81806 2013 ANNUAL REPORT 2013 ANNUAL REPORT Zulian Rivani, Indonesia Kota Ditepi Laut CONTENTS Letter of Transmittal 1 ICSID Secretariat 2 Chapter 1: Introduction 5 Chapter 2: Membership 7 Chapter 3: Panels of Arbitrators and of Conciliators 15 Chapter 4: Operations of the Centre 18 Chapter 5: Outreach 39 Chapter 6: Forty-sixth Annual Meeting of the Administrative Council 47 Chapter 7: Finance 49 Financial Statements 50 Independent Auditors’ Report 63 The photos of art in this Annual Report come from the World Bank collection and are reproduced with the kind permission of the curator of the World Bank. ii | ICSID ANNUAL REPORT 2013 | iii INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES September 5, 2013 Dear Mr. Chairman, I am pleased to submit to the Administrative Council for its approval the Annual Report on the operation of the International Centre for Settlement of Investment Disputes. This Annual Report covers the fiscal year from July 1, 2012 to June 30, 2013. The Report includes the audited financial statements of the Centre, presented pursuant to Administrative and Financial Regulation 19. Yours sincerely, Meg Kinnear Secretary-General Dr. Jim Yong Kim Chairman Administrative Council International Centre for Settlement of Investment Disputes iv | ICSID ANNUAL REPORT 2013 | 1 SECRETARIAT OF THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES JUNE 30, 2013 PARALEGAL, ADMINISTRATIVE AND CLIENT SUPPORT STAFF Joy Berry, Paralegal Arkiatou Boissaye, Paralegal Meg Kinnear, Secretary-General Lara Domínguez, Paralegal Ivania Fernández, Paralegal LEGAL STAFF Cristina Padrao, Paralegal Aurélia Antonietti, Team Leader/Legal Counsel Angela Ting, Paralegal Gonzalo Flores, Team Leader/Legal Counsel Ivanna A. Ursino, Paralegal Milanka Kostadinova, Team Leader/Legal Counsel Alix Ahimon, Program Assistant Eloïse Obadia, Team Leader/Legal Counsel Cindy Ayento, Administrative Assistant to Secretary-General Martina Polasek, Team Leader/Legal Counsel Claudio Batista, Program Assistant Hayane Chang Dahmen, Legal Counsel – Institutional Matters Paula Carazo, Program Assistant Mercedes Cordido-Freytes de Kurowski, Legal Counsel Cinthya Ibáñez Rodríguez, Program Assistant Aïssatou Diop, Legal Counsel Lanny Isimbi, Program Assistant Geraldine R. Fischer, Legal Counsel Laura Amelia Pettinelli, Program Assistant Anneliese Fleckenstein, Legal Counsel Lindsay Gastrell, Legal Counsel Ann Catherine Kettlewell, Legal Counsel Paul-Jean Le Cannu, Legal Counsel Alicia Martín Blanco, Legal Counsel Marco Tulio Montañés-Rumayor, Legal Counsel Frauke Nitschke, Legal Counsel Natalí Sequeira, Legal Counsel Luisa Fernanda Torres, Legal Counsel Mairée Uran Bidegain, Legal Counsel Daniela Argüello, Legal Consultant – Institutional Matters Tatu Ilunga, Legal Consultant Marisa Planells-Valero, Legal Consultant Donna Robinson, Legal Consultant – Institutional Matters Otylia Babiak, Intern Ruqiya Bashir Haji Musa, Intern FINANCIAL AND GENERAL ADMINISTRATION STAFF Javier Castro, Team Leader/Program Officer Zelalem Tesfa Dagnaw, Financial Officer Lawrence Ramm, Information Technology Analyst Rita A. Rovira, Information Analyst Lamiss Al-Tashi, Hearings Organizer Azeb Debebe Mengistu, Sr. Financial Assistant Walter Meza-Cuadra, Sr. Financial Assistant Sherri Akanni, Program Assistant Members of the ICSID Secretariat, photo by Deborah W. Campos, Washington, D.C., May 23, 2013 Diana Magalona, Receptionist 2 | ICSID ANNUAL REPORT 2013 | 3 Alecos Fassianos, Greece Bankers and Skyscrapers CHAPTER 1 INTRODUCTION International investment law and international investment arbitration are relatively new disciplines: the first bilateral investment treaty was signed by Pakistan and Germany in 1959, the first investment treaty offering investor-State arbitration was concluded in 1968 between the Netherlands and Indonesia, the first ICSID case was registered in 1972, and the first treaty-based investment case was registered by the Centre in 1987. The Centre itself was established in 1966, along with the coming into force of the ICSID Convention. It was the first dispute resolution facility designed exclusively for international investment dispute settlement, and it continues to be the only international facility dedicated to this area. This specialized mandate has allowed ICSID to develop an unparalleled expertise and focus, which benefits disputing parties, arbitrators and Contracting States. Cumulatively, ICSID has administered over 430 cases, involving foreign investors from all regions of the world and more than 95 States and State agencies under the ICSID Convention and Rules. In addition, it has administered over 40 investment arbitration cases initiated under the UNCITRAL Arbitration Rules and other arbitral rules. ICSID is universally recognized today as the premiere arbitral institution for international investment matters, and we are dedicated to facilitating the resolution of investment disputes between foreign investors and host States in support of overall economic development. Our end-of-fiscal year results confirm that ICSID remains the leader in international investment dispute resolution. In the past fiscal year alone, ICSID registered 56 proceedings, concluded 35 pending proceedings, held over 110 hearings in locations around the world, participated in more than 60 presentations in the field of international investment arbitration, and published numerous materials on investment law and dispute resolution. While we are justifiably proud of the accomplishments of ICSID to date, our focus is on serving facility users in the future. States continue to conclude international investment agreements, with a discernible trend toward signing these instruments on a multilateral, often regional, basis. Many of these agreements are housed in a broader free trade agreement, regulating various aspects of commerce between the signatory parties. As a result, there is a continuing demand for the cost- effective, expert and impartial mechanisms provided by ICSID to support dispute resolution clauses in investment contracts signed by investors and host States, and pursuant to investment laws and investment treaties negotiated by States. 4 | ICSID ANNUAL REPORT 2013 | 5 CHAPTER 2 MEMBERSHIP With this end in mind, ICSID continues to work toward meeting the needs of disputing parties. These efforts are outlined in Chapter 4 of this report, and include greater capacity building to help parties manage arbitration and conciliation, increased automation of the arbitral process, ICSID is an intergovernmental organization established by the Convention on the Settlement of development of best practices, and retaining additional staff to support case proceedings. I would Investment Disputes between States and Nationals of Other States. like to acknowledge the efforts of the superb staff at ICSID and to thank them for their dedication, inspiration and hard work. At June 30, 2013, there were 158 signatory States to the ICSID Convention. Of these, 149 States were ICSID Contracting States by virtue of their having deposited instruments of ratification, Finally, I would like to thank Contracting States and facility users for their continued confidence acceptance or approval of the ICSID Convention. in the Centre. It remains a unique privilege to serve as Secretary-General of ICSID, and we are committed to excellence in fulfilling the important mandate of ICSID. Two new members joined ICSID in FY2013. Meg Kinnear On July 19, 2012, the ICSID Convention was signed on behalf of Montenegro by H. E. Dr. Srdjan Secretary-General Darmanović, Ambassador of Montenegro to the United States. On April 10, 2013, Montenegro deposited its instrument of ratification and the ICSID Convention entered into force for Montenegro on May 10, 2013. On May 20, 2013, the Democratic Republic of Sao Tome and Principe deposited its instrument of ratification of the Convention with the World Bank, which is the depositary of the ICSID Convention. The Convention entered into force for Sao Tome and Principe on June 19, 2013. Meg Kinnear, Secretary-General of ICSID, with H.E. Kosti Manibe Ngai, Minister of Finance and Economic Planning of South Sudan, at the signing of the ICSID Convention, photo by Deborah W. Campos, Washington, D.C., April 18, 2012 6 | ICSID ANNUAL REPORT 2013 | 7 JULY 2013 LIST OF CONTRACTING STATES AND OTHER SIGNATORIES OF CONTRACTING STATES TO THE ICSID CONVENTION THE CONVENTION SIGNATORY STATES TO THE ICSID CONVENTION AS OF JUNE 30, 2013 The 158 States listed below have signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States on the dates indicated. The names of the 149 States that have deposited their instruments of ratification are in bold, and the dates of such deposit and of the attainment of the status of Contracting State by the entry into force of the Convention for each of them are also indicated. Deposit of Entry into Force State Signature Ratification of Convention Afghanistan Sep. 30, 1966 June 25, 1968 July 25, 1968 Albania Oct. 15, 1991 Oct. 15, 1991 Nov. 14, 1991 Algeria Apr. 17, 1995 Feb. 21, 1996 Mar. 22, 1996 Argentina May 21, 1991 Oct. 19, 1994 Nov. 18, 1994 Armenia Sep. 16, 1992 Sep. 16, 1992 Oct. 16, 1992 Australia Mar. 24, 1975 May 2, 1991 June 1, 1991 Austria May 17, 1966 May 25, 1971 June 24, 1971 Azerbaijan Sep. 18, 1992 Sep. 18, 1992 Oct. 18, 1992 Bahamas, The Oct. 19, 1995 Oct. 19, 1995 Nov. 18, 1995 Bahrain Sep. 22, 1995 Feb. 14, 1996 Mar. 15, 1996 Bangladesh Nov. 20, 1979 Mar. 27, 1980 Apr. 26, 1980 Barbados May 13, 1981 Nov. 1, 1983 Dec. 1, 1983 Belarus July 10, 1992 July 10, 1992 Aug. 9, 1992 Belgium Dec. 15, 1965 Aug. 27, 1970 Sep. 26, 1970 Belize Dec. 19, 1986 Benin Sep. 10, 1965 Sep. 6, 1966 Oct. 14, 1966 Bosnia and Herzegovina Apr. 25, 1997 May 14, 1997 June 13, 1997 Botswana Jan. 15, 1970 Jan. 15, 1970 Feb. 14, 1970 This map was produced by the Map Design Unit of The World Bank. Brunei Darussalam Sep. 16, 2002 Sep. 16, 2002 Oct. 16, 2002 The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any Bulgaria Mar. 21, 2000 Apr. 13, 2001 May 13, 2001 Burkina Faso Sep. 16, 1965 Aug. 29, 1966 Oct. 14, 1966 endorsement or acceptance of such boundaries. Burundi Feb. 17, 1967 Nov. 5, 1969 Dec. 5, 1969 Cambodia Nov. 5, 1993 Dec. 20, 2004 Jan. 19, 2005 Cameroon Sep. 23, 1965 Jan. 3, 1967 Feb. 2, 1967 Canada Dec. 15, 2006 IBRD 39525 8 | ICSID ANNUAL REPORT 2013 | 9 Deposit of Entry into Force Deposit of Entry into Force State Signature Ratification of Convention State Signature Ratification of Convention Cape Verde Dec. 20, 2010 Dec. 27, 2010 Jan. 26, 2011 Haiti Jan. 30, 1985 Oct. 27, 2009 Nov. 26, 2009 Central African Republic Aug. 26, 1965 Feb. 23, 1966 Oct. 14, 1966 Honduras May 28, 1986 Feb. 14, 1989 Mar. 16, 1989 Chad May 12, 1966 Aug. 29, 1966 Oct. 14, 1966 Hungary Oct. 1, 1986 Feb. 4, 1987 Mar. 6, 1987 Chile Jan. 25, 1991 Sep. 24, 1991 Oct. 24, 1991 Iceland July 25, 1966 July 25, 1966 Oct. 14, 1966 China Feb. 9, 1990 Jan. 7, 1993 Feb. 6, 1993 Indonesia Feb. 16, 1968 Sep. 28, 1968 Oct. 28, 1968 Colombia May 18, 1993 July 15, 1997 Aug. 14, 1997 Ireland Aug. 30, 1966 Apr. 7, 1981 May 7, 1981 Comoros Sep. 26, 1978 Nov. 7, 1978 Dec. 7, 1978 Israel June 16, 1980 June 22, 1983 July 22, 1983 Congo, Democratic Rep. of Oct. 29, 1968 Apr. 29, 1970 May 29, 1970 Italy Nov. 18, 1965 Mar. 29, 1971 Apr. 28, 1971 Congo, Rep. of Dec. 27, 1965 June 23, 1966 Oct. 14, 1966 Jamaica June 23, 1965 Sep. 9, 1966 Oct. 14, 1966 Costa Rica Sep. 29, 1981 Apr. 27, 1993 May 27, 1993 Japan Sep. 23, 1965 Aug. 17, 1967 Sep. 16, 1967 Côte d’Ivoire June 30, 1965 Feb. 16, 1966 Oct. 14, 1966 Jordan July 14, 1972 Oct. 30, 1972 Nov. 29, 1972 Croatia June 16, 1997 Sep. 22, 1998 Oct. 22, 1998 Kazakhstan July 23, 1992 Sep. 21, 2000 Oct. 21, 2000 Cyprus Mar. 9, 1966 Nov. 25, 1966 Dec. 25, 1966 Kenya May 24, 1966 Jan. 3, 1967 Feb. 2, 1967 Czech Republic Mar. 23, 1993 Mar. 23, 1993 Apr. 22, 1993 Korea, Rep. of Apr. 18, 1966 Feb. 21, 1967 Mar. 23, 1967 Denmark Oct. 11, 1965 Apr. 24, 1968 May 24, 1968 Kosovo, Rep. of June 29, 2009 June 29, 2009 July 29, 2009 Dominican Republic Mar. 20, 2000 Kuwait Feb. 9, 1978 Feb. 2, 1979 Mar. 4, 1979 Egypt, Arab Rep. of Feb. 11, 1972 May 3, 1972 June 2, 1972 Kyrgyz Republic June 9, 1995 El Salvador June 9, 1982 Mar. 6, 1984 Apr. 5, 1984 Latvia Aug. 8, 1997 Aug. 8, 1997 Sep. 7, 1997 Estonia June 23, 1992 June 23, 1992 July 23, 1992 Lebanon Mar. 26, 2003 Mar. 26, 2003 Apr. 25, 2003 Ethiopia Sep. 21, 1965 Lesotho