Annulment Proceedings under the ICSID Arbitration Rules
Annulment Proceedings under ICSID Arbitration Rules
1. Background
The International Centre for Settlement of Investment Disputes (ICSID) provides a framework for resolving investment disputes between foreign investors and states. Once an ICSID tribunal issues an award, that award is considered final and binding under Article 53 of the ICSID Convention. However, the Convention allows for limited annulment proceedings under Article 52 if specific grounds are met.
2. What is Annulment in ICSID?
Annulment is not an appeal. It is a procedure that allows parties to request the Committee on Annulment to set aside (annul) the arbitral award for limited and specific reasons, reflecting procedural safeguards rather than substantive re-examination of the merits.
3. Grounds for Annulment (Article 52 ICSID Convention)
Article 52 provides five grounds for annulment:
The Tribunal was not properly constituted.
The Tribunal manifestly exceeded its powers.
There was corruption on the part of a Tribunal member.
There was a serious departure from a fundamental rule of procedure.
The award failed to state the reasons on which it was based.
4. Procedure for Annulment (ICSID Arbitration Rule 49-54)
The party seeking annulment must file a request within 120 days after the award is registered.
The request must specify the grounds for annulment.
The Committee on Annulment, composed of three ICSID members, examines the request.
The Committee can confirm, annul, or modify the award (though modifying is rare).
Annulment decisions are final and not subject to further review under ICSID.
5. Important Case Law Examples
a) Amco Asia Corporation and others v. Republic of Indonesia (ICSID Case No. ARB/81/1)
This was one of the earliest annulment cases.
The Committee annulled the award because the Tribunal failed to provide sufficient reasoning.
Significance: Demonstrated the importance of the reasoned award requirement under Article 52(e).
b) Glamis Gold, Ltd. v. United States (ICSID Case No. ARB(AF)/04/3)
The Committee annulled the award for a serious departure from a fundamental rule of procedure when the Tribunal exceeded its powers by making findings outside the scope of the parties' agreement.
Significance: Clarified that the Tribunal must stay within its jurisdiction and mandate.
c) Vivendi v. Argentina (ICSID Case No. ARB/97/3)
The Committee annulled part of the award because the Tribunal failed to provide adequate reasoning and made decisions beyond its powers.
Significance: Reinforced that the Tribunal must give clear reasons and not exceed its mandate.
d) Soufraki v. United Arab Emirates (ICSID Case No. ARB/02/7)
The Committee held that an annulment on the grounds of manifest excess of powers requires a serious breach of jurisdiction, not just any error.
Significance: Narrowed the scope of annulment to serious, clear errors rather than mere disagreements on the Tribunal's jurisdiction.
6. Key Characteristics of ICSID Annulment
Limited review: The Committee does not reassess facts or law except to verify procedural compliance.
Narrow grounds: Annulment is only for procedural irregularities or jurisdictional overreach.
Finality: Annulment decisions cannot be appealed.
7. Distinction Between Annulment and Enforcement Challenges
Annulment proceedings challenge the validity of the award at ICSID.
Enforcement challenges under domestic courts occur when parties seek to enforce or resist enforcement of an ICSID award, but ICSID awards are generally not subject to domestic judicial review, except in annulment proceedings.
Summary Table of Grounds for Annulment and Case Law
| Ground | Description | Relevant Case | Outcome/Principle |
|---|---|---|---|
| Improper constitution | Tribunal not properly formed | Amco Asia | Award annulled |
| Manifest excess of powers | Tribunal exceeded jurisdiction or mandate | Soufraki, Glamis Gold | Narrow review, serious breach required |
| Corruption | Corruption of Tribunal members | No major cases publicly reported | Automatic annulment if proven |
| Serious procedural breach | Fundamental procedural rules violated | Glamis Gold, Vivendi | Award annulled |
| Failure to state reasons | Lack of clear reasoning in the award | Amco Asia, Vivendi | Award annulled |
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