Consent to Arbitration through Legislation

Arbitration, by definition, is always based on an agreement between the disputing parties. In investment arbitration, the agreement is frequently not contained in a direct contract between the disputing parties but results from a general offer by the host State that may be taken up by an eligible investor. In practice, the most frequently used method to give consent to arbitration is through a treaty between the host State and the investor’s State of nationality. Most bilateral investment treaties (BITs) contain clauses offering arbitration to the nationals of one State party to the treaty against the other State party to the treaty. The same method is employed by a number of regional multilateral treaties such as the NAFTA and the Energy Charter Treaty. These offers of consent contained in treaties must be perfected by an acceptance on the part of the investor. Another technique to give consent to arbitration is through a ‘general terms’ provision in the national legislation of the host State offering arbitration to foreign investors. Many capital-importing countries have adopted such provisions. The investor may accept the offer in writing at any time while the legislation is in effect. Unless otherwise provided in the legislation, the acceptance may be made simply by instituting proceedings.1 The possibility that a host State may express its consent to arbitration under the ICSID Convention through a provision in its national legislation or through some other form of unilateral declaration was discussed during the Convention’s preparation. It was uncontested that a unilateral acceptance by Contracting States of ICSID’s jurisdiction constituted an offer that could be accepted by a forI.