Abstract
In 1965, the World Bank established the International Centre for Settlement of Investment Disputes (hereinafter “ICSID”) by means of an international treaty. This treaty, formally entitled the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, is also commonly referred to as the “ICSID Convention” or the “Washington Convention.” Turkey became a party to this Convention in 1988.
The primary purpose of the Centre, established under the ICSID Convention, is to resolve disputes between a host state and a foreign investor through a new system of conciliation and arbitration. The fundamental aim of the system’s creation was to ensure the flow of international capital by fostering an environment of trust.
A foreign investor, when involved in a dispute with the host state, seeks to have access to a process capable of producing a legally binding decision that is insulated from political risks; to obtain such a decision; and to have it enforced. The ability to secure a legal decision is guaranteed through an independent and impartial adjudicatory process administered by the Centre.
The enforceability of the decision, however, depends on the Contracting States, since by acceding to the ICSID Convention, they expressly accept the provision in Article 53 that “the award shall be binding on the parties, shall not be subject to any appeal or to any other remedy except those provided for in this Convention, and the parties shall abide by and comply with the terms of the award unless its enforcement shall have been stayed in accordance with the relevant provisions of this Convention.”
Thus, disputes will be resolved not by the potentially partial national courts of the state concerned, but by ICSID arbitral tribunals with the necessary expertise, in a shorter time, and the resulting award will be directly enforceable without the losing state being shielded by diplomatic protection. Given that ICSID awards are enforceable without review by national courts, the question of which legal remedies are available against such awards within the ICSID system gains particular significance.
Following a brief outline of these remedies, this study focuses on the annulment of ICSID arbitral awards and examines whether, within this system designed for prompt finality, it is possible to reach decisions that are both fair and accurate.
I. General Overview
The legal remedies available to parties against final awards rendered by ICSID arbitral tribunals—that is, the legal review of such awards—are exercised within the ICSID system itself.¹ Article 53 of the ICSID Convention provides:
“The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention.”
Article 54(1) further stipulates:
“Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.”
This provision makes clear that domestic courts have no authority to re-examine or review ICSID awards.²
Pursuant to the ICSID Convention and the ICSID Arbitration Rules,³ parties may, under specified conditions, request:
Rectification of the award – to correct clerical, computational, or similar minor errors;
Supplementation of the award – to address matters presented to the tribunal but omitted from the decision;
Revision of the award – where a fact existing prior to the award, and unknown to both the tribunal and the applying party without negligence, subsequently comes to light and would have been decisive;
Interpretation of the award – where the award is unclear, difficult to understand, or contains contradictory provisions;
Annulment of the award – on specific grounds enumerated in Article 52 of the ICSID Convention.
Rectification allows the tribunal to correct minor errors in its decision. Supplementation addresses issues submitted to the tribunal but inadvertently left unaddressed, particularly where oversight is acknowledged. Revision enables modification of the award when a decisive fact, previously unknown and undiscoverable without negligence, emerges. Interpretation allows clarification of ambiguous or conflicting provisions.
Where the tribunal was improperly constituted, there was a serious departure from a fundamental rule of procedure, the tribunal manifestly exceeded its powers, a tribunal member engaged in corruption, or the award failed to state the reasons on which it was based, a party may request annulment. Annulment is the most significant legal remedy because it removes the legal effect of the award.
Requests for rectification, supplementation, revision, and interpretation are considered by the tribunal that rendered the award, or by a newly constituted tribunal if the original cannot be reassembled. Annulment requests, however, are decided by a newly constituted ad hoc committee, rather than a higher court.
II. Annulment of ICSID Arbitral Awards
A three-member ad hoc committee appointed by the Centre may annul a final award at the request of either party if one or more of the grounds enumerated in Article 52 of the ICSID Convention are established.⁴ Article 52 provides:
“1. Either party may request annulment of the award by applying in writing to the Secretary-General on one or more of the following grounds:
(a) The tribunal was not properly constituted;
(b) The tribunal has manifestly exceeded its powers;
(c) There was corruption on the part of a member of the tribunal;
(d) There has been a serious departure from a fundamental rule of procedure;
(e) The award has failed to state the reasons on which it is based.”
Article 52 allows annulment—either in whole or in part—only on these limited grounds. Although paragraph 1 refers to “annulment of the award” in its entirety, paragraph 3 empowers the committee to annul “all or part of the award,” thus making partial annulment possible even when full annulment is requested.⁵
Only final awards are subject to annulment. Interlocutory decisions, such as a tribunal’s ruling on jurisdiction, cannot be annulled independently, but may be reviewed as part of the final award if they form its basis.
An annulment request can only be made by a party to the proceedings; third parties have no standing to apply. Failure to bring an annulment request within the prescribed time constitutes a waiver of the right.⁶
III. Reasons for Choosing Annulment over Appeal
Parties to arbitration generally seek the swiftest possible resolution resulting in a final and binding award—a principle known as finality. However, the principle of correctness—ensuring the accurate resolution of the dispute—is also important. Correctness, as understood from domestic appellate procedures, is often difficult to achieve; it requires significant time, effort, and extensive review mechanisms.
