Early Dismissal In Investment Arbitration - Analysing Ansung V. China And Issues With ICSID Rule 41(5)

Author: LawSphereX

Category: Arbitration & ADR

Published: 2026-08-23T19:35:57.580682+00:00

Updated: 2026-08-26T17:11:31.26+00:00

EARLY DISMISSAL IN INVESTMENT ARBITRATION:

ANALYSING ANSUNG V. CHINA AND ISSUES WITH ICSID

RULE 41(5)

Milinda Sharma, Queen Mary University of London

PART I

ANSUNG HOUSING CO. LTD. v.

PEOPLES REPUBLIC OF CHINA

(ICSID CASE NO-ARB/14/25)

EARLY DISMISSAL FOR MANIFEST LACK OF LEGAL MERIT

In its Award dated 09 March 2017, the ICSID Tribunal dismissed the claims of the Claimant (Ansung Housing Co. Ltd.) pursuant to the invocation of ICSID Arbitration Rule 41(5) by the Respondent (Peoples Republic of China) in ICSID Case No-ARB/14/25. Basis: - The Agreement between the Government of Republic of Korea and the Government of the People’s Republic of China on the Protection and Promotion of Investments, 01 December 2007 (“China-Korea BIT”) - Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 14 October 1966 (“ICSID Convention”) Main Issues: - Legal Standard for ICSID Arbitration Rule 41(5) and (6) - Applicability of MFN Treatment to the limitation provision in a

BIT

Interpretation of Article 9(7) of China-Korea BIT - Costs Tribunal: - Ms. Geraldine R. Fischer (Secretary) Members - Prof. Lucy Reed (President) - Dr. Michael Pyers (Arbitrator) - Prof. Albert Jan van den Berg (Arbitrator) Claimant’s Counsel: - Bae, Kim & Lee LLC Respondent’s Counsel: - Department of Treaty and Law, Ministry of Commerce, People’s Republic of China - Dentons Europe LLP - Zhong Lun Law Firm INTRODUCTION AND FACTUAL BACKGROUND (¶¶1-4 and ¶¶32-551) The case under discussion relates to an investment dispute submitted to the International Centre for Settlement of Investment Disputes (“ICSID”) by a privately owned Korean company, Ansung Housing Co. Ltd. (“Ansung” or “Claimant”) against the People’s Republic of China (“China” or “Respondent”).

1 ¶¶ refer to paragraph numbers of the Ansung Award dated 09-March-2017

The dispute concerned, inter-alia, alleged issues arising out of Ansung’s investment in a golf course and condominium development project in Sheyang-Xian, China. After Ansung registered its case at ICSID against China, China filed its objection pursuant to ICSID Rule 41(5) contending that the Claimant’s claim was manifestly without legal merit. The facts of the case as submitted by the Claimant in its Notice of Intent, Request for Arbitration, First and Second Observations on the Rule 41(5) Objection, and oral submissions at the Rule 41(5) hearing were assumed true by the Tribunal given the summary nature of proceedings. A tabulated arrangement, chronologically and briefly depicting the facts of the present case as

present in the Award, is presented hereinbelow- S. No.

DATE

EVENT

Ansung learned about investment opportunities in Yancheng- 1. April – Shi, China. Subsequently, it identified land for project to November 2006 build a golf resort. Investment Agreement takes place between Ansung and Communist Party of the Sheyang Harbor Industrial Zone Administration Committee (“Committee”). Under the investment agreement, the Committee had

2. 12 December 2006

approved the development of 1500mu2, which included 1200mu for the 18-hole golf course and 300mu for related facilities like clubhouse and condominiums (“first phase” of the project). Agreement also provided that the Committee would reserve additional 1500mu adjacent to the original

parcel of land for an additional 9-hole golf course (“second phase” of the project).

