In January 2024 a Nantes solar energy producer, which has invested 38 million euros since 2019 in a ground mounted plant in a West African State, learns by decree that the twenty year guaranteed purchase tariff is halved with immediate effect. The concession contract contains an ICC arbitration clause. Yet that is not the clause its counsel read first: it is the bilateral investment treaty between France and that State, which opens to any French investor the International Centre for Settlement of Investment Disputes. The lodging fee will be 25,000 dollars, the administrative charge 52,000 dollars a year, each of the three arbitrators will bill 500 dollars an hour, and the proceedings will run for years. Nobody can tell the producer what it will cost in total. Nobody could.
This page explains why ICSID appears in the comparative table of twelve institutions and why it does not compare: what grounds its jurisdiction, what its fees measure, the effect of duration on the bill, why a commercial clause should not refer to it, how contract and treaty fit together, and the enforcement of awards, its real advantage. The amounts are those of the Schedule of Fees in force since 1 July 2023 and of the Memorandum on the Fees and Expenses of 1 July 2022.
1. What grounds ICSID jurisdiction
ICSID was born of a treaty, not of a set of rules. The Washington Convention of 18 March 1965, concluded under the auspices of the World Bank and in force since 14 October 1966, creates a centre whose jurisdiction is defined by article 25: a legal dispute, arising directly out of an investment, between a Contracting State and a national of another Contracting State, which the parties have consented in writing to submit to it. Four conditions, each argued in almost every case.
The State’s consent may be found in three places. In a contract, where the State or one of its designated agencies signs an establishment or concession agreement referring to the Centre. In national legislation, where the host country’s investment code contains a general offer of arbitration. In a treaty, finally, and that is today the ordinary route: the bilateral investment treaty contains an offer of arbitration the investor accepts by filing its request, without ever having signed anything with the State. Once given, consent cannot be unilaterally withdrawn, and article 26 makes it, unless otherwise stated, an exclusive remedy.
The Convention does not define investment. Treaties do, very broadly, by lists of assets; tribunals further check that the operation shows its objective characteristics: a contribution, a duration, a risk. A sale of goods, however large, is not an investment. A solar plant is. Nationality is checked at the date of consent and at the date of the request: a natural person must not hold the nationality of the respondent State, a company must be incorporated in another Contracting State or, if locally incorporated, be under foreign control and agreed to be treated as such. Restructuring a group to place an investment under a favourable treaty is accepted so long as the dispute has not arisen; it is an abuse once the dispute is foreseeable. And since the Achmea judgment of the Court of Justice of the European Union of 6 March 2018, C-284/16, that protection no longer operates between Member States.
2. The Centre’s fees and the tribunal’s, and why no total can be given
The Schedule of Fees of 1 July 2023 runs to a few lines. The lodging fee is 25,000 dollars, non refundable, payable for the institution of an arbitration, a conciliation or an annulment application; it is 10,000 dollars for a request for a supplementary decision, rectification, interpretation, revision or resubmission. The administrative charge is 52,000 dollars, payable on registration and then each year for as long as the proceedings last. Arbitrators receive 500 dollars an hour, 250 dollars per hour of travel, a per diem of 900 dollars for a day with an overnight stay and 200 dollars without, and travel above economy class. The Memorandum on the Fees and Expenses of 1 July 2022 no longer publishes a daily rate.
Those figures do not add up to a total, which is why the ICSID line of the comparative table is marked off the scale. Commercial institutions with a scale calculate fees on the amount in dispute; the Centre calculates them on time, without a cap, for a tribunal that has three members in almost every case, over proceedings lasting years. It asks the parties, in equal shares, for advances covering the period ahead, renewed every few months; a party that does not pay its share exposes the proceedings to suspension and then discontinuance, unless the other pays for it. What the investor knows in advance is the rhythm of the calls for funds. What it does not know is their cumulative amount.
Two orders of magnitude, drawn from the scale alone. An eight hour hearing day before three arbitrators costs 12,000 dollars in fees and 2,700 dollars in per diems, before the room, transcription and interpretation. Four years of proceedings represent 208,000 dollars of administrative charge, before the first hour of arbitrator time. To that is added an uncertainty the Centre itself does not remove: it publishes no official average cost statistics. The figures found elsewhere are private estimates.
