ICSID published on 30 January 2023 its case statistics up to 31 December 2022 (see here). This post examines the latest trends as compared to ICSID’s earlier results.
New cases registered: a continuing decline?
The second edition of the ICSID caseload statistics of 2022, which covered the period up to 30 June 2022, already hinted at a slight decline in cases administered by the Centre. This trend is confirmed by the latest edition which includes the Centre’s activity up to 31 December 2022 and evidences a significant decrease in the number of cases. While 66 cases were registered in 2021, this number dropped to 41 in 2022. 19 were started in the first half of the year, with 22 started in the second.
Despite this decline in 2022 (compared to 2021), the long-term trend of ICSID administering a larger caseload continues.
What is the regional distribution of ICSID cases?
ICSID continues to administer cases from all over the world. Eastern Europe and Central Asia was the most represented region in 2022 (with 27% of new cases), followed by South America (17%) and Middle East and North Africa (14%). Cases involving Western Europe accounted for 12% of all cases in 2022, followed by Central America and the Caribbean (10%) and South & Southeast Asia & the Pacific (10%). Cases involving North America and Sub-Saharan Africa represent the smallest groups of cases (5% respectively).
In terms of specific states being involved, Romania, Slovenia and Venezuela head the list of countries with most new cases registered in 2022, with 3 cases each. Bulgaria, Iraq, Mexico and Panama each account for 2 new cases registered.
Which economic sectors are involved?
In line with the trend in recent years, oil, gas and mining continues to be the most contentious sector, accounting for 24% of all cases in 2022. It was closely followed by cases involving electric power and other types of energy, which accounted for 20% of new cases. Finance and information & communication each accounted for 12%, while construction (8%) and water (8%) follow closely behind. It is interesting to note that according to ICSID’s statistics, historically construction cases exceeded those in finance, information and communication, whereas in 2022 the opposite was true.
Case outcomes: a steady trend?
The trend reported for Q1-Q2 2022 generally continued throughout the rest of the year, maintaining a balanced picture of outcomes in favour of both investors and states.
Out of all cases that concluded with an award (49% of all cases concluded in 2022), 56% fully or partially upheld the investors’ claims (an 8% increase compared to Q1-Q2 2022), 28% of awards dismissed all investors’ claims on the merits (same as in Q1-Q2 2022), 8% of awards declined jurisdiction (a 13% decrease compared to Q1-Q2 2022), while the remaining 8% of awards were dismissed for manifest lack of legal merit.
Diversity in arbitrator appointments
The geographic distribution of arbitrator appointments re-balanced slightly in Q3-Q4 2022 in favour of the Americas. Whereas the share of arbitrators from Western Europe decreased from 41% (Q1-Q2 2022) to 40% (Q1-Q4 2022), North America increased from 21% to 25% and South America increased from 17% to 20%.
Unfortunately there was a slight decline in female arbitrator appointments (they comprised 23% of all appointments in ICSID cases in Q1-Q4 2022 compared to 24% in Q1-Q2 2022). Among those, appointments made by ICSID also declined (37% female / 63% male in Q1-Q4 2022 compared to 45% female / 55% male in Q1-Q2 2022). Party or co-arbitrator nominated appointments were split 17% (female) / 83% (male) in 2022.
It will be interesting to see how current events and trends impact the caseload at ICSID. Although there was a decrease in cases in 2022, this trend may be short-lived.
Major global impacts arising from the Russian invasion of Ukraine may well lead to a rise in future investment treaty claims, together with the continuing fall-out from the COVID-19 pandemic. For example, increased state regulation of the energy market in response to supply restrictions, inflation and rising costs all have the potential to lead to investor-state claims. Russia itself is party to a significant number of BITs under which claims may be brought.
For more information, please contact Andrew Cannon, Partner, Eduardo Soler Tappa, Partner, Wojtek Zaluska, Associate, Angela Portocarrero, Junior Associate or your usual Herbert Smith Freehills contact.