2018 Annual Report CONTENTS Letter of Transmittal 1 Message from the Secretary-General 2 ICSID Secretariat 7 Year-in-Review 10 Chapter 1: Membership 13 Chapter 2: Panels of Arbitrators and of Conciliators 22 Chapter 3: Caseload Trends 25 Chapter 4: Institutional Developments 41 Chapter 5: Fifty-First Annual Meeting of the Administrative Council 57 Chapter 6: Finance 58 Financial Statements 59 Independent Auditor’s Report 72 INTERNATIONAL CENTRE FOR ICSID and the World Bank Group SETTLEMENT OF INVESTMENT DISPUTES ICSID is one of the five organizations of the World Bank Group, along with the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). September 6, 2018 ICSID is unique within the World Bank Group—it is the only non-financial institution—and offers a distinct set of tools to support achieving the Bank’s goals. By offering impartial and effective dispute Dear Mr. Chairman, settlement services, ICSID helps to strengthen investment climates and make international investment more secure. This contributes to the World Bank’s efforts to maximize finance for development by I am pleased to submit the Annual Report on the operation of the International Centre encouraging private investment and stable investment climates. for Settlement of Investment Disputes for approval by the Administrative Council. This Annual Report covers the fiscal year from July 1, 2017 to June 30, 2018. The Report includes the audited financial statements of the Centre, presented pursuant to Administrative and Financial Regulation 19. The International The International The International The International The Multilateral Yours sincerely, Centre for Bank for Development Finance Investment Settlement of Reconstruction Association Corporation Guarantee Agency Investment and Development provides interest- helps developing promotes foreign Disputes lends to free loans — countries achieve direct investment facilitates foreign governments of called credits sustainable growth into developing investment middle-income and — and grants by financing countries by Meg Kinnear by providing a creditworthy low- to governments investment, offering political multilaterally- income countries. of the poorest mobilizing capital risk insurance Secretary-General agreed system countries. in international (guarantees) to for dispute financial markets, investors and settlement. and providing lenders. advisory services to businesses and governments. Dr. Jim Yong Kim Chairman Administrative Council International Centre for Settlement of Investment Disputes ICSID collaborates with the other World Bank Group institutions in a number of ways, including the organization of joint conferences, input on investment-related documents, and briefings on trends and developments at the Centre. In 2018, ICSID updated the World Bank Executive Directors on its rules amendment process, and also coordinated with World Bank country offices to ensure staff across the institution are aware of ICSID’s dispute resolution services. ii ICS ID 2018 ANNUAL REPO RT 1 MESSAGE FROM THE SECRETARY-GENERAL appointees from different regions. The steps taken by ICSID to improve gender diversity are profiled on pages 48–49 of this report. The World Bank Group leads the global effort to end extreme poverty and boost shared ICSID has offered its Member States and the public substantial technical assistance and prosperity. Central to meeting these goals is Maximizing Finance for Development, an training in dispute prevention, dispute readiness, and arbitration in the last decade. In approach that seeks to systematically leverage all sources of finance, expertise, and 2018, courses were given in more than 10 countries, including in China, Israel, Haiti and innovation to support sustainable growth. ICSID plays a unique role in implementing this Guyana. ICSID also increased mediation training to meet the growing interest of States strategy by offering a forum for impartial and effective resolution of disputes between and investors in alternative dispute resolution mechanisms. We held a 3-day training foreign investors and the host States in which they invest. Indeed, creating an course for mediators in investor-State disputes in May 2018, as well as a series of environment that is conducive to foreign investment was the primary motivation for the events to raise awareness of mediation as an option for international investment formation of ICSID in 1966, and that role remains as vital as ever today. dispute settlement at ICSID. Over more than five decades, ICSID has firmly established itself as the facility of choice In the past year ICSID has also been an active participant in discussions on the for investor-State dispute settlement, having administered more than 70% of all known evolution of investment dispute settlement mechanisms. This dialogue is taking place cases. Demand for the Centre’s services continues to increase, demonstrating the MEG KINNEAR in various States, in intergovernmental institutions such as UNCTAD, UNCITRAL, and ICSID Secretary-General importance of its role. In FY2018 ICSID registered 57 new cases, the highest number in the OECD, and in a range of public fora. We share the goal of ensuring that the ICSID’s history. A full analysis of the cases is published in the ICSID Caseload — Statistics international system of investment dispute settlement continues to enhance every six months and is summarized in Chapter 3 of this report. investment promotion and sustainable development. One concrete example of these efforts is the selection of ICSID as an administrative registry in investment chapters Another indicator of the important role played by ICSID is the continuing growth in of recent free trade agreements. We are very pleased that ICSID has been named as membership. In January 2018, the United Mexican States signed the ICSID Convention, the Secretariat for the investment dispute settlement mechanisms in the recent making it the 162nd State to do so. agreements between the European Union, and Canada, Mexico and Singapore, respectively, and look forward to supporting other States in such endeavors. ICSID Member States serve a number of functions that are vital to the success of ICSID. One has also increasingly been named as the appointing authority in investment treaties, of these is designating individuals to the ICSID Panels of Arbitrators and of Conciliators, reflecting the confidence that States have in the Centre to name qualified, diverse and ensuring that there is an expert and diverse group of candidates to serve on tribunals, impartial adjudicators for international disputes. commissions and committees. In FY2018, Member States designated 102 individuals from 22 countries to the ICSID Panels. These designations complement the work of the The most extensive work on reform of investor-State dispute settlement has been Secretariat in promoting a diverse and highly qualified pool of available arbitrators and ongoing within ICSID over the past year. In 2017–18, ICSID held wide-ranging conciliators. The results of these efforts are evident in the substantial progress that has consultations on potential amendments to its rules of procedure for conciliation, been made in diversifying the appointees to tribunals, annulment committees and arbitration and fact-finding in investment disputes. ICSID released a working paper in conciliation commissions, and in particular the number of female appointees and August 2018 with comprehensive rule amendment proposals. The working paper is 2 ICS ID 2018 ANNUAL REPO RT 3 We share the available on the ICSID website and comments are encouraged from all interested persons and organizations. We are consulting with stakeholders on these proposals over goal of ensuring that the fall of 2018, with the goal of submitting a package of reforms to the ICSID Administrative Council in October 2019 or 2020. The enthusiasm, participation and the international collaboration of Member States, counsel, arbitrators, academics and the public in this project has been heartening, and we believe these proposals will be an important system of investment contribution to the future of our discipline. ICSID serves a critical role in mobilizing dispute settlement Finally, I would like to acknowledge the hard work, collegiality, and skill of the staff at the ICSID Secretariat. I am honoured to work with such a wonderful group of people, private finance for development. As the continues to and their spirit and dedication allows us to achieve new goals every year. I am grateful world’s most trusted venue for settling as well to the Chairman of the Administrative Council, Dr. Jim Yong Kim, for his support enhance in the past year. investment disputes, ICSID gives investors more investment I would also like to thank Member States for their continued confidence in ICSID. We confidence to venture into markets and bring the capital, promotion and know that dispute settlement is a key pillar in the rules-based system that has technology, and ideas necessary to ensure sustainable and underpinned the remarkable growth in foreign investment in recent decades, and we will sustainable continue our work as the premier institution administering these important cases in the inclusive growth. Along with IBRD, IDA, IFC, and MIGA, ICSID decades ahead. enables the World Bank Group to support our client development. countries to achieve our mission of ending extreme poverty and promoting shared prosperity. Meg Kinnear Secretary-General —Jim Yong Kim, President, World Bank Group 4 ICS ID 2018 ANNUAL REPO RT 5 ICSID SECRETARIAT The ICSID Secretariat carries out the day-to-day operations of the Centre. Its composition and principle functions are set out in the ICSID Convention (Articles 9 to 11) and the Administrative and Financial Regulations. The ICSID Secretariat is led by the Secretary- General, who is assisted by two Deputy Secretaries-General. The staff are organized into a front office team, four case management teams and an administration and financial management team. from As at June 30, 2018, the Secretariat consisted of 67 staff members from 29 29 countries, making it one of the most diverse organizations within the World countries Bank Group. Most ICSID staff are fluent in two or all three of the Centre’s 67 official languages (English, French and Spanish), and collectively ICSID staff are fluent in 23 other languages, including Akan, Amharic, Arabic, ICSID Bulgarian, Czech, Finnish, German, Hebrew, Hungarian, Italian, staff members Japanese, Kinyarwanda, Kirundi, Mandarin, Polish, Russian, Swedish, Tagalog, Wolof and Yoruba. Since 2016, ICSID has welcomed more than two dozen interns from Algeria, fluent in Canada, Chile, China, Croatia, Cuba, France, Hong Kong, India, Ireland, 23 languages Republic of Korea, Lebanon, Morocco, Nigeria, Pakistan, Peru, Singapore, Switzerland, the United States of America, and Venezuela. ICSID is proud to announce that the 2018 summer semester has produced the largest intern class to date with eight interns assisting on dispute settlement cases and institutional projects. Staff of the ICSID Secretariat, Washington, D.C. © Franz Rudolph Mahr, World Bank 6 ICS ID 2018 ANNUAL REPO RT 7 SECRETARIAT STAFF AS OF JUNE 30, 2018 Secretary-General Meg Kinnear Legal Assistant Alix Ahimon Drake Palmer Starling Paula Carazo Mayra A. Román Deputy Secretary-General Gonzalo Flores Martina Polasek Dante Herrera Guzman Stuti Sood Lanny Isimbi Alexander Vázquez Jennifer Ann Melendez LEGAL STAFF Administrative Assistant to Senior Legal Adviser Aurélia Antonietti Milanka Kostadinova Secretary-General Cindy Ayento Team Leader/Legal Counsel Paul-Jean Le Cannu Natalí Sequeira Program Assistant Anita Chen Frauke Nitschke Mairée Uran Bidegain Legal Counsel Francisco Abriani Alex B. Kaplan FINANCIAL AND GENERAL ADMINISTRATION STAFF Laura Bergamini Catherine Kettlewell Ana Conover Alicia Martín Blanco Team Leader/Sr. Program Officer Javier Castro Mercedes Cordido-Freytes de Kurowski Sara Marzal Aïssatou Diop Jara Mínguez Almeida Financial Officer Azeb Debebe Mengistu Geraldine Fischer Marco Tulio Montañés-Rumayor Anneliese Fleckenstein Marisa Planells-Valero Financial Analyst Walter Meza-Cuadra Cynthia Nyaoro Benjamin Garel Ella Rosenberg Lindsay Gastrell Celeste Salinas Quero Hearings & Events Organizer Lamiss Al-Tashi Francisco J. Grob D. Luisa Fernanda Torres Anna Holloway Hearings & Events Organizer Assistant Diana Magalona Legal Counsel— Institutional Matters Daniela Argüello Otylia Babiak Communications Officer Damon Vis Dunbar Randi Ayman Sr. Information Technology Assistant Patricia V. Romero PARALEGAL, ADMINISTRATIVE AND CLIENT SUPPORT STAFF Program Assistant Sherri Akanni Paralegal Geraldine Alonso Ghersi Ekaterina Minina Jacqueline Argueta Phoebe Ngan Receptionist Adjoa Apete Joy Berry Céline Pommier Anna Devine Federico Salon Kajganich Records Assistant Sebastian Martinel Colleen Ferguson Francisco Sanchez Ivania Fernández Elizabeth Starkey Ayling Kocchiu 8 ICS ID 2018 ANNUAL REPO RT 9 YEAR-IN-REVIEW In FY2018, ICSID registered In FY2018, 57 new cases and ICSID concluded concluded By the fiscal facilities cooperation 46 cases. year-end, a total of agreements with ICSID Tribunals 676 cases the British Virgin Islands rendered 25 awards. had been registered International Arbitration Centre and the at ICSID since its Shenzhen Court of International The ICSID Review— establishment. Arbitration. the Centre’s flagship ICSID has journal— 19 such agreements published 33 with arbitral institutions articles by around the world. 50 authors 22 ICSID contracting States made in FY2018. 102 designations or re-designations to the ICSID Panels of Arbitrators and of Conciliators by fiscal year-end. Overall, 664 individuals have been appointed to the ICSID Panels. 143 individuals from The ICSID Secretariat gave more than 42 nationalities In January 2018, were appointed to serve as 50 presentations Mexico became the ICSID administered arbitrators, conciliators or and training courses 162nd State to sign 279 cases around the world. the ICSID Convention. ad hoc committee in FY2018, A total of members in ICSID cases. the greatest number 153 States of cases ever administered had ratified the in a single year. ICSID Convention as of June 30, 2018. 