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- Publisher
- Oxford University Press
- Copyright
- © The Author(s) 2022. Published by Oxford University Press on behalf of ICSID. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com
- ISSN
- 0258-3690
- eISSN
- 2049-1999
- DOI
- 10.1093/icsidreview/siac012
- Publisher site
- See Article on Publisher Site
Abstract
I. INTRODUCTION Compliance with an investment arbitration award is the adherence to the outcome of the arbitration proceedings by the award-debtor State and the ability of the foreign investor to cherish the fruits of the award.2 A foreign investor working on financial considerations would have large-scale sunk-in investments in the host State and would not be content with a mere paper decree. The realization and the ability to enforce the successful outcome of arbitration proceedings are critical. An award-debtor State may voluntarily comply with an award. But an important and integral part of compliance is the ability or at least the possibility of achieving involuntary compliance. Compliance is a broad term, generally expressing good faith performance of treaty obligations. It is distinct from procedural issues of enforcement, recognition and execution of arbitral decisions, which are narrower in comparison.3 Also, enforcement and execution are the legal means to achieve compliance.4 Although prominent, they are not the exhaustive means. The importance of compliance with an investment arbitration award is recognized in the preamble of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention): ‘Recognizing that mutual consent by the parties to submit such disputes … and that any arbitral award be complied with’, article 53(1) of the ICSID Convention announces the binding nature of an award by declaring that ‘[e]ach party shall abide by and comply with the terms of the award’. The perception is that States comply with investment arbitration awards, inter alia, due to the fear of loss of their reputation as an investor-friendly environment.5 This perception no longer holds true.6 Most investment disputes are bitterly fought during the arbitration proceedings, but, most importantly, after an award is issued against the host States. A 2020 survey on compliance with investment awards shows that States paid damages in 85 of the 170 cases. No information was available in 51 cases or 30.5 per cent of the cases. The survey was based on investment arbitrations involving the 32 most sued States, covering almost 70 per cent of the cases. The survey concluded that compliance, and most importantly timely compliance, is difficult and enforcement proceedings are unavoidable. Yet, they may not succeed in achieving compliance. States may not comply for political reasons, where there is a series of arbitrations on the same or similar issues, a strong disagreement with the correctness of the outcome, or may initially agree to pay and later back out.7 With the developments in the European Union (EU) after the decision of the Court of Justice of the European Union in Achmea,8 certain States have taken the position that they will not comply with awards that are contrary to EU law and accordingly they have not complied with some awards.9 The increasing instances of non-compliance raise the question of a proper legal response. This article looks at non-compliance and the consequences thereof under the law of State responsibility, as codified and progressively developed by the International Law Commission (ILC) in its work on Responsibility of States for Internationally Wrongful Acts (Articles on State Responsibility or ARSIWA).10 The prospect of a State being declared responsible for non-compliance with an award was raised before the Permanent Court of International Justice (PCIJ), but the claim was abandoned by the Claimant in the oral hearing.11 The PCIJ found itself to be neither in a position to affirm or reject the conclusions arrived at by the Tribunal.12 The current state of doctrinal international law can be applied to investigate the prospect of State responsibility for non-compliance with an investment award. This introductory section is succeeded by Section II briefly explaining the meaning and potential situations of non-compliance. Section III discusses the applicability of the law of State responsibility in situations of non-compliance. This section traces the source of non-compliance as a binding legal obligation followed by an analysis that investigates whether the elements for establishing State responsibility are satisfied if there is non-compliance; followed by the way restitution can be resorted to by an award-creditor investor. The section discusses the possibility of circumstances precluding wrongfulness being raised as a defence to resist compliance and in particular the relevance of countermeasures, force majeure and necessity. Section IV identifies the ways to seek compliance through legal means, such as proceedings before domestic courts and international courts and tribunals and political means. Section V discusses the obstacles to seeking compliance, in the form of sovereign immunity and nullity of an award. Section VI presents concluding observations. II. MEANING OF NON-COMPLIANCE Non-compliance exists where the award-debtor State does not comply, fully or partially, or in good faith, or if there is a delay in compliance. As per article 12 of the Articles on State Responsibility, breach of an international obligation exists if a State does not act ‘in conformity with what is required of it by that obligation’. The expression ‘not in conformity’ is sufficiently broad to include partial non-compliance.13 Partial non-compliance also invokes complete responsibility, and the degree of non-compliance is immaterial.14 Normally, an award ‘shall be carried out in good faith immediately, unless the Tribunal has fixed a time limit within which it must be carried out in its entirety or partly’.15 However, the mere fact of delay could not be termed as non-compliance.16 During the negotiations of the ICSID Convention, there was discussion about specifying the duration for compliance. Eventually, any such formulation was dropped.17 At present, the obligation to comply arises once an award is rendered, ie the day on which the certified copies are dispatched.18 States have to take steps promptly. However, this may take some time, for example to make budgetary arrangements.19 There must be some steps taken by a State to comply and no steps that would evade or obstruct compliance.20 A State would not be in breach of the obligation to comply if it has initiated its challenge under one of the recognized legal means. Under the ICSID Convention, the period for which a State would not be responsible on the ground of delay of non-compliance would be until the period for commencing annulment proceedings has expired or if the proceedings were commenced until they were completed, provided a stay is granted by the Annulment Committee.21 Under the New York Convention, it would be until the challenge could be or is actually made. If a domestic court where a challenge to the award is raised declines to stay an award that may be a potential situation of non-compliance for the delay. III. STATE RESPONSIBILITY FOR NON-COMPLIANCE WITH AN AWARD The ‘basic principle underlying’ the law of State responsibility and encapsulated in article 1 of the Articles on State Responsibility is that ‘[e]very internationally wrongful act of a State entails the international responsibility of that State’.22 A State commits an internationally wrongful act through either action or omission and if the twin tests of ‘attribution’ and ‘breach of an international obligation’ are satisfied.23 Normally, when a State refuses to comply with an award or if it deliberately stalls the efforts of enforcement beyond the permitted legal means, that would be conduct or omission resulting in an internationally wrongful act, provided those actions or omissions are attributable to the State and there is, in fact, a breach of an international obligation. A. Source of the Obligation It is first necessary to trace and establish the source of the obligation to comply with a decision of an international court or tribunal generally and an investment award in particular. An early codification of the obligation to comply with decisions of international courts and tribunals was article 37(2) of the Hague Convention for the Pacific Settlement of International Disputes of 1907, which stated: ‘Recourse to arbitration implies an engagement to submit in good faith to the award’.24 Article 32 of the Model Rules on Arbitration Procedure, prepared by the ILC provides: ‘Once rendered the award shall be binding upon the parties’.25 The binding nature of the decision of an international court or tribunal emanates from its authority to adjudicate.26 In the Free Zones of Upper Savoy and the District of Gex, the PCIJ noted that ‘it would be incompatible with the Statute, and with its position as a Court of Justice, to give a judgment which would be dependent for its validity on the subsequent approval of the parties’.27 Such a condition, if the consent is to be subsequent to the judgment, cannot be reconciled with articles 59 and 60 of the Statute of the Court, which provide that the judgment is binding and final.28 Similarly, in the Avena case, the ICJ observed that domestic law, which hindered the implementation of the obligation incumbent upon the United States, cannot relieve it of its obligation to comply with the decision of the ICJ. It further observed that the Avena case nowhere lays down or implies that the courts in the United States are required to give direct effect to the judgment. The relevant sections of the judgment, according to the ICJ, were ‘an obligation of result’ which had to be performed unconditionally and its non-performance constituted internationally wrongful conduct.29 These observations of the ICJ were in reaction to the decision of the US Supreme Court in Medellín v Texas, which held that even if an international treaty may constitute an international commitment, it is not binding domestic law unless Congress has enacted statutes implementing it or unless the treaty itself is ‘self-executing’ and therefore held the Avena decision of the ICJ was not directly enforceable as domestic law in a State court.30 At times, investment treaties contain express provisions stating that the award is final and binding and States undertake to carry out awards without delay.31 In addition to these obligations, the United States–Mexico–Canada Agreement (USMCA) stipulates the constitution of a Panel to ensure compliance with an award.32 Rules of arbitral institutions also make similar provisions.33 Normally in commercial arbitration when parties agree to the administration of the arbitration proceedings by an institution, there is a deemed agreement to abide by the rules of the institution.34 The situation of States in investment arbitration proceedings is different since a State can be bound by a treaty and not a mere contractual arrangement like a private party. The rules of arbitral institutions may not have the same binding force in investment arbitration proceedings as in commercial arbitration. Where the investment treaty refers to some rules specifically, such as the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules, then the rules on finality in those rules will be applicable.35 For awards delivered under the ICSID Convention, the finality and non-appealability arise from article 53(1): The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention. Additionally, all members of the ICSID Convention are obliged to recognize the award as a final judgment of a court in that State. Article 54(1) specifies this obligation