ARBITRATION PROCEDURE FOR RESOLVING INVESTMENT DISPUTES IN ACCORDANCE WITH THE ICSID CONVENTION(THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES) Текст научной статьи по специальности «СМИ (медиа) и массовые коммуникации»

УДК 347.918.2

ARBITRATION PROCEDURE FOR RESOLVING INVESTMENT DISPUTES IN ACCORDANCE WITH THE ICSID CONVENTION (THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES)

Akhmadi Marat Askaruly1

PHD, assistant professor of the Scientific School of Private Law, M.S. Narikbaev KAZGUU

University, Astana, Republic of Kazakhstan, e-mail: [email protected]

Serdar Nart

PHD, Associate Professor, Dokuz Eylul University, Department of Civil Law, Izmir, Turkey,

e-mail: [email protected]

Abstract. The ICSID Convention provides a well-established arbitration system that has been utilized by both states and investors for over 50 years. To date, ICSID arbitration has considered 19 lawsuits filed against Kazakhstan, with the number expected to rise in the future. The aim of this paper is to uncover the content of the ICSID arbitration process. The article examines the jurisdiction of the ICSID, including the criteria for a dispute to be consideredfor resolution. The paper provides an example of a case in which Kazakhstan challenged the ICSID's jurisdiction. The procedure for ICSID arbitration, starting with the request for arbitration and culminating in a binding arbitral award, is outlined. The study concludes by emphasizing the importance of the ICSID system for resolving investment disputes fairly and impartially, and the significance of the binding nature of the arbitral award. The methodology is based on legal literature analysis and a comprehensive literature review of Convention, including its rules and jurisdiction, with a focus on relevant legal precedents and cases involving Kazakhstan. The author emphasizes that the jjjj future of global arbitration is facing scrutiny due to the challenges in enforcing ICSID arbitration g awards and suggests that reforms are imperative. Additionally, the author notes that arbitration g law in Kazakhstan is under-researched and emphasizes the importance of increasing research jjj in this field, as it will assist the country in cultivating its own arbitration lawyers and enhancing jj the judiciary's understanding of the subject. This will certainly improve the country's image as a A place for conducting business and increase its attractiveness for foreign investments. g

Keywords: ICSID Convention, Investment disputes, Arbitration, Kazakhstan, Enforcement, o Arbitral awards.

ICSID КОНВЕНЦИЯСЫНА СЭЙКЕС ИНВЕСТИЦИЯЛЬЩ ДАУЛАРДЫ ТЭРЕЛ1КТЕ ШЕШУДЩ ТЭРТ1Б1 (ИНВЕСТИЦИЯЛЬЩ ДАУЛАРДЫ ШЕШУДЩ ХАЛЬЩАРАЛЬЩ ОРТАЛЫГЫ)

Марат Аскар^лы Ахмади

PhD докторы, М.С. Нарикбаев атындагы КАЗГЮУ Университеттщ Жеке цуцыц гылыми мектебтщ ассистент профессоры, Астана цаласы, Цазацстан, e-mail: [email protected]

Сердар Нарт

PhD, Dokuz Eylul Университеттщ азаматтыц цуцыц кафедрасыныц цауымдастырылган профессоры, Измир цаласы, ТYркия, e-mail: [email protected]

