I. Introduction
This extended case note walks the reader through a particular contemporary issue of international law and arbitration law that was adjudicated in (initially) Eiser Infrastructure Ltd. (Eiser) and the Kingdom of Spain (Spain); that is, whether the International Centre for Settlement of Investment Disputes (ICSID) Convention preserves immunity from enforcement and execution, or only for the latter. The interpretation and application rests on the linguistic and semantic understanding of the concepts recognition, enforcement, and execution, in general, and as those pertain to the ICSID Convention, in particular.
The case at hand neatly underscores the perplexing interaction and intersection between international arbitration law and sovereign immunity law. More specifically, the case invited a nuanced comparative analysis of whether an ICSID award-debtor state can invoke the plea of sovereign immunity to shield against enforcement of an arbitral award, namely, the converting of an award into a judgment of the court.
But why does this case merit international attention? Put simply: it navigates the Federal Court of Australia’s approach to—and categorization of—the distinction between recognition, enforcement, and execution as pertains to the ICSID Convention. Judicial decisions stemming from the Australian courts play a prominent role as subsidiary means of determining rules of public international law. Thus, it plays an important role in international comparative law.
There are unfortunately many instances where award-creditors are forcefully turned into applicants and must rely on local courts’ coercive function to make the promise of arbitration a real one. When two competing claims are made at the enforcement phase, the court is sometimes tasked with the difficult and sensitive responsibility of adjudicating at the intersection of—and ultimately defer to either—international economic law or sovereignty. This conundrum is one of many manifestations of the everlasting dichotomy of private and public interests in international commerce, trade, and investment. The underlying premise for this author is that an effective transnational legal regime—such as manifested by the elaboration of the international arbitration regime—ultimately rests on the shoulders of local courts willing to enforce a global rule of law.
This case note does not deal with other issues addressed before the Federal Court of Australia, nor does it deal with other post-award proceeding issues. This case note deals only with award enforcement pursuant to the ICSID Convention. Finally, for the reader to better understand the issues at hand and the reasoning of the judges, articles 54 and 55 of the ICSID Convention are spelled out below with relevant parts marked in bold and/or underlined:
Article 54
(1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgment of the courts of a constituent state.
(2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.
(3) Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought.
Article 55
Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution.
II. Federal Court of Australia
The Honorary Justice Stewart heard the initial matter between Eiser and Spain on October 29, 2019, and he delivered the judgment on February 24, 2020. The applicants were initially Eiser, Energia Solar Luxembourg S.A.R.L (Energia SARL), Infrastructure Services Luxembourg S.A.R.L (Infrastructure SARL), and Energia Termosolar B.V. (Energia BV) (jointly, the Applicants). Later, the Applicants were reduced to Infrastructure SARL and Energia BV. Spain (the Appellant) appealed from Eiser v. Spain. The appeal was head by three justices—Allsop CJ, Perram J, and Moshinsky J (jointly, the Appeals CJJ)—on August 24, 2020. The respondents were now only Infrastructure SARL and Energia BV (jointly, the Respondents). The judgment was delivered on February 1, 2021. The matter was heard again on the form of “order for recognition” on May 25, 2021. The final order judgment was delivered on June 25, 2021.
To depict the background to the saga, the Applicants had invested substantially in Spain as a result of regulatory measures “promoting the development of solar power and other sources of renewable energy” (in 1997). Spain later adopted a series of laws “reducing, and eventually revoking, the financial incentives,” reducing the subsidies and therefore the value in the Applicants investment. The Applicants sought recourse through investor-state arbitration by invoking the Energy Charter Treaty (ECT), claiming among other things the right to fair and equitable treatment (FET). The ECT provides for the optional recourse to ICSID arbitration. The ICSID proceedings were commenced in 2013. The tribunals issued awards in favor of the Applicants in 2017 and 2018. Thus, the Applicants were turned award-creditors, while Spain became an award-debtor. Due to non-voluntary compliance, the Applicants turned, among others, to the Federal Court of Australia to recognize and enforce their ICSID awards.
