In Itisaluna v. Iraq, “the Tribunal observe[d] as an initial matter that the OIC Agreement is not in every respect a model of clarity.”1Itisaluna Iraq LLC and others v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, ¶ 158 (Apr. 13, 2017).X1  This Article seeks to examine the basis for that observation by analyzing the Agreement on Promotion, Protection and Guarantee of Investments Among Member States of the Organization of the Islamic Conference’s (“OIC Agreement”) dispute resolution clause as a representative example.

Part II offers a brief overview of the OIC Investment Agreement and highlights the convoluted language of Article 17 (the dispute resolution provision).  Part III examines how this provision has led arbitral tribunals to reach divergent conclusions in different cases.  Part IV observes that similar interpretive challenges have arisen under other bilateral investment treaties, indicating that the OIC Agreement is not an outlier in this regard.  It will emphasise that parties pursuing dispute resolution under the OIC Agreement should remain mindful of the potential for such interpretive disputes to arise.

The OIC Agreement was adopted at the 12th Islamic Conference of Foreign Ministers held in June 1981.1Org. of the Islamic Conference (OIC), Res. 7/12-E, Agreement on Promotion, Protection and Guarantee of Investments Among Member States (June 1-5, 1981); OIC, Final Communique of the Twelfth Islamic Conference of Foreign Ministers, ¶ 86 (June 1-5, 1981), https://www.oic-oci.org/docdown/?docID=4373&refID=1226; Resolution No. 7/12-E (June 1-5, 1981).X1  Following ratification by ten OIC Member states, it entered into force in 1988.2OIC, Rep. of the Secretary General on Legal Affairs Submitted to the 40th Session of the Council of Foreign Ministers, OIC/CFM-40/2013/LEG/SG-REP, at 5 (Dec. 9-11, 2013), https://www.oic-oci.org/subweb/cfm/40/fm/en/docs/rep/cfm_40_som_rep_leg_v2-1_en.pdf; U.N. Conference on Trade and Development, International Investment Agreements Navigator – OIC Investment Agreement (1981), https://investmentpolicy.unctad.org/international-investment-agreements/treaties/bit/5079/oic-investment-agreement-1981- (last accessed Sept. 27, 2025).X2  To date, the Agreement has been ratified by twenty-nine member states and signed by thirty-eight member states.3OIC, Rep. of the OIC Secretary General to the 40th Session of the Standing Committee for Economic and Commercial Cooperation of the OIC (COMCEC), OIC/COMCEC-40/2024, annex 1 (Nov. 2-5, 2024), https://www.comcec.org/wp-content/uploads/2024/10/SG-REPORT-40-COMCEC-007-clean-14-Oct-2024-ENG.pdf.X3 

The OIC Agreement was intended to articulate core principles governing: (i) the promotion of capital transfers among member states; (ii) the protection of investments against commercial risk; and (iii) the guarantee of the free repatriation of capital and investment proceeds.4See OIC, Agreement on Promotion, Protection and Guarantee of Investments Among Member States of the Organization of the Islamic Conference, https://ww1.oic-oci.org/uploads/file/conventions/en/conv_brief/en_conv_promotion_protection_investment.pdf (last accessed Sept. 26, 2025).X4 

Initially, the OIC Agreement attracted little attention.  However, reliance on it in the case of Al-Warraq v. Indonesia brought it out of obscurity.5Craig D. Gaver & Yusuf Kumtepe, Checking in on the OIC Investment Agreement: New Arbitrations, But Slow Progress on Creating A Permanent Dispute Settlement Mechanism, KLUWER ARB. BLOG (Mar. 17, 2023), https://arbitrationblog.kluwerarbitration.com/2023/03/17/checking-in-on-the-oic-investment-agreement-new-arbitrations-but-slow-progress-on-creating-a-permanent-dispute-settlement-mechanism/; see also Hesham T. M. Al Warraq v. Republic of Indonesia, UNCITRAL, Award on Respondent’s Preliminary Objections to Jurisdiction and Admissibility of the Claims (June 21, 2012).X5  Since Al-Warraq, twenty-four cases have been filed under the OIC Agreement.6See Investment Arbitration Reporter, Number of Cases under the OIC Agreement, https://www.iareporter.com/arbitration-cases/?fwp_treaty=oic-investment-agreement&fwp_arbitration_cases_sort=year_desc&fwp_per_page=100.X6  It is therefore unsurprising that the recent increase in cases brought under the OIC Agreement have given rise to challenges concerning its interpretation.  One such example is Article 17.7The Agreement on Promotion, Protection and Guarantee of Investments Among Member States of the Organization of the Islamic Conference, Jun. 5, 1981, art. 17 (hereinafter “OIC Agreement”); Itisaluna Iraq LLC and others v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, ¶ 158 (Apr. 13, 2017).X7  Although one tribunal has noted that “[a]part from chapter headings, individual articles do not contain descriptive headings,” Article 17 can nonetheless be reasonably regarded as the Agreement’s dispute resolution provision.