1 The author for correspondence

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Аннотация. ICSID (Инвестщиялыц дауларды реттеу жвнгндегг халыцаралыц орта-лыц) конвенциясы елу жылдан астам уацыт мемлекеттер мен халыцаралыц инвестор-лар дауларын шешу мацсатында цолданып келе жатцан, жацсы цалыптасцан арбитраж ЖYйесi болып табылады. К,аз1рге дешн ICSID ережелер1не сэйкес инвестициялыц арби-тражда Казацстан Республикасына царсы 19 дау царалды. Мацаланыц мацсаты ICSID Конвенциясына сэйкес арбитраждыц дауларды шешудщ ец взектi мэселелерi мен рэЫм-дерт талдау болып табылады. Мацалада ICSID Тврелт орталыгыныц юрисдикциясы мэселеЫ, оныц штде дауды шешу шарттары царастырылады. Бул бвлiмде мысал ретт-де Казацстанныц бiр дау шецбертде ICSID арбитражыныц юрисдикциясына наразылыц бiлдiргенi келтiрiлген. ICSID тврелт процедурасы, талап арыз беру процеЫ, тврешыер алцасын цуру, тараптар Yшiн мiндеттi арбитраждыц шешiмдi шыгару, шешiмдi даулау жэне шешiмдi орындатудыц мэселелерi жан жацты сипатталган. Корытындылай келе, зерттеуде инвестициялыц дауларды эдш жэне бейтарап шешу Yшiн цурылган ICSID ЖYй-естщ мацыздылыгына, сондай-ац арбитраждыц шешiмдi орындаудыц бiрегей ЖYйесiнiц ерекшелжтерте назар аударылады. Зерттеу эдктемеЫ Казацстанга цатысты тшст1 сот тэжiрибесi мен ютерге назар аудара отырып, Арбитраждыц ережелердi цоса алган-да, ICSID Конвенциясы бойынша цуцыцтыц эдебиеттердi талдауга жэне жан-жацты шолуга негiзделген. Нэтижестде, автор ICSID шешiмдерiнiц орындалуына байланысты туындаган проблемалар жакандыц децгейде арбитраждыц болашагына цатысты турлг сауалдар туындататынын жэне бул саладареформалар цажет екент айтады. Сонымен цатар, автор Казацстан цуцыц гылымында арбитраждыц жеткiлiктi зерттелмегент атап втт, осы саладагы зерттеулердi квбейтудщ мацыздылыгына назар аударуда. Ойт-кеш бул зерттеулер елдщ вз арбитраждыц зацгерлерт жетiлдiруiне жэне сот ЖYйесiнiц бул тацырыпты жт тYсiнуiне септтн тигiзедi. Бул бизнестi ЖYргiзуге цолайлы жер реттде елiмiздiц имиджт жацсартып, шетелдiк инвестиция Yшiн тартымдылыцты арттырары свзЫз.

Тушн сездер: ICSID Конвенциясы, Инвестициялыц дау, Арбитраж, Казацстан, Орын-дау, Арбитраж шешiмдерi.

АРБИТРАЖНАЯ ПРОЦЕДУРА РЕШЕНИЯ ИНВЕСТИЦИОННЫХ СПОРОВ В СООТВЕТСТВИИ С КОНВЕНЦИЕЙ ^ГО (МЕЖДУНАРОДНЫЙ ЦЕНТР ПО РАЗРЕШЕНИЮ ИНВЕСТИЦИОННЫХ СПОРОВ)

g Ахмади Марат Аскарулы

о PHD, ассистент профессор Научной Школы Частного права Университета КАЗГЮУ име-

ни М.С. Нарикбаева, г. Астана, Республика Казахстан, e-mail: [email protected]

< Сердар Нарт

(З PHD, ассоциированный профессор кафедры гражданского права Докуз Эйлюльского Уни-

^ верситета, г. Измир, Турция, e-mail: [email protected]

Аннотация. Конвенция ICSID (Международный центр по урегулированию инвестиционных споров) представляет собой хорошо зарекомендовавшую себя арбитражную систе-< му, которая используется как государствами, так и инвесторами уже более пятидесяти Р лет. На сегодняшний день по правилам ICSID рассмотрено 19 исков, против Республики Казахстан в инвестиционном арбитраже. Целью данной статьи является анализ наиболее актуальных вопросов и процедуры рассмотрения арбитражных споров в рамках Конвенции ICSID. В статье изучен вопрос юрисдикции Арбитражного центра ICSID, включая Ь условия рассмотрения спора. В этой части приводится пример дела, в котором Казахстан оспаривал юрисдикцию арбитража ICSID. Подробно описана процедура арбитража

