Tag Archives: Treaty

[ICSID GUEST POST] Appeal, Review, Annulment …. What’s it all about?

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This post is a guest contribution from Ms. Meg Kinnear, Secretary-General of ICSID.

 

The extent to which a legal decision should be reviewable is a question that all legal systems must address.  On the one hand, everyone can agree that decisions should be correct, and that getting the law, the facts and the procedure right are vital to the administration of justice. One of the ways legal systems try to ensure correct outcomes is by having a second body [and in some national systems, a third and even a fourth court!] review the first decision and correct any errors made by the original tribunal.

On the other hand, some argue that an equally important role of legal decision makers is to resolve disputes once and for all, so that the opposing parties have a final outcome, certainty, and the ability to get on with business without spending time and money on legal appeals. Balancing the goals of “correctness” and “finality” is difficult, and defining the right level of review can depend on factors such as cost, timing, the rights in question, and the goals of the legal system.

Discussion about how to balance correctness and finality has also taken place in the international investment context.  Indeed, the States drafting the ICSID Convention debated this question as early as the mid-1960s when they designed the Convention. States finally decided to provide a review called “annulment” which allowed a second look at ICSID awards, but on limited grounds.  These grounds were set out in Article 52 of the ICSID Convention and allowed a new panel [the ad hoc Committee] to annul an award if: [1] the tribunal was improperly constituted; [2] the tribunal manifestly exceeded its powers; [3] a tribunal member was corrupt; [4] there was a serious departure from a fundamental rule of procedure; or [5] the tribunal failed to state reasons for its decision [paraphrased from Article 52 of the ICSID Convention].

In 2004, ICSID issued a public discussion paper outlining possible features of an international investment appeals system.  The paper suggested that an appeal mechanism could be designed to provide a broader range of review on the basis of clear error of law, serious error of fact, or any of the five grounds of review in Article 52 of the ICSID Convention. States decided not to pursue an appeals facility at that time, however ICSID undertook to further study the matter and to offer its assistance and expertise if treaty negotiators decided to pursue this course in the future.

On September 16, 2015, the European Commission [EC] released a draft text on investment under the Transatlantic Trade and Investment Partnership [TTIP].  This draft included a proposal to create an Appeal Tribunal that could review an award issued by an investment tribunal.  The EC proposal builds on the ICSID Convention by suggesting that investment awards under the TTIP could be appealed based on the grounds in Article 52 of the ICSID Convention plus error of law or manifest error of fact [paraphrased from Article 29 of the EC text].

As investment cases grow in number and complexity, and increasingly arise out of an investment treaty, the discussion on the appropriate level of review for such awards will continue. Clearly the task of establishing the optimal level of review between correctness and finality is a difficult one, and it will be interesting to follow treaty negotiations as they grapple with this question.

Ms. Meg Kinnear, Secretary-General of ICSID