International Centre for Settlement of Investment Disputes facts for kids
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Centre international pour le règlement des différends relatifs aux investissements
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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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165 countries (signatory and contracting states) 154 countries (contracting states only) |
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Secretary-General
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Martina Polasek |
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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 organization. It helps solve disagreements between countries and foreign investors. Think of it as a special court for money matters across borders.
ICSID was created in 1966. It is part of the World Bank Group. Its main office is in Washington, D.C., USA. ICSID helps encourage international investment. It does this by offering a fair way to settle disputes. This makes investors feel safer about putting their money into other countries.
ICSID also offers advice and publishes helpful information.
Contents
What is ICSID and What Does it Do?
ICSID stands for the International Centre for Settlement of Investment Disputes. It's like a referee for big money disagreements. These disagreements happen between countries and people or companies investing there. For example, if a company builds a factory in another country, and then something goes wrong with their agreement, ICSID can help.
The main goal of ICSID is to help solve these problems peacefully. It uses methods like international arbitration and conciliation. Arbitration is like having a neutral judge make a decision. Conciliation is when a neutral person helps both sides talk and find a solution together.
ICSID is funded by the World Bank Group. It is an independent organization. Many countries have agreed to follow ICSID's rules. This means they will accept the decisions made by ICSID.
How ICSID Started
In the 1950s and 1960s, many groups tried to protect international investments. They wanted to make sure investors were treated fairly. But it was hard to agree on how to do this. Especially when a country took over a foreign business.
The Idea Behind ICSID
In 1961, a person named Aron Broches had a new idea. He worked for the International Bank for Reconstruction and Development (IBRD). He thought it would be better to have a way to solve each investment problem one by one. Instead of trying to make one rule for everything.
Broches talked to legal experts from all over the world. They worked together to create a first draft of an agreement. The IBRD staff then wrote the official agreement. Legal representatives helped to finish and approve it.
When ICSID Became Official
The final agreement was called the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The Bank president sent it to member countries to sign on March 18, 1965. Twenty countries quickly agreed to it.
ICSID officially started on October 14, 1966. This was a big step for international business.
Cases ICSID Has Handled
Since it began, ICSID has handled over 1,000 cases. Most of these were arbitration cases. A smaller number were conciliation cases. As of 2024, more than 700 cases have been finished.
Here are a few examples of cases ICSID has helped with:
- In 2012, a mining company sued the government of Indonesia. The company claimed their mining rights were taken away.
- In 2012, an ICSID group decided that Ecuador had to pay a large amount of money to an oil company. This was because Ecuador ended a contract unfairly.
- An Irish oil company took the Ugandan government to court in 2012. They disagreed about taxes on goods for their operations.
- A tobacco company sued Uruguay and Australia. This was because these countries required plain packaging for cigarettes. The company felt this hurt their investment.
- A Swedish energy company asked for money from the German government. This was after Germany decided to close nuclear power plants early.
- In July 2024, ICSID ordered Morocco to pay $150 million to a company called Corral Petroleum Holdings.
How ICSID's Work Has Grown
Many agreements between two countries about investments (called Bilateral Investment Treaties or BITs) became common in the early 2000s. A lot of these agreements said that future investment problems should go to ICSID.
As of June 30, 2012, ICSID had registered 390 disputes. Most of these were arbitration cases. The cases covered many different industries. These included oil, gas, mining, electricity, transportation, and construction.
By May 14, 2016, 362 out of 574 registered arbitration cases were finished. About two-thirds of these were decided by ICSID groups. The rest were settled or stopped by the parties involved.
Conciliation cases were less common. In most conciliation cases, the parties did not reach an agreement.
Only two governments, Gabon and Romania, have ever started an ICSID case against an investor. Countries that were most often involved in cases as the "respondent" (the one being sued) included Argentina, Venezuela, and Egypt.
How ICSID is Managed
ICSID is run by its Administrative Council. This council meets once a year. It chooses the Secretary-General and Deputy Secretary-General. These are the main leaders of ICSID. The council also approves the rules and the budget.
Each country that is a member of ICSID sends one person to the council. The head of the World Bank Group leads the council. But this leader does not vote.
The daily work of ICSID is done by its secretariat. This is a team of about 40 employees. They help the Administrative Council and manage the cases. They also keep lists of experts who can act as conciliators and arbitrators. Each member country can suggest four people for each list. The Secretary-General is in charge of the secretariat. They also represent ICSID legally.
Who Are ICSID Members?
ICSID has 165 member states that have signed its convention. This includes 162 United Nations member states and Kosovo. Out of these, 154 are "contracting member states." This means they have officially agreed to the rules.
Some countries have left ICSID in the past. Bolivia and Venezuela withdrew in 2012. Ecuador left in 2009 but rejoined in 2021.
All ICSID contracting member states must accept and carry out ICSID's decisions. Even if they were not part of that specific disagreement.
Countries That Signed But Not Fully Joined
Some countries have signed the ICSID convention but have not fully joined by ratifying it. 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 Not Part of ICSID
Some large economies have never been ICSID members. These include Brazil, India, and South Africa.
What ICSID Does Day-to-Day
ICSID itself does not make the decisions in cases. Instead, it provides support to the groups that do. These groups are called conciliation commissions or tribunals. ICSID gives them the rules and procedures they need.
There are two main sets of rules for cases. One is for cases under the ICSID Convention. The other is for cases under the ICSID Additional Facility Rules.
For a case to be under the ICSID Convention, it must be between a member country and an investor from another member country. It also has to be a legal problem about an investment. Most cases are handled this way.
A case can be under the Additional Facility Rules if one of the parties is not a member country. Or if the problem is not directly about an investment.
It is always up to the parties to agree to use ICSID. But once they agree to arbitration under the ICSID Convention, they cannot change their mind later.
ICSID also helps with other types of dispute resolution. It supports groups that follow rules from the United Nations Commission on International Trade Law (UNCITRAL). ICSID also provides help to other international dispute resolution centers. These include the Permanent Court of Arbitration in the Netherlands and the London Court of International Arbitration.
ICSID also does research and gives advice. It publishes books about investment laws and treaties. Since 1986, it has published a law journal called ICSID Review: Foreign Investment Law Journal.
Most ICSID meetings happen in Washington, D.C. But the parties can agree to meet in other places. There are many alternative locations around the world.
See also
- Arbitration
- Bilateral investment treaty
- Conciliation
- Investor-state dispute settlement
