ICSID - The World's Leading Institution for Investor-State Dispute Settlement

A L T E R N A T I V E D I S P U T E R E S O L U T I O N
I n t e r n a ti o n a l J u r i s p r u d e n c e
INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT
DISPUTES (ICSID)
What is ICSID?
ICSID is the world’s leading institution devoted to international

investment dispute settlement. States have agreed on ICSID as a forum for
investor-State dispute settlement in most international investment treaties
and in numerous investment laws and contracts. It was established in 1966
by the Convention on the Settlement of Investment Disputes between States
and Nationals of Other States (the ICSID Convention). The ICSID
Convention is a multilateral treaty formulated by the Executive Directors of
the World Bank to further the Bank’s objective of promoting international
investment. ICSID is an independent, depoliticized and effective dispute-
settlement institution. Its availability to investors and States helps to
promote international investment by providing confidence in the dispute
resolution process.
The seat of the ICSID is at the principal office of the International

Bank for Reconstruction and Development.
Purpose
ICSID provides facilities for conciliation and arbitration of investment

disputes between Contracting States and nationals of other Contracting
States in accordance with the provisions of the ICSID Convention. The ICSID
process is designed to take account of the special characteristics of
international investment disputes and the parties involved, maintaining a
careful balance between the interests of investors and host States. Each
case is considered by an independent Conciliation Commission or Arbitral
Tribunal, after hearing evidence and legal arguments from the parties.
The ICSID Convention
The ICSID Convention is a treaty ratified by 154 Contracting States. It

entered into force on October 14, 1966, 30 days after ratification by the first
20 States.
The Convention:
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3S - Dalidig, Domingo, Limpot, Marañon, Orcullo, Somera, Taduran
1. creates the ICSID Administrative Council, Secretariat, Panels of
Arbitrators and of Conciliators, and the status, immunities and
privileges of the Centre (Chapter I);
2. establishes ICSID’s jurisdiction (Chapter II);
3. authorizes conciliation (Chapter III);
4. authorizes arbitration (Chapter IV);
5. addresses replacement and disqualification of conciliators and
arbitrators (Chapter V);
6. discusses the cost of proceedings (Chapter VI);
7. deals with the place of proceedings (Chapter VII);
8. provides for disputes between Contracting States (Chapter (VIII);
9. provides for an amendment procedure (Chapter IX); and
10. includes final provisions such as the processes for signature,
ratification, and denunciation of the Convention (Chapter X).
Structure
The International Centre for Settlement for International Disputes (Centre)

shall have an Administrative Council and a Secretariat and shall maintain a
Panel of Conciliators and a Panel of Arbitrators.
Panel of Conciliators and Panel of Arbitrators
Who may designate
(1) Each Contracting State may designate to each Panel four persons who
may but need not be its nationals.
(2) The Chairman of the Administrative Council (Chairman) may designate
ten persons to each Panel. The persons so designated to a Panel shall
each have a different nationality.
Qualifications
(1) Persons designated to serve on the Panels shall be persons of high

moral character and recognized competence in the fields of law,
commerce, industry or finance, who may be relied upon to exercise
independent judgment. Competence in the field of law shall be of
particular importance in the case of persons on the Panel of
Arbitrators.
(2) The Chairman, in designating persons to serve on the Panels, shall in
addition pay due regard to the importance of assuring representation
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on the Panels of the principal legal systems of the world and of the
main forms of economic activity
Jurisdiction
The jurisdiction of the ICSID extends to any legal dispute arising directly out
of an investment, between a Contracting State (or any constituent
subdivision or agency of a Contracting State designated to the Centre by
that State) and a national of another Contracting State, which the parties to
the dispute consent in writing to submit to the Centre. When the parties
have given their consent, no party may withdraw its consent unilaterally.
 “National of another Contracting State” means:

1. 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 dispute to conciliation or
arbitration as well as on the date on which the request was
registered, but does not include any person who on either date
also had the nationality of the Contracting State party to the
dispute;
2. 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
3. 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.
 Consent by a constituent subdivision or agency of a Contracting State
shall require the approval of that State unless that State notifies the
Centre that no such approval is required.
 No Contracting State shall give diplomatic protection, or bring an
international claim, in respect of a dispute which one of its nationals and
another Contracting State shall have consented to submit or shall have
submitted to arbitration under this Convention, unless such other
Contracting State shall have failed to abide by and comply with the award
rendered in such dispute.
Arbitration
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Request for Arbitration
 Any Contracting State or any national of a Contracting State wishing to

institute arbitration proceedings shall address a request to that effect in
writing to the Secretary-General of the Secretariat who shall send a copy
of the request to the other party.
 The request shall contain information concerning the issues in dispute,
the identity of the parties and their consent to arbitration in accordance
with the rules of procedure for the institution of conciliation and
arbitration proceedings.
 The Secretary-General shall register the request unless he finds, on the
basis of the information contained in the request, that the dispute is
manifestly outside the jurisdiction of the Centre. He shall forthwith notify
the parties of registration or refusal to register.
Constitution of the Tribunal
 The Arbitral Tribunal (the Tribunal) shall be constituted as soon as