3. 5 March 2007

Ansung commenced construction for the first phase. Ansung observed that Sheyang National Park was also 4. March 2007 – May developing a golf course nearby. However, Committee Secretary and other government officials assured Ansung that no other golf course could be legally constructed there. Ansung requested the 300mu land necessary for construction of related facilities. However, the Committee informed

5. June 2007

Ansung that due to change in China’s real-estate policy, it would have to reapply for land use rights through a public sale at higher prices. Ansung established a Chinese company, Sheyang Mirage Field Co. Ltd (“Mirage”) for sole purpose of building related

6. 10 July 2007

facilities on the 300mu of land as Ansung was informed by the Committee that reapplication for land use rights must be done by a Chinese subsidiary.

The Committee arranged for a third-party development

9. 30 June 2009

company to loan funds to Mirage in order to expedite construction of the clubhouse. Ansung learned that Sheyang Island Park had become an operating 18-hole golf course and complained to several

10. August 2009

government officials however no action was taken despite intervention being assured. Ansung completed the 18-hole first phase of the project and

11. November 2010

also repeatedly requested the Committee to provide additional land necessary for the second phase of the project. Ansung approaches the Committee for request additional land

12. March 2011

however internal conflicts in the Committee resulted in no further action. Mirage was unable to repay the loan arranged by the Committee due to inability to produce sufficient returns from its investments given the Sheyang-Xian government’s manifest failure to honor its commitments and assurances.

13. June 2011

Subsequently certain Committee officials visited the golf course to demand repayment through unlawful means leaving Ansung’s employees in perpetual danger.

As a consequence, Ansung disposed of its entire investment in Sheyang-Xian to avoid further losses. Ansung entered into a share transfer agreement with a Chinese purchaser to sell its shareholdings in the subsidiaries.

2 November 2011

Parties reached an agreement on final price for transfer 15. arrangement as per Supplementary Agreement dated 17 December 2011. Consequently, transfer of shares from Ansung to Chinese purchaser takes place on 19 December 2011.

1. PROCEDURAL HISTORY (¶¶ 5-27)

2.1 Ansung submitted its Notice of Intent to arbitrate on 19 May 2014 pursuant to Article

9(5) of the China-Korea BIT.

2.2 The ICSID received an electronic copy of a Request for Arbitration (“RFA”) along

with certain letters and exhibits on 07 October 2014. The hard copy of the same was received by the ICSID Secretariat on 08 October 2014.

2.3 The ICSID General-Secretary requested Ansung to provide additional information on

its claim. The letter containing the additional information was submitted on 3 November 2014. Accordingly, the General-Secretary registered the RFA in accordance with Article 36(3) of the ICSID Convention on 4 November 2014.

2.4 The Tribunal was then constituted in accordance with Article 37(2)(b) of the ICSID

Convention and as per ICSID Arbitration Rule 6(1), the Secretary-General notified the parties on 2 September 2016 that the Tribunal was deemed to have been constituted on that date.

2.5 However, on 15 September 2016, China filed its Rule 41(5) Objection, following which

the Tribunal set the pleading schedule for the Rule 41(5) Objection.

2.6 On 28 October 2016, Ansung filed its First Observations on the Rule 41(5) Objection

which was followed by China’s First Observations filed on 16 November 2016. Ansung then filed its Second Observations on 2 December 2016.

2.7 Subsequently, in accordance with Rule 13(1), the Tribunal held a First Session and a

Rule 41(5) Hearing on 14 December 2016 in Singapore wherein the parties jointly agreed, inter-alia, that the Tribunal was properly constituted, the Arbitration Rules applicable will be those in effect from 10 April 2006, the procedural language would be English and nothing relating to the case except the Award will be published by ICSID.

2.8 As for the post hearing procedure, each party submitted a Statement of Costs on 17

January 2017. The Respondent filed its Observations on Costs on 3 February 2017 to which the Claimant also responded on 15 February 2017.

