On 4 August 2022, the International Centre for Settlement of Investment Disputes (ICSID) released its latest biannual caseload statistics for FY2022 (available here). The report also captures trends of ICSID cases over a longer period since 1972. In this blogpost, we have summarised the key highlights of the report.
Trends in the past decades
Part I of the report contains statistics about all cases registered and administered by ICSID. As of 30 June 2022, ICSID had registered a total of 888 cases since the first case was registered in 1972. Amongst these cases, 90.6% were ICSID Convention Arbitration cases, 8% were Additional Facility Arbitration cases, while conciliation cases accounted for 1.4%. Notably, the three most recent decades have seen a significant increase in the number of cases, as compared to the early 70’s to mid 90’s.
New cases registered: a slight decline?
In FY2022, ICSID registered 50 new cases, a decrease from the 70 new cases registered at ICSID in FY2021. Of these 50 new arbitrations, 48 were brought under the ICSID Convention and two under the Additional Facility Rules. In addition, ICSID also provided full administrative services for 18 cases governed by non-ICSID rules, 14 of which were cases applying the United Nations Commission on International Trade (UNCITRAL) Arbitration Rules.
The majority of new ICSID cases in FY2022 were brought under bilateral investment treaties (56%). 13% of the new cases were brought under investment contracts between the investor and the host-state, representing an increase from the previous year (7%). A further 4% of cases were commenced under the investment law of the host state.
Of the remaining cases, 11% were brought under the Energy Charter Treaty, and 16% under multilateral regional free trade agreements, including 4% under the North American Free Trade Agreement and a further 4% under the US-Mexico-Canada Agreement.
What is the regional distribution of ICSID cases?
In FY2022, ICSID registered new cases involving countries from all regions of the world. In recent years, states in Eastern Europe, Central Asia, South America and Sub-Saharan Africa have been most frequently represented as respondents. These regions remain represented this year, but with significantly more global variation. The largest share of new cases in FY2022 involve states in South America (22%), followed by Eastern Europe and Central Asia (20%). However, states in Central America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa each accounted for 12% of the new cases, while South and East Asian and Western European states accounted for 8% each. States in North America accounted for 6% of the new cases. Peru continues to be the most frequently recurring respondent state to new cases, with 4 new cases in FY2022 (following 6 new cases in both FY2020 and FY2021). Romania is respondent in 4 new cases filed this year.
Which economic sectors are involved?
In terms of sector spread, cases from electric power and other energy sources (24%), and oil, gas and mining (22%) continue to form a significant share of new cases. IT disputes represent 10% of new cases, slightly down from 11% in 2021 but higher than the historic average of 7%. Other sectors include construction (12%), water, sanitation and flood protection (8%), finance (6%), transport (6%) and tourism (4%).
Case outcomes: a balanced picture?
The outcomes of ICSID cases are always of interest, particularly given historic criticism of the investor-state arbitration process for favouring investors. These annual ICSID reports provide concrete data on which to assess these criticisms. The outcomes in FY2022 shows a balanced picture of outcomes. 52% of cases were decided by a tribunal and 48% were either settled or discontinued. Among the cases decided by tribunals in FY2022, 48% of awards upheld the investors’ claims in part or in full (compared with a historic average of 30% since 1972), 28% of awards rejected all of the investors’ claims on the merits (19%), while 21% of awards declined jurisdiction (14%). 3% were dismissed for manifest lack of legal merit (1%).
Diversity in arbitrator appointments: Gender and nationality
As with previous years, arbitrators from Western Europe were heavily represented (41%), followed by North America (21%) and South America (17%).
Overall, female arbitrators made up 24% of all appointments in ICSID cases in FY2022, representing a decline from 31% in FY2021, but an increase from 14% in FY2020. Where ICSID (rather than the parties) was responsible for the appointment, 45% of appointments were female, compared with 37% in FY2021. This mirrors similar statistics from arbitral institutions such as the LCIA and ICC which indicate that gender balance amongst party appointees lags behind institutional appointments. Overall, this would suggest that initiatives to raise awareness and encourage progress in diversity and inclusivity are making some headway, though further efforts are required to increase the share of appointments of more diverse candidates in ICSID arbitrations, including in terms of gender, ethnicity and nationality.
For further information, please contact:
Andrew Cannon, Herbert Smith Freehills