Sep. 19, 1968 July 8, 1969 Aug. 7, 1969 Fiji July 1, 1977 Aug. 11, 1977 Sep. 10, 1977 Liberia Sep. 3, 1965 June 16, 1970 July 16, 1970 Finland July 14, 1967 Jan. 9, 1969 Feb. 8, 1969 Lithuania July 6, 1992 July 6, 1992 Aug. 5, 1992 France Dec. 22, 1965 Aug. 21, 1967 Sep. 20, 1967 Luxembourg Sep. 28, 1965 July 30, 1970 Aug. 29, 1970 Gabon Sep. 21, 1965 Apr. 4, 1966 Oct. 14, 1966 Macedonia, former Yugoslav Rep. of Sep. 16, 1998 Oct. 27, 1998 Nov. 26, 1998 Gambia, The Oct. 1, 1974 Dec. 27, 1974 Jan. 26, 1975 Madagascar June 1, 1966 Sep. 6, 1966 Oct. 14, 1966 Georgia Aug. 7, 1992 Aug. 7, 1992 Sep. 6, 1992 Malawi June 9, 1966 Aug. 23, 1966 Oct. 14, 1966 Germany Jan. 27, 1966 Apr. 18, 1969 May 18, 1969 Malaysia Oct. 22, 1965 Aug. 8, 1966 Oct. 14, 1966 Ghana Nov. 26, 1965 July 13, 1966 Oct. 14, 1966 Mali Apr. 9, 1976 Jan. 3, 1978 Feb. 2, 1978 Greece Mar. 16, 1966 Apr. 21, 1969 May 21, 1969 Malta Apr. 24, 2002 Nov. 3, 2003 Dec. 3, 2003 Grenada May 24, 1991 May 24, 1991 June 23, 1991 Mauritania July 30, 1965 Jan. 11, 1966 Oct. 14, 1966 Guatemala Nov. 9, 1995 Jan. 21, 2003 Feb. 20, 2003 Mauritius June 2, 1969 June 2, 1969 July 2, 1969 Guinea Aug. 27, 1968 Nov. 4, 1968 Dec. 4, 1968 Micronesia, Federated States of June 24, 1993 June 24, 1993 July 24, 1993 Guinea-Bissau Sep. 4, 1991 Moldova Aug. 12, 1992 May 5, 2011 June 4, 2011 Guyana July 3, 1969 July 11, 1969 Aug. 10, 1969 Mongolia June 14, 1991 June 14, 1991 July 14, 1991 10 | ICSID ANNUAL REPORT 2013 | 11 Deposit of Entry into Force Deposit of Entry into Force State Signature Ratification of Convention State Signature Ratification of Convention Montenegro July 19, 2012 April 10, 2013 May 10, 2013 Solomon Islands Nov. 12, 1979 Sep. 8, 1981 Oct. 8, 1981 Morocco Oct. 11, 1965 May 11, 1967 June 10, 1967 Somalia Sep. 27, 1965 Feb. 29, 1968 Mar. 30, 1968 Mozambique Apr. 4, 1995 June 7, 1995 July 7, 1995 South Sudan Apr. 18, 2012 Apr. 18, 2012 May 18, 2012 Namibia Oct. 26, 1998 Spain Mar. 21, 1994 Aug. 18, 1994 Sept. 17, 1994 Nepal Sep. 28, 1965 Jan. 7, 1969 Feb. 6, 1969 Sri Lanka Aug. 30, 1967 Oct. 12, 1967 Nov. 11, 1967 Netherlands May 25, 1966 Sep. 14, 1966 Oct. 14, 1966 St. Kitts & Nevis Oct. 14, 1994 Aug. 4, 1995 Sep. 3, 1995 New Zealand Sep. 2, 1970 Apr. 2, 1980 May 2, 1980 St. Lucia June 4, 1984 June 4, 1984 July 4, 1984 Nicaragua Feb. 4, 1994 Mar. 20, 1995 Apr. 19, 1995 St. Vincent and the Grenadines Aug. 7, 2001 Dec. 16, 2002 Jan. 15, 2003 Niger Aug. 23, 1965 Nov. 14, 1966 Dec. 14, 1966 Sudan Mar. 15, 1967 Apr. 9, 1973 May 9, 1973 Nigeria July 13, 1965 Aug. 23, 1965 Oct. 14, 1966 Swaziland Nov. 3, 1970 June 14, 1971 July 14, 1971 Norway June 24, 1966 Aug. 16, 1967 Sep. 15, 1967 Sweden Sep. 25, 1965 Dec. 29, 1966 Jan. 28, 1967 Oman May 5, 1995 July 24, 1995 Aug. 23, 1995 Switzerland Sep. 22, 1967 May 15, 1968 June 14, 1968 Pakistan July 6, 1965 Sep. 15, 1966 Oct. 15, 1966 Syria May 25, 2005 Jan. 25, 2006 Feb. 24, 2006 Panama Nov. 22, 1995 Apr. 8, 1996 May 8, 1996 Tanzania Jan. 10, 1992 May 18, 1992 June 17, 1992 Papua New Guinea Oct. 20, 1978 Oct. 20, 1978 Nov. 19, 1978 Thailand Dec. 6, 1985 Paraguay July 27, 1981 Jan. 7, 1983 Feb. 6, 1983 Timor-Leste July 23, 2002 July 23, 2002 Aug. 22, 2002 Peru Sep. 4, 1991 Aug. 9, 1993 Sep. 8, 1993 Togo Jan. 24, 1966 Aug. 11, 1967 Sep. 10, 1967 Philippines Sep. 26, 1978 Nov. 17, 1978 Dec. 17, 1978 Tonga May 1, 1989 Mar. 21, 1990 Apr. 20, 1990 Portugal Aug. 4, 1983 July 2, 1984 Aug. 1, 1984 Trinidad and Tobago Oct. 5, 1966 Jan. 3, 1967 Feb. 2, 1967 Qatar Sep. 30, 2010 Dec. 21, 2010 Jan. 20, 2011 Tunisia May 5, 1965 June 22, 1966 Oct. 14, 1966 Romania Sep. 6, 1974 Sep. 12, 1975 Oct. 12, 1975 Turkey June 24, 1987 Mar. 3, 1989 Apr. 2, 1989 Russian Federation June 16, 1992 Turkmenistan Sep. 26, 1992 Sep. 26, 1992 Oct. 26, 1992 Rwanda Apr. 21, 1978 Oct. 15, 1979 Nov. 14, 1979 Uganda June 7, 1966 June 7, 1966 Oct. 14, 1966 Samoa Feb. 3, 1978 Apr. 25, 1978 May 25, 1978 Ukraine Apr. 3, 1998 June 7, 2000 July 7, 2000 Sao Tome and Principe Oct. 1, 1999 May 20, 2013 June 19, 2013 United Arab Emirates Dec. 23, 1981 Dec. 23, 1981 Jan. 22, 1982 Saudi Arabia Sep. 28, 1979 May 8, 1980 June 7, 1980 United Kingdom of Great Britain Senegal Sep. 26, 1966 Apr. 21, 1967 May 21, 1967 and Northern Ireland May 26, 1965 Dec. 19, 1966 Jan. 18, 1967 Serbia May 9, 2007 May 9, 2007 June 8, 2007 United States of America Aug. 27, 1965 June 10, 1966 Oct. 14, 1966 Seychelles Feb. 16, 1978 Mar. 20, 1978 Apr. 19, 1978 Uruguay May 28, 1992 Aug. 9, 2000 Sep. 8, 2000 Sierra Leone Sep. 27, 1965 Aug. 2, 1966 Oct. 14, 1966 Uzbekistan Mar. 17, 1994 July 26, 1995 Aug. 25, 1995 Singapore Feb. 2, 1968 Oct. 14, 1968 Nov. 13, 1968 Yemen, Republic of Oct. 28, 1997 Oct. 21, 2004 Nov. 20, 2004 Slovak Republic Sep. 27, 1993 May 27, 1994 June 26, 1994 Zambia June 17, 1970 June 17, 1970 July 17, 1970 Slovenia Mar. 7, 1994 Mar. 7, 1994 Apr. 6, 1994 Zimbabwe Mar. 25, 1991 May 20, 1994 June 19, 1994 12 | ICSID ANNUAL REPORT 2013 | 13 CHAPTER 3 PANELS OF ARBITRATORS AND OF CONCILIATORS The ICSID Convention requires the Centre to maintain a Panel of Arbitrators and a Panel of Conciliators. According to Article 13 of the Convention, each Contracting State is entitled to designate up to four persons to each Panel. The designees may be nationals or non-nationals of the designating State and are nominated to the Panels for a renewable term of six years. In addition, up to ten persons may be designated to each Panel by the Chairman of the ICSID Administrative Council. The Panels are an important component of the ICSID system of dispute settlement. When the Chairman of the Administrative Council is called upon to appoint arbitrators, conciliators or ad hoc Committee members under Articles 30, 38 or 52 of the ICSID Convention, these appointees are drawn from the Panels. With an increasing ICSID caseload, it has become even more important for States to make designations to the ICSID Panels. To this end, the Centre continues to encourage States to name qualified candidates where nominations have expired or the Panels are otherwise incomplete. During FY2013, 14 ICSID Contracting States made designations to the ICSID Panels: Armenia, Democratic Republic of the Congo, Egypt, Estonia, Finland, Ireland, Kenya, Republic of Korea, Lithuania, Mongolia, New Zealand, Paraguay, Spain, and Sri Lanka. In all, 39 persons were designated or re-designated to the Panels. At the end of FY2013, there were 560 individuals on the ICSID Panels of Arbitrators and of Conciliators. The names of designees to the ICSID Panels made in FY2013 are provided on the following page. Elba Gutierrez, Argentina Irradiacion 14 | ICSID ANNUAL REPORT 2013 | 15 ARMENIA IRELAND NEW ZEALAND Panels of Arbitrators and of Conciliators Panels of Arbitrators and of Conciliators Panel of Arbitrators Designations effective June 26, 2013: Designations effective July 27, 2012: Designation effective July 2, 2012: Yeghishe Kirakosyan, Garegin Melkonyan, James Bridgeman, Patricia C. Moran, Peter Blanchard Aram Orbelyan, Thomas J. Samuelian Colm Ó Hoisín, Ercus Stewart Panel of Arbitrators DEMOCRATIC REPUBLIC OF KENYA Designation effective July 14, 2012: THE CONGO Panel of Arbitrators Ian Barker Panels of Arbitrators and of Conciliators Designations effective July 6, 2012: Designations effective October 24, 2012: Njeri Kariuki, Githu Muigai, Philip Murgor, Panel of Arbitrators Tshibangu Kalala, Tunda Ya Kasende Amos S. Wako Designations effective June 10, 2013 Campbell Alan McLachlan, David A.R. EGYPT Panel of Conciliators Williams Panels of Arbitrators and of Conciliators Designations effective July 6, 2012: Designation effective October 14, 2012: Jacqueline Kamau, Farooq Khan, PARAGUAY Hussein A. Hassouna Ken Kiplagat, Mururu Norman Panel of Arbitrators Designation effective October 17, 2012: ESTONIA REPUBLIC OF KOREA Luis A. Breuer González Panels of Arbitrators and of Conciliators Panel of Arbitrators Designation effective May 13, 2013: Designation effective March 22, 2013: SPAIN Asko Pohla Joongi Kim Panels of Arbitrators and of Conciliators Designation effective May 3, 2013: FINLAND LITHUANIA Andrés Rigo Sureda Panel of Arbitrators Panel of Arbitrators Designations effective January 30, 2013: Designations effective July 30, 2012: SRI LANKA Veijo Heiskanen, Gustav Möller, Gintautas Bartkus, Mažvydas Michalauskas, Panels of Arbitrators and of Conciliators Antero Palajan, Leif Sévon Valentinas Mikelėnas Designations effective July 31, 2012: Amrith Rohan Perera, M.C.W. Pinto Panel of Conciliators MONGOLIA Designations effective January 30, 2013: Panel of Arbitrators Antti Heikinheimo, Carita Wallgren Designation effective March 13, 2013: Michael D. Nolan Panel of Conciliators Designations effective June 5, 2013: Veijo Heiskanen, Leif Sévon 16 | ICSID ANNUAL REPORT 2013 | 17 ICSID Hearing Room, World Bank Paris Conference Center, Paris, France, 2013 While the majority of cases before the Centre are arbitrations administered under the ICSID Convention, there has also been an increase in the use of ICSID conciliation services in recent years. CHAPTER 4 OPERATIONS OF THE CENTRE Other Cases The ICSID Secretariat also administers international dispute settlement proceedings under rules SUMMARY OF ICSID OPERATIONS and treaties other than the ICSID Convention or the ICSID Additional Facility. In particular, the ICSID is an intergovernmental organization established by the Convention on the Settlement Secretariat often assists parties and tribunals with investment arbitrations conducted pursuant to of Investment Disputes between States and Nationals of Other States (the ICSID Convention or the UNCITRAL Arbitration Rules. the Washington Convention). Its primary purpose is to provide facilities and services to support conciliation and arbitration of international investment disputes. It administers cases under The services provided in non-ICSID proceedings are similar to those available under the ICSID the ICSID Convention, the ICSID Additional Facility, the arbitration rules of the United Nations Rules, ranging from handling specific aspects of a case to offering full administrative services. In the Commission on International Trade Law (UNCITRAL Arbitration Rules) and other rules, as requested past fiscal year, the Centre was asked to act as appointing authority in 4 instances, and administered by the parties. It also offers a full range of related services in support of dispute resolution, including 3 investor-State arbitrations under the UNCITRAL Rules, 1 of which concluded with an award and acting as appointing authority, naming consolidation tribunals under certain treaties and deciding 2 are pending. party challenges of arbitrators or conciliators. Overview of ICSID Arbitration ICSID Cases ICSID Convention arbitration is initiated by the submission of a Request for Arbitration to the The initiation and conduct of cases under the Centre’s auspices are often governed by one of Secretary-General. The Request is filed by the potential claimant and outlines the basic facts and ICSID’s two sets of procedural rules. These are the ICSID Convention, Regulations and Rules or the legal issues to be addressed. The Request must be registered unless the dispute is manifestly ICSID Additional Facility Rules. outside the jurisdiction of ICSID. In the past year, Requests for Arbitration were processed on average within 23 days of being filed at ICSID. Conciliation and arbitration under the ICSID Convention involves a legal dispute between an ICSID Contracting State and a national of another ICSID Contracting State. Such disputes arise out of an The next procedural step is constitution of the arbitral tribunal. The ICSID Arbitration Rules offer investment and the disputing parties must have consented in writing to submit their dispute to ICSID. the disputing parties significant flexibility regarding the number of arbitrators and the method of their appointment. In most instances, tribunals consist of 3 arbitrators: 1 arbitrator appointed by The ICSID Additional Facility Rules allow the ICSID Secretariat to administer conciliation and each party, and the third, presiding, arbitrator appointed by agreement of the parties or of the arbitration of investment disputes where either the State party or the home State of the foreign party-appointed arbitrators. The parties may ask the Centre to assist with the appointment of investor is not an ICSID Contracting State. They also authorize conciliation and arbitration of arbitrators, either in accordance with a previous agreement or pursuant to the default provisions in disputes that do not arise directly out of an investment where at least one of the disputing parties is the ICSID Rules. In FY2013, ICSID made such appointments on average within 46 days of receiving a Contracting State or a national of a Contracting State. These rules have been available since 1978. the request to appoint. 