Study On The Expedited Procedure In ICSID Arbitration Rules

With rise of bilateral and multilateral investment agreements and the closer relationship among countries,ICSID has administered and registered quantities of cases which have increased rapidly since the mid-1990 s.As of December 31,2018,ICSID has accepted 706 cases.Among them,696 cases(98.5%)were dealt with pursuant to the ICSID Arbitration Rules and ICSID Arbitration(Additional Facility)Rules.The expedited procedure provision was also designed to respond to the proliferation of cases and the increased demands of the parties for efficiency in the handling of cases.To curb indiscriminate litigation in order to avoid unnecessary investment of costs and resources by the parties,an expedited procedure under article41(5)was added when the ICSID Arbitration Rules were amended in 2006,and article 45(6)was amended accordingly by the Additional Facilities Rules;as of 20 December,2018,the expedited procedure has been applied in 26 cases.Article 41(5)of the ICSID Arbitration Rules provides that,“Unless the parties have agreed to another expedited procedure for making preliminary objections,a party may,no later than 30 days after the constitution of the Tribunal,and in any event before the first session of the Tribunal,file an objection that a claim is manifestly without legal merit.The party shall specify as precisely as possible thebasis for the objection.The Tribunal,after giving the parties the opportunity to present their observations on the objection,shall,at its first session or promptly thereafter,notify the parties of its decision on the objection.The decision of the Tribunal shall be without prejudice to the right of a party to file an objection pursuant to paragraph(1)or to object,in the course of the proceeding,that a claim lacks legal merit.” The expression of the expedited procedure in the Arbitration Rules is limited to this,so how to understand the “manifestly without legal merit” has become the primary problem in the application of the procedure.First of all,expedited procedure is a kind of pretrial objection procedure,it should be made clear that the expedited procedure is not a necessary procedure for the trial of a case,and that there are individual cases in which the claimant has filed an objection(in view of the fact that objections are often raised by the respondent and for convenience of writing,the following contents is mainly discussed in the general context where objections are raised by the respondent).By examining the important cases in which the parties cited the expedited procedure,this paper finds that the standard of “manifestly without legal merit” is very high in the arbitral tribunal.And once arbitral tribunal has upheld all of dissenting parties' objections and concluded that the claimant's claim for arbitration is manifestly unfounded,the case will not go to the substantive proceedings.So in this case,the arbitral tribunal will make the award with great care so as not to infringe upon the legitimate rights of the parties.With regard to the determination of the “manifestly”,the arbitral tribunal required that the respondent's objections should meet the standard of “clarity,certainty and obviousness”.However,this is not a requirement for the objection per se,but means that the respondent needs to prove that the claimant's request does not meet this condition of “manifestly without legal merit”,and this proof process is relatively clear and easy.In other words,a party can easily prove its claim,but doing so does not require a full interpretation of the evidence in the arbitral tribunal.On the contrary,under other high standards,the ease or difficulty of proving a case does notmatter as long as the evidence is sufficiently presented in support of the party's claim.And disputes cannot involve complex,novel and difficult legal issues,since such issues are often not considered appropriate to be resolved at the stage of article 41(5).The purpose of article 41(5)is not to do so,but to curb abuse and to apply indisputable rules of law to facts that are not in doubt.The defect in the legal basis of the claimant's request should be obvious or plain in its face.The “manifestly”standard of review required the tribunal's full consideration of both parties' allegations and required that the dispute should not involve complex,novel and difficult legal issues.On this basis,if in doubt,a judgment shall be made in favour of the claimant.As for the determination of “legal merit”,first of all,the legal basis includes both the basis of jurisdiction and the basis of merit.A review of ICSID jurisdiction can occur in three cases: firstly,refusal by the Secretary-General to register under article36(3)of the ICSID Convention;secondly,objection by the respondent under article41(5)of the Arbitration Rules;and besides,under article 41(1)of the Arbitration Rules.Objections are raised through the “ordinary” jurisdictional objections route.But the three belong to different levels.If