2.9 The proceedings were closed on 15 February 2017.

2. LEGAL ISSUES

2.1. Legal Standard for Rule 41(5) and (6) (¶¶ 62-73)

Both the parties as well as the Tribunal agreed that the test of “manifestly” as under Rule 41(5) is correctly decided upon in Trans-Global3. The Tribunal, accepting the facts pleaded by Ansung, did not agree with the view of the Claimant that mere registration of a case at ICSID would pre-judge a Rule 41(5) Objection as registration merely follows an early screening process on only on the basis of information contained in the request, a position clear under Article 36(3) of the ICSID Convention. The Tribunal further noted that when a 41(5) Objection is concerned with a question of limitation, a decision by the Tribunal would include a decision regarding lack of its jurisdiction, its competence, as well as the issue of manifest lack of legal merit.

2.2. Limitation period – Article 9(7) of China-Korea BIT (¶¶ 74-122)

Article 9(7)4 of the China-Korea BIT stipulated a limitation period of 3 years after the

3 Trans-Global Petroleum Inc. v.The Hashemite Kingdom of Jordan (ICSID Case No. ARB/07/25)

4 Article 9(7) – “Notwithstanding the provisions of paragraph 3 of this Article, an investor may not make a

claim pursuant to paragraph 3 of this Article if more than three years have elapsed from the

date on which "the investor first acquired, or should have first acquired, the knowledge that the investor had incurred loss or damage". Ansung had raised issues of, inter-alia, ‘continuing omissions’ on part of China, however the Tribunal focused on establishing the ‘Dies a Quo’ and ‘Dies ad Quem’, which is the start date and end date respectively of such a temporal limitation period. The Tribunal was of the clear view that the Claimant, in its factual matrix, presented in form of pleadings and oral submissions, set the first date (or the dies a quo) of its acquiring ‘knowledge of loss or damage’ to be by or before October 2011. As can also be understood from the factual background provided above at “Introduction and factual background”, the Tribunal arrived at this conclusion due to factors such as – i. Payment of higher price by Ansung for additional 300mu land between 2007- 2008.

ii. Development of a competing golf course which started operations back in 2009. iii. Ansung being unable to repay the loan taken by its subsidiary Mirage in June 2011. iv. Ansung disposing of its entire investment in Sheyang-Xian and its shareholding to its subsidiaries in October 2011. Relying on the interim award given in Spence v. Costa Rica at para 213, the Tiribunal reiterated that “the limitation clause does not require full or precise knowledge of loss or damage (as) such knowledge is triggered by the first appreciation that loss or damage will be (or has been) incurred. )”. As for the dies ad quem, the Tribunal was clear in interpreting that Article 9(7) of the BIT showcased the end date to be the date “on which an investor deposits its request for arbitration with ICSID”.

It is imperative to reproduce ¶121 of the Award to further clarify the Tribunal’s reasoning – date on which the investor first acquired, or should have first acquired, knowledge that the

investor had incurred loss or damage”.

“Claimant deposited the Request for Arbitration with ICSID electronically on October 7, 2014 and physically on October 8, 2014. Either date is more than three years after late summer or early autumn 2011, or the beginning of October2011.” Therefore, the Tribunal came to the conclusion that even if the breach of continuing omission was attributable to the Respondent, it would not make a difference as the period of limitation, since Ansung first knew it had (or would) incur damage, had run out, thereby making their claim time barred and as a result - manifestly without legal merit.

2.3. MFN Treatment – Article 3 of China-Korea BIT (¶¶ 123-144)

An interesting question of law that came up before the Tribunal was whether Article 3 of the China-Korea BIT would help Ansung beat the limitation clock. Ansung had argued that most Chinese BITs did not have a prescription period thereby making Article 9(7) of the BIT less favorable for Ansung and therefore hoped that invocation of Article 3 of the BIT would help it overpower and override the limitation provisions existent in the BIT. However, relying on the clear wording of the MFN clause in Article 3(3) of the BIT, the Tribunal was clear that neither the provision in Article 3(3) nor Article 3(5) extended to Most Favoured Nation treatment for a State’s consent to arbitrate with investors and, in particular, not to the temporal limitation period as specified in Article 9(7) of the BIT.

