The world bank and ICSID: Family or incestuous ties?

International Organizations Law Review

Volumn 4, Issue 1, 2007, Pages 121-144

  Fouret, Julien ^a  

^a UNIVERSITÉ PARIS OUEST NANTERRE LA DÉFENSE   (France)

Author keywords

Amendment of ICSID arbitration rules; ICSID; Secretary general of ICSID; Structural independence; Transparency of ICSID arbitration; World bank; World bank's influence

Indexed keywords

EID: 34548588514     PISSN: 15723739     EISSN: 15718069     Source Type: Journal    
DOI: 10.1163/157237307X217348     Document Type: Article

References (134)

1. For the text of the convention in English, see 575 U.N.T.S. 159 or on the ICSID website 〈www. worldbank.org/icsid/basicdoc/basicdoc.htm〉.
2. P. Bernardini, "Investment Arbitration under the ICSID Convention and BITs", in ICC (ed.), Global Reflections on International Law, Commerce and Dispute Resolution-Liber Amicorum in honour of Robert Briner (2005), 89.
3. "On a number of occasions in the past, the World Bank as an institution and the President of the Bank in his personal capacity have assisted in mediation or conciliation of investment disputes between governments and private foreign investors. The creation of the International Centre for Settlement of Investment Disputes (ICSID) in 1966 was in part intended to relieve the President and the staff of the burden of becoming involved in such disputes." About ICSID, at 〈www.worldbank.org/ icsid/about/about.htm〉. For authors, the Centre was also an answer from the World Bank Executive Directors to a "void in the resolution of international disputes between States and foreign investors". C.B. Lamm, "Jurisdiction of the International Center for Settlement of Investment Disputes", 6 ICSID Rev. - FILJ 462.
4. For general and concise information about the activities and history of the institution, see 〈web. worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/o, pagePK:50004410-piPK:36602-theSit ePK:29708,00.html〉.
5. About ICSID, at 〈www.worldbank.org/icsid/about/about. htm〉. A French "deputé" even affirmed that "[b]ien qu'étant une organization indépendante, le Centre international de règlement des différends relatifs aux investissements a des liens privilégiés avec la Banque Mondiale". Y. Tavernier, Fonds monétaire international, Banque mondiale: vers une nuit du 4 août?, Rapport d'Information No 2801 de la Commission des finances de l'Assemblée Nationale, Documents d'information de l'Assemblée Nationale, Paris, 2000, at p. 114.
6. See supra note 1.
7. See the statistical analysis in E. Gaillard, La jurisprudence du CIRDI, Pédone, Paris, 2004, pp. 1-9.
8. III cases were pending during the drafting of this article. Statistical data for 2004 and 2005 : Julien Fouret & Dany Khayat, "Centre International pour le Règlement des Différends relatifs aux Investissements (C.I.R.D.I.)", in Julien Fouret et Mario Prost (eds.), Chronique de règlement pacifique des différends internationaux (2004) 17.2 R.Q.D.I. 183, 231 and (2005) 18.2 R.Q.D.I. 271, 313.
9. News From ICSID, (2005) Vol. 22.1, at p. 1.
10. Some lawyers have also affirmed that it is the "arm of the World Bank". M. Kantor, "New Amendments to ICSIDs Arbtiration Rules", (2006) Stockholm International Arbitration Review 213, at 213.
11. See for example the following NGOs: The Democracy Center qualifying ICSID at the "arm of the World Bank", 〈www.democracyctr.org/bechtel/ world_bank.html〉 or the Bretton Woods Project pushing for a global reform of ICSID: 〈www.brettonwoodsproject.org/art.shtml?x=236015〉.
12. Article 4: The Administrative Council shall be composed of one representative of each Contracting State. An alternate may act as representative in case of his principal's absence from a meeting or inability to act.
13. In the absence of a contrary designation, each governor and alternate governor of the Bank appointed by a Contracting State shall be ex officio its representative and its alternate respectively.