The case underscores the interaction and intersection between sovereign immunity laws and international arbitration law. More particularly, Justice Stewart first, and later Allsop CJ, Perram J, and Moshinsky J, had to interpret the ICSID Convention and determine whether a state could invoke the plea of sovereign immunity vis-á-vis enforcement and execution, and whether the signing of the ICSID Convention constituted a submission to the jurisdiction of the court for such purposes.
In this case, as in other similar cases, the Applicants rely on international arbitration law to have their awards recognized and enforced, while the state, Spain, relies on sovereign immunity to resist such attempt. The judge is thus tasked to adjudicate at the intersection between enforcing the global rule of law as manifested in international economic law, on the one hand, and practice enough deference to the award-debtor’s public interest reliance on sovereign immunity, on the other.
A. Eiser Infrastructure Ltd. v. Kingdom of Spain, [2020] FCA 157
1. Facts
The Applicants sought the recognition and enforcement of ICSID awards rendered in their favor against Spain, while Spain invoked sovereign immunity from the jurisdiction of the court. Spain argued that the plea of immunity covers enforcement and execution, but not recognition. The Applicants argued that the plea of immunity can only be invoked with respect to execution, but not with respect to recognition nor enforcement. Justice Stewart succinctly summarized the matter at hand as follows:
[T]he applicants seek, under s 35 of the Arbitration Act, the recognition and enforcement of arbitration awards in their favour by converting them into judgments of the Court. They do not, at least not at this stage, seek to execute on the judgments. The distinction between recognition and enforcement, on the one hand, and execution on the other, is central to these reasons.
2. Issues
The Applicants put forth four major arguments: (1) ICSID excludes “any claim for foreign state immunity in proceedings for the recognition and enforcement of an award, as opposed to in relation to any steps to execute upon a judgment that recognises and enforces such an award”; (2) “by becoming a Contracting Party to the ECT and a Contracting State to the [ICSID Convention], Spain submitted to the jurisdiction of this Court”; (3) the sovereign immunities act “does not apply at the recognition and enforcement stage”; and (4) the ICSID Convention has impliedly repealed the sovereign immunities act “to the extent of an inconsistency.”
This case note deals only with the first and second argument, the so-called “foundational argument” and the “submission to jurisdiction.” Spain’s response is the following: the Applicants’ “foundational argument must fail principally on the basis that the French and Spanish versions of the [ICSID Convention] draw no distinction between recognition/enforcement, on the one hand, and execution, on the other.” The point Spain is making is that properly interpreted, the ICSID Convention “makes no such distinction with the result that Art. 55 expressly preserves the operation of domestic law on foreign state immunity in relation to the enforcement that the applicants seek.” Ultimately, this argument rests on the lack of distinction between linguistic/semantic lack of distinction between enforcement and execution in the French and Spanish versions of the ICSID Convention. Justice Stewart summarized the crux of the matter as follows:
In the French and Spanish texts of Arts 53 to 55, there is no clear distinction in the language between what in English is reflected as “enforcement” and “execution”. In the title to Section 6 of Ch IV, the French text speaks of reconnaissance et de l’exécution and the Spanish text of reconocimiento y ejecución in place of the English “recognition and enforcement”. Consistent with that, thereafter where the English text uses “enforce” or “enforcement” the French text uses l’exécution and the Spanish text uses ejecutar, ejecuten or ejecución. However, where the English text uses “execution” the French text still uses l’exécution (or d’exécution) and the Spanish text still uses ejecución (or ejecutará).
Thus, the ultimate question is whether there is a distinction between enforcement and execution for purposes of the plea of sovereign immunity. Put simply: is immunity preserved for enforcement and execution, or only for the latter? The ICSID Convention was drafted in three authentic languages: English, French, and Spanish. Three (or two) concepts are at play—recognition, enforcement, and/or execution—and there is some confusion or inconsistencies depending on languages.