10 ICS ID 2018 ANNUAL REPO RT 11 Chapter 1 MEMBERSHIP ICSID is an intergovernmental organization established by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. By the end of FY2018, ICSID counted 162 signatories to the ICSID Convention, of which 153 are Contracting States to the Convention. On January 11, 2018, Mexico became the most recent country to sign the Convention, and upon its ratification, ICSID will have 154 Contracting States. Joining ICSID signals Membership in ICSID matters for a number of reasons. Member States: a State’s intent to — Contribute to the Centre’s governance through equal representation on the Administrative Council. The Administrative Council adopts ICSID’s annual budget, encourage foreign elects the Secretary-General and Deputy Secretaries-General, and approves the annual report. direct investment and — Have the right to propose and vote on amendments to the ICSID Convention and foster a stable rules. This is important not only for the conduct of ICSID arbitrations and conciliations—as the global leader in investment dispute settlement, the ICSID rules investment climate. also influence those of regional and domestic arbitration institutions. — Designate the members of the ICSID Panels of Arbitrators and of Conciliators from which adjudicators can be drawn in ICSID cases. This gives States a vital role in ensuring the quality and diversity of these panels. — Create a world-wide network of courts for enforcement of ICSID Convention awards through designations pursuant to Article 54 of the Convention. This ensures a very high level of compliance with ICSID awards, giving States and investors confidence in the system. — Develop expertise in international investment dispute settlement through participation in presentations and training courses for government officials provided around the world by the ICSID Secretariat. The United Mexican States’ Secretary of the Economy, Ildefonso Guajardo Villarreal, signs the ICSID Convention. © ICSID 12 ICS ID 2018 ANNUAL REPO RT 13 Contracting States to the ICSID Convention Signatory States to the ICSID Convention This map was produced by the Cartography Unit of the World Bank  Group. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the World Bank   endorsement or Group, any judgment on the legal status of any territory, or any  acceptance of such boundaries. IBRD 39525 JUNE 30, 2018 14 ICS ID 2018 ANNUAL REPO RT 15 LIST OF CONTRACTING STATES AND OTHER SIGNATORIES OF THE CONVENTION AS OF JUNE 30, 2018 The 162 States listed below signed the Convention on the Settlement of Investment Disputes between States and DEPOSIT OF ENTRY INTO FORCE Nationals of Other States on the dates indicated. The names of the 153 States that have deposited their instruments of STATE SIGNATURE RATIFICATION OF CONVENTION ratification are in bold, with the dates of deposit and the entry into force of the Convention for each of them. Central African Republic Aug. 26, 1965 Feb. 23, 1966 Oct. 14, 1966 Chad May 12, 1966 Aug. 29, 1966 Oct. 14, 1966 DEPOSIT OF ENTRY INTO FORCE STATE SIGNATURE RATIFICATION OF CONVENTION Chile Jan. 25, 1991 Sep. 24, 1991 Oct. 24, 1991 Afghanistan Sep. 30, 1966 June 25, 1968 July 25, 1968 China Feb. 9, 1990 Jan. 7, 1993 Feb. 6, 1993 Albania Oct. 15, 1991 Oct. 15, 1991 Nov. 14, 1991 Colombia May 18, 1993 July 15, 1997 Aug. 14, 1997 Algeria Apr. 17, 1995 Feb. 21, 1996 Mar. 22, 1996 Comoros Sep. 26, 1978 Nov. 7, 1978 Dec. 7, 1978 Argentina May 21, 1991 Oct. 19, 1994 Nov. 18, 1994 Congo, Democratic Rep. of Oct. 29, 1968 Apr. 29, 1970 May 29, 1970 Armenia Sep. 16, 1992 Sep. 16, 1992 Oct. 16, 1992 Congo, Rep. of Dec. 27, 1965 June 23, 1966 Oct. 14, 1966 Australia Mar. 24, 1975 May 2, 1991 June 1, 1991 Costa Rica Sep. 29, 1981 Apr. 27, 1993 May 27, 1993 Austria May 17, 1966 May 25, 1971 June 24, 1971 Côte d’Ivoire June 30, 1965 Feb. 16, 1966 Oct. 14, 1966 Azerbaijan Sep. 18, 1992 Sep. 18, 1992 Oct. 18, 1992 Croatia June 16, 1997 Sep. 22, 1998 Oct. 22, 1998 Bahamas, The Oct. 19, 1995 Oct. 19, 1995 Nov. 18, 1995 Cyprus Mar. 9, 1966 Nov. 25, 1966 Dec. 25, 1966 Bahrain Sep. 22, 1995 Feb. 14, 1996 Mar. 15, 1996 Czech Republic Mar. 23, 1993 Mar. 23, 1993 Apr. 22, 1993 Bangladesh Nov. 20, 1979 Mar. 27, 1980 Apr. 26, 1980 Denmark Oct. 11, 1965 Apr. 24, 1968 May 24, 1968 Barbados May 13, 1981 Nov. 1, 1983 Dec. 1, 1983 Dominican Republic Mar. 20, 2000 Belarus July 10, 1992 July 10, 1992 Aug. 9, 1992 Egypt, Arab Rep. of Feb. 11, 1972 May 3, 1972 June 2, 1972 Belgium Dec. 15, 1965 Aug. 27, 1970 Sep. 26, 1970 El Salvador June 9, 1982 Mar. 6, 1984 Apr. 5, 1984 Belize Dec. 19, 1986 Estonia June 23, 1992 June 23, 1992 July 23, 1992 Benin Sep. 10, 1965 Sep. 6, 1966 Oct. 14, 1966 Ethiopia Sep. 21, 1965 Bosnia and Herzegovina Apr. 25, 1997 May 14, 1997 June 13, 1997 Fiji July 1, 1977 Aug. 11, 1977 Sep. 10, 1977 Botswana Jan. 15, 1970 Jan. 15, 1970 Feb. 14, 1970 Finland July 14, 1967 Jan. 9, 1969 Feb. 8, 1969 Brunei Darussalam Sep. 16, 2002 Sep. 16, 2002 Oct. 16, 2002 France Dec. 22, 1965 Aug. 21, 1967 Sep. 20, 1967 Bulgaria Mar. 21, 2000 Apr. 13, 2001 May 13, 2001 Gabon Sep. 21, 1965 Apr. 4, 1966 Oct. 14, 1966 Burkina Faso Sep. 16, 1965 Aug. 29, 1966 Oct. 14, 1966 Gambia, The Oct. 1, 1974 Dec. 27, 1974 Jan. 26, 1975 Burundi Feb. 17, 1967 Nov. 5, 1969 Dec. 5, 1969 Georgia Aug. 7, 1992 Aug. 7, 1992 Sep. 6, 1992 Cabo Verde Dec. 20, 2010 Dec. 27, 2010 Jan. 26, 2011 Germany Jan. 27, 1966 Apr. 18, 1969 May 18, 1969 Cambodia Nov. 5, 1993 Dec. 20, 2004 Jan. 19, 2005 Ghana Nov. 26, 1965 July 13, 1966 Oct. 14, 1966 Cameroon Sep. 23, 1965 Jan. 3, 1967 Feb. 2, 1967 Greece Mar. 16, 1966 Apr. 21, 1969 May 21, 1969 Canada Dec. 15, 2006 Nov. 1, 2013 Dec. 1, 2013 Grenada May 24, 1991 May 24, 1991 June 23, 1991 16 ICS ID 2018 ANNUAL REPO RT 17 DEPOSIT OF ENTRY INTO FORCE DEPOSIT OF ENTRY INTO FORCE STATE SIGNATURE STATE SIGNATURE RATIFICATION OF CONVENTION RATIFICATION OF CONVENTION Guatemala Nov. 9, 1995 Jan. 21, 2003 Feb. 20, 2003 Madagascar June 1, 1966 Sep. 6, 1966 Oct. 14, 1966 Guinea Aug. 27, 1968 Nov. 4, 1968 Dec. 4, 1968 Malawi June 9, 1966 Aug. 23, 1966 Oct. 14, 1966 Guinea-Bissau Sep. 4, 1991 Malaysia Oct. 22, 1965 Aug. 8, 1966 Oct. 14, 1966 Guyana July 3, 1969 July 11, 1969 Aug. 10, 1969 Mali Apr. 9, 1976 Jan. 3, 1978 Feb. 2, 1978 Haiti Jan. 30, 1985 Oct. 27, 2009 Nov. 26, 2009 Malta Apr. 24, 2002 Nov. 3, 2003 Dec. 3, 2003 Honduras May 28, 1986 Feb. 14, 1989 Mar. 16, 1989 Mauritania July 30, 1965 Jan. 11, 1966 Oct. 14, 1966 Hungary Oct. 1, 1986 Feb. 4, 1987 Mar. 6, 1987 Mauritius June 2, 1969 June 2, 1969 July 2, 1969 Iceland July 25, 1966 July 25, 1966 Oct. 14, 1966 Mexico Jan. 11, 2018 Indonesia Feb. 16, 1968 Sep. 28, 1968 Oct. 28, 1968 Micronesia, Federated States of June 24, 1993 June 24, 1993 July 24, 1993 Iraq Nov. 17, 2015 Nov. 17, 2015 Dec. 17, 2015 Moldova Aug. 12, 1992 May 5, 2011 June 4, 2011 Ireland Aug. 30, 1966 Apr. 7, 1981 May 7, 1981 Mongolia June 14, 1991 June 14, 1991 July 14, 1991 Israel June 16, 1980 June 22, 1983 July 22, 1983 Montenegro July 19, 2012 April 10, 2013 May 10, 2013 Italy Nov. 18, 1965 Mar. 29, 1971 Apr. 28, 1971 Morocco Oct. 11, 1965 May 11, 1967 June 10, 1967 Jamaica June 23, 1965 Sep. 9, 1966 Oct. 14, 1966 Mozambique Apr. 4, 1995 June 7, 1995 July 7, 1995 Japan Sep. 23, 1965 Aug. 17, 1967 Sep. 16, 1967 Namibia Oct. 26, 1998 Jordan July 14, 1972 Oct. 30, 1972 Nov. 29, 1972 Nauru April 12, 2016 April 12, 2016 May 12, 2016 Kazakhstan July 23, 1992 Sep. 21, 2000 Oct. 21, 2000 Nepal Sep. 28, 1965 Jan. 7, 1969 Feb. 6, 1969 Kenya May 24, 1966 Jan. 3, 1967 Feb. 2, 1967 Netherlands May 25, 1966 Sep. 14, 1966 Oct. 14, 1966 Korea, Rep. of Apr. 18, 1966 Feb. 21, 1967 Mar. 23, 1967 New Zealand Sep. 2, 1970 Apr. 2, 1980 May 2, 1980 Kosovo, Rep. of June 29, 2009 June 29, 2009 July 29, 2009 Nicaragua Feb. 4, 1994 Mar. 20, 1995 Apr. 19, 1995 Kuwait Feb. 9, 1978 Feb. 2, 1979 Mar. 4, 1979 Niger Aug. 23, 1965 Nov. 14, 1966 Dec. 14, 1966 Kyrgyz Republic June 9, 1995 Nigeria July 13, 1965 Aug. 23, 1965 Oct. 14, 1966 Latvia Aug. 8, 1997 Aug. 8, 1997 Sep. 7, 1997 Norway June 24, 1966 Aug. 16, 1967 Sep. 15, 1967 Lebanon Mar. 26, 2003 Mar. 26, 2003 Apr. 25, 2003 Oman May 5, 1995 July 24, 1995 Aug. 23, 1995 Lesotho Sep. 19, 1968 July 8, 1969 Aug. 7, 1969 Pakistan July 6, 1965 Sep. 15, 1966 Oct. 15, 1966 Liberia Sep. 3, 1965 June 16, 1970 July 16, 1970 Panama Nov. 22, 1995 Apr. 8, 1996 May 8, 1996 Lithuania July 6, 1992 July 6, 1992 Aug. 5, 1992 Papua New Guinea Oct. 20, 1978 Oct. 20, 1978 Nov. 19, 1978 Luxembourg Sep. 28, 1965 July 30, 1970 Aug. 29, 1970 Paraguay July 27, 1981 Jan. 7, 1983 Feb. 6, 1983 Macedonia, former Yugoslav Rep. of Sep. 16, 1998 Oct. 27, 1998 Nov. 26, 1998 Peru Sep. 4, 1991 Aug. 9, 1993 Sep. 8, 1993 18 ICS ID 2018 ANNUAL REPO RT 19 DEPOSIT OF ENTRY INTO FORCE DEPOSIT OF ENTRY INTO FORCE STATE SIGNATURE STATE SIGNATURE RATIFICATION OF CONVENTION RATIFICATION OF CONVENTION Philippines Sep. 26, 1978 Nov. 17, 1978 Dec. 17, 1978 Sudan Mar. 15, 1967 Apr. 9, 1973 May 9, 1973 Portugal Aug. 4, 1983 July 2, 1984 Aug. 1, 1984 Swaziland Nov. 3, 1970 June 14, 1971 July 14, 1971 Qatar Sep. 30, 2010 Dec. 21, 2010 Jan. 20, 2011 Sweden Sep. 25, 1965 Dec. 29, 1966 Jan. 28, 1967 Romania Sep. 6, 1974 Sep. 12, 1975 Oct. 12, 1975 Switzerland Sep. 22, 1967 May 15, 1968 June 14, 1968 Russian Federation June 16, 1992 Syria May 25, 2005 Jan. 25, 2006 Feb. 24, 2006 Rwanda Apr. 21, 1978 Oct. 15, 1979 Nov. 14, 1979 Tanzania Jan. 10, 1992 May 18, 1992 June 17, 1992 Samoa Feb. 3, 1978 Apr. 25, 1978 May 25, 1978 Thailand Dec. 6, 1985 San Marino Apr. 11, 2014 Apr. 18, 2015 May 18, 2015 Timor-Leste July 23, 2002 July 23, 2002 Aug. 22, 2002 Sao Tome and Principe Oct. 1, 1999 May 20, 2013 June 19, 2013 Togo Jan. 24, 1966 Aug. 11, 1967 Sep. 10, 1967 Saudi Arabia Sep. 28, 1979 May 8, 1980 June 7, 1980 Tonga May 1, 1989 Mar. 21, 1990 Apr. 20, 1990 Senegal Sep. 26, 1966 Apr. 21, 1967 May 21, 1967 Trinidad and Tobago Oct. 5, 1966 Jan. 3, 1967 Feb. 2, 1967 Serbia May 9, 2007 May 9, 2007 June 8, 2007 Tunisia May 5, 1965 June 22, 1966 Oct. 14, 1966 Seychelles Feb. 16, 1978 Mar. 20, 1978 Apr. 19, 1978 Turkey June 24, 1987 Mar. 3, 1989 Apr. 2, 1989 Sierra Leone Sep. 27, 1965 Aug. 2, 1966 Oct. 14, 1966 Turkmenistan Sep. 26, 1992 Sep. 26, 1992 Oct. 26, 1992 Singapore Feb. 2, 1968 Oct. 14, 1968 Nov. 13, 1968 Uganda June 7, 1966 June 7, 1966 Oct. 14, 1966 Slovak Republic Sep. 27, 1993 May 27, 1994 June 26, 1994 Ukraine Apr. 3, 1998 June 7, 2000 July 7, 2000 Slovenia Mar. 7, 1994 Mar. 7, 1994 Apr. 6, 1994 United Arab Emirates Dec. 23, 1981 Dec. 23, 1981 Jan. 22, 1982 Solomon Islands Nov. 12, 1979 Sep. 8, 1981 Oct. 8, 1981 United Kingdom of Great Britain May 26, 1965 Dec. 19, 1966 Jan. 18, 1967 Somalia Sep. 27, 1965 Feb. 29, 1968 Mar. 30, 1968 and Northern Ireland South Sudan Apr. 18, 2012 Apr. 18, 2012 May 18, 2012 United States of America Aug. 27, 1965 June 10, 1966 Oct. 14, 1966 Spain Mar. 21, 1994 Aug. 18, 1994 Sept. 17, 1994 Uruguay May 28, 1992 Aug. 9, 2000 Sep. 8, 2000 Sri Lanka Aug. 30, 1967 Oct. 12, 1967 Nov. 11, 1967 Uzbekistan Mar. 17, 1994 July 26, 1995 Aug. 25, 1995 St. Kitts & Nevis Oct. 14, 1994 Aug. 4, 1995 Sep. 3, 1995 Yemen, Republic of Oct. 28, 1997 Oct. 21, 2004 Nov. 20, 2004 St. Lucia June 4, 1984 June 4, 1984 July 4, 1984 Zambia June 17, 1970 June 17, 1970 July 17, 1970 St. Vincent and the Grenadines Aug. 7, 2001 Dec. 16, 2002 Jan. 15, 2003 Zimbabwe Mar. 25, 1991 May 20, 1994 June 19, 1994 20 ICS ID 2018 ANNUAL REPO RT 21 Chapter 2 PANELS OF ARBITRATORS AND OF CONCILIATORS DESIGNATIONS BY THE CHAIRMAN The ICSID Convention requires the Centre to maintain a Panel of Arbitrators and a Panel Panel of Arbitrators Panel of Conciliators of Conciliators. According to Article 13 of the Convention, each Contracting State is Designations effective September 16, 2017: Designations effective September 16, 2017: entitled to designate up to four persons to each Panel. The designees may be nationals Olufunke Adekoya, Stanimir A. Alexandrov, Yas Banifatemi, Mohamed Abdel Raouf, Phillip Bliss Aliker, Mariana H. C. Gabriel Bottini, Zachary Douglas, Lucinda A. Low, Gonstead, Tomoko Ishikawa, Barton Legum, Marie- or non-nationals of the designating State and are nominated for a renewable term of six Vaughan Lowe, Loretta Malintoppi, Ricardo Ramírez Andrée Ngwe, Rashda Rana, Glenn Sigurdson, Joseph years. In addition, up to 10 persons may be designated to each Panel by the Chairman Hernández, Yuejiao Zhang Tirado, Hannah Tümpel of the ICSID Administrative Council. 