Therefore, the contention of Ansung with regard to Article 3(3) assisting it to prevent its claim from being time-barred (and as a result manifestly without legal merit) failed to stand on its legs before the Tribunal.

3. COSTS (¶¶ 145-169)

Pursuant to the directions of the Tribunal and as is evident from the procedural history above, the parties submitted a Statement of Cost at the end of the First Session. Ansung, relying on Romak v. Uzebkistan5 asked the Tribunal to exercise discretion under Article 61(2) of the ICSID Convention and order parties to equally split and bear the costs. The reasoning behind this request was threefold - substantial loss, case presented in efficient and effective manner and that the issues of law raised were novel. However, the Tribunal was of the clear view that since

5 PCA Case No-AA280.

Ansung’s claim manifestly lacked legal merit, the claim should never have been brought and that as a result of defending the claim successfully, the Respondent was entitled to claim 75% of its costs from the Claimant (along with interest).

4. DECISION

After the one day hearing, the Tribunal in its award declared Ansung’s claim to be barred by limitation and beyond the purview of protection of the MFN Clause. Accordingly, China’s Rule 41(5) objection was upheld as it was found that Ansung’s claims manifestly lacked legal merit. Tribunal ordered Ansung to pay entire arbitration fees and also 75% of China’s legal fees and expenses.

5. CONCLUSION

ICSID, being a torchbearer of investor-state dispute resolutions, once again showcased the silent effective weapons it has under its sleeve. Rule 41(5) is a supreme example of the procedural fluidity provided by ICSID to parties that help in access of justice with seeming effectiveness and efficacy. China’s invocation of Rule 41(5) resulted in the summary dismissal of Ansung’s unmeritorious claim. Prior to Ansung, only in a very few cases such as Global Trading6 and RSM Production7, the entire claims were found to be manifestly without legal merit. It must be understood that Rule 41(5) is a tremendously strong mechanism that entirely throws out the claims in an ICSID based Arbitration by way of an Award dismissing all or certain claims of the Claimant.

Therefore, it is only imperative that Tribunals hold a responsible, authoritative and stringent test to recognize ‘manifest lack of legal merit’. Accordingly, the applicability of Rule 41(5) appropriately requires an extremely high standard for an objection to be accepted.

6 Global Trading Resource Corp. and Globex International, Inc. v. Ukraine (ICSID Case No-ARB/09/11)

7 RSM Production Corporation and others v. Grenada (ICSID Case No-ARB/10/6)

PART II

THE INITIATION, IMPLEMENTATION AND ISSUES WITH RULE 41(5): THE

WAY AHEAD

1. INTRODUCTION

It is trite and universally accepted that frivolous legal actions of a party act as a clog in the wheel of justice. As a result, most nations have, over a period of time, come up with laws in order to prevent such frivolous law suits. Most domestic legislations around the world ensure to act upon such law suits that lack legal merit at their very start. However prior to 2006, ICSID had started facing criticism with regard to its procedure lacking an option to end an unmeritorious claim at its very root in an expedited manner. States wanted a mechanism that could ensure early dismissal of cases where they felt that they were unnecessarily obligated to endure prolonged and expensive legal proceedings to fight a claim that from its very inception seemed to have no projection of success. These issues were addressed by the adoption of ICSID Arbitration Rule 41(5).

It is undeniably tacit that the intention of a legal statute or provision is best understood by interpreting its history and intention of existence. The earliest external aid to such interpretation in the present case would be the ICSID Secretariat Discussion Paper dated

22 October 2004 titled “Possible Improvements of the Framework for ICSID Arbitration”8.

In light of the growing criticism against ICSID for not having a mechanism for summary dismissal of claims lacking merit, the Secretariat, in the aforementioned paper, recognized the need for such an amendment. The Secretariat in its paper was of the view that, interalia, such “provisions would be helpful in reassuring parties that consider the screening power of the Secretary-General to be too limited, especially insofar as it does not extend to the merits of the dispute”. Subsequently, the draft of Rule 41(5) appeared on 12 May 2005 in a working paper of the ICSID Secretariat titled ‘Suggested Changes to the ICSID Rules and Regulations’9. It is then that Rule 41(5) came into existence on 10 April 2006, by an amendment to the ICSID Arbitration Rules. 8https://icsid. worldbank. org/en/Documents/resources/Possible%20Improvements%20of%20the%20Framework %20of%20ICSID%20Arbitration.

