The Court of Appeal (The Chancellor of the High Court, Lord Justice Newey, and Lord Justice Phillips) handed down judgment on 22 October 2024 in the jointly-heard appeals in Infrastructure Services Luxembourg S.À.R.L. v. Kingdom of Spain and Border Timbers Limited v. Republic of Zimbabwe [2024] EWCA Civ 1257.
The judgment attempts to reconcile, at Court of Appeal level, a high-profile conflict of authority in the Commercial Court between Mrs Justice Dias DBE in the Zimbabwe case, and Mr Justice Fraser (as he then was) in the Spain case.
The central issue before the Court of Appeal was whether the ICSID Convention or the Arbitration (International Investment Disputes) Act 1966 (implementing the Convention in UK law), deprives foreign states of their general immunity from the adjudicative jurisdiction of the courts of the United Kingdom conferred by section 1(1) of the State Immunity Act 1978 (the “SIA”).
The respondents in the appeals were investors or alleged investors in Spain and Zimbabwe respectively, which had obtained ICSID awards in each case worth over c. $100 million. They obtained ex parte orders registering those awards under the 1966 Act. Spain and Zimbabwe applied to set aside those orders on the basis that they were immune from the Court’s adjudicative jurisdiction.
Each of Zimbabwe and Spain’s award creditors in turn argued that immunity was displaced by two statutory exceptions: submission under section 2 of the SIA, by way of Article 54 of the ICSID Convention; and the so-called arbitration exception under section 9, which the respondents in the appeals said applied to ICSID awards so as to exclude any review by the enforcement court of arbitral jurisdiction.
Both Mrs Justice Dias DBE and Mr Justice Fraser found that sovereign immunity was displaced but (as the Court of Appeal put it) “for entirely different reasons”.
The Court of Appeal has now rejected the principal analysis of both first instance judges, and decided that the parties to the ICSID Convention have submitted (for the purposes of section 2 of the SIA) to the enforcement jurisdictions of all Contracting States by virtue of Article 54 of the Convention, and therefore may not oppose the registration of ICSID awards against them on the grounds of state immunity.
However, the Court of Appeal also rejected a number of other arguments by the investor parties: that section 1(1) of the SIA simply did not apply to the registration of ICSID awards; that the Supreme Court’s previous decision in Micula v. Romania [2020] 1 WLR 1033 was binding authority disapplying the SIA in ICSID cases; that proceedings under the 1966 Act were outside the temporal scope of the SIA; and that States are precluded (in particular by estoppel) for the purposes of section 9 of the SIA from arguing that ICSID arbitral tribunals lacked jurisdiction (as both Spain and Zimbabwe maintain in respect of each of the awards against them).
The Court of Appeal did not address Spain’s case that there was no valid arbitration agreement between intra-EU parties by way of Article 26 of the Energy Charter Treaty; and non-immunity defences to enforcement reserved by Zimbabwe have been remitted to the Commercial Court.
Tariq Baloch appeared for the Kingdom of Spain (leading Cameron Miles), instructed by Stuart Dutson, Jonathan Schuman, Craig Gilchrist and Eliza Jones of Simmons & Simmons LLP.
Benedict Tompkins appeared for the Republic of Zimbabwe (with Salim Moollan KC and Andris Rudzitis), instructed by Philip Beswick and Christopher Walke of Gresham Legal (with Quinn Smith of GST LLP also advising).
The full judgment is available here.