The specifics of ISDS agreements will vary, however most tend to follow a pattern. There will be a notice provision requiring a claimant to notify the host state in writing of a dispute. Some impose a “cooling off” period in which the claimant and host state must attempt to resolve the dispute amicably. A claimant may also be required during this period to exhaust local remedies. Once this period has expired, and assuming no other pre-conditions apply (e.g. mediation), the claimant may commence arbitration.
The ISDS agreement will typically stipulate the rules that will apply to the proceedings or permit the claimant to elect between certain rules which the host state has consented to in advance. Common rules include the ICSID Arbitration Rules, ICSID Additional Facility Rules, UNCITRAL Arbitration Rules and ICC Rules of Arbitration.
The seat of the arbitration may be defined in the ISDS agreement. If it is not, it may be determined by the tribunal, once constituted, in accordance with the applicable rules. The seat is important because it establishes the supporting legal framework for the arbitration, including how and when the courts of the seat may intervene and the grounds for challenging any award. Arbitrations under ICSID Arbitration Rules do not require a seat as they are considered “de-localized” and domestic courts have no supervisory role.
Generally the tribunal will be constituted of three arbitrators, as opposed to a sole arbitrator. Typically, each party may nominate an arbitrator to the panel and a president is chosen by the two party-nominated arbitrators, in consultation with the parties.
Once the tribunal is constituted, it will set the procedure and timetable. Usually there is a written phase (legal briefs with supporting evidence) and an oral phase (hearing for cross-examination of witnesses and legal argument). The arbitration may take a number of years, from commencement through to final award.