International Centre for Settlement of Investment Disputes facts for kids
ICSID logo
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| Formation | 14 October 1966 |
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| Type | International treaty institution |
| Purpose | International arbitration |
| Headquarters | Washington, D.C., United States |
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Membership
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163 countries (signatory and contracting states) 154 countries (contracting states only) |
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Secretary-General
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Meg Kinnear |
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Parent organization
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World Bank Group |
| Website | icsid.worldbank.org |
The International Centre for Settlement of Investment Disputes (ICSID) is an important group that helps solve money disagreements between countries and foreign investors. It was created in 1966. ICSID is part of the World Bank Group and is located in Washington, D.C., in the United States.
ICSID helps encourage countries to invest in each other. It does this by offering a fair way to solve problems if things go wrong. Many countries have agreed to follow ICSID's decisions.
Contents
What is ICSID?
ICSID is like a special court for money disputes between countries and investors. Imagine a company from one country invests a lot of money in another country. If a problem comes up, like the government changing rules, ICSID can help them talk it out or make a decision.
Why was ICSID created?
In the 1950s and 1960s, countries wanted to protect investments made across borders. It was hard to agree on how to handle problems, especially if a government took over a foreign company's property.
How Aron Broches helped
In 1961, a smart lawyer named Aron Broches from the World Bank had an idea. He thought it would be better to have a way to solve each investment problem one by one. He talked to legal experts from all over the world to create a plan.
This plan became an official agreement called the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Many countries signed it, and ICSID officially started on October 14, 1966.
How ICSID helps solve disputes
Since it began, ICSID has handled over 1,000 cases. Most of these cases were about making decisions, called arbitration. A smaller number were about helping parties talk and find a solution, called conciliation. More than 700 cases have been finished.
Examples of cases ICSID has handled
ICSID deals with many different types of investment problems. Here are a few examples:
Mining company vs. Indonesia
In 2012, a mining company from London sued the government of Indonesia. The company had invested in a local business, but the local government took away its mining rights. The Indonesian government said the company didn't have the right licenses.
Oil company vs. Ecuador
In 2012, an ICSID group decided that Ecuador had to pay a large amount of money to an oil company called Occidental Petroleum. Ecuador had ended a contract with the company. The ICSID group agreed the company had broken a rule, but felt Ecuador's action was not fair.
Tobacco company vs. Uruguay and Australia
Philip Morris, a big tobacco company, sued Uruguay and Australia. Uruguay made cigarette packs show strong health warnings. Australia required plain packaging for cigarettes. Philip Morris argued that these rules hurt their investment.
Energy company vs. Germany
A Swedish energy company, Vattenfall, asked for money from the German government. This was because Germany decided to shut down its nuclear power plants earlier than planned.
How many cases does ICSID handle?
Many agreements between countries about investments (called Bilateral Investment Treaties or BITs) say that problems should go to ICSID. By 2007, there were over 2,500 such agreements.
As of 2012, ICSID had registered 390 disputes. Most of these were arbitration cases (88%). The cases covered many different areas, like oil and gas (25%), electricity (13%), transportation (11%), and construction (7%).
About two-thirds of the arbitration cases were decided by ICSID groups. The other cases were settled or stopped by the parties involved.
How ICSID is run
ICSID is managed by its Administrative Council. This council meets every year. It chooses the Secretary-General, who is like the main leader, and approves the rules and budget. Each member country sends one person to the council.
The World Bank Group President leads the council, but they don't vote. The daily work of ICSID is done by its secretariat, which has about 40 employees. The Secretary-General, currently Meg Kinnear, leads this team. They help the council and manage lists of experts who can act as conciliators or arbitrators.
Who are ICSID members?
ICSID has 163 member states that have signed its agreement. This includes 162 United Nations member states plus Kosovo. Out of these, 154 countries have fully joined by ratifying the agreement.
Some countries, like Bolivia and Venezuela, have left ICSID in the past. Ecuador left in 2009 but rejoined in 2021. All countries that have fully joined ICSID must accept and follow the decisions made by ICSID.
Countries that have signed but not fully joined
Some countries have signed the ICSID agreement but have not yet fully joined. This means they haven't completed all the steps to become a "contracting member state." These include:
Belize (signed in 1986)
Dominican Republic (signed in 2000)
Ethiopia (signed in 1965)
Guinea-Bissau (signed in 1991)
Namibia (signed in 1998)
Russia (signed in 1992)
Thailand (signed in 1985)
Countries that are not members
Some large economies, like Brazil, India, and South Africa, have never been members of ICSID.
What ICSID does
ICSID itself doesn't make the decisions. Instead, it provides the support and rules for groups of experts (conciliation commissions or tribunals) to handle the cases.
How cases are handled
ICSID has two main sets of rules for cases. Most cases follow the ICSID Convention rules. For a case to use these rules, the problem must be between a member country and an investor from another member country. It also needs to be a legal problem about an investment.
If one of the parties is not a member country, or not from a member country, the case can use ICSID's Additional Facility Rules. It's always up to the parties to agree to use ICSID to solve their problem. Once they agree, they can't change their mind later.
ICSID also helps with other types of dispute resolution. It can assist with cases under rules from the United Nations Commission on International Trade Law (UNCITRAL). It also offers administrative help for cases at other places, like the Permanent Court of Arbitration in the Netherlands.
Other activities
ICSID also does research and offers advice. It publishes books about investment laws around the world. Since 1986, it has published a legal journal called ICSID Review: Foreign Investment Law Journal.
While many ICSID meetings happen in Washington, D.C., parties can agree to hold them in other places. These include locations like Singapore, London, Paris, and Hong Kong.
See also
- Bilateral investment treaty
- Investor-state dispute settlement