3. Law
To answer the foundational argument and whether Spain has submitted to the court’s jurisdiction, the court needs to interpret and apply international arbitration law—i.e. Articles 53, 54, and 55 of the ICSID Convention and Articles 34 and 35 of the Australian Arbitration Act (Arbitration Act)—and sovereign immunity law—i.e. sections 9, 10, and 30 of the Foreign States Immunities Act 1985 (FSIA). When doing so, the court needs to entertain treaty interpretation pursuant to the Vienna Convention on the Law of Treaties (VCLT)—i.e. articles 31, 32, and 33.
The general rule on immunity from jurisdiction identified in Article 9 of the FSIA is subject to several exceptions, for example, those found in Article 10. Pursuant to Article 10, a state is not immune if, for example, it has submitted to the jurisdiction by agreement. Agreement is defined in Article 3(1) of the same Act and includes a treaty or other international agreement. On the same lines, Article 30 deals with immunity from “enforcement by way of execution rather than enforcement by way of recognition and judgment.”
4. Reasoning
Foreign arbitral awards are enforced in Australia “as if the award were a final judgment of a court.” This is “done by making a judgment on the award.” Justice Stewart noted that “depending on the context, reference to the enforcement of an arbitral award can be used to mean the entering of a judgment on the award to the exclusion of execution or it can mean execution, or it can encompass both.” Furthermore, Justice Stewart noted that recognition and enforcement is “equivalent to what is referred to in civilian jurisdictions as exequatur.” The English version of the ICSID Convention makes a distinction between enforcement and execution—articles 54(3) and 55 refers only to execution. Stewart J writes that:
In Art 54(3) that is clearly in the context of post-judgment execution measures. That much is clear from the reference being to “execution of judgments in force in the state”. There can be no execution of judgments without there first being a judgment. There is nothing to suggest that execution has a different meaning in Art 55 to what it has in Art 54(3) – use of the same word, in particular in such close proximity, and distinctly from the use of recognition and enforcement, would suggest that both uses are the same.
He continues in this light and explains that “the question of interaction with the [FSIA] only arises at the next stage of analysis,” and that by becoming a signatory to the ICSID Convention, “Spain submitted to the jurisdiction of designated courts and therefore, in Australia, waived immunity under s. 10 of the [FSIA].”
Spain argued that if Articles 54(3) and 55 were to limit immunity from execution only, such would lead to an absurdity and “the court would be engaged in an exercise in futility by converting a Centre award into a judgment only to have that judgment rendered unenforceable on the grounds of immunity when execution is sought.” Spain submitted that such creation would constitute a “zombie judgment” and that such “cannot have been the intention of the legislature.”
Justice Stewart found Spain’s submission to be wrong because “the question of interaction with the [FSIA] arises only at the next stage of analysis” due to “the distinction in the [FSIA] between immunity from jurisdiction and immunity from execution.” If there is no immunity from jurisdiction, the question of a possible immunity from execution arises. Justice Stewart further explains, “[t]hat is the inevitable consequence of the separate treatment of immunity from jurisdiction and immunity from execution in Pts II and IV. This demonstrates that a so-called “zombie judgment” is not viewed by the legislature as an absurdity.”
Justice Stewart explained that when “applicants are successful in having judgments entered against Spain,” they can go about seeking to establish an exception to immunity from execution, for example by finding “commercial property” of Spain in Australia. It was reasoned that such property would be susceptible to execution, and therefore the award turned into a judgment would not constitute a “zombie judgment.” Moreover, “the dichotomy between pre-execution (i.e. up to and including judgment) steps and execution (i.e. post-judgment) steps is quite clear in the Immunities Act itself.”
