Much attention has been paid to the increasingly outdated provisions of the rules of the International Centre for Settlement of Investment Disputes ("ICSID"). In fact, the ICSID has been working on the amendment of its rules since 2016, and in November 2021, it published its sixth working paper together with a complete set of proposed amendments. They were published to prepare the voting of the most extensive review of the ICSID rules to date.

In its 21 March 2022 press release, the ICSID informed that the ICSID Member States approved the set of amendments to ICSID's rules for resolving disputes between foreign investors and their host States. This concluded the reform process which was going on for the past five years. David Malpass, President of the World Bank Group and Chair of the ICSID Administrative Council, commended this accomplishment: "The amendment of the ICSID rules is a key achievement for improving international dispute resolution. The amended rules streamline procedures to enable greater access and speed, increase transparency and enhance disclosures, with the ultimate goal of facilitating foreign investment for economic growth."

The amendments aim to modernise and simplify the rules, while leveraging information technology to reduce the environmental footprint of ICSID proceedings. The reform process drew on the lessons learned from hundreds of ICSID cases, and this is clear from the amendments to the ICSID Arbitration Rules.

Furthermore, the ICSID notes in its press release that 'over the coming months, ICSID will publish guidance notes to assist users in applying the updated rules, as well as offer briefings and courses by request'.

The amended version of the ICSID Arbitration Rules will come into effect on 1 July 2022 and apply to ICSID arbitrations registered from that date onwards.

We describe below the amended ICSID Arbitration Rules and some of the notable changes that are likely to have significant impact in practice.

Regulation of Third-Party Funding

The amended ICSID Arbitration Rules intend to promote greater transparency by addressing the profile of the third-party funder. Under the new rules, parties will have to disclose 'the name and address of any non-party from which the party, directly or indirectly, has received funds for the pursuit or defense of the proceeding through a donation or grant, or in return for remuneration dependent on the outcome of the proceeding'.

The new Rule 14(1) also provides that 'if the non-party providing funding is a juridical person, the notice shall include the names of the persons and entities that own and control that juridical person'. This provision was drafted to address the concerns of a group of Member States. This group proposed that the disclosure of third-party funding be sufficiently comprehensive, meaning it should include the name of the ultimate beneficial owner of the funder to allow arbitrators accurately identify any conflict of interest.

The arbitral tribunal is granted discretion to order the disclosure of further information pertaining to the third-party funding. This includes, for example, the funding agreement's details or of the funder's history of funding cases against the same State.

Once in effect, time will tell if this new disclosure obligation will include insurances or other more novel funding arrangements.

Security for costs

The amended rules now express the possibility of either party to request security for costs. The amendments instruct the arbitral tribunal to consider 'all relevant circumstances' when deciding on this request, including the party’s ability and willingness to comply with an adverse decision on costs. Other 'relevant circumstances' would include the effect an order granting security for costs will have over the party’s ability to pursue its claim or counterclaim and the conduct of the parties (Rule 53).

GREATER TRANSPARENCY WITH ACCESS TO NON-DISPUTING PARTIES

The amended ICSID Arbitration Rules provide for the publication of a final award by default, if no party objects within 60 days (Rule 62). The ICSID is also authorised to publish other decisions and orders rendered by the arbitral tribunal by default, with any redactions agreed to by the parties (Rules 63). The arbitration hearing must also be open to be public, unless either party objects (Rule 65).

The rules also enable the ICSID, conditioned to the consent of the parties, to publish any written submission or supporting document filed by a party in the proceeding (Rule 64).

The amendments seem to consider the increasing interest of non-disputing parties in disputes related to the environment and sustainability transition.

Without prejudice, the rules empower the arbitral tribunal to ensure that publishing any of the arbitration documents, awards or submissions will not disclose any confidential or protected information (Rules 64 and 66).

Finally, under the new rule, non-disputing parties now have the right to submit comments on treaty interpretation. For comments on any other topic, the non-disputing party must seek permission from the arbitral tribunal, which shall ensure that the participation of the non-disputing party does not 'unduly burden' nor 'unfairly prejudice' one of the parties (Rules 67 and 68).

NEW EXPEDITED ARBITRATION RULES

A new expedited procedure will apply on an opt-in basis under the amended ICSID Arbitration Rules. The rules feature a shortened procedural calendar and a 120-day deadline from the end of the merits hearing to issue an award (Rule 81).

Unlike expedited procedures provided by other arbitration institutional rules, the ICSID expedited procedure is not exclusive to claims under a certain threshold.

RULES FOR REDUCING COSTS AND ENVIRONMENTAL IMPACT

The amendments also attempt to streamline proceedings and maximise efficiency by introducing specific timelines for different phases of the arbitration proceedings. Most notably, awards have to be rendered no later than 240 days after the last submission (Rule 58).

Special procedures have also been introduced to fast track proceedings. For example, applications of dismissal on the grounds of lack of merits must be decided by the arbitral tribunal within 60 days after the last submission on the topic (Rule 41). Similarly, bifurcation requests shall be granted or denied by the arbitral tribunal within 30 days (Rule 42).

The amended ICSID Arbitration Rules also bring the ICSID to the same practice standard found in most commercial arbitration institutional rules by mandating that all filing be carried out electronically, unless there are 'special circumstances' under which the arbitral tribunal orders the filing of hard copies (Rule 4). This exemplifies the ICSID's efforts to promote greater use of technology and a paperless practice.