102 The Panels are an important component of the ICSID system of dispute settlement. DESIGNATIONS BY ICSID CONTRACTING STATES designations to When the Chairman of the Administrative Council is called upon to appoint ICSID Panels by arbitrators, conciliators or ad hoc Committee members under Articles 30, 38 or 52 ALBANIA Panel of Conciliators Panel of Conciliators 22 of the ICSID Convention, these appointees are drawn from the Panels. In addition, Panels of Arbitrators and of Designations effective Re-designation effective States parties often look to the list when making appointments. With a growing ICSID Conciliators September 4, 2017: March 26, 2018: Designations effective August 18, 2017: Jorge Carey Tagle, Carlos Eugenio José Antonio Rivas caseload, it has become increasingly important for States to make designations Yves Derains, George Kahale III, Jorquiera Malschafky, Alejandro Jara to the ICSID Panels. Cherie Blair, Toby Landau Puga, Gonzalo Biggs Panel of Conciliators 664 During FY2018, 22 ICSID Contracting States made 102 designations to the BENIN CHINA Designations effective March 26, 2018: Jorge Pinzón Sánchez, Margarita panel ICSID Panels: Albania, Benin, Chile, China, Colombia, Croatia, Egypt, Ghana, Panel of Arbitrators Designations effective April 11, 2018: Panel of Arbitrators Designations effective August 22, 2017: Sánchez nominees Guyana, Haiti, Jordan, Lebanon, Luxembourg, Mauritania, Oman, Pakistan, Paraguay, Peru, Syria, Timor-Leste, Turkey, and the United Arab Emirates. Désiré Aïhou, Rufino d’Almeida, Hu Li, Yuqing Zhang, Xuehua Wang, CROATIA Raymond Dossa, Luciano Hounkponou Teresa Cheng Panel of Arbitrators Designations effective August 2, 2017: Dr. Jim Yong Kim, Chairman of the Administrative Council, also designated 10 Panel of Conciliators Panel of Conciliators Petar Miladin, Ðuro Sessa, persons to the Panel of Arbitrators and 10 persons to the Panel of Conciliators, Designations effective April 11, 2018: Designations effective August 22, 2017: Hrvoje Sikirić, Zoran Vukić effective September 16, 2017. Razacki Amouda*, Flavien Bachabi, Huaqun Zeng, Song Lu, Wenhua Arthur Ballé, Abdoulaye Bio Tchane* Shan, Jingxia Shi Panel of Conciliators By the end of FY2018, there were 664 individuals on the ICSID Panels of Arbitrators and Designations effective August 2, 2017: CHILE COLOMBIA Damir Kontrec, Dubravka Akšamović, of Conciliators. A complete list of ICSID Panel nominees is available in an official ICSID Panel of Arbitrators Panel of Arbitrators Mladen Vukmir, Srdan Šimac document known as ICSID/10, available on the ICSID website. Re-designations effective Re-designation effective September 4, 2017: March 26, 2018: ARAB REPUBLIC OF EGYPT The names of designees to the ICSID Panels made in FY2018 are provided below. Andrés Jana Linetzky, Ricardo Carlos Urrutia Valenzuela Panel of Conciliators Vásquez Urra, Felipe Bulnes Serrano, Designations effective May 3, 2018: Enrique Barros Bourie Panel of Arbitrators Tarek Riad, Mohamed S. Amr, Designations effective March 26, 2018: Mahmoud Fawzy Martín Carrizosa Calle, Juan Carlos Henao, Eduardo Zuleta Jaramillo 22 ICS ID 2018 ANNUAL REPO RT 23 Chapter 3 CASELOAD TRENDS GHANA LEBANON PARAGUAY Panel of Arbitrators Panels of Arbitrators and of Conciliators Panel of Arbitrators Designations effective July 28, 2017: Designation effective February 2, 2018: Designation effective February 28, 2018: The primary mandate of ICSID is to provide facilities and services to support the Ace Anan Ankomah, Francis Botchway, Nayla Comair-Obeid Fernando Filártiga resolution of international investment disputes. ICSID administers cases under the Emmanuel Amofa ICSID Convention, the ICSID Additional Facility, and other rules such as the Arbitration LUXEMBOURG PERU Rules of the United Nations Commission on International Trade Law (UNCITRAL Panel of Conciliators Panels of Arbitrators and of Conciliators Panels of Arbitrators and of Conciliators Arbitration Rules). ICSID also offers a full range of related services, including acting as an Designations effective July 28, 2017: Re-designations effective Designations effective appointing authority, naming consolidation tribunals under certain treaties, deciding Mangowa A. Ghanney, Mercy Louise November 13, 2017: November 1, 2017: party challenges of arbitrators or conciliators, administering State-State disputes, and Ohene, Vincent Kizito Beyuo, Philippe Dupont, Steve Jacoby, Fernando Cantuarias Salaverry, acting as the registry for dispute settlement under treaties. In addition, ICSID helps Kow Essuman Marc Seimetz, Alex Schmitt Carlos Cárdenas Quirós, Fernando Piérola Castro, Elvira Martínez Coco parties to resolve investment disputes through mediation. GUYANA MAURITANIA Panels of Arbitrators and of Conciliators Panels of Arbitrators and of Conciliators SYRIAN ARAB REPUBLIC Designations effective Designation effective Panels of Arbitrators and of Conciliators New ICSID Cases Registered November 10, 2017: November 28, 2017: Designations effective May 23, 2018: Payam Akhavan, Duke E. Pollard Jemal Ould Agatt Georges Affaki, Mohammad Fifty-seven new ICSID cases were registered in FY2018. This is a 16% increase over the Tareq Alkhen number of cases registered last year (49), and constitutes the highest number of cases HAITI OMAN ever registered at ICSID in a single fiscal year. Fifty-six of the new cases were arbitration Panel of Arbitrators Panel of Arbitrators TIMOR-LESTE proceedings and one was a conciliation case. The majority of these new cases were Designations effective June 29, 2018: Designations effective October 16, 2017: Panel of Arbitrators instituted under the ICSID Convention (51 cases), and six arbitrations were instituted Bernard H. Gousse, Daniel Jean, Ahmed Ali Al Ajmi, Moosa Salim Al Azri Designation effective October 19, 2017: under the Additional Facility Rules. David Lafortune, Nancy Thevenin Timothy J. Feighery Panel of Conciliators CASES REGISTERED UNDER THE ICSID CONVENTION AND Panel of Conciliators Designations effective October 16, 2017: TURKEY ADDITIONAL FACILITY RULES IN FY2018 Designations effective June 29, 2018: Hamed Sulaiman Al Wahaibi, Panels of Arbitrators and of Conciliators 60 Aline Nathalie W. Akam Cyprien, Salim Humaid Al Khusaibi Designations effective January 10, 2018: Rose-Berthe Augustin, Patrice Ziya Akıncı, Fatma Aslı Başgöz, 50 50 Laventure, Ketty Luzincourt PAKISTAN Arslan Kaya, Cemal Şanli Panel of Arbitrators 40 JORDAN Designations effective UNITED ARAB EMIRATES Panel of Arbitrators December 6, 2017: Panel of Arbitrators 30 Designations effective Abid Hassan Minto, Makhdoom Ali Designation effective March 12, 2018: 20 November 1, 2017: Khan, Nasir-ul-Mulk*, Nudrat Piracha Habib Al Mulla Salaheddin Al-Bashir*, Hisham Al-Tal*, 10 Sharif Ali Zu’bi*, Ayman Odeh* Panel of Conciliators 1 6 Designations effective 0 ICSID Convention ICSID Convention ICSID Additional Facility Panel of Conciliators December 6, 2017: Arbitration Cases Conciliation Cases Arbitration Cases Designations effective Farrukh Karim Qureshi, Khilji Arif November 1, 2017: Hussain*, Shakil Hadi*, Tassadiq Omar Al Jazi*, Tariq Hamouri*, Hussain Jilani* Mahasen Jaghoub*, Ahmad Ziadat* *Pending acceptance 24 ICS ID 2018 ANNUAL REPO RT 25 The Centre administered a record of 279 ICSID cases over the past fiscal year. This is BASIS OF CONSENT INVOKED TO ESTABLISH JURISDICTION IN CASES REGISTERED equal to 41% of ICSID’s lifelong caseload, which stands at 676 cases as of June 30, 2018. IN FY2018 UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY RULES Two-hundred-and-forty-nine cases were pending as at June 30, 2018. This is more than double the number of cases pending compared to June 2010 (123 cases pending). U.S.-Colombia Trade 2% 2% Eurasian Economic Union Treaty Promotion Agreement 2% Eurasian Investment Agreement ICSID CASES ADMINISTERED BY THE SECRETARIAT (FY2003–FY2018) Canada-Colombia Free Trade Agreement 3% Energy Charter Treaty 8% 300 North American Free 279 Trade Agreement 2% 258 Investment Law 247 5% 250 243 of the Host-State 209 200 195 Investment Contract 172 between the Investor 14% 60% Bilateral Investment 154 154 159 and the Host-State Treaty 150 145 130 118 Dominican Republic- United States-Central 2% 103 100 America Free Trade Agreement 85 63 50 The chart above identifies the instruments invoked by the requesting parties in ICSID 0 cases registered in the past fiscal year. There is an increasing variety of treaties 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 invoked in these cases. The majority (38 cases) asserted ICSID jurisdiction on the FISCAL YEAR basis of a bilateral investment treaty. Five cases were brought on the basis of the Energy Charter Treaty. Nine cases relied on investment contracts between the investor and the host-State, and four cases were based on investment laws. In two Basis of Consent to ICSID Proceedings cases, ICSID jurisdiction was asserted on the basis of the Canada-Colombia Free Trade Agreement. In one case, the investor sought to establish ICSID jurisdiction on Arbitration and conciliation under the ICSID Convention and Additional Facility Rules the basis of the North American Free Trade Agreement and in another, the investor are entirely voluntary. The basis of the parties’ consent to ICSID jurisdiction can be relied on the Dominican Republic-Central America-Free Trade Agreement. found in a variety of sources, including investment laws, contracts, and bilateral or multilateral treaties. For the first time, investors invoked ICSID dispute settlement proceedings under the U.S.-Colombia Trade Promotion Agreement (one case); the Eurasian Investment Agreement (one case); and the Eurasian Economic Union Treaty (one case). Six cases relied on two bases for jurisdiction. 26 ICS ID 2018 ANNUAL REPO RT 27 State Parties to ICSID Proceedings Registered GEOGRAPHIC DISTRIBUTION OF CASES REGISTERED IN FY2018 UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY RULES in FY2018 State parties involved in disputes registered at ICSID in FY2018 remained diverse. They included States from every geographic region of the world. The greatest number of newly registered cases involved States in Eastern Europe and Central Asia (40%). The number of cases brought against States in South America decreased from 21% to 12%. The number Belarus 2 1 Romania of new cases brought against States in Western Europe also decreased from 14% to 4%. 2 Turkey Latvia 1 The number of States named as Respondents from the Middle East and North Africa region Hungary 1 Georgia 2 remained steady at 14% of newly registered cases. States in the South and East Asia and Croatia 4 1 Azerbaijan Italy the Pacific region represented 5% of States named in cases in FY2018. One State from the 1 1 Kazakhstan Central America and Caribbean region was involved in a new case in FY2018. Participation Spain 1 1 Uzbekistan 1 Armenia 1 Turkmenistan of States from Sub-Saharan Africa increased from 4% in FY2017 to 19% in FY2018. Morocco 1 1 Kuwait Bangladesh Power North American State parties were involved in 4% of new cases, as in the previous year. Mexico 2 Algeria 1 1 Development Board 3 Saudi Arabia 1 Vietnam Nicaragua 1 2 Venezuela 2 Egypt GEOGRAPHIC DISTRIBUTION OF NEW CASES REGISTERED IN FY2018 Colombia 4 UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY RULES, BY REGION 4 1 Rwanda Gambia 1 1 Tanzania North America (Canada, Mexico & U.S.) Peru 1 Togo 1 Central America & the Caribbean 2% 4% 1 1 Gabon Côte d’Ivoire Madagascar South America 12% 1 Mozambique 1 Papua New Guinea South & East Asia 5% 40% Eastern Europe & & the Pacific Central Asia Serbia 1 Montenegro 1 1 Bulgaria Middle East & 14% Kosovo 1 1 Macedonia, FYR North Africa 4% Western Europe RESPONDENT STATE IN NUMBER OF NEW CASES Sub-Saharan Africa 19% Twenty-three cases were brought against 17 different States from Eastern Europe and Central Asia. Eleven cases were initiated against eight different States from Sub-Saharan Africa. Eight cases were initiated against five different States from the Middle East and North Africa region and seven cases involved three States in South America. Three cases were initiated against three different States in the South and East Asia and the Pacific region. Two States in Western Europe were named as the respondent in two new arbitrations, and two cases were brought against one State in North America. One further case involved a State in Central America and the Caribbean. 28 ICS ID 2018 ANNUAL REPO RT 29 Economic Sectors Involved in New Cases Post-Award Remedy Applications The investment dispute settlement proceedings registered in FY2018 involved a variety In FY2018, the Centre registered 22 applications and requests for post-award remedies of economic sectors. Cases in the oil, gas and mining sector increased from 10% in under the ICSID Convention and Additional Facility Rules. These proceedings included FY2017 to 21% in FY2018; however, they remain under the 37% all-time high mark in two requests for rectification of an award, two requests for revision of an award and FY2010. The electric power and other energy sector remained steady at 16%. The one request for a tribunal to supplement its award. Seventeen annulment applications finance sector was involved in 12% of the cases registered in FY2018, followed by cases were registered during the fiscal year, which largely reflects the increased number of in the construction sector (11% of newly registered cases). Another 11% of new cases awards rendered in previous years. Ten such applications were brought by the involved a variety of industries, such as textile, metal and railcar manufacturing. Respondent/State and seven annulment proceedings were initiated by the Claimant/ Seven-percent of cases involved the tourism sector. The information and investor in the underlying arbitration. communication, and the services and trade sectors were represented in equal parts (5% each). The agriculture, fishing and forestry sector was involved in 6% of cases, and 4% of NUMBER OF ANNULMENT APPLICATIONS REGISTERED BY ICSID (FY2008–FY2018) cases related to water, sanitation and flood protection. Two-percent of cases related to 20 the transportation sector. 17 DISTRIBUTION OF CASES REGISTERED IN FY2018 UNDER THE ICSID CONVENTION 15 AND ADDITIONAL FACILITY RULES, BY ECONOMIC SECTOR 11 13 12 10 10 9 Agriculture, Fishing & Forestry 8 8 8 6% 6 5 Information & Communication 5% 21% Oil, Gas & Mining 3 Finance 12% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 FISCAL YEAR Services & Trade 5% Transportation 2% 16% Electric Power & Other Energy Constitution of Commissions, Tribunals and Other Industry 11% Ad Hoc Committees in ICSID Cases 4% Water, Sanitation & Flood Protection 7% 11% In FY2018, a record 263 appointments were made to ICSID commissions, tribunals or ad Tourism Construction hoc committees, more than double the number of appointments made in ICSID cases 10 years ago. Fifty-eight tribunals in original arbitrations, one conciliation commission and 18 ad hoc committees were constituted. In addition, two tribunals were constituted in two revision proceedings. Eighteen further tribunals and eight ad hoc Committees were reconstituted in proceedings before the Centre during the fiscal year. 30 ICS ID 2018 ANNUAL REPO RT 31 An increasingly diverse group of arbitrators, conciliators and ad hoc committee STATE OF NATIONALITY OF ARBITRATORS, CONCILIATORS AND AD HOC COMMITTEE MEMBERS APPOINTED IN members were appointed in FY2018: 143 different individuals were named in 91 cases to FY2018 IN CASES REGISTERED UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY RULES serve on ICSID tribunals, commissions and committees. Forty-two different nationalities Argentina/Spain were represented. Seventeen-percent of the appointments in FY2018 involved persons Canada/Lebanon who served for the first time on an ICSID tribunal, commission or ad hoc committee. Czech Republic Dominican Republic Forty-percent of the first-time appointees were nationals from low or middle-income France/Lebanon/Ecuador Germany/Austria economies. Twenty-four percent of the appointments in FY2018 were women, up from Ireland/United States of America 14% in FY2017. Japan Morocco 1 Pakistan Peru/Switzerland In FY2018, two-thirds of appointments were made either by the parties or by the Portugal party-appointed arbitrators (65%), and one-third (35%) were made by ICSID, based on Somalia Switzerland/Ireland an agreement of the parties or the applicable default provisions. In total, the Centre United Kingdom/Italy United Kingdom/Pakistan acted as appointing authority 91 times in FY2018, almost double the number of times United States of America/United Kingdom as in FY2017, and appointed 63 individuals of 33 different nationalities. About 37% of Australia/Ireland Bahamas the appointments by ICSID involved nationals of low or middle-income economies, a Canada/New Zealand France/Sweden 60% increase over the prior year, and 30% of ICSID appointees were women. 