in the following words: Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by the award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state. Three consequences flow from these provisions. First, the ICSID award is final and operates as res judicata since the parties cannot seek a remedy on the same dispute in another forum. Second, there is no external review of an ICSID award, except that provided for in articles 49(2), 50, 51 and 52. Third, all States have to carry out an ICSID award as if it were a final decision of their own courts. Therefore, ‘non-compliance by a party with an award would be a breach of a legal obligation’. Provisions on finality are contained in the rules of other arbitral institutions.36 These provisions do not apply to proceedings conducted under the ICSID Additional Facility Rules, hence those arbitrations are not insulated from national laws. They are governed by the national law of the seat or other applicable treaties.37 In most cases, they would be regulated by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). The general obligation to recognize and enforce awards, subject to other provisions of the New York Convention, is noted in article 3 in the following words: Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. Some investment tribunals have found the non-enforcement of commercial arbitration awards as a breach of an international obligation arising from the New York Convention.38 If an investment arbitration award is treated as enforceable under the New York Convention and the domestic law implementing the New York Convention,39 then the refusal by a State to comply contrary to the New York Convention ought to result in international responsibility. This may not always be the case and the situation would depend on the position under domestic law since the enforcement happens under domestic law, as long as the interpretation and application of law is in conformity with the standard of discretion provided under the New York Convention. There is enough material to suggest that compliance with an award is not just a treaty obligation but also possesses the characteristics of an international custom.40 Consequentially, any ‘violation of a duty imposed by an international judicial standard’ is sufficient to raise international responsibility.41 On the theoretical level, compliance with awards is suggested to be necessary to uphold the value of international arbitration.42 This expectation of compliance arises from the consent of the parties to the arbitration.43 Non-compliance with an award may cause a breach of another obligation, which will, in turn, result in the responsibility of a State. The European Court of Human Rights (ECtHR) has treated the failure of the judiciary to enforce an award within a reasonable time as a breach of the right to a fair trial under article 6 of the European Convention of Human Rights (ECHR).44 Additionally, an award is treated as a ‘possession’ hence covered by the right to property under Protocol 1. Awards are treated as a right in personam: the same as any other pecuniary right. If it is established that a State wrongfully interfered with rights arising from an award that has not been enforced, the award may be enforced by the ECtHR, thus giving special protection to awards as opposed to judgments.45 Thereby, non-compliance with an award was found to be an expropriation and wrongful deprivation of the right to property.46 Within the EU legal system, once it is found that a State has failed to respect the property rights by non-enforcement of an award under Protocol 1, there is no need to additionally establish delay or deprivation of the right of a fair trial under article 6.47 Overall, ‘the State must make sure that the execution of such an award is carried out without undue delay and that the overall system is effective both in law and in practice’.48 The threshold of fair trial required under article 6 is tailor-made to the EU system and a delay in enforcement, which may not be treated as unreasonable in other jurisdictions, may be so treated by the ECtHR.49 So is the situation with the wide approach of treating an award as a possession. Therefore, the EU has a highly effective system for the enforcement of awards as compared to other enforcement regimes, including potential State–State dispute resolution for compliance with awards.50 The net for catching non-compliance is quite broad in the EU legal system51—although available only against European States for investors having the standing to avail themselves of those provisions. It needs to be seen how these courts will react to investment arbitration awards arising out of intra-EU investment treaties after the Achmea judgment. Also, denial of justice may be invoked if there is a deliberate failure of the judiciary to enforce an award or to shield the other branches of government and obstruct compliance. Denial of justice, however, is a high standard and limited only to procedural irregularities and often difficult to meet.52 Some argue that if not precisely the invocation of denial of justice, then something akin to it must be applied in case of failure of a State to enforce an award.53 Even if assumed desirable, there does not appear to be any such rule or legal principle. B. Attribution For a State to be responsible under international law, the alleged breach of an international obligation must be attributable to the State. A State, acting through all its organs, is responsible to comply with the award. The specific duty to comply with an international judicial decision would be determined based on the domestic constitutional framework.54 The duty of compliance is discharged once the internal organs according to their constitutional competence comply with the decision.55 In most cases, the refusal to comply would be on the part of the executive, which is normally responsible for international relations. Additionally, the domestic courts or some other agencies56 of the State may be involved in the process of enforcement of an award. As a consequence of the principle of unity of State,57 these entities being organs of the State, their actions or omissions would be attributable to the State.58 Inaction on the part of State authorities due to failure to undertake necessary steps where they were evidently called for, are attributable to the State and attract responsibility.59 Additionally, failure to comply with an award may take the nature of a composite act. In such a case, the non-compliance with an award would be ‘through a series of actions or omissions’.60 These may be undertaken by different branches of the State. The individual actions or omissions that affect compliance and the composite act of non-compliance would be a breach of international legal obligations.61 The breach would continue over the entire period of actions and omissions.62 In other words, for the entire period, the award will not have been complied with. C. Breach of Obligation Breach of an international obligation would occur ‘when an act of that State is not in conformity with what is required of it by that obligation, regardless of its origin or character’.63 The contents of the obligation are decisive, and the extent of compliance of an international legal obligation is derived from the primary obligation.64 As noted in the Commentary of the Articles on State Responsibility: But in the final analysis, whether and when there has been a breach of an obligation depends on the precise terms of the obligation, its interpretation, and application, taking into account its object and purpose and the facts of the case.65 To establish a breach of an international obligation, there has to be ‘dis-conformity between the conduct required of the State by that obligation and the conduct actually adopted by the State’.66 The extent of the obligation to be complied with depends on the precise terms of the award—the dispositive (the operative part).67 Most investment awards are monetary in nature and determination of their compliance or breach is fairly straightforward, unlike in many inter-State cases involving disputes over the precise scope of the decision. International responsibility would arise for ‘one or more actions or omissions or a combination of both’.68 A ‘refusal to fulfil a treaty obligation involves international responsibility’.69 Non-compliance with an award would take the form of an ‘omission’ to comply with an international obligation flowing from the award. A State may not breach the obligation to comply with an award through ‘actions’, by seeking to challenge the award, as long as the challenge is based on a legal right emanating from an international instrument or domestic laws protected by international law. The defence of immunity is available under international law and domestic law, but it is hard to argue that such efforts would amount to an ‘action’ undertaken for committing the breach. That does not dilute the fact that non-compliance with an award on substance remains a breach of an international legal obligation. The right to challenge the award or protect properties based on immunity are matters of procedure, although they may ultimately affect the substantive right to seek enforcement of the award.70 D. Nature of Non-Compliance Non-compliance with an award is a separate breach of an international obligation from the underlying breach that led to the proceedings and the award. An international court or tribunal would be reluctant to specify the consequences of non-compliance with its decision while delivering the decision. Since non-compliance is a separate breach, separate proceedings, if maintainable, would have to be initiated. Potential non-compliance cannot be addressed.71 The International Court of Justice (ICJ) said the following in the Mavrommatis case: In these circumstances, the Court does not find it necessary to consider the question of whether in certain cases, it might have jurisdiction to decide disputes concerning the non-compliance with the terms of one of its judgments.72 Non-compliance with an award is viewed as non-payment of a debt owed by a State. Non-compliance with an award would make the State a debtor towards the investor since non-fulfilment of the obligation results in financial implications for the State concerned.73 The question of non-payment of debt owed by a sovereign is a matter governed by public international law.74 The Tribunal in the Russian Indemnity case declined to distinguish between debts owed from different sources and concluded that: It is certain, indeed, that all liability, whatever its origin, is finally valued in money and transformed into an obligation to pay; it all ends, or can end, in the last analysis, in monetary debt.75 Furthermore, a State is responsible for ‘delay in the payment of a monetary debt, unless the existence of a contrary international custom is established’.76 Additionally, a State would be responsible for the payment of interest caused by such delayed payments.77 E. Reparation for Non-Compliance Non-compliance with an international obligation has to be remedied by a ‘full reparation for the injury caused by the internationally wrongful act’.78 As explained in the famous paragraph of the Factory at Chorzów case: ‘reparation must, as far as possible, wipe out all the consequences of the illegal act and re-establish the situation which, would, in all probability, have existed if that act had not been committed’.79 Since the breach in question would be non-compliance with an award, the award-debtor State would have to comply with the contents of the award. In the context of diplomatic protection, the ICJ observed in the Barcelona Traction case that: reparation due... as a result of the internationally unlawful acts for which the