possible after registration of a request.
 The Tribunal shall consist of a sole arbitrator or any uneven number of
arbitrators appointed as the parties shall agree.
 Where the parties do not agree upon the number of arbitrators and the
method of their appointment, the Tribunal shall consist of three
arbitrators, one arbitrator appointed by each party and the third, who
shall be the president of the Tribunal, appointed by agreement of the
parties.
 The majority of the arbitrators shall be nationals of States other than the
Contracting State party to the dispute and the Contracting State whose
national is a party to the dispute; provided, however, that this shall not
apply if the sole arbitrator or each individual member of the Tribunal has
been appointed by agreement of the parties.
 Arbitrators may be appointed from outside the Panel of Arbitrators.
Powers and Functions of the Tribunal
 The Tribunal shall be the judge of its own competence. Any objection by a
party to the dispute that that dispute is not within the jurisdiction of the
Centre, or for other reasons is not within the competence of the Tribunal,
shall be considered by the Tribunal which shall determine whether to deal
with it as a preliminary question or to join it to the merits of the dispute.
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 The Tribunal shall decide a dispute in accordance with such rules of law as
may be agreed by the parties. In the absence of such agreement, the
Tribunal shall apply the law of the Contracting State party to the dispute
(including its rules on the conflict of laws) and such rules of international
law as may be applicable.
 The Tribunal may not bring in a finding of non liquet on the ground of
silence or obscurity of the law. But this shall not prejudice the power of
the Tribunal to decide a dispute ex aequo et bono if the parties so agree.
 Except as the parties otherwise agree, the Tribunal may, if it deems it
necessary at any stage of the proceedings,
(a) call upon the parties to produce documents or other evidence, and
(b) visit the scene connected with the dispute, and conduct such
inquiries there as it may deem appropriate.
 Any arbitration proceeding shall be conducted in accordance with the
provisions of the Convention and, except as the parties otherwise agree,
in accordance with the Arbitration Rules in effect on the date on which the
parties consented to arbitration. If any question of procedure arises which
is not covered by the Convention or the Arbitration Rules or any rules
agreed by the parties, the Tribunal shall decide the question.
The Award
(1) The Tribunal shall decide questions by a majority of the votes of all its
members.
(2) The award of the Tribunal shall be in writing and shall be signed by the
members of the Tribunal who voted for it.
(3) The award shall deal with every question submitted to the Tribunal,
and shall state the reasons upon which it is based.
(4) Any member of the Tribunal may attach his individual opinion to the
award, whether he dissents from the majority or not, or a statement of
his dissent.
(5) The Centre shall not publish the award without the consent of the
parties.
(6) The Secretary-General shall promptly dispatch certified copies of the
award to the parties. The award shall be deemed to have been
rendered on the date on which the certified copies were dispatched.
(7) The Tribunal upon the request of a party made within 45 days after
the date on which the award was rendered may after notice to the
other party decide any question which it had omitted to decide in the
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award, and shall rectify any clerical, arithmetical or similar error in the
award.
Recognition and Enforcement of the Award
 The award shall be binding on the parties and shall not be subject to any
appeal or to any other remedy except those provided for in the
Convention.
 Each Contracting State shall recognize an award rendered pursuant to the
ICSID Convention as binding and enforce the pecuniary obligations
imposed by that award within its territories as if it were a final judgment
of a court in that State.
 A party seeking recognition or enforcement in the territories of a
Contracting State shall furnish to a competent court or other authority
which such State shall have designated for this purpose a copy of the
award certified by the Secretary-General.
 Execution of the award shall be governed by the laws concerning the
execution of judgments in force in the State in whose territories such
execution is sought.
Place of Proceedings
Conciliation and arbitration proceedings shall be held at the seat of the

Centre. But it may be held, if the parties so agree,
(a) at the seat of the Permanent Court of Arbitration or of any other

appropriate institution, whether private or public, with which the
Centre may make arrangements for that purpose; or
(b) at any other place approved by the Commission or Tribunal after
consultation with the Secretary-General.
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SGS SOCIETE GENERALE DE SURVEILLANCE S.A. vs. REPUBLIC OF

THE PHILIPPINES
ICSID CASE No. ARB/02/06
FACTS:
SGS is a large Swiss corporation providing certification services based

on pre-shipment inspections carried out on behalf of the governmental
authorities of the importing country. Pre shipment inspection not only covers
quality, quantity and export market price but also seeks to verify compliance
with import regulations, the declared value of goods and their classification
for customs purposes. SGS also provides assistance in the modernization of
customs and tax infrastructures in the country of import. The Philippines
entered into 2 successive comprehensive import supervision service (CISS)
contracts with SGS under which SGS would provide specialized services to
assist in improving the customs clearance and control processes of the
Philippines. The agreement was first agreed to last for 3 years but it was
subsequently extended. In the period from March 1992 to March 1998,
payment to SGS for inspections was made regularly pursuant to the
revolving letter of credit arrangements set out in the CISS Agreement.
Problems arose in 1998 with the change of administration in the Philippines.
SGS submitted to the Philippines certain monetary claims in the amount of
approximately US140m which were subject to various attempts for amicable
settlement. SGS then sent a request for arbitration before the International
Centre for Settlement of Investment Disputes (ICSID) invoking the
provisions of a bilateral Agreement of 1997 between the Swiss Confederation
and the Republic of the Philippines on the promotion and reciprocal
protection of Investments (BIT). It alleged that in refusing to pay the
amount claimed (most of which was conceded by the BOC to be payable),
the Philippines is in breach of the BIT. SGS bases its request for arbitration
on the ICSID Convention considering that there is a dispute of legal nature
arising directly out of an investment between a contracting state and a
national of another contracting state and the parties have consented in
writing to ICSID Arbitration. The Philippines filed an initial submission on
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jurisdiction raising objections to the jurisdiction of the tribunal on the basis
that it had not consented to submit the dispute to ICSID arbitration. In
particular, it argues that there was no investment in the Philippines as
required by the BIT and that the dispute is purely contractual in character as
such, the dispute are governed by a subsisting dispute resolution provision
in the CISS agreement requiring submission of all contractual disputes to the
courts of the Philippines.
SGS on the other hand argues that the jurisdictional requirements under
Article 25(1) of ICSID Convention are satisfied. First, the dispute is a legal
dispute as it concerns the failure by the Philippines to perform their
obligations to SGS under the BIT and the CISS Agreement. Second, the
dispute arises directly out of an investment. SGS’s activities under the CISS
Agreement clearly satisfied the investment requirements identified in ICSID
case law with regard to duration, regularity of profit and return and the
substantial commitment of human and financial resources in setting up the
pre-shipment inspection system and assisting with the modernisation of the
Philippines’ customs infrastructure, thus making a significant contribution to
the development of the Philippines.. third, there is no doubt that the dispute
is between Contracting State and a national of another contracting state.
Lastly, the parties have consented in writing to ICSID arbitration
ISSUE: Whether or not tribunal can exercise jurisdiction over contractual

