The Plea of Sovereign Immunity in Defence of a New York Convention Award Before the US Superior Courts: Process & Industrial Development v. The Federal Republic of Nigeria (P&ID v. FRN)

Abstract

The sovereign immunity defence is a plea that had long served sovereign Convention awarddebtors well across jurisdictions worldwide. Although there was a noticeable gradual whittling down of its influence in several jurisdictions in the 1950s and 1960s, the unwary arbitration stakeholder might be mistaken to assume that the principle has gone extinct in popular arbitration jurisdictions. The United States appears to be one jurisdiction where the sovereign immunity plea has recently enjoyed a resurgence; in virtue of the subtle but practical distinction that American superior courts [in their interpretation of the Foreign Sovereign Immunities Act (FSIA), 1976], have drawn between the jurisdiction to entertain suits against a sovereign, founded on commercial activity involving the sovereign, and the jurisdiction to order execution upon the assets of the sovereign. The upshot of how US superior courts have interpreted the Act is that, while subjectmatter jurisdiction invests the US courts with power to entertain suits against a sovereign (as regards their commercial relations), they lack the corresponding power to order execution against the sovereign’s assets. Put differently, the sovereign has executional immunity over their assets but lacks subject matter immunity to be sued before a District Court, as long as it relates to a commercial activity involving the sovereign. The immunity of a sovereign’s asset from execution inevitably leaves the award creditor with a vacuous victory.