The enforcement of arbitral awards against states and state entities: global developments

• Published date: 23 November 2024
• Law Firm: Corrs Chambers Westgarth
• Author: Ms Nastasja Suhadolnik and Eleanor Clifford

Globally, there are a number of new developments in regards to the recognition and enforcement of arbitral awards against states and state entities - a critical issue from the perspective of prospective claimants and award creditors. However, the question continues to generate vast amounts of jurisprudence as parties search for assets against which to secure and recover states' award debt.

At ACICA's recent Australian Arbitration Week, Corrs' Head of Arbitration Nastasja Suhadolnik chaired a panel on this topic, alongside global experts Ben Juratowitch KC (Essex Court Chambers, London), Swee Yen Koh SC (WongPartnership, Singapore), Chester Brown SC (7 Wentworth Selborne Chambers, Sydney) and Robert Kirkness (Thorndon Chambers, Wellington).

The panel discussed a number of key developments in Australia, the United Kingdom, Singapore, Hong Kong, New Zealand and the United States, including:

• State immunity from jurisdiction for the purpose of recognition and enforcement
  
  
• The relationship between EU law and investment treaty obligations
  
  
• Immunity from execution and prospects for enforcement against the assets of a state's alter ego.

State immunity from jurisdiction for the purpose of recognition and enforcement

When faced with an application for recognition and enforcement of an unfavourable award, states' first line of defence typically is to rely on state immunity from the jurisdiction of foreign courts. The question of how states' jurisdictional immunity may apply in recognition and enforcement proceedings has recently given rise to a series of interesting decisions. A trend has emerged of courts giving wide scope to various exceptions and waivers of immunity in this context. Each of the panellists provided an overview of the current legal position on state immunity for the purpose of recognition and enforcement of arbitral awards across a range of jurisdictions.

Australia

The position in Australia, as Chester Brown SC summarised, is most notably synthesised in the recent decision of the Australian High Court, where it determined that Spain had waived immunity from recognition and enforcement by becoming a party to the International Centre for Settlement of Investment Disputes (ICSID) Convention (Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2023] HCA 11). In this seminal decision, discussed in our article, High Court rejects Spain's foreign state immunity claim and reinforces Australia's reputation as 'pro-arbitration', the High Court disagreed with Spain's submission that any waiver of immunity must be express and not implied. The High Court also held that, while Spain had waived immunity for recognition and enforcement, its immunity from execution of the award had been preserved. The High Court emphasised the distinct differences between these three concepts, with recognition being the Court's determination that an award is entitled to be binding, enforcement being the process through which an award becomes part of the domestic law, and execution being the process of giving effect to the award.

Chester explained that the same outcome was reached for recognition and enforcement of non-ICSID Awards in CCDM Holdings, LLC v Republic of India (No 3) [2023] FCA 1266. In that case, as discussed in Federal Court finds India waived foreign state immunity in proceedings to recognise and enforce US$111 million award, the Court held that India had waived its immunity from recognition and enforcement via its accession to the India-Mauritius Bilateral Investment Treaty. The first instance judgment has been appealed and, at the time of writing, the appeal judgment is reserved.

United Kingdom

Ben Juratowitch KC explained that the English High Court reached the same outcome as the Australian High Court in Infrastructure Services Luxembourg SARL & Anor v Kingdom of Spain (Rev1) [2023] EWHC 1226 (Comm).

However, in Border...