latter State is responsible, must be complete and must, so far as possible, reflect the damage suffered by its nationals whose case the [other] State has taken up; and that, since restitutio in integrum is, in the circumstance of the case, practically and legally impossible, the reparation of the damage suffered can only take place in the form of an all-embracing pecuniary indemnity.80 The relief is limited to the injury,81 ie a host State would have to comply with the award to the extent that it removes the consequences of non-compliance. Full reparation in the context of non-compliance means nothing more than the payment of the award amount and consequential interest since compensation as a form of reparation cannot be of a punitive or exemplary nature.82 The ILC debated the use of full reparation, with members expressing their doubt on its effectiveness.83 It was felt that the insistence on full reparation could be fraught with consequences for developing countries.84 In further discussions, full reparation was considered unsuitable since reparation could only be used to remedy the consequences of the wrongful act as much as possible and seldom fully.85 Factors like the weak financial position of the responsible State would affect its ability to make full reparation.86 However, since the governments had not objected to the use of full reparation, the Commission decided to retain the provision along with the seminal dictum of the ICJ from the Factory at Chorzów case.87 This meant that full reparation had to wipe out the consequences of the illegal act as far as possible.88 Despite the rule of full reparation, practice suggests that the parties may settle the amount through negotiations.89 Thus, even where an investor is entitled to a higher amount, the investor and the host State may negotiate and settle for a lesser amount than that of the award. There is extensive State practice that suggests the acceptance of less-than-full reparation.90 In the preparatory work at the ILC, there was an acknowledgment of the impossibility of full reparation in certain situations.91 The Eritrea–Ethiopia Claims Commission has also discussed the prohibitory impact that a huge quantum of compensation has on the responsible State’s ability to provide basic services to its own citizens.92 Special Rapporteur Professor Crawford (as he then was) criticized this decision for hastily concluding the emergence of State practice which shows that States take into account the impact of high compensation amounts on the population of the responsible State.93 He offers a competing example of Iraq’s payments for claims arising from its invasion and occupation of Kuwait to the United Nations Compensation Commission.94 In traditional State–State litigation, the amounts of compensation awarded by international tribunals would normally be trivial as compared to the resources of the State.95 This position has changed drastically after investment arbitration, where the amounts awarded are large enough to have a crippling effect on the economy of a State.96 While the rule is for full reparation, there is a possibility of an argument, based on State practice, for excluding full reparation where the effect is crippling.97 F. Circumstances Precluding Wrongfulness Non-compliance may be justified on the ground of circumstances precluding wrongfulness.98 The determination of breach of an international obligation is linked to the defences contained in circumstances precluding wrongfulness.99 The circumstances precluding wrongfulness provide ‘a shield against an otherwise well-founded claim for the breach of an international obligation’.100 According to the ICJ, if present, the obligations on the State ‘cease to be binding upon it’ and the international responsibility would not be incurred.101 However, the circumstance precluding wrongfulness would not obliterate the obligation—it may simply suspend the need for compliance until the situations that force non-compliance have ended.102 Once the situation ceases, ‘the duty to comply… revives’.103 The defences listed as circumstances precluding wrongfulness are of general application and apply across all range of breaches.104 Since these defences are available for any party which has been alleged to have committed a breach, they would be available for States. Additionally, these are rules of customary international law on which a State can always rely as a defence. In situations of non-compliance with an award, it is conceivable that award-debtor States may potentially rely upon three such defences: non-compliance as a countermeasure against an internationally wrongful act, force majeure or necessity. The onus of establishing them lies with the State relying on these defences.105 (i) Countermeasures A State may invoke countermeasures in respect of an internationally wrongful act106 as a justification for its non-compliance with an award. As discussed in this issue by Eran Sthoeger and Christian Tams in ‘Swords, Shields and Other Beasts: The Role of Countermeasures in Investment Arbitration’, doctrinal questions remain outstanding as to whether the defence of countermeasures can be invoked against an investor, as opposed to their home State that is a party to the relevant investment agreement, and cases addressing this question are rare, but include three NAFTA proceedings against the government of Mexico. In these cases, which arose out of the same set of facts, Mexico argued in its defence that the challenged measures were lawful countermeasures aimed at forcing the USA to provide market access for Mexico’s surplus sugar production. These three tribunals were divided: two of them concluded that countermeasures are not available against a foreign investor for the actions of its home State.107 However, in the third case, the Tribunal held that countermeasures may be adopted against the investor for actions of the home State.108 Depending on which approach a tribunal takes, a State may or may not succeed in defending non-compliance as a legitimate countermeasure. However, the requirements of a valid countermeasure—which are strict in nature—have to be complied with. State responsibility is suspended and not terminated for the duration of the countermeasure.109 A home State may resort to a countermeasure if an award in the favour of its national is not satisfied.110 Such countermeasures have to comply with certain requirements which are outlined in articles 49–53 of ARSIWA. Importantly, countermeasures must be proportionate to the injury suffered by the injured State, which has to also take into account the gravity of the wrongful act in its own right.111 Given the extreme nature of countermeasures, the home State of the award-creditor investor will have to justify their proportionality against the wrongful act of non-compliance with an award.112 (ii) Force majeure The defence of force majeure, codified in article 23 of the Articles on State Responsibility ‘may qualify as a general principle of law’.113 As discussed in Wenhua Shan and Lu Wang’s article in this issue, ‘Force Majeure and Investment Arbitration’, in order to claim this defence, non-compliance would have to be occasioned by ‘the occurrence of an irresistible force or an unforeseen event, beyond the control of the State, making it materially impossible in the circumstances to perform the obligation’.114 The non-compliance with the obligation, ie an award, would have to be involuntary or at least without an element of free choice.115 Material impossibility to perform may arise due to a ‘natural or physical event’.116 Force majeure excludes circumstances that make the performance of the obligation difficult such as a political or an economic crisis.117 Some argue that instances of non-compliance with an award, which arise from an inability to pay the compensation, may not be covered by force majeure.118 Such a general proposition is doubtful. In the Russian Indemnity case, the Tribunal acknowledged the possibility of the defence of force majeure for the failure to make timely payment of a debt. The Tribunal reasoned that: ‘however little the responsibility may imperil the existence of the State, it would constitute a case of force majeure which could be pleaded in public international law as well as by a private debtor’.119 But force majeure will not be established if the debt does not ‘imperil the existence … or seriously compromise its internal or external situation’.120 Arguably, whether circumstances justifying force majeure exist is to be decided based upon the amount owed by the State and its overall impact on the economy and functioning of the State. (iii) Necessity Finally, a State may seek to justify non-compliance on the basis of necessity (état de nécessité),121 which is an extremely narrow defence,122 as discussed in greater detail in Federica Paddeu and Michael Waibel’s contribution to this issue, ‘Necessity 20 Years On: The Limits of Article 25’. Mere financial distress may not be sufficient to establish necessity, so in the context of non-compliance with an award, it may be more feasible to defend non-compliance on the basis of force majeure than necessity. IV. WAYS OF ACHIEVING COMPLIANCE When an award-debtor State does not voluntarily comply, an award-creditor investor can seek compliance with an award on its own. The commentary under article 33 of the Articles on State Responsibility acknowledges this: ‘where a primary obligation is owed to a non-State entity’.123 When these efforts fail, it can seek the support of its home State. The steps the award-creditor investor can take on its own are predominantly judicial and the outcome of those proceedings would be based on legal considerations. Whereas the steps taken by its home State may be either judicial or political. In both these cases, whether to seek compliance on behalf of its national is a matter of discretion of that State. The decision of the home State may or may not be influenced by legal considerations. A. Enforcement Proceedings in Domestic Courts The most usual way to seek compliance with an investment award is to commence enforcement proceedings before domestic courts. The regime created by the ICSID and New York Conventions has greatly facilitated this process, as opposed to the process for compliance with the decisions of other international courts and tribunals—including the ICJ. Domestic courts may decline to entertain proceedings for the enforcement of decisions of international courts and tribunals.124 But State parties to the ICSID and New York Conventions are under an obligation to recognize and enforce awards covered by these conventions. The rules on recognition and enforcement are contained in domestic law enforcing the ICSID Convention or the New York Convention, where relevant. Due to the finality attached to ICSID awards under article 54(1), an ICSID award is treated as a ‘final judgment of a court’ of a State party. An ICSID award is delocalized and it cannot be reviewed or annulled in domestic courts.125 An ICSID award would have to be directly executed. However, this execution is subject to the exception of sovereign immunity.126 The New York Convention is relevant if the place of enforcement is not a party to the ICSID Convention or the obligation to be enforced is non-pecuniary in nature127—article 54(1) expects giving finality and execution limited to the pecuniary obligations imposed in the award. The New York Convention does not give the same status of finality as given under the ICSID Convention. It allows domestic courts to refuse recognition and enforcement based on certain narrow grounds.128 There are inherent uncertainties in enforcement proceedings under the New York Convention due to widely different approaches of domestic courts on different aspects of the