disputes concerning an investment?
RULING:
Article VIII of the BIT provides for settlement of disputes with respect
to investments between a Contracting Party and an investor of the other
Contracting Party. If a dispute is not resolved by consultations between the
parties pursuant to Article VIII(1), the investor may submit the dispute
either to the national jurisdiction of the Contracting Party in whose territory
the investment has been made or to international arbitration, and in the
latter case, at the investor’s option, to ICSID or UNCITRAL arbitration. Under
Article X(2) of the BIT, however, “Each contracting party shall observe any
obligation it has assumed with regard to specific investments in its territory
by investors of the other contracting party.” includes commitments or
obligations arising under contracts entered into by the host State. The basic
obligation on the State in this case is the obligation to pay what is due under
the contract, which is an obligation assumed with regard to the specific
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investment. But this obligation does not mean that the determination of how
much money the Philippines is obliged to pay becomes a treaty manner. The
extent of the obligation is still governed by the contract and can only be
determined by reference to the terms of the contract. Article X(2) makes it a
breach of the BIT for the host State to fail to observe binding commitments,
including contractual commitments, which it has assumed with regard to
specific investments. But it does not convert the issue of the extent or
content of such obligations into an issue of international law. that issue is
still governed by the investment agreement.
Jurisdiction of the Tribunal is defined by reference to the BIT and the

ICSID Convention. But the Tribunal should not exercise its jurisdiction over a
contractual claim when the parties have already agreed on how such a claim
is to be resolved, and have done so exclusively. SGS should not be able to
approbate and reprobate in respect of the same contract: if it claims under
the contract, it should comply with the contract in respect of the very matter
which is the foundation of its claim. The Philippine courts are available to
hear SGS’s contract claim. Until the question of the scope or extent of the
Respondent’s obligation to pay is clarified—whether by agreement between
the parties or by proceedings in the Philippine courts as provided for in
Article 12 of the CISS Agreement—a decision by this Tribunal on SGS’s claim
to payment would be premature. The limitation period for proceedings to
recover the debt before the Philippine courts has not expired. The Tribunal
holds that it has jurisdiction over SGS’s claim under Articles X(2) and IV of
the BIT, but that in respect of both provisions, SGS’s claim is premature and
must await the determination of the amount payable in accordance with the
contractually-agreed process. The present arbitration proceedings shall be
stayed pending a decision on the amount due but unpaid under the CISS
agreement, a matter which is to be determined by the agreed contractual
forum.
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IN THE MATTER OF THE SOUTH CHINA SEA ARBITRATION
BEFORE AN ARBITRAL TRIBUNAL CONSTITUTED UNDER ANNEX VII

TO THE 1982 UNITED NATIONS CONVENTION ON THE LAW OF THE
SEA
PCA Case No 2013-19
FACTS:
The Parties to this arbitration are the Republic of the Philippines and the
People’s Republic of China. This arbitration concerns disputes between the
parties regarding the legal basis of maritime rights and entitlements in the
South China Sea, the status of certain geographic features in the South
China Sea, and the lawfulness of certain actions taken by China in the South
China Sea. The basis for this arbitration is the 1982 United Nations
Convention on the Law of the Sea (UNCLOS).
On January 22, 2013, the Philippines initiated compulsory arbitration

proceedings against China by Notification and Statement of Claim pursuant
to Articles 286 and 287 and in accordance with Article 1 of Annex VII of the
UNCLOS. In response, China presented a Note Verbale to the Department of
Foreign Affairs of the Philippines on February 19, 2013, rejecting the
arbitration and returning the Notification and Statement of Claim to the
Philippines.
Nevertheless, the arbitration being compulsory, the Philippines appointed

Judge Rüdiger Wolfrum, a German national, as a member of the arbitral
tribunal. As China did not appoint an arbitrator, the President of the
International Tribunal for the Law of the Sea, pursuant to Articles 3(c) and
3(e) of Annex VII to the UNCLOS, appointed Judge Stanislaw Pawlak, a
national of Poland, as the second arbitrator. The three remaining arbitrators
were appointed pursuant to Articles 3(d) and 3(e) of Annex VII to the
UNCLOS.
On July 12, 2013, the arbitral tribunal issued Administrative Directive No.
1, pursuant to which the Permanent Court of Arbitration (PCA) was
appointed as Registry.
China has consistently rejected the Philippines’ recourse to arbitration

and has adhered to a position of non-acceptance and non-participation in the
proceedings. China did not participate in the constitution of the arbitral
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tribunal, it did not attend the Hearings on Jurisdiction or on the Merits, and it
did not reply to the arbitral tribunal’s invitations to comment on specific
issues of substance or procedure.
Despite its decision not to appear formally at any point in these

proceedings, China has taken steps to informally make clear its view that the
arbitral tribunal lacks jurisdiction to consider any of the Philippines’ claims.
In a position paper made public on December 7, 2014, China argued that the
arbitral tribunal lacks jurisdiction because:
(1) The essence of the subject-matter of the arbitration is territorial

sovereignty over several maritime features in the South China Sea, which is
beyond the scope of the UNCLOS. (Legal basis: Under Art. 286 of UNCLOS,
compulsory arbitration merely covers any dispute concerning the
interpretation or application of the UNCLOS.)
(2) Even assuming some of the claims were concerned with the
interpretation and application of the UNCLOS, they would still be an integral
part of maritime delimitation, which has been excluded by China through its
2006 Declaration and consequently is not subject to compulsory arbitration.
(3) Given that China and the Philippines have agreed to settle their
disputes in the South China Sea through negotiation, the Philippines is
precluded from initiating arbitration unilaterally. (Legal basis: Under Art.
286 of the UNCLOS, compulsory arbitration may only apply “where no
settlement has been reached” between the disputants.)
ISSUE: Whether or not the arbitral tribunal has jurisdiction.
RULING: Yes, the arbitral tribunal has jurisdiction.
China’s non-participation cannot bar the continuation of the proceedings.