In the review of decisions, finality and correctness can conflict. In international arbitration, finality takes precedence over correctness, with annulment serving as a limited safeguard that preserves efficiency while allowing for the correction of fundamental procedural defects.⁷
Another reason annulment is preferred over appeal in the ICSID system lies in the drafting history of the ICSID Convention: the states involved in drafting were primarily capital-exporting countries. Host states—those receiving the investment—tend to be in the respondent position, while capital-exporting states see themselves as claimants. For the latter, finality of awards is paramount; for the former, correctness may be more important. Nonetheless, host states also seek to encourage investment, and thus may accept reduced opportunities for review in order to promote a stable investment climate.
IV. Differences Between Annulment and Appeal
Article 53 of the ICSID Convention provides:
“The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention.”
Because the ICSID Convention does not provide for an appeal procedure, awards rendered by ICSID tribunals are not subject to appeal. The differences between appeal and annulment were discussed during the drafting of the Convention.
The outcome of a successful annulment request is the invalidation of the original award. In contrast, the outcome of a successful appeal is the modification of the original award. In an annulment proceeding, the deciding body has no options other than to uphold or annul the award, in whole or in part. In an appeal, however, the deciding body may find the earlier award inadequate and issue its own decision, which may involve amending or correcting the award.
Under the ICSID Convention, the ad hoc committee may only annul an award—either in whole or in part. It may not itself amend the award or substitute a new decision in place of the original tribunal’s award. Following annulment, the dispute is referred to a newly constituted tribunal pursuant to Article 52(6) of the ICSID Convention. This new tribunal is not bound by the reasoning of the ad hoc committee that annulled the original award.⁸
Annulment concerns matters of legal validity rather than the substantive correctness of the award. It is available only for the limited and specific grounds set out in Article 52 of the ICSID Convention. Any annulment request must be based on one or more of these enumerated grounds.⁹
In an appellate procedure, decisions are reviewed in two respects:
Procedural legality — whether the procedure followed in reaching the award was in accordance with the law (covering issues such as proper constitution of the tribunal, jurisdiction, and compliance with fundamental procedural rules);
Substantive correctness — whether the content of the award is factually and legally accurate, which requires assessing whether the facts were correctly determined and properly applied in resolving the dispute.
The scope of remedies available in a given system reflects its preference for either finality or correctness. The ICSID system’s rejection of appeal and adoption of annulment demonstrates a preference for finality; conversely, a system that provides for appeal indicates a preference for correctness.¹⁰
Ad hoc committees, when considering annulment requests, often stress the limited nature of their functions, emphasizing that they are not as empowered as appellate bodies. In MINE v. Guinea,¹¹ the ad hoc committee explained its limited role as follows:
“As stated in Article 52(1) of the Convention, annulment is clearly a limited remedy. This is apparent from Article 53 of the Convention, which excludes any comprehensive review of the award. Annulment is not a remedy against incorrect decisions. Consequently, an ad hoc committee cannot substitute its own decision for that of the tribunal.”
V. Interpretation of Article 52 by Ad hoc Committees
Ad hoc committees have debated whether Article 52 should be interpreted narrowly or broadly, without reaching a definitive conclusion. In MINE v. Guinea,¹² the committee noted that because annulment is the only remedy available to invalidate an award, one could either adopt a strict interpretation consistent with the limited nature of the remedy, or alternatively adopt a liberal interpretation to ensure that unfair awards can be addressed. The committee ultimately opted for a middle ground, interpreting Article 52 in a manner consistent with its purpose and objectives.
In Klöckner v. Cameroon,¹³ the ad hoc committee emphasized the need for caution in interpreting Article 52, warning that an expansive reading could lead to an overreach of the committee’s authority. The committee suggested that a review of the final award would only be justified where there had been a serious departure from a fundamental rule of procedure. In cases of doubt, the matter should be resolved in favor of upholding the award. However, subsequent committees have been reluctant to accept a presumption in favor of the award’s validity in cases of uncertainty.
VI. Non-Reviewability of ICSID Awards by Domestic Courts
In arbitration proceedings outside the ICSID framework, final awards may be challenged before domestic courts—either in the courts of the state where enforcement is sought or in the courts of the state where the tribunal is seated. However, the prevailing trend in international arbitration is to restrict or entirely eliminate the ability of domestic courts to re-examine arbitral awards.
For example, Article V of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards¹⁴ sets out limited and specific grounds on which recognition or enforcement of an arbitral award may be refused. Turkey is a party to the New York Convention, which applies to foreign arbitral awards—those rendered outside the state where recognition and enforcement are sought or those not considered “domestic” awards under that state’s law.
The grounds for refusal under Article V of the New York Convention include: the absence of a valid arbitration agreement; lack of proper notice of the appointment of the arbitrator or the arbitration proceedings; the award dealing with a dispute beyond the scope of the arbitration agreement; violation of due process rights; the arbitrators exceeding their powers; and procedural irregularities.¹⁵
Similarly, the 1985 UNCITRAL Model Law on International Commercial Arbitration¹⁶ adopts provisions parallel to Article V of the New York Convention, enumerating in a restrictive manner the circumstances under which domestic courts may refuse to recognize or enforce an award.
