In this judgment, the Court of Appeal of England and Wales:

• emphasised that States cannot invoke sovereign immunity to avoid the registration of ICSID awards in the United Kingdom.
• confirmed that ICSID Contracting States submit to the jurisdiction of the UK courts by way of Article 54 of the ICSID Convention.
• added to broad international consensus, aligning with decisions by courts in various civil and common law jurisdictions on the same issues.

On 22 October 2024, the Court of Appeal of England and Wales handed down its judgment in Infrastructure Services Luxembourg SARL & Anor v The Kingdom of Spain (“Antin v. Spain”), which was heard together with the appeal in Border Timbers Limited & Anor v Republic of Zimbabwe (“Border Timbers v. Zimbabwe”). Both appeals dealt with the same issue: whether State immunity can bar the registration of ICSID awards in the United Kingdom (the “UK”).

In a judgment authored by Lord Justice Phillips, the Court unanimously answered the question in the negative, concluding that Article 54 of the ICSID Convention is a waiver of sovereign immunity, echoing similar findings of courts in other jurisdictions.

BACKGROUND

The dispute in Antin v. Spain arose out of the reform of Spain’s renewable energy framework. Antin had invested in solar power installations that were affected by the regulatory changes. Antin resorted to ICSID arbitration under the Energy Charter Treaty (the “ECT”), obtaining a favourable award in 2018 of over EUR 100 million. Antin has initiated enforcement proceedings in several jurisdictions, including Australia and the UK. The award was registered in the UK in 2021, and Spain’s application to set aside the registration was dismissed in May 2023 by Mr Justice Fraser.

In Border Timbers v. Zimbabwe, the dispute arose out of an expropriation of the claimants’ land following Zimbabwe’s land reform programme. The investors initiated ICSID arbitration under the Switzerland-Zimbabwe BIT and obtained a favourable award of over USD 125 million in 2015. The award was registered in the UK in 2021, and Zimbabwe’s application to set aside that registration was rejected in January 2024 by Mrs Justice Dias.

Both Spain and Zimbabwe appealed against the set-aside decisions, claiming that: (i) neither the ICSID Convention nor the UK’s Arbitration (International Investment Disputes) Act 1966 (the “1966 Act”) deprived them of their immunity from the adjudicative jurisdiction of UK courts, as guaranteed by section 1(1) of the UK’s State Immunity Act 1978 (the “SIA”); (ii) Article 54 of the ICSID Convention is not a prior written agreement to submit to the jurisdiction of UK courts within the meaning of the State immunity exception under section 2 SIA; and (iii) the appropriate exception to State immunity is found under section 9 SIA, applying in cases where States have agreed in writing to submit their dispute to arbitration. In relation to the latter point, both Spain and Zimbabwe argued that they were entitled to challenge—and the Court must determine anew—the validity of the reference to arbitration and the jurisdiction of the arbitral tribunals.

In this context, Spain challenged the validity of the arbitration agreement under Article 26 of the ECT on intra-EU grounds. Specifically, Spain claimed that the agreement had been disapplied between EU Member States following the judgments of the Court of Justice of the EU in Achmea and Komstroy, which found that investor-State arbitration between EU investors and EU Member States (under BITs and the ECT, respectively) is incompatible with EU law. Zimbabwe claimed that the dispute brought by the investors did not fall within the scope of application of the arbitration agreement in the underlying Switzerland-Zimbabwe BIT.

THE COURT'S JUDGEMENT

The Court’s task was to first assess whether the SIA applied to the registration of ICSID awards. If it found so, the Court would then turn to whether one of the separate and alternative sovereign immunity exceptions under sections 2 and 9 SIA were satisfied.

SIA Applies to the Registration of ICSID Awards

The Court first examined whether section 1(1) SIA applied in principle to the registration of ICSID awards against a foreign State. It found that the act of registration is not a ministerial or administrative act (contrary to the finding of Dias J) but adjudicative, as it requires a judge to be satisfied that the requirements of the 1966 Act are met. Lord Justice Phillips then found that enforcement of an award against another State is a sovereign act engaging State immunity. He concluded that section 1(1) SIA applied to the registration of ICSID awards. This finding then gave rise to the “key question” of whether one of the sovereign immunity exceptions were engaged.

Section 2 SIA Exception Satisfied

The Court had to assess whether Spain and Zimbabwe had “submitted to the jurisdiction of the courts of the United Kingdom” by way of Article 54 of the ICSID Convention. The Court found that, on its true construction, Article 54 was an agreement by ICSID Contracting States to recognise and enforce ICSID awards in all their jurisdictions as final court judgments. It also found that it contained an express and sufficiently clear submission to the jurisdiction of the courts of the UK, as required by section 2(2) SIA. For the Court, it did not matter that such agreement was found in a convention and not in a particularised arbitration agreement concerning a specific dispute between identified parties (disagreeing with Dias J)—SIA addresses this in section 17(2), which provides that “references to an agreement include references to a treaty, convention or other international agreement.”

Unnecessary to Address Section 9 SIA Exception

Given the Court’s prior findings on section 2 SIA, it considered it “unnecessary” to address whether section 9 actually applied. Consequently, it also declined to address Spain’s challenge to the validity of the arbitration agreement under Article 26 ECT on intra-EU grounds, simply calling it “a particularly complex issue”. The Court did not understand Zimbabwe to challenge the validity of the arbitration clause in the Switzerland-Zimbabwe BIT.

Notwithstanding the above conclusion, Lord Justice Phillips made two comments on section 9 SIA: (i) he distinguished section 9 from section 2, emphasising that section 9 requires the Court to assess whether a valid arbitration agreement to submit the specific dispute to arbitration exists, “imposing a duty on the court to satisfy itself that the state in question has in fact agreed in writing” to submit the specific dispute to arbitration; and (ii) although Article 54 of the ICSID Convention provides a prior written agreement for the purposes of section 2 SIA, the Convention does not contain a specific (or valid) arbitration agreement for the purposes of section 9 SIA.  

Since one of the exceptions was satisfied, there was no immunity from jurisdiction, and the Court dismissed the appeals. In Border Timbers v. Zimbabwe, it remitted the case to the lower court for determination of Zimbabwe’s other defences per the State’s request.

COMMENT

The Court’s judgment adds to the “broad international consensus” that Article 54 of the ICSID Convention is a waiver of adjudicative immunity by each ICSID Contracting State, confirmed by courts in Australia, New Zealand, the United States, France and Malaysia. Throughout the judgment, Lord Justice Phillips referred to—and extensively quoted from—an April 2023 judgment by the High Court of Australia which dealt with similar issues, treating it as a “highly persuasive opinion of the highest court in Australia” that got the interpretation “plainly right”.  

For Spain, resisting registration is part of its overall strategy to escape enforcement of intra-EU awards—notably, Spain raised familiar intra-EU arguments to contest the validity of its consent to arbitration under Article 26 of the ECT and the ICSID tribunal’s jurisdiction. These arguments had been previously dismissed by the tribunal in its 2018 award and in the ICSID ad hoc committee’s 2021 decision on annulment. Spain routinely raises these arguments in all intra-EU investment treaty claims. Overall, 115 known tribunals and ad hoc committees have rejected the intra-EU objection to date, in both ECT and non-ECT and ICSID and non-ICSID claims; Spain has succeeded only three times. Similarly, courts in Australia, Switzerland, the UK and the United States have rejected these arguments in enforcement proceedings. European Union courts have been more open to upholding the intra-EU objection, either in set-aside or enforcement proceedings.

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