Under Art. 9 of Annex VII to the UNCLOS, if one of the parties to the dispute
does not appear before the arbitral tribunal or fails to defend its case, the
other party may request the tribunal to continue the proceedings and to
make its award. Absence of a party or failure of a party to defend its
case shall not constitute a bar to the proceedings. Before making its
award, the arbitral tribunal must satisfy itself not only that it has jurisdiction
over the dispute but also that the claim is well founded in fact and law.
As set out above, where a party does not appear before the arbitral
tribunal, Article 9 of Annex VII to the UNCLOS requires as condition that “the
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arbitral tribunal must satisfy itself not only that it has jurisdiction over the
dispute but also that the claim is well founded in fact and law.”
Although China did not participate in the constitution of the tribunal, the
latter held that it had been properly constituted pursuant to the provisions of
Annex VII to the UNCLOS. The tribunal had taken steps to satisfy itself
regarding its jurisdiction, including through questions posed to the
Philippines and through its decision to bifurcate the proceedings by
convening a separate hearing to consider the matter of jurisdiction and
admissibility of the Philippines’ submissions. The tribunal also recalled the
steps it had taken to safeguard the procedural rights of both Parties in the
circumstances of China’s non-participation.
With respect to the question of whether the question concerns an

interpretation or application of the UNCLOS, the tribunal held in the
affirmative. Indeed, there is a dispute between the parties regarding
sovereignty over islands, but held that the matters submitted to arbitration
by the Philippines do NOT concern sovereignty. That there exists a dispute
over sovereignty between the parties, does not mean that sovereignty is
also the appropriate characterization of the claims the Philippines has
submitted in the proceedings. Each of the Philippines’ claims reflected a
dispute concerning the UNCLOS. A dispute concerning the interaction
between the UNCLOS and other rights (including any Chinese historic rights)
is a dispute concerning the UNCLOS.
On the matter maritime delimitation excluded by China through its 2006

Declaration, the tribunal noted that a dispute concerning whether a State
possesses an entitlement to a maritime zone is a distinct matter from the
delimitation of maritime zones in an area in which they overlap. While a wide
variety of issues are commonly considered in the course of delimiting a
maritime boundary, it does not follow that a dispute over each of these
issues is necessarily a dispute over boundary delimitation.
(Note: In connection with the foregoing, the tribunal earlier said that,
among others, the Philippines is merely seeking a declaration that China’s
rights and entitlements in the South China Sea must be based on the
UNCLOS and not on any claim to historic rights.)
With respect to China’s third argument, the tribunal held that the
preconditions under the UNCLOS before the application of compulsory
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arbitration has been complied with. Under Art. 286 of the UNCLOS, any
dispute concerning the interpretation or application of the UNCLOS shall,
where no settlement has been reached by recourse to Section 1, be
submitted at the request of any party to the dispute to the court or tribunal
having jurisdiction under this section.
Indeed, although the dispute settlement mechanism of the UNCLOS

provides for compulsory settlement, including through arbitration, it also
permits parties to agree on the settlement of disputes through alternative
means of their own choosing. Articles 281 and 282 of the UNCLOS may
prevent a State from making use of the mechanisms under the same if they
have already agreed to another means of dispute resolution. Article 283 also
requires the parties to exchange views regarding the settlement of their
dispute before beginning arbitration.
In this regard, the (1) 2002 China–ASEAN Declaration on the Conduct of

Parties in the South China Sea, and (2) the series of joint statements issued
by the Philippines and China referring to the resolution of disputes through
negotiations were NOT intended to be legally binding documents. With
respect to the (3) Treaty of Amity and Cooperation in Southeast Asia and the
(4) Convention on Biological Diversity, both are legally binding agreements
with their own procedures for disputes, but neither provides a binding
mechanism and neither excludes other procedures.
The Philippines had sought to negotiate with China and it is well

established that international law does not require a State to continue
negotiations when it concludes that the possibility of a negotiated solution
has been exhausted.
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FEDERAL DEPOSIT INSURANCE CORPORATION VS. IIG CAPITAL
FACTS:
IIG Capital appeals the district court's confirmation and enforcement of

the award resulting from arbitration between the FDIC and IIG on the
ground that the sole arbitrator, Grigera Naon, failed to disclose his prior and
ongoing contacts with Jose Astigarraga, counsel for the FDIC. IIG argues
that it is entitled to an evidentiary hearing to determine the extent of Naon
and Astigarraga's contacts and whether the award should be vacated
because of them.
Specifically, IIG asserts that (a) it was unable to present its case before
an impartial arbitrator; (b) the composition of the arbitral authority was not
what IIG agreed to because IIG was not aware of Naon's contacts with
Astigarraga; and (3) recognizing the award of a biased arbitrator would be
contrary to United States public policy.
ISSUE:
Whether or not the IIG is entitled to evidentiary hearing and whether or not
the award by the district court should be awarded
RULING:
International arbitration awards such as the one in this case "are subject
only to minimal standards of domestic judicial review for basic fairness and
consistency with national public policy." An arbitral award must be confirmed
unless appellants can successfully assert one of the seven defenses against
enforcement of the award enumerated in Article V of the New York
Convention.
The "mere appearance of bias or partiality is not enough to set aside an