Article 17 provides that “[u]ntil an Organ for settlement of disputes . . . is established, disputes that may arises shall be entitled through conciliation or arbitration in accordance with the following rules and procedures.”8OIC Agreement, art. 17 (emphasis added).X8  It then sets out two mechanisms for dispute resolution:

1. Conciliation

a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen ….

2. Arbitration

a) If the two parties to the dispute do not reach an agreement as a result of their resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute . . . . 9Id. (emphasis added).X9 

As discussed in the following section, the wording of this provision has led tribunals to diverging conclusions on whether conciliation constitutes a mandatory precondition to arbitration or whether parties can proceed directly to arbitration.

A. Al-Warraq v. Indonesia

In Al-Warraq, Indonesia argued that the Claimant had failed to discharge the burden to demonstrate an unequivocal consent to arbitrate under Article 17 of the OIC Agreement.1Hesham Talaat M. Al-Warraq v. The Republic of Indonesia, UNCITRAL, Award on Respondent’s Preliminary Objections to Jurisdiction and Admissibility of Claims, ¶ 56 (June 21, 2012).X1  Under Indonesia’s interpretation, Article 17 conferred “no independent right to arbitration.”2Id., ¶ 57.X2  Instead, it required the “ . . . parties to entire into an separate written agreement to conciliate a specific dispute, with the right to arbitration only arising if conciliation failed . . . .”3Id. (emphasis added).X3  For the Claimant, once a dispute had arisen, Article 17 did not require any separate consent to arbitrate by the State party.4Id., ¶ 77.X4 

In the Tribunal’s view, Article 17 did not mandate conciliation as a pre-condition to arbitration.5Id., ¶ 79.X5  It found that the opening phrase of Article 17 clearly referred to “arbitration or conciliation” as alternatives.6Id.X6  In addition, it held that under a correct interpretation of Article 17, conciliation and arbitration were different forms of dispute resolution — which could be used either sequentially or alternatively.7Id.X7  For the Tribunal, the absence of a prior conciliation agreement was not an obstacle to an investor-State arbitration.8Id.X8  

B. Itisaluna Iraq LLC and others v. Republic of Iraq

The Tribunal in Itisaluna adopted a completely different reading of Article 17.  It found that the “Al-Warraq award [was] . . . of only limited use”, because it had not adequately considered the impact of the “if . . . then” language of Article 17(2)(a).9Itisaluna Iraq LLC and others v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, ¶ 178 (Apr. 13, 2017).X9  While the Tribunal recognised that the chapeau of Article 17 addressed “conciliation or arbitration” and that the terms of Article 17(1) suggested that resort to conciliation required an agreement between the parties, it found that there “[was] no avoiding the ‘if . . . then’ language of Article 17(2).”10Id., ¶ 183.X10  Thus, for the Tribunal, the language of Article 17(2) made it apparent that resort to arbitration was conditional on the prior resort to conciliation.11Id.X11  Ironically, one of the arbitrators dissented from the majority and accepted the Al-Warraq approach of finding that conciliation and arbitration were separate forms of dispute resolution, which could be used sequentially or alternatively.12Id., ¶ 234.X12

While the vague and imprecise language of the OIC Agreement may present interpretive challenges, it is by no means unique in this respect.  Arbitral tribunals have faced similar difficulties in construing provisions found in other bilateral investment treaties.  For example, the fork-in-the road provision in the Turkey-Turkmenistan BIT was scrutinised in Ä°çkale Ä°nÅŸaat Limited Åžirketi v. Turkmenistan.1Agreement between the Republic of Turkey and Turkmenistan concerning the Reciprocal Promotion and Protection of Investments, art. VII(2); see generally Ä°çkale Ä°nÅŸaat Limited Åžirketi v. Turkmenistan, ICSID Case No. ARB/10/24, Award (Mar. 8, 2016).X1  In that case, the parties disputed whether the phrase “provided that, if” required investors to first pursue claims before domestic courts as a condition precedent to initiating international arbitration.2Ä°çkale Ä°nÅŸaat Limited Åžirketi v. Turkmenistan, ICSID Case No. ARB/10/24, Award, ¶ 167 (Mar. 8, 2016).X2 

Although such ambiguity in treaty language may offer fertile ground for crafty lawyers, parties seeking dispute resolution under the OIC Agreement must remain alert to its practical implications.  In the absence of a binding system of precedent in international arbitration, future tribunals may align themselves with either the approach adopted in Al-Warraq or that taken in Itisaluna.  This very possibility was acknowledged by the dissenting arbitrator in Itisaluna, who observed that “ . . . for a treaty that is not a model of clarity [the OIC Agreement], the freedom of interpretation of the Tribunal should be used.”3Itisaluna Iraq LLC and others v. Republic of Iraq, ICSID Case No. ARB/17/10, Award, ¶ 241 (Apr. 13, 2017).X3