# Mediation of Investment Disputes Under the ICSID Mediation Rules: An Overview

Catharine Titi

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Catharine Titi. Mediation of Investment Disputes Under the ICSID Mediation Rules: An Overview. Marc Bungenberg et al. Alternative Dispute Resolution in the Western Balkans. Trends and Challenges, 20, Springer, pp.157 - 171, 2025, European Union and its Neighbours in a Globalized World, 978-3-031-76344-1. 10.1007/978-3-031-76345-8_10. hal-05478156

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Catharine Titi

**Abstract** The criticisms that have been voiced against investment arbitration have led to a growing interest in alternative means of dispute settlement, especially mediation. In 2022, as part of an overhaul of its Rules and Regulations, the International Centre for Settlement of Investment Disputes (ICSID) adopted a set of mediation rules, which are the first institutional mediation rules developed specifically for investment disputes. These rules are the focus of this chapter. The chapter reviews the context of the adoption of the ICSID Mediation Rules, before considering the reasons that may have encouraged ICSID to establish them, given that, even before 2022, the Centre provided a framework for the conciliation of investment disputes. The chapter further examines the mediation procedure under the ICSID Mediation Rules, from the initiation of proceedings to their conduct and termination, and considers remaining challenges, which it argues will need to be addressed, if mediation is to become a more mainstream means of settling investment disputes.

## 1 Introduction

The criticisms that have been voiced against investment arbitration<fnref n="1" /> have led to a growing interest in alternative means of dispute settlement.<fnref n="2" /> In Working Group III of the United Nations Commission on International Trade Law (UNCITRAL), where

The author would like to thank Aurélia Antonietti, Meg Kinnear and Frauke Nitschke for sharing material on the adoption of the ICSID Mediation Rules and for their useful comments on an earlier version of this chapter.

C. Titi (✉)

French National Centre for Scientific Research (CNRS) and CERSA, University Paris-Panthéon-Assas, Paris, France
e-mail: cathy_titi@hotmail.com

<footnote n="1">¹ E.g. Waibel et al. (2010), Weber and Titi (2015), UNCITRAL (2018), pp. 3–5.</footnote>

<footnote n="2">² Titi and Fach Gómez (2019).</footnote>
negotiations on the reform of Investor-State Dispute Settlement (ISDS) are ongoing,<fnref n="3" /> states have expressed an interest in alternative dispute resolution, including, especially, mediation.<fnref n="4" /> The working group has taken the view that mediation could be useful in investor-state disputes, and it continues to explore ways in which to encourage mediation as a dispute settlement option for these disputes.<fnref n="5" /> As of the time of writing, UNCITRAL has adopted model provisions on mediation for investor-state disputes and mediation guidelines.<fnref n="6" />

Besides UNCITRAL, an institution that has lent a sympathetic ear to states’ growing interest in mediation is the International Centre for Settlement of Investment Disputes (ICSID). Like other institutions, ICSID participates as an observer in the negotiations in Working Group III and has followed closely developments in that context. In 2022, as part of an overhaul of its Rules and Regulations, ICSID adopted a set of mediation rules, which are the first institutional, as opposed to ad hoc, rules developed specifically for the mediation of investment disputes.<fnref n="7" /> These rules are the focus of this chapter.

The remainder of this chapter is structured as follows. The chapter starts by examining the context of the adoption of the ICSID Mediation Rules, before considering the reasons that may have led ICSID to establish the rules, given that the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) provides for conciliation anyway. That part of the chapter aims to answer the question: What differences between ICSID mediation and conciliation justify the adoption of standalone mediation rules? The next part of the chapter focuses on the mediation procedure under the ICSID Mediation Rules, from the initiation of proceedings to their conduct and termination. Finally, the chapter takes into account remaining challenges that investment mediation faces, and which will need to be addressed, if mediation is to become a more mainstream means of settling investment disputes.

<footnote n="3">³ See UNCITRAL, Working Group III: investor-state dispute settlement reform, https://uncitral.un.org/en/working_groups/3/investor-state.</footnote>

<footnote n="4">⁴ See UNCITRAL, Investment mediation and dispute prevention, https://uncitral.un.org/en/investmentmediationanddisputeprevention. See further Böhme and Braun (2023), p. 10.</footnote>

<footnote n="5">⁵ Knieper and Haddad (2023), p. 240.</footnote>

<footnote n="6">⁶ UNCITRAL (2023), paras. 35–40.</footnote>

<footnote n="7">⁷ See ICSID, Rules and Regulations: mediation, https://icsid.worldbank.org/rules-regulations/mediation.</footnote>
## 2 The Context of the Adoption of the ICSID Mediation Rules