2 STATE OF NATIONALITY OF APPOINTEE Guatemala Korea, Rep. of ARBITRATORS, CONCILIATORS AND AD HOC COMMITTEE MEMBERS APPOINTED IN Netherlands New Zealand/United Kingdom FY2018 IN CASES REGISTERED UNDER THE ICSID CONVENTION AND ADDITIONAL Paraguay FACILITY RULES — DISTRIBUTION OF APPOINTMENTS BY ICSID AND BY THE PARTIES Argentina/United States of America (OR PARTY-APPOINTED ARBITRATORS), BY GEOGRAPHIC REGION Austria Brazil China 100 Costa Rica Egypt, Arab Rep. of 85 France/Switzerland 3 80 Iran, Islamic Rep. of/France Ireland/Germany Nigeria 60 Slovak Republic United Kingdom/France 40 United Kingdom/Nigeria Colombia 4 32 35 Peru 20 15 19 16 14 Chile New Zealand 5 13 9 5 2 3 6 6 1 2 Singapore Australia 7 0 Canada North South Central Middle East Sub-Saharan South & Eastern Europe Western Germany 9 America America America & Africa East Asia & Europe (Canada, & the North Africa & the Pacific Central Asia Italy Mexico, & U.S.) Caribbean Mexico Spain Appointments by ICSID Appointments by the Parties (or Party-appointed Arbitrators) Argentina 10 Belgium 13 Bulgaria Switzerland 14 United Kingdom United States of America 20 France 27 NUMBER OF APPOINTMENTS 32 ICS ID 2018 ANNUAL REPO RT 33 Challenges to Arbitrators, Experts and Counsel Of the 24 cases decided by tribunals, six awards declined jurisdiction, three tribunals rejected all of the investors’ claims, and 15 awards upheld the investors’ claims in part or Parties to ICSID proceedings filed 18 proposals for disqualification of arbitrators during in full. the fiscal year, all of which were subsequently resolved. One arbitrator resigned ARBITRATION PROCEEDINGS UNDER THE ICSID CONVENTION AND ADDITIONAL following the filing of the proposed disqualification. Sixteen proposals were rejected and FACILITY RULES IN FY2018 — TRIBUNAL RULINGS, SETTLEMENT & one challenge was upheld. In one case, a party filed a proposal for disqualification of the DISCONTINUANCES other party’s expert which was subsequently rejected by the Tribunal. The proposed disqualification of an expert appointed by a tribunal was also rejected. In a further case, a party sought to disqualify the other party’s counsel, which was also rejected by the Proceeding discontinued at 19.0% the request of both parties presiding ad hoc Committee. Proceeding discontinued at the 2.7% request of one party Cases Concluded in FY2018 Award upholding claims 40.5% in part or in full Settlement agreement 2.7% embodied in an award at parties’ request During the fiscal year, the Centre continued to encourage practices that reduce the time 8.1% Proceeding discontinued for lack of payment of and cost of arbitration. These include: (i) requiring tribunals and ad hoc committees to the required advances report to the parties on the timing of outstanding decisions or awards; (ii) holding tribunal 2.7% Proceeding discontinued for failure of parties to act consultations immediately prior to hearings and in-person deliberations immediately after hearings; and (iii) establishing a budget at the outset of a case and updating Award dismissing all claims 8.1% 16.2% Award declining jurisdiction parties on costs incurred. Forty-six proceedings concluded during the fiscal year. Thirty-seven proceedings were Of the 13 arbitrations that were discontinued, seven cases were discontinued following a arbitrations, and nine were post-award proceedings. request by both parties, three cases were discontinued for lack of payment of the required advances, one was discontinued at the request of one party, one arbitration In the 37 concluded arbitrations, 24 disputes were decided by a tribunal, and 13 cases was discontinued for failure of the parties to act, and in one further case the parties’ were settled or otherwise discontinued. settlement agreement was embodied in an award. ARBITRATION PROCEEDINGS UNDER THE ICSID CONVENTION AND ADDITIONAL FACILITY RULES CONCLUDED IN FY2018 — OUTCOMES During FY2018, nine post-award proceedings were concluded. This includes four rectification proceedings and five annulments. Four ad hoc Committees rejected the application for annulment and one annulment proceeding was discontinued at the request of both parties. Dispute settled or 35% proceeding otherwise   discontinued 65% Dispute decided by Tribunal 34 ICS ID 2018 ANNUAL REPO RT 35 ANNULMENT PROCEEDINGS UNDER THE ICSID CONVENTION AWARDS RENDERED AND OUTCOMES IN ANNULMENT PROCEEDINGS UNDER THE ICSID CONVENTION, BY DECADE 200 605 Convention Arbitrations Registered 158 150 285 Convention Awards Rendered 121 Annulment Proceedings Instituted 96 100 44 Decisions Refusing Annulment 50 30 18 13 8 18 18 Proceedings Discontinued 9 4 1 3 1 1 5 5 0 0 0 0 0 0 Awards Annulled 1971–1980 1981–1990 1991–2000 2001–2010 2011– 17 (5 in full + 12 in part) Number of Convention awards rendered Number of decisions rejecting the application for annulment Number of decisions annulling the award in part or in full Number of annulment proceedings discontinued Generally, the rate of annulment remains low. The annulment rate for the years 1971–2000 is 13%, the rate for the decade 2001–2010 is 8%, and the rate of annulment for the period since January 2011 is 3%. Since January 2011, 158 Convention awards Matters of Procedure in ICSID Cases in FY2018 were rendered, 80 annulment proceedings were instituted and five awards were partially annulled. At the same time, the number of discontinued annulment proceedings ICSID administered a record number of 279 cases in FY2018. As at June 30, 2018, 249 has increased over the past years, with a total of 18 discontinuances since 2011. cases were pending, which is the highest number of pending cases in ICSID’s history, with a noticeable increase over FY2017. One-hundred and fifty-eight of ICSID administered cases were conducted in English (66%), 12 in Spanish (5%) and six in French (2%), which are the three official languages of the Centre. Sixty-five proceedings were conducted simultaneously in two languages (27%), with the English-Spanish combination continuing to be the most common. 36 ICS ID 2018 ANNUAL REPO RT 37 CASES ADMINISTERED IN FY2018 UNDER THE ICSID CONVENTION AND ADDITIONAL During the fiscal year, 25 awards and 454 decisions and procedural orders were issued FACILITY RULES, BY PROCEDURAL LANGUAGE(S) by tribunals and ad hoc committees. The Centre publishes these rulings on its website, with the parties’ permission. Where a party withheld permission to publish awards, the 200 Centre published excerpts of the legal reasoning of the tribunal or ad hoc committee, as 158 required by the Rules, or included bibliographic references to rulings made public by 150 other sources on ICSID’s website and in its publications. 100 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 58 50 appointing each arbitrator, counsel representing the parties, and the outcome of 6 12 6 1 proceedings can be found on the ICSID website at www.worldbank.org/icsid. 0 English French Spanish English & English & English & Spanish French Portuguese In the course of the fiscal year, 169 sessions or hearings were held in the cases administered by ICSID. These were held at the seat of the Centre in Washington, D.C., at the World Bank offices in Paris, or at other venues as agreed by the parties. Where suitable, hearings and sessions were conducted by telephone or video conference; more than half (57%) of all sessions and hearings in FY2018 were held in this manner. HEARING VENUES IN ICSID PROCEEDINGS 19% Paris 14% Washington, D.C. Telephone / Video Conference 57% 5% London 5% Other Venues 38 ICS ID 2018 ANNUAL REPO RT 39 Spotlight on the ICSID Rules Amendment Process Chapter 4 INSTITUTIONAL DEVELOPMENTS ICSID is amending the ICSID Convention Rules and Regulations, the Additional Facility Rules, the Administrative and Financial Regulations, and the Institution Rules. These are the most widely used procedural rules in investor-State dispute settlement. ICSID’s primary mandate is to provide first-class services and facilities to support the resolution of international investment disputes. To complement this function, ICSID provides capacity building to Member States, shares information with the public and This is the fourth update to the ICSID rules, and is expected to result in the most private sector to promote greater awareness of investor-State dispute settlement comprehensive changes to date. (ISDS), and collaborates with a range of organizations. A working paper published in August 2018 proposes changes to the rules, and forms the In FY2018, ICSID engaged widely with Member States, intergovernmental and non- governmental organizations, investment law professionals, academics and journalists. basis for further discussion. The proposed rules have been re-drafted in plain, gender- The Secretariat also partnered with the other institutions that comprise the World Bank neutral language, and numerous measures are suggested to reduce the time and cost of Group on events, training and public outreach. proceedings. For example, all filing would be electronic and new timelines are introduced. In addition, parties would have the option to elect an expedited arbitration process. The Centre continued to expand its network of institutional cooperation agreements, ensuring that ICSID users have access to facilities around the world. Changes are also being proposed to the rules on the appointment and disqualification of arbitrators; third-party funding; security for costs; consolidation of cases; transparency and non-disputing party participation. An entirely new set of rules for mediation are also proposed. The process has involved extensive Over consultation with ICSID’s Member States and the public. As of June 30 30, 2018, ICSID had received input from over 30 States and 20 States and organizations and individuals. 20 organizations & Ultimately, a package of amendments will be presented to the individuals submitted preliminary ICSID Administrative Council—the Centre’s governing body—in suggestions. 2019 or 2020. Members of the ICSID Secretariat. © ICSID 40 ICS ID 2018 ANNUAL REPO RT 41 Membership of ICSID Cooperation with Other Intergovernmental Organizations The ICSID Secretariat maintains an ongoing dialogue with Member States on a variety of institutional matters. Through periodic training and meetings with State delegations, A number of intergovernmental processes have been established to facilitate dialogue ICSID keeps Member States informed of developments at the Centre, and ensures that on ISDS. These fora provide States and other stakeholders an opportunity to discuss the representatives on the Administrative Council have the information needed to make effectiveness of dispute settlement mechanisms. ICSID contributes to these discussions governance decisions. in important ways; for example, sharing its knowledge and extensive experience. In FY2018, the ICSID Secretary-General met with numerous government officials at ICSID’s UNCITRAL WORKING GROUP III headquarters in Washington, D.C. On September 29, 2017, ICSID held its third annual ICSID participated in the first two meetings of UNCITRAL Working Group III and began joint briefing for members of the Washington, D.C.-based diplomatic corps, which was attended work with the UNCITRAL Secretariat to prepare a background paper overviewing arbitrator by more than 40 ambassadors, ministers, counsellors, first secretaries, and advisors. codes of conduct. ICSID staff also travelled extensively to meet with Member State officials. In FY2018, meetings and events were held with State officials in South Korea (November 2017), In July 2017, the United Nations Commission on International Trade Law (UNCITRAL) Haiti (January 2018), Australia (April 2018), Guyana (April 2018), and Israel (May 2018). tasked Working Group III to work on the possible reform of ISDS. Specifically, UNCITRAL asked the Working Group to identify and consider concerns regarding ISDS; consider Two important functions played by Member States include designating qualified candidates whether reform was desirable in light of any identified concerns; and if the Working to the ICSID Panels of Arbitrators and of Conciliators, and designating competent Group were to conclude that reform was desirable, develop any relevant solutions to be courts or authorities for recognition and enforcement of ICSID Convention awards. recommended to the Commission. ICSID participated in the first session of the Working Group III, held on November 27–December 1, 2017 in Vienna, as well as in the subsequent ICSID encourages Member States to designate their full complement of four arbitrators session in New York on April 23-27, 2018. and four conciliators and to fill vacancies as they arise. To assist in that effort, the Secretariat published a guidance note in February 2018 on “Considerations for States in UNCTAD Designating Arbitrators and Conciliators to the ICSID Panels”. The note addresses the ICSID briefed participants on its rules amendment project at a high-level conference types of qualifications that Member States may look for in potential candidates, and organized by UNCTAD. how States can expand diversity on the lists. Earlier guidance notes have focused on dispute avoidance and management, including the steps Member States can take to The United Nations Conference on Trade and Development (UNCTAD) provides a forum prepare for ICSID cases. The Centre also maintains and publishes a list that indicates for a multi-stakeholder dialogue on international investment law and policy. UNCTAD’s actions taken in accordance with the ICSID Convention by each Member State. This list “Reform Package for the International Investment Regime” draws on global expertise to is an official ICSID document known as ICSID/8 which is revised and updated periodically. propose systematic, sustainable development-oriented reforms to international As of FY2018, 93 Contracting States have made such designations. The full list of investment agreements (IIAs). In October 2017, ICSID participated in UNCTAD’s Measures taken by Contracting States for the purposes of the ICSID Convention is High-Level IIA Conference, updating participants on the ICSID rules amendment project. available on the ICSID website. 