ICSID, процесс предъявления иска, формирования состава арбитража, вынесение обязательного для сторон арбитражного решения, процесс оспаривания решения и заканчивая вопросами приведения решения в исполнение. В заключении исследования подчеркивается важность системы ICSID для справедливого и беспристрастного разрешения инвестиционных споров, а также значение уникальной системы исполнения арбитражного решения. Методология основана на анализе и всестороннем обзоре юридической литературы по Конвенции ICSID, включая регламент арбитража, с акцентом на соответствующие судебные прецеденты и дела, связанные с Казахстаном. В результате автор подчеркивает, что будущее глобального арбитража находится под пристальным вниманием из-за проблем с обеспечением исполнения арбитражных решений ICSID, и предполагает, что реформы необходимы. Кроме того, автор отмечает, что арбитражное право в Казахстане недостаточно изучено, и подчеркивает важность расширения исследований в этой области, поскольку это поможет стране в воспитании собственных арбитражных юристов и улучшении понимания предмета судебными органами. Это, безусловно, улучшит имидж страны как места для ведения бизнеса и увеличить привлекательность для иностранных инвестиций.

Ключевые слова: Конвенция ICSID, Инвестиционный спор, Арбитраж, Казахстан, Приведение в исполнение, Арбитражные решения.

Introduction

Direct and indirect foreign investments play a crucial role in international trade and are highly sought after by states. Recognizing foreign investment as a key tool for development, states enact domestic laws that incentivize, encourage and protect international capital, and also become signatories to international agreements in this regard [1, p.501]. One such international agreement is the ICSID Convention, or the Convention on the Settlement of Investment Disputes between States and Nationals of Other States2 . Drafted under the leadership of the World Bank, the ICSID Convention is one of the most widely ratified international agreements, having been signed by 165 states and in force in 158 states3 . The Republic of Kazakhstan became a party to the ICSID Convention on July 23, 19924 .

The ICSID provides an international framework for resolving disputes that arise from worldwide investment activities. ICSID arbitration is unique compared to other arbitration systems as it seeks to balance the interests of the foreign investor and the host state where the investment is made [2, p.447]. However, achieving a harmonious mechanism that fosters mutual trust between the parties can be challenging. As a result, the ICSID system is

DOI: 10.52026/2788-5291_2023_73_2_159

sometimes criticized and alternative solutions are sought. Nevertheless, it is important to recognize that ICSID arbitration provides a rare opportunity for foreign investors to have their disputes resolved in a fair and impartial manner [3, p.491]. The equality of the interests of the parties involved has been ensured throughout the entire arbitration process, from application to arbitration, formation of the arbitral tribunal, decision-making, and execution [4, p.41].

ICSID does not directly participate in the dispute resolution process as a mediator or arbitrator. Instead, it provides a panel of internationally recognized experts for the parties to choose their arbitrators or mediators from. If the state and foreign investor agree to utilize ICSID's dispute resolution methods, they are committed to abide by the recommendations of the mediator or the decision of the arbitrator. Furthermore, all states that are parties to ICSID, whether they are directly involved in the investment dispute or not, are required to accept the binding nature of the arbitral award given in accordance with the convention and to enforce the execution of any monetary debts determined by the award (as specified in ICSID Article 54).

Materials and methods

During the research process, the general

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2 The Convention on the Settlement of Investment Disputes between States and Nationals of Other States of March 18, 1965, 575 U.N.TS. 159. 4 ILM532 (1965) (ICSID Convention), available on the website of the Centre at www.worldbank.org/icsid.

3 https://icsid.worldbank.org/about/member-states/database-of-member-states The access date: 29.01.

4 There is conflicting information about the date of the entry into force of the ICSID Convention for The Rebublic of Kazakhstan. The ICSID Convention website states that it took effect on October 21, 2000. However, according to the Republic of Kazakhstan's International Treaties Bulletin, the date of entry into force is July 20, 2004.

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scientific methods of analysis and synthesis were employed. Specifically, the present practical situation in the field of resolving investment disputes was scrutinized, and a comprehensive review of legal literature on the Convention was conducted, taking into account relevant court cases.

Discussion and results

THE ICSID CENTER'S JURISDICTION

It is significant to remember that ICSID arbitration will not take place only because the accepting state or the investor's state approves the convention. The drafters of the convention deemed it necessary to include such provisions in the preamble, anticipating the possibility of interpretations that participation in the convention implies such an obligation. The ratification of the convention by the relevant states signifies their intention to resolve investment disputes through ICSID arbitration; however, there is no obligation to do so merely by being a party to the convention. The decision to arbitrate is left to the express consent of each state. Furthermore, states can also notify certain matters they do not wish to be subject to the jurisdiction of ICSID arbitration by recording them as a reservation5 .

