ratified by the majority of the states party to ICSID on 21 March 2022 and will enter into force on 1 July 2022. The main purpose of the amendments is to modernize and simplify the rules, to make them more accessible, to increase the efficiency of the proceedings in terms of time and expenses, to reduce environmental impacts with the use of technological opportunities, and also to improve transparency. David Malpass, Chairman of the World Bank Group and the ICSID Governing Council, stated the purpose of the amendments as follows: “Amended rules simplify judicial procedures to improve accessibility, speed, transparency and improved disclosure procedures with the primary aim of facilitating foreign investment for economic growth.”

Changes to the Rules These changes are the fourth and most comprehensive in ICSID history. Among these, the most important changes are (i) to the efficiency of the proceedings; (i) third Increasing the efficiency of the judiciary is one of the main aims of the amendments and many changes have been made that serve this purpose from different angles. While some of these changes are related to existing rules, some of them foresee completely new provisions.

  • First of all, Article 4 of the Arbitration Rules is a change in the method of submission of documents, and in this context, documents must be submitted electronically as a rule, except for special reasons that require them to be submitted in a different way. This introduces a different method from the previous practice of physical submission of documents. This change aims to ensure that document submission is time and expense efficient, in line with the green arbitration trend.
  • Secondly, in accordance with Article 2 of the ICSID Institutional Rules, explanations regarding the investment, ownership and control of the investment should be included in the arbitration request, unlike the previous practice. In addition, Article 3 of the ICSID Institutional Rules makes recommendations regarding a number of additional information that the parties may include in their arbitration request to help expedite the initial stages of the proceedings. The additional information proposed is by the parties: (i) the number and method of appointment of arbitrators, (ii) the language of the proceedings, (iii) the agreements and proposals regarding the use of rapid arbitration, and (iv) if the party submitting the arbitration request is a legal entity, the owner or control of the legal entity. are the names of the real and legal persons holding it.
  • In addition, in accordance with Article 31 of the Arbitration Rules, in order for the arbitral tribunal to conduct an efficient trial in terms of time and expenses; One or more case management meetings are required to identify the uncontested cases, clarify the subject of the dispute, and limit the contentious matters.
  • In addition, the Arbitration Rules now contain new regulations regarding serial arbitration. In this way, it has been made possible to apply to the rapid trial procedure with the consent of the parties. Since the rules regarding the serial trial procedure foresee a shorter time and petitions, they can reduce the trial time by half. It should be noted that, pursuant to Article 86 of the Arbitration Rules, the parties may waive the application of rapid arbitration at any stage of the proceedings.
  • In addition, Article 42 of the Arbitration Rules expressly permits bifurcation, a previously unregulated procedure that already exists in practice. It also provides a non-limiting list of criteria that the arbitral tribunal should consider when deciding on the division of proceedings (for example, that the duration and costs of the proceedings will be significantly reduced). The amendments also confirm that the arbitral tribunal can decide on the division of the proceedings ex officio, even if the parties do not demand it.
  • The Arbitration Rules now allow for consolidation and coordination of cases. This is a change in line with the arbitration rules of internationally preferred institutions such as the International Chamber of Commerce. Unlike the division of proceedings, the consolidation and coordination of cases is only possible with the consent of the parties.
  • The Arbitration Rules also provide for stricter deadlines throughout the proceedings compared to previous arrangements, in order to reduce time and expenses. In addition, the deadlines that the arbitral tribunal must comply with while making its interim and final decisions are also stipulated. However, it is difficult to predict the effect of the timeframes regarding the decisions of the arbitral tribunal, as they are not precise.

Third Party Financing Third party funding has been one of the controversial issues during the drafting of the amendment bill. Some states have demanded that this practice be banned completely. However, the Arbitration Rules still allow for third party financing, with stricter disclosure requirements.

  • The party applying for third party financing under Article 14 of the Arbitration Rules; The third party providing the financing is required to disclose in writing the name and address. This disclosure must be made immediately with the request for arbitration or, if the agreement regarding third party financing is made at a later stage, at the time of such agreement. In addition, if the financier is a legal entity, the names of those who have control of that legal entity must also be disclosed. The scope of third party financing is broad, to include nonprofit deals.
  • A comprehensive and strong protection against possible conflicts of interest has been provided by giving the arbitral tribunal the authority to request additional information.

