The recognition and enforcement of ICSID awards is governed by Articles 53, 54 and 55 of the ICSID Convention.
A party who seeks enforcement of an ICSID award may do so in any ICSID Contracting State, under the same conditions, and may simultaneously do so in more than one State.[1] The choice of enforcement forum will ultimately depend on the availability of assets and domestic laws on enforcement of judgements and sovereign immunity.
According to Article 53 of the ICSID Convention, an ICSID award is final and binding, and immune from appeal or annulment, other than as provided in the ICSID Convention. The limited grounds for annulment under Article 52 of the ICSID Convention are the main defence that losing Respondent States put forward to resist the enforcement of an award. Resisting enforcement otherwise and not implementing an award is a clear violation of international obligations. During recognition and enforcement in domestic courts, the court’s authority is limited to only verifying that the award is authentic.[2]
According to Article 54 of the ICSID Convention, all Contracting States shall recognise an ICSID award as binding and execute the pecuniary obligations contained therein as a final domestic judgement of the court of that State. This is usually interpreted to mean a final judgment of the highest court in that State, or in any case a judgement against which no ordinary remedy is available.[3] Pursuant to the same article, the execution of the award will be governed by the domestic laws relating to the execution of judgements in each State where enforcement is sought.
According to Article 55 of the ICSID Convention, laws relating to sovereign immunity from execution remain applicable, thus ratification of the ICSID Convention is not a waiver of sovereign immunity from execution.
The law of sovereign immunity from execution is governed by customary international law, although many countries have enacted legislation that codifies relevant rules, and the position varies according to jurisdiction. The Draft 2004 UN Convention on Jurisdictional Immunities of States and their Property, while not binding or in force, contain many guiding principles for the execution of judgements and awards against State property.[4]
In general, States have moved past the theory of absolute sovereign immunity from execution, to the so-called restrictive theory of sovereign immunity, according to which the execution of judgments and awards is allowed against certain assets of States’ property. In particular, execution is allowed against commercial assets of States, or assets used for commercial purposes, while it is prohibited for assets of either a public nature or assets used for official or governmental purposes.[5] The distinction is not an easy one to make, since it is disputed whether the purpose of an asset is the only decisive criterion, and there are some problematic categories of assets, especially when States mix commercial funds with public purpose. Diplomatic property, including embassy accounts and accounts held by national central banks are usually immune from execution.[6] Execution is allowed where States have either explicitly waived their immunity or have earmarked property for the satisfaction of a specific claim.[7]
Pursuant to Article 27 of the ICSID Convention, were a State to disregard an ICSID award, the party seeking the enforcement of the award could benefit from the diplomatic protection of its home State that can also bring an international claim.
The actual compliance of States with ICSID awards rendered against them has been high.[8] States face reputational risks, pressure from the World Bank, and diplomatic and political pressure to pay what is awarded.[9] Even Argentina eventually paid the amounts it owed, although doing so took some time, and voluntarily compliance is the norm.
THE ENFORCEMENT OF ICSID AWARDS IN COUNTRIES OTHER THAN THE RESPONDENT STATE
The enforcement of an ICSID award may be sought under the same conditions in any Contracting State to the ICSID Convention, as if it were a judgement of the highest court of that State.[10]
In the following paragraphs, we will briefly explain the execution of ICSID awards in three important European jurisdictions.
In France, the designated competent judicial authority for the execution of ICSID awards is the Tribunal de Grande Instance having jurisdiction where the enforcement is to take place.[11] The law of sovereign immunity in France has undergone significant changes in the last two years.[12] It includes Article 111-1 of the civil enforcement procedures code, providing for the principle of immunity of domestic and foreign public entities, and Article 153-1 of the monetary and financial code providing for the immunity of foreign central banks and monetary authorities. In addition, according to Article 59 of Law No. 2016-1691 of 9 December 2016, a creditor cannot go directly to a bailiff to perform a seizure, but judicial prior authorisation for post-judgement measures of constraint must first be acquired, while a waiver for execution against diplomatic property, including bank accounts, must be express and specific to the property in question. Article 60 of Law No. 2016-1691 contains specific rules for execution proceedings against States undertaken by “vulture funds”.