42 ICS ID 2018 ANNUAL REPO RT 43 List of Cooperation Agreements — Australian Commercial Disputes Centre; OECD Training and Capacity Building — Australian Centre for ICSID contributed to an OECD consultation on appointing authorities in investment arbitration. International Commercial Arbitration; Over the last ten years ICSID has developed a variety of training courses to build Governments and other stakeholders convened for the Organisation for Economic capacity in and awareness of investment dispute settlement. These demand-driven — British Virgin Islands Co-operation and Development (OECD) Freedom of investment Roundtable, an services are tailored to the needs of the participants. Options include introductory International Arbitration Centre; intergovernmental forum hosted by the OECD Investment Committee. The Roundtable courses on ICSID practice and procedure, as well as more targeted training in areas such — Cairo Regional Centre for International Commercial has focused on ISDS reform since 2011, and ICSID has contributed to the discussions. as dispute avoidance or mediation. Arbitration; ICSID participated in the October 2017 meeting at OECD headquarters in Paris, and also — Center for Arbitration and provided written comments for the OECD’s consultation paper on appointing authorities In FY2018, ICSID ‘101’ courses were held in Rome, Italy; Beijing, China; Singapore; Lisbon, Conciliation of the Bogota in investor-State disputes.   Portugal; Georgetown, Guyana; Jerusalem, Israel; and Washington, D.C., United States Chamber of Commerce; of America. ICSID also provided training on ICSID jurisdiction in Santiago, Chile, and on — China International Economic and investor-State mediation in Washington, D.C., and Paris, France. Trade Arbitration Commission; Institutional Cooperation Agreements — Dublin Dispute Resolution Centre; Following a recent mediation training course, ICSID interviewed the trainers and asked — German Institution of Arbitration; them to outline some of the techniques used in mediation and the considerations — Gulf Cooperation Council parties should bear in mind when considering mediation. These interviews were Commercial Arbitration Centre; published on ICSID’s website and are freely available for viewing online. — Hong Kong International Arbitration Centre; — International Centre for Dispute Resolution; — International Chamber of Commerce; — Kuala Lumpur Regional Centre for Arbitration; — Maxwell Chambers, Singapore; — Permanent Court of Arbitration; — Regional Centre for International ICSID Secretary-General Meg Kinnear and SCIA President Xiaochun Liu sign a cooperation agreement. © ICSID Commercial Arbitration, Lagos; — Seoul International Dispute ICSID offers disputing parties the option of holding hearings in any mutually agreed— Resolution Center; upon location, and has developed partnerships with numerous arbitration institutions to — Shenzhen Court of International Arbitration; and complement its ability to offer hearings in World Bank facilities around the world. — Singapore International Arbitration Centre. In FY2018, ICSID entered into cooperation agreements with the British Virgin Islands International Arbitration Centre and the Shenzhen Court of International Arbitration. As of June 30, 2018, ICSID had 19 cooperation agreements with other arbitration institutions.  Instructors and participants of a training course for mediators in investor-State disputes. Paris, France. © ICSID 44 ICS ID 2018 ANNUAL REPO RT 45 Conferences and Events EVENT HIGHLIGHTS FROM FY2018 ICSID organized or participated in over 50 conferences and events in more than — October 24–26, 2017: ICSID held a workshop at the 7th Investment Treaty 20 countries in FY2018. Increasingly, ICSID is holding events online, allowing a Arbitration Conference in Prague, updating participants on the latest developments greater number of participants from around the world to participate free-of-charge. at ICSID and the rules amendment process. DIALOGUE ON DISPUTE SETTLEMENT PROCEDURE — October 27, 2017: ICSID participated in the 1st Mauritius Conference on International The evolution of international investment law generally, and dispute settlement Investment Law and International Arbitration, introducing ICSID and highlighting procedures in particular, is an ongoing topic of discussion. A variety of reforms recent caseload trends. are underway, including to institutional rules of procedure. Chief among these is Me Panelists discuss proportionality in — November 10–13, 2017: As part of the Seoul Alternative Dispute Resolution Festival, g ICSID’s process of amending its rules. ICSID staff spoke at a wide variety of events investor-State arbitration in Paris on Ki ne n ar and fora to inform States and other interested stakeholders of the amendment September 18, 2017. © ICSID ICSID organized a workshop on investor-State dispute settlement. pr e se n tin g i n I s ra e l © I C SI D process and encourage their input. — December 1, 2017: Each year ICSID holds a colloquium with the International At the 2018 ASIL Annual Meeting, ICSID Secretary-General Meg Kinnear delivered the Chamber of Commerce’s International Court of Arbitration and the American Charles N. Brower Lecture on International Dispute Resolution. The Secretary-General’s Arbitration Association’s International Center for Dispute Resolution. The 34th lecture emphasized the importance of fostering engagement and building consensus in Annual Joint Colloquium on International Arbitration, held in New York, focused on the process of amending the ICSID rules. She previewed the types of changes to the the advances made and challenges ahead in the field of international arbitration. rules that were under consideration, and noted that these provide an opportunity for tangible improvements to dispute settlement procedures in the very near-term. Updates — April 12, 2018: At a public event organized by Australia’s Department of Foreign on the ICSID rules amendment process were given in other locations throughout Affairs and International Trade, Secretary-General Meg Kinnear spoke about ICSID’s FY2018, including in South Africa, Mauritius, Canada, Australia, Spain and Chile. role in international investment dispute settlement and the factors behind the Centre’s expanding membership and caseload. DISCUSSING DIVERSITY Improving diversity and gender balance in international investment dispute settlement — April 16, 2018: Meg Kinnear joined a panel on reforming substantive obligations in is a priority that ICSID staff spoke about on a number of occasions. The American Society treaties and conditions of access to investment arbitration at the International Meg Kinnear joins a panel at iLaw2017 in Miami of International Law (ASIL) Women in International Law Interest Group held a panel on February 16, 2018. © ICSID Council for Commercial Arbitration’s 2018 Congress in Sydney. discussion on improving the representation of women in arbitration on January 10, 2018. In his role as a conference commentator, ICSID Deputy Secretary-General Gonzalo Flores — May 3–4, 2018: The 1st ITA-ALARB Joint Conference on International Arbitration, highlighted the steps that ICSID is taking to promote balanced representation of women held in Santiago, Chile, focused on arbitrating disputes in the natural resources and men on ICSID tribunals and committees. Secretary-General Meg Kinnear addressed sector. ICSID Team Leader Mairée Urain-Bidegain gave a presentation on the issues the topic of women’s participation in investment arbitration at an event organized by at stake in investment cases involving natural resources. Women in Leadership and Australia’s Department of Foreign Affairs and Trade Lawyers Network, held in Canberra in April 2018. ICSID counsel Lindsay Gastrell also contributed to a panel on gender and racial diversity at the American Bar Association’s Annual Conference of the Section of International Law in New York in April 2018. 46 ICS ID 2018 ANNUAL REPO RT 47 62 of the Spotlight on Diversity appointments involved women (24%), up from ICSID contributes to diversity through different practices, 14% in FY17. including by: • These appointments The individuals appointed to decide cases at ICSID increasingly involved 29 Proposing qualified nominees from different States, reflect the diversity of the participants in ISDS. individuals. first-time nominees and female nominees when parties ask the Secretary-General or Chairman to make an In FY18, 263 appointments were made to Commissions, appointment; As a global leader in ISDS, ICSID plays a Tribunals and ad hoc Committees in 91 cases. These appointments were the most diverse to date in terms • Encouraging Member States to appoint qualified conciliators and arbitrators to Panels with diversity in mind; and key role in advancing diversity and inclusion in of nationality, gender, and first-time appointees. • Publishing submissions by a variety of authors, with a focus on expanding the field and showcasing new contributors in ICSID’s flagship journal—the ICSID Review. the field. —Meg Kinnear, ICSID Secretary-General ICSID SECRETARIAT 75% women across all levels and roles The conciliators and arbitrators appointed had 42 ICSID REVIEW — 50 authors published in FY18 issues, of which 34% were women different nationalities, up from 19% women on Panels named by Member States 33 in FY17. PANELS OF ARBITRATORS & OF CONCILIATORS APPOINTMENTS OF CONCILIATORS AND ARBITRATORS 50% Gender parity in 20 new designations by Chairman 100 94% 92% 80 76% GENDER DIVERSITY IN FIRST-TIME APPOINTMENTS 70% 65% 60 263 Total Appointments 40 35% 45 of the 30% 24% appointments 20 involved first-time 6% 8% 0 appointees (17%), Appointed Appointed by Appointed by Appointed by Appointed by by ICSID Claimant/ Respondent/ parties co-arbitrators up from 13% in (35%) Investor State jointly (5%) (25%) (25%) (11%) FY17. % Women % Men 45 14 First-time Appointments 31 Women (31%) Men (69%) 48 ICS ID 2018 ANNUAL REPO RT 49 Transparency Initiative Publications ICSID continued to publish procedural details, awards, decisions and orders in ICSID ICSID publications build knowledge and awareness of international investment law and cases on the ICSID website. The Centre also publishes excerpts of the legal reasoning in dispute settlement across a range of audiences. an award where a party does not consent to publishing the full award. During FY2018, ICSID published over 172 awards, decisions, and orders in cases concluded in 2017 and ICSID REVIEW early 2018. This ongoing initiative enhances public understanding of ICSID proceedings The ICSID Review is a specialized legal periodical devoted exclusively to foreign investment and investment law, and offers free access to ICSID case law. law and international investment dispute settlement. It offers legal and business professionals an up-to-date review of the field and includes articles, case comments, PUBLIC HEARING BROADCASTS documents, and book reviews on the law and practice relating to foreign investments as The Centre continued to offer parties the option to webcast proceedings in cases well as the procedural and substantive law governing investment dispute resolution. administered by ICSID. In FY2018, ICSID broadcasted hearings in: In FY2018, the ICSID Review published three issues, covering a range of topics, — Mobil Investments Canada Inc. v. Canada (ICSID Case No. ARB/15/5), held on July 24 developments in cases, and newly released books from prominent authors. Two issues and 28, 2017 examined current themes of interest in depth. Volume 32(3) showcased a collection of articles on an appellate body in ISDS, prepared with the National University of — Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc. v. Republic of Panama Singapore Centre for International Law. Volume 33(1) featured a special focus section on ICSID’s YouTube channel. (ICSID Case No. ARB/16/34), held on September 3–6, 2017 evaluating and enhancing outcomes of investment treaties resulting from a recent The ICSID Review. OECD Conference on the topic. Vol. 33(2) included case comments and articles on — Italba Corporation v. Oriental Republic of Uruguay (ICSID Case No. ARB/16/9), held on © ICSID various contemporary topics. Future issues will continue to provide quality analysis for November 13–21, 2017 professionals in the field, making the journal an essential component of any library on international investment law and dispute settlement. — Lone Pine Resources Inc. v. Canada (ICSID Case No. UNCT/15/2), held on October 2–13, 2017 and November 24, 2017 ICSID CASELOAD – STATISTICS The ICSID Caseload – Statistics contains a profile of the ICSID caseload since the first — BSG Resources Limited, BSG Resources (Guinea) Limited and BSG Resources (Guinea) case was registered in 1972. ICSID has hosted the majority of all known international SARL v. Republic of Guinea (ICSID Case No. ARB/14/22), held on March 26–27, 2018 investment cases and the ICSID Caseload – Statistics is a valuable empirical reference about trends in international investment dispute settlement generally. The issues are available in English, French and Spanish, and are updated every six months. Two issues were published in FY2018: Connecting With ICSID @icsid — The ICSID Caseload – Statistics (Issue 2017-2) — covering trends in cases registered In FY2018 ICSID grew its social media following by launching accounts on Twitter, LinkedIn and YouTube. These channels and administered by ICSID in fiscal year 2017, spanning July 1, 2016 to June 30, 2017. provide a means to share information on trends and developments at ICSID and engage with the public. On Twitter, ICSID shares procedural updates on cases, links to public awards and decisions, and posts highlights from events and — The ICSID Caseload – Statistics (Issue 2018-1) — covering trends in cases registered training courses. LinkedIn is also a platform for sharing information on ICSID events, publications and caseload trends. and administered by ICSID in the 2017 calendar year (January – December). Also in FY2018, ICSID moved its extensive video archive to YouTube. ICSID videos include interviews with leading experts in the field of investment dispute settlement, recordings of events, and broadcasts of public hearings. ICSID also offers daily email updates on case developments, news and events, along with a periodic newsletter. 