Number of Arbitrators and Method of Appointment - ICSID Convention
Parties should agree on the number of arbitrators on a Tribunal and the method of their appointment. If they cannot agree, ICSID’s default mechanism will apply (Article 37 of the ICSID Convention and Arbitration Rules 2 and 3).
Method of Constitution of a Tribunal
As a first step in the appointment process, the parties should refer to the contract, treaty or law containing the consent to ICSID arbitration. This instrument may set forth a prior agreement between the parties on the number of arbitrators and/or the method of their appointment.
Absent a prior agreement, ICSID invites the parties to agree on the number of arbitrators and the method of their appointment when ICSID registers the request for arbitration. Arbitration Rule 2 provides a procedure and timeline to assist the parties in reaching an agreement.
A Tribunal must always consist of a sole arbitrator or any uneven number of arbitrators. The parties are otherwise free to adopt any workable method of appointment that suits their needs, including provisions on time limits and special procedures. The parties do not need to appoint arbitrators from the ICSID Panel of Arbitrators.
The most common agreements for three-member Tribunals are:
- Each party appoints one co-arbitrator, and the parties attempt to agree on the third arbitrator, the President of the Tribunal. If the parties fail to agree, the Secretary-General (or the Chairman of the Administrative Council) of ICSID appoints the President.
- Each party appoints one co-arbitrator, and the co-arbitrators attempt to agree on the third arbitrator, the President of the Tribunal. If the co-arbitrators fail to agree, the Secretary-General (or the Chairman of the Administrative Council) of ICSID appoints the President.
As part of their agreement on the method for constituting the Tribunal, the parties may agree to adopt a list procedure concerning proposed candidates. List procedures can be used for a sole arbitrator, the President of the Tribunal or all members of the Tribunal. Commonly used list procedures include:
- The parties exchange a list of candidates; each party informs the other party of the candidate(s) whom it accepts or rejects.
- The parties request that ICSID provide them with a list of candidates. Each party can strike a certain number of candidates and rank the remaining candidates. The candidate with the best ranking is appointed or, if two or more candidates have the same ranking, ICSID selects one of them.
ICSID supports parties’ efforts to agree on the method of appointment and will follow the agreed method and facilitate the process to the fullest extent possible.
If the parties are unable to appoint all members of the Tribunal under the established method, either party may invoke the ICSID default mechanism for appointing the missing arbitrator(s).
If no agreement on the number of arbitrators and the method of their appointment is reached within 60 days after registration of the request for arbitration, either party may request the application of the default formula under Article 37(2)(b) of the ICSID Convention. The formula provides that:
- The Tribunal consists of three arbitrators.
- Each party appoints one co-arbitrator.
- The parties attempt to agree on the third arbitrator, the President of the Tribunal.
In cases where the default formula applies, Arbitration Rule 3 sets forth the process by which the parties appoint the members of the Tribunal:
- The first party to appoint an arbitrator also proposes a candidate to serve as President of the Tribunal.
- The other party then appoints an arbitrator and either agrees to the appointment of the arbitrator proposed for President or proposes another candidate.
- If a counter-proposal is made, the party making the first appointment then indicates whether it agrees to the new proposal for President.
- The parties are not limited in the number of proposals or counter-proposals that can be made.
No Agreement (Default Mechanism): Article 37(2)(b) of the ICSID Convention
The parties may agree on a different method of constituting the Commission even after a party has raised the ICSID default formula.
If the parties are unable to appoint all members of the Commission under the established method, either party may invoke the ICSID default mechanism for appointing the missing conciliator(s).