14. Article 6(1) Without prejudice to the powers and functions vested in it by other provisions of this Convention, the Administrative Council shall:
15. (a) adopt the administrative and financial regulations of the Centre;
16. (b) adopt the rules of procedure for the institution of conciliation and arbitration proceedings;
17. (c) adopt the rules of procedure for conciliation and arbitration proceedings (hereinafter called the Conciliation Rules and the Arbitration Rules);
18. (d) approve arrangements with the Bank for the use of the Bank's administrative facilities and services;
19. (e) determine the conditions of service of the Secretary-General and of any Deputy Secretary-General;
20. (f) adopt the annual budget of revenues and expenditures of the Centre;
21. (g) approve the annual report on the operation of the Centre...
22. Christoph H. Schreuer, The ICSID Convention: A Commentary (2001), 18.
23. See the concerns of "several speakers" in Documents concerning the Origin and the Formulation of the Convention, ICSID publications, Washington D.C., 1968, Vol. II-Part 1, at 129, para. 22.
24. Art. 6, Washington Convention.
25. History of the Convention, supra note 15, at 544.
26. Documents concerning the Origin and the Formulation of the Convention, ICSID publications, Washington D.C., 1968, Vol. II-Part 2, Comments by Mr Da Cunha to Legal Committee (25 November 1964), SID/LC/11, at 690.
27. Article 5 The President of the Bank shall be ex officio Chairman of the Administrative Council (hereinafter called the Chairman) but shall have no vote. During his absence or inability to act and during any vacancy in the office of President of the Bank, the person for the time being acting as President shall act as Chairman of the Administrative Council.
28. Documents concerning the Origin and the Formulation of the Convention, ICSID publications, Washington D.C., 1968, contra Vol I. at 55-56, 315-316, 381 and 482, and infavorem at 101, 127, 382, 560 and 691.
29. Such as privatizations or reorganization of public sectors for example.
30. See Mr. Lieftinck's comments, Ibid, Vol. II-Part 1, p. 122 at para. 67.
31. IFC website: 〈www.ifc.org/about〉.
32. SECTION 5. Chairman, President and Staff
33. (a) The President of the Bank shall be ex officio Chairman of the Board of Directors of the Corporation, but shall have no vote except a deciding vote in case of an equal division. He may participate in meetings of the Board of Governors but shall not vote at such meetings.
34. A procedure foreseen in Article 38 of the ICSID Convention, see infra, and used in more than half the cases.
35. Article 17 If the expenditure of the Centre cannot be met out of charges for the use of its facilities, or out of other receipts, the excess shall be borne by Contracting States which are members of the Bank in proportion to their respective subscriptions to the capital stock of the Bank, and by Contracting States which are not members of the Bank in accordance with rules adopted by the Administrative Council.
36. Schreuer, supra note 14, at 64.
37. "The Administrative expenditures of ICSID were, again, entirely covered by the World Bank" in ICSID 2005 Annual Report, at 10.
38. Article 33 of the Statute of the ICJ:The expenses of the Court shall be borne by the United Nations in such a manner as shall be decided by the General Assembly.
39. The World Court can be seen as arbitralizing itself in the last decades, through in part the multiplication of ad hoc judges and chambers and the changes in drafting judgments leading to an increasing consensual approach in dispute settlement. See for our full argumentation on the subject, Julien Fouret and Mario Prost, "Du rôle de la Cour internationale de Justice : peau neuve ou peau de chagrin? Quelques réflexions sur l'arbitralisation de la Cour mondiale", (2003) 16.2 R.Q.D.I. 191, mainly at 224 et seq.
40. Article 18: The Centre shall have full international legal personality. The legal capacity of the Centre shall include the capacity:
41. (a) to contract;
42. (b) to acquire and dispose of movable and immovable property;
43. (c) to institute legal proceedings.
