India’s Position regarding ICSID Membership


ICSID (International Centre for Settlement of Investment Disputes) is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States. It is funded by the World Bank Group and in total consists of 163 member states which have signed the centre’s convention but that does not include India & many other developing countries. 

India’s Position regarding ICSID Membership  

Many prominent and developing countries have refrained from being the member of ICSID.  There are certain criticisms, which ultimately results in many developing states, including India, to abstain from the said convention. The criticism includes: 

  • Parties are not permitted to seek annulment of an ICSID award before a national court i.e., there is no scope for a review of the award by an Indian Court even if it violates the public policy of India. 
  • The proceedings are more complicated and costly.  
  • The Convention’s rules for arbitration are leaned towards the developed countries only.
  • ICSID’s complicated relationship with the World Bank endangers its judicial functions.

While India has not specifically stated any reason for abstaining from ICSID, the Indian Council for Arbitration, in the year 2000, recommended to the Indian Ministry of Finance that India shall continue its absence of the ICSID Convention because:  

  1. The Convention’s rules for arbitration favour the developed countries, and  
  2. The ICSID award cannot be reviewed even if it violates India’s public policy.

Despite these criticisms, ICSID remains the foremost institution for investor-state disputes around the world. 

India’s position to resolve International Investment Disputes 

Indian Government has entered plethora of Bilateral Investment Treaties (BIT) with various countries including United Kingdom, Germany, France, Italy, Belgium, Netherlands and Poland etc to resolve Investor-State dispute. 

Solution for Developing Countries and India for Joining ICSID 

Solution can be adduced in two Articles of ICSID Convention, for inducing India to join ICSID i.e., Article 42(1) & Article 54(1), which is as under:  

Article 42(1) of the ICSID Convention says that a dispute shall be decided by the Tribunal in compliance with the laws agreed by the parties to the dispute.  Consequently, parties may agree on domestic, or international, or both domestic and international rules of a legal system.  

Article 54(1) of the ICSID Additional Facility Rules governs the issue of applicable law by stating that the law designated by the parties to the dispute shall be used to decide the dispute. 

This observation should ease some of India’s apprehension to enter the Convention. 


The Indian economy is growing at faster pace needing more international investment. Conclusively, India should join ICSID convention to attract more international investment.  

The question remains whether India’s participation in the ICSID Convention would be detrimental to its interests. The complicated problem will be ensuring compliance of international investment treaty Arbitral Awards. India would be willing to retain some leeway in contesting the enforceability of such verdicts if they violate India’s domestic arbitration rules.

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