Law Assignment: Short Notes On ICSID Convention & Consent In Investor-State Arbitration

Question

Task:
In this law assignment, you are tasked to write short notes on:
i) Recognition and Enforcement of arbitral awards under the ICSID Convention & the New York Convention.
ii) Significance of ‘Consent’ and ‘Scope of Consent’ in Investor-State Arbitration.

Answer

Recognition and Enforcement of arbitral awards under the ICSID Convention & the New York Convention:
Introduction- The United States adopted the New York Convention in 1970, which is described in Chapter 2. As mentioned in this law assignment, it states that the federal courts of the United States will be able to abide by all the rules governing the convention. Not only federal but also state courts are bound to abide by its rules. The arbitral awards are under the New York Convention. The range is very generally compared with this and this is only a domestic matter and by implication, it is imposed on a particular party seeking it and its limit is only one year. Generally speaking, these used pro-arbitration policies affect the effective court even in some situations where there is no written obligation or rule to seemingly recognize the control of the award.

Recognition and Enforcement of arbitral awards under the ICSID Convention-

• Arbitration is a very important provision in the case of the award law. The award process of arbitration under a tribunal must be accepted by both parties and it is mandatory. Each party must also abide by its terms and regulations. This is stated in Article 53 (1) of the ICSID Convention .
• If one party does not agree with the award, the opposing party may seek pecuniary obligation and the same decision is taken as a final decision with the permission of ICSID members, as described in detail in Article 54 (1) of the ICSID Convention .
• If a party belonging to the member state seeks enforcement or recognition, it must submit a copy of the arbitration award signed by the Secretary-General working in the competent court, otherwise, it will not be accepted. Certified copies are sent to the party on the day of the award's dispatch, or the party may claim an additional copy from the court if it so desires
• Article 55 of the ICSID Convention states that member states must be connected to the sovereign community to enforce and accept arbitration rewards. Otherwise, it will not be applicable.
• One thing that is considered very important is that ICSID has no role of its own in enforcing the awards and enforcement under the ICSID Convention . If anyone informs ICSID about the non-compliance of an award, the primary task of ICSID will be to inform the party and take the details of all their actions and act accordingly.

Many states have now begun to introduce this system as a civil process in their laws and constitutions. According to this principle, those who are entitled to a reward must rely on domestic law and seek the help of Abdi for a major punishment such as the death penalty.

Recognition and Enforcement of arbitral awards under the New York Convention practice in U.S courts- All courts in the United States adhere to a specific policy, which must be consistent and clear. In the country and outside the country, their rewards and punishments are the same, and the manner of application is the same. These basic principles motivate U.S. courts to formulate various treaties, as well as to award rewards in both domestic and foreign cases. The application of arbitration is generally popular in international trade for the settlement of disputes arising out of transactional matters. The court and the country's rules recognize the arbitration process because it has many features –

There are several features for which this arbitration system is recognized in convention practices, one of which is that it is less expensive, less time consuming, and it is used for sufficient efficiency in managing dispute cases . This process is usually applied in the conventional court system. Also, this activity is done in secret, that is, the public can't rectify it. An arbitration policy similarly encourages trade between the two countries, since the parties play a vital role in domestic and foreign trade agreements. Inflation or decline both have an impact on this. Finally, another feature of arbitration is that it is also applicable to the United States. Arbitration awards are made with the consent of both parties, and the losing party may seek judicial support from outside, as well as compensation.

Article1 of the New York Convention states that in the event of a major dispute arising within or outside the state, the arbitration procedure may be invoked, whether the dispute is moral or physical . It would be entirely a matter of arbitration, not domestic. There are two reservations within the arbitration system that are covered under Article
1, the first of which deals with the rules of New York concerning any other state, and the other of all the commercial rules within the State.