44. See A. Broches, "On the Finality of Awards: A Reply to Michael Reisman", (1993) 8 ICSID Rev.-FILJ 92, at 98 et seq.
45. Schreuer, supra note 14, at 67.
46. History of the Convention, supra note 20, Vol. II at 312 and 380.
47. Article 38: If the Tribunal shall not have been constituted within 90 days after notice of registration of the request has been dispatched by the Secretary-General in accordance with paragraph (3) of Article 36, or such other period as the parties may agree, the Chairman shall, at the request of either party and after consulting both parties as far as possible, appoint the arbitrator or arbitrators not yet appointed. Arbitrators appointed by the Chairman pursuant to this Article shall not be nationals of the Contracting State party to the dispute or of the Contracting State whose national is a party to the dispute.
48. See the statistics in C. Schreuer, supra note 14, at 489, 494-495.
49. See the mention, for the first time in an ICSID/NAFTA procedure, in ICSID 1998 Annual Report, at 4.
50. C. Schreuer, supra note 14, at 493;
51. A.A. Escobar "Three Aspects of ICSID's Administration of Arbitration Proceedings", (1997) 14.2 News From ICSID 4, at 6.
52. For the list, see 〈www.worldbank.org/icsid/pubs/icsid-10/icsid-10. htm〉.
53. Article 67: This Convention shall be open for signature on behalf of States members of the Bank. It shall also be open for signature on behalf of any other State which is a party to the Statute of the International Court of Justice and which the Administrative Council, by a vote of two-thirds of its members, shall have invited to sign the Convention.
54. This issue was of major concern for some of the drafters and was therefore explicitly requested : History of the Convention, supra note 20, Vol. 1 at 128, paras 19-20.
55. See art. 93(2), UN Charter ("A state which is not a Member of the United Nations may become a party to the Statute of the International Court of Justice on conditions to be determined in each case by the General Assembly upon the recommendation of the Security Council.").
56. See the very recent study of eminent scholar highlighting the poor quality of the reasoning of some of die Bank's publication which, nevertheless, serve as basis for some of its activities and programs. Abhijit Banerjee, et al., An Evaluation of World Bank Research, 1998-2005, 24 September 2006, available at 〈siteresources.worldbank.org/DEC/Resources/84797- 1109362238001/726454-1164121166494/ RESEARCH-EVALUATION-2006-Main-Report. pdf〉.
57. See, amongst others, "La Banque Mondiale et l'accès à l'eau", 1 April 2005, available at 〈eau.apinc. org/article.php3? id_aiticle=396〉. One can also see the excellent international legal study on fresh water: Edith Brown Weiss, Laurence Boisson de Chazournes, and Nathalie Bernasconi-Osterwalder (eds.), Fresh Water and International Economic Law (2005).
58. For all the facts, see Aguas del Tunari S.A. v. Bolivia, ICSID case No. ARB/02/3, Decision on Jurisdiction of 21 October 2005, paras 50-73, at 〈www.worldbank.org/icsid/cases/awards.htm〉. See our comments in Fouret and Khayat, supra note 8, in 18.2 issue, 373.
59. See the summary of all these events in IISD, Investment Treaty News, 20 January 2006, at 〈www.iisd.org/investment/itn〉.
60. K.J. Vandevelde, "Investment Liberalization and Economic Development: The Role of Bilateral Investment Treaties", (1998) 36 Colum. J. Transnat'l L. 501, at 522.
61. Aguas del Tunari, supra note 45, at paras 15-18.
62. See the recognition of the openness of A.R. Parra, Secretary-General of ICSID at the time, to NGOs vision, Agir Ici, Cochabamba: La Guerre de l'eau n'est pas finie !, at 〈www.agirici.org/HTML/ACTIONS/ACTIONS_CAMP_VOIR.php? IdCampagne=37〉. Two arbitral tribunals have in fact recently accepted to hear amicus curiae, illustrating the openness and transparency of ICSID's procedures: Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. v. Mexico, ICSID Case No. ARB/03/19,12 February 2007, Order in Response to a Petition by Five NGOs for Permission to Make an Amicus Curiae Submission and Biwater Gauf (Tanzania) Ltd. v. Tanzania, ICSID Case No. ARB/05/22, 2 February 2007, Procedural Order No. 5 on amicus curiae.
