Who can turn to the International Centre On The Settlement Of

Investment Disputes?
Conf.univ.dr.Claudiu-Paul Buglea

The answer to this question, which is important regarding the start of the procedure
before the Centre, is actually equivalent to a detailed analysis of its competence rationae
personam. From this perspective, it can be observed, that the competence of the Centre
is limited to disputes between a Contracting State (or certain public entities or state
dependent bodies) and the citizen of another Contracting State. The Centre does not
handle disputes between states or between private persons.
Thus, we shall attempt to present and to analyse the parties to such a dispute,
respectively, on one side, the state hosting the investment and public entities or state
dependent bodies and, on the other side, the foreign merchant, physical or moral person,
but also the way in which the will of both parties meet, materialized in the necessary and
compulsory consent, so that the Centre may be invested with the mission to solve the
dispute.

A.The parties to the dispute

1. The notion of Contracting State

The concept of Contracting State is clearly determined by the Convention. A

Contracting State is a state which has submitted the ratification, acceptance or approval
instruments.
According to the provisions of article 68 of the Convention, it becomes a party state to
the Convention in 30 days from the deposit of the ratification instruments. The statute of
Contracting State is considered lost through a written notice by which the state
denounces the Convention (article 71). Such a denunciation is subject to two limitations:
it becomes effective only after six months and does not influence the consent given to
the competence of the Centre given prior to the denunciation (article 71 and article 72) 1.

1C.H. Schreuer, The ICSID Convention: A Commentary, Cambridge University Press, p. 141 (2000).
 2. Public entities or state dependent bodies

According to article 25 paragraph (1) of the Convention, different public entities or

state dependent bodies can participate to the disputes solved within the framework of
the ICSID.
While the notion of Contracting State is unproblematic, defining public entities or state
dependent bodies is much trickier.
In many states, investment agreements are not concluded by the Government itself,
but by a state company which exercises public attributions, being, however, distinct from
the state from a legal point of view.
In other cases, in some federal states, a small entity like a province or even a
municipality shall be able to conclude the agreements with foreign investors.
Article 25 paragraph (1) of the Convention offers the possibility to resort to the ICSID
not only to Contracting States but also to public bodies or dependent organisms.
These expressions deliberately do not receive a clear contour, the authors of the
Convention being aware of the impossibility of finding a precise technical expression,
given the terminological variety used in national legislations 2.
The access to the ICSID is allowed to these entities only if they fulfil two cumulative
conditions.
First, the Contracting State must have clearly indicated the respective entity to the
Centre and, secondly, the respective entity must give its consent, the latter being approved
by the state. Fulfilling the second condition is not required when the Contracting State has
informed the Centre that this approval is not necessary.
Regarding the first condition, its introduction in the Conventions text gives the
investor the certainty that he can litigate with that entity in front of the ICSID. In other
words the investor has the advantage of knowing with who he is in litigation 3.

2 Journal du Droit International, no. 1/1982, G.R. Delaume, La pratique du CIRDI.

 It is very important that the designation be brought to the knowledge of the Centre.
The simple designation of the entity in the agreement with the investor is not enough.
Also, it is clear that the respective entity cannot designate itself and the promise made
by the state that it shall make the designation to the Centre is not enough either. The
designation is not subject to a formal procedure. It must not be made through a separate
document. The notification of the Centre regarding the investment agreement containing
such a designation is sufficient. What is important is the existence of a clear intention to
make this designation, without importance regarding how and in which conditions it shall
be communicated to the Centre4.

3P.C. Szasz, The Investment Disputes Convention, p. 39.

4C.E. Amerasighe, The Jurisdiction of the International Centre, p. 188; also, C.B. Lamm, Jurisdiction
of the International Centre, p. 469; P.C. Szasz, op. cit., p. 31.
 The Centre holds a register regarding the designations made by the states. An
examination of this list shows that the designations are made in two categories. Australia
and Great Britain have designated territorial entities and, on the other hand, certain public
bodies. Ecuador, Guinea, Kenya, Madagascar, Nigeria, Peru, Portugal and Sudan have
designated, on one hand, non-territorial entities and, through other terms, the agencies.
The fact that there is such a list does not mean that the states cannot make such
designations through ad hoc notifications for certain distinct situations.
The designation to the Centre of the respective entity was of crucial importance in the
Case Cable TV v/St. Kitts & Nevis5. This case had at its origin an agreement from
September 1986, containing an ICSID clause between the plaintiff and the administration of
the island of Nevis (NIA). According to the St. Kitts & Nevis Constitution, the country is
organized as a federation, with the island of Nevis representing an autonomous entity
within the federation. The Request for Arbitration designated the federation as defendant.
The Tribunal observed that the Federation was not party to the agreement containing the
consent for the ICSID competence and that NIA was not designated as a dependent
organism or agency. The Tribunal has concluded that, in the absence of the designation of
the NIA, according to article 25 paragraph (1), it is not competent, the substitution of the
Federation for the NIA being impossible.
Ascertaining the link between a given body and a Contracting State leaves unsolved
the problem of knowing if this body has the right to appear automatically before the
Centre. The designation by the state does not give it per se (from its own power) the
capacity of accepting the Centres competence. Article 25 paragraph (3) conditions the
acceptance formulated by the respective body to the states subsequent approval.
Some difficulties may appear in case of imperfect approval or litigation regarding the
nature of the formalities that need to be accomplished. It is preferable that states inform

5Cable TVc/St. Kitts & Nevis, ruling of January 13th 1997, 13 ICSID Review-Foreign Investment Law
Journal 328 (1998).
the Centre beforehand regarding the nature of the formalities that need to be achieved in
order to obtain the approval when it is necessary.

