A newly updated report by the ICSID Secretariat provides a comprehensive assessment of the annulment remedy in the ICSID Convention.

First published in 2012—and now in its third edition—ICSID’s Background Paper on Annulment surveys the drafting history of the ICSID Convention’s provisions on annulment, details how the annulment process works in practice, and draws from over fifty years of data to highlight trends in annulment proceedings.

Annulment is one of a discrete set of post-award remedies available to parties in ICSID Convention proceedings. It is an extraordinary recourse intended to uphold fundamental legal principles in ICSID procedures.

Key findings of the report include:

• As of December 31, 2023, annulment proceedings had been instituted in 189 cases (out of a total body of 885 ICSID Convention cases). In five of those cases, a second annulment proceeding was instituted after the dispute was re-submitted to ICSID following the initial annulment, meaning 194 annulment proceedings have been instituted in total.
• The rate of annulment as of December 31, 2023, is 2.6 percent of all registered arbitrations under the ICSID Convention and 5 percent of all Convention awards rendered.
• Nearly 80% of all annulment applications have been registered since 2011. This reflects the growth in cases (and thus awards) over that period.
• Both respondents and claimants have pursued annulments. Respondents account for 57% of annulment applications and claimants for 38%. In 5% of annulment proceedings, both parties filed for annulment.
• With respect to the outcomes of annulment decisions, 58% have favored respondents and 42% favored claimants.
• Discontinuance of an annulment proceeding occurs in approximately 25% of all annulment proceedings.
• A substantial body of ICSID caselaw on annulment—which the background paper highlights with relevant excerpts—has affirmed key principles, including:
  • Article 52(1) of the ICSID Convention establishes the only grounds on which an award may be annulled.
  • Annulment is an exceptional and narrowly defined remedy, and the role of an ad hoc Committee is limited.
  • Ad hoc committees are not a court of appeal intended to remedy incorrect decisions.
  • Ad hoc committees should exercise their discretion not to defeat the object and purpose of the annulment remedy.

Background on Annulment Under the ICSID Convention

In contrast to other international arbitration awards, those rendered under the ICSID Convention cannot be challenged before national courts. Rather, the Convention sets out five post-award remedies—all contained within the ICSID system—that allow the parties to request:

1. That the tribunal rectify a clerical, arithmetical or similar error.
2. That the tribunal issue a supplementary decision that addresses a question that was omitted in the award.
3. That the tribunal issue an interpretation in a situation where the parties disagree about the meaning or scope of the award.
4. That the tribunal revise an award on the basis of a newly discovered fact that has a decisive impact on the case’s outcome.
5. That an ad hoc committee—rather than the original tribunal—fully or partially annul an award. The grounds for annulment are limited to:
   • The tribunal was not properly constituted.
   • The tribunal manifestly exceeded its powers.
   • There was corruption on the part of a tribunal member.
   • There was a serious departure from a fundamental rule of procedure.
   • The award failed to state the reasons on which it is based.