The ICSID Convention entered into force in Iraq on 17 December 2015. This comes after Iraq signed the ICSID Convention and deposited its instrument of ratification on 17 November 2015 to become the Convention's 160th signatory State.
In a climate of on-going challenges facing investments into Iraq, this is a significant step forward in the legal context by the Iraqi Federal Government which has been seeking to attract foreign investment to help stabilise, rebuild and diversify the country's economy. Despite the country's significant security challenges in addition to the financial impact of declining world oil prices, Iraq remains an important market for international investment given that it has the world’s fifth largest proven oil reserves and needs reconstruction and infrastructure development on a massive scale.
The immediate impact of this step on the investment climate in Iraq is likely to be relatively limited given the small number of bilateral and multilateral investment treaties to which Iraq is party to and that are currently in force. However, this may signal a shift of approach and appetite as to how quickly Iraq wants to improve its legal framework for investment protection. This step is expected to be followed by the further ratification of bilateral and multilateral investment treaties and international conventions.