3. The notion of a national of another Contracting State

The private investor receives in the application of the Convention a right to direct
access to the Centres courts.
The Convention is part of a broader trend favourable to the free access of private
persons to international arbitration institutions. Besides, it is much more progressive than
other projects regarding the protection of the investor.
Article 27 in the Convention expressly forbids a Contracting State to give diplomatic
protection or to formulate an international claim regarding a dispute that one of its
nationals and a Contracting State have agreed to submit or have effectively submitted to
arbitration on the basis of the Convention. Private investors thus receive a right that
cannot be taken away by their own state.
Article 25 paragraph (2) allows access to the Centre both for natural and legal persons,
subject to nationality conditions. Here we can analyse another problem: the private
character of the investor.
The Convention preamble mentions its role regarding private international
investments. This indicates the fact that the investor must be a private natural person or
a company (legal person). In this sense, a state acting as an investor shall not have
access to the Centres jurisdiction as investor.
A more delicate problem appears when the investor is a government controlled
company. The comment on the preliminary project shows that the term national is not
restricted to 100% private companies, but it is allowed to be part of a litigation resulting
from an investment and a company with majority or part state-owned capital6. This solution
was never contradicted in the course of later deliberations on the Convention, but at the
same time it was never repeated in the Executive Directors Report.
In case CSOB v/Slovakia, the defendant contested the competence of the tribunal,
showing that the plaintiff was a state agency of the Czech Republic and not an

6 History, vol. II, p. 230.

independent commercial entity and, thus, it would not have had access to ICSID
arbitration. The tribunal has rejected this complaint. Referring to the history of the
enactment of the Convention, the tribunal held that the notion of national, in light of
the Convention, is not limited only to companies with exclusively state-owned capital,
excluding companies with total or partial state participation. The decisive test is to
ascertain the sort of activities undertaken by the respective company. The activity of
CSOB in executing international banking transactions under state control had to be
judged by its nature and not by its purpose. From the analysis of the CSOBs activity, in
the context of privatization and restructuring, it was interpreted as a commercial activity
and not as an administrative (governmental) one.7.
The Convention mentions a national, using the singular, but it would be completely
erroneous to consider that only a single party could be admitted to the ICSID procedure
as investor, which would mean that we could deal with one or more plaintiffs and
defendants, respectively, with the same interest in the case.
The first case, in which the tribunal was notified by three plaintiffs, was the one in
which Jamaica was sued by Alcoua Minerals of Jamaica, Inc., by Kaiser Bauxite Company
and by Reynolds Jamaica Mines Ltd. Their requests were registered simultaneously but
were based on three ICSID arbitration clauses in individual agreements between the
plaintiffs and Jamaica. The object of the three cases was identical: duty and new taxes
contrary to the agreement. The naming of the arbiters by the plaintiffs and by the
president of the ICSID
Administrative Council President coincided, giving thus birth to three tribunals having the
same composition. The procedure, however, was not the same. The three tribunals
pronounced three decisions on the competence in the same day (only the decision in case
Kaiser Bauxite v/Jamaica being published8) and with the same solution, which specified
that the competence of the Centre was respected. The parties solved the disputes later,
amicably, on the basis of separate transactions
In all the situations, the national of another Contracting State must be involved.

7CSOB v/Slovakia, dec. as. comp., May 24th 1999, 14 ICSID Review-Foreign Investment Law Journal
251, 257-261 (1999).Error: Reference source not found
 This restriction was criticized because a relevant question is knowing if the necessity
regarding another Contracting State is useful. The simple mention of another Contracting
State would not have sufficed?
Individuals request most often the arbitration of disputes in investment. Host states
are, generally, reluctant regarding this type of solution. Thus, it appears that it should
suffice that the investment host State accept the B.I.R.D. Convention without being
necessary that the investors state of origin accept it too.
The suspension of diplomatic protection is less important than solving the dispute and
should not lead to such a limitation of the scope of the Convention.
In order to repair this small imperfection, through the Additional Facility created
(Additional Facility) it is possible for investors belonging to states who have not signed
the Convention to gain access to this jurisdiction.

4. Physical persons party to a dispute

Article 25 paragraph (2) letter a) gives the natural person national of another
Contracting State the following definition: any natural person who had the nationality of
a Contracting State other than the State party to the dispute on the date on which the
parties consented to submit such a dispute to conciliation or arbitration as well as on the
date on which the request was registered pursuant to paragraph (3) of Article 28 or
paragraph (3) of Article 36, but does not include any person who on either date also had
the nationality of the Contracting State party to the dispute.
Although the Convention mentions the nationality of the natural person, we must take
into account the concept of nationality, establishing the link between state and physical
person in our law system.
In any case, establishing whether a person is a national of a certain state, or not, is
done on the basis of the law system of the states claimed nationality.
According to the analysis of the article cited above, a natural person must first have a
nationality. It may be considered unfortunate that stateless people are thus excluded from
the benefits of the Convention. The citizenship must be that of a Contracting State.

8 1 ICSID Reports 296.

 The nationality condition must be fulfilled at two important dates: at the moment in
which the parties have consented to solve their dispute through the courts of the Centre
and at the moment of the registration of their complaint. This requirement is univocal. The
question may be asked if the citizenship must exist continuously between the two dates.
The necessity of the continuous character of the citizenship must be linked to an analogue
rule regarding diplomatic protection, which is the continuous national character of the
complaint.
The justification of the rule thus derives from the following reasons 9:
by making a natural person demonstrate a certain permanence of her nationality,
this avoids the effects of naturalisations made with this purpose, which would make
benefit from the advantages of the Centre natural persons which are normally excluded
(nationals of third countries in relation to the Convention);
the natural person cannot change the nationality between the moment of consent
and the moment the Centre is notified. Thus is avoided that the natural person benefit at
the same time from the procedure before the Centre (as national of a Contracting State at
the moment of the consent) and from diplomatic protection of another state (contracting
or not) whose nationality he would have acquired later.
The requirement to have the same nationality at the date of the consent and of the
request is enough to eliminate the possibility of naturalisations with this purpose, without
imposing a much stricter requirement to make the initial nationality permanent; this
solution also has the advantage of not eliminating the competence of the centre in these
exceptional cases.
Indeed, the Convention does not exclude from the competence of the Centre private
persons that have the nationality of a Contracting State and of a non-Contracting state.
Persons belonging to a non-Contracting State shall be able to exercise, eventually, the
diplomatic protection that is favourable to them. This case is even more frequent than the
voluntary acquisitions of a second nationality between the consent and the notice. Besides,
the requirement of the continuity of the nationality between the two dates, borrowed from
the law of diplomatic protection, is a rule contested even in this domain (of diplomatic
protection).

9Ch. Schreuer, op. cit., p. 274.

