Robert Volterra, Graham Coop and Álvaro Nistal recently wrote a chapter for the newly-released guide on the “Enforcement of Investment Treaty Arbitration Awards”, published by Global Business Publishing (see link). The guide addresses the main enforcement issues in investment treaty arbitration and provides an overview of the domestic enforcement regimes in 26 jurisdictions. The Volterra Fietta team’s chapter is entitled “Sovereign immunities and investor-state awards: specificities of enforcing awards based on investment treaties”. The chapter focuses on sovereign immunities and the specificities of enforcing awards based on investment treaties.
Overview of the chapter
The chapter discusses the enforcement of ICSID and non-ICSID awards and the issue of sovereign immunity as a potential bar to the enforcement of those awards. It also provides a brief overview of the legislation and case law on sovereign immunity in France, the United Kingdom and the United States.
The enforcement of ICSID awards is governed by the ICSID Convention. Contracting States to the ICSID Convention have an obligation to recognise ICSID awards as binding and enforce the pecuniary obligations imposed by the awards within its territory as if they were a final judgment of a court in that State. To seek recognition or enforcement of an ICSID award in the territory of a contracting State, the investor must furnish a copy of the award certified by ICSID’s Secretary-General to a competent court or any other authority designated by the State for this purpose.
The domestic courts of ICSID contracting States cannot question the jurisdiction of the arbitral tribunal that rendered an ICSID award, nor can they consider their national law on sovereign immunity in deciding whether they should recognise that award. Sovereign immunity is only relevant with regard to measures of execution against specific assets. Article 55 of the ICSID Convention makes clear, however, that the national law on sovereign immunity of ICSID contracting States may prevent the forced execution in those States of ICSID awards obtained against foreign States or against the State in which execution is sought.
The enforcement of non-ICSID investment treaty arbitration awards is slightly different. A party seeking enforcement of a non-ICSID arbitral award – such as an award rendered under the ICSID Additional Facility Rules or the UNCITRAL Arbitration Rules – will generally be able to rely on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention“) or on the Inter-American Convention on International Commercial Arbitration 1975 (the “Panama Convention“). The main difference between the enforcement mechanisms provided for in those two conventions and that established by the ICSID Convention is that the former allow domestic courts to refuse enforcement of an award on the basis of a number of grounds, while the latter does not. The possibility that a domestic court may refuse enforcement of an award on the basis of grounds such as the invalidity of the arbitration agreement or public policy considerations undoubtedly makes enforcement a more cumbersome task.
The New York Convention does not expressly address the issue of sovereign immunity in the enforcement of awards. However, Article III of the New York Convention could be read as implicitly allowing domestic courts to apply their national law on sovereign immunity (including any applicable rules of international law) at the enforcement stage.
The provisions of the Panama Convention – including those relating to the ground upon which enforcement of an award may be refused – largely mirror those of the New York Convention. Like the New York Convention, the Panama Convention does not expressly address issues of sovereign immunity. Article 4 of the Panama Convention, however, provides that execution or recognition of an award may be ordered in the same manner as that of decisions handed down by national or foreign ordinary courts, in accordance with the procedural laws of the country where the award is to be executed and the provisions of international treaties. This provision is subject to the same analysis and conclusion as the analogous Article III of the New York Convention, that is to say, domestic courts may, under the Panama Convention, apply their local law on sovereign immunity to the execution of covered awards.
Sovereign immunity may become relevant at two separate and distinct stages of the process between the issuance of an award by an arbitral tribunal and the receipt of payment from a reluctant debtor State: (i) at the stage of recognition of the award (where the State may claim immunity from the jurisdiction of the domestic courts where recognition is sought); and (ii) at the stage of execution of the award (where the State may claim immunity from having another jurisdiction attach, freeze or seize its assets).
Historically, sovereign immunity barred the exercise of jurisdiction and execution against States. Over time, however, a trend toward the application of a more restrictive doctrine has developed which, in certain cases, permits domestic courts to exercise jurisdiction over States as well as execution against certain State assets.
The ICSID, New York and Panama conventions are all applicable to the enforcement of awards based on investment arbitration treaties. Those conventions require their contracting States to take positive measures to recognise and ensure effective enforcement of arbitral awards in their jurisdictions. However, they all leave to domestic law the issue of sovereign immunity from execution.
The guide has received critical acclaim by practitioners and academics alike. Global Arbitration Review described the guide as:
“Highly recommended: The combined academic quality of the analysis and the practical approach of the contributions is a hallmark of this book. The chapters also feed into one another seamlessly. Ultimately, this book provides a complete and exhaustive review of the various issues.”
Professor Pierre Tercier, Honorary Chairman of the ICC International Court of Arbitration, described the guide as:
“A great contribution to the field and a must-have for every investment arbitration lawyer.”
Professor Anne Marie Whitesell of Georgetown University said:
“This book provides a substantive analysis of general principles as well as a comparative study across diverse jurisdictions. It fills a void in arbitral literature and will prove extremely useful for both academics and practitioners.”