Foreign governments cannot rely on state immunity to contest arbitration awards against them when they had submitted to the jurisdiction of the English courts, the Supreme Court ruled today.
Spain and Zimbabwe were each the subject of multi-million pound adverse arbitration awards under the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). The states argued they could rely on their sovereign immunity to set aside the registration of those awards in the High Court under the Arbitration (International Investment Disputes) Act 1996.
Spain was ordered to pay €112m, later reduced by €11m, plus interest and costs to energy companies in 2018. In 2021, the High Court granted the companies' application to register the award under the Arbitration Act despite Spain's objection on the basis of state immunity.
Zimbabwe was ordered to pay US$124m as well as interest and US$1m in moral damages and costs to a company which had invested in land that was expropriated without compensation. Zimbabwe’s application to have the award annulled was dismissed by the ICSID committee. The companies applied to the High Court to register the award, which was granted in 2021 and served on Zimbabwe the following year. Zimbabwe appealed the dismissal of its set aside application.