 As a general rule, I consider that more precaution should be taken in the analogy with
the law of diplomatic protection, regarding the application of a convention that strays
from the traditional outline, expressly excluding the intervention of the state, whose
national can make use of his rights in front of the Centres courts, in the solution of the
dispute.
The necessity of the continuity of the nationality presents the inconvenient of
preventing the application of the convention in case a person, because of fortuitous
circumstances, would change his nationality, or in the situation when the copyright-
holders of a person would not hold the same nationality.
Thus, article 25 paragraph (2) letter a) can be interpreted also in the sense that
nationality refers to the necessity to hold the nationality of a Contracting State at the
date of the consent and at the date of the registration of the request, without the
necessity of the same nationality. Such an interpretation would allow the favourable
solution of exceptional cases.
The Executive Directors Report, interpreting the provisions of the clause at article 25
paragraph (2), consider that the Centre is not competent in case of double nationality,
from which one is of the Contracting State and one of the parties to the dispute. This
exclusion is absolute and cannot be discarded, even if the state party to the dispute
consents10.
However, nothing allows the removal of the physical person with several nationalities
of Contracting States that are not parties to the disputes. Also, the person that would hold
the nationality of a Contracting State and a third party would have access to the Centre.
The provisions related to the necessity of the nationality of a Contracting State and
especially the one related to the double nationality pose the problem regarding the
nationality control by the courts of the nationality state. Normally, the proof of nationality
is established on the basis of the right of the respective state. Can the nationality link be
reviewed by the centre? The answer is affirmative, without distinguishing between the
control of the regularity of the granting of the nationality according to the state of the
legal system which granted it and the control of the real and effective nationality link.

10 1 ICSID Reports 29.

 An interesting problem arises when the investor, natural person, has double
nationality, more precisely when he has both the nationality of a Contracting State and
the nationality of the host State, party to the dispute
Regarding this problem, the Report of the Executive Directors considers that in this
case, the investor, natural person with double nationality, one of which is the nationality
of the host State of the investment, does not have access to the jurisdiction of the Centre,
given that he does not fulfil the essential condition of not being citizen of the state where
he invested11.
Article 25 paragraph (2) letter a) must be interpreted correlated with letter b)
regarding legal persons in favour of which there is a derogation to the impossibility of
turning to the Centre in case they hold the nationality of the state party to the dispute.
The absence of any exception to letter a) certifies the idea that that investor, natural
person, has no access to the jurisdiction of the Centre.

5. Legal persons party to the dispute

Article 25 paragraph (2) letter b) gives a legal person from a Contracting State the
possibility to sit in front of the Centre, defining it as follows: any juridical person which
had the nationality of a Contracting State other than the State party to the dispute on the
date on which the parties consented to submit such dispute to conciliation or arbitration
and any juridical person which had the nationality of the Contracting State party to the
dispute on that date and which, because of foreign control, the parties have agreed
should be treated as a national of another Contracting State for the purposes of this
Convention.
This definition poses three problems:
the notion of legal person;
the nationality condition of a legal person from a state party to a dispute;
the extraordinary capacity of the legal person when it is a national of a state party to
the dispute.

11 See C.F Amerasinghe, The Jurisdiction of The International Centre, p. 205.

 1. The convention gives no definition of the legal person, this notion having different
definitions from one state to another.
The Convention being essentially a procedural text, its authors did not feel compelled to
formulate substantive rules. In the absence of a definition, we shall relate to the legal
system of the state to establish if an entity has legal personality.
2. Regarding the nationality of the legal person, the Convention adopts more supple
solutions compared to the ones retained regarding the nationality of the natural person.
The first problem refers to fixing the nationality of the legal person which does not
come from a state party to the dispute. Normally, legal persons having the nationality of
a state party to the dispute are excluded, which results from provisions of article 25
paragraph (2) letter b).
These have, however, access when the respective state recognizes this right through
the investment agreement. In this sense, case Klckner v./Cameroon where the foreign
investor has participated to the constitution of the mixt company, SOCAME, in Cameroon.
The 1973 agreement between SOCAME and Cameroon contained an ICSID clause. In this
time, Klckner held 51% of SOCAME actions and Cameroon 49%. The validity of the ICSID
clause was put in discussion because SOCAME was a company from Cameroon, which
could have suggested that it would not have access to the ICSID. However, the arbitration
tribunal considered that inserting a ICSID arbitration clause, in itself, entails implicitly that
the parties have jointly agreed that SOCAME is a company under foreign control and,
thus, having the capacity to act before ICSID arbitration12.
No nationality criteria are mentioned in the Convention, its authors not wanting to
choose between the social criteria, the incorporation criteria or the control criteria.
The nationality of the legal person is given by internal law on the basis of international
private law norms. However, the arbitral body can check the validity of the assignment of
the nationality depending on the principles of international law.
In international private law, there are several criteria for determining the nationality of
the legal person. Most states use the criteria of incorporation or the place where the legal
person is registered. Alternatively, the place of the main headquarters or the place where

12 Decision, October 21st 1983, 2 ICSID Reports 16.

the governing bodies are found can be chosen. The incorporation and headquarters
criteria were understood as criteria related to the sphere of diplomatic protection. On the
other hand, in certain conditions, the criteria chosen in establishing the nationality of the
legal person was that of control13.
There are several opinions in international doctrine. On one hand, some authors
consider that the incorporation and headquarters criteria should be the only elements
taken into account for determining the nationality according to article 25 paragraph (2)
letter b). According to Delaume, it is generally accepted that, according to the ICSID
Convention, the nationality of a legal person is determined on the basis of its
headquarters (sige social) or the place of incorporation14. The same opinion is shared by
other authors15.
In contrast with this opinion, Amerasinghe asked the question of the relevance of the
criteria of the legal persons nationality in the context of diplomatic protection. He
advocated for a flexible appreciation depending on several criteria which should establish
the link between the legal person and a certain state, including the criteria of control
through the nationals of another state16.
Finally, in Broches opinion, the place of establishment17 should be determinant, in light
of the Convention, for establishing the nationality of the legal person.
Romanian international private law norms, as regulated by the New Civil Code, Book
VII, regarding the regulation of international private law relations 18, mention in article
2571 that:

(1)The legal person has the nationality of the state on whose territory is has
established its headquarters, according to its articles of incorporation.
(2)If there are headquarters in several states, the real headquarters is determinant for
identifying the nationality of the legal person.