This is not the first time that ICSID has revised its Rules and Regulations, nor is it the first time that it adopts rules on the settlement of investment disputes by alternative dispute resolution (understood here as alternative to, especially, arbitration).<fnref n="8" /> ICSID's Rules and Regulations have evolved on a number of occasions over the nearly sixty years of ICSID's existence.<fnref n="9" /> In contrast with the ICSID Convention, a treaty binding on almost 160 states,<fnref n="10" /> and whose amendment is generally considered to present insurmountable challenges,<fnref n="11" /> the revision of the ICSID Rules and Regulations is a lot simpler.<fnref n="12" /> While amendments to the ICSID Arbitration and Conciliation Rules and the Administrative and Financial Regulations and Institution Rules require a two-thirds approval by the Administrative Council, a majority of the votes cast suffices for the adoption of the amended Additional Facility Rules for Arbitration and Conciliation Proceedings and the standalone Mediation Rules.<fnref n="13" /> The amendment of the ICSID Rules and Regulations and the adoption of the new set of Mediation Rules are important developments, given ICSID's popularity in the settlement of international investment disputes.<fnref n="14" /> The most recent revision is the fourth and “most extensive amendment to date”, whose purpose has been to “modernize, simplify, and streamline the rules”.<fnref n="15" /> The amended rules and regulations, and the new ICSID Mediation Rules, were approved by the majority of states and entered into force on 1 July 2022.<fnref n="16" />

<footnote n="8">⁸ See text to nn. 19 ff.</footnote>

<footnote n="9">⁹ ICSID, A brief history of amendment to the ICSID Rules and Regulations, 10 March 2020, https://icsid.worldbank.org/news-and-events/speeches-articles/brief-history-amendment-icsid-rules-and-regulations.</footnote>

<footnote n="10">¹⁰ ICSID, Database of ICSID member states, https://icsid.worldbank.org/about/member-states/dat-base-of-member-states (information correct as of 1 March 2024).</footnote>

<footnote n="11">¹¹ According to Article 66(1) of the ICSID Convention, an amendment of the Convention would require “ratification, acceptance or approval” by all member states.</footnote>

<footnote n="12">¹² Titi (2023a).</footnote>

<footnote n="13">¹³ ICSID, Press release: ICSID submits amended Rules to the Administrative Council for a vote, 20 January 2022, https://icsid.worldbank.org/news-and-events/news-releases/icsid-submits-amended-rules-administrative-council-vote. See also Parra (2007), p. 57.</footnote>

<footnote n="14">¹⁴ Kinnear (2022).</footnote>

<footnote n="15">¹⁵ ICSID, ICSID Rules and Regulations Amendment, https://icsid.worldbank.org/resources/rules-amendments (17/5/2024).</footnote>

<footnote n="16">¹⁶ ICSID, Press release: ICSID releases 2022 versions of its Rules and Regulations, 22 June 2022, https://icsid.worldbank.org/news-and-events/news-releases/icsid-releases-2022-versions-its-rules-and-regulations.</footnote>
## 3 Mediation or Conciliation?

Both mediation and conciliation are negotiations facilitated by a third-party neutral, the mediator or conciliator.17 In contrast with negotiations, where the disputing parties need to confront each other directly, the presence of the third party neutral in mediation and conciliation has the advantage of removing a layer of tension, where parties find it difficult to establish a productive dialogue.18 Even before the 2022 introduction of the new Mediation Rules, ICSID proposed a set of Conciliation Rules. In fact, conciliation is provided for in the ICSID Convention itself.19 Since therefore ICSID already gave disputing parties the opportunity to use conciliation as a means of settling their investment disputes, it is worth briefly considering the differences between conciliation and mediation that may have pushed ICSID to adopt the new mediation rules.

Unlike conciliation, which by comparison is a relatively formal dispute settlement process, mediation is relatively informal and flexible, although both mediation and conciliation allow the parties to retain control over the outcome of their dispute.20 Despite this difference of degree between the two types of dispute settlement, conciliation and mediation are very similar, and the distinction between them is not always drawn in the literature.21 What matters more in terms of understanding the need for or interest in adopting a set of mediation rules may have to do less with the formal distinction between conciliation and mediation and more with perceived limitations of ICSID conciliation. It is also worth keeping in mind that, since ICSID conciliation is laid down in the ICSID Convention, a radical amendment was not envisageable, while mediation was unchartered territory.

