Manifest Lack of Legal Merit - ICSID Convention Arbitration (2006 Rules)
Arbitration Rule 41(5) 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.
Rule 41(5) took effect on April 10, 2006, by an amendment to the ICSID Arbitration Rules. The drafting history of the Rule is found in paper published by the ICSID Secretariat: Possible Improvements of the Framework for ICSID Arbitration: Discussion Paper and Suggested Changes to the ICSID Rules and Regulations: Working Paper.
A party raising an objection under Arbitration Rule 41(5) 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 Arbitration Rule 41(1) 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.
Provisions Similar to Rule 41(5)
Pac Rim Cayman LLC. v. Republic of El Salvador, ICSID Case No. ARB/09/12, Decision on the Respondent's Preliminary Objections Under CAFTA Articles 10.20.4 and 10.20.5, August 2, 2010; and
Railroad Development Corporation v. Republic of Guatemala, ICSID Case No. ARB/07/23, Decision on Objection to Jurisdiction CAFTA Article 10.20.5, November 17, 2008.