50 ICS ID 2018 ANNUAL REPO RT 51 COLLECTIONS ICSID OFFICIAL DOCUMENTS In FY2018, the Centre published four supplements of its two loose-leaf collections, — List of Contracting States and Other Signatories of the Convention, Doc. ICSID/3 Investment Laws of the World and Investment Treaties. The Investment Laws of the World (periodic updates) (English, French and Spanish) release contained new or revised investment legislation from Kosovo, Myanmar, Serbia, Seychelles and Tunisia (Release 2018–1). — Contracting States and Measures Taken by Them for the Purpose of the Convention, Doc. ICSID/8 (periodic updates) (English) Three updated supplements to the Investment Treaties collection were published containing the texts of 58 bilateral investment agreements, concluded by 52 countries — Members of the Panels of Arbitrators and of Conciliators, Doc. ICSID/10 (periodic between 1974 and 2016 (Releases 2017–2, 2017–3 and 2018–1). updates) (English) ICSID PRIMER — ICSID Regulations and Rules, Doc. ICSID/4/Rev. 1 (May 1975) (contains the texts of the Newly published in 2018, the ICSID Primer offers a brief introduction to ICSID. Intended Centre’s Regulations and Rules in effect from January 1, 1968 to September 25, for those who are new to the Centre, it explains what ICSID does, how it is structured, 1984) (English, French and Spanish) and highlights recent trends. Available in English, French and Spanish, the ICSID Primer aids a broader public audience in understanding this unique institution and its role as — ICSID Basic Documents, Doc. ICSID/15 (January 1985) (contains the texts of the the global leader in international investment dispute settlement. Centre’s Regulations and Rules in effect from September 26, 1984 to December 31, 2002 and the text of the ICSID Convention) (English, French and Spanish) ICSID STAFF PUBLICATIONS — Meg Kinnear, Foreword, in Evidence in International Investment Arbitration (Frédéric — ICSID Convention, Regulations and Rules, Doc. ICSID/15/Rev. 1 (January 2003) (contains G. Sourgens, Kabir Duggal and Ian A. Laird, Oxford University Press, May 2018) the texts of the Centre’s Regulations and Rules in effect from January 1, 2003 to April 9, 2006 and the text of the ICSID Convention) (English, French and Spanish) — Meg Kinnear, Foreword, in Procedural Issues in International Investment Arbitration (Jeffery Commission and Rahim Moloo, Oxford University Press, May 2018) — ICSID Convention, Regulations and Rules, Doc. ICSID/15 (April 2006) (contains the texts of the Centre’s Regulations and Rules in effect from April 10, 2006 and the text of — Meg Kinnear and Otylia Babiak, International Investment Arbitration Needs Equal the ICSID Convention) (English, French and Spanish) Representation, in Reshaping Trade Through Women’s Economic Empowerment, CIGI The ICSID Primer introduces the Centre to Essay Series (Centre for International Governance Innovation, April 9, 2018) — List of Pending and Concluding Cases, ICSID/16 (Internet edition only) new audiences. © ICSID — Meg Kinnear and Chrysoula Mavromati, Consolidation of Cases at ICSID, in — Memorandum on the Fees and Expenses of ICSID Arbitrators (July 6, 2005) (English, Jurisdiction, Admissibility and Choice of Law in International Arbitration: Liber French and Spanish) Amicorum Michael Pryles (Neil Kaplan and Michael Moser eds., Kluwer Law International, March 2018) — ICSID Schedule of Fees (July 1, 2017) (English, French and Spanish) — Meg Kinnear and Christine Sim, “NUS Centre for International Law Collection of Articles — ICSID Annual Report (1967–2017) (English, French and Spanish) on an Appellate Body in ISDS: Introduction to the Collection”, 32(3) ICSID Review–FILJ 457 (Fall 2017) 52 ICS ID 2018 ANNUAL REPO RT 53 Spotlight on Young ICSID — ICSID Additional Facility for the Administration of Conciliation, Arbitration and Fact- Young ICSID is a network designed to encourage professional development for young Finding Proceedings, Doc. ICSID/11 (June 1979) (contains the texts of the Additional lawyers, and to provide a forum to discuss ideas and meet other professionals. Facility Rules in effect from September 27, 1978 until December 31, 2002) (English, As of June 30, 2018, Young ICSID had grown to over 1,000 members. French and Spanish) — ICSID Additional Facility Rules, Doc. ICSID/11/Rev. 1 (January 2003) (contains the texts Each year Young ICSID holds events in different countries, and, increasingly, online. Young of the Additional Facility Rules in effect from January 1, 2003 to April 9, 2006) ICSID initiated a book launch series in 2017 to facilitate discussion on international law (English, French and Spanish) and ISDS. Each of the events invites members of Young ICSID to join in person or online, ensuring that physical distance from the place of the event is not a barrier to participation. — ICSID Additional Facility Rules, Doc. ICSID/11 (April 2006) (contains the texts of the Additional Facility Rules in effect from April 10, 2006) (English, French and Spanish) Overall, four Young ICSID events were held in FY2018: • September 18, 2017: Launch of “Proportionality in Investor-State Arbitration”, authored by Gebhard Bücheler. • November 30, 2017: A panel of experts reflected on how young lawyers can advance their careers and face diverse challenges in the arbitration community, on the eve of the ICSID’s Online Databases AAA/ICC/ICSID Colloquium. The ICSID website offers a number of databases that allow visitors to find information efficiently using filter boxes. — The cases database provides entries for cases registered with ICSID, along with up-to-date procedural information • May 10, 2018: Launch of “Procedural Issues in International Investment Arbitration”, authored by Jeffery Commission and Rahim Moloo. and case-related materials. — The Member States database features information relating to signatures, ratifications and entry into force of the ICSID Convention; designations and notifications made by ICSID Member States to implement and apply the • June 5, 2018: Launch of “The Rise of Investor-State Arbitration: Politics, Law, and Unintended Consequences”, Young ICSID had grown to over Convention; and designations made to the ICSID Panels of Arbitrators and of Conciliators. — The database of arbitrators, conciliators and ad-hoc committee members includes a standardized web-based authored by Taylor St John. 1,000 curriculum vitae form, with biographical information on arbitrators and conciliators on the ICSID Panels of members Arbitrators and of Conciliators, as well as arbitrators, conciliators and annulment committee members who have served in ICSID cases. — The database of bilateral investment treaties allows users to locate treaties by Signatory States, by particular treaty and by year of signature. — The ICSID bibliography on investment law and procedure offers an extensive list of articles, books, research, and working papers on ICSID, investment law and treaties, and international investment dispute resolution. 54 ICS ID 2018 ANNUAL REPO RT 55 Chapter 5 FIFTY-FIRST ANNUAL MEETING OF THE ADMINISTRATIVE COUNCIL The ICSID Administrative Council is the governing body of ICSID. Its composition, functions and decision-making procedure are provided for in the ICSID Convention (Articles 4 to 8). Pursuant to Article 4 of the ICSID Convention, the ICSID Administrative Council is composed of one representative of each Contracting State. In the absence of a contrary designation, the governor for the World Bank appointed by that State serves ex officio as its representative on the Council. Each member has one vote on the Administrative Council. By the end of FY2018, 153 Contracting States were represented on the ICSID Administrative Council. An up-to-date list of members of the Administrative Council is available on the ICSID website. On October 13, 2017, the Chairman of the Administrative Council, Dr. Jim Yong Kim, presided over the 51st Annual Meeting of the Administrative Council, which took place in Washington, D.C., on the occasion of the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund. At its 51st Annual Meeting, the Administrative Council approved the Centre’s 2017 Annual Report and its administrative budget for FY2018. The Resolutions adopted at the Meeting are reproduced below. AC(51)/RES/134—Approval of the Annual Report The Administrative Council RESOLVES To approve the 2017 Annual Report on the operation of the Centre. AC(51)/RES/135—Adoption of Budget for Fiscal Year 2018 The Administrative Council RESOLVES To adopt, for the period July 1, 2017 to June 30, 2018, the budget set forth in paragraph 2 of the Report and Proposal of the Secretary-General on the Budget for Fiscal Year 2018, dated June 30, 2017. 2017 ICSID Administrative Council Meeting at Plenary Session of World Bank Group Annual Meetings, Washington, D.C., October 13, 2017. © Grant Ellis, World Bank 56 ICS ID 2018 ANNUAL REPO RT 57 Chapter 6 FINANCIAL STATEMENTS ALL AMOUNTS EXPRESSED IN U.S. DOLLARS UNLESS OTHERWISE NOTED FINANCE STATEMENT OF FINANCIAL POSITION JUNE 30, 2018 AND JUNE 30, 2017 ICSID’s administrative expenditures in FY2018 were covered by fee income and by the International Bank for Reconstruction and Development (IBRD) pursuant to the 2018 2017 Memorandum of Administrative Arrangements concluded between the IBRD and ICSID. Assets: It is therefore not necessary to assess any excess expenditures on Contracting States Cash (Note 2) $ 481,479 $ 467,846 pursuant to Article 17 of the Convention. Share of cash and investments in the Pool (Notes 2 and 3) 61,238,016 49,391,967 Due from parties to arbitration/conciliation proceedings (Note 2) 389,437 340,012 Expenditures relating to pending arbitration proceedings are borne by the parties in Other assets, net (Notes 2 and 4) 92,017 161,785 accordance with ICSID’s Administrative and Financial Regulations. Total assets $ 62,200,949 $ 50,361,610 The Financial Statements of the Centre for FY2018 are presented in the following pages. Liabilities and net assets: Liabilities: Payable to International Bank for Reconstruction and Development (Note 2) $ 2,749,493 $ 2,336,875 Advance received for miscellaneous services 6,760 5,018 Deferred revenue (Note 2) 3,447,264 2,160,000 Accrued expenses related to arbitration/conciliation proceedings (Note 2) 10,343,763 7,097,252 Advances from parties to arbitration/conciliation proceedings (Note 2) 40,537,027 33,554,100 Total liabilities 57,084,307 45,153,245 Net assets, unrestricted (Note 5) 5,116,642 5,208,365 Total liabilities and net assets $ 62,200,949 $ 50,361,610 The notes to the financial statements are an integral part of these statements. 58 ICS ID 2018 ANNUAL REPO RT 59 STATEMENT OF ACTIVITIES STATEMENT OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2018 AND JUNE 30, 2017 FOR THE YEARS ENDED JUNE 30, 2018 AND JUNE 30, 2017 2018 2017 2018 2017 Support and revenues: Cash flows from operating activities: Revenues/Fees from arbitration/concilation proceedings (Notes 2 and 7) $ 50,271,305 $ 45,000,076 Change in net assets ($ 91,723) ($ 1,440,456) In-kind contributions (Notes 2 and 9) 943,803 935,582 Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Net investment income (Notes 2 and 3) 714,104 330,036 Amortization cost 69,768 106,076 Sales of publications 86,479 66,042 (Increase)/Decrease in due from parties to arbitration/conciliation proceedings (49,425) 279,925 Total support and revenues $ 52,015,691 $ 46,331,736 Decrease in other receivables — 8,119 Increase in payable to International Bank for Reconstruction & Development 412,618 370,013 Expenses: Increase/(Decrease) in miscellaneous liability 1,742 (45,732) Expenses related to arbitration/conciliation proceedings (Notes 2 and 8) $ 38,894,210 $ 36,327,875 Increase/(Decrease) in deferred revenue 1,287,264 (197,333) Administrative expenses (Note 9) 12,429,332 11,008,205 Increase/(Decrease) in accrued expenses related to arbitration/conciliation proceedings 3,246,511 (275,832) Amortization expenses (Notes 2 and 4) 69,768 106,076 Net Investment income applied to arbitration/conciliation proceedings (Notes 2 and 3) 714,104 330,036 Increase/(Decrease) in advances from parties to arbitration/conciliation proceedings 6,982,927 (458,419) Total expenses 52,107,414 47,772,192 Net cash provided by (used in) operating activities 11,859,682 (1,653,639) Change in net assets (91,723) (1,440,456) Net assets, beginning of the year 5,208,365 6,648,821 Cash flows from investing activities: Net assets, end of the year $ 5,116,642 $ 5,208,365 Increase in share of pooled investments (11,846,049) (2,430,322) Net cash used in investing activities (11,846,049) (2,430,322) Net Increase /(Decrease) in cash 13,633 (4,083,961) Cash at beginning of the year 467,846 4,551,807 Cash at end of the year $ 481,479 $ 467,846 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. 