The convention regulates the cases in which disputes between the investor and the host state, where the investment was made, can be brought to ICSID arbitration under the section on the center's jurisdiction (Article 25). For a dispute to be heard in ICSID arbitration, the following three conditions must be met. As is demonstrated below, some of these conditions pertain to the consent of the parties, some to their identity, and some to the type of conflict.

1. Consent of the Parties

The parties must provide express consent for ICSID arbitration to occur. This declaration of consent can be made prior to or after the emergence of a conflict [5, p.540]. The ICSID convention does not stipulate any specific form requirements for the written consent, although it is common for investment agreements between

the parties to include a clause declaring their willingness to participate in ICSID arbitration [6, p.288].

Alternatively, states may incorporate such provisions in their investment protection and promotion laws or investment treaties6 with other states, giving the investor the ability to apply for ICSID arbitration in the presence of specific conditions, together with the host country. It is important to note that all bilateral investment treaties (BITs) signed by Kazakhstan with other countries contain provisions for the resolution of investment disputes through ICSID arbitration or other arbitration centers.

2. Identity of Parties

The second requirement for ICSID arbitration is that one of the parties must be a state7 and the other must be a national of another state party to the Convention8 . In the case of dual citizenship, the Convention regulates which citizenship will be considered as the basis [7, p.290].

Firstly, if the investor has dual citizenship and is a citizen of both the state party to the conflict and another state, then the condition for ICSID arbitration will not be met (Article 25/2-a). This means that the investor will not be entitled to initiate ICSID arbitration against the host country, which is also their home country.

In the second case, if the investor is not a citizen of the state where the investment was made but holds dual citizenship with at least one state party to the Convention, then ICSID arbitration can be initiated. It is important to note that the concept of citizenship in the Washington Convention poses challenges for legal entities. The determination of citizenship for legal persons is not as straightforward as it is for individuals. As a result, the Convention has decided to determine the citizenship of legal entities based on the place of establishment. For example, if a UK-based company has an investment dispute in Kazakhstan, it can be brought to the ICSID. The determination of citizenship based on place of establishment presents an important issue for companies with foreign capital established in Kazakhstan.

5 Some countries have ratified the Convention with varying reservations. For example, Turkiye has excluded disputes arising from the same property in its jurisdiction from the ICSID due to the exclusive jurisdiction of Turkish courts.

6 Bilateral Investment Treaties (BITs) are agreements that provide protection and incentives for bilateral investments. To date, Kazakhstan has entered into BITs with 52 countries. A list of these countries can be found at: https://investmentpolicy.unctad. org/country-navigator/110/kazakhstan. The access date: 29.01.2022.

7 It is important to note that resolution of investment disputes through ICSID arbitration has been a viable option if both the state party and the investor's state are parties to the Convention simultaneously. To increase the jurisdiction of ICSID, the Additional Protocol was signed, which is referred to as the "Additional Ways to Resolve Investment Disputes" and includes Additional Rules. This protocol introduced the Additional Rules of Procedure, granting ICSID the authority to determine whether a dispute between a state and an investor of another state falls within the jurisdiction of ICSID arbitration.

8 The Convention does not apply to stateless individuals and refugees, as it specifically mentions state citizenship.

The Civil Code of Kazakhstan determines citizenship for legal entities based on the place of registration. Hence, in the case of a dispute between a company established in Kazakhstan with foreign capital and registered in the Kazakh legal entities registry, and the Kazakhstan state or state-affiliated institutions, it becomes necessary to determine if ICSID arbitration is applicable.

The ICSID Convention provides a unique perspective on the issue of a legal entity having citizenship in a state different from the state in which it is in conflict. Pursuant to Article 25/2-b of the Convention, even if an investor company holds the nationality of the conflicting state, if it is determined that the company is under foreign control, it will be considered a "citizen of another state". As a result, even in the presence of foreign control in Kazakhstan, the investor has the right to be treated as a citizen of another state and to bring the dispute to ICSID arbitration. The inclusion of this principle in the Convention is due to the fact that many countries globally recognize that companies established in their jurisdiction with foreign capital possess their own citizenship. As a consequence, these companies, despite being established with foreign capital, are deemed local companies in terms of citizenship, thus exempting them from ICSID arbitration. The Convention aims to address this by treating such companies as "foreign" entities on the basis of foreign control [8, p291].