13In detail, see, G.Sacerdoti, Barcelona Traction Revisted: Foreign-Owned and Controled Companies in
International Law, in International Law in a Time of Perplexity-Essays in Honour of Shabtai Rosenne,
(Y. Dinstain ed.) 699 (1989).
 (3)Real headquarters means the place where the main leading and statutory activity
management headquarters are found, even if the decisions of the respective body are
taken according to the directives sent by shareholders or associates from other states.
Through certain bilateral treaties regarding the mutual protection of foreign
investments, concluded in Romania, the criteria of control was sometimes accepted as
criteria for the determination of a legal persons nationality.
The nationality condition must be fulfilled at the date the parties have consented to
submit their dispute to the Centres authorities. This requirement is less strict than the
one applicable to natural persons. Thus, any change of nationality of the legal person
after the moment of consent is no longer relevant regarding the competence of the
Centre. After the consent, the legal person can lose the nationality that belonged to a

14G.R.Delaume, ICSID Arbitration and the Courts, 77 American Journal of International Law 784,
793/4 (1983); G.R. Delaume, ICSID Arbitration in Practice, 2 International Tax and Business Lawyer
58, 62 (1984);
G.R. Delaume, ICSID Arbitration, p. 111.

15
M. Hirsch, The Arbitration Mechanism, p. 85; J.P. Laviec, Protection et promotion, p. 282;
P.F.Sutherland, The World Bank Convention on the Settlement of Investment Disputes, 28
International and Comparative Law Quarterly 367, 384/5 (1979).
Contracting State and can acquire the nationality of a non-Contracting State or even the
nationality of the host State, however without losing the right of access to ICSID bodies.
3. The Convention mentions that a legal person, having the nationality of a Contracting
State party to a dispute, may be considered, following an agreement between the legal
person and that state, as belonging to another Contracting State due to the control
exercised over it by foreign interests. This use of the control system is interesting, but
raises a few problems.
The expression under foreign control, for which the Convention gives no definition, is
extremely imprecise, the authors of the Convention leaving to the parties, in a pragmatic
way, the decision to determine if a society is foreign or not.

16
C.F. Amerasinghe, The International Centre for Settlement of Investment Disputes and Development
through the Multinational Corporation, 9 Vanderbilt Journal of Transnational Law 793, 807/8 (1976);
C.F. Amerasinghe, The Jurisdiction of the International Centre, 212-214, 222; C.F.Amerasinghe,
Interpretation of Article 25 (2) (b), p. 241; P.C. Szasz, The Investment Disputes Convetion, p. 33; C.
Vuylsteke, Foreign Investment Protection and ICSID Arbitration, 4 Georgia Journal of International and
Comparative Law 343, 356 (1974).

17
A. Broches, Bilateral Investment Protection Treaties and Arbitration of Investment Disputes, in The
Art of Arbitration, Liber Amicorum Pieter Sanders (J. Schultz, A. van den Berg eds.) 63, 70 (1982).
 The reference to the control system has limited application. For example, it does not
include the case of a society that has the nationality of a non-Contracting State, but
which, regarding the control, could be regarded as having the nationality of a state party
to the Convention.
An agreement on the nationality was proven relevant in case MINE v/Guinea. The
agreement between parties from 1975 referred, for disputes resolution, to the ICSID
arbitration. The ICSID clause provided that the parties have agreed that the investor is
Swiss19. Actually MINE was incorporated in Liechtenstein, while under Swiss control. Since
Switzerland had ratified the Convention, while Liechtenstein had not, nationality was
decisive to establish ICSID competence.
Determining the person who can have access to the Centre raises other problems
regarding the capacity of associates.
The convention does not mention the possibility of access of a private person in
consideration of the interests it holds in a company. Nothing prevents the state party to a
dispute and the associate to validly consent to the competence of the Centre. In this

18
M. Of. nr. 505/2011, applicable from October 1st 2011.
case, the associates act as natural persons. This solution is interesting when the Centres
competence conditions are not met. However, the associate cannot have access to the
Centre when the state party to the dispute gave its consent only regarding the company,
with the exception, maybe, of the case when the latter would be dissolved.

6. Subrogation in the investors rights

A special problem arises in the situation where the investor has obtained an indemnity
following an insurance clause. Highly industrialized states operate with different
insurance methods of national traders against political risks and expropriations or of civil
conflicts, as well as with guarantee mechanisms. 20 To these national methods are added
investment programmes under the auspices of the Multilateral Investment Guarantee
Agency, a World Bank organization, created through the Seoul Convention of October 12
1985 (MIGA21) and the Inter-Arab Investment Guarantee Corporation.

19
G.R.Delaume, ICSID Arbitration and the Courts, 77 American Journal of International Law 784, 786/7
(1983); B.E. Shifman, Maritime International Nominees Estabilishment v/ Republic of Guinea: Effect
on U.S. Jurisdiction of an Agreement by a Foreign Sovering to Arbitrate before the International
Centre for Settlement of Investment Disputes, 16 George Washington Journal of International Law
and Economics 451, 461/2 (1982).

20
Guarantee mechanisms mean the ensemble of mechanisms that refer to the transfer, from the
investor to a specialized body, of the financial consequences resulting from the occurrence of a
political risk. Guarantee mechanisms can be internal or international. Developed countries hold
guarantee mechanisms which cover national investments made in less developed countries. At the
same time, states can agree to constitute a multilateral investment guarantee mechanism. The
guarantee differs from insurance, from several points of view. The guarantee mechanism works,
generally, from public funds, being a public interest mechanism with the object of promoting a
national policy of channelling national investments to certain states. The guarantee is an accessory
act, supporting the existence of a series of legal relations. The insurance contract is a sinalagmatic
contract, without accessory character. Granting the guarantee is subordinated to certain conditions
regarding the treatment and the protection of investments imposed to the state receiving the
investment. However, the investment market being an unbalanced market, it is evident that
exporting countries shall impose enhanced requirements on importing countries. For this reason,
developing countries prefer international investment guarantee mechanisms.
 The provisions regarding the disputes regulation procedures related to the
interpretation or the application of the Seoul Convention refer to the ICSID conciliation
and arbitration regulations. Thus, the ad hoc arbitration established shall unfold according
to the dispositions of the Washington Convention. Furthermore, in case one of the parties,
in a 60 day delay, does not receive its arbiter, its designation shall be made by the ICSID
Secretary General.
General aspects regarding the investment treatment, protection and guarantee,
presented above, facilitates the situation of disputes regarding investments in the
framework of international commercial disputes, outlining the application domain of
conciliation and arbitration procedures established by the Washington Convention.

