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  • The High Court has confirmed that foreign States are not immune from proceedings for the ‘recognition and enforcement’ of investor-State awards under the ICSID Convention in Australian courts.
  • Australia’s law on submission of States to jurisdiction is consistent with customary international law principles concerning waiver of immunity by express words, including necessary implications from the terms of a treaty.
  • The High Court has also provided much needed clarity regarding the use of terms of recognition, enforcement and execution in the context of international awards.

On 12 April 2023, the High Court of Australia delivered judgment in Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. & Anor [2023] HCA 11 (‘Kingdom of Spain’). The proceeding concerned the recognition and enforcement of an award of a tribunal formed under the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature 18 March 1965 (entered into force 14 October 1966) (the ‘ICSID Convention), which is given force of law in Australia by s 32 of the International Arbitration Act 1974 (Cth).

Art 54(1) of the ICSID Convention obliges Contracting States, including Australia, to ‘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’. Any implicit waiver of immunity in Art 54 is subject to Art 55, which preserves only national laws concerning State immunity from execution.

The High Court dismissed an appeal by Spain from the orders of the Full Federal Court (Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l [2021] FCAFC 3 (‘reasons’) and Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l (No 3) [2021] FCAFC 112 (‘orders’)). The High Court unanimously held that Spain, in agreeing to Art 54 of the ICSID Convention, had submitted to the jurisdiction of (or waived its immunity from) Australian courts for the purposes of s 10 of the Foreign States Immunities Act 1985 (Cth) (‘Immunities Act’) in proceedings for the ‘recognition and enforcement’ of an award under the ICSID Convention.

Section 10 of the Immunities Act provides an exception to the general rule of foreign State immunity before Australian courts (s 9). A foreign State is not immune in a proceeding where the foreign State ‘has submitted to the jurisdiction’ of the Australian courts, whether by express agreement (including by treaty) (s 3) or by various conduct.

Much has been written as to the implications of the judgment in a domestic and international context for investors and other holders of awards under the ICSID Convention. The focus of this article is to dissect the judgment and identify its key findings.

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