Tackling International Investment Disputes With ADR

To begin with, please tell us a little about your career and your experience in investment disputes and international arbitration.

September 2023 marks my 20^th anniversary at ICSID – time flies. As a Senior Legal Counsel at ICSID, I serve as secretary to tribunals, conciliation commissions, ad hoc committees and mediators in proceedings involving disputes spanning a variety of economic sectors and legal instruments.

I also lead a team of ICSID counsel and paralegals handling ICSID dispute settlement proceedings. I further lead ICSID’s investor-state mediation activities, including the drafting of the recently released ICSID Mediation Rules and amended conciliation frameworks. In this capacity, I’ve also conducted investment mediation trainings for mediators and government officials and supported our World Bank colleagues in various capacity building initiatives.

Outside of my activities in the mediation sphere, I’ve also worked in ICSID’s institutional team, working on ICSID’s data analysis and statistics program. Prior to joining ICSID, I served in the World Bank’s Legal Vice Presidency and the Inspection Panel.

What are some of the key issues facing investor-state dispute settlement (ISDS), and what is ICSID’s role in addressing them?

I would start by noting that international investment dispute settlement has — for several decades now—been an incredibly dynamic area. That dynamism continues today, as states and other stakeholders work to evolve both substantive and procedural aspects of ISDS. I can highlight a few examples in which ICSID has played a pivotal role.

One is the recently concluded Code of Conduct for Arbitrators in International Investment Disputes. The Code has been under development by ICSID and the UN since 2017 and was adopted by the United Nations Commission on International Trade Law (UNCITRAL) in July 2023. As the name implies, the Code is tailored to investment arbitration. It reinforces arbitrators’ duty of independence and impartiality, and among aspects of this core duty, the Code provides express guidance with respect to double-hatting, disclosure requirements and the requirement to charge reasonable fees and expenses, amongst other issues.

Another example of a reform priority for ISDS stakeholders that ICSID has played a key role in is ensuring a time- and cost-effective dispute resolution process. With respect to ICSID arbitrations, there are many different factors that influence the time it takes to complete a case, and one of those is the procedural framework that guides the conduct of the arbitration. ICSID recently completed a major modernisation of its procedural rules, in which the optimsation of efficiency in arbitration was one of the key objectives. We achieved this through a variety of means, such as stipulating precise timelines for various steps and outputs (like the rendering of decisions and awards).

I would start by noting that international investment dispute settlement has — for several decades now—been an incredibly dynamic area.

A third example is the adoption of the ICSID Mediation Rules, which came into effect last year. These mark the first institutional mediation rules of an international organisation designed specifically for investment disputes. The rules are certainly timely given the increased interest in the amicable resolution of disputes, problems or grievances between states and state entities and investors. The ICSID Mediation Rules are the continuation of a longer trend we have witnessed over the past decade in investment treaty drafting, work by the Energy Charter community, ICSID’s own data on settlement and the 30-plus investment mediations that have already taken place.

There are many other topics that fall under the banner of ISDS reform, but hopefully this gives a flavor of ICSID’s contribution to that agenda.

How can frameworks like the Singapore Convention and the Singapore Convention Week assist with this?

The Singapore Convention was a milestone for the advancement of international amicable dispute settlement generally, and instrumental in the context of investment mediation. The ICSID Mediation Rules were developed while the international community was working on the drafting of the Singapore Convention, and we worked closely with our colleagues at UNCITRAL to ensure the ICSID mediation and conciliation frameworks are aligned with the Singapore Convention’s requirements, should parties wish to avail themselves of the Convention in the context of enforcing a settlement agreement reached in an ICSID mediation or conciliation.

The Singapore Convention also had a more general halo effect for mediation and its acceptance as a viable dispute resolution process. The annual Singapore Convention Week, which features panels and workshops on international dispute resolution, including that of investment mediation, plays an important role in sharing and fostering knowledge and understanding of mediation in the investor-state context.

What priorities does ICSID have going forward and what is your outlook on amicable investment dispute settlement?

I think I speak for all of my colleagues when I say that first and foremost our priority is to provide world-class services to parties, commissions, mediators and tribunals in ICSID proceedings. That is a continual process that involves assessing and refining best practices, investing in new technology and updating our procedures based on experience. It is very much a team effort.

On the matter of procedures, I’ve mentioned that ICSID launched amended procedural rules for arbitration and conciliation last year, as well as entirely new rules for investment mediation. We now have a substantial body of cases under the new rules, and communicating lessons learned is — and will continue to be — important. We recently published a report on the first year of practice of the 2022 ICSID Rules, and we will provide further updates and insights as cases progress under the 2022 Rules.

In terms of the outlook for amicable dispute settlement, the international community continues to focus on this, and ICSID plays an important role in that space. At UNCITRAL, the Commission recently adopted in July 2023 the Guidelines on Investment Mediation and the mediation provisions to be used in investment treaties. Other examples include the ICCA Panel of Experts to Develop a Paris Agreement Conciliation Annex, or the ILA Committee on Alternative Dispute Resolution in International Law.

ICSID’s new mediation and conciliation rules have also been relied upon by disputing parties and are being tested in practice. Our World Bank colleagues are supporting structural reforms on the domestic level, including the creation of so-called lead agencies tasked with managing investment grievances. ICSID supports knowledge sharing and awareness raising of mediation and amicable dispute settlement. Given the many developments at the policy, institutional and awareness-raising level, I am optimistic about the future use of amicable investor-state dispute settlement mechanisms.

Frauke Nitschke, Team Leader

International Centre for Settlement of Investment Disputes (ICSID)

1818 H Street, N.W., Washington, D.C. 20433, USA

Tel: +1 202-473-2706

E: fnitschke@worldbank.org

Frauke Nitschke is Team Leader and Legal Counsel for one of ICSID’s case management teams. Prior to joining ICSID in September 2003, Frauke worked at the World Bank’s inspection panel in Washington, D.C. Fluent in English, French and German, she is an accredited mediator and admitted to practice law in the State of New York and Washington, D.C.

ICSID is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and states. ICSID is the world’s leading institution devoted to the settlement of international investment disputes, having administered the majority of all such cases. States have agreed on ICSID as a forum for investor-state dispute settlement in most international investment treaties and in numerous investment laws and contracts.