Sovereigns Rule Again: Recent Challenges to Enforcement and Execution of Arbitral Awards against Sovereigns
Abstrakt
The last two decades have been marked by a sharp increase in international arbitral proceedings brought by private parties against states. The ability to bring disputes against states to international fora is, however, only a partial victory for investors.
Unlike international dispute resolution mechanisms, the execution of arbitral awards remains in the realm of national laws, and state immunity from execution, the last bastion of state immunity, seems to be on the rise rather than in retreat, judging from recent decisions from prominent jurisdictions such as the United Kingdom, France, Belgium and Hong Kong. Recent developments in the United States related to obstacles at the enforcement stage such as forum non conveniens also evidence a tendency toward a stricter standard for enforcement and execution of arbitral awards against sovereigns.
The current fragmentation of the law on state immunity favors states. The low ratification rate of the 2004 U.N.
Convention on State Immunity shows that states are reluctant to abandon their national regimes in favor of an international one. In this author's view, the effort by states to keep state immunity rules within their national realm is a fair counterbalance to the liberalization of private parties' access to international arbitral tribunals for claims against states and the sharp increase in the number of such disputes.
In the current context, potential new investors contracting with states are advised to include in their contracts, in addition to an arbitration clause, express and specific waivers of immunity adapted to the new case law. This article includes guidance on how to draft effective waivers of immunity with examples of model clauses.
The recent case law will also be presented from a comparative perspective to reveal possibilities of potential forum shopping for state creditors.