pdf 9https://icsid. worldbank. org/en/Documents/resources/Suggested%20Changes%20to%20the%20ICSID%20Rules %20and%20Regulations. pdf

2. THE RULE

To understand the nature and applicability of Rule 41(5) and (6), it is imperative to reproduce the provisions – “41(5) Unless the parties have agreed to another expedited procedure for making preliminary objections, a party may, no later than 30 days after the constitution of the Tribunal, and in any event before the first session of the Tribunal, file an objection that a claim is manifestly without legal merit. The party shall specify as precisely as possible the basis for the objection. The Tribunal, after giving the parties the opportunity to present their observations on the objection, shall, at its first session or promptly thereafter, notify the parties of its decision on the objection.

The decision of the Tribunal shall be without prejudice to the right of a party to file an objection pursuant to paragraph (1) or to object, in the course of the proceeding, that a claim lacks legal merit” “41(6) If the Tribunal decides that the dispute is not within the jurisdiction of the Centre or not within its own competence, or that all claims are manifestly without legal merit, it shall render an award to that effect. ” A mere perusal of the provision helps in analyzing its characteristics. They can be broken

down as below – i. The parties must not have agreed to another expedited procedure. ii. Invocation of the Rule is at the discretion of the party due to the usage of the word ‘may’. iii. The objection, if any, must be raised within 30 days of the constitution of the Tribunal and in any event, before the First Session. iv. The basis of the Objection shall be specified in a precise manner. v. The Tribunal shall provide a decision at the First Session or promptly after. vi. The decision on Objection shall be without prejudice to a party’s rights under Rule 41(1).

As a consequence of the introduction of Rule 41(5), the question of jurisdiction in ICSID arbitration can now be dealt at three exclusively progressive stages. First, the screening process exercised by the Secretariat as under Article 36(3) of the ICSID Convention, and if the claim passes that level, a Rule 41(5) Objection can be filed, and if it passes that level, the claim may still face preliminary objections under the ambit of Rule 41(1)10.

3. THE MANIFEST TEST

Rule 41(5) provides a mechanism for a tribunal to dismiss claims at a very early stage in a summary manner following a truncated hearing. Given its severity, it is sparingly applied and the meaning of the manifestly without merit standard has now been elucidated by several tribunals11. Given the fact that Rule 41(5) aims to dismiss a manifestly unmeritorious claim at the very beginning, its sensitivity cannot be questioned. ‘The Manifest Test’ remains the most important part of Rule 41(5). In recognizing this sensitivity, each Tribunal that has dealt with the objection of Rule 41(5) has accepted that the test to decide what is ‘manifest’ as under Rule 41(5) must be of the most stringent and decisive nature. Many Tribunals starting from the Trans-Global case have gone on to say that the word manifestly would require the Respondent to establish its objection ‘clearly and obviously’.

In MOL v. Croatia12, the tribunal meticulously deliberated on the standard of application with regard Rule 41(5). The tribunal started by noting that the rule ‘plainly envisages a claim that is so obviously defective from a legal point of view that it can properly be dismissed outright’. 13 It must also be understood that this rule is not intended to determine unusual, challenging or disputed legal issues, but instead only to apply undisputed or genuinely indisputable rules of law to uncontested facts. 14 The manifest test is furthered to the point that the objection raised must be of a legal nature and not factual. In Alvarez v. Panama15 the

10 Brandes Investment Partners, LP v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/08/3.

[Decision on the Respondent’s objection under Rule 41(5), 2 February 2009, para. 53] 11 “Concise International Arbitration. 2nd, Rev. Ed.” by Loukas A. Mistelis, Kluwer Law International, 2015, pg. 325.