New York Convention. Article V of the New York Convention leaves the discretion with domestic courts as long as it is exercised through one of the ways mentioned in article V.129 The standard of review applied by domestic courts differs vastly. Some apply an ‘autonomous’ standard unconnected and uninfluenced by domestic law, whereas others use their domestic law to determine whether to recognize a commercial arbitration award or not.130 Enforcement proceedings can be brought before domestic courts of a State having primary or secondary jurisdiction. Primary jurisdiction is the place where the award was rendered (the ‘seat’ of arbitration) and secondary jurisdiction is any other place where recognition and enforcement are sought. The host State may not be a primary or secondary jurisdiction and recognition and enforcement may be sought in a third State. Also, when there is more than one award or the same award with several judgment creditors, successful enforcement may involve negotiations and settlement with all of them collectively. Pursuing coercive enforcement by one or some or all may complicate the situation. These proceedings may serve as pressure tools for coercing a State to comply with such awards.131 The proceedings may be initiated in different jurisdictions. It is arguable whether a secondary jurisdiction that fails to enforce an award contrary to its obligation to enforce awards under the ICSID or New York Convention has itself committed a breach of an international obligation through ‘aid or assistance in the commission of an internationally wrongful act’.132 It would be necessary to establish that the third State voluntarily aided or assisted ‘with a view to facilitate the commission of an internationally wrongful act’,133 ie conniving to block the enforcement. Arguably, for parties to the ICSID Convention, a general obligation to enforce ICSID awards may be said to exist under article 54. This cannot be the case for the New York Convention due to different approaches taken by domestic courts. Some jurisdictions have refused to enforce an award because it was annulled in another jurisdiction.134 Other jurisdictions have enforced awards even when they were annulled in another jurisdiction.135 Once the decision of an international court or tribunal is brought before a domestic court, there is inevitably some element of review involved and it is impossible to remove it completely. Even where the given grounds are technical, such as competence or immunity, the influence of substantive considerations cannot be ruled out.136 A possibility cannot be ruled out that a domestic court may appear to be acting perfectly within its jurisdiction but acting with the aim of resisting the enforcement.137 In all cases of execution, even if the domestic court recognizes and enforces the award, execution would be subject to the rule of sovereign immunity. In some situations, after approaching a domestic court, if a State fails to comply, monetary contempt sanction may be sought. But domestic courts may or may not allow such proceedings against a State.138 These efforts may not always be successful since domestic courts of one State may not want to intimidate another State by protecting the interests of private creditors due to the fear of reciprocity.139 B. Proceedings before the International Court of Justice If the award-creditor investor fails in achieving compliance even after having approached the appropriate domestic court for enforcement, the home State can take up the cause by invoking diplomatic protection. Where both the concerned States are parties to the ICSID Convention, if an award-debtor State has ‘failed to abide by and comply with the award rendered in such dispute,’ the home State of the award-creditor investor can grant diplomatic protection under article 27.140 Member States of the ICSID Convention can resort to article 27 if ‘the State party to the dispute fails to honor the award rendered in that dispute’.141 This procedure is ‘an alternative and supplement to the judicial enforcement of awards’.142 Furthermore, article 64 permits a State to bring a dispute with another State regarding the ‘interpretation or application’ of the ICSID Convention before the ICJ. Non-compliance with an award would fall within the wide purview of ‘interpretation or application’ of the ICSID Convention, coupled with the fact that the home State can grant diplomatic protection in case of non-compliance by the host State. Article 27 allows the home State to grant diplomatic protection, but article 64 allows any Contracting State to the ICSID Convention to commence proceedings against any other Contracting State. The question that remains open is whether proceedings under article 64 could be brought before the ICJ against a third State for having declined to comply with an award or whether the purview of article 64 would be limited by article 27. If one of the States is not a party to the ICSID Convention, the home State would have to find avenues to commence proceedings. Proceedings can be brought before the ICJ if the home State and the host State both have a declaration accepting the compulsory jurisdiction of the ICJ under article 36(2) of the ICJ Statute.143 If there is no such declaration, then it is for the concerned States to enter into a compromis to refer the issue of non-compliance. They may agree to refer the dispute to the ICJ or constitute a tribunal. Often the foreign investor is a multinational corporation availing itself of the most convenient bilateral investment treaty, with only a legal link to the home State rather than a real connection of nationality.144 For diplomatic protection, a link of nationality would be required.145 Moreover, whether to grant diplomatic protection is a political decision, completely at the discretion of the home State.146 The home State decides whether, to what extent, subject to which conditions and how long to grant diplomatic protection. The home State may withdraw diplomatic protection at any time. The decision to grant diplomatic protection is not based on legal considerations and is unrelated to the given case.147 Political considerations are decisive.148 Third States may have an interest in ensuring compliance with awards but they cannot grant diplomatic protection to the investor due to the absence of a link of nationality.149 Even if the home State takes non-compliance with an award to the ICJ under article 64 of the ICSID Convention or otherwise, enforcement of that decision could be challenging. To seek compliance with an ICJ decision, the home State would have to approach the Security Council under article 94, which has its own structural deficiencies and political compulsions.150 The political methods for collective enforcement by the Security Council may include partial interruption of economic relations or freezing of assets in third countries.151 Once the home State is involved and considering the overall tendency of compliance with the ICJ decisions, one may expect that there may be enough pressure from diplomatic means that may achieve compliance, although, without any assurance of compliance. Also, efforts at enforcing ICJ decisions in domestic courts are not always effective.152 In dualist jurisdictions, a domestic court may decline to enforce the decision of an international court or tribunal on the ground that the underlying treaty is not incorporated in its domestic law.153 C. Political Means Legal methods for achieving involuntary compliance have their limitations. A combination of non-legal methods such as external political influence, through the international community, third States or international organizations, reputational cost, the closeness of relations between concerned States and internal political influence driven by a need for a definitive solution is relevant in achieving compliance.154 The UK government linked payment of amounts due under the Lena Goldfields case to trade negotiations with the USSR and the amounts due were accordingly settled.155 The home State of the award-creditor investor may adopt different political means to achieve compliance with an award. Self-help remains the prominent method for enforcement of international judicial decisions.156 Normally, States could undertake countermeasures to achieve compliance.157 The home State may resort to ‘self-help’, including the imposition of ‘sanctions’ to ensure compliance.158 Political intervention by the Obama administration ensured compliance with five unpaid awards of Argentina, which involved the suspension of trade benefits under the Generalized System of Preferences (GSP) Programme for Argentina.159 Use of sanctions may work, but there are arguments against the use of them for achieving compliance with investment awards—for example that the regime of investment arbitration aims at achieving compliance in the form of monetary compensation for losses and not to impose punitive damages or sanctions. Since the same protection is not extended to domestic investors, it may result in market distortions.160 Since negotiations and diplomacy are involved in these processes, there is inherent unpredictability. Their outcome is dependent on the negotiating strength of the parties concerned and may significantly water down the entitlements under the award.161 Often, resort to such methods may strain relations between the home and host States and is a choice of the home State rather than the affected party.162 Political methods involve the use of diplomatic and economic pressure, which may result in the rupture of relations,163 or involve a strong State using such means against weak States. Unlike States, a foreign investor can rarely resort to self-help; or, rather, it can but with little or no consequence. For any effective result, it would have to rely upon its home State or a third State. As noted in the above section on proceedings before the ICJ, there may not always be a clear link with a State for the foreign investor. International organizations may play a role in achieving compliance. The World Bank Policy No. 7.40 provides that the Bank can limit lending to States that have expropriated property or failed to fulfil their contractual obligations.164 In practice, the World Bank would be reluctant to apply this clause for achieving compliance with an award.165 If the home State is willing to undertake the cause of non-compliance, the issue could be raised also before regional organizations, such as the Organization of African Unity or Organization of American States, through the political process.166 Ordinarily, pressures of regional organizations have greater prospects of success than international organizations such as the UN.167 V. OBSTRUCTIONS TO COMPLIANCE An award-debtor State may rely on legal mechanisms available in general international law to avoid compliance. These are sovereign immunity and challenge of the award on the ground of nullity. A. Sovereign Immunity An award-debtor State can resist enforcement and consequentially evade its obligation of compliance through the defence of sovereign immunity. This protection accorded to States is based on the principle of sovereign equality of States168 and ‘[e]xceptions to the immunity of the State represent a departure from the principle of sovereign equality’, as per the ICJ.169 It is a rule of customary international law,170 available even in the absence of a treaty.171 It is difficult to achieve compliance through execution till the exception to immunity prevails. Immunity is procedural in nature and the breach of an underlying legal obligation is not sufficient to allow the exercise of jurisdiction against the defence of immunity.172 It functions as a jurisdictional obstacle and, unless it has crossed the issue of substantive