Litigation Expenses

  • With the amendments, a section specific to litigation expenses has been created. In this section, in addition to other amendments, it is regulated that all decisions regarding litigation expenses in accordance with Article 52 of the Arbitration Rules must be reasoned.
  • Furthermore, Article 52 of the Arbitration Rules provides guidance to arbitrators on how to decide on litigation costs, by providing a non-limiting list of criteria that the arbitral tribunal should consider when deciding on litigation costs. In this regard, all relevant circumstances must be taken into account, in particular the complexity of the case, the reasonableness of the requested costs and the attitude of the parties throughout the proceedings.
  • As an important change, the arbitral tribunal can now make an interim decision regarding the litigation expenses, if it deems necessary. In addition, there is no obligation to bear the costs of litigation entirely on the losing party, unless a claim has been rejected as manifestly ill-founded.
  • Article 53 of the Arbitration Rules is a new regulation on security for litigation expenses. Upon the request of one of the parties, the arbitral tribunal may decide that the plaintiff in the main action or counterclaim should deposit a security for the costs of the proceedings. In addition, a non-limiting list of criteria that the arbitral tribunal can evaluate while making this decision is also included in the regulation. It should be noted that in case of non-compliance with the decision to deposit a guarantee regarding the litigation expenses, the trial may be suspended by the arbitral tribunal and if the suspension continues for 90 days, the arbitral tribunal may terminate the proceedings after receiving the opinions of the parties.

Composition of the Arbitration Committee and Refusal of the Arbitrators

  • Article 15 of the Arbitration Rules envisages a method for the formation of the arbitral tribunal and simplifies this process. In this framework, if the parties fail to agree on the number of arbitrators and the procedure for their appointment within 45 days from the registration of the case, the arbitral tribunal shall consist of three arbitrators and pursuant to Article 37(2)(b) of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (“ICSID Convention”). each party will appoint an arbitrator and, according to the agreement of the parties, a third arbitrator will be appointed who will preside over the arbitral tribunal.
  • Articles 22 and 23 of the Arbitration Rules provide for shorter deadlines for the dismissal of the arbitrators, and also clearly stipulate that the arbitrators who are not the subject of the rejection request or the President of the ICSID Administrative Council shall decide on the rejection of the arbitrator.

Transparency

  • The new Section X of the Arbitration Rules includes improvements in transparency. In accordance with Article 62 of the Arbitration Rules, all final and annulment decisions will be published in full or in anonymized form with the consent of the parties. As a significant change, the parties will be deemed to have consented to the publication of a document if they do not object in writing within 60 days of its sending. It should be noted that in cases where the parties do not consent to the publication of a whole document, the previous practice of publishing excerpts from documents continues. In addition, Articles 63 and 64 of the Arbitration Rules regulate the conditions and procedures for the publication of documents submitted in interim decisions and proceedings.
  • Article 65 of the Arbitration Rules, which presumes that the hearings are open if one of the parties does not object; This is an important step towards improving transparency. In addition, if hearings are open to third parties, the arbitral tribunal will take procedural measures to prevent disclosure of confidential and protected information.
  • Another development in terms of transparency, Article 67 of the Arbitration Rules sets out the non-limiting criteria to be evaluated by the arbitral tribunal when allowing non-participants to participate in the proceedings.

Temporary Legal Protection Measures

  • With Article 47 of the Arbitration Rules, which is a regulation regarding temporary legal protection measures, it is clearly regulated that the arbitral tribunal can decide on a temporary legal protection measure upon the request of one of the parties or ex officio by evaluating all the relevant conditions.

Changes to ICSID Additional Service Rule: Since the scope of the ICSID Convention is limited only to disputes between states parties and nationals of states parties, the ICSID Additional Service Rules aim to expand access to ICSID services and expertise. With the new amendments, the scope of the ICSID Supplementary Service Rules has been increased by (i) making it applicable where neither the host state nor the investor state is a party state, and (i) making it accessible to regional economic integration organizations, the best known example of which is the European Union. has also been expanded.

Conclusion

The amendments brought by the rules include important developments, especially in order to reduce the duration and expenses of the proceedings and to increase transparency, as a result of a comprehensive and ambitious work. Time will tell how the changes will be reflected in the application and how successful it will be. In addition, ICSID is expected to publish a guide on the Code and its applications in the coming months.