21
AMGI, Droit et pratique du commerce international, 1987, p. 273-310; Journal du Droit
International, 1987, Les operations AMGI; D. Carreau, Droit International Economique, p. 684-689.
 A national as well as an international method regarding investment guarantee consists
in the signing, by an investor, of an insurance contract with an insurance company. The
scope is the payment of a sum corresponding to the risk intervened following a harmful
activity for the investor, deriving from an action of the host state. From this moment, an
interesting question regards the subrogation in the investors rights by the insurance
company that has paid the investor the compensations following the contingency insured.
The important matter is that the host state manifested its consent for such a subrogation.
Usually, this problem is solved through Bilateral Treaties regarding Investment Protection
concluded between the investment host State and the investors nationality state. Many
such treaties contain clauses through which states accept the subrogation of insurance
companies22 in investors rights.
From the Conventions analysis it can be found that it does not addresses the problem
of the subrogation of an insurance company in private persons rights. It regards,
however, a practice of protecting an essential interest regarding investments.
The access of the subrogated body can be possible only by respecting two conditions:
on one hand, the defendant state having consented, situation presented previously;
on the other hand, the action of the subrogated body not having as an effect the
suppression of the mixed nature of the procedure.
This might happen in the situation where a state, a state agency handling the
administration of investment programmes or an international organization handling
investment insurance would pay a compensation to the investor. The problem is
answering if, compensating the investor, the state or the bodies mentioned previously
can subrogate in its rights, thus having access to the ICSID procedures. The answer is
clearly no23. There are three strong reasons for this answer:
1. The Convention refers to the solution of disputes between states and nationals of
other states. The clear formulation of article 25 paragraph (1) cannot be reinterpreted in

22
R. Dolzer, M. Stevens, Bilateral Investment Treaties, p. 156-160;
A.R. Parra, Provision on the Settlement, p. 342.
the sense of accepting party to a dispute other states, state agencies or international
organizations which would take the place of the investor;
2. One of the objectives of the Convention is depoliticizing the disputes. This objective
is expressed very clearly in article 27 which forbids diplomatic protection exercised in
favour of the investor. This interdiction would be removed if the investors nationality
state were allowed to stand in front of the Centre;
3. The Conventions preparatory acts show without a doubt that it was intended to
exclude the possibility for states, state bodies or international bodies to take the
investors place in the framework of ICSID proceedings.
States keep the possibility of overseeing the transfer of any attributions regarding the
exercise of rights that the investor has against the state, including the access to Centre
proceedings.
However, it is perfectly possible that, in spite of the indemnity received from a public
guarantee body, the investor may keep the right to bring the state with which he has
contracted before the ICSID court. Provisions maintaining the investors right appear in the
ICSIDs type clauses24 and in a few bilateral treaties. In this sense, article 9 paragraph (5) of
the Agreement between the Government of Australia and the Government of Romania on
the Reciprocal Promotion and Protection of Investments 25 states:
In any proceeding involving a dispute relating to an investment, a Contracting Party
shall not assert, as a defence, counter-claim, right of set-off or otherwise, that the
investor concerned has received or will receive, pursuant to an insurance or guarantee
contract, indemnification or other compensation for all or part of any alleged loss.

23

W.E. Albrecht, Some Legal Questions Concerning the Convention on the Settlement of Investment
Disputes between States and Nationals of other States, 12 St. Louis Univesity Law Jouranl 679, 683
(1968); C.F. Amerasinghe, The Jurisdiction of the International Centre, p. 194-196; A. Broches, La
Convention et lAssurance Investissement: Le Probleme dit de la Subrogation, n Invetissments
Etrangers et Arbitrage entres Etats et Personnes Prives: la Convention BIRD du 18 mars 1965, 161,
166 (1969); G.R. Delaume, Le Centre International, p. 798; N.S.Rodley, Some Aspects of the World
Bank Convention on the Settlement of Investment Disputes, 4 Canadian Yearbook of International
Law 43, 53/4 (1966) ; N.G. Ziad, ICSID Caluses in the Subrogation Context, News from ICSID, vol.
7/2, p. 4 (1990).
 Moreover, the mentioned agreement provides the possibility of the subrogation of the
state or agency that guaranteed or insured the investment in the investors rights, thus
also acquiring the right to resort to ICSID arbitration:
1. If a Contracting Party or an agency of that Contracting Party makes a payment to
its own national or company under a guarantee, a contract of insurance or other form of
indemnity it has granted in respect of an investment, the other Contracting Party shall
recognise the transfer of any right or title in respect of such investment. The subrogated
right or claim shall not be greater than the original right or claim.
2. Where a Contracting Party has made a payment to its own national or company and
has accordingly taken over rights and claims, that national or company shall not, unless

24

ICSID Model Clauses Doc. ICSID/5/Rev.2, February, 1993.

25

Ratified through Law nr. 6/1994 (M. Of. nr. 60, March 8th 1994).
authorised to act on behalf of the Contracting Party which has made the payment, pursue
those rights and claims against the other Contracting Party.
The provisions of the article cited above enshrine the possibility to authorize the
investor to continue existent procedures in the name of the state or of the insuring
institution.

B. Investing the Centres court

The Centres competence is based on a purely consensual aspect, the parties

agreement. The agreement of both parties is an essential condition for attracting the
Centres competence.
The simple fact of ratifying the Convention by the host State and the investors
nationality state is not sufficient in itself. It does not oblige a state to resort to the
Centres proceedings; it only gives it this possibility.
The Executive Directors Report on the Convention describes the consent as being the
cornerstone of the Centres competence. Delaume has resumed this situation in the
following manner: the scope of this consent is left to the parties free will. It must be
observed that the ratification of the ICSID Convention is, from the contracting states
point of view, only an expression of its agreement to make the ICSID machinery work.
Thus, this ratification does not mean, at the same time, an obligation to use this
mechanism. This obligation can appear only after the State gives its consent, expressly,
to submit to ICSID arbitration a particular dispute or a certain category of disputes. In
other words, the states decision to consent to ICSID arbitration is a purely political
problem. It is at each Contracting States discretion to determine the type of dispute
related to an investment that it considers arbitrable in the context of the ICSID 26.
Interested persons shall be able to also use other means for the resolution of disputes,
if they want to.

26

G.R. Delaume, ICSID Arbitration, p. 104/5.

 The importance of the parties consent results from the notice of the Centres courts
principle and explains the purposefully imprecise character of certain provisions regarding
the Centres competence. Surprisingly, though, the Convention only gives little
specifications relating to the consents conditions. It is, however, much more precise,
regarding the effects of the parties consent.

