Of the various facilities used to resolve foreign investment disputes, the International Centre for Settlement of Investment Disputes (ICSID) is the busiest.

As of mid-November, the Washington, DC-based facility was presiding over 137 arbitrations between foreign investors and their host countries. Other arbitration centres in London, Paris, Stockholm and Singapore handle investor-state arbitrations, but not in nearly the numbers seen at the ICSID.

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Despite the ICSID’s popularity, not everyone is enamoured with the centre these days. While ICSID users often praise its new secretary-general, Meg Kinnear, and its experienced staff, some express concerns about the lack of finality of the ICSID process.

In theory, ICSID arbitration decisions are supposed to be subject to a very limited form of internal review – by new 'committees' of three lawyers selected by ICSID to make sure that the arbitration tribunals did not commit any egregious failings. In practice, however, the ICSID 'annulment' process has found fault with a string of recent arbitral awards, thus upending seemingly settled legal disputes – and sending them back to square one.

The first shock came in June of 2010, when a panel of three lawyers found fault with a 2007 ruling that had ordered the government of Argentina to pay $128m to Sempra, a US energy company. The annulment panel’s highly technical ruling could be boiled down to a finding that the original arbitrators had failed to fully examine one of Argentina’s defence arguments. A month later, a different annulment panel overturned another $100m arbitral award against Argentina, after finding that arbitrators in that case also failed to examine all of Argentina’s defence arguments. These developments were welcomed in Buenos Aires, but served to roil the arbitration community – with observers wondering whether the ICSID annulment process was becoming much more intrusive and far-reaching.

In the dying days of 2010, another ICSID arbitration ruling was overturned when an annulment panel decided that a German company had been denied a full and fair hearing of its claims against the Republic of the Philippines. Much to the chagrin of the Philippines, the investor, Fraport, was permitted to file a new arbitration claim at ICSID, and re-launched its quest for compensation for the alleged expropriation of an airport terminal development contract.

All of this legal upheaval at the centre has led to calls for the ICSID annulment process to be reined in. There have been calls for panellists to refrain from nit-picking and to let arbitral awards stand – unless the original arbitration was a travesty of justice.

Long-time ICSID observers know that this is not the first time that the centre’s annulment process has been criticised for judicial activism. As in an earlier era, it is quite likely that the process will correct itself over time, with lawyers showing more self-restraint – perhaps under the watchful eye of the ICSID secretary-general (who chooses the members of such annulment committees). In the meantime, the ICSID may benefit from the fact that parties often choose their dispute resolution forum long before a dispute erupts between them.

Thus, while the ICSID works to iron out the kinks in its annulment process over the coming months, parties will continue to bring their disputes to the centre – sometimes because they want to, and sometimes because contracts and treaties drafted years earlier do not provide for other alternatives.

Luke Eric Peterson is the editor of InvestmentArbitrationReporter.com, an online news service dedicated to foreign investment law and policy.