Furthermore, Justice Stewart reasoned that so much is clear also from comparative law. Justice Stewart then exercised treaty interpretation vis-á-vis the ICSID Convention (i.e. entertained a comparative legal analysis). The justice analyzed the convention in light of its object and purpose, the preparatory work, the different language versions, scholarly work, and foreign cases.
With respect to the preparatory work, Justice Stewart analyzed the history of the ICSID Convention and concluded as follows:
There is nothing in the Report of the Executive Directors which would indicate that where foreign state immunity is preserved under Art 55 that includes foreign state immunity from the jurisdiction of any court. What is preserved is foreign state immunity from the execution of judgments, and that up to and including the recognition and enforcement of awards by making judgments on them no foreign state immunity is intended to be preserved. Indeed, Contracting States are obliged to equate an award rendered pursuant to the Investment Convention with a final judgment of its own court.
Justice Stewart then moved on to analyze the French and Spanish texts of articles 53, 54, and 55 of the ICSID Convention. The French and Spanish texts make no clear distinction between enforcement and execution, instead interchangeably using “l’exécution” or “d’exécution” (French) and “ejecución” or “ejecutará” (Spanish) for both enforcement and execution. Justice Stewart concluded:
[G]iven that l’exécution in French and ejecución in Spanish are used in the text in some places to mean what in English would be understood as “enforcement” and in other places as “execution”, the only way of reading the three texts consistently with each other is to give those words the meaning of the English word “execution” where they are used in Art 54(3) and Art 55.
Spain’s submission to the contrary was not accepted because “[p]roperly interpreted, “execution”, l’exécution and ejecución in Art 54(3) in all three texts can only mean what in English would be understood as post-judgment execution.”
Having already analyzed the history, origins, purpose, and language differences, the justice embarked on comparing and contrasting (perhaps reinforcing) his conclusion against commentary to the ICSID Convention and foreign case law. Notably, the two leading authorities are Mr. Broches, also known as the “principal architect” of the ICSID Convention, and Professor Schreuer. According to Broches, states have two obligations for which the award is equated as a final court decision: “to recognise an award as binding and to enforce the pecuniary obligations imposed by it.” Broches lands in a clear distinction between enforceability and its implementation by execution, which is governed by domestic law. Schreuer, on the other hand, does not agree with such an analysis. Instead, he lands in that “the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, would appear to be that the words ‘enforcement’ and ‘execution’ are identical in meaning.” Justice Stewart concluded:
In my view, the only sensible way of reconciling the three authentic texts is to interpret “enforcement” in Art 54(1) to include enforcement by recognition and by judgment, and to interpret “execution” as meaning post-judgment execution. “Execution” in Art 55 has the same meaning. I otherwise agree with what Professor Schreuer says about Art 55 – it clearly only deals with immunity from execution and not immunity from jurisdiction at the prior stage of enforcement.
Justice Stewart then highlighted the work of other prominent scholars that supports his position before embarking on an analysis of foreign case law. Primarily, he analyzed French and U.S. case law on the matter. Eloquently, the justice reasoned: “It is significant that the French courts, presumably with reference to the French text of the Convention, have recognised and maintained the distinction between recognition/ enforcement and execution in Arts 54 and 55. That rather tells against Spain’s reliance on that text as revealing no such distinction.”
Justice Stewart concluded that “[i]t is thus apparent that the weight of comparative case law favours the interpretation that I have thus far come to.” Having concluded so, the justice moved on to the conflict between Section 9 of the FSIA and the ICSID Convention, i.e., to figure out whether Spain had submitted to the jurisdiction of the court.
Section 10 of the FSIA makes it clear that “a state is not immune from jurisdiction in a proceeding in which it has submitted to the jurisdiction of the court,” and such submission can be made “by agreement or otherwise.” He did accept Spain’s submission that the “arbitration-exception” in Section 17 of the FSIA deals exhaustively and exclusively with arbitration and that section 10 therefore cannot be relied on. He reasoned that “[s]ection 17(2) will continue to apply, and be required, in circumstances where the parties have submitted their dispute to arbitration without such submission amounting to a submission to the jurisdiction of the Court for the purposes of recognition and enforcement.”