63. "World Bank's ICSID to Hear Case on Bolivia Water Privatization", Economic Justice News Online, Vol.5, No 3, at 〈www.50years.org/cms/ejn/story/85〉.
64. Aguas del Tunari, supra note 45, paras 13-14.
65. See supra in Section I. Structural Ties: A Genealogical Tree Difficult to Mask, at 2.
66. Hal Weitzman, "Bechtel Drops Bolivian Compensation Claim", Financial Times, 19 January 2006, at 〈www.ft.com〉.
67. Mentioned in IISD's ITN is also the abandonment of a claim by the Big Food Group against Guyana in 2003 due to strong activism as well as media exposure and criticism, see supra note 46.
68. M. Barlow and T. Clarke, "Water Privatization: The World Bank's Latest Market Fantasy", Economic Justice News Online, Vol.7, No 1, January 2004, at 〈www.50years.org/〉.
69. The proceedings are the following: Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic (Case No. ARB/97/3); Aguas Cordobesas S.A., Suez, and Sociedad General de Aguas de Barcelona S.A. v. Argentine Republic (Case No. ARB/03/18;) Azurix Corp. v. Argentine Republic (Case No. ARB/03/30); SAUR International v. Argentine Republic (Case No. ARB/04/4).
70. F. de Ly, "Who Wins and Who Loses in Investment Arbitration? Are Investors and Host States on a Level Playing Field? - The Lauder/Czech Republic Legacy", (2005) 6.1 J. World Inv't & Trade 59, at 60.
71. See also Article 39 of the ICSID Convention the obligation as to the nationality of arbitrators, in order to avoid a flawed Tribunal resulting from nationality issues.
72. Nigel Blackaby, "Public Interest and Investment Treaty Arbitration", in G. Kaufmann-Kohler and B. Stucki (eds.), Investment Treaties and Arbitration, (2002) ASA special Series No.19, 145, at 150.
73. See also, N. Bernasconi-Osterwalder, "Who Wins and Who Loses in Investment Arbitration ? Are Investors and Host States on a Level Playing Field? - The Lauder/Czech Republic Legacy", (2005) 6.1 J. World Inv't & Trade 69, at 71.
74. Article 52: Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds:
75. (a) that the Tribunal was not properly constituted;
76. (b) that the Tribunal has manifestly exceeded its powers;
77. (c) that there was corruption on the part of a member of the Tribunal;
78. (d) that there has been a serious departure from a fundamental rule of procedure; or
79. (e) that the award has failed to state the reasons on which it is based...
80. See the comparison between the different rules applicable and the disparities in transparency, M. Weiniger and M. Page, "The Rise of Transparency", 1.4 Global Arbitration Review 27 (Sept. 2006).
81. See Noble Ventures, Inc. v. Romania (ICSID Case No. ARB/01/11), Award of 12 October 2005. Our comments on this award can be found in supra note 8, issue 18.2 at 368, and Telenor Mobile Communications A.S. v. Hungary, (ICSID Case No. ARB/04/15), award on jurisdiction of 13 September 2006.
82. See mainly, one of the latest awards, Azurix Corp. v. Argentine Republic (ICSID Case No. ARB/01/12), Award of 14 July 2006.
83. C. Schreuer, supra note 14, at 398.
84. F. Orrego Vicuña, "Carlos Calvo, Honorary NAFTA Citizen", (2002) 11 N.Y.U. Envt'l L.J. 19, at 30.
85. Generation Ukraine Inc. v. Ukraine (Case No. ARB/00/9), Award of 16 September 2003, (2005) 44 ILM 404.
86. See our comments in Julien Fouret and Dany Khayat, "Centre International pour le Règlement des Différends relatifs aux Investissements (C.I.R.D.I.)", in Julien Fouret and Mario Prost (eds.), Chronique de règlement pacifique des différends internationaux (2003), 16.2 R.Q.D.I. 187, 257 at 282.