arbitration award", but it is enough to require the district court to grant an
evidentiary hearing. Records disclose that the fact that Naon, who was the
director of an international arbitration program at American University, hired
Astigarraga as a faculty member for the summer program, only reveals
"nothing beyond the kind of professional interactions that one would expect
of successful lawyers active in the specialized area".
It is difficult to see how Naon and Astigarraga's participation in the same

summer program would lead Naon to curry favor with Astigaragga by ruling
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in his party's. And Naon, the arbitrator, was the director of the summer
program. As the party with the power to hire Astigarraga, Naon had no need
to gain Astigarraga's favor through the ruling. Therefore, Naon and
Astigarraga's contact through a professional organization in 2003, years
before the arbitration began, does not warrant an evidentiary hearing. Such
professional contact does not, in any manner, give Naon a motive for using
his decision to curry Astigarraga's favor.
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RUSK RENOVATIONS INC. V. ROBERT DUNSWORTH, INGRID
DUNSWORTH, AND EUROPA STAIRWAYS INC.
FACTS:
Rusk Renovations Inc. had a contract to renovate an apartment in New

York, and it subcontracted Europa Stairways Inc. to supply materials for, and
install, new stairways. Rusk paid half the subcontract price as a down
payment. Two months later, when the subcontract was still in the design
phase, Europa went out of business.
The subcontract provided for arbitration. Rusk initiated arbitration in New

York. Apparently, Rusk and the arbitrator viewed the proceeding as including
a claim in fraud made personally against the CEO of Europa, Ms. Ingrid
Dunsworth, and her husband. They were not parties to the arbitration
agreement, and they did not consent to be joined in the proceeding.
The Dunsworths did not participate in the arbitration. Neither did Europa.
The arbitrator made an award against all three for the down payment and an
additional $12,000 described as "liquidated damages".
Rusk seeks enforcement in Nova Scotia under the International

Commercial Arbitration Act. Europa did not oppose. The Dunsworths do.
ISSUES:
1. Whether or not a personal award against the Dunsworths is within the

International Commercial Arbitration Act
2. Whether or not the Dunsworths have established a ground for refusal
RULING:
1. NO. International Commercial Arbitration Act does not apply.
Arbitrators have authority either by contract or by statute. They are

either consensual or statutory. The International Commercial Arbitration Act
is focused on the consensual kind. The Dunsworths never bound themselves
to the arbitration initiated by Rusk Renovations, and it was not a statutory
arbitration.
Article 2.1: Each Contracting State shall recognize an agreement in

writing under which the parties undertake to submit to arbitration all or any
differences which have arisen or which may arise between them in respect of
a defined legal relationship, whether contractual or not, concerning a
subject-matter capable of settlement by arbitration.
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Article 4.1: To obtain the recognition and enforcement mentioned in the
preceding article, the party applying for recognition and enforcement shall,
at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof;
(b) The original agreement referred to in article II or a duly certified copy

thereof.
Article 7(1) of the Model Law defines "arbitration agreement" as an

"agreement by the parties". After that, the Model Law frequently refers to
"the parties", but at no point does it suggest any distinction between the
parties to the agreement and the parties to the arbitration. Neither the main
part of the statute, the Convention, nor the Model Law provide any
mechanism by which a person who is not a party to the arbitration
agreement can become a party to the arbitration.
The arbitration agreement between Rusk Renovations and Europa

Stairways recognizes that it is impossible to join someone against their will.
A party to the agreement may join a person under certain conditions
"provided that the party sought to be joined consents in writing to such
joinder".
The award against the Dunsworths is not an arbitral award under the
International Commercial Arbitration Act because the Dunsworths are not
parties to an arbitration agreement and did not consent to be joined. This is
a sufficient reason to dismiss the application without calling on the
Dunsworths to prove anything under Article 5 of the Convention.
2. YES. Assuming arguendo that the International Commercial Arbitration

Act did apply, recognition and enforcement still cannot be had because Rusk
Renovations failed to give the Dunsworths proper notice of the personal
claim.
Article 5.1(b): The party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator or of the arbitration
proceedings or was otherwise unable to present his case.
Article 23(1) of the Model Law required Rusk to "state the facts
supporting [its] claim, the points at issue and the relief or remedy sought",
and Article 25(a) required the arbitrator to terminate the arbitration
proceedings if "the claimant fails to communicate his statement of claim".
Section 6.3.1 of the arbitration agreement includes:
A demand for arbitration shall be made in writing, delivered to the other

party to the subcontract, and filed with the person or entity administering
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the arbitration. The party filing a notice of demand for arbitration must
assert in the demand all claims then known to that party on which
arbitration is permitted to be demanded.
A demand for arbitration was never delivered to the Dunsworths. Mr.

Rusk filled out an "Online Filing Demand for Arbitration/Mediation Form" with
the American Arbitration Association. The form says, "To institute
proceedings, please send a copy of this form and the Arbitration Agreement
to the opposing party." Mr. Rusk did not do that. Had Mr. Rusk sent the
demand for arbitration to the Dunsworths, they might or might not have
seen that a claim was being made against them personally. Such a claim is
not clear from the document. Nothing was sent by Rusk Renovations or the
American Arbitration Association to the Dunsworths or Europa Stairways to
tell them of the allegation of fraud, the claim for personal liability, or the
process by which the Dunsworths were taken to be parties to an arbitration
without their consent. Ms. Dunsworth never got to tell the arbitrator about
her side of the story because nothing told her that she and her husband
were being claimed against.
In light of the undisclosed allegation of fraud, the unexplained lifting of

the corporate veil, and the absence of a legal basis for including non-
contracting individuals in an arbitration, the recognition of, or enforcement
of, the award in favour of Rusk Renovations is hereby denied.
CONCLUSION:
The application to recognize and enforce the arbitration award by Mr.