5. Holding
Justice Stewart concluded that the Applicants’ foundational argument was established, and that Spain had submitted to the jurisdiction of the court by becoming a member to the ICSID Convention. Put differently, Spain had “waived any reliance on foreign state immunity from the jurisdiction of such courts in proceedings to recognize and enforce such awards.”
The court ordered, among other things, that Eiser and Energia SARL (1) have leave under section 35(4) of the Arbitration Act to enforce their ICSID award, and (2) for Spain to pay EUR 128,000,000. The court also ordered that Infrastructure SARL and Energia BV (1) have leave to enforce their ICSID award, and (2) for Spain to pay EUR 101,000,000.
B. Kingdom of Spain v. Infrastructure Services Luxembourg S.á.r.l., [2021] FCAFC 3
Spain maintains that it has the right to invoke immunity because: (1) Respondents’ proceeding is to be understood as a proceeding to enforce the ICSID award; and (2) “the question of the proper construction of Art 55 can only be definitively resolved by the International Court of Justice.” Justice Perram rejected the first argument because “[w]hether Art 55 applies to proceedings for execution only (as the Respondents submit) or enforcement as well (as Spain submits), it has no application to recognition proceedings” and that the proceeding in the first instance was one of recognition as opposed to enforcement. Justice Perram continued: “[o]nce it is so characterized, the dichotomy in Art 54(2) observed in the preceding paragraph necessitates the conclusion, contrary to Spain’s submission, that the proceeding in the Court below could not be a proceeding to enforce the award within the meaning of Art 54(2).”
The principal question in the appeals procedure is instead “whether Spain’s accession to the ICSID Convention constitutes a submission to the jurisdiction of the Federal Court.” The Appeals CJJ found a solution in characterization, or rather supposed mischaracterization by Justice Stewart. Chief Justice Allsop reasoned that:
The proceeding which this Court has before it, which is untouched by foreign State immunity from execution, is one to obtain an order equivalent to exequatur: a form of recognition of the status of the award as a judgment of the Court or as equivalent to a judgment of the Court so that it may be, henceforth, enforced by way of pecuniary obligations as if it were such a judgment, subject to the Kingdom of Spain’s rights of immunity as to execution recognised by Arts 54(3) and 55, as part of the International Arbitration Act. In point of characterisation that is a proceeding to recognise the award in respect of which proceeding Spain has, by acceding to the ICSID Convention, submitted to the jurisdiction of the Court and waived immunity under s 10 [of the FSIA].
The bottom line for the Appeals CJJ was that the question of whether “execution” includes “enforcement” in articles 54 and 55 was irrelevant for the matter at hand and that article 55 does not apply to recognition proceedings. Justice Perram, like Justice Stewart in the first instance, concluded that Spain had submitted to the jurisdiction of the Federal Court, but in a recognition proceeding as opposed to an enforcement procedure. Justice Perram reasoned that recognition pursuant to the ICSID Convention “may be afforded by entry of judgment on the award or by making an order granting leave to enforce the award ‘as if it were a final judgment’ of this Court.” Conclusively then, Justice Perram reasoned for the court that the proceeding at first instance was a recognition proceeding. He highlighted that “[m]any civilian jurisdictions have a procedure known as exequatur where a foreign judgment or arbitral award is recognised by a domestic court [and that] [a]fter the grant of an exequatur a party may subsequently seek execution.”
Justice Perram read the ICSID Convention and articles 54(1) and 54(2) to “contemplate[] two distinct applications” for recognition and enforcement and to mean that “Article 54 does not contemplate the enforcement of awards which have not been recognised.”