For ICSID Convention conciliation, the threshold for establishing jurisdiction is relatively high, as will be discussed later.22 By contrast, ICSID mediation is open to disputing parties with no limitation as regards nationality and no need for ICSID membership of the investor's host or home states.23 Unlike a request for conciliation, a request for mediation does not need the parties' prior consent, although such consent must ultimately be established.24 ICSID conciliation tends to be more formal than mediation in other respects too. This is obvious, for example, in the role of the conciliator, who, unlike mediators, is encouraged to make non-binding recommendations

<footnote n="17">17 UNCTAD (2010), p. xix, Alberstein (2007), p. 334.</footnote>

<footnote n="18">18 Collier and Lowe (1999), p. 27, Tomuschat (2012), p. 125.</footnote>

<footnote n="19">19 For an overview of ICSID conciliation, see Nitschke (2019).</footnote>

<footnote n="20">20 UNCTAD (2010), pp. xiii, xix. See also Salacuse (2007), p. 154. For a comparison between conciliation and mediation, see Sudborough (2023), pp. 69–73.</footnote>

<footnote n="21">21 E.g. in Titi and Fach Gómez (2019) a conscious choice was made not to distinguish between the two dispute settlement systems, due to the important similarity between them. See also Stipanowich (2015), p. 1222.</footnote>

<footnote n="22">22 See text to nn. 35 ff.</footnote>

<footnote n="23">23 See text to nn. 35 ff.</footnote>

<footnote n="24">24 See text to nn. 40–41.</footnote>
for dispute resolution.<fnref n="25" /> Under the ICSID conciliation framework, a conciliation commission, whose purpose is to “clarify the issues in dispute between the parties and to endeavour to bring about agreement between them upon mutually acceptable terms”, “may at any stage of the proceedings and from time to time recommend terms of settlement to the parties”.<fnref n="26" /> As we shall see, the mediator’s role is more “modest”: to assist the parties in resolving their dispute.<fnref n="27" /> The disputing parties are expected to “cooperate in good faith” with the conciliation commission and “give their most serious consideration to its recommendations”.<fnref n="28" /> The commission is also required to draw up a report noting the parties’ agreement or failure to reach an agreement, as the case may be.<fnref n="29" /> The mediator, by contrast, is not expected to draw up a report at the end of the proceeding or make recommendations to the parties.<fnref n="30" />

In short, the formal nature and strict jurisdictional criteria of ICSID conciliation, in addition to the fact that this method of dispute settlement has not been very popular over the years, probably explain the interest ICSID and states have shown in adopting new rules for investment mediation.

# 4 Mediation Under the ICSID Mediation Rules

## 4.1 ICSID Mediation in General and Institution of Proceedings

ICSID explains that the newly-adopted Mediation Rules complement its existing arbitration, conciliation, and fact-finding rules and can “be used either independently of, or in conjunction with, arbitration proceedings”.<fnref n="31" /> An author has suggested that the mediation could not only coincide with an arbitral proceeding but may even continue after the tribunal has rendered its award and become functus officio.<fnref n="32" /> That the conduct of an arbitration does not prevent the conduct of a mediation, and vice versa, is compatible with the idea that mediation is a means of dispute settlement complementary to arbitration but one that cannot replace arbitration.<fnref n="33" />

The ICSID Mediation Rules have a wide scope of application: they are designed to be able to be used by the broadest categories of parties, so long as the parties

<footnote n="25">²⁵ Shane (1995), Sudborough (2023), p. 71. Cf. text to n. 44.</footnote>

<footnote n="26">²⁶ Article 34(1) of the ICSID Convention; Rules 24 and 29(4) of the ICSID Conciliation Rules.</footnote>

<footnote n="27">²⁷ See text to n. 44.</footnote>

<footnote n="28">²⁸ Article 34(1) of the ICSID Convention.</footnote>

<footnote n="29">²⁹ Article 34(2) of the ICSID Convention. See also Nitschke (2019).</footnote>

<footnote n="30">³⁰ See text to n. 85.</footnote>

<footnote n="31">³¹ ICSID, Rules and Regulations: mediation, https://icsid.worldbank.org/rules-regulations/mediation. See also ICSID (2021), p. 4.</footnote>

<footnote n="32">³² Coe (2019), pp. 62–63.</footnote>

<footnote n="33">³³ Titi (2019), pp. 33–34, Coe (2019). See also Coe (2005), discussing specifically conciliation.</footnote>
consent in writing to submit their dispute to ICSID mediation. ICSID can admin-
ister mediations that “relate to an investment, involve a State or [a regional economic
integration organisation]”, such as the European Union.<fnref n="34" /> This contrasts with concil-
iation under the ICSID Convention, which imposes a relatively high threshold for
establishing jurisdiction, requiring that a dispute must be legal, “arising directly out
of an investment”, and that it must involve a contracting state and a national of
another contracting state.<fnref n="35" /> It is notable that by not imposing a foreign nationality
requirement, the ICSID Mediation Rules allow for an ICSID mediation to take place
not only between host states and foreign investors but also between host states and
their national investors.<fnref n="36" /> This is an interesting development and may encourage
states and scholars to consider the desirability of extending other procedural invest-
ment protections, notably ISDS, to national investors. Although there is certainly a
political cost to such a decision, the idea of guaranteeing protection of one’s own
nationals at the international level is not unprecedented—for example, this is the case
with human rights covenants and regional human rights courts.