Thomas D. Czik at New York on November 4, 2010 is allowed as against
Europa Stairways Inc. but, as against Ingrid Dunsworth and Robert
Dunsworth, the application is dismissed because the Dunsworths never
agreed to arbitration, and the International Commercial Arbitration Act
cannot apply to them.
Rusk Renovations Inc. will have costs against Europa Stairways Inc. of
$500 plus disbursements for the unopposed application.
Ingrid Dunsworth and Robert Dunsworth will have costs against Rusk
Renovations Inc. of $2,000 plus disbursements.
18
LW INFRASTRUCTURE PTE LTD vs LIM CHIN SAN CONTRACTORS PTE
LTD
FACTS:
LCSC had been LWI’s subcontractor for a building project. However, it
failed to complete certain works by the completion date. As a result, a
dispute arose between the parties and LWI commenced arbitration against
LCSC on 22 June 2004. A final award was eventually rendered by the
Arbitrator in favour of LWI on 29 June 2010. Pursuant to the Singapore
Arbitration Act, both parties appealed that final award to the High Court on
questions of law arising out of the award. LCSC’s appeal was dismissed
but LWI’s appeal was substantially allowed. The final award was
remitted to the Arbitrator for reconsideration.
The Arbitrator subsequently rendered his “Second Supplementary
Award” on 21 September 2011 which increased the quantum of damages
awarded to LWI due to liquidated damages but it only dealt with post-
award interest. The awards were silent on pre-award interest.
Accordingly, on 17 October 2011, LWI’s solicitors wrote to the
Arbitrator and requested that he render an additional award for pre-
award interest. LWI cited section 43(4) of the Arbitration Act which
provided that, “Unless otherwise agreed by parties, a party may, within 30
days of receipt of the award and upon notice to the other party, request the
arbitral tribunal to make an additional award as to claims presented
during the arbitration proceedings but omitted from the award”.
The Arbitrator responded 3 days later on 20 October 2011 with the
Additional Award which awarded pre-award interest. LCSC’s solicitors
protested against the Additional Award on the same day it was rendered and
argued that LCSC had been deprived of an opportunity to make
submissions. In any event, LCSC had also argued that the Arbitrator
was functus officio and therefore had no power to make the
Additional Award.
The High Court had set aside the Additional Award on the basis that
there had been a breach of natural justice by the Arbitrator. However,
the High Court refused to make a declaration that the Additional
Award was a nullity.
As a result, LWI appealed against the setting aside of the
Additional Award while LCSC appealed against the refusal of the
High Court to grant a declaration that the Additional Award was a
nullity.
ISSUE/S:
1. WON the high court erred in refusing to declare the award a nullity
19
2. WON the additional award out to be set aside for breach of natural
justice
RULING:
1. NO. The courts have no power except those expressly provided
for in the Arbitration Act.
LCSC also sought to argue that the Arbitration Act did not exclude the
power of the Singapore courts to grant a declaratory judgment in an
arbitration. This was on the basis that the court retained supervisory
jurisdiction over the arbitral tribunal through the grant of a declaratory
order. Pursuant to the legislative history of the Arbitration Act, a concurrent
supervisory jurisdiction would be contrary to the underlying doctrine of
minimal curial intervention in arbitration. The certainty of when court
intervention would be permitted would be “significantly
undermined” if the court could exercise the grant of declaratory
orders, where such a power was not expressly provided for in the
Arbitration Act.
The Court cited the DOCTRINE OF MINIMAL CURIAL
INTERVENTION as found in Article 5 of the Model Law and held that its
effect was “to confine the power of the Court to intervene in an
arbitration to those instances which were provided for in the Model
Law and to “exclude any general or residual powers” arising from
sources other than the Model Law.”
The Court further held that section 47 of the Arbitration Act was
comparable to Article 5 of the Model Law and should be construed in a
manner that was consistent with the intent underlying Article 5 of the Model
Law. Section 47 provided that “No judicial review of award. The Court shall
not have jurisdiction to confirm, vary, set aside or remit an award on an
arbitration agreement except where so provided in this Act”.
2. YES.
Section 48(1)(a)(vii) governs the setting aside of an award for a
breach of natural justice. “An award may be set aside by the Court — (a) if
the party who applies to the Court to set aside the award proves to the
satisfaction of the Court that (vii) a breach of the rules of natural justice
occurred in connection with the making of the award by which the
rights of any party have been prejudiced;”
A party challenging an arbitration award as having contravened the