breaches, cannot be addressed.173 Immunity functions on two levels, immunity from jurisdiction and immunity from execution, both of which are rules of customary international law.174 In cases of immunity from jurisdiction, proceedings cannot be brought against a foreign State before domestic courts; in cases of immunity from execution, even if proceedings can be brought, certain assets are protected from execution proceedings.175 These are those assets used for governmental purposes.176 Compliance is not possible through execution proceedings against these protected assets and the rule of absolute immunity applies, until waived.177 In both cases, immunity is a default rule and has to be waived to allow domestic courts to exercise jurisdiction.178 In major jurisdictions—particularly in places that are favourite seats of arbitration—consent to arbitration is deemed to be a waiver of immunity from jurisdiction.179 Ratification of the ICSID Convention or the New York Convention is treated as an implied waiver of immunity from jurisdiction.180 Although rarely, submission of arbitration proceedings to arbitral institutions such as the International Chamber of Commerce (ICC) is treated as a waiver from immunity in certain jurisdictions.181 Compliance with an investment award can be achieved in these jurisdictions by commencing execution proceedings before domestic courts. Exceptionally, in jurisdictions where absolute rule of immunity is adhered to it may be possible to initiate proceedings to seek involuntary compliance.182 The effect of waiver of jurisdiction is that enforcement proceedings can be brought against an award-debtor State for compliance. Even if execution proceedings are undertaken based upon exceptions to immunity from jurisdiction, the assets of States are protected by immunity from execution. Article 54 of the ICSID Convention grants finality to an investment award, but makes the award subject to article 55. Article 55 is as follows: Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution. Article 55 is treated as an interpretation of article 54. Particularly since article 54(3) states that enforcement is governed by the law of the State where execution is sought. This includes the law of State immunity.183 Moreover, while subjecting article 54 to article 55, the latter specifically mentions the domestic law on immunity. The Report of the Executive Directors elaborates upon this relationship in the following words: In order to leave no doubt on this point, Article 55 provides that nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution.184 It is worth emphasizing that article 55 applies only to immunity from execution and not from jurisdiction.185 The expression of immunity from execution was part of a necessary compromise for the ICSID Convention. Suggestions for its removal were resisted since that was treated as drastic and attracting opposition from a lot of developing countries, thereby jeopardizing the wide ratification of the Convention.186 It was kept intact and barely questioned, although there was some discontent at the unequal treatment that would be meted out to awards, depending on where execution is sought.187 In current literature, however much one decries it, little can be achieved towards neutralizing its effect.188 Article 55 is called the ‘Achilles’ heel of the Convention’ since it weakens the efforts of enforcement.189 States were reluctant to let go of immunity during the drafting of the Convention190—consequentially creating an obstruction for compliance. Major jurisdictions make a ‘commercial exception’ to the rule of immunity from execution.191 This would allow execution against properties used by a State for commercial purposes. Properties of the State used for a public purpose, such as embassy premises or bank accounts of governmental agencies, enjoy absolute immunity.192 The distinction between ‘commercial’ and ‘non-commercial’ is not always clear under domestic laws, making the execution difficult.193 It may not always be possible to locate commercial properties, allowing a State to avoid compliance. Immunity creates a situation where there is a right of execution against a sovereign but without a remedy. As per the US Court of Appeals, the abstract principle of statutory interpretation that there cannot be a right without a remedy is of no relevance on the issue of immunity of property of a State from execution.194 Domestic courts are sensitive towards forced execution against properties of a foreign sovereign since ‘execution of judgments against foreign-state property creates greater impositions on sovereign interests and potentially generates significantly greater friction, with the possibility of reciprocal action’.195 Nevertheless, successful invocation of immunity does not eliminate the obligation of the award debtor to comply with the award.196 State responsibility for non-compliance continues. The observations in MINE v Guinea are instructive in this regard: State immunity may well afford a legal defense to forcible execution, but it provides neither argument nor excuse for failing to comply with an award. In fact, the issue of State immunity from forcible execution of an award will typically arise if the State party refuses to comply with its treaty obligations. Non-compliance by a State constitutes a violation by that State of its international obligations and will attract its own sanctions.197 Under the ICSID Convention, refusal to comply with an award on the grounds of State immunity may become the basis for invocation of diplomatic protection under article 27(1) and proceedings before the ICJ under article 64.198 B. Nullity of an Award Although rarely, nullity of an award has been raised as a ground for justifying non-compliance in inter-State disputes. If not before domestic courts, but when non-compliance is taken before an international court or tribunal by the home State of the award-creditor against the judgment-debtor State, the possibility of the argument of nullity being raised cannot be ruled out, especially in the currently highly contested environment of investment arbitration. An arbitral award may be vitiated if the claim of nullity is established.199 In its work, the Institut de Droit International noted that: ‘The arbitral award is void when the compromis is void, or when the Tribunal has exceeded its jurisdiction, or in the case of proved corruption of one of the arbitrators, or the case of essential error.’200 The ICJ has not ruled out the possibility of challenges to an arbitration award on the ground of nullity. It has implicitly suggested that nullity may be a ground to challenge an arbitral award.201 In the Arbitral Award Made by the King of Spain case, it simply rejected Nicaragua’s challenge to the award on the grounds that there was a delay in raising these challenges and that ‘by express declaration and by conduct, recognized the Award as valid and it is no longer open to Nicaragua to go back upon that recognition and to challenge the validity of the Award’.202 In fact, the ICJ entertained arguments challenging the validity of the award on the grounds of nullity. Elucidating the scope of inquiry it would conduct the ICJ noted that ‘the Award is not subject to appeal and that the Court cannot approach the consideration of the objections raised by Nicaragua to the validity of the Award as a Court of Appeal’.203 While deciding nullity, the Court is not to decide whether the decision is ‘right or wrong’.204 Ultimately, the ICJ found that the grounds for nullity were nevertheless not established, and these grounds were given detailed consideration.205 Thus, nullity may be raised as a ground for non-compliance with an arbitration award. At the same time, the grounds to establish nullity are narrow and a higher standard would be required. Without assessing the merits or the correctness of an award, the following grounds have been raised in the past as the basis for a challenge of nullity. The ILC noted three grounds in the Model Rules on Arbitral Procedure: (i) excess of power; (ii) corruption of a member of the tribunal; or (iii) a serious departure from a fundamental rule of procedure.206 The ICJ considered challenges based on the excess of jurisdiction;207 acting beyond the scope of a treaty forming the basis of the proceedings;208 essential and manifest error on the part of the arbitrator;209 lack or inadequacy of reasons in support of the conclusions210 and that the award was ‘incapable of execution by reason of omissions, contradictions or obscurities’.211 Additionally, nullity may be based on a void or invalid compromis.212 Nullity has been raised in the past not only in proceedings before international courts and tribunals, but also during diplomatic negotiations between the home and the host States. In the Camizal Tract dispute, the USA refused to carry out the arbitral award with Mexico for 50 years on the ground of nullity of an award on the basis of excès de pouvoir, ‘that the arbitrators had gone beyond the terms of the parties’ consent to submit the dispute’.213 Whether a State can succeed in obstructing compliance would depend not only on the legal processes adopted by the State, but importantly on the quality of its reasons. VI. CONCLUSIONS Non-compliance is normally associated with the political and controversial nature of the underlying dispute.214 Investment arbitration involves adjudication of a wide range of disputes involving governmental actions with differing degrees of sensitivities and public concerns. From a political perspective, compliance with an investment award is less attractive in situations where a negative reaction by the public opinion can be expected and where the government has publicly denounced the investor’s claims before.215 It is often noted that ISDS and the debate surrounding its legitimacy could have led to a political climate in which governments would not expect strong political backlash from the public in case of non-compliance with an investment treaty award.216 At times, excess haste in seeking enforcement may backfire.217 Especially in multi-party proceedings, concerted efforts at negotiations may bear better results than coercive enforcement sought by some parties.218 Compliance with decisions of international courts and tribunals is a comparatively underdeveloped area of international law. Existing mechanisms for achieving compliance with decisions of international courts and tribunals were developed in the inter-State context. Recent developments have enhanced the avenues for individuals to participate in international adjudication and consequentially the possibility of an individual being effective in achieving compliance against a sovereign State. The most effective mechanisms available for individuals, whether persons or legal persons exist in domestic law. To seek remedy under international law, there would be a need to fall back on the home State, to commence a State–State exercise to achieve compliance. In inter-State disputes, compliance has been considered ‘political’ and has not been a matter for legal consideration.219 The area continues to be influenced by diplomacy and politics. Probably for obvious reasons: States may not wish themselves to be tied down conclusively. Awards of investment tribunals are in a comparatively better position since the ICSID and New York Conventions provide for procedures and binding obligations on State parties to recognize and enforce awards, despite some leeway to evade compliance. Legal means are insufficient and resort to political means may be necessary. The procedural formalities or obstacles, whichever way one sees them, do not take away the normative quality of an award as a binding obligation under international law. This normative quality may not translate into practical terms. On the practical side, the rule of politics in achieving non-compliance can never be ruled out. To that extent, political involvement may become inevitable, although it goes against the very objective of investment arbitration to depoliticize the process. Success in achieving compliance is subjective. The extent of success depends on the abilities of an award-creditor investor. Professor Reisman aptly notes the practical problem in the following words: ‘Securing enforcement of a particular decision in the contemporary international arena depends ultimately upon the ingenuity, resourcefulness, and energy of the winning party.’220 Therefore, apart from the strictly legal side to compliance, there are practical considerations as well. It is a choice, whether to succeed in receiving the outcome of an award or simply have the satisfaction of a paper decree of having declared a sovereign to be in default of international judicial decisions. Particularly for a foreign investor, who would be functioning on economic considerations. Footnotes 1 Member, UN International Law Commission; Consultant, Withers LLP. I thank Advaya Hari Singh, Anjali Sasikumar, Mansi Avashia, Pradosh Shetty, Bharatt Goel and Sameer Gupta for their excellent research assistance. 