3. Duration, and its effect on cost
Duration is not a hazard of ICSID proceedings; it is their structure. The request is first examined by the Secretary General, who registers it unless the dispute is manifestly outside the Centre’s jurisdiction. The tribunal is then constituted, which takes months where the State is slow to appoint its arbitrator. Then comes the first session, followed by a full exchange of submissions, memorial, counter memorial, reply, rejoinder, each accompanied by expert reports. The State almost always raises jurisdictional objections: no investment, nationality of convenience, conditional consent. If the tribunal decides to hear them first, the proceedings split into a jurisdiction phase and a merits phase, with two hearings and often two more years.
The award does not necessarily close the case. Article 52 of the Convention opens an annulment application before an ad hoc committee of three members, on five exhaustively listed grounds, including manifest excess of powers, serious departure from a fundamental rule of procedure and failure to state reasons. That application costs a further 25,000 dollar lodging fee, the annual administrative charge that continues and three new arbitrators at the same hourly rate. The committee does not revise the award: if it annuls it, the dispute may be resubmitted to a new tribunal, for a 10,000 dollar lodging fee and an entire new proceeding. The Arbitration Rules of 1 July 2022 introduced time limits; they did not change the nature of the calendar.
Take the Nantes producer again. Request filed in June 2024, registered in August, tribunal constituted in spring 2025, jurisdictional objections heard separately, jurisdiction hearing in 2026, merits hearing in 2027, award in 2028, annulment application by the State, committee decision in 2030. Six years of administrative charge make 312,000 dollars, to be advanced in equal shares. Each additional year costs 52,000 dollars to the Centre alone, before arbitrators, lawyers and experts. Time here is billed.
4. Why a commercial clause should not refer to ICSID
A Saint-Nazaire maker of port equipment sells, in 2025, two gantry cranes for 2.3 million euros to the port authority of a Maghreb State. The contract, taken from an earlier concession, stipulates that any dispute shall be submitted to ICSID arbitration in Washington. The 700,000 euro balance goes unpaid. The seller then discovers that its clause will take it nowhere. The port authority is not the State and has not been designated to the Centre by it, as article 25 requires. Selling two gantry cranes is not an investment. The State’s consent does not exist. The Secretary General will refuse to register the request as manifestly outside the Centre’s jurisdiction, and the buyer will argue before its own courts that the inoperative clause leaves them the dispute.
An ICSID clause in a sale contract is a dead clause. It cannot be saved by interpretation, because the defect lies not in the drafting but in the Centre’s jurisdictional conditions, which the parties’ intention does not create. Call it the borrowed prestige trap: the name of an institution is copied because it reassures, without looking at who it is open to. The Centre’s Additional Facility repairs nothing here, since it too requires an investment and a State party.
A contract with a foreign public entity has other routes, and they work. The ICC routinely administers arbitrations where one party is a State, a public body or a State owned company; its scale gives a figure before filing. The Permanent Court of Arbitration in The Hague offers a secretariat well used to disputes involving public entities, under the UNCITRAL arbitration rules, with a tribunal paid for time spent that the clause must frame. What matters is to write a clause the public entity can accept and an enforcement judge will recognise: an institution open to that type of party, a seat in a State party to the New York Convention, the number of arbitrators, the governing law and an express waiver of immunities from jurisdiction and execution. ICSID is not chosen in a commercial contract; it is earned by an investment.
5. The contract clause and treaty protection: two routes that do not freely add up
An investor that has signed a State contract and benefits from a treaty has two routes. The first is contractual: the concession clause, often ICC or UNCITRAL, decides breaches of the contract under the chosen law. The second is treaty based: the treaty guarantees fair and equitable treatment, protects against direct or indirect expropriation, secures free transfer of funds, and the ICSID tribunal judges the State’s breaches under international law. The same facts may feed both: halving a purchase tariff by decree breaches the concession and may amount to a measure equivalent to expropriation. Some treaties further contain an observance of undertakings clause, known as an umbrella clause, which raises the State’s contractual breaches to treaty violations.
Those routes are not freely cumulative. Many treaties contain an irrevocable choice clause, known in practice as a fork in the road: an investor that has taken the dispute to the host State’s courts can no longer seise the arbitral tribunal, and vice versa. Whether a local challenge to the decree is the same dispute as the treaty claim, and therefore exhausts the choice, is argued at length; tribunals compare the parties, the object and the cause of the two actions, and they do not converge. Other treaties, modelled on North American practice, require a written waiver of any other proceedings when the request is filed, which forces the investor to abandon the commercial arbitration or the local action before knowing whether the treaty tribunal will uphold jurisdiction.
