UK Supreme Court confirms that States cannot invoke sovereign immunity to prevent registration of ICSID awards in the English courts

Background

The Court heard conjoined appeals relating to two ICSID awards:

1. Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. v. Kingdom of Spain, ICSID Case No. ARB/13/31 was a claim under the Energy Charter Treaty concerning Spain’s reforms to incentives for renewable energy investments. The tribunal awarded damages of EUR 112 million plus interest and costs.
2. Border Timbers Limited and Hangani Development Co. (Private) Limited v. Republic of Zimbabwe, ICSID Case No. ARB/10/25 was a claim under the Switzerland-Zimbabwe Bilateral Investment Treaty arising from land expropriations. The tribunal awarded damages of around USD 124 million plus interest, moral damages and costs.

In each case, the award creditor obtained an order registering their award in the High Court under the Arbitration (International Investment Disputes) Act 1966 (“1966 Act”). Spain and Zimbabwe applied to set aside registration under section 1(1) of the SIA. 

Key points of law

1. What does Article 54(1) of the Convention say?: The UK, Spain and Zimbabwe are Contracting States to the Convention. Article 54(1) of the Convention requires each Contracting State to recognise an ICSID award as binding and to enforce the pecuniary obligations it imposes as if the award were a final judgment of a court in that State.
2. What is registration under the 1966 Act?: An award creditor who wants to enforce an ICSID award in England and Wales must first obtain registration of the award in the High Court under section 1 of the 1966 Act. Once an award is registered under section 1, section 2(1) of the 1966 Act gives it judgment-equivalent effect for execution. In practical terms, registration converts the award into a judgment-equivalent within the English enforcement system, without the English courts revisiting the merits of the dispute.
3. Recognition vs. execution: Execution comes after registration, and concerns practical recovery, such as through asset seizures or third-party debt orders. This distinction can be seen in the Convention: Article 54 obliges recognition of awards. However, Article 54(3) leaves the rules on execution up to domestic laws, and Article 55 preserves any immunity from execution under those laws.
4. How is the SIA relevant?: Section 1(1) of the SIA contains the general rule that a foreign State is immune from the jurisdiction of UK courts unless a statutory exception applies. Section 13(2)(b) of the SIA provides that, subject to exceptions, State property shall not be subject to any process of the enforcement of a judgment or arbitral award. Two key exceptions are: (i) if the State has expressly consented in writing to enforcement (section 13(3)); and (ii) if the property is currently in use or intended for use for commercial purposes (section 13(4)). Central bank/monetary authority property is treated as immune even if it is argued to be commercial (section 14(4)). Registration is therefore only the starting point: recovery through execution depends on identifying and attaching non-State immune assets. Also relevant to the Judgment is section 2(2) of the SIA, which provides that there is an exception to immunity from jurisdiction under section 1(1) if a State has submitted to the jurisdiction of the UK courts “by a prior written agreement.” Section 9 of the SIA also states that where a State has agreed in writing to submit a dispute to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.

What was the basis for Spain’s and Zimbabwe’s appeals?

Spain and Zimbabwe sought to set aside the registrations, arguing that sovereign immunity under section 1(1) of the SIA barred the English courts from registering the awards. They argued that Article 54 of the Convention did not amount to a prior written agreement submitting to the jurisdiction of the English courts under section 2(2) of the SIA. They also relied on section 9 of the SIA, contending that the English courts had to determine for themselves whether there was a valid agreement to arbitrate.

What did the Court decide?

The Court unanimously dismissed the appeals. The Judgment holds that Article 54(1) of the Convention amounts to a clear and unequivocal submission to adjudicative jurisdiction for the purposes of registration, making sovereign immunity unavailable at that stage. This was necessarily inherent in the words of Article 54(1) of the Convention, without requiring specific words such as “waiver” or “submission.” The Judgment also emphasises the closed, self-contained ICSID enforcement procedure: once the basic requirements for registration are met, the court is not invited to re-try the case on the merits in a way that may occur under New York Convention enforcement. The Judgment settles the position under English law after differing reasoning at first instance in the respective cases.

Since the appeals had been dismissed under section 2(2) of the SIA, the Court did not need to resolve the section 9 arguments.

Why does this matter, and how can we help?

The UK is a key jurisdiction for enforcement: London in particular is a major financial centre and a common location for State-related commercial flows and assets. The Judgment reinforces that England and Wales is a credible place to register ICSID awards. It provides welcome clarity on the interaction between the Convention and the SIA at the registration stage of enforcement. 

However, award creditors must still plan ahead for execution hurdles. Asset mapping, tracing likely payment flows through the UK, and building an execution strategy along the arbitration timeline can materially improve recovery prospects at the end of a dispute. Hogan Lovells is well-placed to support clients across the full lifecycle: determining strategy at the outset, and coordinating multi-jurisdictional recognition steps, including registration of awards in the English courts.

Authored by Markus Burgstaller and Scott Macpherson.