This article examines some recent controversies surrounding the standards for annulling investor-state awards rendered under the auspices of the World Bank’s International Center for the Settlement of Investment Disputes (ICSID), and suggests practical measures to address them.1

Established in 1965 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention), ICSID provides an international forum for foreign investors and host states to arbitrate their disputes. Just as the American Arbitration Association provides a domestic arbitration forum for U.S. disputes but does not itself establish the contractual rights or tort obligations that are the subject matter of domestic arbitrations, the ICSID Convention does not create the legal standards under which investor-state claims are brought. These standards are instead usually created by bilateral investment treaties that oblige host states, under international law, to accord foreign investments certain treatment and to provide compensation if the state violates those standards. Bilateral investment treaties also often provide that disputes about whether the host state has violated those standards, and about the amount of compensation, are subject to international arbitration. ICSID is a venue frequently selected in the arbitration provision of bilateral investment treaties.

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