18 | ICSID ANNUAL REPORT 2013 | 19 Proceedings are deemed to have begun once the tribunal is constituted. The tribunal holds a first Arbitration under the ICSID Additional Facility is similar in process to ICSID Convention arbitration session within 60 days of its constitution. Preliminary questions of procedure are dealt with at the with some notable differences. In particular, parties must obtain approval of access to the Additional first session. Subsequently, the proceeding usually comprises 2 distinct phases: a written procedure Facility prior to instituting proceedings, and post-award remedies under the Additional Facility followed by in-person hearings. After the parties present their case, the tribunal deliberates and Rules are limited to interpretation, correction, and supplementary decision by the original tribunal. renders its award. New ICSID Cases Registered Once an ICSID Convention award is rendered, it is binding and not subject to any appeal or other Forty-three new ICSID cases were registered in FY2013. This is the most cases registered at remedy except those provided by the Convention. The Convention allows the parties to request ICSID in a single fiscal year and represents an increase of over 10% compared to the number of a supplementary decision or rectification of the award, or to seek the post-award remedies of cases registered in FY2012. All of the new cases registered are arbitrations: 38 under the ICSID annulment, interpretation or revision. Convention and 5 under the Additional Facility. Conduct of an ICSID Convention Arbitration New Cases Registered under the ICSID Convention and Additional Facility Rules in FY2013 Request for Arbitration 40 Refusal to Register 38 Registration 30 Constitution of the Tribunal 20 First Session 10 Written Procedure 5 0 Oral Procedure ICSID ICSID Convention Additional Facility Arbitration Cases Arbitration Cases Deliberations Award In total, the Centre administered a new record of 195 ICSID cases over the course of the year. This number exceeds the previous high mark by over 20 cases, and represents 45% of the 433 ICSID Supplementary Decision and Rectification cases ever administered by the Centre. Post-Award Remedies: Annulment, Interpretation, Revision 20 | ICSID ANNUAL REPORT 2013 | 21 Of the new cases registered in FY2013, the vast majority (36 cases) asserted ICSID jurisdiction on ICSID Cases Administered by the Secretariat (FY2003–FY2013) the basis of a bilateral investment treaty (BIT). One case was brought on the basis of the Energy 250 Charter Treaty (ECT). Investors claimed under investment contracts in 4 further cases, and 8 cases 195 relied on investment laws. Two of those cases relied alternatively on an investment law or a bilateral 200 investment treaty. Two further cases invoked three alternative bases for jurisdiction (a law, a BIT and 150 the ECT in one case, and a law, a BIT and a contract in the other). 100 63 State Parties to ICSID Proceedings Registered in FY2013 50 State parties involved in ICSID disputes registered in FY2013 remained diverse and included States from every region of the world. Eastern Europe and Central Asia continued to be the region with 0 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 the greatest number of States involved in newly registered ICSID cases. Geographic Distribution of New Cases Registered in FY2013 under the ICSID Convention Basis of Consent to ICSID Proceedings and Additional Facility Rules, by State Party Involved Arbitration and conciliation under the ICSID Convention and Additional Facility are entirely voluntary. The basis of the parties’ consent to ICSID jurisdiction can be found in a variety of sources, Western Europe including investment laws, contracts concluded between a foreign investor and the host State of 7% the investment, and bilateral or multilateral treaties. 9% Sub-Saharan Africa 33% Eastern Europe & Central Asia Basis of Consent Invoked to Establish ICSID Jurisdiction in New Cases Registered in FY2013 under the ICSID Convention and Additional Facility Rules 14% Middle East & North Africa Investment Contract between the Investor and the Host-State 8% 2% Central America & the Carribean 9% South & East Asia & the Pacific 16% Investment Law of the Host-State 26% South America 2% Energy Charter Treaty (ECT) Eleven Eastern European and Central Asian States were named as respondent in 14 cases, while 11 cases were instituted against 3 States in South America. States from Sub-Saharan Africa were 74% involved in 4 cases, and 6 cases were instituted against States in the Middle East and North Africa Bilateral Investment Treaty (BIT) region. Four cases were brought against 4 States in the South and East Asia region, and 1 case was brought against a State in the Caribbean and Central America region. Finally, 3 cases were brought against States in Western Europe. 22 | ICSID ANNUAL REPORT 2013 | 23 Geographic Distribution of New Cases Registered in FY2013 under the ICSID Convention Distribution of New Cases Registered in FY2013 under the ICSID Convention and and Additional Facility Rules, by State Party Involved — Further Details Additional Facility Rules by Economic Sector Transportation Bulgaria, 1 Other Industry 9% 18% 2% Services & Trade Croatia, 2 Water, Sanitation 14% Finance & Flood Protection 5% Georgia, 1 Argentina, 1 Kazakhstan, 1 Peru, 1 Information & Construction 7% 5% Kyrgyz Communication Republic, 1 Latvia, 1 Tourism 5% 5% Argiculture, Fishing & Forestry Macedonia, 1 5% Electric Power & Other Energy Montenegro, 1 25% Oil, Gas & Mining Algeria, 2 Romania, 1 Venezuela, 9 Slovenia, 1 Burundi, 1  Indonesia, 1 Post-Award Remedy Applications Egypt, 3 Guinea, 1 Korea, 1 Belgium, 1 In FY2013, the Centre also registered 13 proceedings in which the parties sought post-award Uzbekistan, 3 South Sudan, 1 Lao PDR, 1 Greece, 1 remedies under the ICSID Convention. Parties instituted rectification and supplementary decision Tunisia, 1 Uganda, 1 Pakistan, 1 Spain, 1 Costa Rica, 1 proceedings in two cases, and applications for annulment in 11 cases. While the number of registered annulment applications increased from the previous fiscal year, this increase corresponds Eastern South Middle Sub-Saharan South & Western Central North to the higher number of awards rendered in FY2013. Of the 11 applications for annulment initiated Europe & America East & Africa East Asia & Europe America America Central Asia North the Pacific & the (Canada, in FY2013, 6 were brought by the Claimant/investor, and 5 were initiated by the State/Respondent Africa Caribbean Mexico, in the underlying arbitration. U.S.) Number of Annulment Applications Registered by ICSID (FY2008–FY2013) Economic Sectors Involved in New Proceedings 12 The investment disputes commenced in FY2013 involved a variety of economic sectors. Based on 10 11 World Bank industry sector codes, the oil, gas, and mining sector remained dominant, with 25% of 8 9 cases registered in FY2013. Eighteen percent of the cases involved a variety of industries, such as 8 8 8 pharmaceutical, chemical, food production and textile. The portion of cases registered concerning 6 transportation decreased from 15% in FY2012 to 9% in FY2013. Fourteen percent of the new cases 4 concerned the financial sector, and 7% related to the construction industry. The agriculture, fishing 2 3 and forestry sector, and the electric power and other energy sector were represented in equal parts 0 (5% each), as were the information and communication sector, and the water, sanitation and flood FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 protection sector (5% each). The remaining cases involved tourism and services and trade. 24 | ICSID ANNUAL REPORT 2013 | 25 Constitution of Tribunals and ad hoc Committees in ICSID Cases In the course of the fiscal year, 37 tribunals, 11 ad hoc Committees, and 1 conciliation commission State of Nationality of Arbitrators, Conciliators and ad hoc Committee Members were constituted or reconstituted in proceedings pending before the Centre. A total of 145 Appointed in FY2013 in Cases Registered under the ICSID Convention and Additional Facility Rules individual appointments were made by the parties and by ICSID, 9 of these naming female appointees. This is the greatest number of appointments made in a single fiscal year at ICSID, and Uruguay 1 Morocco 1 exceeds the appointments made in FY2012 by over 10%. Overall, 85 individuals from 35 different Malaysia 1 countries were appointed to serve as arbitrators, conciliators, or ad hoc Committee members in Korea 1 ICSID cases in FY2013. Japan 1 Guatemala 1 In FY2013, the pool of arbitrators, conciliators and ad hoc Committee members continued to Germany/Austria 1 Finland 1 expand. In terms of diversity, 29% of the new appointees were nationals of developing countries, United Kingdom/France 1 and 6% of the new appointees were women. Brazil 1 Somalia 2 As in previous fiscal years, about 70% of the appointments were made either by the parties or by the Singapore 2 party-appointed arbitrators, while the other 30% were made by the Chairman of the Administrative Philippines 2 Pakistan 2 Council. In total, the Centre acted as appointing authority 44 times in FY2013 and appointed 34 State of Nationality of Appointee France/Sweden/Bahrain 2 different individuals of 29 different nationalities. About 43% of the appointments by ICSID involved China 2 nationals of developing economies. Canada/New Zealand 2 Bulgaria 2 Sweden 3 Arbitrators, Conciliators and ad hoc Committee Members Appointed in FY2013 Italy 3 in Cases Registered under the ICSID Convention and Austria 3 Additional Facility Rules — Distribution of Appointments by ICSID and Germany 4 Netherlands 4 by the Parties (or Party-appointed Arbitrators) by Geographic Region Colombia 4 60 Belgium 4 51 New Zealand 5 50 Mexico 5 40 Costa Rica 5 30 Argentina 6 Switzerland 7 20 17 19 14 14 Canada 7 11 Australia 7 10 7 2 2 3 1 2 2 United States 8 0 Spain 8 North South Central Middle Sub-Saharan South & Eastern Western Chile 8 America America America East & Africa East Asia Europe & Europe (Canada, & the North & the Central United Kingdom 12 Mexico Caribbean Africa Pacific Asia France 16 & U.S.) 0 5 10 15 20 Appointments by ICSID Appointments by the Parties (or Party-appointed Arbitrators) Number of Appointments 26 | ICSID ANNUAL REPORT 2013 | 27 Challenges to Arbitrators and Counsel During the fiscal year, parties to ICSID proceedings proposed the disqualification of 8 arbitrators in Disputes Decided by Arbitral Tribunals under the ICSID Convention and ICSID proceedings. Two of these proposals were declined, 1 arbitrator resigned following the filing Additional Facility Rules in FY2013 — Findings of the proposal, and 5 are currently pending. 32% Award dismissing all claims 31% In 1 case, a party proposed the disqualification of the other party’s counsel, and in a further Award declining jurisdiction proceeding, a party sought to disqualify the other party’s expert witness. The respective tribunals declined both proposals in the course of the year. Cases concluded in FY2013 Thirty-five proceedings were concluded during the fiscal year. Twenty-seven of these were arbitrations, and 1 was a conciliation case. Five further annulment proceedings, 1 revision 37% proceeding and 1 supplementary decision and rectification proceeding also concluded during the Award upholding claims in part or in full fiscal year. Of the 8 arbitration cases that were discontinued or settled, 2 were discontinued following an In the 27 concluded arbitration proceedings, 19 disputes were decided by a tribunal, and 8 cases agreement by the parties, 2 were discontinued at the request of one party, 1 was discontinued for were discontinued or settled. lack of payment of the required funds, and 1 case was discontinued for failure to act. In 2 further cases, the parties’ settlement agreement was embodied in an award. Arbitration Proceedings under the ICSID Convention and Additional Facility Rules In the concluded conciliation case, the Commission issued its findings in the form of a report. Concluded in FY2013 — Outcomes The revision proceeding was concluded with a decision by the relevant tribunal. 