In England and Wales, the designated competent judicial authority for handling the execution of ICSID awards is the High Court, where an award must be registered, pursuant to section 1(2) of the Arbitration Act of 1966 (Investment Disputes).[13] In keeping with the obligations of the Convention, the Courts will not review the award but subject its execution to the same conditions as its judgements, including the laws on sovereign immunity.[14] The regime of sovereign immunity from execution is regulated by Statute, the State Immunity Act of 1978, which generally allows the execution against commercial State property, albeit dictating that a declaration by a diplomatic official is sufficient evidence that assets are not used for commercial purposes, and that execution against assets held by foreign central banks or monetary authorities, irrespective of the purpose they are used, is not allowed.[15]
The Russian Federation has only signed but not ratified the ICSID Convention. However, it is a member State to the 1958 New York Convention and as such, an ICSID award which falls under the ambit of the Convention would follow the procedures of recognition and enforcement contained therein. Russia used to be one of the few remaining States embracing the doctrine of absolute sovereign immunity. However, with its new Law on Jurisdictional Immunity of a Foreign State and a Foreign State’s Property in the Russian Federation, it adopted a more restrictive stance on sovereign immunity largely depending on principles of reciprocity, i.e., the extent to which Russian property is protected in the State on whose assets execution is sought.[16] It now allows for execution against property which is not used for sovereign purposes.[17]
Of course, the correct choice of a State for the enforcement of ICSID awards depends on the location of the commercial assets of the State in question.
[1] Dolzer and Schreuer, Principles of International Investment Law, Second Edition (Oxford University Press, 2012), p. 310-311.
[2] Dolzer and Schreuer, Principles of International Investment Law, Second Edition (Oxford University Press, 2012), p. 311
[3] Christoph Schreuer, Loretta Malintoppi, August Reinsch and Anthony Sinclair, The ICSID Convention; A Commentary, Second Edition (Cambridge University Perss, 2009), p. 1142.
[4] 2004 UN Convention on Jurisdictional Immunities of States and their Property, available at: https://treaties.un.org/doc/source/recenttexts/english_3_13.pdf.
[5] See article 19(c) of the 2004 UN Convention on Jurisdictional Immunities of States and their Property, available at: https://treaties.un.org/doc/source/recenttexts/english_3_13.pdf.
[6] Dolzer and Schreuer, Principles of International Investment Law, Second Edition (Oxford University Press, 2012), p. 311.
[7] Nigel Blackaby and Constantine Partasides et al., Redfern and Hunter on International Arbitration, 5th (Oxford University Press 2009), para. 11.145; See also, article 19(a) and (b) of the 2004 UN Convention on Jurisdictional Immunities of States and their Property, available at: https://treaties.un.org/doc/source/recenttexts/english_3_13.pdf.
[8] Anastasiaa Filipiuk, Enforcement of Arbitration Awards and Sovereign Immunity (2016).
[9] Ibid., p. 27.
[10] Dolzer and Schreuer, Principles of International Investment Law, Second Edition (Oxford University Press, 2012), p. 310-311.
[11] See France’s Designation of Competent Court or Other Authority for the Purpose of Recognizing and Enforcing Awards Rendered Pursuant to the Convention (Article 54(2)), available at https://icsid.worldbank.org/en/Pages/about/MembershipStateDetails.aspx?state=ST49.
[12] Victor Grandaubert, France Legislates on State Immunity from Execution: How to kill two birds with one stone? (EJIL: Talk!, January 2017), available at https://www.ejiltalk.org/france-legislates-on-state-immunity-from-execution-how-to-kill-two-birds-with-one-stone/.
[13] See UK’s Designation of Competent Court or Other Authority for the Purpose of Recognizing and Enforcing Awards Rendered Pursuant to the Convention (Article 54(2)), available at https://icsid.worldbank.org/en/Pages/about/MembershipStateDetails.aspx?state=ST180.
[14] Viorel Micula et. al. v Romania and European Commission [2017] EWHC 31 (Comm), at 129.
[15] Section 13(5), 14(4) of the 1978 Ste Immunity Act; Nigel Blackaby and Constantine Partasides et al., Redfern and Hunter on International Arbitration, 5th (Oxford University Press 2009), paras. 11.145-147.
[16] Russian Federation: New Law Allows Seizure of Foreign Governments’ Property, available at http://www.loc.gov/law/foreign-news/article/russian-federation-new-law-allows-seizure-of-foreign-governments-property/.
[17] Article 17(3) of Law on Jurisdictional Immunity of a Foreign State and a Foreign State’s Property in the Russian Federation (Federal Law No. 297-FZ).
