The International Center for the Settlement of Investment Disputes (ICSID) is an institution of the World Bank established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention or the Washington Convention, 1965). The Convention sets forth ICSID’s mandate, organization and core functions. The primary purpose of ICSID is to provide facilities for conciliation and arbitration of international investment disputes. The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). It was opened for signature on March 18, 1965 and entered into force on October 14, 19662.
The Convention sought to remove major impediments to the free international flows of private investment posed by non-commercial risks and the absence of specialized international methods for investment dispute settlement. ICSID was created by the Convention as an impartial international forum providing facilities for the resolution of legal disputes between eligible parties, through conciliation or arbitration procedures. Recourse to the ICSID facilities is always subject to the parties’ consent3. As evidenced by its large membership4, considerable caseload5, and by the numerous references to its arbitration facilities in investment treaties and laws, ICSID plays an important role in the field of international investment and economic development.
ICSID is an autonomous international organization and is considered to be the leading international arbitration institution devoted to investor-State dispute settlement (also known as investment treaty arbitration)6.
HISTORY OF ICSID
In the past, the World Bank as an institution has assisted in mediation or conciliation of investment disputes between nations and private foreign investors7. Thus to reduce the burden on World Bank , Aron Broches, then General Counsel of the World Bank conceived the idea for the Convention in 1961 in conjunction with the Organization for Economic Cooperation and Development (OECD), The idea was to create a framework for the protection of international investment. This idea gave birth to the International Centre for Settlement of Investment Disputes (ICSID) under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States which came into force on October 14, 1966. The aim of establishing the ICSID was the Bank’s belief that an institution specially designed to facilitate the settlement of investment disputes between governments and foreign investors, could help promote increased flow of international investment.