30% Dispute settled or proceeding otherwise discontinued Disputes Settled or Proceedings Otherwise Discontinued under the ICSID Convention and Additional Facility Rules in FY2013 — Basis Proceeding discontinued for lack 70% 12% of payment of the required advances Dispute decided by Tribunal Settlement agreement embodied in an award at 25% parties’ request Proceeding discontinued 13% for failure of parties to act Of the 19 cases decided by a tribunal, 6 awards declined ICSID jurisdiction, 6 tribunals rejected all of the investors’ claims, and 7 upheld the investors’ claims in part or in full. 25% 25% Proceeding discontinued Proceeding discontinued at the request of one party at the request of both parties 28 | ICSID ANNUAL REPORT 2013 | 29 The majority of arbitrations concluded in FY2013 lasted between 3 to 4 years from the date of the tribunal’s constitution. The Centre has adopted a number of practices in an effort to reduce Average Duration of ICSID Annulment Proceedings Concluded in FY2010–FY2013 (in months) the duration of arbitrations while respecting the due process rights of the parties. These include: (i) requiring arbitrators to submit calendars indicating their long-term availability when accepting 28 their appointment, (ii) updating parties on a regular basis concerning the costs expended to date, 24 25 (iii) encouraging tribunal members to establish a budget at the outset of a case outlining anticipated 24 20 23 arbitrator fees and expenses, (iv) encouraging tribunal consultations immediately prior to hearings 20 and deliberations immediately after hearings, and (v) requiring tribunals to report to the parties on 16 17 17 15 16 the timing of outstanding decisions or awards. 12 8 Five annulment proceedings were also concluded in FY2013. In 2 cases, the ad hoc Committee 4 rejected the application for annulment of the award. Two annulment proceedings were discontinued 0 at the request of one party, and in 1 case the award was partially annulled. FY2010 FY2011 FY2012 FY2013 Average Duration—Registration to Conclusion Awards Rendered and Outcomes in Annulment Proceedings under the Average Duration—Constitution of ad hoc Committee to Conclusion ICSID Convention, by Decade 100 96 80 Matters of Procedure in ICSID Cases in FY2013 60 Of the 195 ICSID cases administered in FY2013, 92 were conducted in English, 10 in French and 42 20 in Spanish, which are the three official languages of the Centre. Seventy-two proceedings were 40 18 conducted in 2 official languages, with the English-Spanish combination continuing to be the most 20 9 13 8 4 0 0 0 1 3 0 5 6 1 8 frequent. One further case was administered in all three official languages. 0 0 1 1 1971–1980 1981–1990 1991–2000 2001–2010 2011–June 30, 2013 Cases Administered in FY2013 under the ICSID Convention and Number of Convention awards rendered Number of decisions rejecting the application Additional Facility Rules by Procedural Language(s) for annulment Number of decisions annulling the award Number of annulment proceedings discontinued 100 92 in part or in full 80 64 60 40 The average duration of annulment proceedings concluded in FY2013 continued to decrease to 20 a period of 16 months, which is a reduction of about 50% compared to annulment proceedings 20 10 7 concluded in FY2011. 1 1 0 English English & Spanish French English & French & English, Spanish French Spanish French & Spanish 30 | ICSID ANNUAL REPORT 2013 | 31 In the course of the year, 112 sessions or hearings were held in the cases administered by ICSID. These Meeting of the ICSID Administrative Council. The paper offered a comprehensive overview of were held at the seat of the Centre in Washington, D.C., at the World Bank offices in Paris, or at other the annulment remedy as a unique feature of the ICSID system. It considered a number of topics venues as agreed by the parties. Where suitable, hearings and sessions were conducted by telephone including drafting history, procedural conduct of annulment proceedings, principles commonly or video conference, reflecting the Centre’s continuing efforts to reduce the cost and increase the cited by ad hoc Committees, and empirical data up to June 30, 2012. The annulment paper is efficiency of proceedings. The number of proceedings conducted by telephone and video conference available on the ICSID website. remained steady; about 41% of all sessions and hearings in FY2013 were held in this manner. In FY2013, 11 annulment proceedings were instituted at ICSID. To date, of the 382 ICSID During the fiscal year, 21 awards, 1 report and 277 decisions and procedural orders were issued by Convention arbitrations registered at ICSID, only 6 have been annulled in full, and 7 have been arbitral tribunals, conciliation commissions and ad hoc Committees. This is a significant increase in annulled in part. This is consistent with the limited nature of annulment intended by the drafters of jurisprudence developed under the ICSID Rules. The Centre publishes these rulings on its website, the ICSID Convention. with the parties’ permission. Where parties refused permission to publish awards, the Centre published excerpts of the legal reasoning of the tribunal. Annulment Proceedings under the ICSID Convention – Overview Comprehensive and up-to-date information about the procedural steps taken in each case, the composition of the tribunal, commission, or ad hoc Committee, the party appointing each 382 Convention Arbitrations Registered arbitrator, counsel representing the parties, and the outcome of proceedings is found on the ICSID 169 Convention Awards Rendered website at www.worldbank.org/icsid. 64 Annulment Proceedings Instituted INSTITUTIONAL MATTERS 20 Decisions Refusing ICSID worked on numerous institutional projects in FY2013. These included support for the ICSID Annulment Administrative Council, expansion of the Centre’s network of institutional cooperation agreements, 14 Proceedings Discontinued and collaboration with other international and non-governmental organizations on matters related to investment law and dispute resolution. ICSID also continued enhancing its information 13 Awards Annulled technology and working practices to ensure facility users are offered the most efficient and cost- (6 in full + 7 in part) effective services. Developments Related to the Administrative Council On July 1, 2012, Dr. Jim Yong Kim became the 12th President of the World Bank Group. On the same date, Dr. Kim became the ex officio Chairman of the ICSID Administrative Council pursuant to Article 5 of the ICSID Convention. In this capacity, Dr. Kim chaired the 46th Meeting of the ICSID Administrative Council, held on October 12, 2012 in Tokyo, Japan. The Resolutions adopted by the ICSID Panel Update Initiative Administrative Council at its 46th Annual Meeting are reproduced in Chapter 6. As indicated in Chapter 3 of this report, the ICSID Convention entitles each Contracting State to designate up to four persons to the Panels of Arbitrators and of Conciliators. Individuals of In the course of FY2013, the ICSID Secretariat completed and provided ICSID Contracting States any nationality may serve on the Panels. The arbitrators and conciliators listed on the Panels are with a background paper on annulment. The paper was produced to assist Contracting States available for selection to ICSID Tribunals, Commissions and ad hoc Committees. with a matter raised by the delegation of the Republic of the Philippines during the 2011 Annual 32 | ICSID ANNUAL REPORT 2013 | 33 The ICSID Secretariat initiated a project in spring 2012 to update and increase the designation of In the course of FY2013, ICSID took part in the deliberations of several professional organizations Panel members by Contracting States. On April 8, 2013, the Secretary-General addressed a letter dedicated to enhancing expertise and knowledge in the practice and administration of arbitration. to Contracting States with vacant or expired nominations, inviting them to make designations ICSID Secretary-General Meg Kinnear continued her work as a member of the governing bodies to the ICSID Panels. The Secretary-General emphasized the vital role of the Panels for the good of the International Federation of Commercial Arbitration Institutions (IFCAI) and the International functioning of the international investment arbitration system and stressed the legal and practical Council for Commercial Arbitration (ICCA). The Secretary-General and several senior ICSID staff criteria for selection of qualified candidates in light of the duties they may be called on to perform lawyers also contributed to a series of discussions on investment law and arbitration, and continued in ICSID cases. A number of Contracting States have responded with updated designations to the their involvement in several International Bar Association (IBA) committees. Further information can ICSID Panels and others are in the process of selecting nominees. be found in Chapter 5 of this Report. A list of members of the ICSID Panels of Arbitrators and of Conciliators nominated in FY2013 and Young ICSID the State nominating them is found in Chapter 3. The full list of members of the ICSID Panels is On November 2, 2012, Young ICSID was launched at the ICSID-hosted Joint Colloquium in available on the ICSID website. Washington, D.C. Young ICSID encourages professional development among international investor- State dispute resolution practitioners under the age of 45. As of June 30, 2013, Young ICSID has Institutional Arrangement Agreements received over 300 enrollment applications from the seven continents. Young ICSID will continue ICSID offers disputing parties the option of holding hearings in any location agreed upon, and to organize periodic events to discuss recent developments in the area of international investment has developed partnerships with other arbitration institutions to complement its ability to offer arbitration. hearings in diverse locations around the world. In FY2013 ICSID entered into a facilities cooperation agreement with the China International Economic and Trade Arbitration Commission (CIETAC). Best Practices During FY2013, ICSID continued to develop and implement its best practices in investment ICSID now has 13 such agreements in place, including agreements with: the Australian Centre for arbitration. As part of this project, the ICSID Secretariat has created templates related to various International Commercial Arbitration in Melbourne; the Australian Commercial Disputes Centre in aspects of the administration of proceedings. The best practices tools and templates have also Sydney; the Centre for Arbitration and Conciliation at the Chamber of Commerce in Bogota; the been incorporated in the ICSID case management system and have significantly reduced ICSID staff German Institution of Arbitration; the Gulf Cooperation Council Commercial Arbitration Centre time for completing various tasks in the administration of the cases. in Bahrain; the Hong Kong International Arbitration Centre; Maxwell Chambers in Singapore; the Permanent Court of Arbitration in The Hague; the Regional Arbitration Centers of the Asian-African The ICSID Secretariat also continued to expedite its target timelines for conclusion of internal Legal Consultative Committee in Cairo, Kuala Lumpur and Lagos; and the Singapore International steps and procedures in the administration of the cases. For example, the Secretariat completes Arbitration Centre. the review of a Request for Arbitration in an average of 25 days from the date the file is received. Similarly, when ICSID is asked to appoint arbitrators under Article 38 of the ICSID Convention, the Cooperation with Other International Organizations process is completed in an average of six weeks from the date the request to appoint was filed by ICSID continued to collaborate with other multilateral institutions on investment law and dispute the parties. Tribunals are normally constituted within one day from receiving confirmation that all settlement issues during FY2013. For instance, in February 2013 ICSID participated in the members have accepted their appointments. ICSID tracks its compliance with its service standards 58th Working Group Session (Arbitration & Conciliation) of the United Nations Commission to ensure we meet our goals in this respect. on International Trade Law (UNCITRAL) concerning transparency in treaty-based investor-State arbitration. In March 2013, ICSID participated in an Organisation for Economic Co-operation and ICSID also adopted practices this year to provide parties with enhanced, real-time information Development (OECD) conference held in Paris. This conference served as a stock-taking on current about the status of a case, including budget and the progress of a tribunal in drafting decisions and issues in investment law and arbitration. awards. Similar practices have been adopted for annulment and conciliation proceedings. 