World Bank Arbitration Statistics show record number of new cases in 2021

International

On 7 February 2022, the International Centre for Settlement of Investment Disputes (ICSID), the World Bank’s arbitration institution, published its annual caseload statistics.

The caseload statistics show that, in the period from its first case, Holiday Inns S.A. and others v. Morocco (ICSID Case No. ARB/72/1) registered in 1972, to 31 December 2021, ICSID has registered 869 arbitration and conciliation cases under the ICSID Convention and Additional Facility Rules.

Record Level of New Cases Registered

In 2021, ICSID set a record by registering 66 new cases brought under the ICSID Convention.  The majority of these new cases (i.e., 58%) continues to involve claims brought under bilateral investment treaties (BITs).  Cases brought under the Energy Charter Treaty (ECT), a multilateral treaty protecting energy investments, accounted for 8% of cases registered by ICSID in 2021.

Investor Claims Remain Regionally Distributed

In terms of geographical distribution, in 23% of the new cases the respondent States were Eastern European and Central Asian (which ICSID tracks collectively as a region) and South America, respectively.  The unfortunate title of most sued host State in investment disputes in 2021 goes to Peru, which faces nine new cases arising from different governmental measures.

Despite the recent suite of judicial and legislative acts emanating from the EU or its Member States and set to exclude intra-EU cases from investor-State arbitration, the new cases continue to include intra-EU parties in cases involving BITs or the ECT.

Energy and Mining Remain Top Sectors for Disputes, with Construction Cases and Telecoms Cases on the Rise

In terms of sector distribution, the energy and mining sectors continue to dominate with a total of 47% of the new cases, followed by construction disputes (16.5%) and telecommunications (11%).  Disputes in the latter two sectors are on the rise compared to their historical average.  Regulatory reforms in the renewable energy sector continue to generate new cases.  It is notable that ICSID has registered two cases arising from The Netherlands’ measures to phase out coal power. 

Contrary to Criticisms About the Legitimacy of the System, ISDS Outcomes Remain Balanced and Stable

The data on outcomes of ICSID cases reveals a relative historical stability in a balanced resolution of investor-State cases.  In 31% of ICSID cases concluded in 2021, the tribunal upheld at least some of the investor’s claims, 33% of concluded cases were dismissed (either on the merits or on jurisdiction), while the remaining 36% of cases were discontinued for various reasons.  Such data continues to cast doubts on the criticism of the legitimacy of the investor-State dispute settlement (ISDS) system based on perceptions of bias in favour of investors.  At the same time, the statistical data reinforces the utility of the current neutral dispute resolution system provided by existing investment treaties, thereby calling into question the need for a permanent multilateral investment court system as promoted by the European Union. 

Modest Gains in the Diversity of the Arbitrator Pool

In terms of gender and geographical diversity within the pool of arbitrators, the ICSID data shows a slight improvement on gender diversity, but still a considerable way to go to achieve gender parity: women represented only 27% of arbitrators, ad hoc committee members, and conciliators appointed in 2021.  Geographical diversity likewise remains a concern, with 43% of arbitrators, ad hoc committee members, and conciliators hailing from Western Europe, and 20% from North America.  As most of the ICSID arbitrators are appointed by the parties, diversity concerns remain to be addressed principally by the users of the system.

Amendments Around the Corner

The caseload statistics show intense activity at ICSID at a time when ICSID Member States are expected to cast a vote on the amendments to the ICSID Arbitration and Conciliation Rules, as well as to the Administrative and Financial Regulations and Institution Rules, which, if approved, would go into effect on 1 July 2022.  The amendments are aimed at streamlining the procedure and making it more user-friendly and efficient.  They address topics that Member States and the public raised during the consultative period, such as greater transparency in the conduct and outcome of proceedings, new disclosure requirements for third-party funding, and expedited arbitration rules for parties wishing to shorten the procedural calendar.