ICSID mediation is also broader in coverage than conciliation under the ICSID Additional Facility Rules. The latter still require the existence of a “legal” dispute “arising out of an investment”, involving, on the one hand, a state or a regional economic integration organisation, and, on the other, a national of another state, assuming that either the home state of the investor or the respondent state or both states are not a contracting state, or that a regional economic integration organization is a party to the dispute.<fnref n="37" /> It is interesting that the ICSID Mediation Rules do not require a “legal dispute”—in fact even the word “dispute” is not mentioned. This is in line with the fact that mediation does not necessarily require the existence of an escalated dispute but is instead sometimes seen as akin to dispute mitigation or dispute prevention.<fnref n="38" /> In addition, as a diplomatic means of dispute settlement, mediation may be an attempt to solve the dispute without application of the strict law, either because the parties prefer to achieve a balancing of their interests rather than rely on the existing legal framework or because the legal framework applicable to their dispute is not yet definitely settled.<fnref n="39" />

If the parties have not given their prior written consent to ICSID mediation, a party
wishing to institute a mediation may still file a request with the Secretary-General

<footnote n="34">³⁴ Rule 2(1) of the ICSID Mediation Rules. See also Rule 3(1) of the ICSID Mediation Rules.</footnote>

<footnote n="35">³⁵ Article 25 of the ICSID Convention. The ICSID Convention does not indicate the form that the conciliation commission’s finding on jurisdiction must take. However, the Conciliation Rules establish that, if lack of jurisdiction has been raised as a preliminary objection and the commission upholds jurisdiction, it must record its jurisdictional finding in “a reasoned decision”, while, in the opposite case, it must render a reasoned report, see Rule 33(5) of the ICSID Conciliation Rules. In practice, conciliation commissions have incorporated their decision on jurisdiction in their final report, see Nitschke (2019), p. 136.</footnote>

<footnote n="36">³⁶ ICSID, Key differences between mediation and conciliation at ICSID, https://icsid.worldbank.org/rules-regulations/mediation/key-differences-between-mediation-and-conciliation.</footnote>

<footnote n="37">³⁷ Article 2(1) of the ICSID Additional Facility Rules.</footnote>

<footnote n="38">³⁸ Titi (2019), pp. 29–31, Sudborough (2023), p. 86.</footnote>

<footnote n="39">³⁹ Titi (2021), pp. 156–157.</footnote>
inviting the other party to mediate their dispute.<fnref n="40" /> This request must be accompanied by the payment of a non-refundable lodging fee to ICSID.<fnref n="41" /> Currently, the lodging fee for the institution of proceedings under the ICSID Mediation Rules is US$1,000.<fnref n="42" /> ICSID also levies an administrative charge of US$200 per hour for “staff services” in relation to mediation proceedings.<fnref n="43" />

## 4.2 The Mediator

The role of an ICSID mediator is to “assist the parties in reaching a mutually acceptable resolution of all or part of the issues in dispute”.<fnref n="44" /> Since mediation, like conciliation, is a soft dispute settlement process, the mediator cannot “impose a resolution of the dispute on the parties”.<fnref n="45" /> The parties remain in control of their dispute, and they can agree to disagree.

ICSID mediation involves one mediator or two co-mediators, appointed by agreement of the parties.<fnref n="46" /> The default rule is one mediator.<fnref n="47" /> The parties may request ICSID’s assistance to appoint a mediator.<fnref n="48" /> The mediator or mediators must be independent and impartial, while the parties may decide to appoint persons who possess specific qualifications or expertise.<fnref n="49" /> The parties may also jointly decide that a mediator must resign.<fnref n="50" /> Trust in the mediator is vital for the success of the dispute settlement process, and it is for this reason that some limitations that apply to the appointment of arbitrators under the ICSID Convention are not relevant to ICSID mediation (or conciliation).<fnref n="51" /> For example, under the ICSID Convention, the majority of the arbitrators cannot have the nationality of the disputing parties, unless the parties agree on all appointed arbitrators.<fnref n="52" /> The stated purpose of this provision was to “avoid a situation in which the third arbitrator, as the only one appointed by a neutral party, might find himself in the position of a sole arbitrator in having to maintain a balance between two other arbitrators who were more inclined to act as advocates for the parties appointing them”.<fnref n="53" /> These considerations do not apply to

