor risk. Critically, Canadians investing in foreign countries will now also enjoy reduced risks through access to ICSID arbitration further to consent in applicable treaties and contracts. ICSID membership is a significant complement to Canada's network of Foreign Investment Promotion and Protection Agreements, which stands at 24 agreements currently in force.
This important development underscores that suggestions of the deterioration of the ICSID system by some commentators have been misplaced. There has been much attention to Bolivia, Ecuador and Venezuela seeking to denounce the ICSID Convention in recent years (as well as terminating certain investment protection treaties), and very recently on South Africa’s termination of several bilateral investment treaties with European countries. Yet, the reality is that the number of Contracting States has continued to increase, as has the number of investment protection treaties on a global level. Since 2011, the ICSID Convention has entered into force with respect to seven additional States.
Furthermore, the ICSID case load reached an all-time high in 2012 with the registration of a record 58 new ICSID cases. The nature of cases before ICSID has also continued to expand, to diverse types of investments with varied types of participating parties. ICSID recently registered the first case filed by a Latin American state, an underutilized scenario in the ICSID system.1 ICSID tribunals are also hearing cases involving varied mass claims, such as the case brought by tens of thousands of holders of sovereign bonds against Argentina.2
1 - Republic of Peru v. Caravelí Cotaruse Transmisora de Energía S.A.C., ICSID Case No. ARB/13/24.
2 - Abaclat and Others v. Argentina Republic, ICSID Case No. ARB/07/5.