Court of Appeal judgment on State immunity and registration / enforcement of ICSID awards
The Court of Appeal on Tuesday handed down judgment on the question of whether a State can claim immunity to resist registration of an ICSID award.
The proceedings concerned two joined appeals: Border Timbers Ltd and another v Zimbabwe and Infrastructure Services Luxembourg S.A.R.L. and another v Spain. The States in both cases claimed immunity from the adjudicative jurisdiction of the UK courts in proceedings brought by the investors to register and enforce the respective ICSID awards. The basis on which they attempted to resist registration was section 1 of the State Immunity Act 1978 (UK), which accords State immunity to foreign States before the courts of the UK unless an exception as set out in the State Immunity Act 1978 (UK) applies.
There were two exceptions at issue.
The first was section 2 of the State Immunity Act 1978 (UK), by which a State can, by prior written agreement, expressly waive State immunity and submit to the adjudicative jurisdiction of the English courts. The Court of Appeal unanimously held that Article 54(1) of the ICSID Convention constitutes such an express submission by the Contracting States to the ICSID Convention to the adjudicative jurisdiction of the courts of other Contracting States in respect of proceedings to register and enforce ICSID awards. As such, Zimbabwe and Spain could not resist registration of the ICSID awards on the basis of State immunity. This decision confirms the UK’s alignment with the position taken in the courts of all other Contracting States to the ICSID Convention that have considered this question, including Australia, New Zealand, the US, France and Malaysia.
The second exception was section 9 of the State Immunity Act 1978 (UK), which provides that where a State has agreed to arbitrate, it is not immune in respect of proceedings before the courts of the UK which relate to the arbitration. Having found that the section 2 exception applied, the Court of Appeal considered it unnecessary to rule definitively on whether the section 9 exception is also automatically engaged in the case of ICSID awards.
The 3VB team representing the investors (Border Timbers Ltd and Hangani Development Co. (Private)) in the appeal against Zimbabwe comprised Christopher Harris KC leading Dominic Kennelly and Catherine Drummond, instructed by Ed Poulton, Katia Contos and others of Baker & McKenzie LLP.
Cameron Miles represented Spain in the joined appeal.