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The ICSID Convention: A Commentary
Christoph Schreuer, The ICSID Convention: A Commentary, Cambridge UP 2001 (1466 pages, text of the ICSID convention; table of ICSID cases; bibliography and very extensive index, ISBN 0521803470, Price: ……
Investment arbitration between a private investor and a host state was up to recently a much noted rarity. It was seen primarily as an instrument to discipline not well governed underdeveloped countries, and as thus part of the NIEO-debate, with Third-World sovereigntists adamantly opposed and Western advocates of business and property equally strongly in favour. This debate, though still informing the conceptual thinking of many older scholars and classic textbooks on international (economic) law, should be laid to rest, though there is a rejuvenation by the NGO-movement; here, diminished sovereignty by privately initiated international adjudication is good for developing countries to enforce modern cultural values related to human rights and the environment, but not appropriate for developed countries where harassment by foreign investors is alleged to undermine a country's regulatory sovereignty.
The ICSID-Convention of 1965 is a major milestone in the development of international investment arbitration. It created for the first time a multilateral treaty (with now over134 members) which regulates arbitration of foreign private investors against host states. The treaty requires an arbitral agreement to establish jurisdiction; at the onset, it was assumed investment agreements or a specific arbitral compromis would be executed.
Now, the arbitral agreement is increasingly contained in modern bilateral, or multilateral investment treaties (Energy Charter Treaty, with over 50 members; NAFTA Chapter XI, with the US, Mexico and Canada as members). ICSID's arbitration business, largely dormant for the first 30 years, has now taken off, with now a total of over 75 registered cases. That is due to the sharp reversal of economic policies away from the statist, restrictive and bureaucratic model of the "NIEO" in the 1970s to a liberalized, open, privatized, but then regulated, model of the 1990s. Large patches of nationally owned industries were sold off in the 1990s, mainly in natural resources and energy, utilities and infrastructure.
Disputes now arising are different from the nationalization, coercive renegotiation or repatriation of foreign exchange related disputes of the past. They relate very much to the impact of financial crises on investment and post-privatisation projects, non-compliance with terms relating to economic regulation (tariffs and usage terms for utility and infrastructure), use (and alleged abuse) of economic, fiscal and environmental regulation for essentially protectionist purposes. In addition, international investment arbitration is no longer exclusively a "Northern" instrument to discipline wayward "Southern" countries.
Many of the major political risk situations now occur in the volatile and materially largely lawless countries of the former Soviet Union. But investment arbitration is also no longer characterized by lack of reciprocity - such as, e.g. in a German-Uzbek or US-Haiti bilateral investment contract. Much investment takes place between developing or transition countries (e.g. Russia - Ukraine) or even in Northern countries (e.g. Russian investment in Germany or Chinese investment in Australia). Disputes, and ways to settle disputes by arbitration (and perhaps in the future more by mediation), have therefore grown by multiples in the global economy where foreign investment in particular in countries with governance problems or intervention of other unpredictable forces (global or regional financial crises or NGO campaigning against projects) still and perhaps even increasingly meets classical and even more so modern forms of political and regulatory risk.
There are new challenges to investment arbitration - such as the calls of NGOs to restrict investment arbitration or to provide them with a right of intervention, to represent the no longer exclusively "private" commercial interests being litigated. Literature on investment arbitration based on bilateral treaties, the Energy Charter Treaty, the Mercosur Colonia Protocol but foremost chapter XI of the NAFTA has mushroomed recently. New issues of procedure and substance are emerging for which established treaty and arbitral rules have no ready answer, and where jurisprudence by arbitral tribunals in particular, processed conceptually by scholars, is necessary to guide future decision-making and legal counseling.
The commentary by Christoph Schreuer is (perhaps together with the massive treatise on the US-Iran Claims tribunal by Brower & Brueschke) the most significant work of practical relevance in this field. It is a "Commentary" in the German tradition, i.e. a detailed discussion and conceptualization of the main issues and decision standards under the heading of each article of the ICSID-Convention, with exhaustive use of tribunal jurisprudence and academic writing. Commentaries thus written are among the best instruments for legal research for practitioners; if written by authorities such as Professor Schreuer, they tend to be in substance, organization and ease of access superior to the user to treatises and handbooks.
They are, in fact, sorely absent otherwise in international law, where few if any treaties have the privilege of an in-depth, authoritative commentary; the GATT, for example, enjoys the availability of the WTO secretariat's "Analytical Index", article by article, but it is hampered by the very-low-profile mandate and its concomitant restrictions on rigour, scope and openness of legal analysis and assessment imposed on the GATT legal advisers. This Commentary digests, however, every decision by the ICSID tribunals and a large part of the relevant literature available and comes to a reasoned and balanced view on the many particular issues. It includes an excellent extensive bibliography and a most impressive and very detailed index for searches.
A future edition could perhaps add a table of court and other arbitral tribunal cases where matters relevant to ICSID have been commented on and widen the analysis of ICSID-relevant law to the decision practice of non-ICSID arbitral tribunals and national enforcement courts. The Commentary also makes extensive references to multilateral and bilateral treaties. In a future edition, it would be desirable to have a table of such treaties, and perhaps a way to find a reference to a bilateral treaty via the index. The old British university printing houses are still wedded to classical approaches - otherwise a diskette or CD-Rom with a search function for index, bibliography, cases and treaties should be something to enhance the usability.
A substantial part of an earlier version of the Commentary was published earlier in the ICSID-Review / Foreign Investment Law Journal. The book deals with ICSID non-Treaty activities, such as in particular the ICSID Additional Facility used when not all parties are members of ICSID, now much relied upon in NAFTA Chapter XI arbitration. It does not include the ICSID Arbitration Rules, through their operation is always examined when relevant under a particular article of the ICSID Convention.
The book is a requirement for any user or prospective user of ICSID arbitration, i.e. negotiators of ICSID clauses, but in particular litigators before ICSID arbitration tribunals. It should also be of considerable use in negotiating modern bilateral and multilateral investment treaties; these are often quite far from being perfect examples of legal clarity and precision, and in applying such treaties in negotiations, but particularly in the case of dispute management and before arbitral tribunals and enforcement courts. An excellent and major scholarly work of great practical relevance in the field of international investment arbitration.
