Summary LLM International Dispute Resolution - Investment Treaty Arbitration I - Module 9 (BIT Enforcement & State Immunity)
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Course
LLM
Institution
Queen Mary, University Of London (QMUL)
• Recognition
• Enforcement
• Execution
• Substantive provisions
o Enforcing state
o Final award
o Stay of enforcement
o No review
o Pecuniary obligations
• Procedural provisions
o Award notice
o Federal courts
• Non-ICSID awards
o Reservations
o BIT/MIT
o More favourable...
‘Recognition’ means the domestic court’s formal confirmation that the award is authentic and
has legal consequences provided by law1. It allows a party to rely on the award in later
judicial proceedings between the same parties. It confirms the entirety of issues decided by
the award as ‘res judicata’ between the parties, in which it precludes re-litigation of the same
issues in the court’s legal system. The applicable procedure is sometimes referred to as
‘exequatur’. However, it may not be sufficient condition to enforce the award’s terms.
‘Each Contracting State shall recognize an award rendered pursuant to this
Convention as binding and enforce the pecuniary obligations imposed by that award’2.
Therefore, an award containing a non-pecuniary obligation (restitution, desisting from a
certain action) will be ‘res judicata’ upon its recognition in a Contracting State, even if the
State has no enforcement obligation under the Convention.
A finding in the award that a certain action was legal/illegal will be res judicata upon
the award’s recognition. It may conclusively determine such issue if it arises in separate
proceedings between the parties in the State’s legal system.
Enforcement
‘Enforcement’ refers to the domestic court’s legal process to obtain compliance with the
award. The procedure may vary significantly between legal systems. It includes the use of
measures like attachment or seizure of the debtor’s assets.
The distinction between recognition and enforcement can be seen in SOABI v
Senegal3. The Paris Court of Appeals set aside an order granting exequatur of ICSID award
because SOABI did not show that the award would not be enforced in a way to guarantee
Senegal’s state immunity. In a subsequent appeal, French Court of Cassation found that the
grant of exequatur was merely the award’s recognition, but not an ‘act of execution’
impacting Senegal’s state immunity regarding its assets. Thus Paris Court of Appeals’
decision was struck down.
Execution
‘Execution of the award shall be governed by the laws concerning the execution of judgments
in force in the State in whose territories such execution is sought’4. However, Article 55
states 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’5. Some commentators have argued that ‘enforcement’ refers to the award’s
enforceability under the ICSID Convention, whereas ‘execution’ refers to the award’s
implementation under the Contracting States’ domestic law6. Whereas others have argued
1
Christoph Schreuer and others, ‘Enforcement’ in The ICSID Convention: A Commentary (Cambridge
University Press 2009) para 42
2
Article 54(1), ICSID Convention.
3
SOABI v Senegal, ICSID Case No. ARB/82/1, Award (25 February 1988)
4
Article 54(3), ICSID Convention.
5
Article 55, ICSID Convention.
6
Aron Broches (1987), ‘Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality,
Recognition, Enforcement, Execution’, ICSID Review – F.I.L.J., Volume 2, Issue 2, 287–334; Georges
Delaume (1983), ‘Arbitration with Governments: Domestic v International Awards’, 17 The International
Lawyer 687
, that this distinction does not exist in French and Spanish texts of the ICSID Convention, in
which no distinction needs to be made7.
What are the substantive provisions of the ICSID Convention?
Enforcing state
‘Each Contracting State shall recognize an award rendered pursuant to this Convention as
binding and enforce the pecuniary obligations imposed by that award within its territories as
if it were a final judgment of a court in that State’ 8. This is contrast to Article 53 which
provides that the award only binds the parties to the proceedings. Thus the award may be
enforced not only in the Host State or Investor’s home state, but in any Contracting State.
Such state is usually determined by the location of the debtor’s assets. In AIG v Kazakhstan9,
enforcement of the award made in favour of US Claimants was sought in the Court of
England and Wales as the funds were held in a bank account in London.
‘Final’ award
‘Award’ under Article 54(1) refers to final awards. This can include Tribunal’s decisions to
decide omitted questions or error rectifications, which shall be notified to the parties in the
same manner as the award10. Also, ‘“award” shall include any decision interpreting, revising
or annulling such award pursuant to Articles 50, 51 or 52’ 11. Tribunal can record the parties’
settlement as an award. Thus, it can be recognised and enforced by Contracting States. ‘If the
parties file with the Secretary-General the full and signed text of their settlement and in
writing request the Tribunal to embody such settlement in an award, the Tribunal may record
the settlement in the form of its award’12. Lastly, Tribunal’s decisions finding that they have
no jurisdiction or the claim is manifestly without legal merit shall be considered as a ‘final’
award as it finally disposes the case13.
Whereas Article 54(1) does not apply to preliminary decisions, unlike they are
expressly or implicitly incorporated into the final award. Other decisions that do not
constitute as final awards include decisions upholding jurisdiction, decisions recommending
provisional measures under Article 47, and procedural orders.
Stay of enforcement
ICSID awards can be stayed in the course of pending interpretation14, revision15 or
annulment16 proceedings. Parties usually apply to the ICSID Secretary-General to stay a
pending award pending the appointment of an Ad Hoc Committee, who can then revisit the
stay. Article 53(1) provides that ‘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
7
Christoph Schreuer and others, ‘Enforcement’ in The ICSID Convention: A Commentary (Cambridge
University Press 2009) at para 65
8
Article 54(1), ICSID Convention
9
AIG v Kazakhstan, ICSID Case No. ARB/01/6
10
Article 49(2), ICSID Convention
11
Article 53(2), ICSID Convention
12
Rule 43(2), ICSID Arbitration Rules
13
Rule 41(6), ICSID Arbitration Rules
14
Article 50(2), ICSID Convention
15
Article 51(4), ICSID Convention
16
Article 52(5), ICSID Convention
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