Orders (1) and (2) in the first instance were set aside. The first order omitted the wording “as if the award were a judgment,” and therefore “leaves open the possibility [of] enforcement . . . without further consideration of the issues arising under Art 55.” The second order “may also be seen as an order requiring Spain to do something,” whereas recognition puts the award “on the same footing as . . . a final judgment, no more and no less.” This culminates in the justice’s view that orders (1) and (2) did “not reflect a correct approach to recognition.” Thus, the appeal was allowed and orders (1) and (2) were set aside. The appeal was stood over to a date when there would be “further argument on the form of [the] order for . . . recognition of the award.” The court invited the parties to elaborate on what form recognition should take. Justice Perram held that:
The conclusion that the proceeding was a recognition proceeding means that Art 55 has no application. Consequently, for the reasons I have already given, Art 54(2) operates as an agreement by Spain not to raise any immunity it would otherwise have and hence to submit itself to the jurisdiction of the competent court referred to in that article. There is therefore an agreement within the meaning of s 10(1) and (2) and immunity is not available under s 9. However, for the reasons I have given, the appeal must be allowed on a limited basis so as to hear further argument on the form that recognition should take.
Justice Perram concluded that the interpretation on the meaning of article 55 was of no relevance, but that he would have disagreed with Justice Stewart because he would have “accept[ed] Spain’s submission that ‘execution’ and ‘enforcement’ are essentially synonymous in Art 54 and Art 55[,]” i.e. “both bear the broader meaning of ‘enforcement.’” Justice Perram analyzed the language versions in French and Spanish, concluding that “Spain’s construction of ‘execution’ and ‘enforcement’ is correct.”
Justice Perram did not stop at the “right” characterization of the matter before the court, but instead (in an obiter dictum fashion) went on to agree with Spain’s submission that the word “execution” includes the concept of “enforcement,” even though he deemed such to be “of no assistance to Spain in a proceeding which seeks recognition.” He reasoned that, “[b]ecause recognition is necessarily distinct from enforcement or execution, the distinction between execution and enforcement is irrelevant in the present litigation.”
C. Kingdom of Spain v. Infrastructure Servs. Lux. S.á.r.l. (No. 3), [2021] FCAFC 112
The court ordered the ICSID award to be recognized as binding on Spain and “order[ed] that judgment be entered in favour of the applicants against [Spain] for the pecuniary obligations under the Award in the sum of, inter alia, ‘EUR101,000,000 as compensation for [Spain’s] breach of the [ECT.]’” Chief Justice Allsop provided the reasons for the judgment, and Justices Perram and Moshinsky agreed with his honor. The court clarified that nothing in the order “shall be construed as derogating from the effect of any law relating to immunity . . . from execution.” Spain had preferred a more limited order, recognizing the award, but not making a judgment of it.
The court now reasoned that “[t]he immunity recognised by the ICSID Convention was as to execution [and] [t]he recognition and enforcement contemplated by Art 54(1) and (2) does not extend to execution from which there may be immunity.” The Arbitration Act contemplates the recognition of awards to mean as if it were a judgment or order of the court, i.e. what is within article 54 of the ICSID Convention. The award is to be enforced as if it were a judgment, namely, by “entering [a] judgment for the award debtor’s pecuniary obligations under the award and thereby creating a judgment debt.” This, according to Chief Justice Allsop, recognizes the award as contemplated by the Arbitration Act and article 54 of the ICSID Convention. Furthermore, he explained that “there is a practical aspect to this” and that article 54(1) of the ICSID Convention and section 35(4) of the Arbitration Act “do not address legal theory, or legal philosophy, or abstracted analysis” but that they “are about recognising the award to the point of having an enforceable status.”
The chief justice also highlighted that the judgment “conforms in substance” with the decision in Liberian E. Timber Corp. (LETCO) v. Gov’t of Republic of Liberia, “though . . . not precisely in terms.”
III. Concluding Reflections
If the reader can read only one document this year on the interaction between sovereign immunity and the ICSID Convention, the reasoning in Eiser Infrastructure Ltd. should be that. It is one of the most pro-arbitration decisions of our lifetime and accordingly deserves to be applauded and praised. Ultimately, it was rightly concluded that Spain’s plea of sovereign immunity from enforcement must fail.
