Sovereign Immunity and Enforcement of Arbitral Awards; Breaking the Barrier

Abstract

In international commercial arbitration, parties that contract with states and state agencies seek to arbitrate disputes, but an increasing problem is the attempt by these state parties to raise the defence of sovereign immunity to challenge the jurisdiction of the arbitral tribunal or to avoid the enforcement of an arbitral award. It is discouraging in handling disputes with these sovereign entities which serve as major concern particularly with the growing prospect of sovereign defaults leading to cross-border disputes. The article reviewed the judicial decision in Trendtex v. Bank of Nigeria which is critical to the sovereign immunity that spreads across the globe. Award being final and binding as agreed in the parties’ agreement should always be honoured. The article discovered that many states always resulted to the sovereign immunity doctrine in order to prevent the enforcement of arbitral awards. This article found that if this continues it may wreck and discourage the cooperation between the investors and the state agencies because investors prefer enforceable arbitration to litigation. The article concluded that by the practice of arbitration, it is honourable for states to allow enforcement of arbitral awards against their states or state agencies for the upliftment of global arbitration. The article recommended that states that have not ratified the New York Convention should do so and also the NYC should be amended to provide that any state party to the NYC has automatically waived the right to claim sovereign immunity when the issue of enforcement of award comes up.