<footnote n="40">⁴⁰ Rule 6(1)–(2) of the ICSID Mediation Rules.</footnote>

<footnote n="41">⁴¹ Rule 6(1) of the ICSID Mediation Rules. See also Point I.3 of ICSID’s Schedule of Fees (2023).</footnote>

<footnote n="42">⁴² Point I.3 of ICSID’s Schedule of Fees (2023).</footnote>

<footnote n="43">⁴³ Point II.5 of ICSID’s Schedule of Fees (2023).</footnote>

<footnote n="44">⁴⁴ Rule 17(1) of the ICSID Mediation Rules.</footnote>

<footnote n="45">⁴⁵ Rule 17(1) of the ICSID Mediation Rules.</footnote>

<footnote n="46">⁴⁶ Rule 13(1) of the ICSID Mediation Rules.</footnote>

<footnote n="47">⁴⁷ Rule 13(2) of the ICSID Mediation Rules.</footnote>

<footnote n="48">⁴⁸ Rule 13(3)–(4) of the ICSID Mediation Rules.</footnote>

<footnote n="49">⁴⁹ Rule 12 of the ICSID Mediation Rules.</footnote>

<footnote n="50">⁵⁰ Rule 16(2) of the ICSID Mediation Rules.</footnote>

<footnote n="51">⁵¹ Titi (2020), pp. 46–47.</footnote>

<footnote n="52">⁵² Article 39 of the ICSID Convention.</footnote>

<footnote n="53">⁵³ ICSID (1968), p. 983.</footnote>
mediation (or, for that matter, conciliation), where no decision is made by the third-party neutral.<fnref n="54" /> Accordingly, in ICSID mediation and conciliation, it is possible to appoint a mediator or conciliator of the nationality of the other party.<fnref n="55" /> In any event, the fact that mediators are appointed with the agreement of the parties should dispel any doubts about the appropriateness of appointing a mediator with the nationality of one of the parties.<fnref n="56" /> That said, independence and impartiality may play a different role in mediation than in arbitration. It has been suggested, for instance, that disputing parties should consider the appointment of mediators proposed by the other disputing party, including when such appointments concern mediators who are nationals of or have the same nationality as the other disputing party.<fnref n="57" /> The idea is that this could have the double effect of ensuring that the other party commits to the process and increasing their trust in the third-party neutral.<fnref n="58" />

## 4.3 Conduct of the Mediation and Procedural Principles

The mediator must conduct the dispute settlement proceeding “in good faith and in an expeditious and cost-effective manner”.<fnref n="59" /> Cost-effectiveness is an important consideration, since the attractiveness of mediation for investment disputes lies in good part in the fact that mediation is considerably less costly than arbitration; investment arbitration’s high cost has encouraged states to explore alternative means of dispute settlement in the first place.<fnref n="60" /> The principle of the disputing parties’ equality of arms<fnref n="61" /> also applies to mediation: the mediator must not only treat the parties equally but must also provide each one of them “with a reasonable opportunity to participate in the mediation”.<fnref n="62" /> In contrast with arbitration, where ex parte communications are not allowed, the ICSID Mediation Rules make it clear that the mediator is at liberty to “meet and communicate with the parties jointly or separately” no matter whether in person, in writing, or by other means.<fnref n="63" /> It has been even suggested that the parties may actually expect to have ex parte meetings.<fnref n="64" /> These meetings are known as “causes”.<fnref n="65" /> Caucuses provide opportunities for the parties to express themselves on

<footnote n="54">⁵⁴ Titi (2020), pp. 46–47.</footnote>

<footnote n="55">⁵⁵ See Chap. IV of the ICSID Mediation Rules; Articles 29–31 of the ICSID Convention.</footnote>

<footnote n="56">⁵⁶ See text to n. 46.</footnote>

<footnote n="57">⁵⁷ Brower II (2019), pp. 301, 306–307.</footnote>

<footnote n="58">⁵⁸ Brower II (2019), pp. 306–307.</footnote>

<footnote n="59">⁵⁹ Rule 17(2) of the ICSID Mediation Rules.</footnote>

<footnote n="60">⁶⁰ Bottini et al. (2020).</footnote>

<footnote n="61">⁶¹ For a discussion of the principle in investment arbitration, see Vanhonnaeker (2024).</footnote>

<footnote n="62">⁶² Rule 17(3) of the ICSID Mediation Rules.</footnote>

<footnote n="63">⁶³ Rule 17(4) of the ICSID Mediation Rules.</footnote>

<footnote n="64">⁶⁴ Brower II (2019), p. 317.</footnote>

<footnote n="65">⁶⁵ Coe (2019), p. 76.</footnote>
sensitive issues and to appreciate, if relevant, the eventual weakness of their posi-
tion.<fnref n="66" /> In addition, caucuses may increase the probability that the parties are honest
and that the mediator can ask questions more freely, without worrying about whether
his or her questions will be interpreted by the other party as giving preference to
one party or another.<fnref n="67" /> Ultimately, caucuses can contribute to the success of the
mediation.<fnref n="68" />