34 | ICSID ANNUAL REPORT 2013 | 35 World Bank Headquarters in Washington D.C., photo by Deborah W. Campos, April 7, 2011 Finally, ICSID continues its effort to support transparency of the process by encouraging the publication of awards, decisions, and procedural orders and information about the status of each case. Over 1,400 individual entries were posted on the website in the past year. Technology ICSID continued to develop technological systems in FY2013 to enhance its ability to deliver cost- effective, high-quality services. Among these tools are innovative in-house financial management systems and a modern document management system. ICSID also developed and implemented a Case Management System, which allows the Centre to manage the substantial documentation generated in its proceedings and to monitor procedural developments in cases more effectively. ICSID is working on further such initiatives, which include an updated external website and a web- based system to automate and streamline key case-related financial transactions. Staffing In FY2013, ICSID continued to align its workforce with the growing caseload, mainly by recruiting additional counsel, paralegals and administrative support staff. The majority of the Secretariat staff is dedicated to case administration, and the remainder has responsibility for the Centre’s institutional, general administration and financial operations. The Secretariat is currently composed of 50 staff members from 32 different countries, making it one of the most culturally diverse organizations within the World Bank Group. Most staff are fluent in two or all three of the Centre’s official languages (English, French and Spanish), and several are fluent in other languages, including Amharic, Arabic, Bulgarian, German, Italian, Malay, Mandarin, Portuguese, Somali, Swedish, Tagalog, Urdu and Wolof. Overall, the Centre is able to communicate with users in over 28 different languages. 36 | ICSID ANNUAL REPORT 2013 | 37 CHAPTER 5 OUTREACH ICSID undertakes various activities each year to contribute to a better understanding of the Antonio Parra at the Book Launch for ‘The History of ICSID,’ photo by Ryan Rayburn, Washington, D.C., September 6, 2012 ICSID process and to advance knowledge of, and discussion about, current developments in international investment arbitration. This includes making presentations in locations around the world and publishing general and specialized materials on international investment law and dispute settlement. Publications Update ICSID REVIEW—FOREIGN INVESTMENT LAW JOURNAL — As a result of ICSID’s partnership with Oxford University Press in 2011, the ICSID Review is now available online and in print. The full archive of the ICSID Review has also been made available online. This has increased access to the journal for international audiences, simplified legal research, and complemented the research initiatives of the Centre. During FY2013, the Centre published three issues of the ICSID Review (Spring 2012, Fall 2012 and Spring 2013). Every issue contains three sections: case comments, articles and notes. The case comments analyze significant decisions under the ICSID Convention, Additional Facility, Eloise Obadia (ICSID Staff) presenting an ICSID Martina Polasek (ICSID Staff) presenting at the Arbitration Academy, or other rules. The articles address topics related to investment law and arbitration in depth, while 101 course, Tunis, Tunisia, January 16, 2013 Paris, France, July 10, 2012 the notes consider current issues on a more specific basis. All submissions for the ICSID Review are evaluated and selected for publication under a double-blind peer review process. The Spring 2012 issue covered topics such as document production; Australia’s policy change with respect to investor-State arbitration; cross-regime harmonization of laws; national treatment for foreign investment and investor-State dispute settlement provisions in China’s investment treaties; the Trans-Pacific Partnership Agreement; and the Secretary-General’s registration of requests for arbitration. The issue also reproduced the New York City Bar Association’s Recommended Procedures for Recognition and Enforcement of International Arbitration Awards Rendered under the ICSID Convention, prepared by the Committee on International Commercial Disputes. The Fall 2012 issue examined mass and collective claims in investment arbitration and consent Martina Polasek and Geraldine R. Fischer (ICSID Staff) with China Gonzalo Flores (ICSID Staff) at the ABA-ICSID-LCIA Investment Promotion Agency delegation, Washington, D.C., Symposium, Washington, D.C., April 23, 2013 in large-scale proceedings; the definition of ‘investment’; issues of jurisdiction, admissibility and November 9, 2012 pre-conditions to arbitration; the consideration of legal security under Article 52(5) of the ICSID Convention; third-party funding, corporate nationality planning, the emergence of Asian parties as claimants, and policy space in European investment treaties. The Fall 2012 issue also contained the Background Paper on Annulment prepared by the Secretariat for the Administrative Council of ICSID. Ivanna Ursino (ICSID Staff) at the Young ICSID Launch, Meg Kinnear at the International Workshop Roundtable on Washington, D.C., November 1, 2012 International Investment Law and Arbitration, Xi’an, China, ANNUAL REPORT 2013 | 39 June 25, 2012 The third annual ICSID Review Student Writing Competition was held in FY2013. A paper by Felipe ICSID cases by State party to the dispute; the economic sectors involved in ICSID disputes; the Mutis Téllez of Colombia on the conditions and criteria for the protection of legitimate expectations outcomes in ICSID arbitration and conciliation proceedings; the nationality and geographic origins was selected by the Judges panel and published in the Fall 2012 issue of the ICSID Review. The of arbitrators, conciliators and ad hoc committee members appointed in ICSID proceedings; and 2013 Competition is currently underway. the outcomes in annulment proceedings under the ICSID Convention. Issue 2013-2, updating the information to June 30, 2013, was published in July 2013. The Spring 2013 ICSID Review included submissions on the Southern African Development Community Tribunal; legitimate PUBLICATION INITIATIVE — The Centre continued to publish procedural details, awards, decisions expectations in investment treaty law; the notion of an arbitral and orders on the ICSID website. The Centre also publishes excerpts of the legal reasoning in an award as an ‘investment’; world heritage and investors’ rights in award where a party refuses consent to publish the full award. During FY2013, ICSID published international investment law and arbitration; refining the content numerous awards, decisions, and orders in cases concluded in 2010 and 2011. The Centre continued and role of ‘rules’ and ‘standards’ in investment treaty making; the to contact ICSID parties in concluded cases to seek their authorization to publish all rulings. This future of EU investment agreements; the rules of interpretation of ongoing initiative supports the Centre’s outreach mission by enhancing public understanding of the Vienna Convention on the Law of Treaties; and an arbitrator’s ICSID proceedings and investment law and offering free access to ICSID case law. perspective on time and cost in international arbitration. PUBLIC HEARING BROADCASTS — The Centre continued to offer parties to ICSID cases the COLLECTIONS — In FY2013, the Centre published three option of webcasting proceedings. In FY2013, ICSID arranged to broadcast the continuation of the supplements of its two loose-leaf collections, Investment Laws of hearing on objections to jurisdiction and the merits in TECO Guatemala Holdings, LLC v. Republic the World and Investment Treaties. The Investment Laws of the World release contained new or of Guatemala (ICSID Case No. ARB/10/23), a Dominican Republic-Central America-United States revised investment legislation from the following countries: Bangladesh, Bosnia and Herzegovina, Free Trade Agreement (CAFTA-DR)/ICSID Arbitration Rules proceeding. The hearing was held Kosovo, Mexico and Samoa (release 2013-1). Two updating supplements of the Investment Treaties March 1–5, 2013, in Washington, D.C. collection were published containing the texts of 40 bilateral investment agreements and protocols, concluded by 39 countries from all regions of the world between 1994 and 2011 (releases 2012-2 WEB UPDATES — ICSID continued to utilize its website as a primary means of communicating and 2013-1). The editorial staff at the Centre also completed two additional updating supplements information in English, French, and Spanish about ICSID cases and practices, as well as significant to the Investment Treaties, adding to the collection another 40 bilateral investment agreements, events and institutional developments. ICSID is currently designing and implementing an updated concluded by 30 different countries, which will be published together with the launch of the 12th website, which will be launched in early FY2014. volume of the publication. Events and Presentations THE ICSID CASELOAD—STATISTICS — In FY2013, the Centre published Issues 2012-2 and During FY2013, ICSID held several of its own events and co-sponsored a number of conferences 2013-1 of the ICSID Caseload – Statistics online in English, French and Spanish. In these issues, with other international arbitration bodies and multilateral organizations. More than 60 presentations the Centre continued its practice of profiling the ICSID caseload by reporting quantitative analyses were made during the year in countries in different regions of the world including Belarus, Canada, on the cases registered and administered by the ICSID Secretariat; the basis of consent to ICSID China, Colombia, Costa Rica, France, Hong Kong, India, Ireland, Japan, Morocco, Panama, Peru, jurisdiction invoked in registered arbitration and conciliation cases; the geographic distribution of Singapore, Spain, Tunisia, the Ukraine, and the United States. 40 | ICSID ANNUAL REPORT 2013 | 41 2012 the Secretary-General and two ICSID Legal Counsel held a one-day introductory course on ICSID practice and procedure called ‘ICSID 101.’ The event was attended by legal practitioners and government officials and policy makers from several countries in the region. ICSID Legal Counsel traveled to other destinations, including Lima (Peru), Tunis (Tunisia) and Casablanca (Morocco), to present the ‘ICSID 101’ course in Spanish and French, respectively. ICSID staff were panelists and speakers at international investment arbitration conferences organized by the International Bar Association, the African Law Association, the Inter-American Bar Association, the American Society of International Law, the Canadian Council of International Law, the Japan Commercial Arbitration Association, the Association of the International Petroleum Negotiators, the Lima Chamber of Commerce, the Centre for Conflict Resolution, Panama City, the Arbitration Academy, Paris, and the International Federation of Commercial Arbitration Institutions. On July 13, 2012, the Secretary-General, Meg Kinnear, presented the key note address at a conference organized by the Society for International Economic Law in Singapore. The Secretary- General also presented the Grotius Lecture at an event organized by the Royal Academy of Jurisprudence and Legislation of Spain, and held on May 14, 2013 in Madrid. The lecture focused Dr. Ngozi Okonjo-Iweala, Minister of Finance of Nigeria, delivering the keynote speech at the 29th AAA- on innovations in international investment arbitration. ICDR/ICC/ICSID Joint Colloquium, photo by Deborah W. Campos, Washington, D.C., November 2, 2012 On November 2, 2012, ICSID hosted the 29th AAA-ICDR/ICC/ICSID Joint Colloquium on On September 6, 2012, ICSID and Oxford University Press hosted a book launch event for, ‘The International Arbitration in Washington, D.C. The colloquium focused on a wide range of topics, History of ICSID’ by Antonio R. Parra. ICSID staff also spoke on international investment arbitration including the overlap of criminal law and arbitration; the role of dissenting opinions in the at a training session organized by the Multilateral Investment Guarantee Agency, and at events development of international arbitration; mass claims and their effect on modern arbitration; and during the Law, Justice and Development Week organized by the World Bank. new approaches to arbitration. The keynote address was delivered by Dr. Ngozi Okonjo-Iweala, Minister of Finance of Nigeria. In addition, the Secretary-General and ICSID Legal Counsel delivered numerous lectures at different universities, including the American University Washington College of Law, Howard University On April 23, 2013, ICSID partnered with the American Bar Association’s Section of International School of Law, Harvard Law School, Columbia Law School, Yale Law School, Georgetown University Law and the London Court of International Arbitration to present a symposium focused on complex Law Center, and the Fletcher School of Law and Diplomacy. issues in international arbitration. The program included panels of experts and ICSID Legal Counsel who discussed current issues including jurisdiction, arbitration practice and procedure, and awards As part of ICSID’s outreach initiative, the Secretary-General and ICSID Legal Counsel addressed and enforcement. During FY2013, ICSID also co-sponsored a joint seminar on arbitration in Latin numerous groups of government officials and judges at meetings held at the offices of ICSID in America, which was held in Lima, Peru. Washington, D.C. and abroad. ICSID also hosted meetings as part of judicial training programs for Supreme Court Judges of the Republic of Korea and of the United Arab Emirates and for the Another event co-sponsored by ICSID was the first Hong Kong Arbitration Week 2012, which was Ministry of Justice officials of Vietnam. organized by the Hong Kong International Arbitration Centre. As part of this event, on October 16, 42 | ICSID ANNUAL REPORT 2013 | 43 On November 2, 2012, Young ICSID was launched with its inaugural event, Approaches to ICSID Additional Facility Rules, Doc. ICSID/11/Rev. 1 (January 2003) (contains the texts of the Arbitration: Across the Ages. This event was an inter-generational discussion among practitioners Additional Facility Rules in effect from January 1, 2003 to April 9, 2006) (English, French and Spanish) about how to get involved in arbitration and develop expertise. ICSID Additional Facility Rules, Doc. ICSID/11 (April 2006) (contains the texts of the Additional ICSID Official Documents Facility Rules in effect from April 10, 2006) (English, French and Spanish) AVAILABLE FROM THE CENTRE FREE OF CHARGE UNLESS OTHERWISE INDICATED ICSID Model Clauses, Doc. ICSID/5/Rev. 1 (February 1, 1993) (English, French and Spanish) (Internet List of Contracting States and Other Signatories of the Convention, Doc. ICSID/3 (periodic updates) edition only) (English, French and Spanish) Bilateral Investment Treaties 1959–2007: Chronological Country Data (Internet edition only) Contracting States and Measures Taken by Them for the Purpose of the Convention, Doc. ICSID/8 (periodic updates) (English) List of ICSID Cases, ICSID/16 (Internet edition only) Members of the Panels of Conciliators and of Arbitrators, Doc. ICSID/10 (periodic updates) (English) Memorandum on the Fees and Expenses of ICSID Arbitrators (July 6, 2005) ICSID Regulations and Rules, Doc. ICSID/4/Rev. 1 (May 1975) (contains the texts of the Centre’s ICSID Schedule of Fees (January 1, 2013) (English, French and Spanish) Regulations and Rules in effect from January 1, 1968 to September 25, 1984) (English, French and Spanish) ICSID Annual Report (1967–2013) (English, French and Spanish) ICSID Basic Documents, Doc. ICSID/15 (January 1985) (contains the texts of the Centre’s Other ICSID Publications Regulations and Rules in effect from September 26, 1984 to December 31, 2002 and the text of ICSID Review—Foreign Investment Law Journal (semi-annual) (available from Oxford University the ICSID Convention) (English, French and Spanish) Press, Journals Customer Service Department, 2001 Evans Road, Cary, N.C. 27513, U.S.A.; Tel.: 800–852–7323; Fax: 919–677–1714; URL: http://icsidreview.oxfordjournals.org; Email: ICSID Convention, Regulations and Rules, Doc. ICSID/15/Rev. 1 (January 2003) (contains the texts jnlorders@oup.com at US$73 for individuals (print and online combined) and US$170, US$187, or of the Centre’s Regulations and Rules in effect from January 1, 2003 to April 9, 2006 and the text US$204 for institutions for online, print, or print and online combined subscriptions.) of the ICSID Convention) (English, French and Spanish) Documents Concerning the Origin and Formulation of the Convention on the Settlement of ICSID Convention, Regulations and Rules, Doc. ICSID/15 (April 2006) (contains the texts of the Investment Disputes between States and Nationals of Other States (1967; 2001; 2006) (English, Centre’s Regulations and Rules in effect from April 10, 2006 and the text of the ICSID Convention) French and Spanish) (available from the Centre at US$250) (English, French and Spanish) Investment Laws of the World (ten loose-leaf volumes) and Investment Treaties (eleven loose-leaf ICSID Additional Facility for the Administration of Conciliation, Arbitration and Fact-Finding volumes) (available from Oxford University Press, Order Management Department, North Kettering Proceedings, Doc. ICSID/11 (June 1979) (contains the texts of the Additional Facility Rules in effect Business Park, Hipwell Road, Kettering, Northamptonshire, NN14 1UA, UK; Tel.: +44 (0) 1536 452773; from September 27, 1978 until December 31, 2002) (English, French and Spanish) Email: customer.services@oup.com at US$2,420 for both sets, US$1,210 for the Investment Laws of the World volumes only and US$1,210 for the Investment Treaties volumes only) 44 | ICSID ANNUAL REPORT 2013 | 45 The ICSID Caseload—Statistics, Issues 2010-1, 2010-2, 2011-1, 2011-2, 2012-1, 2012-2, 2013-1 (contains a profile of the ICSID caseload; semi-annual updates) (English, French and Spanish) (Internet edition only) Bilateral Investment Treaties 1959–1996: Chronological Country Data and Bibliography, Doc. ICSID/17 (May 30, 1997) (English) (Internet edition only) ICSID Staff Publications 2012 ICSID Administrative Council Meeting, photo by Deborah W. Campos, Tokyo, Japan, October 12, 2012 Meg Kinnear, Foreword, The Legal Protection of Foreign Investment: A Comparative Study (Wenhua Shan ed., Hart Publishing, 2012) CHAPTER 6 Meg Kinnear and Campbell McLachlan, Editorial, 27(1) ICSID Rev. 1-3 (2012) FORTY-SIXTH ANNUAL MEETING OF THE Meg Kinnear, Preparation of Cases before International Courts and Tribunals, Proceedings of the ADMINISTRATIVE COUNCIL 106th Annual Meeting of the American Society of International Law, 106 ASIL Proc. 160 (2013) Article 4 of the ICSID Convention states that the Administrative Council is composed of one representative of each Contracting State. In the absence of a contrary designation, the governor Meg Kinnear, The Future of ICSID, in The Future of ICSID and the Place of Investment Treaties in of the World Bank appointed by that State serves ex officio as representative on the Council. Each International Law, Investment Treaty Law Current Issues IV (N. Jansen Calamita, David Earnest, and member has one vote on the Administrative Council. Markus Burgstaller eds., British Institute of International and Comparative Law, 2013) The 46th Annual Meeting of the Administrative Council took place on October 12, 2012, in Tokyo, Meg Kinnear, Eloise Obadia and Michael Gagain, The ICSID Approach to Publication of Information Japan, on the occasion of the Annual Meetings of the Boards of Governors of the World Bank in Investor-State Arbitration, in Confidentiality in International Arbitration by Rinaldo Sali and Group and the International Monetary Fund. Alberto Malatesta (JurisNet LLC 2013) At its 46th Meeting, the Administrative Council approved the Centre’s 2012 Annual Report and its Meg Kinnear, Appointment to Arbitral Tribunals at ICSID, ABA Newsletter, International Section – administrative budget for FY2013. Arbitration Committee, Special Issue (Volume 1, Issue 1, 2013) The Resolutions adopted at the Meeting are reproduced below. Meg Kinnear, Navigating International Dispute Resolution: Innovations in Investor-State Arbitration, VI Hugo Grotius Lecture (forthcoming 2013) AC(46)/RES/121— AC(46)/RES/122— Approval of the Annual Report Adoption of Budget for Fiscal Year 2013 Meg Kinnear, Opening remarks, ICSID and the International Investment Treaty Arbitration: Progress and Prospects, in Silk Road Collected Courses on International Economic Law, Volume: International The Administrative Council The Administrative Council RESOLVES RESOLVES Investment Law and Arbitration (Wenhua Shan ed., forthcoming 2014) To approve the 2012 Annual Report on the To adopt, for the period July 1, 2012 to June operation of the Centre. 30, 2013, the budget set forth in paragraph 2 of the Report and Proposal of the Secretary- General on the Budget for Fiscal Year 2013, dated June 29, 2012. 46 | ICSID ANNUAL REPORT 2013 | 47 CHAPTER 7 FINANCE Soledad Salame, Chile As Old as My Soul II ICSID’s administrative expenditures in FY2013 were covered by fee income and by the International Bank for Reconstruction and Development (IBRD) pursuant to the Memorandum of Administrative Arrangements concluded between the IBRD and ICSID. It is therefore not necessary to assess any excess expenditures on Contracting States pursuant to Article 17 of the Convention. Expenditures relating to pending arbitration proceedings are borne by the parties in accordance with ICSID’s Administrative and Financial Regulations. The Financial Statements of the Centre for FY2013 are set forth in the following pages. 48 | ICSID ANNUAL REPORT 2013 | 49 FINANCIAL STATEMENTS ALL AMOUNTS EXPRESSED IN U.S. DOLLARS UNLESS OTHERWISE NOTED STATEMENTS OF FINANCIAL POSITION STATEMENTS OF ACTIVITIES JUNE 30, 2013 AND JUNE 30, 2012 FOR THE YEARS ENDED JUNE 30, 2013 AND JUNE 30, 2012 2013 2012 2013 2012 Assets: Support and revenues: Cash $ 5,566,349 $ 3,239,450 Revenues from arbitration/conciliation proceedings $ 29,332,044 $ 28,084,175 (Notes 2 and 8) Share of cash and investments in the Pool (Notes 2 and 3) 25,523,764 22,192,061 In-kind contributions (Notes 2 and 10) 2,848,664 2,796,419 Due from parties to arbitration/conciliation proceedings (Note 2) 586,082 279,700 Net investment income (Note 2) 56,321 48,074 Other receivables 80 32,092 Sales of publications (Note 10) 34,306 16,088 Other assets, net (Note 4) 375,922 377,813 Total support and revenues 32,271,335 30,944,756 Total assets $ 32,052,197 $ 26,121,116 Expenses: Liabilities and net assets: Expenses related to arbitration/conciliation 23,513,696 23,779,301 Liabilities: proceedings (Notes 2 and 9) Payable to International Bank for Reconstruction Administrative expenses (Note 10) 6,794,722 6,371,251 $ 1,285,353 $ 899,744 and Development (Note 2) Amortization expenses (Notes 2, 4 and 10) 118,495 127,695 Accrued expenses related to arbitration/conciliation proceedings 6,378,259 6,360,496 Net investment income applied to arbitration/conciliation 56,321 48,074 Deferred revenue (Note 2) 1,871,025 1,562,019 proceedings (Note 2) Total expenses 30,483,234 30,326,321 Advances from parties to arbitration/conciliation proceedings (Note 2) 19,731,586 16,111,265 Advance from International Bank for Reconstruction Change in net assets 1,788,101 618,435 379,438 569,157 and Development (Note 5) Net assets, beginning of the year 618,435 — Total liabilities 29,645,661 25,502,681 Net assets, end of the year $ 2,406,536 $ 618,435 Net assets, unrestricted (Note 6) 2,406,536 618,435 Total liabilities and net assets $ 32,052,197 $ 26,121,116 The notes to the financial statements are an integral part of these statements. The notes to the financial statements are an integral part of these statements. 