This PPT explains the role of world trade organisation and international centre for settlement of investment disputes in international investment law.

1. THE ROLE OF WORLD BANK AND
ICSID IN INTERNATIONAL
INVESTMENTS
DONE BY,
SHRUTHI ARCHITHA M
18BLB1061
VITSOL

2. INTRODUCTION:
The World Bank is an international financial institution with a
mandate of poverty alleviation and provides leveraged loans to
developing countries for capital programs.
The World Bank differs from the World Bank Group, World Bank
comprises of :
a. International Bank for Reconstruction and Development
(IBRD)
b. International Development Association (IDA).
WORLD BANK

3. The IBRD aims to reduce poverty in middle-income and
creditworthy poorer countries, while IDA focuses on the
world’s poorest countries.
Whereas the World Bank Group (WBG) is a family of five
international organizations, namely International Finance
Corporation (IFC),Multilateral Investment Guarantee
Agency (MIGA), International Centre for Settlement of
Investment Disputes (ICSID), IBRD and IDA.

4. + The World Bank envisions inclusive and sustainable globalization an
endeavors to provide low-interest loans, interest-free credits and
grants to developing countries for a wide range of development
programs.
+ Following the recovery from World War II, the International Bank of
Reconstruction and Development(IBRD) broadened its mandate to
increasing global economic growth and eliminating poverty.
+ These countries, like Indonesia, India, and Thailand, are often home
to fast-growing economies that attract a lot of foreign investment and
large infrastructure building projects.
+ The success of middle-income countries is precarious, as many
economies that look promising will collapse under the weight of
corruption and economic mismanagement.

5. + The World Bank supports investments in countries that
underpin long-term growth and that help to meet the needs
of their citizens.
+ The World Bank (IBRD), which lends to middle-income
countries, and the International Finance Corporation (IFC),
which lends to private enterprises in developing countries,
issue bonds in the global capital markets.
+ Productive private sector investment is an important
component of developing countries’ growth strategies.
Attracting FDI helps to link a country’s economy to global
value chains and facilitates economic upgrading.

6. + The IFC's stated aim is to create opportunities for people
to escape poverty and achieve better living standards:
+ mobilizing financial resources for private enterprise,
promoting accessible and competitive markets, supporting
businesses and other private-sector entities, and creating
jobs.

7. The International Bank for
Reconstruction and Development
IBRD is one of the largest Multilateral Development Banks (MDB) in the
world and combines knowledge services and financing with global reach.
IBRD provides loans, guarantees, and other financial products for
development-focused projects and programs to creditworthy middle-
income and low-income countries to support sustainable development.
The goal of the International Bank of Reconstruction and Development is
to provide financing and economic policy advice to help the leaders of
middle-income countries navigate the path toward greater prosperity.
IBRD offers its borrowers, in middle income and creditworthy low-income
countries, long-term loans with maturities of up to 35 years.

8. IDA contributes to the WBG’s twin goals of ending extreme poverty and
promoting shared prosperity by providing loans, grants, and guarantees to
countries to help meet their development needs and by leveraging its
experience and expertise to provide technical assistance and policy advice.
Investment Project Financing (IPF) IPF is used in all sectors; it supports a
wide range of activities including capital-intensive investments, agricultural
development, service delivery, credit and grant delivery, community-based
development, and institution building.
It provides a substantial and stable source of funding those IDA countries
can rely on to fund their development priorities.
The International Development Association (IDA)

9. The international community founded the ICSID in 1966 in response to a
growth in cross-border investments, which require a special international
body to facilitate dispute resolution.
Structurally, two main parts comprise ICSID, an Administrative Council and a
Secretariat." The Administrative Council acts as ICSID's governing body. The
Secretariat is a group of staff members who support the Administrative
Council and groups engaging in ICSID arbitration.
The International Centre for Settlement of Investment Disputes

10. The drafters of the ICSID Convention wanted to increase the certainty
surrounding international investment dispute resolution in order to
increase the ease with which people could conduct such investments.
Each case is considered by an independent Conciliation Commission or
Arbitral Tribunal, after hearing evidence and legal arguments from the
parties.
ICSID also promotes greater awareness of international law on foreign
investment and the ICSID process. It has an extensive program of
publications, including the leading ICSID Review-Foreign Investment Law
Journal and it regularly publishes information about its activities and
cases.
If a dispute is submitted to ICSID, it must qualify for coverage not only
under the investment treaty but also under the ICSID Convention.

11. Article 25(1) of the 1966 Convention on the Settlement of Investment Disputes between States
and Nationals of Other States (Washington Convention) provides that:
“The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an
investment between a Contracting State and a national of another Contracting State, which the
parties to the dispute consent in writing to submit to the Centre. When the parties have given
their consent, no party may withdraw its consent unilaterally.”
ICSID arbitration offers advantages to the investor as well as to the host State. The advantage
for the investor is obvious: it gains direct access to an effective international forum should a
dispute arise. The advantage for the host State is twofold:
by offering arbitration it improves its investment climate and is likely to attract more
international investments. In addition, by consenting to ICSID arbitration the host State shields
itself against diplomatic protection (Art. 27) and protects itself against other forms of foreign or
international litigation (Art. 26)

12. Zhinvali Development Ltd. v. Georgia:
The firm reclaimed expenses of more than
USD 26 million incurred during negotiations
with the government.
the Tribunal argued that these up-front costs
do not fall under the definition of investment
as set out in the ICSID Convention.
In addition, the required consent of the host
state to treat development costs as an
investment was missing.
CASE LAWS

13. In Saipem S.P.A. v. The People’s Republic of Bangladesh:
To determine whether Saipem made an investment within the meaning of Article 25 of the
ICSID Convention.
Tribunal applied the Salini-test, making reference to the following elements:
a) a contribution of money or other assets of economic value,
b) a certain duration,
c) an element of risk,
d) a contribution to the host state’s development.
However, the Tribunal emphasized that for the purpose of determining whether there is an
investment under Article 25 of the ICSID Convention the entire operation should be taken
into consideration. In the present case, the entire or overall operation included the
construction contract as well as the credits for sums of money deriving from an ICC award.

14. CONCLUSION:
ICSID states that the primary purpose of the Convention is to stimulate
international investment flows, it underlines the body’s desire to address
the interests of both investors and states:
Adherence to the Convention by a country would provide additional
inducement and stimulate a larger flow of private international investment
into its territories.
The provisions of the Convention maintain a careful balance between the
interests of investors and those of host States.

15. There is also a clear link between ICSID and the World Bank, which has strong
developmental goals in its lending practices.
For example, the purpose of the International Bank for Reconstruction and
Development (IBRD), one of the entities that comprise the World Bank, is,
among others, to facilitate and encourage international investment for: (a)
productive purposes; (b) for the development of the productive resources of
countries to increase productivity, standards of living and conditions of labor.
Furthermore, ICSID is a part of the World Bank Group, together with the IBRD
and other multilateral institutions. As portrayed by the World Bank Group,
ICSID complements the overall mission of the group by helping “People help
themselves and their environment by providing resources, sharing knowledge,
building capacity and forging partnerships in the public and private sectors.”