1. The consent conditions

The Convention includes two requirements related to the consent: one on the form of
the expression of the consent, the other on the moment it must be given.

Form
The Convention limits itself in stating the written form that the consent must take
[article 25 paragraph (1)].
The request of the written form is legitimate regarding the necessity to insure legal
certainty, because there is no presumption for the consent (the principle of
consensualism). The written consent must normally be communicated between parties.
The necessity to give a written consent did not raise big problems in practice. Thus, in
case Hollyday Inns v/Morocco, the government argues that there is no written consent of
the contract partys mother company. The argument was not accepted, because it was
considered that there was a written consent, but the investor was not identified very well in
writing27.
The convention leaves the parties a large array of modalities for the expression of their
consent.
An agreement between parties materialized in a single instrument is the most used
method of expressing consent. This can take the shape of an arbitration clause in an
agreement regarding investments concluded between the host state and the investor.
Through the clause, it is established that future disputes arising from investment
operations be subjected to ICSID competence. It is also possible to bring before ICSID
competence a dispute already appeared between parties, situation where the consent
takes the form of a compromise.

27

Decision on competence, July 1st 1973, P. Lalive, The First World Bank Arbitration, p. 150.
 Model clauses introduced in 1993 offer, in turn, the model that parties can insert in the
on-going contract to solve subsequent disputes (Clause 1), as well as the model clause
through which the solution to an existent dispute is provided (Clause 2).
We must observe the fact that through the Convention there is no obligation to express
consent from both parties in the same legal act.
Thus, a host state could, through a legislation meant to promote investments, submit
to the Centre the disputes resulting from certain investment categories, while the
investor could give his consent accepting the offer in writing 28. This situation is
encountered also in the Romanian legislation on investment regime. Thus, article 11 from
GEO nr. 92/1997 gives foreign investors the right to pick competent courts for solving
disputes appearing between them and the Romanian state.
Thus, the foreign investor, in order to solve possible disputes, can choose from one of
the following procedures:
- an internal procedure, provided by the Administrative litigation Law nr. 554/2004 and
the New Code of Civil Procedure;
- an institutional conciliation or arbitration procedure, performed under the auspices of
the International Centre On The Settlement Of Investment Disputes (ICSID);
- an ad-hoc arbitration procedure, according to the United Nations Commission on
International Trade Law (UNCITRAL) Arbitration Regulation.
Thus, it can be observed that the consent to an institutional conciliation or arbitration
procedure, performed under the auspices of the International Centre On The Settlement
Of Investment Disputes (ICSID) is one of the options that the investor has.
Also, the majority of ICSID clauses from modern bilateral treaties on investments
express the consent of Contracting States to submit to the competence of the ICSID, to
the benefit of the national of the other state party to the treaty 29. In this sense, the
majority of bilateral treaties regarding the protection of investments concluded by

28

For a biography on national legislations on investments, see 7 ICSID Review-Foreign Investment

Law Journal 512 (1992); also, A.R. Parra, Provisions on the Settlement, p. 290, 314 and following.
Romania with different states contain such clauses, which refer to the competence of the
ICSID30.
The introduction of these clauses in bilateral treaties represent however only the first
element which leads to the shaping of the parties consent.
The Convention provisions show that the written consent of both parties to the dispute
is necessary. In other words, the clauses included in the bilateral treaties represent, in the
same way as in their introduction in national legislation on investments, only an offer
which must be accepted. Thus, although the provisions of bilateral treaties dont mention
the acceptance of the investor, however, through a mutatis mutandis interpretation, it is
understood that, in this situation also, the investors acceptance of the ICSID competence
is necessary.
We have an example in practice in case AMT v/Zaire, where there was the question of
the acceptance by the investor of the offer contained in a bilateral treaty regarding
investments. In this case the tribunal decided: in the present case, it happens that AMT
(...) has opted for a proceeding before ICSID. AMT has expressed its choice without any
equivocations; this willingness together with that of Zaire expressed in the Treaty, creates
the consent necessary to validate the assumption of jurisdiction by the Centre31.
Finally, it is possible to set up an Interstate Convention through which a state accepts
the competence of the Centre. It would suffice, thus, that private investors subsequently
accept the same competence.
Beginning with the 1990s, a large number of multilateral treaties, as well as other
international instruments, which refer to the ICSID competence, have entered into force.
The mechanism is similar to the one in bilateral treaties regarding the investments that
we mentioned earlier. These multilateral instruments also contain the offers from party
states for the consent regarding ICSID competence, these offers being later accepted by
investors with the nationality of other states party to these Conventions 32. Examples of
such conventions are presented in the following:

29

A. Broches, Bilateral Investment Protection Treaties and Arbitration of Investment Disputes, in The
Art of Arbitration, Liber Amicorum Pieter Sanders (J. Schultz, A. van den Berg eds.) 63, 66 (1982);
G.R. Delaume, ICSID and Bilateral Investment Treaties, News from ICSID, vol. 2/1, p. 12, 13 (1985);
P. Peters, Dispute Settlement Arrangements, p. 121 and following.
 A. NAFTA, the North American Free Trade Agreement from 1992, between Canada,
Mexico and the United States of America 33, contains a Chapter 11 regarding investments.
In Section A, a set of substantive rules is offered regarding investments (articles 1101-
1114); Section B refers to the Settlement of Disputes between a Party and an Investor of
Another Party34. Article 1122 bears the title Consent to Arbitration and contains the
following relevant part:
1. Each Party consents to the submission of a claim to arbitration in accordance with
the procedures set out in this Agreement;
2. The consent given by paragraph 1 and the submission by a disputing investor of a
claim to arbitration shall satisfy the requirement of:

