Originally from World Arbitration and Mediation Review (WAMR)

PREVIEW

I. INTRODUCTION

Provisional measures, in the context of investor-state arbitrations, refer to interim decisions made to preserve rights of the parties pending the decision of the arbitral tribunal.   Parties to the arbitration, both investors and states, mostly request the tribunals to prevent aggravation of the dispute, stay parallel proceedings, protect investments, and provide security of costs. They are generally free to make use of mechanisms for provisional measures at any stage of their proceeding.  While tribunals have significant discretion in deciding on such applications, they, by and large, rely on factors such as urgency, necessity, an examination of the right requiring protection, risk of irreparable harm, and a determination of their prima facie jurisdiction. 

Article 47 of the ICSID (International Centre for Settlement of Investment Disputes) Convention and its corresponding rules provide for provisional measures in an ICSID arbitration.   However, as with certain other ICSID provisions, arbitral tribunals do not apply the provisions of Article 47 in a way that is consistent with the text of the Convention.   Specifically, several tribunals have taken the common view that provisional measures rendered under Article 47 are binding upon the parties, despite the language of the Article suggesting otherwise. 

In addition to this, a recent empirical study conducted by the British Institute of International & Commercial Law and White & Case titled, “Provisional Measures in Investor-State Arbitration,” discovered that investors are twice as successful as states in securing a favorable outcome for their provisional measures’ applications in the investor-state arbitration regime.   This is also true for arbitrations under the ICSID Convention and the ICSID Additional Facility (AF).  In fact, the contrast between the respective success rates for provisional measure applications is even starker in the arbitrations held under the AF rules (50% success rate for investors; 0% success rate for states). 

The intertwining of the tribunals’ interpretation of Article 47 with their tendency to be more favorable towards investors’ provisional measures applications can cause dissatisfaction among the states.  This lack of textual compliance may cause the states to question the legitimacy of investor-state arbitration as a valid investment dispute resolution regime. ICSID takes such issues very seriously and has accordingly proposed amendments to the existing ICSID Arbitration Rules to allay the concerns of the states during the ongoing fourth revision of its rules, which has been described as the most extensive review to date.