The foreign investors involved in a dispute with a host State of investment usually get two choices in order to resolve their investment dispute: ICSID arbitration or ad hoc arbitration.        

Have a look at the practical differences between Icsid and UNCITRAL arbitration:

The arbitration under the ICSID regime does require payment of both the arbitral tribunal and the arbitration institution. However, most empirical assessments of the total cost of ICSID and UNCITRAL investment arbitrations do not show that ICSID arbitration proceedings are more expensive. The average cost of investment arbitrations under an ICSID tribunal is approximately USD 1.04 million and the average cost of investment arbitrations under an UNCITRAL tribunal is higher, at USD 1.38 million according to one recent assessment. However, there is no clear winner between ICSID and UNCITRAL arbitration.

Natural persons who are dual nationals are barred by the ICSID Convention from bringing claims against host States of investment except in exceptional circumstances.

As the ICSID Convention is inapplicable to UNCITRAL arbitrations, UNCITRAL arbitral tribunals have historically been more permissive with respect to allowing the claims of dual nationals.

Poor awards rendered by UNCITRAL and non-ICSID tribunals can be set aside by State courts at the seat of arbitration in the same manner as commercial arbitration awards, ensuring an additional level of scrutiny over awards by judges who may have a more diverse outlook.

ICSID tribunals, on the other hand, operate under a specific, self-contained ICSID regime and are not subject to any seat. In practice, the Chairman of the Administrative Council has often appointed arbitrators who are serving as arbitrators in other ICSID disputes to rule on annulment.

ICSID awards are different. Once they make it through the self-contained annulment mechanism, ICSID Arbitration Awards enjoy automatic enforcement in any ICSID contracting State.

However, the importance of automatic enforcement is perhaps overstated, as it is typically the actual execution of an investment arbitration award that is the most problematic for foreign investors.

UNCITRAL tribunals are less likely to refuse jurisdiction on the basis that a dispute arises from an economic activity that does not qualify as an investment and are more likely to allow the claims of dual nationals. ICSID tribunal awards offer the advantage of automatic recognition. They are not final until they survive the internal annulment mechanism. Furthermore, International Arbitration under ICSID must meet the requirements and limitations of the ICSID Convention.

To put in the nutshell, when choosing between ICSID or UNCITRAL arbitration, foreign investors must decide whether one arbitral forum is more appealing according to the peculiar facts of a case.

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