In contrast with arbitration, where transparency has become the norm, confiden-
tiality is still important in investment mediation.<fnref n="69" /> In principle, all information and
all documents related to the mediation are to be kept confidential.<fnref n="70" /> The Mediation
Rules provide exceptions to the principle, notably if the parties agree to release the
information or documents, when the information or documents are independently
available, or when disclosure is required by law.<fnref n="71" /> The fact that the parties are medi-
ating or have mediated is to be kept confidential, unless the parties agree otherwise.<fnref n="72" />
Information given confidentially by one of the disputing parties to the mediator (in a
caucus) cannot be disclosed to the other party.<fnref n="73" /> In addition, unless the parties agree
otherwise, a party may not rely in the course of other dispute settlement proceedings
on "any positions taken, admissions or offers of settlement made, or views expressed
by the other party or the mediator during the mediation".<fnref n="74" /> This is again customary
in mediation and the idea behind it is that such confidentiality will encourage the
parties to participate in the mediation "with a comfort level that enables them to be
forthright in terms of their position regarding the dispute".<fnref n="75" />

Pursuant to the ICSID Mediation Rules, the disputing parties have the duty to cooperate with the mediator or mediators and with one another and, as is the case for the mediator, they too must “conduct the mediation in good faith and in an expeditious and cost-effective manner”.<fnref n="76" /> At the beginning of the mediation, each party must file with ICSID a brief written statement describing the issues in dispute, and its position on these issues and on the procedure to be followed in the mediation.<fnref n="77" /> These statements are then to be transmitted by the ICSID Secretary-General to the mediator and to the other disputing party.<fnref n="78" /> Within thirty days after the transmittal of the mediation request, unless the parties agree on a different timeline, the mediator

<footnote n="66">⁶⁶ Welsh and Kupfer Schneider (2012), p. 93; Sudborough (2023), p. 90.</footnote>

<footnote n="67">⁶⁷ Abramson (2004), p. 91.</footnote>

<footnote n="68">⁶⁸ Brower II (2019), p. 317.</footnote>

<footnote n="69">⁶⁹ Brown and Winch (2019), Sudborough (2023), p. 108.</footnote>

<footnote n="70">⁷⁰ Rule 10(1) of the ICSID Mediation Rules.</footnote>

<footnote n="71">⁷¹ Rule 10(1) of the ICSID Mediation Rules.</footnote>

<footnote n="72">⁷² Rule 10(2) of the ICSID Mediation Rules.</footnote>

<footnote n="73">⁷³ Rule 17(4) of the ICSID Mediation Rules.</footnote>

<footnote n="74">⁷⁴ Rule 11 of the ICSID Mediation Rules.</footnote>

<footnote n="75">⁷⁵ Tuchmann et al. (2019), p. 111.</footnote>

<footnote n="76">⁷⁶ Rule 18 of the ICSID Mediation Rules. See also text to n. 59.</footnote>

<footnote n="77">⁷⁷ Rule 19(1) of the ICSID Mediation Rules.</footnote>

<footnote n="78">⁷⁸ Rule 19(2) of the ICSID Mediation Rules.</footnote>
or mediators hold a first session with the parties.<fnref n="79" /> After consulting with the parties, the mediator determines the protocol for the conduct of the mediation, including the language of the proceedings, the method of communication, the place of the meetings including whether they will be held in person or remotely,<fnref n="80" /> the issue of confidentiality, and the eventual agreement of the parties not to pursue other proceedings for the topics that are being mediated.<fnref n="81" />

The Rules require the mediator to conduct the procedure in accordance with the protocol and to consider the positions of the parties.<fnref n="82" /> With the parties’ agreement, the mediator may ask for expert advice.<fnref n="83" /> In contrast with conciliation, where the conciliation commission may “at any stage of the proceedings and from time to time” make recommendations for the resolution of the dispute to the parties,<fnref n="84" /> the mediator can only make such recommendations, whether written or oral, if requested to do so “by all parties”.<fnref n="85" />

The mediator (or ICSID, if no mediator has been appointed) terminates the medi-
ation when he or she receives the parties’ notice that they have either signed a
settlement agreement, that they have agreed to terminate the mediation proceeding,
that a party has withdrawn from the mediation (unless the remaining parties wish to
continue), or if the mediator determines that the dispute is unlikely to be resolved
through the mediation proceeding.<fnref n="86" /> The Secretary-General of ICSID will terminate
the dispute if the parties have failed to appoint a mediator within 120 consecutive
days after the registration of the mediation, or after another period that the parties
may have agreed upon.<fnref n="87" />

