When is Arbitration possible? When both the claimant and the respondent have consented to it, then arbitration is possible. An investor can “perfect consent” by accepting an offer to arbitrate in an investment treaty.
The Icsid Convention contains two provisions that regulate the denunciation. First, the denunciation shall take place six months after receipt of the notice. Second, restricts the effect of denunciation.
The tribunal therefore concluded that the Convention’s procedural rights and obligations are applicable only when consent is perfected before ICSID denunciation takes place. Additionally, the tribunal did not agree with the Venoklim tribunal, which held that “consent” which referred to a unilateral offer to arbitrate, not “perfected consent.” It reasoned that the term could not refer to unilateral consent, otherwise the words “any nationals of the Contracting State” would be devoid of meaning. Such consent is provided only by a Contracting State through an investment treaty or domestic legislation.
The investor in the Favianca case filed an application for annulment. The ICSID annulment process is not an appeal, and it only allows annulment in limited and extraordinary circumstances. The investor is requesting the annulment committee to invalidate the award due to an incorrect interpretation of the law in the annulment application. An annulment would indeed remove the inconsistency in decisions on this issue, as Favianca is the only outlier.
The Favianca decision highlights the unpredictability of investment arbitration decisions. Although it might influence future arbitrators, the annulment decision will not solve the ambiguity.
An investor should therefore perfect the consent provided in their host State’s applicable investment treaty or domestic legislation as soon as possible, if there is a risk that the ICSID Convention will be denounced. Thereby, in the event of ICSID denunciation, the investor can initiate Icsid Arbitration against the host State while avoiding the interpretative issues outlined above.
For more information, get in touch with renowned ICSID arbitration lawyers. Aceris Law’s ICSID Arbitration Lawyers Desk is a dedicated team of lawyers which accompanies clients involved in ICSID investment arbitrations, i.e., where the ICSID Arbitration Rules apply or the dispute is being resolved under the aegis of the ICSID.
Although the fees of arbitration lawyers do not vary, by offering more competitive legal fees for high quality international arbitration legal representation than other firms and being specialized in the domain, we generally can reduce the overall cost of ICSID arbitrations by well over half. ICSID arbitrations can be very expensive, with the largest cost component being arbitrator fees and legal fees. We also have successfully assisted clients in obtaining third-party funding for investor-State arbitrations in the past to address the high costs of investment arbitration.
To learn more, feel free to visit https://www.acerislaw.com/.
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