Most contracts governing sovereign bond issues will contain dispute resolution clauses that designate New York courts or the courts of another major financial centre such as London or Frankfurt as the forum of choice. But sometimes arbitration through the International Centre for Settlement of Investment Disputes (Icsid) is a more appropriate dispute resolution mechanism for sovereign bond-related disputes.
What is Icsid?
Icsid was set up by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14 1966 under the auspices of the World Bank. The Administrative Council and Secretariat, headed by a secretary-general, run the Centre's day-to-day operations from its offices in the World Bank in Washington DC. The Convention provides a system, administered by the Centre, which facilitates the settlement of investment disputes between host states and foreign investors, through arbitration or conciliation. It...