Law & Legal Studies

Enforcing Arbitral Awards against States and the Defence of Sovereign Immunity from Execution

Enforcing Arbitral Awards against States and the Defence of Sovereign Immunity from Execution

This paper praises the achievements of investment treaty arbitration while scrutinising the enforcement barrier of sovereign immunity.

Author

Ylli Dautaj, Lecturer, O.P. Jindal Global University, Sonipat, Haryana, India.

Summary

As a result of the high number of investment treaties, most investors enjoy substantive protection under public international law. Procedurally, most treaties provide for arbitration to solve disputes between investors and host-states (investment treaty arbitration or ‘ITA’).

One of the main advantages of opting for ITA is considered to be its enforceability framework. Thus, any obstacle to final, binding, and directly enforceable arbitral awards is a threat serious enough to be addressed with intense scrutiny. One such obstacle is the plea of sovereign immunity.

The issues surrounding sovereign immunity are not new. One unresolved issue is that of sovereign immunity from execution of arbitral award. Because of inter alia (a) the public international law barrier (‘legal barrier’) when seeking to execute awards against states, (b) municipal courts’ deference to states when the plea is invoked (‘procedural barrier’), and (c) a lack of logic in the justification of the doctrine (‘norms-based barrier’), the inability to execute arbitral awards inevitably becomes a forefront issue for a system that seeks to guarantee the means as well as the ends of its product.

Conversely, it is suggested that any law, procedural design, or norm that enables states to successfully invoke immunity from execution in the international arbitration context lacks logic, is underpinned by an outdated understanding of sovereignty, and by consequence fails to facilitate for and further strengthen multilaterally undertaken efforts to elaborate a free, open, and fair global market-place.

Successfully invoking the plea of immunity in this context is a direct attack on global values and post-WWII virtues that transcends nationalism, idiosyncrasy, and parochialism.

A new international legal and economic order grounded on transnational cooperation has emerged and has partly been facilitated by reliable dispute settlement. This paper praises the achievements of ITA while scrutinising the enforcement barrier of sovereign immunity.

Published in: Manchester Journal of International Economic Law

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