2 The instances of non-compliance by an investor with an award are not covered by this article since issues of State responsibility would not be involved in such a situation. 3 Alan Alexandroff and Ian Laird, ‘Compliance and Enforcement’ in Peter Muchlinski and others (eds), The Oxford Handbook of International Investment Law (OUP 2012) 1173. 4 W Michael Reisman, ‘The Enforcement of International Judgments’ (1969) 63 AJIL 1, 6; Yuval Shanny, Assessing the Effectiveness of International Courts (OUP 2014) 119. 5 Patrick Mitchell v Democratic Republic of Congo, ICSID Case No ARB/99/7, Decision on the Stay of Enforcement of the Award (30 November 2004) para 41. 6 See Emmanuel Gaillard and Ilija Mitrev Penusliski, ‘State Compliance with Investment Awards’ (2020) 35(3) 1 ICSID Rev—FILJ 540. For a theoretical analysis of the reasons for non-compliance, see Moshe Hirsch, ‘Explaining Compliance and Non-Compliance with ICSID Awards: The Argentine Case Study and a Multiple Theoretical Approach’ (2016) 19 J Intl Econ L 681, 692–706. 7 Gaillard and Penusliski (n 6) 588–95. 8 Slovak Republic v Achmea BV, Case C-284/16, [2018] ECR 158. 9 Gaillard and Penusliski (n 6) 561. 10 International Law Commission, ‘Draft Articles on the Responsibility of States for Internationally Wrongful Acts with Commentaries’, UN GAOR 56th Session Supp 10, ch 4, UN Doc A/56/10 (2001) (ARSIWA). 11 Société Commerciale de Belgique (Belgium v France) (Judgment) PCIJ Rep Series A/B, No 78, 174. 12 ibid 174–75. 13 ARSIWA (n 10) art 12, commentary para 2. 14 As noted by the Tribunal: ‘it must be concluded that the responsibility of States can be denied or accepted only in its entirety and not in part; it would not then be possible for the Tribunal to declare this responsibility in the matter of monetary debts inapplicable without extending this inapplicability to all the other categories of responsibilities’. Russian Claim for Interest on Indemnities, Award of the Tribunal (11 November 1912) para 4 (Russia v Turkey). 15 ILC YB 1958, vol II, 85. 16 James AR Nafziger, ‘National Implementation of International Court Decisions’ in Rainer Grote, Frauke Lachenmann and Rüdiger Wolfrum (eds), Max Planck Encyclopedia of Comparative Constitutional Law (OUP 2017) para 28; Iain Scobbie, ‘Case Concerning Certain Phosphate Lands in Nauru (Nauru v Australia), Preliminary Objections Judgment’ (1993) 42 ICLQ 710, 711. 17 Christoph Schreuer, Loretta Malintoppi, August Reinisch and Antony Sinclair, The ICSID Convention: A Commentary (CUP 2009) 1110–11. 18 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (opened for signature 18 March 1965, entered into force 14 October 1966) art 49 (1) (ICSID Convention). 19 Schreuer and others (n 17) 1110–11. 20 ibid 1113–14. 21 ICSID Convention (n 18) arts 51(4) and 53(1). 22 ARSIWA (n 10) art 1, commentary para 1. 23 ibid art 34. 24 Convention for the Pacific Settlement of International Disputes (signed 18 October 1907, entered into force 26 January 1910) art 37. 25 ILC Yearbook 1958 (n 15) 10. 26 Abdul G Koroma, ‘The binding nature of the decisions of the International Court of Justice’ in Laurence Boisson De Chazournes and Marcelo Kohen (eds), International Law and the Quest for Its Implementation: Le droit international et la quête de sa mise en oeuvre - Liber Amicorum Vera Gowlland—Debbas (Martinus Nijhoff 2010) 436–39. 27 Free Zones of Upper Savoy and the District of Gex (France v Switzerland) (Judgment) (1938) PCIJ Series A/B, No 46, 661. 28 ibid para 197. 29 Request for Interpretation of the Judgment of 31 March 2004 in the Case Concerning Avena and Other Mexican Nationals (Mexico v US) (2008) 47 ILM 726, para 44. 30 Jose Ernesto Medellin, Petitioner v Texas, 552 US 491, 8, 15 and 27 (2008). 31 Treaty between the United States of America and the Republic of Kazakhstan concerning the Encouragement and Reciprocal Protection of Investment (signed 19 May 1992, entered into force 12 January 1994) arts VI (4) and (6); North American Free Trade Agreement (signed 17 December 1992, entered into force 1 January 1994, terminated 1 July 2020) (NAFTA) arts 1136(2) and (4); Agreement between the Lebanese Republic and the Republic of Austria on Reciprocal Promotion and Protection of Investment (signed 26 May 2001, entered into force 30 September 2002) art 17(1); Agreement between the Government of the Federal Democratic Republic of Ethiopia and the Government of the Republic of Sudan on Reciprocal Promotion and Protection of Investments (signed 7 March 2000, entered into force 30 November 2000) art 8(5); Agreement between the Republic of Lebanon and the Republic of Hungary for the Promotion and Reciprocal Protection of Investments (signed 22 June 2001, entered into force 23 July 2002) art 8(3); Agreement between the Government of the Republic of India and the Government of United Arab Emirates on the promotion and protection of investments (signed 12 December 2013, entered into force 30 August 2014) art 10(7)(e); Bilateral Agreement for the Promotion and Protection of Investments between the Government of the United Kingdom of Great Britain and Northern Ireland and Republic of Colombia (signed 17 March 2010, entered into force 10 October 2014) art IX(10). 32 Agreement between the United States of America, the United Mexican States and Canada (signed 30 November 2018, entered into force 1 July 2020) (USMCA) arts 14.D.13 (8)–(10). Erstwhile NAFTA also contained identical provisions: see art 1136(5), NAFTA. 33 London Court of International Arbitration, Arbitration Rules (2020) art 26.8; International Chamber of Commerce Rules of Arbitration (2021) art 35(6); Singapore International Arbitration Centre Rules (2016) r 32.11. 34 See Rémy Gerbay, The Functions of Arbitral Institutions (Wolters Kluwer 2016). 35 Investment Agreement between the Government of Australia and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (signed 26 March 2019, entered into force 17 January 2020) art 25; Agreement between the Swiss Confederation and the Republic of Uzbekistan on the Promotion and Reciprocal Protection of Investments (signed 16 April 1993, entered into force 5 November 1993); Agreement between the Government of the Kingdom of Norway and the Government of the Republic of Poland on the Promotion and Reciprocal Protection of Investments (signed 5 June 1990, entered into force 24 October 1990) art 9; Arbitration Rules of the United Nations Commission on International Trade Law (2013) art 34. 36 Schreuer and others (n 17) 1097. 37 ibid 1098; see also United Mexican States v Metalclad, Canada, Supreme Court of British Columbia, 2 May 2001, 2001 BCSC 664, 1529 (2002) 5 ICSID Reports 236 (2004) 6 ICSID Reports 52. See also William S Dodge, ‘Metalclad Corporation v. Mexico. ICSID Case No. ARB(AF)/97/1.40 ILM 36 (2001), and Mexico v. Metalclad Corporation. 2001 B.C.S.C. 664’ (2001) 95 AJIL 910; Henri C Alvarez, ‘Setting Aside Additional Facility Awards: The Metalclad Case’, in Emmanuel Gaillard and Yas Banifatemi (eds) (2004) 1 IAI International Arbitration Series No 1, Annulment of ICSID Awards 267. 38 Saipem SpA v People’s Republic of Bangladesh, ICSID Case No ARB/05/07, Award (30 June 2009); ATA Construction, Industrial and Trading Company v Hashemite Kingdom of Jordan, ICSID Case No ARB/08/02, Award (18 May 2010); Frontier Petroleum Services Limited v The Czech Republic, UNCITRAL, Award (12 November 2010). 39 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (opened for signature 10 June 1958, entered into force 7 June 1959) 330 UNTS 4739 (New York Convention). It may not always be the case that an investment arbitration award would be enforced under art V of the New York Convention due to the ‘commercial’ exception under its art 1(3). See Union of India v Vodafone Group PLC United Kingdom & Anr, CS (S) 383/2017, High Court of Delhi, para 90; the High Court of Delhi held that the Convention applies to ‘disputes arising out of legal relationships whether stricto sensu contractual or not provided they are considered as commercial under the domestic law of the State making such a declaration’ (Gas Authority of India Ltd v Spie Capag SA and others, 1993 SCC OnLine Del 561, 571; see also European Grain and Shipping Ltd v Bombay Extractions Ltd., High Court of Bombay, India, 5 November 1981, AIR 1983 Bom 36, 41); a US court has held that the notion of ‘commercial relationship’ is broad, noting that its purpose is only ‘to exclude matrimonial and other domestic relations awards, political awards, and the like’ (Island Territory of Curacao v Solitron Devices, Inc., Court of Appeals, Second Circuit, United States of America, 14 February 1973, 356 F Supp 1 para 9); see generally, Aniruddha Rajput, ‘Balancing the Power of Anti-Arbitration Injunction with the Competence of Investment Tribunals: Union of India v. Vodafone Group Plc United Kingdom’ (2020) 7 GNLU L Rev 109. The USMCA Agreement gets over this obstacle by declaring that all investment awards are to be treated as ‘commercial’ for enforcement under the New York Convention, USMCA (n 32) art 14.D.13. A Tunisian court held that a contract for an architectural plan for a resort was not commercial under Tunisian law (Taieb Haddad v Hans Barett, Société d’Investissement Kal, Supreme Court, Tunisia, 10 November 1993 (1998) XXIII YB Com Arb 770). In yet another case, a US court held that a dispute arising out of proceedings to disqualify counsel was non-commercial (R3 Aerospace v Marshall of Cambridge Aerospace Ltd., District Court, Southern District of New York, United States of America, 29 May 1996, 927 F. Supp. 121). Other States use the procedure under the New York Convention to enforce investment arbitration awards (BG Grp plc v Republic of Argentina, 572 US 25 (2014); PAO Tatneft v Ukraine, [2018] EWHC 1797 (Comm)). 40 Bernardo Sepulveda-Amor and Merryl Lawry-White, ‘State Responsibility and the Enforcement of Arbitral Awards’ (2017) 33(1) Arb Intl 1, 15–17, 26–27; Oscar Schachter, ‘The Enforcement of International Judicial and Arbitral Decisions’ (1960) 54 AJIL 1, 2–6. 41 ARSIWA (n 10) art 12, commentary para 2; D Anzilotti, Corso di dirittointernazionale, vol 1 (4th edn, 1955) 385; W Wengler, Völkerrecht, vol 1 (Springer 1964) 499; GI Tunkin, Teoria mezhdunarodnogoprava (Mezhdunarodnyeotnoshenia 1970) 470, trans WE Butler, Theory of International Law (George Allen & Unwin 1974) 415; E Jiménez de Aréchaga, ‘International Responsibility’ in M Sørensen (ed), Manual of Public International Law (Macmillan 1968) 533; I Brownlie, Principles of Public International Law (5th edn, OUP 1998) 435; B Conforti, Diritto internazionale (4th edn, Editoriale Scientifica 1995) 332; P Daillier and A Pellet, Droit international public (Nguyen Quoc Dinh) (6th edn, Librairie générale de droit et de jurisprudence 1999) 742; P-M Dupuy, Droit international public (4th edn, Dalloz 1998) 414; R Wolfrum, ‘Internationally Wrongful Acts’ in R Bernhardt (ed), Encyclopedia of Public International Law, vol II (North-Holland 1995) 1398. 