An ICSID ad hoc committee has continued a stay of enforcement of part of an award against an investor, pending the investor's application to annul the award. The committee also declined to impose any security on the investor as a condition of the stay.

The investor (L) has applied for annulment of an award in which an ICSID tribunal declined jurisdiction over its claim and ordered it to pay the Republic of Turkey costs of over US$15 million. Pending the outcome of the annulment proceedings, L requested a stay of enforcement of the part of the award that ordered it to pay Turkey's costs, under article 52(5) of the ICSID Convention and article 54 of the ICSID Arbitration Rules.

In deciding whether to exercise its discretion to grant a stay of enforcement, the committee observed that it had to assess all the relevant circumstances. Therefore, the grant of a stay should not be regarded as automatic.

The committee rejected Turkey's argument that no stay of enforcement could be granted in the case of an award on jurisdiction. The key question was whether part of the "dispositif" (the decisive part) of the award warranted a stay of execution. It would not in most awards on jurisdiction. However, this award on jurisdiction included an order for costs, which gave L a clear interest in a stay of enforcement of that part of the award.

On balance, L's interest in a continued stay of enforcement should be given more weight than Turkey's interest in immediate enforcement. There was no basis for finding the stay request to be dilatory or vexatious. Nor was Turkey's complaint that it would not be fully compensated by interest accruing on the amount of the award during the stay relevant. That was a consequence of the terms of the award, as it did not provide for compound interest, and it was not for the committee to improve on the terms of the award. Furthermore, the current timetable for the annulment proceedings indicated that the stay should be relatively short.

On the question of security, the committee noted that no party to ICSID arbitration had a right to protection from enforcement efforts. Therefore, the stay of enforcement gave L a benefit to which it had no right. The question was whether the committee should impose a cost in some form of assurance to comply with the award if the annulment request was dismissed. The purpose of doing so would be to balance the rights of the parties.

There was no evidence here that Turkey's chances of enforcing the award would deteriorate as a result of the stay, but the committee considered that requiring security from L, with its scarce financial means, would affect it disproportionately. Therefore, it concluded that the stay of enforcement should not be subject to any condition of security.

In a separate decision, the committee refused an application by L for provisional measures, on the basis that L had not adduced evidence to support its application. In doing so, it avoiding having to decide whether ad hoc committees have power to order provisional measures in annulment proceedings. This is a matter on which the ICSID Convention and ICSID Rules are not clear.

The decision on the stay of enforcement clarifies that there is no reason, in principle, why a stay should not be granted in respect of an award on jurisdiction. What matters is whether there is a decisive part of the award that warrants a stay. Clearly, an order to pay costs satisfies that requirement. Furthermore, as in earlier cases, the committee's power to impose conditions on a stay was assumed, despite the lack of any provision to this effect in the ICSID Convention or ICSID Rules. The committee's ultimate refusal to impose any security on L might seem to be at odds with its rationale for the existence of the power to impose conditions on a stay of enforcement.

Case: Libananco Holdings Co Ltd v Republic of Turkey (ICSID Case No ARB/06/8, Annulment proceeding (Decision on Applicant's Request for a Continued Stay of Enforcement of the Award)) (7 May 2012).