Settlement of international investment disputes through the International Centre for Settlement of Investment Disputes (ICSID) case study in Fraport v. Republic of the Philippines

Abstract

Globalization has increased international investment flows, but has also given rise to potential disputes between foreign investors and host countries. The International Centre for Settlement of Investment Disputes (ICSID), established under the 1965 Washington Convention, has emerged as the primary mechanism for the settlement of such disputes through arbitration and conciliation. This article examines the mechanism for the settlement of international investment disputes through ICSID, focusing on its jurisdictional aspects and analyzing the case study of Fraport AG v. The Republic of the Philippines. The discussion covers the basis of ICSID jurisdiction which is consensual, requires written consent of the parties, legal disputes arising directly from investment, and involves a member state and nationals of another member state. The case study of Fraport v. Philippines highlights the complexities of applying ICSID rules, including the issue of initial refusal of jurisdiction because the investment is considered illegal under Philippine law, as well as the important procedural issue of conflict of interest of legal counsel raised by the Philippines. The case analysis highlights the challenges in developing and applying ethical rules for legal representation in ad hoc international arbitrations and the crucial role of arbitral tribunals in upholding due process standards. In conclusion, ICSID jurisdiction depends on the fulfillment of the Convention requirements and the consent of the parties, while the Fraport case demonstrates the importance of clear procedural rules, particularly regarding legal representation, in maintaining the integrity of the international investment arbitration process.