rules of natural justice must establish the following:
(a) which rule of natural justice was breached;
(b) how it was breached;
20
(c) in what way the breach was connected to the making of the award; and
(d) how the breach had prejudiced the party’s rights.
In relation to the issue of prejudice, the Court explained that not every
breach of natural justice will amount to the required prejudice to attract
curial intervention it must be established that the breach of the rules of
natural justice must, at the very least, have actually altered the final
outcome of the arbitral proceedings in some meaningful way. If, on
the other hand, the same result could or would ultimately have been
attained, or if it can be shown that the complainant could not have
presented any ground-breaking evidence and/or submissions
regardless, the bare fact that the arbitrator might have inadvertently
denied one or both parties some technical aspect of a fair hearing
would almost invariably be insufficient to set aside the award.
The applicant is not required to “demonstrate affirmatively that a
different outcome would have ensued but for the breach of natural justice”
or that his application was not “bound to fail if there was a possibility that
the same result might have been arrived at even if the breach of natural
justice had not occurred” The test is whether “there had been some
actual or real prejudice caused by the alleged breach.”
It is never in the interest of the Court, much less its role, to assume
the function of the arbitral tribunal. To say that the Court must be
satisfied that a different result would definitely ensue before
prejudice can be said to have been demonstrated would be incorrect
in principle because it would require the Court to put itself in the
position of the arbitrator and to consider the merits of the issue with
the benefit of materials that had not in the event been placed before
the arbitrator. The real inquiry was whether the breach of natural
justice was merely technical and inconsequential or whether as a
result of the breach, the arbitrator had been denied the benefit of
arguments or evidence that had a real as opposed to a fanciful
chance of making a difference to his deliberations. The issue was
whether the material could reasonably have made a difference to the
arbitrator; rather than whether it would necessarily have done so. Where it
was evident that there was no prospect whatsoever that the material if
presented would have made any difference because it wholly lacked any
legal or factual weight, then it could not seriously be said that the
complainant had suffered actual or real prejudice in not having had
the opportunity to present this to the arbitrator”
(I) The jurisdiction question and the substantive question
The Court considered that there were actually two different issues to which
LCSC was entitled to be heard on in respect of the Additional Award (a)
firstly, whether the requirements of s 43(4) of the Act were met – ie,
21
whether pre-award interest was a presented claim that had been omitted
from the Second Supplementary Award (“the jurisdictional question”); and
(b) secondly, if the requirements of s 43(4) of the Act were met, whether
pre-award interest should be awarded, and if so, to what extent (“the
substantive question”).
The Court considered that the High Court had only directed its mind to
the jurisdictional question and as a result, the arguments on appeal were
mostly directed to that issue.
(II) Lack of express provision does not remove right to be heard
The Court held that the Arbitrator should have given LCSC the right to
be heard on the applicability of section 43(4) prior to his decision.
This is so, notwithstanding the absence of the express words “giving
the parties a reasonable opportunity to be heard” in the section.
The Court held that the notice requirement “was included on the
premise that embedded within it was the requirement that “the
other party” be afforded the opportunity to respond to the
requesting party’s request for an additional award”
LWI had cited the Analytical Commentary on Draft Texts of a Model
produced by the UNCITRAL (“Analytical Commentary”), which commented
on Article 33(3) as follows: “The third possible measure was to make an
additional award as to any claim presented in the arbitral proceedings but
omitted from the award (e.g. claimed interest was erroneously not
awarded). If the arbitral tribunal consider[ed] the request, not necessarily
the omitted claim, to be justified, it shall make an additional award,
irrespective of whether any further hearing or taking of evidence is required
for that purpose”
However, as the Court explained, a variant of the phrase “whether
any further hearing or taking of evidence is required” i.e. “can be
rectified without any further hearings or evidence” had been
included in the early drafts of Article 33(3), but was subsequently
deleted.
Finally, the Court explained that the sentence in the Analytical Commentary
i.e. “shall make an additional award whether any further hearing or taking of
evidence is required for that purpose” had been misunderstood and
actually referred to the substantive question and not the
jurisdictional question.
They simply meant that once the tribunal had decided that a
claim had been omitted, it must make an additional award to deal
with that omitted claim and it must proceed to do so whether
additional evidence is required or not. Nothing in the Analytical
22
Commentary excluded the opportunity for evidence to be led or hearings to
be held if the tribunal deemed that this was necessary.
As to the Breach
The Court held that the Arbitrator had breached the rules of natural
justice by rendering the Additional Award just three days after LWI’s
application and even before LCSC had been given a chance to
respond on whether section 43(4) was applicable. The Court held that
the short timeframe was unreasonable unless the Arbitrator had taken
the initiative to inquire if LCSC had intended to object to LWI’s
application.
Natural Justice – Prejudice
LCSC had been deprived of a right to argue that the claim for
pre-award interest had in fact “not [been] omitted” and therefore
the Second Supplementary Award had in fact been final and the
Arbitrator had no right reconsider and vary such a final award. This
was the prejudice that LCSC had suffered as “it could reasonably have made
a difference to the outcome of the case had [the argument] been
presented”. This prejudice sufficed for the Additional Award to be set
aside
(e) Breach of natural justice – the substantive question
There had been at the very least an issue of fact which the Arbitrator
should have heard parties on i.e. whether the pre-award interest should
have had been reduced as LWI had taken nearly three and a half years to
confirm the Arbitrator’s appointment after it had served its notice of
arbitration on LCSC.
23
OKTAY MAHMUTI VS. GALATASARAY SPOR KULUBU DERNEGI
FACTS:
On January 11, 2018, Mr. Oktay Mahmuti (Oktay) was engaged by
Galatasaray Spor Kulubu Dernegi (the Club), a team competing in the
Turkish professional basketball league as their coach for the remainder of
the 2017-2018 season with a salary of USD 400,000 and the following
season with a salary of USD 800,000 on installment basis. Article 6 of the
Agreement provides that shall the Club fails to pay such salary within 45
days from the date it becomes due, Oktay shall send a written notice to the
club giving it 15 days to make the payment. It also gives the power to Oktay
to terminate the agreement unilaterally and to accelerate all future
payments required under the Agreement.
The Club failed to pay Oktay’s salary from March to June 2018. Oktay
sent a warning letter to the Club on May 31, 2018 asking it to pay within 5
days. On July 2, 2018, Oktay’s counsel sent another letter terminating the
Agreement. The parties submitted the case to Basketball Arbitration Tribunal
(BAT) for arbitration pursuant to the arbitration clause in Article 9 of the
Agreement. Oktay seeks payment of the unpaid salary and interest of 5%
per annum. The Club, on the other hand, while admitting that it failed to
comply with its obligation of paying in installment the salary of Oktay, claims
that the termination was invalid since (a) it has not received the May 31,
2018 letter, (b) that the letter is in violation of Article 6 since it only gives
the Club 5 days and not 15 days to pay and (c) that Oktay should mitigate
the damages since he intentionally refused to sign a new contract of
employment with Karsiyaka, another Turkish basketball team and that it
would be unfair and unjust for it to pay the entire salary given that Oktay
rendered work for only less than four months.
ISSUE: Whether or not Oktay complied with Article 6 and thus is entitled to
the unpaid salary with interest of 5% per annum
RULING:
Yes. Pursuant to the BAT Rules, the seat of BAT shall be Geneva,
Switzerland. It also presupposes the existence of a valid written arbitration
agreement. The Agreement complied with the following requirements. It is
also provided under the Agreement that the arbitrator shall decide the
dispute ex aequo et bono or applying general considerations of justice and
fairness without reference to any particular national or international law.
The arbitrator, from an ex aequo et bono perspective, considers that
Oktay validly terminated the Agreement. It found that Oktay established
that it has sent the May 31 letter showing a photo of his email “sent box”
which was unrefuted by the Club. The termination letter is also valid since
the termination notice was sent more than 15 days from the first notice, in
24
accordance with Article 6, even though the first notice requests for payment
within 5 days only. Furthermore, the Arbitrator denies the claim for
mitigation on the reason that it would be unequitable for it to pay the entire
amount since Oktay worked for less than four months as this was not
proven.
As to the ground that Oktay intentionally refused to sign with
Karsiyaka, the arbitrator rejected Oktay’s defense he did so due to the
“general financial situation in Turkey”. The arbitrator considers the fact that
the Coach received the offer on 6 February 2019, i.e. after more than six
months of unemployment and at a time during the season where subsequent
offers were becoming more and more unlikely. Hence, the Coach’s claim for
salaries in the 2018-19 season must be reduced by the amount of USD
125,000 that he could have earned with Karsiyaka BC. Lastly, as to the
interest being claimed by Oktay, there is nothing in the Agreement which
provided for the payment of interest in case of non-payment of salaries.
However, in accordance with well-established BAT jurisprudence and on an
ex aequo et bono basis, such interest can nevertheless be awarded at a rate
of 5% per annum.
25