50 | ICSID ANNUAL REPORT 2013 | 51 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 AND JUNE 30, 2012 STATEMENTS OF CASH FLOWS NOTE 1 — ORGANIZATION FOR THE YEARS ENDED JUNE 30, 2013 AND JUNE 30, 2012 Established on October 14, 1966, the International Centre for Settlement of Investment Disputes (ICSID or the Centre), is a member of the World Bank Group which also includes the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the 2013 2012 International Development Association (IDA) and the Multilateral Investment Guarantee Agency Cash flows from operating activities: (MIGA). The Centre provides facilities for the conciliation and arbitration of investment disputes Change in net assets $ 1,788,101 $ 618,435 between Contracting States (Countries that have ratified the ICSID Convention) and nationals of Adjustments to reconcile change in net assets to net cash provided by operating activities: other Contracting States. The Centre provides such facilities for cases brought under the ICSID Amortization 118,495 127,695 Convention, the ICSID Additional Facility Rules, or where parties involved so request, under (Increase)/Decrease in due from parties to arbitration/ (306,382) 190,834 the Arbitration Rules of the United Nations Commission on International Trade Law. In order to conciliation proceedings Decrease in other receivables 32,012 22,667 process the cases, the Centre constitutes Conciliation Commissions, Arbitral Tribunals or ad hoc Increase in payable to International Bank for 385,609 85,386 Committees, as necessary. On February 13, 1967, IBRD and the Centre entered into Administrative Reconstruction and Development Increase in accrued expenses related to arbitration/ Arrangements, which were effective as of the date of the establishment of the Centre. The 17,763 588,709 conciliation proceedings Increase in deferred revenue 309,006 538,686 Memorandum of Administrative Arrangements (the Memorandum) provides that, except to the Increase in advances from parties to arbitration/ extent that ICSID, pursuant to its Administrative and Financial Regulations (the Regulations), 3,620,321 2,054,818 conciliation proceedings Net cash provided by operating activities 5,964,925 4,227,230 collects funds from the parties to proceedings to cover its administrative expenses, IBRD shall provide reasonable facilities and services to ICSID without charge, as described in Notes 2 and 10. Cash flows from investing activities: Increase in share in pooled investments (3,331,703) (2,834,361) Effective February 2012, pursuant to the Operational Guidelines for the Funding of the Operations Purchase of other assets (116,604) — of the Centre entered into by IBRD and the Centre, if at the end of each fiscal year, the Centre’s Net cash used in investing activities (3,448,307) (2,834,361) total expenditure less the IBRD’s in-kind contribution is less than the revenues collected by the Centre, then the accumulated surplus amount will be retained by the Centre and may be carried Cash flows from financing activities: Payment of advance from International Bank for forward indefinitely. In the event the Centre’s total expenditure, less the IBRD’s in-kind contribution, (189,719) (189,719) Reconstruction and Development is greater than the revenues collected by the Centre during the year, the excess expenditure will be Cash provided by financing activities (189,719) (189,719) charged against the balance of any accumulated surpluses retained by the Centre before the Centre Net increase in cash 2,326,899 1,203,150 requests supplementary funding from IBRD. Cash at beginning of the year 3,239,450 2,036,300 Cash at end of the year $ 5,566,349 $ 3,239,450 NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting and Financial Statement Presentation: The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). The notes to the financial statements are an integral part of these statements. 52 | ICSID ANNUAL REPORT 2013 | 53 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP and IFRS have occurred if the carrying amount exceeds its recoverable amount, at which time, a write-down requires management to make estimates and assumptions that affect the reported amounts of would be recorded. assets, liabilities, revenues and expenses, together with the related disclosures as at the date of the financial statements. Payable to IBRD: These amounts represent the balance of outstanding expenses paid by IBRD on behalf of ICSID, which are incurred in the normal course of business. Management estimates the amount of unbilled expenses incurred by arbitrators, and related revenues, for ongoing cases at each year end. The nature of the cases handled by the Centre Advances from parties to arbitration/conciliation proceedings: In accordance with the requires the use of external arbitrators, who charge fees for their service based on time spent on the Regulations, the Centre periodically requests parties to arbitration/conciliation proceedings to make cases. The estimation process uses information received from the arbitrators about unbilled time advance payments to cover administrative charges and the fees and expenses of the Conciliation spent on the cases through the end of the fiscal year. In some cases the determination of arbitrators’ Commissions, Arbitral Tribunals or ad hoc Committees. These advances are recorded as liabilities. fees and expenses incurred for ongoing cases is based on estimated time spent by the arbitrators in relation to the progress of the case and the number of hearings and sessions held during the year. Revenues from arbitration/conciliation proceedings: The Centre’s direct expenses attributable Actual results of arbitrator fees earned but unbilled, and other case-related expenses incurred for to arbitration/conciliation proceedings are borne by the parties in accordance with the Centre’s the year may differ materially from management’s estimates. Regulations. These direct expenses, which include arbitrators’ fees and expenses, and the costs associated with meeting rooms and support services for conducting proceedings, are paid from Cash: Cash consists of cash held in a bank account. advances from parties (see Note 9). Accordingly, the Centre recognizes revenues from these transactions to the extent expenses related to arbitration/conciliation proceedings are incurred Share of the cash and investments in the Pool: Investments in the Pool are held for trading and during the period. they are reported at fair value. Resulting gains or losses are reported as an increase or reduction, in Net investment income in the Statement of Activities. All income earned is required to be used by In addition, revenues from arbitration/conciliation proceedings also include the following (see Note 8): the parties to arbitration/conciliation proceedings to offset the costs of their proceedings. Registration fees: The Centre charges a non-refundable fee of $25,000 to parties wishing Due from parties to the arbitration/conciliation proceedings: Direct expenses incurred by to institute an arbitration/conciliation proceeding or $10,000 to parties wishing to request a arbitrators in excess of advance payments made by the parties to the ongoing arbitration/ supplementary decision to, or the rectification, interpretation, revision or annulment of an arbitral conciliation proceedings are recognized as due from parties to arbitration/conciliation proceedings award, or request resubmission of a dispute to a new tribunal after the annulment of an arbitral and are payable in accordance with the Centre’s Regulations. award. The revenues are recognized upon receipt of payment. Effective January 2013, the Centre revised its lodging fee for annulment of an arbitral award from $10,000 to $25,000. Other assets and amortization: The Centre’s other assets comprise computer systems software costs which, upon achieving technological feasibility, are capitalized at cost and amortized using the Administration fees: The Centre charges $32,000 following the constitution of the Conciliation straight line method over a range of four to ten years. Amortization is charged from commencement Commission, Arbitral Tribunal or ad hoc Committee concerned and the same amount on an annual of the use of the software. basis thereafter. The Centre collects administration fees from advance deposits from the parties to arbitration/conciliation proceedings. The revenues are recognized on a straight-line basis, over the The Centre evaluates the carrying value of software and the website annually, and whenever events twelve month period during which services are performed. The unearned revenue at year end is or changes in circumstances indicate that impairment has occurred. Impairment is considered to deferred and recognized in the subsequent fiscal year. 54 | ICSID ANNUAL REPORT 2013 | 55 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Attendance fees: If the proceeding is held away from the seat of the Centre (Washington, D.C.), beginning after December 15, 2011, and IFRS 13 is effective for annual periods beginning after the Centre charges a case attendance fee of $1,500 per day when the Secretary of the Commission, January 1, 2013. Both IFRS 13 and the ASU amendments are not expected to have a material Tribunal, or Committee attends the meetings. The Centre collects these fees from advance deposits impact on the Centre’s financial reporting. from the parties to the arbitration/conciliation proceedings. The fees are recognized as revenue when the service is rendered. Effective January 1, 2012, the Centre ceased charging attendance fees. International Accounting Standards Board (IASB): In November 2009, the IASB issued IFRS 9 Financial Instruments as the first step in its project to replace IAS 39 Financial Instruments: Investment of undisbursed advances from parties and refund of surplus advance to the parties: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring Net investment income earned on funds advanced from parties is recorded as revenue and expense financial assets. In October 2010, the IASB reissued IFRS 9, incorporating new requirements on in the Statement of Activities, and applied to advances from parties to arbitration/conciliation accounting for financial liabilities, and carrying over from IAS 39 the requirements for derecognition proceedings, which can be used for expenses related to the parties’ respective arbitration/ of financial assets and financial liabilities. IFRS 9 as amended is mandatorily effective for annual conciliation proceedings. After the completion of an arbitration / conciliation proceeding, if there is periods beginning on or after January 1, 2015. The standard is not expected to have an impact on an excess of advances and investment income over expenditures for the proceedings, the surplus the Centre’s financial reporting. is refunded to the parties in proportion to the amounts advanced by them to the Centre. Value of services provided by IBRD and in-kind contributions: NOTE 3 — SHARE OF CASH AND INVESTMENT IN THE POOL AND FAIR IBRD provides support services and facilities to the Centre including the following: VALUE MEASUREMENT 1) The services of staff members and consultants; and Amounts paid to the Centre, but not yet disbursed, are managed by IBRD, which maintains an 2) Other administrative services and facilities, such as travel, communications, office investment portfolio (the Pool) for all of the trust funds administered by the World Bank Group. accommodations, furniture, equipment, supplies and printing. IBRD, on behalf of the World Bank Group, maintains the Pool’s assets separate and apart from the funds of the World Bank Group. The Centre recognizes expenses, as incurred, for the value of services provided by IBRD, which is determined by the estimated fair value of such services. Services by IBRD for which the Centre The Pool is divided into sub-portfolios to which allocations are made based on fund specific provides no compensation are similarly recognized and measured and are recorded as in-kind investment horizons, risk tolerances and/or other eligibility requirements for trust funds with common contribution revenue. characteristics as determined by IBRD. Generally, the Pool includes cash and financial instruments such as time deposits, money market securities, government and agency obligations, and asset- Relevant accounting and reporting developments: backed securities. The Pool may also include securities pledged as collateral under repurchase Financial Accounting Standards Board: In May 2011, the FASB issued ASU 2011-04, Fair Value agreements as well as derivatives with other counterparties, and receivables from resale agreements Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and as well as derivatives for which it has accepted collateral. Additionally, the Pool may also include Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS). derivative contracts such as currency forward contracts, currency swaps, interest rates swaps and The amendments result in common fair value measurement and disclosure requirements in U.S. contracts to purchase or sell mortgage-backed-securities to-be-announced (TBA). Payables and GAAP and IFRS. The ASU is similar to IFRS 13, Fair Value Measurement issued by the International receivables associated with the investment activities are also included in the Pool. The Centre’s funds Accounting Standards Board in May 2011. Many of the amendments are changes in wording that are invested in a sub-portfolio of the Pool, which invests solely in cash and money market instruments are not expected to significantly impact current practice. The ASU is effective for annual periods such as overnight time deposits, time term deposits, certificate of deposits and commercial paper with terms of three months or less recorded at par value which approximates fair value. 