The Problem of Execution Immunities and the ICSID Convention

Mees Brenninkmeijer,Fabien Gélinas

doi:10.1163/22119000-12340214

Abstract

Abstract The prevailing view in international practice is that, by consenting to arbitration, a State does not waive its immunity from execution. Yet, in the context of arbitration administered by the International Centre for Settlement of Investment Disputes (ICSID) – as in the context of arbitration between States and private parties more generally – the problem of execution immunities is a very significant obstacle to the effective implementation of arbitral awards. When immunity from execution allows States to escape obligations they have freely undertaken, and when it withholds from claimants the fruits of a favourable award, the benefits of arbitration become illusory. This article contends that the prevailing view is no longer compelling. We argue that domestic courts can and should uphold the rule-of-law objectives and benefits of the ICSID Convention by adjusting their approach to immunity claims in the arbitral context: consent to arbitration should be interpreted as an implied waiver of immunity from execution.

Highlights

It should come as no surprise to any student of international arbitration that its effectiveness depends on the enforcement machinery provided by State legal systems
We argue that domestic courts can and should uphold the rule-of-law objectives and benefits of the International Centre for Settlement of Investment Disputes (ICSID) Convention by adjusting their approach to immunity claims in the arbitral context: consent to arbitration should be interpreted as an implied waiver of immunity from execution
The present article shows how the separate enforcement mechanism of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (‘the ICSID Convention’ or ‘the Convention’) can be read to align with the implied waiver we propose here

Summary

Introduction

It should come as no surprise to any student of international arbitration that its effectiveness depends on the enforcement machinery provided by State legal systems. In the ICSID Convention cannot be interpreted as an implied waiver of immunity from execution because the Convention preserves said immunity.[16] But as will be seen, the provisions that do so are considered to be ‘the Achilles heel’ of the International Centre for Settlement of Investment Disputes (ICSID) system.[17] Against this background, it may be opportune to examine whether an implied waiver of execution immunity can be made compatible with ICSID arbitration, and, if so, whether it may convince domestic courts to change their practice and to lift the execution immunities of foreign States in the arbitral context. This article will set out the distinction between recognition and enforcement, on the one hand, and execution, on the other, and discuss why this causes domestic courts to reject the possibility of an implied waiver of immunity from execution (Section 5)

The Recognition and Enforcement of ICSID Awards

The Problem of Execution

Is There a Way Forward?

Conclusion

Biographical Note