42 Sepúlveda-Amor and Lawry-White (n 40) 33. 43 Lucy Reed and Lucy Martinez, ‘Treaty Obligations to Honor Arbitral Awards’ in Doak Bishop (ed), Enforcement of Arbitral Awards Against Sovereigns (JurisNet 2009) 13. 44 Regent Company v Ukraine App no 773/03 (ECtHR, 3 April 2008) 59, 60. 45 Deyan Draguiev, ‘State Responsibility for Non-Enforcement of Arbitral Awards’ (2014) 8(4) WAMR 577, 594–5. 46 Case of Stran Greek Refineries and Stratis Andreadis v Greece App no 13427/79 (ECtHR, 9 December 1994) 62, 64; Regent Company v Ukraine (n 44) 61, 62. 47 Bijelić v Montenegro and Serbia App no 11890/05 (ECtHR, 28 April 2009) 88. 48 Kin-Stib and Majkic v Serbia App no 12312/05 (ECtHR, 4 October 2010) 83. 49 Draguiev (n 45) 601–03. 50 ibid 617–18. 51 ibid 584–87. 52 Jan Paulsson, Denial of Justice in International Law (CUP 2005). 53 Alexandroff and Laird (n 3) 1186. 54 Constanze Schulte, Compliance with Decisions of the International Court of Justice (OUP 2004) 24–25. 55 Karin Oellers-Frahm, ‘Article 94’ in Bruno Simma and others (eds), The International Court of Justice (OUP 2012) 1965. 56 Article 4 covers a wide range of organs, especially the judiciary, even where it is independent as per domestic law: ‘whether the organ exercises legislative, executive, judicial or any other functions’. 57 See ARSIWA (n 10) art 4, commentary para 4. 58 ibid 40, 42; James Crawford, The International Law Commission’s Articles on State Responsibility: Introduction, Text and Commentaries (CUP 2003) 98; ‘State Responsibility and Attribution’ in Rudolf Dolzer and Christoph Schreuer (eds), Principles of International Investment Law (2nd edn, OUP 2012); UAB v Latvia, ICSID Case No ARB/12/33, Award (22 December 2017) paras 825–27; Saipem SpA v People’s Republic of Bangladesh, ICSID Case No ARB/05/7, Award (30 June 2009, paras 188–91; EDF (Services) Limited v Romania, ICSID Case No ARB/05/13, Award (8 October 2009) para 197. 59 United States Diplomatic and Consular Staff in Tehran (United States of America v Iran) (Judgment) [1980] ICJ Rep 3, 63, 67. 60 ARSIWA (n 10) art 15. 61 ibid. 62 ibid 63. 63 ibid 54. 64 ibid 96, 97. 65 ibid 54. 66 ibid. 67 Oellers-Frahm (n 55) 1960. 68 ARSIWA (n 10) art 1, commentary para 1. 69 Interpretation of Peace Treaties with Bulgaria, Hungary and Romania, Second Phase (Advisory Opinion) [1950] ICJ Rep 228. 70 The effect of immunity as an obstruction to enforcement and its effect on State responsibility for non-compliance with an award is discussed in greater detail below. 71 In SS Wimbledon, the PCIJ declined to grant punitive interest for possible non-compliance with its decision: ‘The Court does not award interim interest at a higher rate in the event of the judgment not being complied with at the expiration of the time fixed for compliance. The Court neither can nor should contemplate such a contingency.’ SS Wimbledon (United Kingdom, France, Italy and Japan v Germany) [1923] PCIJ Series A No 1, 32; Interpretation of Peace Treaties (n 69) 229–30. 72 Case of the Readaptation of the Mavromattis Jerusalem Concessions (Greece v United Kingdom) (Jurisdiction) (Judgment) [1927] PCIJ Series A, No 11 13–14. 73 Russia v Turkey (n 14) 11 . 74 ibid 9. 75 ibid 10. 76 ibid. 77 ibid 12. 78 ARSIWA (n 10) art 3. 79 Factory at Chorzów (Germany v Poland) (Jurisdiction) [1927] PCIJ, Series A, No 9, 47. 80 Case Concerning the Barcelona Traction, Light and Power Company, Limited (Belgium v Spain) (Judgment) [1970] ICJ Rep 3, 24. 81 ARSIWA (n 10) art 31, commentary para 5. 82 ibid 99. 83 Benoit Mayer, ‘Less-than-Full Reparations in International Law’ (2016) 56(3–4) Indian J Intl L 463. 84 Summary record of the 2314th meeting, ILC YB 1993, vol 1, 78 (PS Rao). 85 ILC YB 2000, vol II(2), 27. 86 ibid. 87 ibid 29. 88 James Crawford, State Responsibility—The General Part (CUP 2013) 482; ARSIWA (n 10) art 31, commentary para 2; International Law Commission, Summary Records of the 2288th Meeting (20 July 1992), UN Doc A/CN4/SR.2288 (1992) para 16 (p 217); International Law Commission, Report of the International Law Commission on the Work of Its Forty-Fifth Session (3 May–23 July 1993), UN Doc A/48/10 (1993), art 6 bis commentary, para 2 (p 59); International Law Commission, Third Report on State Responsibility by Mr James Crawford, UN Doc A/CN4/507 and Add 1–4 (2000), para 20 (p 16). 89 For examples of practice, see ARSIWA (n 10) art 36, commentary paras 11–20. 90 Mayer (n 83). 91 Report of the Working Group on International Liability for Injurious Consequences Arising out of Acts Not Prohibited by International Law ILC YB 1996, vol 2(2) (Annex I), para 4 (p 130). 92 Final Award: Eritrea’s Damages Claims (2009) 26 RIAA 505, 523–24; Final Award: Ethiopia’s Damages Claims (2009) 26 RIAA 631, 650–51. 93 Crawford (n 88) 484 (The Commission ‘relied, for example, on the Treaty of Peace with Japan which, as explained in the ILC debates, was a situation in which full reparation was waived and which does not provide guidance regarding the general principles to be used in determining the quantum of compensation owed’). 94 ibid 484–85 (‘While Iraq’s ability to pay was considered in establishing the Compensation Commission, it only affected the method by which compensation payments were to be met; it did not affect Iraq’s obligation to provide full reparation’). 95 James Crawford and Jeremy Watkins, ‘International Responsibility’ in Samantha Besson and John Tasioulas (eds), The Philosophy of International Law (OUP 2010) 283, 294. 96 For a detailed discussion of this topic see in this issue Martins Paparinskis, ‘Crippling Compensation in the International Law Commission and Investor-State Arbitration’. See also Martins Paparinskis, ‘A Case Against Crippling Compensation in International Law of State Responsibility’ (2020) 83(6) Modern Law Review 1246, 1248–50. 97 Paparinskis (n 96) 1256–63. 98 Shabtain Rosenne, The Law and Practice of International Court 1920–2005, vol II (Martinus Nijhoff 2006) 227–30. 99 ARSIWA (n 10) art 12, commentary para 1. The relevant section of the commentary states that: In order to conclude that there is a breach of an international obligation in any specific case, it will be necessary to take account of the other provisions of Chapter III which specify further conditions relating to the existence of a breach of an international obligation, as well as the provisions of Chapter V dealing with circumstances precluding wrongfulness of an act of a State. 100 ARSIWA (n 10) ch V, commentary para 1. 101 Gabčíkovo–Nagymaros Project (Hungary v Slovakia) (Judgment) [1997] ICJ Rep 7, 39 (para 48). 102 ARSIWA (n 10) ch V, commentary para 2. 103 Gabčíkovo–Nagymaros Project (n 101) 63 (para 101) 104 ARSIWA (n 10) ch V, commentary para 2. 105 ibid ch V, commentary para 8. 106 ibid art 22. 107 Corn Products International Inc v United Mexican States, ICSID Case No ARB(AF)/04/1, Decision on Responsibility (15 January 2008) paras 161–62, 167–69; Cargill, Incorporated v United Mexican States, ICSID Case No ARB(AF)/05/2, Award (18 September 2009) paras 422, 424. These Tribunals held that, just as countermeasures are not available against ‘third’ States, they should not be available against foreign investors, even though the countermeasure is taken against the home State. Countermeasures are available only between the injured State and the State that committed the internationally wrongful act. ARSIWA (n 10) art 22, commentary para 5, citing Execution of German–Portuguese Arbitral Award of June 30th, 1930 (Germany v Portugal) (Award) (1933) 3 UNRIAA 1371, 1056–57; Gabčíkovo–Nagymaros Project (n 101) 55 (para 83). Based on these cases, commentators argue that there is no countermeasure available for a State against an investor. 108 Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc v United Mexican States, ICSID Case No ARB(AF)/04/5, Award (21 November 2007) paras 120–21. According to the Tribunal, countermeasures are an outcome of State–State relationships and part of customary international law. They continue to apply in relations between States, and a host State can justify its breach of an international obligation based on the right to undertake countermeasures. Investment arbitration provides a procedural avenue for dispute resolution between investors and the host State but does not remove the substantive law obligations that are essentially inter-State in nature, and hence the defence of countermeasures is available. ibid paras 169–74. 109 ARSIWA (n 10) art 22, commentary para 4. 110 Roberto Echandi, ‘Non-Compliance with Awards: The Remedies of Customary International Law’ (2012) 106 Am Socy Intl L Proc 118, 120. 111 ARSIWA (n 10). 112 See Jürgen Kurtz, ‘The Paradoxical Treatment of the ILC Articles on State Responsibility in Investor-State Arbitration’ (2010) 25(1) ICSID Rev—FILJ 200–17. 113 ARSIWA (n 10) art 23, commentary para 1. 114 ibid art 23(1). 115 ibid art 23, commentary para 1. 116 ibid commentary para 3. 117 ibid art 23. 118 Gaillard and Penusliski (n 6) 589. 119 Russia v Turkey (n 14) 11 (para 4). 120 ibid 12 (para 6). 121 ARSIWA (n 10) art 25. 122 ibid art 25, commentary para 14. 123 ibid art 33, commentary para 4 124 See Schachter (n 40) 5. 125 Schreuer and others (n 17) 1103; Maritime International Nominees Establishment v Republic of Guinea, ICSID Case No ARB/84/4, Decision on Annulment (22 December 1989) para 4.02. Some States argue that grounds for challenge available in domestic law against a final decision of domestic courts are applicable. Aniruddha Rajput, ‘National Courts as Actors in Investment Arbitration’ in Catharine Titi (ed), European Yearbook of International Economic Law (Springer 2021) 37, 47. 126 See Section VI.A. 127 Schreuer and others (n 17) 1118. 128 New York Convention art V. 129 Christian Borris and Rudolph Henneck, ‘Article V General Remarks’ in Reinmar Wolf (ed), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards: Commentary (Hart 2012) 264–65. 130 Nadia Darwazeh, ‘Article V (1)(e)’ in Herbert Kronke and others (eds), Recognition and Enforcement of Foreign Arbitral Awards (Wolters Kluwer 2010) 312–19. 131 Such complications were experienced in enforcement of sovereign debts against States. See Mark Cymrot, ‘Enforcing Sovereign Arbitral Awards: State Defences and Creditor Strategies in an Imperfect World’ in Tom Ruys, Nicolas Angelet and Luca Ferro (eds) The Cambridge Handbook of Immunities and International Law (CUP 2019) 374–77. 132 ARSIWA (n 10) art 16. 133 ibid commentary para 1. 134 TermoRio SA v Electranta, 487 F 3d 928 (DC Cir 2007) para 930; Getma International v Republic of Guinea, 862 F.3d 45 (DC Cir 2017) 5; Maximov v OJSC Novolipetsky Metallurgichesky Kombinat (Supreme Court of the Netherlands, 2017); Maximov v OJSC Novolipetsky Metallurgichesky Kombinat [2017] EWHC 1911 (Comm). 135 Yukos Capital SARL v OJSC Rosneft Oil Company [2014] EWHC 2188 (Comm); Yukos Capital SARL v Rosneft (Amsterdam Court of Appeal, 2011); Hilmarton v Omnium (French Cour de Cassation, 1994); Corporación Mexicana de Matenimiento Integral S De RL De CV v Pemex-Exploración y Producción, 832 F.3d 92 (2d Cir 2016); Chromalloy Aeroservices v Arab Republic of Egypt, 939 F Supp 907 (DDC 1996). 136 Christoph Schreuer, ‘The Implementation of International Judicial Decisions by Domestic Courts’ (1975) 24 ICLQ 153, 153–54. 137 ibid 180–82. 