60 ICS ID 2018 ANNUAL REPO RT 61 NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2018 AND JUNE 30, 2017 ALL AMOUNTS EXPRESSED IN U.S. DOLLARS UNLESS OTHERWISE NOTED Note 1 — Organization Note 2 — Significant Accounting Policies The International Centre for Settlement of Investment Disputes (ICSID or the Centre) was established on October 14, Basis of Accounting and Financial Statement Presentation: The financial statements have been prepared in accordance 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the with U.S. generally accepted accounting principles (U.S. GAAP) and with International Financial Reporting Standards ICSID Convention). ICSID is a member of the World Bank Group (WBG), which also includes the International Bank for (IFRS), as issued by the International Accounting Standards Board (IASB). Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the International Development Association (IDA) and the Multilateral Investment Guarantee Agency (MIGA). Under the ICSID Convention, the Centre Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP and IFRS requires management provides facilities for the conciliation and arbitration of investment disputes between Member States (countries which to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, have ratified the ICSID Convention) and nationals of other Member States. Pursuant to Additional Rules adopted in 1978, together with the related disclosures as at the date of the financial statements. Actual results could differ from those ICSID also administers certain types of proceedings between governments and foreign nationals that fall outside the estimates. Significant items subject to such estimates and assumptions include the amount of accrued expenses and scope of the ICSID Convention. These include conciliation and arbitration proceedings for the settlement of investment related revenues for ongoing cases at each year end; the fair value of the share of cash and investments in the pool; and disputes where either the home or the host country of the investor concerned is not a Member State. ICSID also the useful lives of other assets. administers investor-State proceedings under other sets of rules, such as the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). Finally, the Centre also acts as appointing authority under various Cash: Cash consists of cash held in a bank account. arbitral rules and international treaties. In order to process the cases, the Centre constitutes arbitral tribunals, conciliation commissions and ad hoc committees, as necessary. On February 13, 1967, IBRD and the Centre entered into Share of cash and investments in the Pool: Investments in the Pool are held for trading and are reported at fair value. Administrative Arrangements, which were effective as of the date of the establishment of the Centre. The Memorandum Resulting gains or losses are reported as an increase or a reduction in Net investment income in the Statements of of Administrative Arrangements (the Memorandum) provides that, except to the extent that ICSID, pursuant to its Activities. All income earned is required to be used by the parties to arbitration/conciliation proceedings to offset the Administrative and Financial Regulations (the Regulations), collects funds from the parties to proceedings to cover its costs of the proceedings. administrative expenses, IBRD shall provide reasonable facilities and services to ICSID without charge, as described in Notes 2 and 9. Due from parties to arbitration/conciliation proceedings: Direct expenses incurred by arbitrators, conciliators and committee members in excess of advance payments made by the parties to ongoing proceedings are recognized as due Effective February 2012, pursuant to Operational Guidelines for the Funding of the Operations of the Centre entered into from parties and are payable in accordance with the Centre’s Regulations. by IBRD and the Centre, if at the end of each fiscal year the Centre’s 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 Other assets and amortization: The Centre’s other assets comprise computer systems software costs, which are the Centre and may be carried forward indefinitely. In the event the Centre’s total expenditure, less the IBRD’s in-kind capitalized at cost and amortized using the straight-line method over a range of four to ten years. Amortization is contribution, is greater than the revenues collected by the Centre during the year, the excess expenditure will be charged charged from commencement of the use of the software. against the balance of any accumulated surpluses retained by the Centre before the Centre requests supplementary funding from IBRD. The Centre evaluates the carrying value of software annually, and whenever events or changes in circumstances indicate that impairment has occurred. Impairment is considered to have occurred if the carrying amount exceeds its recoverable amount, at which time, a write-down would be recorded. Payable to IBRD: These amounts represent the balance of outstanding expenses incurred in the normal course of business, which are paid by IBRD on behalf of ICSID. 62 ICS ID 2018 ANNUAL REPO RT 63 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Accrued expenses related to arbitration/conciliation proceedings: Accrued expenses are recorded when it is probable that Administration fees: The Centre charges an annual administration fee. The fee was increased from $32,000 to $42,000 the expense has been incurred and the amount can be reasonably estimated. Management estimates the amount of effective July 1, 2017. For proceedings registered on or after July 1, 2016, the fee is due on the registration of the request unbilled expenses incurred by arbitrators, conciliators, committee members and other service providers, and related for arbitration, conciliation or post award proceeding and annually thereafter. For proceedings registered before July 1, revenues, for ongoing cases at each year end. The nature of the cases handled by the Centre requires the use of external 2016, the fee is due on the date of constitution of the Tribunal, Commission or Committee concerned and annually arbitrators, conciliators and committee members, who charge fees for their services based on time spent on the cases. thereafter. The same annual fee is charged in proceedings administered by the Centre under rules other than the ICSID The estimation process uses information received from those individuals about unbilled time spent and expenses Convention and the ICSID Additional Facility Rules. incurred on the cases through the end of the fiscal year. In some instances, the determination of fees and expenses incurred in ongoing cases is based on estimated time spent by them in relation to the progress of the case and the The Centre collects administration fees from advance deposits from the parties to arbitration/conciliation proceedings. number of hearings and sessions held during the year. Actual results of case-related fees earned and expenses incurred Revenues are recognized on a straight-line basis, over the twelve-month period during which services are performed. The but unbilled during the year may differ materially from management’s estimates. unearned revenue at year end is recorded as Deferred revenue in the Statements of Financial Position and recognized in the subsequent fiscal year. Advances from parties to arbitration/conciliation proceedings: In accordance with its Regulations, the Centre periodically requests parties to proceedings to make advance payments to cover case administrative charges and the fees and Investment of undisbursed advances from parties and refund of surplus advance to parties: Net investment income earned expenses of Tribunal, Commission and Committee members. These advances are recorded as liabilities. on funds advanced from parties is recorded as revenue and expense in the Statements of Activities, and applied to advances from parties to arbitration/conciliation proceedings, which can be used for expenses related to the parties’ Revenues/fees from arbitration/conciliation proceedings: The Centre’s direct expenses attributable to proceedings are respective arbitration/conciliation proceedings. After the completion of the proceedings, if there is an excess of advances borne by the parties in accordance with the Centre’s Regulations. These direct expenses, which include fees and and investment income over expenditures for the proceedings, then the surplus is refunded to the parties in proportion to expenses of arbitrators, conciliators and Committee members, as well as costs associated with meeting rooms and the amounts advanced by them to the Centre. support services for conducting proceedings, are paid from advances from the parties (see Note 8). Accordingly, the Centre recognizes revenues from these transactions to the extent expenses related to arbitration/conciliation Value of services provided by IBRD and in-kind contributions: proceedings are incurred during the period. IBRD provides support services and facilities to the Centre including the following: In addition, revenues from proceedings also include the following (see Note 7): 1) The services of staff members and consultants; and 2) Other administrative services and facilities, such as travel, communications, office accommodations, furniture, Registration fees: The Centre charges a non-refundable fee of $25,000 to parties requesting the institution of equipment, supplies and printing. arbitration/conciliation proceedings under the ICSID Convention and the ICSID Additional Facility Rules; applying for annulment of an arbitral award rendered pursuant to the ICSID Convention; or requesting the institution of fact-finding The Centre recognizes expenses, as incurred, for the value of services provided by IBRD, which is determined by the proceedings under the ICSID Additional Facility Rules. The Centre charges a non-refundable fee of $10,000 to parties estimated fair value of such services. Cost approximates fair value for these services. Services by IBRD for which the requesting a supplementary decision to, or the rectification, interpretation or revision of, an arbitral award rendered Centre provides no compensation are similarly recognized and measured, and are recorded as in-kind contribution pursuant to the ICSID Convention; requesting a supplementary decision to, or the correction or interpretation of an revenue in the Statements of Activities. arbitral award rendered pursuant to the ICSID Additional Facility Rules; or requesting the resubmission of a dispute to a new tribunal after the annulment of an arbitral award rendered pursuant to the ICSID Convention. The revenues are Relevant accounting and reporting developments: recognized upon receipt of payment. Financial Accounting Standards Board (FASB): In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers (Topic 606), which supersedes most of the existing revenue recognition guidance in U.S. GAAP. The core principle of the guidance is that an entity recognizes 64 ICS ID 2018 ANNUAL REPO RT 65 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) revenue when it transfers control of promised goods and services to customers in an amount that reflects consideration The Pool is divided into sub-portfolios to which allocations are made based on fund specific investment horizons, risk to which the entity expects to be entitled. The standards also require additional quantitative and qualitative disclosures tolerances, and/or other eligibility requirements for trust funds with common characteristics as determined by IBRD. to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue and cash Generally, the Pool includes cash and financial instruments such as government and agency obligations, time deposits, flows arising from contracts with customers. The ASU is effective for nonpublic entities for annual reporting periods money market securities, and asset-backed securities. Additionally, the Pool includes equity securities, derivative beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The contracts such as currency forward contracts, currency swaps, interest rate swaps, and contracts to purchase or sell ASU is not expected to have a material impact on ICSID’s financial statements. mortgage-backed securities to-be-announced (TBAs). Payables and receivables associated with the investment activities are also included in the Pool. The Pool may also include securities pledged as collateral under repurchase In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and agreements, receivables from resale agreements, and derivatives for which it has accepted collateral. Measurement of Financial Assets and Financial Liabilities, which will significantly change the income statement impact of equity investments, and the recognition of changes in fair value of financial liabilities when the fair value option is The Centre’s funds are invested in a sub-portfolio of the Pool, which invests primarily in cash and money market elected. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after instruments, such as overnight time deposits, time term deposits, certificate of deposits, and commercial paper with December 15, 2018. ICSID is currently evaluating the impact of this ASU on its financial statements. terms of three months or less recorded at par value which approximates fair value. The sub-portfolio also includes government and agency obligations. International Accounting Standards Board (IASB): In May 2014, IASB issued IFRS 15 Revenue from Contracts with Customers. IFRS 15 establishes a single comprehensive The share in pooled cash and investments represents the Centre’s share of the Pool’s fair value at the end of each framework for determining when to recognize revenue and how much revenue to recognize. The core principle in that reporting period. Net investment income consists of the Centre’s allocated share of interest income earned by the Pool, framework is that a company should recognize revenue to depict the transfer of promised goods or services to the realized gains/losses from sales of securities, and unrealized gains/losses resulting from recording the assets held by the customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for Pool at fair value. As explained in Note 2, net investment income is recorded as revenue and expense in the Statements those goods or services. IFRS 15 will be effective for annual periods beginning on or after January 1, 2018, with early of Activities and it is applied to advances from parties to arbitration/conciliation proceedings, which can be used for application permitted. The IFRS is not expected to have a material impact on ICSID’s financial Statements. expenses related to such proceedings. In July 2014, IASB issued IFRS 9 Financial Instruments. IFRS 9 is built on a logical, single classification and measurement IBRD, on behalf of the WBG, has an established and documented process to determine fair values. Fair value is based approach for financial assets that reflects the business model in which they are managed and their cash flow upon quoted market prices for the same or similar instruments, where available. Financial instruments for which quoted characteristics. The standard also includes an improved hedge accounting model to better link the economics of risk market prices are not readily available are valued based on discounted cash flow models. These models primarily use management with its accounting treatment. IFRS 9 will be effective for annual periods beginning on or after January 1, market-based or independently-sourced market parameters such as yield curves, interest rates, volatilities, foreign 2018, with early application permitted. The IFRS is not expected to have a material impact on ICSID’s financial exchange rates and credit curves, and may incorporate unobservable inputs. Selection of these inputs involves judgment. Statements. The Pool’s financial instruments are categorized based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1), the Note 3 — Share of Cash and Investments in the Pool and Fair next highest priority to observable market-based inputs or inputs that are corroborated by market data (Level 2), and Value Measurement the lowest priority to unobservable 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 Amounts paid to the Centre, but not yet disbursed, are managed by IBRD, which maintains an investment portfolio (the categorized is based on the lowest level input that is significant to the fair value measurement of the instrument in its Pool) for all the trust funds administered by the WBG. IBRD, on behalf of the WBG, maintains the Pool’s assets separate entirety. IBRD categorizes overnight time deposits and certain government obligations as Level 1 and the other money and apart from the funds of the WBG. market instruments, government and agency obligations as Level 2. 66 ICS ID 2018 ANNUAL REPO RT 67 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) The Centre is exposed to credit and liquidity risks. There has been no significant change during the fiscal year to the Hierarchy level June 30, 2018 June 30, 2017 types of financial risks faced by the Centre or its general approach to the management of those risks. The exposure and the risk management policies employed to manage these risks are discussed below: Level 1 $ 2,663,854 $ 2,232,338 Level 2 58,574,162 47,159,629 Credit risk — The risk that one party to a financial instrument will fail to discharge an obligation and cause the other Total $ 61,238,016 $ 49,391,967 party to incur a financial loss. Of the Centre’s financial assets, cash held in the depository bank account which is subject to U.S. Federal Deposit Insurance Corporation (FDIC) insurance limits of $250,000 is not subject to credit risk. Therefore, the Centre’s maximum credit exposure as at June 30, 2018 is equivalent to the gross value of the remaining assets As of June 30, 2018, and June 30, 2017, ICSID’s share of cash and investments in the Pool does not include any financial amounting to $61,469,495 (2017: $49,609,813). The Centre does not hold credit enhancements or collateral to mitigate instruments measured at fair value on a non-recurring basis. credit risk, and believes the Pool is adequately managed. All other financial assets and financial liabilities are carried at cost. Their carrying values are considered to be a IBRD invests the Centre’s share of pooled investments primarily in money market securities. The Centre’s share of the reasonable estimate of fair value because these instruments tend to be very short-term in nature and none are cash and investments in the Pool is not traded in any market. However, the assets within the Pool are traded in the considered to be impaired. market and are reported at fair value. IBRD’s policy is to only invest in money market instruments issued or guaranteed by financial institutions whose senior debt securities are rated at least A- in the U.S. markets or equivalent. Note 4 — Other Assets The following table presents investment holdings in terms of the counterparty credit risk exposure categories as of June 30, 2018 and June 30, 2017. Other assets comprise computer systems software. Amortization charges amounted to $69,768 for the year ended June 30, 2018 (2017: $106,076). None of these assets are considered impaired. Counterparty credit ratings June 30, 2018 June 30, 2017 Note 5 — Net Assets, Unrestricted AA- or greater 43% 67% A- or greater 100% 100% Net assets, unrestricted represents accumulated surplus in the amount of $5,116,642 (2017: $5,208,365). The amount may be carried forward indefinitely. IBRD defines the concentration of credit risk as the extent to which the pooled investments are held by an individual counterparty. The concentration of credit risk with respect to the Pool of investments is mitigated because IBRD has Note 6 — Risks Arising from Financial Instruments investment policies that limit the amount of credit exposure to any individual issuer. The Centre’s financial assets consist of its share of cash and investments in the Pool, cash and other receivables. The Other receivables and amounts due from parties to arbitration/conciliation proceedings result from the ordinary course of Centre holds the cash in a depository bank account. business. The amounts are neither past due nor impaired. The Pool is actively managed and invested in accordance with the investment strategy established by IBRD for all trust Liquidity risk — The risk that an entity will encounter difficulty in raising liquid funds to meet its commitments. ICSID funds administered by the WBG. The objectives of the investment strategy are foremost to maintain adequate liquidity Regulations require parties to arbitration/conciliation proceedings to make advance deposits with the Centre to meet to meet foreseeable cash flow needs and preserve capital and then to maximize investment returns. anticipated expenses of such proceedings. The Centre’s share of cash and investments in the Pool are substantially invested in highly liquid money market instruments and liabilities carried generally have no stated maturity. 68 ICS ID 2018 ANNUAL REPO RT 69 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Note 7 — Revenues/Fees from Arbitration/Conciliation Proceedings Note 9 — In-Kind Contributions Revenues/fees from arbitration/conciliation proceedings comprise: As described in Note 1, the Memorandum provides that, except to the extent that the Centre may collect funds from the parties to proceedings to cover its administrative expenses, IBRD will provide facilities and services to the Centre. 2018 2017 Therefore, in-kind contributions represent the value of services provided by IBRD, less amounts reimbursed by ICSID to Drawdown of advances from parties* $ 38,894,210 $ 36,327,875 IBRD using proceeds from non-refundable fees and the sale of publications. A summary is provided below: Administrative fees 9,021,094 6,519,890 Case lodging and other fees 2,356,001 2,152,311 2018 2017 Total $ 50,271,305 $ 45,000,076 Staff services (including benefits) $ 10,604,550 $ 8,606,205 Contractual Services 184,502 233,158 *The Centre recognizes revenue to the extent expenses related to arbitration/conciliation proceedings are incurred. The Administrative Services 194,721 585,897 details of such expenses are provided in Note 8. Communication and Information Technology 774,924 859,924 Office Accommodation 603,274 605,521 Note 8 — Expenses Related to Arbitration/Conciliation Proceedings Travel 67,361 117,500 Total administrative services and facilities 12,429,332 11,008,205 Direct expenses related to arbitration/conciliation proceedings are paid out of advances made by parties to the Plus: Amortization expenses 69,768 106,076 proceedings. These expenses comprise: Total recorded value of services provided by IBRD 12,499,100 11,114,281 2018 2017 Less: Proceeds from fees and sale of publications 11,463,574 8,738,243 Arbitrators’ fees and expenses $ 32,572,016 $ 29,837,480 Drawdown from Surplus Account 91,723 1,440,456 Arbitration/conciliation meeting costs 5,779,309 5,923,068 In-kind contributions $ 943,803 $ 935,582 Travel expenses 403,184 446,016 Other costs 139,701 121,311 Total $ 38,894,210 $ 36,327,875 Note 10 — Authorization of Financial Statements ICSID’s management has evaluated subsequent events through August 23, 2018, the date the financial statements were approved and authorized for issue. 70 ICS ID 2018 ANNUAL REPO RT 71 KPMG LLP Suite 12000 1801 K Street, NW Washington, DC 20006 In making those risk assessments, the auditor considers 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 circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 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, as Independent Auditorsʼ Report well as evaluating the overall presentation, structure, and content of the financial statements including disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Chairman of the Administrative Council and Secretary General of the International Centre for Settlement of Investment Disputes: As part of an audit, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: We have audited the accompanying financial statements of the International Centre for Settlement of Investment Disputes (the Centre), which comprise the statements of financial position as of June 30, 2018 and • Conclude on the appropriateness of management's use of the going concern basis of accounting and 2017, and the related statements of activities, and cash flows for the years then ended, and the related notes based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions to the financial statements. that may cast significant doubt on the Centre’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related We are independent of the Centre in accordance with the ethical requirements that are relevant to our audit of disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our the financial statements in the United States of America, together with the International Ethics Standards Board conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, for Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other ethical future events or conditions may cause the Centre to cease to continue as a going concern. responsibilities in accordance with these requirements, respectively. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business Responsibilities of Management and Those Charged with Governance of the Financial Statements activities within the Centre to express an opinion on the financial statements. We are responsible for the Management is responsible for the preparation and fair presentation of these financial statements in direction, supervision, and performance of the group audit. We remain solely responsible for our audit accordance with U.S. generally accepted accounting principles and International Financial Reporting Standards opinion. as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are We communicate with those charged with governance regarding, among other matters, the planned scope and free from material misstatement, whether due to fraud or error. timing of the audit and significant audit findings, including any significant deficiencies or material weaknesses in internal control that we identify during our audit. In preparing the financial statements, management is responsible for assessing the Centre’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our basis of accounting, unless management either intends to liquidate the Company or to cease operations or has opinion. no realistic alternative but to do so. Opinion Those charged with governance are responsible for overseeing the Centre’s financial reporting process. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial Auditors’ Responsibility position of the International Centre for Settlement of Investment Disputes as of June 30, 2018 and 2017, and the results of its financial performance and its cash flows for the years then ended in accordance with U.S. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted generally accepted accounting principles and International Financial Reporting Standards as issued by the our audits in accordance with auditing standards generally accepted in the United States of America and International Accounting Standards Board. 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, whether due to fraud or error. Reasonable assurance is a high level of assurance but is not a guarantee that an audit will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the Washington, D.C. economic decisions of users taken on the basis of these financial statements. August 23, 2018 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 of the risks of material misstatement of the financial statements, whether due to fraud or error. We design audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. KPMG LLP is a Delaware limited liability partnership and the U.S. member 2 firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. 1818 H Street, NW Washington, D.C. 20433 USA Telephone: +1 (202) 458 1534 Facsimile: +1 (202) 522 2615 Email: ICSIDsecretariat@worldbank.org Website: worldbank.org/icsid