However, for this principle to be applied, the parties must have agreed on this matter in advance. This means that for disputes between the government of Kazakhstan and a foreign investor to be resolved through ICSID arbitration, it is necessary for the investor to agree to classify the company established in Kazakhstan as a foreign entity in their investment agreement.

3. Subject of Dispute

The third requirement for the jurisdiction of ICSID arbitration is that the dispute must arise from an investment. It is important to note that the Washington Convention does not provide a definition for the term "investment." The majority of disputes submitted to ICSID arbitration are related to investments in the commonly accepted modern sense.

The definition of investment is based on the types of investments expressed in the bilateral investment agreements between the state in question and the investor's state. However, it should be noted that these agreements do not

provide precise parameters for defining the concept of investment. For example, the Israel-Kazakhstan bilateral investment agreement allows for arbitration in the resolution of "any legal disputes arising...related to the investments made by the investor in the territory of the host state." Similarly, the bilateral investment agreement between Kazakhstan and Qatar states that "any dispute under the provisions of this Agreement between one Party and the investor of the other Party in connection with an investment" may be submitted to arbitration.

In practice, ICSID arbitral tribunals refer to the "Salini test" [9, p.298] to determine the concept of "investment." Accordingly, the following five criteria are considered essential for an asset to be deemed an investment:

1. The duration of the investment project;

2. The investor's assumption of risk;

3. The significance of the contribution;

4. The project's importance for the development of the host state;

5. The regular generation of profit or income.

In the matter of "Anatolie Stati and Others v. The Republic of Kazakhstan," a case brought before the ICSID, Kazakhstan challenged the jurisdiction of the ICSID arbitration tribunal on the basis that the licenses issued by the state for the development of oil and gas fields, liquefied E natural gas facilities, and other assets held by q the claimants cannot be considered investments K [10]. 0

Kazakhstan's counsel argued that the criteria q established in the "Salini test", developed | by ICSID arbitration, were not met by the ^ claimants. It was suggested that the claimants A did not assume a significant risk in acquiring o these assets, nor did they make a substantial g investment in Kazakhstan, leading to the E conclusion that the assets in question could ^ not be considered investments. The arbitral q

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PROCEDURE FOR ICSID ARBITRATION §

In accordance with the ICSID Convention, if k the parties have agreed to engage in arbitration № and have not made alternative arrangements, ( in the event of a dispute between them, either -the contracting state or the investor may 2 submit a written request to the ICSID General 3

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Secretariat for resolution. However, the parties may choose to exhaust all local, administrative, and judicial remedies before proceeding with arbitration as a means of resolving the dispute (Article 26). Pursuant to the ICSID Arbitration Rules9 , documentation should be submitted electronically as a general rule. However, in cases where special circumstances require a different mode of submission, alternative arrangements may be made (Article 4).

An arbitration request must contain documents establishing the parties' identities, details of the dispute, evidence of the parties' consent to arbitration, and information relating to the investment, ownership, and control thereof10 . The General Secretariat will conduct a preliminary assessment of the request and take one of two actions. It may reject the request on the grounds that the dispute falls outside the jurisdiction of the ICSID arbitration as determined by the information contained in the request, or if the request satisfies the necessary requirements, it will be recorded n. Upon acceptance of the application by the General Secretariat, an arbitral tribunal will be established to resolve the dispute (as per articles 37/2ab, 38-40).

The tribunal will first assess its jurisdiction over the dispute, either of its own accord or in response to an objection raised by one of the parties, which may be considered a preliminary question (per article 41/1). The principle of freedom of choice governs the law to be applied in the dispute. In accordance with Article 42 of the Convention, the tribunal will resolve the dispute in accordance with the rules of law agreed upon by the parties, or, in the absence of agreement, with the host country's law, including conflict of laws rules. The tribunal may apply both relevant international law and the rules of the host country, or, upon agreement of the parties, may resolve the dispute through the application of rules of equity without reference to the contracting country or international law

[12]. It is worth noting that the parties determine the procedural rules to be followed by the tribunal, and if left unaddressed, the applicable ICSID arbitration rules will apply.

