Series
Blogs
Series
Blogs
In Border Timbers Limited and another v Republic of Zimbabwe [2024] EWHC 58 (Comm), the English Commercial Court has taken what it described as “a novel approach for which there is no direct authority” in finding that sovereign immunity does not arise in an application to register an ICSID award in the English Courts. We take a short look at the judgment.
Background
Border Timbers and Hangani (the “Claimants”) obtained an ICSID award worth approximately USD 125 million in a claim against Zimbabwe under the Switzerland-Zimbabwe investment treaty. After an ICSID annulment committee dismissed Zimbabwe’s annulment application, the Claimants successfully applied without notice to the English courts (under CPR 62.21) for registration and entry of judgment of the award under the Arbitration (International Investment Disputes) Act 1966 (the “1966 Act”), i.e. the statute implementing the ICSID Convention in English law.
Zimbabwe applied to set aside the registration order, on the grounds that it was immune from the jurisdiction of the English courts to determine the registration application by virtue of section 1(1) of the State Immunity Act 1978 (SIA 1978).
The Claimants argued in response that Zimbabwe fell within one or both of the following exceptions to adjudicative immunity set out in the SIA 1978, asserting that:
The Court’s decision
Exceptions to sovereign immunity
Dias J held that the Claimants failed to establish that either of those exceptions to sovereign immunity under the SIA 1978 applied. In particular, she held that:
Whether sovereign immunity was engaged at all
Nevertheless, Dias J ultimately declined to set aside the registration order. In her view, sovereign immunity does not arise at the stage of an application to register and enter judgment on an ICSID award at all. So it was not open to Zimbabwe to have it set aside on that basis. The Judge found that:
Once served, a state may apply to have the order set aside only on very limited grounds (such as a failure of full and frank disclosure, and not on the grounds that it should have not been made on the merits). A state, including Zimbabwe, could, however, still then claim immunity against execution in relation to any steps taken to execute the award following registration.
Whilst Dias J acknowledged that this part of her decision was “novel” and had not in fact been raised by either side, she was of the view that it:
Comment
This judgment represents a new take on a matter that has been the subject of much legal debate across enforcement actions globally, and its ramifications remain to be seen. Dias J herself observed that the Court of Appeal may soon be considering aspects of this topic (in particular, the interrelationship between Article 54 ICSID Convention and section 2 SIA 1978) in an appeal in the Infrastructure Services case (indeed she noted that this allowed her "slightly more latitude" in reaching her conclusions); albeit that case also carries with it additional intra-EU issues. Zimbabwe has also been granted permission to appeal the decision to the Court of Appeal. Parties to ICSID award enforcement cases will no doubt be eager to see how this issue plays out in the higher courts.
Click here for a copy of the judgment.
7 February 2024
Up next