STATE COUNTERCLAIMS CONCERNING ESG AND ENVIRONMENTAL HARM IN ICSID PRACTICE: AN ANALYSIS OF NEW PROCEDURAL OPPORTUNITIES UNDER THE 2022 RULES

Abstract

Introduction. The article addresses the issue of asymmetry in international investment arbitration, where states primarily act as respondents to claims filed by foreign investors. The study's relevance is driven by two key trends: the global strengthening of Environmental, Social, and Governance (ESG) standards, prompting active state regulation, and the most extensive reform in recent decades of the Arbitration Rules of the International Centre for Settlement of Investment Disputes (ICSID), which entered into force in 2022. The purpose of the article is a comprehensive analysis of how the new ICSID procedural rules create additional opportunities for states to effectively use the instrument of counterclaims to hold investors accountable for causing environmental harm and non-compliance with ESG standards. The research methodology comprises formal-legal and comparative-legal methods, as well as an analysis of key arbitral jurisprudence.

Summary of the main research findings. It is noted that the fundamental jurisdictional hurdles for counterclaims, embedded in Article 46 of the Washington Convention (the requirements of party "consent" and a "direct connection" with the subject-matter of the dispute), remain unchanged, as the reform only affected the procedural rules, and not the Convention itself. The key doctrinal dichotomy that has emerged in arbitral jurisprudence regarding the interpretation of investor consent is analyzed, using the cases of Roussalis v. Romania (a narrow approach, requiring express consent in the international investment agreement) and Goetz v. Burundi (a broad approach, recognizing implicit consent from the very act of initiating arbitration). It is shown that the growing role of ESG and successful precedents, notably in the Burlington v. Ecuador and Perenco v. Ecuador cases, have created a new substantive legal basis for environmental counterclaims. The article details how specific procedural innovations of the 2022 Rules affect the process: 1) Rule 48 on ancillary claims introduces procedural discipline by setting clear deadlines for their submission; 2) Rule 31 on case management conferences strengthens the tribunal's role in structuring complex proceedings; 3) The new transparency regime (Chapter X) promotes the development of consistent jurisprudence through the publication of decisions.

Conclusion. The article substantiates the conclusion that although the 2022 Rules do not resolve the fundamental jurisdictional problems, they significantly improve the procedural environment, making the filing of counterclaims more manageable, predictable, and legitimate. These procedural improvements lower the practical barriers for states seeking to protect public interests related to ESG and contribute to restoring balance in the investment arbitration system. Prospects for further research lie in monitoring new arbitral jurisprudence to assess the real impact of the reforms on the quantity and success rate of state counterclaims in disputes related to environmental and social responsibility.