The judgment and reasoning in the appeal, Infrastructure Servs. Lux. S.à.r.l., is more cumbersome to distill firm principles from. The reasoning from Justice Perram was very confusing indeed. Eventually, the justices analyzing Infrastructure Servs. Lux. S.à.r.l. find a practical solution in categorization, namely, the application was considered a recognition procedure. Concluding so, it was easy to agree on the fact that Spain had waived its immunity by becoming a member of the ICSID Convention but retained such right with respect to enforcement and execution. It is argued that Justice Perram was wrong in his analysis of what “exequatur” means and its practical effects. In contrast, Justice Stewart understood this concept better, which is reflected in his analysis of French case law. In a word: “exequatur” includes recognition and enforcement, i.e., pre-execution steps.
The Appeals CJJ’s re-categorization effectively meant that they included what is typically considered to be enforcement—i.e. making a judgment of the award—within the concept of recognition. When such categorization was made, the distinction between recognition and enforcement was (and is) indeed irrelevant and the linguistic reference to “enforcement” can only mean execution for practical purposes. Therefore, at the end of the day, in some roundabout manner, Justice Perram and the Appeals CJJ got the holding right.
To the effect that the reasoning in the appeals procedure was confusing, the actual order moderately corrected the shortcomings by essentially: (a) recognizing the award, and (b) ordering the enforcement of the award. The order de facto dealt with both recognition and enforcement. The practical outcome of the order is to be praised and applauded, as is Justice Stewart’s reasoning. At the end of the day, all justices ultimately arrived at the same “forensic destination.” I argue that, colloquially speaking, Justice Stewart entertained a “duck test,” while the appeals court cloaked the same outcome as a recognition order.
In this light, Chief Justice Allsop found it necessary to explain that the articles relevant “do not address legal theory, or legal philosophy, or abstracted analysis” but that they “are about recognising the award to the point of having an enforceable status.” Chief Justice Allsop also found it necessary to note that their order conforms in substance to that of the Southern District of New York in the LETCO case, but not precisely in terms.
This is especially so because the outcome constitutes comparative international law. In that light, I also argue that the Appeals CJJ obiter dictum reasoning should not be treated as ratio decidendi. If any reasoning gains traction, it should be that in the first instance. It is clear that the Australian FSIA, just as the UNCSI, the U.S. FSIA, and the U.K. SIA draws a sharp distinction between immunity from jurisdiction and immunity from execution. Justice Stewart rightly reasoned that section 30 of the FSIA deals with immunity from “enforcement by way of execution rather than enforcement by way of recognition and judgment.” Meanwhile, it is true that depending on context, enforcement can mean either entering of a judgment on the award or it can mean execution. In some instances, it can mean both simultaneously.
I argue that, despite some confusion and contemporary divergence, the distinction between the concepts of recognition, enforcement, and execution in the ICSID Convention are distinct, as demonstrated by the courts in France and the United States. The distinction between recognition and enforcement are pre-execution matters that fall within the realm of a local jurisdictional ambit by submission (or waiver). In this linguistic conundrum, even though French and U.S. case law reaches the same endpoint, the French judgments merit additional attention because they deal with the French text of the ICSID Convention. Article 33 of the VCLT is indeed right on point, but so is Article 31(3)(b) which explicitly deals with “[a]ny subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation.”
Despite my arguments against Spain’s submission, to some extent I believe that Spain nevertheless underscored some prevalent ambivalences. The ability to frustrate an ICSID award by invoking immunity from execution is a serious obstacle and barrier that renders the utility in the award real and unreal at the same time, i.e. “zombie-like.” Furthermore, Spain was also right by pointing out that the ICJ should determine the proper construction of articles 54 and 55 of the ICSID Convention.