Significance of 'consent' and 'scope of consent' in investor-state arbitration:
Arbitration is a method of settling investment disputes . Investor/state arbitration has substituted other forms of dispute resolution, such as arbitration as well as diplomatic protection between the investor's nationality and the host state. Investment arbitration, like any other type of arbitration, is always centred around a contract. Consent to arbitration by the state as well as the investor may be cited as an essential requirement for the jurisdiction of a tribunal. Although the tribunal cannot establish jurisdiction on its own, participation in the treaty plays a leading role in the jurisdiction. In this case, both sides have revealed their consent.

Generally, there are three approaches to consent:

• The most important and transparent way is a consent clause through which an agreement is signed directly between the parties .
• Another tactic of consent to arbitration is its provision of the presence of its investment code in national law and host state.
• The third method is an arbitration agreement between the host state and the investor.

Significance of Consent: Consent is known as a prerequisite for arbitration, it applies to a private party or foreign investor and its host state for a commercial transaction. The tribunal of arbitration is determined and constituted through consent. So, it is a cornerstone of the arbitration system between investors and States. Naturally, investor-state arbitration does not require confidentiality, although consent is significant in substantiating that the tribunal in question has been given the power to arbitrate. In addition, the host state and foreign investors may be able to obtain arbitration approval at different times . It often happens that the host state agrees first, which is considered a permanent proposal. The offer's acceptance is recognized by the investor, and thus a request for arbitration is filed with his consent, which may be accomplished by giving direct notice to the respondent state. Due to several agreements entered into between the foreign investor and the host state, the issue of whether a host state has consent to the arbitration as well as the scope of consent often remain in the issue. As far as possible the consent form is trembling, most rules of arbitration determine whether a valid consent can be formed. For example, the settlement of an investment dispute between other states and citizens requires the written consent of the Convention ('ICSID Convention') . However, in this case, no writing is required. In such cases, the parties to the dispute may freely choose to express their consent. Under the circumstances, investment-related arbitration tribunals are left to discretion to determine whether consent has been granted and its scope. On account of this kind of situation, tribunal decisions related to investment arbitration are sometimes criticized.

Scope of Consent: The scope for consent also plays an essential role. A state may independently limit its consent to certain matters, such as the compensation amount for an occupation or a dispute over something related to natural resources. Investors must agree to stand arbitration.

Unlike traditional contractual arrangements, where consent is implied by the agreement sent by the parties, the investor can either give consent by filing a claim (e.g., a request file for arbitration) or by giving notice by a 'trigger' letter. Significantly, the filing date affects time issues, inclusive of the nationality of the investor, the immutability of both parties' consent, as well as the abandonment of other existing legal remedies. There are some offers of consent in arbitration on national law which expands and creates controversy about foreign investment. Others describe in narrow terms the relatable questions that are covered by the consent. This dispute must be in the case of an authorized enterprise that can include such requirements and conditions. The tribunal of Insisa vs. El Salvador has rejected the jurisdiction . The reason is that the investment was not able to meet the conditions of validity and this is because the claim was not related to the violation of law in question .

Conclusion:
The existence of legitimate consent to arbitration as discussed above within this law assignmentis one of the most complex issues in resolving investment disputes internationally. The difficulties are partially created based on different methods of consent. The dramatic development of these methods has taken place over time. At the outset, the lawsuits were based on an agreement between the investors and the host states. Recent developments are largely based on agreements and sometimes on proposals for compliance with national law. It is not surprising that different ways of giving consent have led to various problems as well as questions.

References
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2.Khan, A. N., Ahmad, N., &Munir, B. (2020). Jurisdictional Determinants of Investor-State Dispute Settlement: A Contemporary Critique. Global Economics Review, 4, 47-57. https://www.researchgate.net/profile/Bakht-Munir-2/publication/350277289_Jurisdictional_Determinants_Of_Investor-State_Dispute_Settlement_A_Contemporary_Critique/links/60586590299bf173675c9fba/Jurisdictional-Determinants-Of-Investor-State-Dispute-Settlement-A-Contemporary-Critique.pdf

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