In the event that the mediation proceeding takes place in parallel with an ICSID
Convention arbitration, to the extent that the arbitral tribunal has not yet rendered its
award, the arbitral tribunal upon successful conclusion of the mediation must take
note of the discontinuance of the arbitral proceeding, if requested to do so by the
parties.<fnref n="88" /> The parties may also file the mediated settlement agreement and request
of the tribunal to include it into the award.<fnref n="89" /> In that case, the award rendered by the

<footnote n="79">⁷⁹ Rule 20(1) of the ICSID Mediation Rules.</footnote>

<footnote n="80">⁸⁰ Since the COVID-19 pandemic, virtual hearings have become more common in arbitration, see Fach Gómez (2023), pp. 111–121. There is every reason to assume that this trend will be reflected in investment mediation too.</footnote>

<footnote n="81">⁸¹ Rule 20(3) of the ICSID Mediation Rules.</footnote>

<footnote n="82">⁸² Rule 21(1) of the ICSID Mediation Rules.</footnote>

<footnote n="83">⁸³ Rule 21(3) of the ICSID Mediation Rules.</footnote>

<footnote n="84">⁸⁴ Article 34(1) of the ICSID Convention. For a discussion, see Nitschke (2019), *passim*; Reif (1990).</footnote>

<footnote n="85">⁸⁵ Rule 21(4) of the ICSID Mediation Rules.</footnote>

<footnote n="86">⁸⁶ Rule 22(1) of the ICSID Mediation Rules.</footnote>

<footnote n="87">⁸⁷ Rules 13(5) and 22(1) of the ICSID Mediation Rules.</footnote>

<footnote n="88">⁸⁸ Rule 55(2) of the ICSID Arbitration Rules.</footnote>

<footnote n="89">⁸⁹ Rule 55(2) of the ICSID Arbitration Rules.</footnote>
tribunal will be described as a consent or settlement award.<fnref n="90" /> The advantage of incorporating the settlement in an ICSID award in such a case is that the settlement agreement will then benefit from the strong enforcement regime of the ICSID Convention.<fnref n="91" /> It must however be borne in mind that, strictly speaking, this enforcement regime only concerns pecuniary obligations and not specific performance.<fnref n="92" />

Finally, when it comes to costs, the default rule under the ICSID Mediation Rules is that, unless the parties agree otherwise, the fees and expenses of the mediator and the administrative charges and costs of ICSID are borne equally by the disputing parties.<fnref n="93" /> Any other costs, such as legal representation costs, will in principle be borne by the party that has incurred them.<fnref n="94" />

## 5 Challenges of Mediation

Although mediation is a relatively popular dispute settlement method for some types of disputes, such as cultural heritage repatriation disputes,<fnref n="95" /> and some cultures attach particular value to it,<fnref n="96" /> it remains a relatively unexplored means of settling investor-state disputes, although its desirability has often been invoked.<fnref n="97" />

There are several reasons for this reluctance to mediate investment disputes.<fnref n="98" /> The first is directly related to the involvement of the state and the politics behind settlements. It has been suggested that “active political oppositions” may be “waiting for an opportunity to pounce on the incumbents for having ‘betrayed’ the national patrimony by settling with an investor”<fnref n="99" /> and that the decision to willingly compensate investors for public interest measures will be hard to “sell to constituents”.<fnref n="100" /> This unease with mediation can also prove to be true in the case of directly negotiated settlement agreements, and, possibly for that reason, such settlements are often kept confidential. In *SPP v. Egypt* (the Pyramids case),<fnref n="101" /> the Egyptian Prime Minister had rejected a tentative settlement agreement of 10 million US dollars in favour of arbitration, since he considered that such a settlement “would open him to attack by

<footnote n="90">⁹⁰ Bottini (2024).</footnote>

<footnote n="91">⁹¹ See Bungenberg et al. (2024).</footnote>

<footnote n="92">⁹² Article 54(1) of the ICSID Convention. See also Bungenberg et al. (2024).</footnote>

<footnote n="93">⁹³ Rule 9 of the ICSID Mediation Rules.</footnote>

<footnote n="94">⁹⁴ Rule 9 of the ICSID Mediation Rules.</footnote>

<footnote n="95">⁹⁵ For an overview, see Titi (2023), pp. 195–198.</footnote>

<footnote n="96">⁹⁶ E.g. McFadden (2019).</footnote>

<footnote n="97">⁹⁷ See Bottini and Lavista (2009), making a similar case for conciliation.</footnote>

<footnote n="98">⁹⁸ See Titi (2019), pp. 35–38. That said, it has been informally reported to this author that there have been at least 30 investment mediations.</footnote>

