Authors: Ylli Dautaj* and Maxime Chevalier**
Published: February 2022
Recognition, Enforcement, and Execution
States as Parties
This article analyzes the interaction and intersection between international arbitration law and public international law. More specifically, it analyzes whether the ICSID Convention preserves immunity from enforcement and execution, or only from the latter.
In the U.S., this topic has been of relatively little to no relevance since a 1986 decision from the Southern District of New York, Liberian Eastern Timber Corporation (LETCO) v. The Government of the Republic of Liberia, where the court decided that Liberia had waived immunity from enforcement by becoming a signatory to the ICSID Convention. Since then, this decision has played an instrumental role in international comparative law. Nevertheless, this rationale has been challenged recently in court and in scholarly work. Particularly, some argue that the French and Spanish versions make it clear that immunity is indeed preserved from enforcement as well as from execution because, for both enforcement and execution, the French version uses only the word “l’exécution,” and the Spanish version uses only the word “ejecutar.” This is so where the English version—the supposed anomaly—uses the different terms of “enforcement” and “execution” instead.
This article makes the point that recognition and enforcement are categorically and unequivocally pre-execution matters that fall within the realm of a local court’s ancillary jurisdictional ambit by submission (or waiver). Put briefly: ICSID preserves immunity from execution, but not from recognition or enforcement.
When an award-debtor state does not voluntarily comply with a binding ICSID award, the state is in breach of its international obligations. In such situations, the award-creditor can either seek to assert some form of (political) pressure or turn to domestic courts for post-award proceedings, seeking recognition, enforcement, and/or execution of the award. When the award-creditor is forced down that road, the plea of sovereign immunity can sometimes present as a hurdle too big to surmount.
The more notorious and long-lasting immunity hurdle is that of immunity from execution. For example, the ICSID Convention expressly preserves immunity from execution in Article 55. Another incidental but outstanding issue with respect to the law of sovereign immunity in the international arbitration context is whether arbitrating under the ICSID regime effectively constitutes a waiver of immunity from recognition and enforcement in Article 54 and/or whether signing the ICSID Convention itself constitutes a submission to the enforcing courts’ jurisdiction. We contend that signing an arbitration agreement (e.g. referring to ICSID arbitration in a bilateral or multilateral investment treaty) is generally considered an implied waiver of immunity from jurisdiction. Additionally, signing the ICSID Convention is itself a submission to the jurisdiction of the court for ancillary jurisdiction with respect to recognition and enforcement (i.e., pre-execution matters). However, making the same inference is not sustainable with respect to the execution phase, neither as pertains to the waiver doctrine nor with respect to submission to the court’s jurisdiction.
Thus, when discussing the potential applicability of sovereign immunities, the difference between notions of recognition, enforcement and execution is of great importance and is by no means clear-cut. To discern the meaning of recognition, enforcement, and/or execution in the ICSID Convention, one must engage with treaty interpretation of the equally authentic English, French, and Spanish versions. The analysis therefore invites a thorough comparative legal exercise.
* Adjunct Professor, Penn state Law (USA). PhD candidate, University of Edinburgh (UK). Managing Partner, DER Legal, Stockholm (Sweden). Author can be contacted at firstname.lastname@example.org.
** Assistant Professor, Jindal Global Law School (India). LL.M., (University of Stockholm). Master 2 (Paris Descartes University). Maxime Chevalier has worked on the section on French drafting history of the ICSID Convention, as well as with the French court decisions. Author can be contacted at email@example.com.