The question put to this panel for discussion is whether there is a need for sanctions in investor-state arbitration if parties do not comply with arbitral awards. Before answering this question, it is important to answer another preliminary one: Are states actually not complying with arbitral awards rendered against them? And is it an issue of general interest beyond some particular cases involving always the same state party as a defendant? Is it an issue because of Argentina's strategy, or is an issue relevant generally in the case of ICSID and other arbitral awards?
To begin, it should be mentioned that the assumption is that it is an issue of compliance by the state because in Investor-State Dispute Settlement (ISDS) cases, the state is usually the respondent, although in practice the issue may also arise when the state is awarded the costs. But for the sake of discussion, the following remarks will focus on compliance by the state and sanctions against the non-complying state.
This question is asked against the background of an increasing number of disputes between states and foreign investors. In spite of a general perception that we see only the tip of the iceberg of these cases, there is more and more information available about these cases and the reactions by states and investors to the awards, (1) International arbitration institutions are making commendable efforts to provide information about ISDS cases, and although the outcome and the content of awards is not always known, information is generally available about disputes and arbitration procedures. It is possible to know more about the extent to which awards rendered by various arbitral tribunals in ISDS cases are subjected to annulment or set-aside procedures or where enforcement of an award is sought in other states. The issue of non-compliance does not arise frequently. Maybe there is some empirical research needed here, although some information provided during the panel discussion shows that with the exception of two early cases in which the state did not immediately pay the award because of financial difficulty, ultimately paying the award in installment, states have paid ICSID awards rendered against them.
This question is also asked against the background of the decision taken by a few states to exit the ICSID Convention, most recently in the case of Venezuela. Is this also a way to avoid compliance with adverse awards? The answer is no, if we take into account that, at the same time, these states have kept bilateral investment treaties in force and remained signatories of the New York Convention that regulates the enforcement of foreign arbitral awards and provides for equally limited windows to set aside an arbitral award. It may be useful to recall that...