87. B. Legum, "Investor-State Arbitrator Disqualified for Pre-Appointment Statements on Challenged Measures", (2005) 21.2 Arb. Int'l 241.
88. See nevertheless the Victor Pey Casado Saga, where the whole tribunal was disqualified, the president even twice, after a lengthy process which led to the constitution of new Tribunal on 14 July 2006, some 8 years after the dispute was registered by the Centre.
89. See Investment treaty News of 14 December 2005 and of 31 January 2006, at 〈www.iisd.org/investment/itn〉 and the various exchange of letters on El Clarins website 〈www.elclarin. cl/fpa/pdf/081105_fr.pdf〉 and 〈www.elclarin.cl/fpa/pdf/040106_fr.pdf〉. El Clarín was the alleged expropriated newspaper.
90. Joseph C. Lemire v. Ukraine (ICSID Case No. ARB(AF)/98/1), Award embodying the Parties' settlement agreement rendered on September 18, 2000, at 〈www.worldbank.org/icsid/cases/conclude.htm〉.
91. Rule 9: Disqualification of Arbitrators
92. A party proposing the disqualification of an arbitrator pursuant to Article 57 of the Convention shall promptly, and in any event before the proceeding is declared closed, file its proposal with the Secretary-General, stating its reasons therefore.
93. The Secretary-General shall forthwith:
94. (a) transmit the proposal to the members of the Tribunal and, if it relates to a sole arbitrator or to a majority of the members of the Tribunal, to the Chairman of the Administrative Council; and
95. (b) notify the other party of the proposal.
96. The arbitrator to whom the proposal relates may, without delay, furnish explanations to the Tribunal or the Chairman, as the case may be.
97. Unless the proposal relates to a majority of the members of the Tribunal, the other members shall promptly consider and vote on the proposal in the absence of the arbitrator concerned. If those members are equally divided, they shall, through the Secretary-General, promptly notify the Chairman of the proposal, of any explanation furnished by the arbitrator concerned and of their failure to reach a decision.
98. Whenever the Chairman has to decide on a proposal to disqualify an arbitrator, he shall use his best efforts to take that decision within 30 days after he has received the proposal.
99. The proceeding shall be suspended until a decision has been taken on the proposal.
100. Article 57: A party may propose to a Commission or Tribunal the disqualification of any of its members on account of any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14. A party to arbitration proceedings may, in addition, propose the disqualification of an arbitrator on the ground that he was ineligible for appointment to the Tribunal under Section 2 of Chapter IV.
101. See the executive summary online with the mention of Dr. Voss on page 4: UKRAINE INVESTMENT POLICY REVIEW - The Legal and Institutional regime for Investment: Assessment and Policy recommendations - Executive Summary and Recommendations, March 2001, at 〈www.oecd.org/ dataoecd/33/29/1905166. pdf#search=%22voss%20ukraine%20oecd%22〉.
102. Generation Ukraine, supra note 65, para. 4.16.
103. Ibid, para. 4.15.
104. Article 58: The decision on any proposal to disqualify a conciliator or arbitrator shall be taken by the other members of the Commission or Tribunal as the case may be, provided that where those members are equally divided, or in the case of a proposal to disqualify a sole conciliator or arbitrator, or a majority of the conciliators or arbitrators, the Chairman shall take that decision. If it is decided that the proposal is well-founded the conciliator or arbitrator to whom the decision relates shall be replaced in accordance with the provisions of Section 2 of Chapter III or Section 2 of Chapter IV.
105. Fouret and Khayat, supra note 65, at 283.
106. Generation Ukraine, supra note 65, para. 4.16.
107. Ibid, para. 4.18.
108. B. Legum, supra note 66, at 242.
109. Nigel Blackaby, supra note 58, at 152-153.
110. Ibid., at 156.
111. See the first page of News From ICSID, Vol. 22.1 (2005), since he also became ex officio the Chairman of the Administrative Council.