12 MOL Hungarian Oil And Gas Company Plc v, Republic of Croatia ICSID Case No. ARB/13/32

13 Pages 258-259, Chapter 9: Preliminary Objections to Dismiss Claims that are Manifestly Without Legal Merit under Rule 41(5) of the ICSID Arbitration Rules, ICSID Convention after 50 Years: Unsettled Issues (Baltag; Jan 2016)

14 PNG Sustainable Development Program Ltd. v. Independent State of Papua New Guinea (ICSID Case No.

ARB/13/33), para 83 15 Álvarez y Marín Corporación S.A. and others v. Republic of Panama (ICSID Case No. ARB/15/14), para 95- 96.

Tribunal refused to entertain the Respondent’s objection that the claim lacked legal merit and the Tribual lacked jurisdiction as the investment was illegally made, as a decision in such a case would have required indulging into the facts of the case. As also seen in the Brandes v. Venezuela case, creation of a plausible doubt in the mind of the Tribunal16 with regard to the manifest nature of a claim not bearing legal merit can result in the Tribunal dismissing the Rule 41(5) objection as the matter then begs to be decided on a factual basis, which Rule 41(5) does not envisage. Therefore, it can be right to say that for claims to be rejected under Rule 41(5), they must possess a legal nature with facts being undisputed.

4. LACUNAE

The test of Rule 41(5), as introduced in 2006, is not of an old vintage but a rather novel one. As per available data17, the fact that only 26 cases out of the total heavy workload of ICSID related to manifest lack of legal merit is a clear testament to the aforementioned statement. Interestingly, ICSID has accepted all the objections as raised by the Respondent under Rule 41(5) in less than 20% of such cases. What the future holds for this rule can only be seen with the progression of time (and further decisions under the Rule). However, certain issues that arise as of now can be summarized as below – i.

LIMITATION

As per a 2012 OECD sample survey18, 7% of the sample of treaties with Investor State Dispute Settlement sections contained statutes of limitation that bar access to international arbitration if a claim has not been brought within a specified period of time. The 1992 NAFTA treaty and the Canada-Czech Republic BIT (1992) were the first to include such clauses. The proportion of treaties that contain such clauses has only begun to increase significantly since 2004 in bilateral treaties in general and in BITs in particular.

Multilateral agreements, including CAFTA (2004), NAFTA (1992), the Investment Agreement for the COMESA Common Investment Area (2007) and the ASEAN Comprehensive Investment Agreement (2009) all set 16 The Respondent in its Rule 41(5) objection had submitted that the claims ought to be dismissed for manifestly lacking legal merit as the Claimant had provided a waiver of its claims. However, the Claimant asserted that the waiver in question was obtained by way of coercion. This ensured two parties to be at factual loggerheads.

17 https://icsid.worldbank.org/en/Pages/Process/Decisions-on-Manifest-Lack-of-Legal-Merit.aspx

18 Pohl, J., K. Mashigo and A. Nohen (2012), “Dispute Settlement Provisions in International Investment Agreements: A Large Sample Survey”, OECD Working Papers on International Investment, 2012/02, OECD Publishing. http://dx.doi.org/10.1787/5k8xb71nf628-en

limitation periods. However, the only limitation Rule 41(5) sets is with regard to an objection being raised within 30 days and in any event before the First Session. As seen in the Ansung19 case, the Tribunal had a cushion of falling upon Article 9(7) of the China-Korea BIT to give a clear ruling with regard to limitation running out for the claims of the Claimant. However, as observed from the 2012 OECD survey, there remain many BITs and other International Investment Agreement (IIA) instruments that do not consist of a limitation clause to bring in a claim. This could result in parties taking advantage of volatile socio-political situations that change with time in order to bring in claims against another party as per a time of their convenience and benefit.

