Copyright (c) 2007 San Diego International Law Journal
San Diego International Law Journal
8 San Diego Int'l L.J. 345
LENGTH: 17288 words
ARTICLE: The Antinomies of the (Continued) Relevance of ICSID to the Third World
NAME: IBIRONKE T. ODUMOSU*
BIO: * Ph.D. Candidate, Faculty of Law, University of BritishColumbia. Many thanks to Professors Natasha Affolder, Obiora Okafor, and Robert Paterson for immensely helpful discussions, and comments on earlier drafts. The editorial comments of the editors of the San Diego International Law Journal are also appreciated.
... In the face of unclear rules, and against the backdrop of the need to protect foreign investment through theinternationalization of investment dispute settlement, and the position that this will facilitate investment flows to Third World states, the World Bank established the International Centre for the Settlement of Investment Disputes (ICSID). ... In purporting to provide a balanced approach to investment dispute settlement between the Third World and capital exporting states, which are mostly developed states,ICSID was established to play a dual role - settle foreign investment disputes (through arbitration and conciliation) and in the process, facilitate the flow of investment to states that need it, especially in the Third World. ... In addition to these intersections, international investment dispute settlement, including the ICSID mechanism, addresses investment disputes that often implicateissues of international magnitude that affect the welfare of local populations like economic development, environmental protection and human rights. ... The ICSID Report states that the ICSID Convention is premised on the position that guaranteeing investment protection by providing a mechanism for dispute resolution fosters the flow of private capital to host states. ... Given the history of ICSIDtribunals' approach to dispute settlement, which might not completely dispose of disputes between Third World states and foreign investors, it is easy to conclude that the institution cannot account for Third World interests. ... Despite arbitration without privity clauses that now seem to prevail, by paragraph 13 of the ICSID Report, ICSID contemplates a dual dispute settlement mechanism, and aspart of its secondary role in drafting model clauses, it could encourage the drafting of reciprocal investment dispute settlement clauses.
The international law on foreign investment is commonly accepted as one of the most controversial areas of international law. n1 Not only does international investment law lack clear rules on investment promotion andprotection, this area of the law has always generated opposing rules, and implicates divergent interests in the process. n2 In the face of unclear rules, and against the backdrop of the need to protect foreign investment through the internationalization of investment dispute settlement, n3 and the position that this will facilitate investment flows to Third World states, n4 the World Bankestablished the International Centre for the Settlement of Investment Disputes (ICSID). n5 In the last quarter of the 20th century, investment arbitration garnered considerable international attention, especially in relation to issues that implicate international and local public interest, including environmental protection, labor and human rights. While issues of human rights and environmental protectionare relevant the world over, a further issue of economic development arises in the case of the Third World.
The drafters of the ICSID Convention did not contemplate, at least not explicitly, public interest issues related to foreign investment that have become prominent lately. However, they did consider ICSID's utility in facilitating the economic development of [*347] the Third...