30

Romania concluded such agreements with the following states (mentioned in the chronological order
of the agreements, depending on the first agreement): Great Britain and Northern Ireland (D.C.S. nr.
215/1976, replaced by Law nr. 109/1995 M. Of. nr. 273/1995); Egypt (D.C.S. nr. 367/1976, replaced
by Law nr. 5/1997
M. Of. nr. 18/1997); Austria (Decree nr. 82/1977, replaced by Law nr. 34/1997 M. Of. nr. 47/1997);
France (D.C.S. nr. 82/1977, replaced by Law nr. 88/1995 M. Of. nr. 239/1995); Pakistan (D.C.S. nr.
432/1978, replaced by Law
nr. 4/1996 M. Of. nr. 49/1996); The Belgium Luxembourg Economic Union (D.C.S. nr. 70/1979,
replaced by Law nr. 8/1997 M. Of. nr. 20/1997); Sudan (D.C.S. nr. 418/1979); Gabon (D.C.S. nr.
418/1979); Federal Republic of Germany (D.C.S. nr. 316/1980, replaced by Law nr. 125/1997 M. Of.
nr. 154/1997); Senegal (D.C.S. nr. 316/1980); Cameroon (D.C.S. nr. 67/1981); Denmark (D.C.S. nr.
67/1981, replaced by Law nr. 7/1995 M. Of. nr. 7/1995); Sri Lanka (D.C.S. nr. 342/1981); Morocco
(D.C.S. nr. 52/1982, replaced by Law nr. 61/1994 M. Of. nr. 200/1994); Yugoslavia presently Serbia
and Montenegro (D.C.S. nr. 100/1983, replaced by Law nr. 38/1996 M. Of. nr. 112/1996); China
(D.C.S. nr. 482/1983, replaced by Law nr. 8/1995 M. Of. nr. 7/1995); Malaysia (D.C.S. nr. 482/1983,
replaced by Law nr. 25/1997 M. Of.
nr. 45/1997); Kingdom of the Netherlands (D.C.S. nr. 215/1984, partially replaced by Law nr. 114/1994
M. Of. nr. 337/1994); Bangladesh (D.C.S. nr. 221/1987); Tunisia (D.C.S. nr. 326/1987); Mauritania
(D.C.S. nr. 183/1988); Italy (D.C.S. nr. 82/1977, replaced by H.G. nr. 319/1991); Uruguay (Law nr.
38/1991); Turkey (Law nr. 10/1992 M. Of. nr. 19/1992); Greece (Law
nr. 90/1992 M. Of. nr. 192/1992 and Law nr. 27/1997 M. Of. nr. 46/1997, replaced by Law nr.
166/1997 M. Of. nr. 288/1997); Israel (Law
nr. 91/1992 M. Of. nr. 192/1992, replaced by Law nr. 59/1999 M. Of. nr. 182/1999); the Investment
stimulation agreement with the USA (G.D. nr. 617/1992 M. Of. nr. 289/1992); Treaty between the
Government of Romania and the Government of the United States of America concerning the
reciprocal encouragement and protection of investments (Law nr. 110/1992 M. Of. nr. 293/1992);
Finland (Law nr. 113/1992 M. Of. nr. 302/1992); Cyprus (Law nr. 30/1993
M. Of. nr. 115/1993); Kuwait (Law nr. 90/1993 M. Of. nr. 313/1993); United Arab Emirates (Law nr.
94/1993 M. Of. nr. 4/1994); Republic of Moldova (Law nr. 3/1994 M. Of. nr. 12/1994); Australia (Law
nr. 6/1994 M. Of. nr. 60/1994); Thailand (Law nr. 7/1994 M. Of. nr. 61/ 1994); Argentina (Law nr.
39/1994 M. Of. nr. 161/1994); Switzerland (Law nr. 40/1994
M. Of. nr. 161/1994); Czech Republic (Law nr. 62/1994 M. Of. nr. 201/1994); Hungary (Law nr.
63/1994 M. Of. nr. 201/1994); Russia (Law nr. 81/1994 M. Of. nr. 291/1994); Lithuania (Law nr.
82/1994 M. Of. nr. 291/1994); Portugal (Law nr. 92/1994 M. Of. nr. 308/1994); Slovakia (Law
nr. 97/1994 M. Of. nr. 316/1994); Republic of Korea (Law nr. 103/1994
M. Of. nr. 330/1994, modified by Law nr. 55/1997 M. Of. nr. 69/1997); Peru (Law nr. 105/1994 M.
Of. nr. 330/1994); Bulgaria (Law nr. 106/1994 M. Of. nr. 331/1994); Albania (Law nr. 107/1994 M. Of.
nr. 332/1994); the Philippines (Law nr. 108/1994 M. Of. nr. 334/1994); Poland (Law nr. 109/1994 M. Of.
nr. 334/1994); Algeria (Law nr. 110/1994 M. Of. nr. 334/1994); Croatia (Law nr. 111/1994 M. Of. nr.
334/1994); Paraguay (Law
nr. 115/1994 M. Of. nr. 337/1994); Vietnam (Law nr. 9/1995 M. Of.
nr. 7/1995); Lebanon (Law nr. 28/1995 M. Of. nr. 78/1995); Turkmenistan (Law nr. 37/1995 M. Of.
nr. 97/1995); Armenia (Law nr. 38/1995
M. Of. nr. 97/1995); Ukraine (Law nr. 54/1995 M. Of. nr. 118/1995); Spain (Law nr. 63/1995 M. Of. nr.
128/1995); Belarus (Law nr. 93/1995
M. Of. nr. 256/1995); Chile (Law nr. 94/1995 M. Of. nr. 258/1995); Jordan (Law nr. 110/1995 M. Of.
 (a) Chapter II of the ICSID Convention (Jurisdiction of the Centre) and the Additional
Facility Rules for written consent of the parties;
B. The 1994 Treaty on Energy between the European Communities and 49 states, in
majority European, contains in article 26 provisions regarding the consent to the ICSID
jurisdiction of party states in relation to investors from another party state 35. The treaty
contains an unconditional consent to the ICSID and the Additional Facility. The presented
article mentions also the investors written consent.
C. MERCOSUR36, the Colonia Protocol for the Reciprocal Promotion and Protection of
Mercosur Investments, concluded in Colonia and Buenos Aires, contains a similar
provision. Thus, article 9 of the Protocol offers the investor the possibility to opt for one of

