The Continuing Appeal of Annulment?: Lessons from Amco Asia and Cme

Abstract

Parties to an ICSID arbitration are able to seek annulment of an award rendered under the ICSID Convention, but are not able to appeal the merits of the award. This control mechanism was adopted after careful consideration and negotiation as a way to monitor the integrity of ICSID Convention arbitration without imperiling the goal of achieving relatively quick and final resolution of investment disputes. Both Amco Asia v. the Republic of Indonesia and CME v. the Czech Republic raised concerns in the arbitral community; their outcomes seemed to threaten the legitimacy of investor-State arbitration. With Amco Asia the concern was that annulment proceedings might too easily become full-fledged appellate review, thereby undermining the balance between finality and correctness of awards achieved by those designing the ICSID Convention's control mechanism, whereas with CME it was the unavailability of appellate review which seemed problematic. Deciding whether establishment of an appellate mechanism is reasonable depends on the weight given to different objectives served by investor-State arbitration generally and the purpose an appellate body would serve within that framework. An appellate body would, ideally, help to establish systemic regularity and predictability for both investors and States. It is possible, however, that establishing this mechanism would undercut to a significant extent the underlying purpose of the ICSID Convention - the encouragement of foreign direct investment. Moreover, an appellate body would not necessarily be able to resolve all legitimacy issues, and its failure to do so could backfire, generating even more criticism about the integrity of investor-State arbitration. The international arbitral community would be advised to consider these questions carefully before making decisions. Festina lente.

Keywords: economic law, investor-State arbitration, international appellate mechanisms, ICSID, NAFTA, BIT, bilateral investment treaties

JEL Classification: F13, K33