138 American Law Institute, Restatement (Fourth) of Foreign Relations Law of the United States, Sovereign Immunity, Council Draft No 3, para 464. 139 See generally T Araya, ‘A Decade of Sovereign Debt Litigation: Lessons from the NML v Argentina Case and the Road Ahead’ (2016) 17 Bus L Intl 83. 140 ICSID Convention (n 18) art 27(3). 141 Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (18 March 1965) para 33. 142 Schreuer and others (n 17) 426. 143 Andreas Zimmerman and others (eds), The Statute of the International Court of Justice (OUP 2012) paras 68–81. 144 See generally Stephan Schill, Multilateralisation of International Investment Law (CUP 2010) 197–249. 145 Barcelona Traction, Light and Power Co. Ltd (Belgium v Spain) [1970] ICJ Rep 4, para 70; Notteböhm Case (Liechtenstein v Guatemala) (Judgment) [1955] ICJ Rep 4, 23 and 24. 146 J Dugard, ‘First Report on Diplomatic Protection’ (2000) UN Doc A/CN.4/506, paras 80–87. 147 Barcelona Traction, Light and Power Co Ltd (Belgium v Spain) [1970] ICJ Rep 4, 44, paras 78–79. 148 Zachary Douglas, The International Law of Investment Claims (2009) 17 (2009); Barcelona Traction, Light and Power (n 148) paras 78–79 149 Notteböhm Case (Liechtenstein v Guatemala) (Judgment) [1955] ICJ Rep 4, 23; Schreuer and others (n 17) 1109. 150 For a detailed account of these issues, see Schulte (n 54) 18–19. 151 Attila Tanzi, ‘Problems of Enforcement of Decisions of the International Court of Justice and the Law of the United Nations’ (1995) 6 EJIL 539, 561–62. 152 A US court dismissed the claims seeking enforcement of the ICJ decision in the Military and Paramilitary Activities case on the ground that private individuals do not have cause of action to enforce the decisions of the ICJ before US courts. See Committee of United States Citizens Living in Nicaragua v Ronald Wilson Reagan 859 F 2D 929 (DC Cir 1988) 85 ILR 248, p 936. 153 The Supreme Court of Ghana declined to enforce the decision of International Tribunal of the Law of the Sea on the grounds that the decision was not binding on its because UNCLOS was not incorporated into domestic law through appropriate legislation. Republic v High Court (Commercial Division) Accra, Ex parte Attorney General, NML Capital and the Republic of Argentina, (Civil Motion no J 5/10/2013) (Supreme Court of Ghana, 2013), referred to in Richard Frimpong Oppong and Angela M Barreto, ‘Enforcement’ in William A Schabas and Shannonbrooke Murphy (eds), Research Handbook on International Courts and Tribunals (Elgar 2017) 289. 154 Heather L Jones, ‘Why Comply? An Analysis of Trends in Compliance with Judgments of the International Court of Justice since Nicaragua’ (2012) 12 Chi-Kent JICL 57, 60–85. 155 Prime Minister Baldwin, Statement in the House of Commons (13 March 1933) <https://api.parliament.uk/historic-hansard/commons/1933/mar/13/lena-goldfields-limited#S5CV0275P0_19330313_HOC_81>; Arthur Nussbaum, ‘The Arbitration between Lena Goldfields Ltd. and the Soviet Government’ (1950) 36 Cornell L Rev 31. 156 Rosenne (n 98) 225. 157 See discussion in Section IV.A.; Massimo Lando, ‘Compliance with Provisional Measures Indicated by the International Court of Justice’ (2017) 8 JIDS 22, 27–28. 158 Echandi (n 110) 119–20. 159 For a discussion of the narrative, see Cymrot (n 131) 374–75. 160 Anna Joubin-Bret, ‘Is There a Need for Sanctions in International Investment Arbitration?’ (2012) 106 Am Socy Intl L Proc 130, 131–32. 161 Oppong and Barreto (n 153) 284. 162 Echandi (n 110) 118–20. 163 Schachter (n 40) 6–7. 164 World Bank, Operations Manual O.P 7.40—Disputes over Defaults on External Debt, Expropriation, and Breach of Contract, para 5 (2012) <https://ppfdocuments.azureedge.net/1660.pdf>. 165 Antonio Parra, ‘The Enforcement of ICSID Arbitration Awards’ in Bishop (n 43) 137. 166 Schulte (n 54) 76–77. 167 Reisman (n 4) 10. 168 Jurisdictional Immunities of the State (Germany v Italy: Greece intervening) (Judgment) [2012] ICJ Rep 99, 123 (para 57). 169 ibid. 170 United Nations Convention on Jurisdictional Immunities of States and Their Property (opened for signature 17 January 2007, not yet entered into force), preamble. 171 Jurisdictional Immunities of the State (n 168) 123 (para 54). 172 ibid 142 (para 97). 173 ibid 140–41 (paras 93–95). 174 NML Capital Ltd v Argentina, UK Supreme Court, 6 July 2011 (2011) UKSC 31, para 8. 175 UN Convention on Jurisdictional Immunities of States and Their Property (n 170) art 5. 176 Hazel Fox and Philippa Web, The Law of State Immunity (OUP 2013) 1733–90. 177 The European Convention of State Immunity, ETS No 074 (opened for signature 16 May 1972, entered into force 11 June 1976) art 23. 178 Jurisdictional Immunities of the State (n 168) 123 (para 56). 179 PAO Tatneft v Ukraine [2018] EWHC 1797 (where the Court held that Ukraine’s consent to arbitrate pursuant to the Russia–Ukraine BIT amounted to a waiver of sovereign immunity) paras 34–37; Svenska Petroleum Exploration AB v Lithuania [2006] EWCA Civ 1529; Sokaogon Gaming Enter. Corp, et al v Tushie-Montgomery Assoc, Inc 86 F3d 656 (7th Cir 1996) para 661; Creighton Limited v Minister of Finance, Decision of 6 July 2000, Cass ILDC 772 (2000) (Fr); M Schneider and J Knoll, ‘Enforcement of Foreign Arbitral Awards against Sovereigns—Switzerland’ in Bishop (n 43) 331; Cymrot (n 131) 555–58. 180 See TMR Energy Ltd v State Property Fund of Ukraine, 411 F3d 296 (DC Cir 2005), for implied waiver in the context of the New York Convention. See also Collavino Inc v Tihama Development Authority, 2007 ABQB 212, where the Queen’s Bench of Alberta (Canada) ruled that the respondent State had waived immunity from execution of awards by agreeing to international commercial arbitration; Canadian Planning and Design Consultants Inc v Libya, 2015 ONCA 661, where the Ontario Superior Court of Justice issued an Order stating that Libya was deemed to have waived its immunity from execution by agreeing to ICC arbitration; TMR Energy Ltd v State Property Fund of Ukraine, 2003 FC 1517 (Canada) where the obiter states that an agreement to arbitrate constitutes a waiver of immunity. 181 Schneider and Knoll (n 179). 182 Democratic Republic of the Congo and others v FG Hemisphere Associates LLC [2011] HKCFCA 41, paras 118–23; Jackson v People’s Republic of China (1986) 794 F.2d 1490. See also Yilin Ding, ‘Absolute Restrictive or Something More: Did Beijing Choose the Right Type of Sovereign Immunity for Hong Kong?’ (2012) 26 Emory Intl L Rev 997. China is a Member State of the ICSID Convention and submits to the jurisdiction only to disputes over compensation resulting from expropriation and nationalization. It is not clear how the law of absolute sovereign immunity in China would function with its obligations under the ICSID Convention and whether its reservation to the ICSID jurisdiction would have any impact on its role as merely a place for enforcement of ICSID awards. 183 Schreuer and others (n 17) 1152. 184 Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (n 141) para 43. 185 Schreuer and others (n 17) 1153. 186 ibid 1154; Aron Broches, ‘The Convention on the Settlement of Investment Disputes between States and Nationals of Other States’ (1972-II) 136 Recueil des Cours 331, 403. 187 ICSID, History of the ICSID Convention: Documents Concerning the Origin and the Formulation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID 1968) vol II-2 429, 671. 188 Some suggest the need to review the doctrine of sovereign immunity in its entirely. See Alexandroff and Laird (n 3). Hunter suggests that investors should enter into another contract that waives immunity of States from execution. J Martin Hunter and Javier Gracía Olmedo, ‘Enforcement/ Execution of ICSID Awards Against Reluctant States’ (2011) 12 JWIT 307, 318–19. The suggestion is interesting but unrealistic since investment arbitration does not happen after an agreement to arbitrate—it is mostly accidental and unexpected. It would be difficult to imagine that States would be ready to agree to waive immunity once disputes have arisen. 189 History of the ICSID Convention (n 187) vol II 1154. 190 Aron Broches, ‘The Convention on the Settlement of Investment Disputes between States and Nationals of Other States’ (1972-II) 136 Recueil des Cours 331, 333–34, 403. 191 Article 10 read with 2(1)(c), which defines commercial transactions; Foreign Services Immunities Act 28 USC § 1605(A)(2) (1977); State Immunity Act 1978 s 3 (UK); State Immunity Act, RSC 1985 s 5 (Can); Xiadong Yang, State Immunity in International Law (CUP 2012) 75–131; Blue Ridge Investments, LLC v Republic of Argentina, 735 F.3d 72 (2d Cir 2013); Philippine Embassy Bank Account Case (13 December 1977) Constitutional Court, 65 ILR 146, 155 (Ger); Société Sonatrach v Migeon (1 October 1985) Cass civ 1, 77 ILR 525, 527 (Fr); United Arab Republic v Mrs X (10 February 1960) Federal Tribunal, 65 ILR 385, 391–92 (Switzerland). 192 Liberian Eastern Timber Corporation v Liberia, 650 F Supp 73 (SDNY 1986); SARL Benvenuti & Bonfant v People’s Republic of the Congo, ICSID Case No ARB/77/2, Award (8 August 1980) (1993) 1 ICSID Rep 330; AIG Capital Partners Inc and another v Republic of Kazakhstan [2005] EWHC 2239 (Comm); Sedelmayer v Russian Federation, Decision on Jurisdiction and Final Award (7 July 1998); Fox and Web (n 176) 1746–59, 1765–77. 193 Schreuer and others (n 17) 1158. 194 Letelier v Chile, 20 November 1984, United States, Court of Appeals, Second Circuit, 748 F. 2d 790 (2d Cir 1984), 799. 195 American Law Institute (n 138) para 464, p 48. 196 History of the ICSID Convention (n 187) vol II, 763. 197 Maritime International Nominees Establishment v Republic of Guinea, ICSID Case No ARB/84/4, Interim Order No 1 (12 August 1988) para 25. 198 History of the ICSID Convention (n 189) vol II, 1153–54; Patrick Mitchell v Democratic Republic of Congo, ICSID Case No 99/7, Decision on the Stay of Enforcement of the Award (30 November 2004) para 41. 199 See generally Arpad Balasko, Cases de Nullité de la Sentence Arbitrale en Droit International Public (Pedone 1938); W Michael Reisman, Nullity and Revision: The Review and Enforcement of International Judgments and Awards (Yale UP 1971). 200 [1877] Annuaire de l’Institut de Droit International 133. 201 Effect of Awards of Compensation Made by the United Nations Administrative Tribunal (Advisory Opinion) [1954] ICJ Rep 47, 55–56. 202 Arbitral Award Made by the King of Spain on 23 December 1906 (Honduras v Nicaragua) (Judgment) [1960] ICJ Rep 192, 213–14. 203 ibid 214. 204 ibid. 205 ibid 214–17. 206 ILC, Model Rules on Arbitral Procedure, in [1958-II] ILC YB, art 35. 207 Arbitral Award Made by the King of Spain on 23 December 1906 (Honduras v Nicaragua) (Judgment) [1960] ICJ Rep 192, 214–15. 208 ibid 215. 209 ibid 215–16. 210 ibid 216. 211 ibid 216–17. 212 [1874] Annuaire de l’Institut de Droit International 45, 84. 213 Chamizal Case (Mexico v United States) (1911) 11 RIAA 316; Lori F Damrosh, ‘Comparative Look at Domestic Enforcement of International Tribunal Judgments’ (2009) 103 Am Socy Intl L Proc 39, 39. 214 Schachter (n 40) 4–5. 215 George K Foster, ‘Collecting from Sovereigns: The Current Legal Framework for Enforcing Arbitral Awards and Court Judgments Against States and Their Instrumentalities, and Some Proposals for its Reform’ (2008) 25 Ariz J Intl & Comp L 665, 668. 216 Julian Scheu and Petyo Nikolov, ‘The Setting Aside and Enforcement of Intra-EU Investment Arbitration Awards after Achmea’ (2020) 36(2) Arb Intl 14. 217 Reisman (n 4) n 78 at 22. 218 Such complications were experienced in enforcement of sovereign debts against States (Cymrot (n 131) 374–77). 219 Schachter (n 40) 6. 220 Reisman (n 4) 23. © The Author(s) 2022. 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ICSID Review - Foreign Investment Law Journal – Oxford University Press
Published: Jun 20, 2022