<footnote n="99">⁹⁹ Reisman (2010), p. 26.</footnote>

<footnote n="100">¹⁰⁰ Welsh and Kupfer Schneider (2013), pp. 86–87.</footnote>

<footnote n="101">¹⁰¹ *Southern Pacific Properties (SPP) v. Egypt*, ICSID Case No. ARB/84/3.</footnote>
opponents and the media”.<fnref n="102" /> This dispute was ultimately settled after arbitration for 17.5 million US dollars.<fnref n="103" />

A probably even more important obstacle to investment mediation is that public officials may not be habilitated to settle with foreign investors or that, if they are, they may bear legal and financial liability and face prosecution, such as on allegations of corruption or for having incurred losses for the state.<fnref n="104" /> Moreover, while usually there is authorisation for compensation to be paid to an investor on the basis of an arbitral award, a special authorisation may be necessary for a settlement agreement.<fnref n="105" /> This can make a decision imposed by a third party, an arbitrator, preferable and, by the same token, reduce the attractiveness of mediation. Therefore, enabling public officials to reach settlement agreements is key for the success of investment mediation.

A further complication concerns communication inefficiencies between state agencies. Public officials may be uninformed about the facts that have given rise to the investment dispute, and the legal defence of the state often does not start before the state receives the actual arbitration request.<fnref n="106" /> The state agency that has adopted the contested measures is typically not the agency responsible for defending the state against legal claims,<fnref n="107" /> and it may be weeks or even months before officials in the latter identify their counterparts in the agency at the origin of the dispute.<fnref n="108" /> It can take even longer before the legal defence agency can make a first assessment of the merits of the dispute.<fnref n="109" /> Such assessment is crucial for the state, since the strength of its legal case can have an impact on its preferred method of dispute settlement.<fnref n="110" />

A final challenge concerns the enforcement of mediated settlement agreements, although the Singapore Mediation Convention is likely to change this. While its applicability to investment disputes still needs to be formally confirmed,<fnref n="111" /> the better argument seems to be that it is indeed applicable to at least some investment mediated settlement agreements. According to the *travaux préparatoires* of the Convention, if “a settlement agreement between a government entity and an investor was considered to be of a commercial nature under the applicable law, such an agreement should fall under the scope of the [Convention]”.<fnref n="112" /> ICSID too has stressed the compatibility of future ICSID mediated settlement agreements with the requirements of the Singapore Convention on Mediation.<fnref n="113" />

<footnote n="102">¹⁰² Salacuse (2007), p. 150.</footnote>

<footnote n="103">¹⁰³ Salacuse (2007), p. 150.</footnote>

<footnote n="104">¹⁰⁴ Valderrama (2021), p. 129, Constain (2014), p. 34.</footnote>

<footnote n="105">¹⁰⁵ Legum (2006), p. 2.</footnote>

<footnote n="106">¹⁰⁶ Legum and Crevon (2014), p. 3, Sharpe (2014), pp. 43–45.</footnote>

<footnote n="107">¹⁰⁷ Legum (2006), p. 1.</footnote>

<footnote n="108">¹⁰⁸ Legum (2006), p. 2.</footnote>

<footnote n="109">¹⁰⁹ Legum (2006), p. 2. See also Coe (2005), p. 41.</footnote>

<footnote n="110">¹¹⁰ Titi (2023b), pp. 27, 190.</footnote>

<footnote n="111">¹¹¹ Abramson (2019), Sudborough (2023), pp. 109–115.</footnote>

<footnote n="112">¹¹² UNCITRAL (2016), para. 110.</footnote>

<footnote n="113">¹¹³ ICSID, Termination of the mediation—ICSID mediation (2022), https://icsid.worldbank.org/procedures/mediation/termination-of-mediation/2022.</footnote>
# 6 Conclusion

ICSID conciliation proceedings have not proved very popular, although ICSID conciliation has been an available dispute settlement option for as long as ICSID Convention arbitration has been available. Will ICSID mediation be more popular? Probably. It is certainly designed to be easier to access and its flexibility should help make it attractive. After all, if one decides against arbitration and in favour of a flexible means of dispute settlement, mediation is a more obvious choice than conciliation, the latter resembling arbitration in its formality.

This does not mean that mediation is going to compete with arbitration for popularity, since mediation and arbitration tend to be appropriate in different circumstances. Arbitration will certainly continue to be more widely used, but just as some disputes are resolved through direct negotiations, from now on some other disputes are likely to be resolved through ICSID mediation. The confidentiality of proceedings may well mean that we know little about it, as we know little about negotiated settlement agreements. However, the fact remains that the new Mediation Rules offer an additional means of settling investment disputes, and this in itself makes their adoption a very welcome development.

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