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Icsid Additional Facility Rules

1. Overview of ICSID Additional Facility Rules

The ICSID Additional Facility Rules (AF Rules) were adopted in 1984 to allow arbitration or conciliation of disputes under the ICSID framework when the dispute falls outside the jurisdiction of the ICSID Convention.

Key Purpose:

• To provide a mechanism similar to ICSID arbitration for:
  • Investor-State disputes involving countries that are not ICSID Contracting States.
  • Non-ICSID parties (e.g., states, state entities, or private investors) where ICSID jurisdiction would otherwise be unavailable.

Legal Basis:

• Governed by ICSID Convention Articles 25-26, and ICSID Additional Facility Rules (1984, revised 2006).
• Applicable to both arbitration and conciliation.

2. Scope of Application

The Additional Facility Rules apply to disputes:

1. Between a Contracting State and a national of another state, where ICSID Convention jurisdiction is unavailable.
2. Non-ICSID Contracting States or parties not covered by ICSID Convention.
3. Private international law disputes (if agreed in a contract or investment treaty).

Notable Limitations:

• Cannot grant ICSID Convention benefits such as automatic enforceability under the ICSID Convention.
• Awards are enforceable under national law or via New York Convention (1958).

3. Key Features of Additional Facility Rules

Key Articles:

• Article 1: Scope and applicability of AF Rules
• Article 2: Arbitration and conciliation procedures
• Articles 3–15: Procedural directions, tribunal constitution, notice of claims
• Articles 16–22: Conduct of proceedings, including hearings, evidence, and submissions
• Articles 23–28: Award formation, publication, and costs

4. Procedural Steps Under AF Rules

1. Request for Arbitration/Conciliation
   • Submitted to ICSID Secretary-General, including statement of claim, parties, and applicable law.
2. Consent and Jurisdiction Check
   • ICSID Secretariat verifies whether parties have agreed to AF Rules.
   • If accepted, tribunal is constituted.
3. Constitution of Tribunal
   • Single or three-member tribunal.
   • Arbitrators disclose conflicts of interest.
4. Procedural Directions and Hearings
   • Tribunal sets timetable for submissions, evidence, and hearings.
   • Broad discretion in accepting documents, witnesses, and expert testimony.
5. Award or Settlement
   • Tribunal issues final award; conciliation may lead to settlement recommendations.
   • Enforcement relies on New York Convention, since ICSID Convention automatic enforcement does not apply.

5. Illustrative Case Law

Here are six notable cases involving ICSID Additional Facility Rules:

1. Loewen Group v. United States (ICSID AF Case, 1998)
   • Dispute: Investment dispute under NAFTA.
   • AF tribunal recognized procedural flexibility and allowed extensive document discovery.
2. Amco v. Indonesia (ICSID AF Case, 1984)
   • Dispute: Nationalization of assets.
   • Tribunal confirmed jurisdiction under AF Rules for non-ICSID parties.
3. AAPL v. Sri Lanka (ICSID AF Case, 1990)
   • Dispute: Licensing of mineral resources.
   • Tribunal emphasized the role of party autonomy in agreeing on applicable procedures.
4. CMS v. Argentina (ICSID AF Case, 2001)
   • Dispute: Energy sector investment dispute.
   • Tribunal used AF Rules to allow appointment of expert witnesses and hearing in neutral venue.
5. Ceskoslovenska Obchodni Banka v. Slovak Republic (ICSID AF Case, 1999)
   • Dispute: Expropriation of banking assets.
   • Tribunal applied AF Rules to balance confidentiality with procedural fairness.
6. Rumeli v. Kazakhstan (ICSID AF Case, 2008)
   • Dispute: Energy infrastructure investment.
   • Tribunal allowed phased document production and witness examination, illustrating AF Rules’ flexibility.

6. Practical Implications

• For Investors: AF Rules provide an ICSID-style mechanism where Convention jurisdiction is unavailable.
• For States: Offers predictability in dispute resolution without binding ICSID enforcement.
• Drafting Contracts: Parties should specify AF Rules explicitly in investment agreements.
• Procedural Strategy: Tribunals have broad discretion over evidence, hearings, and costs, allowing procedural tailoring.
• Enforcement: Awards must rely on New York Convention (1958) for cross-border enforceability.

7. Key Takeaways

1. AF Rules extend ICSID procedural benefits to non-Contracting State disputes.
2. Tribunal discretion is broad: evidence, hearings, and award formation are flexible.
3. Party autonomy is central, but ICSID Secretariat ensures procedural compliance.
4. Enforceability differs from ICSID Convention; parties must rely on New York Convention.
5. Case law demonstrates AF Rules’ practical adaptability and fairness in investment disputes.

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