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Convention on the settlement of investment disputes between States and nationals of other States
The Convention on the Settlement of Investment Disputes between States and Nationals of other States signed in Washington on 18 March 1965, established the International Centre for Settlement of Investment Disputes (ICSID) within the World Bank Group. The purpose of the Centre is to resolve, through conciliation and arbitration, disputes arising between Contracting States and foreign investors.
ICSID arbitration and conciliation allows States and foreign investors to settle their disputes on an equal footing within an international institutional framework.
Arbitration under the ICSID rules protects Contracting States, with regard to investment disputes, against any diplomatic protection or intervention emanating from the State where the investor has his place of business. In return, the Contracting States commit themselves to recognizing and enforcing arbitral awards rendered against them under the ICSID Rules.
The Centre's jurisdiction over disputes is based on an agreement of the parties to resolve an existing or future dispute in accordance with the ICSID's rules. The agreement is generally made in the form of an arbitration clause inserted in a contract. Unilateral withdrawal by parties from their given consent to submit their dispute to ICSID's jurisdiction is expressly excluded. The subject of the dispute should be related to an "investment" and must involve a Contracting State and a national of another State. Reference to ICSID arbitration has been made by States in their "Investment Codes", which may specifically provide for recourse to ICSID facilities in case of disputes regarding investments. In addition, several bilateral investment treaties refer to ICSID arbitration.
The Convention provides for a mechanism of conciliation as well as for an arbitral procedure.