nr. 275/1995); Bolivia (Law

nr. 39/1996 M. Of. nr. 111/1996); Mongolia (Law nr. 57/1996 M. Of. nr. 142/1996); Tunisia (Law nr.
58/1996 M. Of. nr. 142/1996); Slovenia (Law nr. 64/1996 M. Of. nr. 144/1996); Canada (Law nr.
6/1997
M. Of. nr. 19/1997); Kazakhstan (Law nr. 9/1997 M. Of. nr. 21/1997); Qatar (Law nr. 11/1997 M.
Of. nr. 21/1997); Ecuador (Law nr. 12/1997 M. Of. nr. 22/1997); Cuba (Law nr. 58/1997 M. Of. nr.
68/1997); Uzbekistan (Law nr. 59/1997 M. Of. nr. 69/1997); Indonesia (Law
nr. 8/1998 M. Of. nr. 12/1998); Georgia (Law nr. 113/1998 M. Of.
nr. 219/1998); India (Law nr. 158/1998 M. Of. nr. 283/1998); Nigeria (Law nr. 116/1999 M. Of. nr.
320/1999); Mauritius (Law nr. 213/2000 M. Of. nr. 632/2000); the Democratic People's Republic of
Korea (Law nr. 12/2001 M. Of. nr. 93/2001); Macedonia (Law nr. 146/2001 M. Of. nr. 174/2001);
Bosnia and Herzegovina (Law nr. 620/2001 M. Of. nr. 739/2001); Latvia (Law nr. 433/2002 M. Of.
nr. 508/2002); Sweden (Law nr. 651/2002 M. Of.
nr. 901/2002).

31

AMT v/Zaire, court ruling, February 21st 1997, 36 ILM 1531, 1545/6 (1997); also, AAPL v/Sri Lanka,
court ruling, June 27th 1990, 4 ICSID Reports 251; Fedax v/Venezuela, dec. as. comp., June 11th
1997, 37 ILM 1378, 1384 (1998); CSOB v/Slovakia, dec. as. comp., May 24th 1999, 14 ICSID Review-
Foreign Investment Law Journal 251, 264 (1999).

32
several procedures. These include the arbitration under the ICSID Convention. The
consent of the investor is not expressly mentioned.
D. The 1994 Cartagena Agreement37 on free trade, concluded between Mexico,
Columbia and Venezuela, offers, also, another example of consent to ICSID arbitration
through a multilateral agreement. Articles 17-18 offer the investor the option for certain
procedures, including the arbitration of the ICSID. The investor must communicate to the
other party the written consent to the arbitration and include him in the arbitration
request.

See A.R. Parra, Provisins on the Settlement, p. 344and following, 356.

33

32 ILM 605 (1993).

 The consent being given, the bodies competent to solve the dispute (the conciliation
commission or the arbitration tribunal) can be notified by unilateral request by one or the
other of the parties involved in disputes.

The moment
Rule 2 in the Procedural Rules drafted by the ICSID provides: (3) date of consent
meaning the moment in which any of the litigating parties has consented in writing to
submit the dispute to the Centre; if the parties have not manifested their consent in the
same day, the moment is considered the one in which the second party had done it 38.
The date of acceptance is particularly important in the case where the host State makes
a general offer for the acceptance of the ICSID competence in its national legislation or in

34

C.D. Eklund, A Primer on the Arbitration of NAFTA Chapter Eleven Investor - State Disputes, 11
Journal of International Arbitration 135, 140-143 (1994).

35
treaties. In these situations, the moment of consent is determined by the acceptance of the
offer by the investor. Finally, this offer can be accepted through the introduction, by the
Centre39, of a conciliation or arbitration request.
The consent to the Centres jurisdiction creates a large number of legal consequences,
according to the Convention.
Probably, one of the most important consequences is that, once perfected, the consent
becomes irreversible, according to the dispositions of article 25 paragraph (1).
Also, the nationality of the foreign investor, according to the provisions of article 25
paragraph (2), is determined by reference to the date of the consent. Both physical and
legal persons must be nationals of another Contracting State at the moment of consent.

34 ILM 360, 399 (1995); T.W. Wlde, International Investment under the 1994 Energy Charter
Treaty, 29 Journal of World Trade 5, 56-63 (1995); K.J. Vandevelde, Arbitration Provisions in the BITs
and the Energy Charter Treaty, n The Energy Charter Treaty (T.W. Wldeed.) 409, 413 (1996);
J. Paulsson, Arbitration Without Privity, in 10 ICSID Review-Foreign Investment Law Journal 232 (1995).

36

Mercado Comn del Sur; Common Market of the Southern Cone; community constituted at the level
of the southern zone of Latin America, by the Treaty of December 31st 1994, establishing a
common market between the Argentine Republic, the Federal Republic of Brazil, the Republic of
Paraguay and the Eastern Republic of Uruguay.

37
 The consent must intervene before the notification of the Centre. The party that
requests the resolution of the dispute must submit, in its request, information regarding
the consent. The application of the principle forum prorogatur seems to be excluded40.
Before this deadline, the parties are free to consent to the competence of the Centre at
any moment they see fit. The consent refers mainly to the engagement of the parties to
resort to Centre proceedings.
The parties can choose between several formulas: accept only the conciliation, only
the arbitration or the succession of the two.
Also, they can specify several special aspects undetermined though the Convention:

The Andean Pact, signed in 1970 between Mexico, Columbia and Venezuela.

38

1 ICSID Report 154.

39
 - the object of the dispute, establishing the content of the notion of investment, with
the condition not to misinterpret the meaning of this concept;
- the access of the legal person having the nationality of a state party to the dispute,
by accepting the state that considers it foreign;
- the obligation to resort first to domestic remedies;
- the applicable law.

2. The effects of the consent

Evidently, the essential consequence is the acceptance, by the state party, of the
international resolution of the dispute between itself and a private person.

C.F. Amerasinghe, Submissions to the Jurisdiction, p. 217; A. Broches, Convention, Explanatory

Notes and Survey, p. 643.

40

Ch. Schreuer,op. cit., p. 226.

 The consent of the parties has the character of an international commitment, given its
link with an inter-state convention. Compulsory at international level, the commitment
has remarkable legal force41.
This consent is protected from any unilateral action of the state; once given, it cannot
be taken back unilaterally.
The Convention draws all the consequences from this principle. Thus, it thoroughly
provides for the situation where the parties disagree, as well as regarding ones fault on
the constitution of conciliation or arbitration bodies.
Also, the consent is protected against subsequent modifications of the Convention or
of its domain of application, decided either by the contracting state party to the consent
or by the contracting state whose citizen is party in the dispute.
Amendments to the convention, its denunciation, modifications regarding the
application of its territorial competence, have no effect on previous commitments.

41

S. M. Schweber, International arbitration: Three Salient Problems, 1987, p. 1-60. Also, M. Hirsch, The
Arbitration Mechanism of the International Centre for the Settlement of Investment Disputes (1993), p.
62-64.