ARBITRAL AWARD

The arbitral tribunal shall issue its decision, which shall be made by a majority of its members and shall be in writing and signed by all members who participated in the voting. Any member of the tribunal may add a dissenting opinion to the award. The award must be reasoned and shall address all issues submitted to the tribunal in the petition. The Tribunal shall render the award as soon as possible and in any event no later than within 60 days from the submission of the last document, as provided for under Article 58 of the ICSID arbitration rules.

The award is conveyed to the General Secretariat of the ICSID by the tribunal. The General Secretariat then notifies the parties of the availability of certified copies of the award. The award becomes effective from the date of notification. The Center shall not automatically publish the award without the consent of the parties, as per Article 48 of the ICSID Convention12 . In the event that the arbitrators overlooked a matter while rendering their award, the arbitral tribunal may make additional award upon the request of either party within 45 days from the date of the award. This can be done through an additional award or written letter, as deemed necessary by the tribunal. If there are any inaccuracies in the award, they may be corrected in accordance with Article 49. These additional awards are considered part of the original award and are communicated to the parties in the same manner as the original award.

OBJECTION TO AN ARBITRATION AWARD

As per the provisions of the ICSID

9 The ICSID Convention, Regulations, and Rules were adopted in 1967 and have undergone four amendments since then, with the latest coming into effect in July 2022. These changes are the most comprehensive in ICSID's history. The key modifications include (1) improvements to the proceedings' efficiency, (2) provisions for third-party financing, (3) provisions regarding litigation expenses, (4) reforms to the formation of the arbitral tribunal and the rejection of arbitrators, (5) increased transparency, (6) provisional measures, and (7) expansion of access to the ICSID Supplementary Service Rules.

10 Article 3 ofthe ICSID Institutional Rules recommends additional information that parties may include in their arbitration request to facilitate the early stages ofproceedings. These recommendations include: (i) the method of appointment and number of arbitrators; (ii) the language of the proceedings; (iii) agreements and proposals regarding the use of expedited arbitration; and (iv) if the submitting party is a legal entity, the names of its owners or controllers, and the real and legal persons holding it.

11 The revisions made to the ICSID Arbitration Rules in 2022 encompass new provisions relating to serial arbitration. These modifications allow for the parties to opt for a streamlined trial procedure if they so choose. The expedited trial procedure is characterized by shorter timelines and fewer filings, thereby potentially reducing the overall duration of the trial by half.

12 The revisions made to the ICSID Arbitration Rules in 2022 encompass new provisions relating to serial arbitration. These modifications allow for the parties to opt for a streamlined trial procedure if they so choose. The expedited trial procedure is characterized by shorter timelines and fewer filings, thereby potentially reducing the overall duration of the trial by half.

Convention, the arbitral award rendered under the jurisdiction of ICSID is considered to be final and binding on the parties. No appeal or any other form of remedy, other than those specified in the Convention, can be sought against such an award (Article 53/1). Furthermore, if there are no circumstances necessitating the interpretation, revision, or annulment of the award, the parties are obligated to comply with and fulfill the requirements of the decision (Article 53/1). In addition, every country that is a party to the ICSID Convention shall recognize the arbitral award, which has been rendered in accordance with the provisions of the Convention and the relevant arbitration rules, as binding. Such an award shall be enforced in the same manner as a final decision of the state court within the territorial borders of the country (Article 54/1).

The ICSID Convention provides three methods for recourse to an arbitral award. These include:

1. Requesting an interpretation of the award, as stipulated in Article 50.

2. Requesting a reconsideration of the award due to the emergence of new material facts, as outlined in Article 51.

3. Requesting the annulment of the award in the presence of certain reasons, as specified in Article 52.

Generally, the procedure for annulment of arbitral awards in international arbitration law and domestic legislation of countries is commonly based on the UNCITRAL Model Law and sought from the national courts of place of arbitration [13, p. 41]. However, the ICSID Convention has introduced a different system for objecting the final arbitral award. Unlike the systems accepted in international arbitration law and globally, there is no authorized state court to which the parties can appeal the award. Instead, objections raised by the parties are discussed and resolved within the ICSID Centre.