In ICC (International Chamber of Commerce) arbitration,¹⁷ if the parties have expressly waived in advance their right to apply to national courts, such waiver is recognized as binding.
In ICSID arbitration, however, awards are not subject to review by domestic courts. Article 54(1) of the ICSID Convention provides that awards shall be enforced within the territories of each Contracting State as if they were final judgments of that state’s courts, and enforcement may not be refused on public policy grounds. Article 27(1) further prohibits diplomatic protection by the investor’s home state unless the award is not complied with.
Accordingly, ICSID awards may only be reviewed through the remedies available within the ICSID system itself: rectification, supplementation, revision, interpretation, and annulment.
Bibliography
Books
Amerrasinghe, F.C., Local Remedies in International Law, Cambridge University Press, 2005.
Erdoğan, F., Uluslararası Hukuk ve Tahkim [International Law and Arbitration], Ankara, 2006.
Nomer, E. / Şanlı, C., Devletler Hususi Hukuku [Private International Law], Istanbul, 2008.
Schreuer, C.H., ICSID Convention: A Commentary, Cambridge University Press, 2001.
Şit, B., Kurumsal Tahkim ve Hakem Kararlarının Tanınması ve Tenfizi [Institutional Arbitration and the Recognition and Enforcement of Arbitral Awards], Ankara.
Toope, J.S., Mixed International Arbitration, Cambridge Grotius Publications Limited, 1990.
Torun, Y., Uluslararası Yatırım Uyuşmazlıklarının Çözüm Merkezi (ICSID) Hakem Kararlarına Karşı Hukuki Başvuru Yolları [Legal Remedies Against ICSID Arbitral Awards], Ankara, 2011.
Articles
Schreuer, C.H., “Non-Pecuniary Remedies in ICSID Arbitration,” Arbitration International, Vol. 20, No. 4 (2004).
Schreuer, C.H., ICSID Annulment, Kluwer Law International, Netherlands, 2003.
Walsh, W.T., “Substantive Review of ICSID Awards,” Berkeley Journal of International Law, Vol. 24 (2006).
Other Sources
ICSID Convention – Turkish text: http://ua.mfa.gov.tr/detay.aspx?4375
ICSID Arbitration Rules: http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/partF.htm
ICSID case database: https://icsid.worldbank.org/ICSID/FrontServlet
UNCITRAL resources: http://www.uncitral.org/uncitral/en/types_symbols/types.html
ICC Arbitration: http://www.iccwbo.org/court/arbitration/id4424/index.html
- For the Turkish text of the ICSID Convention, see: http://ua.mfa.gov.tr/detay.aspx?4375 (accessed 04 December 2012).
- See further: Torun, Y., Uluslararası Yatırım Uyuşmazlıklarının Çözüm Merkezi (ICSID) Hakem Kararlarına Karşı Hukuki Başvuru Yolları, Ankara, 2011.
- ICSID Arbitration Rules available at: http://icsid.worldbank.org/ICSID/StaticFiles/basicdoc/partF.htm (accessed 04 December 2012).
- Amerrasinghe, F.C., Local Remedies in International Law, Cambridge University Press, 2005, p. 263.
- Toope, J.S., Mixed International Arbitration, Cambridge Grotius Publications Limited, 1990, p. 225.
- Toope, op. cit., p. 225.
- Schreuer, C.H., ICSID Annulment, Kluwer Law International, Netherlands, 2003, pp. 103–104.
Schreuer, C.H., ICSID Convention: A Commentary, Cambridge University Press, 2001, pp. 891–893.
Schreuer, ICSID Annulment, op. cit., p. 103.
Walsh, W.T., op. cit., p. 447.
ICSID Review – Foreign Investment Law Journal, Vol. 5, p. 102.
ICSID Review – Foreign Investment Law Journal, Vol. 5, p. 102; ICSID Case No. ARB/84/4, para. 4 (accessed 04 December 2012).
ICSID Review – Foreign Investment Law Journal, Vol. 4, p. 125.
Turkey ratified the New York Convention on 8 May 1991 by Law No. 3731. Official Gazette, 25 September 1991, No. 20877.
Nomer, E. / Şanlı, C., Devletler Hususi Hukuku, op. cit., p. 513.
See http://www.uncitral.org/uncitral/en/types_symbols/types.html (accessed 04 December 2010).
See http://www.iccwbo.org/court/arbitration/id4424/index.html
Attorney Yalçın Torun
© 2025 Torun Law Firm – All Rights Reserved.
This article is protected under the provisions of the Law on Intellectual and Artistic Works (No. 5846). The content, in whole or in part, may not be copied, reproduced, published, or shared on any other website without the prior written permission of the author and Torun Law Firm.
This material may only be shared by licensed attorneys, for professional purposes, without any modifications, and with full attribution to the author and the source.
Any unauthorized use may result in legal and criminal liability.