The Republic of Djibouti is the latest country to become a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). Djibouti’s Minister of Economy and Finance, Ilyas Moussa Dawaleh, signed the ICSID Convention on 12 April 2019. Djibouti must now ratify the ICSID Convention in order for it to become a Contracting State (or Member State) to the ICSID Convention, and for the ICISD Convention to come into force for Djibouti.
The ICSID Convention is a multilateral treaty which provides a procedural framework for dispute resolution between host states and foreign investors through conciliation or arbitration. It entered into force on 14 October 1966, 30 days after ratification by the first 20 States. There are currently 163 signatories to the ICSID Convention, of which 154 have ratified it.
Once Djibouti has ratified the ICSID Convention and become a Contracting State, it will participate in the governance of ICSID through representation on the Administrative Council, ICSID’s chief governing body. Each Contracting State has one representative – and one vote – on the Administrative Council. Its responsibilities include passing rules of procedure for ICSID cases, and electing the ICSID Secretary-General and Deputy Secretaries-General. Contracting States also have the right to name arbitrators and conciliators to the ICSID Panels.
Ratification of the ICSID Convention by Djibouti would be a move towards creating a more investor-friendly climate in Djibouti. The past few years have seen numerous states join the ICSID Convention in order to encourage investment. Since 2010, the ICSID Convention has been ratified by and entered into force for Mexico, Nauru, Iraq, San Marino, Canada, Sao Tome and Principe, Montenegro, South Sudan, Moldova, Cabo Verde and Qatar.
For further information please contact Andrew Cannon, Partner, Natalie Yarrow, Associate, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.