56 | ICSID ANNUAL REPORT 2013 | 57 NOTES TO FINANCIAL STATEMENTS (CONTINUED) The share in pooled cash and investments represents the Centre’s share of the Pool’s fair value at As of June 30, 2013 and June 30, 2012, ICSID does not have any financial instruments measured at the end of each reporting period. Net investment income consists of the Centre’s allocated share fair value on a non-recurring basis. During the fiscal year ended June 30, 2013, transfers between of: interest income earned by the Pool, realized gains/losses from sales of securities, and unrealized levels were not significant. gains/losses resulting from recording the assets held by the Pool at fair value. As explained in Note 2, net investment income is recorded as revenue and expense in the Statement of Activities, and All other financial assets and financial liabilities are carried at cost. Their carrying values are applied to advances from parties to arbitration/conciliation proceedings, which can be used for considered to be a reasonable estimate of fair value because these instruments tend to be very expenses related to arbitration/conciliation proceedings. short term in nature and none are considered to be impaired. IBRD, on behalf of the World Bank Group, has an established and documented process of determining fair values. Fair value is based upon quoted market prices for the same or similar NOTE 4 — OTHER ASSETS instruments, where available. Financial instruments for which quoted market prices are not readily Other assets comprise computer systems software. Amortization charges amounted to $118,495 available are valued based on discounted cash flow models. These models primarily use market- for the year ended June 30, 2013 (2012: $127,695). None of these assets are considered impaired. based or independently-sourced market parameters such as yield curves, interest rates, volatilities, foreign exchange rates and credit curves and may incorporate unobservable inputs. Selection of these inputs involves judgment. NOTE 5 — ADVANCE FROM IBRD During the year ended June 30, 2008, IBRD agreed to lend up to $917,000 to the Centre to enable The Pool’s financial instruments are categorized based on the priority of the inputs to the valuation the Centre to acquire software and develop information systems. The loan bears no interest and is technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for repayable in full within four years upon completion of the development of the information systems. identical assets or liabilities (Level 1), the next highest priority to observable market-based inputs The Centre had borrowed $758,876 and repaid the second installment, $189,719 (2012: $189,719), or inputs that are corroborated by market data (Level 2) and the lowest priority to unobservable with an outstanding balance of $379,438 (2012: $569,157). inputs that are not corroborated by market data (Level 3). When the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement NOTE 6 — NET ASSETS, UNRESTRICTED of the instrument in its entirety. ICSID categorizes overnight time deposits as Level 1 and the other Net assets, unrestricted represents accumulated surplus in the amount of $2,406,536 (2012: money market instruments as Level 2. $618,435). The amount may be carried forward indefinitely. Hierarchy level June 30, 2013 June 30, 2012 Level 1 $ 5,324,709 $ 2,155,769 NOTE 7 — RISKS ARISING FROM FINANCIAL INSTRUMENTS Level 2 20,199,055 20,036,292 The Centre’s financial assets consist of its share of cash and investments in the Pool, cash and other Level 3 — — receivables. The Pool is actively managed and invested in accordance with the investment strategy Total $ 25,523,764 $ 22,192,061 established by IBRD for all trust funds administered by the World Bank Group. The objectives of the investment strategy are foremost to maintain adequate liquidity to meet foreseeable cash flow needs and preserve capital and then to maximize investment returns. The Centre holds the cash in a depository bank account. 58 | ICSID ANNUAL REPORT 2013 | 59 NOTES TO FINANCIAL STATEMENTS (CONTINUED) The Centre is exposed to credit and liquidity risks. There has been no significant change during the NOTE 8 — REVENUES FROM ARBITRATION/CONCILIATION PROCEEDINGS fiscal year to the types of financial risks faced by the Centre or the Centre’s general approach to the Revenues from arbitration/conciliation proceedings comprise: management of those risks. The exposure and the risk management policies employed to manage these risks are discussed below: 2013 2012 Drawdown of advances from parties for direct expenses related to arbitration/conciliation proceedings* $ 23,513,697 $ 23,779,301 Credit risk – The risk that one party to a financial instrument will fail to discharge an obligation Administration fees 4,413,046 2,901,234 and cause the other party to incur a financial loss. Of the Centre’s financial assets, cash held in the Registration fees 1,405,301 1,216,890 depository bank account which is subject to U.S. Federal Deposit Insurance Corporation (FDIC) Attendance fees - 186,750 insurance limits of $250,000 is not subject to credit risk. Therefore, the Centre’s maximum credit Total $ 29,332,044 $ 28,084,175 exposure at June 30, 2013 is equivalent to the gross value of the remaining assets amounting to $30,840,193 (2012: $25,213,603). The Centre does not hold credit enhancements or collateral to *The Centre recognizes revenue to the extent expenses are incurred related to arbitration/conciliation mitigate credit risk. proceedings. The details of the expenses are provided in Note 9. IBRD invests the Centre’s share of pooled investments in money market securities. The Centre’s share of the cash and investments in the Pool is not traded in any market; however, the assets NOTE 9 — EXPENSES RELATED TO ARBITRATION/CONCILIATION within the Pool are traded in the market and are reported at fair value. IBRD’s policy is to only PROCEEDINGS invest in money market instruments issued or guaranteed by financial institutions whose senior debt Direct expenses related to arbitration/conciliation proceedings are paid out of advances made by securities are rated at least A- in the U.S. markets or equivalent. parties to arbitration/conciliation proceedings. The expenses comprise: At the reporting date, 100% of the Centre’s share of the investment portfolio is held in securities 2013 2012 rated at least A- (2012: 100%) and 52% is held in securities rated at least AA- (2012: 65%). IBRD Arbitrators’ fees and expenses $ 20,333,932 $ 20,569,583 defines the concentration of credit risk as the extent to which the pooled investments are held by Arbitration/conciliation meeting costs 2,757,092 2,733,777 an individual counterparty. The concentration of credit risk with respect to the Pool of investments Travel expenses 301,050 320,613 is mitigated because IBRD has investment policies that limit the amount of credit exposure to any Other costs 121,622 155,328 individual issuer. Total $ 23,513,696 $ 23,779,301 Other receivables and amounts due from parties to arbitration/conciliation proceedings result from the ordinary course of business. The amounts are neither past due nor impaired. Liquidity risk – The risk that an entity will encounter difficulty in raising liquid funds to meet its commitments. ICSID regulations require parties to disputes to make advance deposits with the Centre to meet anticipated expenses of arbitration/conciliation proceedings. The Centre’s share of cash and investments in the pool are invested in highly liquid money market instruments and liabilities carried generally have no stated maturity. 60 | ICSID ANNUAL REPORT 2013 | 61 KPMG LLP Suite 12000 1801 K Street, NW Washington, DC 20006 NOTES TO FINANCIAL STATEMENTS (CONTINUED) Independent Auditors’ Report Chairman of the Administrative Council and Secretary General NOTE 10 — IN-KIND CONTRIBUTIONS International Centre for Settlement of Investment Disputes: As described in Note 1, the Memorandum provides that, except to the extent that the Centre may charge the parties to proceedings for fees and expenses of members of Conciliation Commissions, Report on the Financial Statements Arbitral Tribunals or ad hoc Committees, IBRD will provide facilities and services to the Centre. We have audited the accompanying statements of financial position of the International Centre for Settlement of Investment Disputes as of June 30, 2013 and 2012, and the related statements of activities Therefore, in-kind contributions represent the value of services provided by IBRD, less amounts and cash flows for the years then ended, and the related notes to the financial statements. reimbursed to IBRD using proceeds from non- refundable fees and the sale of publications. Management’s Responsibility for the Financial Statements A summary is provided below: Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America and International 2013 2012 Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the Recorded value of services provided by IBRD design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or Staff services (including benefits) $ 4,951,154 $ 4,680,759 error. Administrative services and facilities: Auditors’ Responsibility Contractual services 353,588 409,300 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted Administrative services 298,551 197,759 our audit in accordance with auditing standards generally accepted in the United States of America and Communications and information technology 618,733 434,793 International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Office accommodations 476,724 563,514 Travel 95,972 85,126 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment Total administrative services and facilities 6,794,722 6,371,251 of the risks of material misstatement of the financial statements, whether due to fraud or error. In making Amortization expense 118,495 127,695 those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the Total recorded value of services provided by IBRD 6,913,217 6,498,946 circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal Less: ICSID reimbursement 4,064,553 3,702,527 control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, In-kind contributions $ 2,848,664 $ 2,796,419 as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. NOTE 11 — AUTHORIZATION OF FINANCIAL STATEMENTS Opinion ICSID’s management has evaluated subsequent events through August 27, 2013, the date the In our opinion, the financial statements referred to above present fairly, in all material respects, the financial statements were approved and authorized for issue. financial position of the International Centre for Settlement of Investment Disputes as of June 30, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America and International Financial Reporting Standards as issued by the International Accounting Standards Board. August 27, 2013 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity. 62 | ICSID ANNUAL REPORT 2013 | 63 1818 H STREET, NW WASHINGTON, D.C. 20433 USA TELEPHONE (202) 458 1534 FACSIMILE (202) 522 2615 EMAIL ICSIDsecretariat@worldbank.org WEBSITE www.worldbank.org/icsid