ICSID - The World's Leading Institution for Investor-State Dispute Settlement

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ICSID - The World's Leading Institution for Investor-State Dispute Settlement

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A L T E R N A T I V E D I S P U T E R E S O L U T I O N

ICSID is the world’s leading institution devoted to international

The seat of the ICSID is at the principal office of the International

ICSID provides facilities for conciliation and arbitration of investment

The ICSID Convention

The ICSID Convention is a treaty ratified by 154 Contracting States. It

The International Centre for Settlement for International Disputes (Centre)

Panel of Conciliators and Panel of Arbitrators

Who may designate

(1) Persons designated to serve on the Panels shall be persons of high

 “National of another Contracting State” means:

 Any Contracting State or any national of a Contracting State wishing to

Constitution of the Tribunal

 The Arbitral Tribunal (the Tribunal) shall be constituted as soon as

Powers and Functions of the Tribunal

Recognition and Enforcement of the Award

Conciliation and arbitration proceedings shall be held at the seat of the

(a) at the seat of the Permanent Court of Arbitration or of any other

SGS SOCIETE GENERALE DE SURVEILLANCE S.A. vs. REPUBLIC OF

ICSID CASE No. ARB/02/06

SGS is a large Swiss corporation providing certification services based

ISSUE: Whether or not tribunal can exercise jurisdiction over contractual

Jurisdiction of the Tribunal is defined by reference to the BIT and the

BEFORE AN ARBITRAL TRIBUNAL CONSTITUTED UNDER ANNEX VII

PCA Case No 2013-19

On January 22, 2013, the Philippines initiated compulsory arbitration

Nevertheless, the arbitration being compulsory, the Philippines appointed

China has consistently rejected the Philippines’ recourse to arbitration

Despite its decision not to appear formally at any point in these

(1) The essence of the subject-matter of the arbitration is territorial

ISSUE: Whether or not the arbitral tribunal has jurisdiction.

RULING: Yes, the arbitral tribunal has jurisdiction.

China’s non-participation cannot bar the continuation of the proceedings.

With respect to the question of whether the question concerns an

On the matter maritime delimitation excluded by China through its 2006

Indeed, although the dispute settlement mechanism of the UNCLOS

In this regard, the (1) 2002 China–ASEAN Declaration on the Conduct of

The Philippines had sought to negotiate with China and it is well

IIG Capital appeals the district court's confirmation and enforcement of

The "mere appearance of bias or partiality is not enough to set aside an

It is difficult to see how Naon and Astigarraga's participation in the same

Rusk Renovations Inc. had a contract to renovate an apartment in New

The subcontract provided for arbitration. Rusk initiated arbitration in New

Rusk seeks enforcement in Nova Scotia under the International

1. Whether or not a personal award against the Dunsworths is within the

2. Whether or not the Dunsworths have established a ground for refusal

1. NO. International Commercial Arbitration Act does not apply.

Arbitrators have authority either by contract or by statute. They are

Article 2.1: Each Contracting State shall recognize an agreement in

(b) The original agreement referred to in article II or a duly certified copy

Article 7(1) of the Model Law defines "arbitration agreement" as an

The arbitration agreement between Rusk Renovations and Europa

2. YES. Assuming arguendo that the International Commercial Arbitration

Section 6.3.1 of the arbitration agreement includes:

A demand for arbitration shall be made in writing, delivered to the other

A demand for arbitration was never delivered to the Dunsworths. Mr.

In light of the undisclosed allegation of fraud, the unexplained lifting of

The application to recognize and enforce the arbitration award by Mr.

A party challenging an arbitration award as having contravened the

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