Supreme Court says sovereign immunity no bar to registration of ICSID awards

Contracting with sovereign states can bring big rewards for investors. It can also be a high risk strategy. Political instability, the threat of regime change, and the inevitable ‘inequality of arms’ mean that resolving disputes and enforcing awards against states can be challenging. 

The 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) minimises those risks. Ratified by 158 states, it aims to provide an impartial, enforceable arbitral mechanism to resolve disputes, bypassing local courts and guaranteeing protection against political risk. However, until recently it has been unclear whether – despite ratifying the convention – sovereign states retained the ultimate trick up their sleeve: sovereign immunity.

In its judgment in The Kingdom of Spain v Infrastructure Services Luxembourg S.A.R.L. & Anor [2026] UKSC 9, the Supreme Court has decisively answered that question in favour of the investor. Upholding the finding of the Court of Appeal, it confirmed that Article 54 of the ICSID Convention constitutes a waiver of sovereign immunity from adjudication in proceedings for the enforcement of ICSID arbitral awards. In ratifying the ICSID Convention, contracting states have submitted to the jurisdiction of the English courts for the purposes of section 2(2) of the State Immunity Act 1978 (SIA) in proceedings brought to register ICSID awards against them in the Commercial Court pursuant to the Arbitration (International Investment Disputes) Act 1966.

Background

The Kingdom of Spain and the Republic of Zimbabwe were each the subject of ICSID Convention arbitration awards, for €101 million and US$124 million respectively. The claimant companies in both cases registered the awards in the English High Court. The states both then applied to set aside the registration on the basis of sovereign immunity.

At first instance, the High Court in the Zimbabwe case ruled that while entry into the ICSID Convention was a general waiver of immunity, it did not meet the ‘elevated threshold’ required for submission to the jurisdiction under section 2(2) of the SIA. However, it also held that registration of the award was a ‘purely administrative act’ and not within the scope of the SIA in any event.

By contrast, in the Spanish case, the court held that entry into the ICSID Convention constituted a sufficient submission to the jurisdiction. Both states appealed, with the Court of Appeal ruling that entry into the ICSID Convention was a waiver of immunity and submission to the jurisdiction of the English courts. The Supreme Court agreed with the Court of Appeal but has provided further clarity, which will be welcomed by investors and states alike.

Sovereign immunity and submission to jurisdiction

In their underlying arbitrations, both Spain and Zimbabwe argued that:

1. Article 54 of the ICSID Convention did not constitute a ‘prior written agreement’ to submit to the jurisdiction (required under section 2(2) of the SIA) and that;
2. the convention did not override their sovereign immunity under section 1(1) of the SIA.

They argued the relevant exception to state immunity was section 9 of the SIA (which requires a valid agreement to arbitrate). The states essentially contended that the enforcing court (here, the English Commercial Court) is required to re-examine the validity of the underlying arbitration agreement and the jurisdiction of the arbitral tribunal. Both states, for different reasons, also disputed the validity of the arbitrations initiated against them.

The Supreme Court has now clarified the general test for submission pursuant to section 2(2) of the SIA in the context of international treaties. It held that a submission ‘requires a clear and unequivocal expression of the state’s consent to the exercise of jurisdiction’. Crucially, it confirmed this can be conveyed not only by the express words used but also by ‘what necessarily follows’ from those words.

The reciprocal obligations in Article 54(1) are at the heart of the ICSID Convention and are intended to result in binding and enforceable awards which a national court may not re-examine. This necessarily entails a waiver of adjudicative immunity. While section 2(2) of the SIA requires an express, not implied, submission to jurisdiction, the wording of Article 54(1) constitutes a clear and unequivocal expression of consent. This aligns with the approach to treaty interpretation under the Vienna Convention on the Law of Treaties, and the broad international consensus in the courts of Australia, New Zealand, Malaysia and the United States.

Sovereign immunity and execution

Immunity from adjudicative jurisdiction is only half the battle. Once an ICSID award is recognised and registered as a judgment, it must still be enforced. Article 55 of the ICSID Convention addresses immunity from execution separately. Article 55 does not confer absolute immunity from execution but instead preserves whatever immunity already exists to protect state assets under the relevant domestic law. This means that the award creditor must still identify state assets that are not immune from execution to actually satisfy the award.

In light of its conclusion on immunity from adjudication, the Supreme Court considered it did not need to decide the argument relating to the ‘arbitration exception’ in section 9 of the SIA (‘Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration’). This means that in cases where section 2(2) of the SIA is not available for any reason, for example, if the state joined the ICSID Convention prior to the SIA coming into force, the exception under section 9 of the SIA may still be relevant.

Enforcement of arbitral awards

The Supreme Court has provided welcome clarity to states and private investors alike, definitively resolving  a troubling possible interpretation of the ICSID treaty. In so doing, it has reinforced the English courts’ robust reputation for consistent interpretation and pro-active enforcement with a pro-arbitration stance. While immunity from execution remains a significant challenge, it is now clear that sovereign immunity cannot be used by the 158 contracting states or private investors to delay or avoid the registration of ICSID awards in this jurisdiction.

Whether ratification of the New York Convention 1958 constitutes a similar waiver of adjudicative immunity is another hotly contested question. The Court of Appeal’s decision in CC/Devas (Mauritius) Ltd and others v The Republic of India CA-2025-001365 is one to watch.