a claim for arbitration pursuant to article 41(5)of the rules manifestly lacks jurisdiction,including four aspects: personae,materiae,temporis,voluntatis,and then the tribunal will reject the claimant's claim.Furthermore,based on the nature of the expedited procedure,while a review of the facts relevant to the dispute is necessary,it is not exhaustive.In a case,legal and factual issues are often closely related and sometimes difficult to distinguish completely,but based on the characteristics of the expedited procedure,the facts should be discussed in a sufficient and selective manner.The principle of the credibility of the prima facie case is generally applied to the factual claims of the claimant.On this basis,the claimant needs to prove the legal basis of his request,and if such basis is difficult to provide or corroborate to the extent “manifestly lacking”,the objection of the other party will be supported.In addition,the facts previously found by the arbitral tribunal are no longer subject to review.Next,this paper focuses on the practical effect of the application of the expedited procedure.As of 31 December,2018,ICSID has made public a total of 26 cases in which the expedited procedure has been applied.In these 26 cases,the percentage of the time spent in the expedited procedure phase in comparison with time spent in the entire case was calculated,in order to explore whether it takes more time to hear a case that undergoes the expedited procedure because of the “manifestly without legal merit” pretrial objection raised by the respondent,compared with the ordinary trial procedure.The paper also selects 50 cases that have been tried under the ordinary procedure since 2011,in order to have a more intuitive understanding of the trial time limit of ICSID under the ordinary case.Through statistics and comparison,the results show that the expedited procedure has played a positive role in saving the time and cost of the parties.In respect of cases that have undergone expedited proceedings,no matter whether or not the respondent's objections are upheld by the arbitral tribunal in whole or in part,the average length of time spent in these cases is significantly shorter than which spent in those case under ordinary proceedings.And the proportion of the expedited procedure in the overall trial time of the case is not high.On the basis of the improvement of the efficiency of the trial of the case,the expenses of the parties on the arbitration fee items linked to the length of time have also been saved.The results show that the expedited procedure procedure has played a positive role in saving the time and cost of the parties,thus saving the parties' expenses on the arbitration fee items linked to the duration of the arbitration.Its legislative purpose of improving the efficiency of cases has been better achieved;at the same time,the arbitral tribunals have guaranteed the high standards applicable to “manifestly unfounded” and the opportunity of the parties' opinions to be heard by the tribunal;in addition,the arbitral tribunal's consideration of the evidentiary material is not limited to the relevant information submitted by the parties at the stage of the expedited procedure.Especially when it is inclined to make a decision in support of the dissenting opinion,the arbitral tribunal further ensures the accuracy of the final decision by making assumptions and extrapolations about the material that may be submitted at the follow-up stage of the case.These factors promote the balance between trial efficiency and procedural justice.China has developed into a large investment country with both the status of host country and home country,and has two-way investment relations with many countries.It is not feasible to make a distinction in applying expedited procedure in investment agreements.At the same time,if a completely new agreement is made on pre-trial acceleration procedures,there is not only a great deal of effort to be spent,but also a great deal of uncertainty about its interpretation and application.Therefore,it is a wise choice to apply the expedited procedure under the ICSID Arbitration Rules,which takes into account both the efficiency of the trial and the fairness of the procedure.Under this premise,as China may deal with the investment dispute as the home country or host country of the investment,the flexible application of the procedure can fully safeguard our own rights and interests.If China appears as the home country of investment,Chinese investors should familiarize themselves with ICSID rules and plan a well-prepared response to objections that the other party may file based on “manifestly lack of legal basis”;if China appears as the host country of the investment in the investment dispute,it should make effective use of the period from the registration of the case to the constitution of the arbitral tribunal,seize the opportunity to invoke the expedited procedure,and prepare strong theoretical and evidentiary materials.