ENFORCEMENT OF ARBITRAL AWARDSUNDERTHEICSIDCONVENTION

In accordance with Article 54(2) ofthe ICSID Convention, a party seeking recognition or enforcement of an ICSID arbitration award in a member state must submit a copy of the award, as approved by the Secretary General, to a court or authority designated by the contracting state for this purpose.

One of the key benefits of ICSID arbitration is the immunity of arbitral awards from review

by national courts. These awards are not subject to annulment and local courts are required to provide legal assistance to facilitate their enforcement. In addition, a court of a state party cannot refuse to enforce an award that has not been annulled and was issued as a result of ICSID arbitration [14, p. 215].

Consequently, the enforcement of ICSID arbitration awards in the realm of international investment law is commonly carried out smoothly by states [15, p.25]. The ICSID Convention provides a special procedure for the recognition and enforcement of arbitral awards, allowing for the bypassing of domestic laws and international agreements. As a result, objections based on the New York Convention or the UNCITRAL Model Law cannot be raised during the recognition or enforcement process. It is also not possible to assert that the arbitral award is in violation of the public order of the country where enforcement is sought, and recognition or enforcement cannot be denied on these grounds [16, p.13 ].

The execution of the arbitral award will be carried out in accordance with the procedural laws for the enforcement of domestic court decisions in the country where enforcement is sought (Article 54/1). This aims to eliminate the potential disputes arising from differences in laws and legal systems between countries E regarding the execution of arbitral awards. q Each state is required to enforce the decision in K accordance with its domestic law as if it were a § judgment of its own domestic courts. q

In accordance with Kazakh law, the Astana | City Court [17] has jurisdiction over the ^ enforcement of investment dispute arbitral A awards in which the Kazakh state is the o defendant, including those made by the ICSID. g It is important to note that ICSID arbitral awards E are not subject to the procedure for foreign or ^ international arbitral awards in Kazakhstan B (Article 54/1 Each Contracting State shall § recognize an award ... as if it were a final p judgment of a court in that State.), but rather, B they must be enforced through the ordinary § provisions established for Kazakh state court § decisions. As a result, the enforcement order g necessary for the execution of the ICSID award p should not be issued under Article 253 of the > Kazakhstan Civil Procedure Code, which §§ governs the compulsory enforcement of arbitral k awards, but rather, under Article 241 which № governs the execution of court decisions. (

In the AIG Partners v. Kazakhstan case under -the ICSID, the government of Kazakhstan 2 disregarded Article 54(1) of the ICSID 3

Convention and refused to honor the arbitration award. The plaintiff secured a lien on assets of the Kazakhstan central bank held in UK banks (ABN AMRO Mellon Global Security Services BV), but Kazakhstan contested the lien by claiming immunity from jurisdiction [18, p.217 ] and lien. It is worth mentioning that the government's behavior in cases like AIG Partners and Anatolie Stati makes Kazakhstan an unreliable destination for international investment, as it fails to uphold its contracts and shirks its international obligations [19].

Conclusion

The ICSID Convention provides a well-established arbitration system that has been utilized by both states and investors for over half a century. Despite its popularity, several challenges still arise in practice, particularly in regards to jurisdiction and the enforcement of arbitral awards before the host state. This article provides an overview of the ICSID arbitration process and highlights some of the main issues encountered in practice.

It is noteworthy that there is limited

research on the ICSID arbitration procedure and its application in Kazakh legal doctrine. Nevertheless, data from the United Nations Conference on Trade and Development (UNCTAD) reveals that there have been 19 lawsuits filed against the Republic of Kazakhstan in investment arbitration, with the number expected to increase in the future due to the increasing use of third party founding (TPF) in investment arbitration.

Given these circumstances, we believe that further research on ICSID arbitration is crucial for the legal doctrine of Kazakhstan. In particular, cases where Kazakhstan is a party should be examined from both theoretical and practical perspectives. This will enable Kazakhstan to train its own arbitration lawyers and state courts, allowing them to be better prepared to handle investment arbitration cases. In conclusion, ICSID arbitration plays an important role in promoting foreign investment and ensuring the protection of investor rights, and it is imperative for Kazakhstan to fully understand and engage with this system.

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