The resulting rule is simple and often ignored. Seise no court anywhere before reading the treaty. The Nantes producer that, in the weeks after the decree, brings a challenge before the administrative court of the capital in order to be seen to act, risks closing the ICSID door; the one that starts the ICC arbitration without checking the treaty’s waiver clause risks having to give it up six months later. The right order is the opposite of urgency: identify the treaty, check the nationality of the entity holding the investment, notify the dispute to the State, and only then choose the route.
6. Enforcement of ICSID awards, the one advantage that justifies the price
What makes ICSID unique, and explains why an investor accepts an uncapped bill, is in articles 53 and 54 of the Convention. The award is binding on the parties and is not subject to any appeal or to any remedy other than those provided in the Convention. Each Contracting State recognises it and enforces the pecuniary obligations it imposes as if it were a final judgment of its own courts. The party seeking enforcement presents to the court designated by that State a copy certified by the Secretary General. Nothing else. That court reviews neither the tribunal’s jurisdiction, nor due process, nor the award’s conformity with its public policy.
Comparison with the 1958 New York Convention measures the gap. An award made against a State under the ICC or UNCITRAL rules has a seat, whose courts may set it aside, in France on the five grounds of article 1520 of the code of civil procedure. It must then obtain enforcement in every State where assets are located, and article V of the New York Convention allows the judge to refuse for lack of jurisdiction, breach of the rights of the defence or conflict with public policy. The State ordered to pay has as many cases as there are countries of enforcement. An ICSID award has no seat, is subject to no challenge before a national court, and is recognised in every Contracting State without that court being able to rehear it.
Immunity from execution remains, and article 55 expressly preserves it. Recognition of the award is automatic; attachment of the State’s property is not. In France, articles L. 111-1-1 to L. 111-1-3 of the code of civil enforcement procedures, from the statute of 9 December 2016, make any enforcement measure against the property of a foreign State subject to prior authorisation from the judge, granted only where the State has consented or where the property is used otherwise than for non commercial public service purposes; diplomatic property requires an express and specific waiver. An investor whose debtor State does not pay therefore looks, country by country, for attachable commercial assets, work that is itself billed by time. The true price of ICSID is measured at enforcement: on paper no award is stronger; in the bank account everything depends on the State.
Frequently asked questions
Can a small company bring an ICSID claim
Legally, yes: the Washington Convention sets no threshold of amount or company size, and a ten employee company that has made an investment protected by a treaty has the same access to the Centre as a listed group. Economically, the question is funding: a 25,000 dollar lodging fee, a 52,000 dollar annual administrative charge, three arbitrators at 500 dollars an hour and years of fees exceed the capacity of most small companies. Hence the growth of third party funding, whose share of the proceeds is negotiated before signing.
What happens if the host State has not ratified the Washington Convention
The Centre cannot be seised under the Convention, article 25 of which requires both the respondent State and the investor’s State to be Contracting States. The treaty then usually provides either for the ICSID Additional Facility, administered by the Centre outside the Convention, or for arbitration under the UNCITRAL rules. In both cases the award loses the regime of articles 53 and 54: it has a seat, whose courts may set it aside, and it is enforced abroad under the New York Convention. Treaty protection survives; the strength of the award is less.
Can an ICSID award be appealed
No. Article 53 of the Convention excludes any appeal and any remedy other than those it organises. The only way to challenge it is the annulment application of article 52, before an ad hoc committee of three members, on five grounds: improper constitution of the tribunal, manifest excess of powers, corruption of a member, serious departure from a fundamental rule of procedure, failure to state reasons. The committee does not rehear the merits and does not correct an error of law; it annuls or it upholds. No national court may hear a challenge to the award.
Must local remedies be exhausted before seising ICSID
Not as a matter of principle. Article 26 of the Convention presumes that consent to arbitration excludes any other remedy, but it allows the State to make that consent conditional on prior exhaustion of local remedies. Everything therefore depends on the treaty: some require a period before local courts, others a period of amicable consultation, others nothing. The converse is just as true: going to the local courts where the treaty contains an irrevocable choice clause can close off arbitration. Reading the treaty precedes any step in litigation.
Can a French investor still invoke a bilateral treaty against another EU Member State
No, as the law stands. The Court of Justice of the European Union held on 6 March 2018, in Achmea, C-284/16, that the arbitration clause of a bilateral treaty concluded between two Member States is incompatible with EU law, and the Member States signed on 5 May 2020 an agreement terminating their intra EU treaties. The Court extended that reasoning to the Energy Charter Treaty. A French investor in Poland or Italy therefore relies on the arbitration clause of its contract, on EU law and on national courts, not on ICSID.