Manifest Lack of Legal Merit - Additional Facility Arbitration

Article 45(6) of the Arbitration (Additional Facility) Rules provides an expedited procedure to dispose of unmeritorious claims at the preliminary stage of a proceeding. The rationale for the Rule is to allow claims that manifestly lack legal merit to be dismissed early in the process before they unnecessarily consume the parties’ resources. It applies to objections to jurisdiction as well as objections on the merits.

Article 45(6) took effect on April 10, 2006, by an amendment to the ICSID Additional Facility Arbitration Rules. The drafting history of the Rule is found in papers published by the ICSID Secretariat: Possible Improvements of the Framework for ICSID Arbitration and Suggested Changes to the ICSID Rules and Regulations.

Procedure

A party raising an objection under Article 45(6) of the Arbitration (Additional Facility) Rules should do so no later than 30 days after the constitution of the Tribunal and, in any event, before the Tribunal holds its first session. It must state the basis for its objection “as precisely as possible.”

After the objection is raised, the Tribunal fixes a schedule for one or two rounds of written observations by the parties, usually followed by oral submissions made at the first session. The Tribunal must notify the parties of its decision on the objection at its first session or promptly thereafter.

A decision upholding the objection dismisses the claim(s) that manifestly lack(s) legal merit. For any remaining claims, a decision rejecting the objection is without prejudice to the right of a party to file an objection pursuant to Article 45(2) of the Arbitration (Additional Facility) Rules or to object to the merits of the claim in the proceeding.

If the entire case is dismissed because of a manifest lack of legal merit, the Tribunal renders an award which disposes of the case. 

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Provisions Similar to Article 45(6)

Some investment treaties contain procedures similar to Article 45(6) of the Arbitration (Additional Facility) Rules and ICSID Arbitration Rule 41(5), which are applicable to cases brought to ICSID under these instruments. An example of this is Articles 10.20.4 and 10.20.5 of the United States-Dominican Republic - Central America Free Trade Agreement (CAFTA). These provisions were invoked in:

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