112. Investment Treaty News, 31 January 2006, at ch. 6, at 〈www.iisd.org/investment/itn〉.
113. News From ICSID, Vol. 22.2 (2005).
114. See the Financial Times articles: Andrew Balls and Edward Alden, "Wolfowitz triggers graft storm at World Bank", 23 January 2006;
115. Andrew Balls and Edward Alden, "Questions raised about Wolfowitz style", 23 January 2006, at 〈www.ft.com〉.
116. W. Rowley, "ICSID at a Crossroads", (2006) 1.1 Global Arbitration Review11.
117. For a concise summary of these amendments and of their implications, see M. Kantor, supra note 10, and A. Cohen Smutny and E. Serran, "The Amended ICSID Rules - In Brief", 1.4 Global Arbitration Review 29 (Sept. 2006).
118. It is still only a possibility if the parties accept to do so. The wording is therefore a codification of the existing practice of arbitral tribunals.
119. E. Gaillard, "Amended Arbitration Rules Now in Effect for Investment Disputes", N.Y. L. J., 1 June 2006, at 3.
120. F. De Ly, supra note 57, at 62.
121. E. Gaillard, supra note 87, at 14.
122. Ibid, at 3, 14.
123. See the comments of the Counsels to The Republic of El Salvador after the dismissal of a claim against their client at the jurisdictional phase in Inceysa Vallisoletana S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26): "The award may stand as a stark warning to the unscrupulous who would prey on small countries and bolster the reputation of ICSID as a forum for even-handed resolution of investment disputes",
124. Arnold & Porter LLP, Summary of Inceysa Vallisoletana S.L. v. Republic of El Salvador (ICSID Case No. ARB/03/26) - Decision on Jurisdiction of 2 August 2006, at 〈ita.law.uvic.ca/documents/InceysaDescription. pdf〉.
125. W Rowley, supra note 84 at 11.
126. E. Gaillard, supra note 87, at 14.
127. At p.4 : "given the evolution of the Centre and its enormous responsibilities, I believe the time has come for ICSID to have a full time Secretary-General. For the last 40 years, the General Counsel of the World Bank has served ex officio as a part time Secretary-General of the Centre. However, the new volume and complexity of cases really require a full time commitment. I have proposed this to Mr. Wolfowitz for its implementation in the near future." Roberto Danifio, "Opening Remarks", in Making The Most of International Investment Agreements: A Common Agenda, Symposium co-organised by ICSID, OECD and UNCTAD, 12 December 2005, at 〈www.oecd.org/dataoecd/5/8/36053800.pdf〉.
128. W. Rowley, supra note 84, at 12.
129. See the Survey of the Global Arbitration Review which polled counsels and arbitrators with an interesting result: 78 percent of the persons answered that ICSID should have a full time leader, "ICSID Deserves a Full-Time Leader", 1.4 Global Arbitration Review 8 (Sept. 2006), at 14.
130. W. Rowley, supra note 84, at 12.
131. E. Gaillard, supra note 87, at 14.
132. Even though the formal election by ICSID's Administrative Council only occurred on 20 September 2006 and was published on ICSID's website the next day, the nomination by Paul Wolfowitz was already announced on 16 June by the World Bank, highlighting the uselessness of the election procedure compared to the decision making power of the Bank, see the World Bank's website for the announcement of the nomination: 〈web.worldbank.org/WBSITE/EXTERNAL/BANCO MUNDIAL/NEWSSPANISH/0,contentMDK:20962988-menuPK:1074627-pagePK:34370-piPK: 34424-theSitePK:1074568,00.html〉.
133. "Palacio Told to Review ICSID", 30 June 2006, Global Arbitration Review, at 〈www.globalarbitrationreview.com/news/news_item. cfm?item_id=3496〉.
134. V. Hugo, "Thoughts, Post-scriptum de ma vie", in Victor Hugo's Intellectual Autobiography (Lorenzo O'Rourke trans.) (1907).