Revised ICSID Regulations and Rules: Official recognition of third-party funding’s popularity

Member States of the International Centre for Settlement of Investment Disputes (ICSID) recently approved long-awaited updates to the ICSID Regulations and Rules. These are the first amendments since 2006, and will apply to investor-state arbitrations initiated on or after July 1, 2022.

Any corporation doing business on a global scale could potentially be involved in an investment dispute. According to the OECD, approximately 2,500 global investment treaties are in force today, including investment provisions found in trade agreements. The ICSID Rules are the most popular procedural rules in investor-state dispute settlement (“ISDS”) proceedings.

The updated ICSID Rules are broadly in line with recent amendments to several arbitral institutions’ rules that, among others, explicitly recognize and address certain issues arising from third-party funding. The purpose of the revisions to the ICSID Rules is to enhance transparency and offer clearer guidance to arbitrators, arbitration counsel and arbitration parties on important issues such as: cost allocation; security for costs; and third-party funding, to name a few.