Most legislations around the world like UK and India, prescribe the applicability of their respective Limitation Acts to arbitral claims being brought under their national laws20 thereby bringing clarity and uniformity to the prescribed period of bringing a claim. The way ahead: The existence of the rules of extinctive protection and the doctrine of laches under customary international law do not fully resolve this issue in order to bring clarity and uniformity with regard to the limitation in ICSID arbitration. The ICSID, seemingly, is taking a soft stand on the issue to ensure further growth of its already existent massive load of cases. However, an introduction of a uniform limitation period to bring in a claim against a party would further strengthen the solidified structure of the ICSID Convention.

Needless to say such a provision must have a savings/exception clause which would be without prejudice to the existence of an already existing limitation period under an IIA instrument that covers the parties under dispute. As a result of the aforementioned, the proposed limitation period provision under the ICSID Convention/Rules would come in effect only in cases where the concerned IIA instrument is silent on the issue. ii.

EFFICIENCY AND EFFICACY

At the outset, the implementation of Rule 41(5) may seem to have resolved issues of

19 Ansung Housing Co. Ltd. v. People’s Republic of China ICSID Case No.-ARB/14/25

20 INDIA - Section 43, Arbitration and Conciliation Act, 1996;

UNITED KINGDOM – Section 13, Arbitration Act, 1996

timeliness and effectiveness as Tribunals are mandated to provide a decision on the Rule 41(5) Objection “at its first session or promptly thereafter”. However, there lies no mandate which describes when the First Session will take place. As seen in the Ansung case and also in Emmis v. Hungary21, it took more than six months from the filing of the objection till the date of Award, whereas in Global Trading case it took more than ten months for the same process. The way ahead: It would be naive to not accept that the nature of investment arbitration disputes submitted to ICSID are usually of extremely complex nature as they cover issues such as, but not limited to, investor protection from expropriation, fair and equitable treatment, freedom to transfer funds, protection and security etc.

The strictness of the applicability of Rule 41(5) ensures the Tribunal to identify whether a claim lacks legal merit manifestly, which means that the Tribunal need not dig deep into the entire factual or legal matrix of the case but decide on a particular objection raised by a party thereby making the whole process a limited one. In order to reach actualize the intention of induction of ICSID Rule 41(5), the ICSID Secretariat must bring in an amendment that specifies a time-limit for the Tribunal to decide upon an objection raised by the party. Such a provision would not only ensure timely disposal of extra cases at ICSID but also encourage parties (especially the Respondent) to entrust more faith in the efficient functioning of ICSID mechanism.

5. CONCLUSION

Inna Uchkunova called ICSID Arbitration Rule 41(5) ‘the sleeping beauty of the ICSID system’22. A statutory or procedural legal provision or remedy, at the time of its introduction cannot fully envisage its applicability in terms of the issues it is capable of handling. Having been introduced in 2006, Rule 41(5) is still in the air without having reached its full flight. An example of the aforementioned is that eight years after its birth, in Elsamex v. Honduras23, the Tribunal for the first time dealt with the issue as to whether annulment proceedings can come under the purview of the Rule. It may now seem that the sleeping

21 Emmis International Holding, B.V., & Ors. v. Hungary (ICSID Case No. ARB/12/2)

22 http://arbitrationblog.kluwerarbitration.com/2014/06/27/rule-415-of-the-icsid-arbitration-rules-the-sleepingbeauty-of-the-icsid-system/

23 Elsamex, S.A. v. Republic of Honduras (ICSID Case No. ARB/09/4)

beauty Princess Aurora has slowly started to wake from her beauty sleep to explore further new pastures in the field of international investment arbitration. The introduction of Rule 41(5) was one of necessity. Kenneth Kaye once famously said that if necessity is the mother of invention, conflict is its father. The emergence and application of novel issues is imminent with regard to introduction of new rules and laws, however what can be said in certain terms is that ICSID has most certainly addressed a problem to deal with early dismissal of cases. The next step, as discussed above, should be to deal with its limited lacunas so as to further strengthen the provision that aims to bring relief to parties that feel they are being dragged unnecessarily towards an unmeritorious and expensive legal process.