Originally from American Review of International Arbitration - ARIA

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ENFORCEMENT OF ARBITRAL AWARDS AGAINST STATES
Crina Baltag*
 

I. INTRODUCTION

The enforceability of arbitral awards is one of the main advantages of
international arbitration, which makes arbitration an attractive alternative to
litigation.1 Until now, the anecdotal evidence surrounding the recognition and
enforcement of arbitral awards2 in disputes between private entities and states has
indicated that there is a high degree of compliance by the debtor-state with regard
to arbitral awards.3 The 2008 Survey on Corporate Attitudes and Practices on
Recognition and Enforcement of Arbitral Awards and Settlement in International
Arbitration4 (the "2008 Survey") confirms that states usually honor arbitral
awards rendered against them and that in cases where this does not happen,
enforcement proceedings against states present no major problems.

The enforcement of foreign arbitral awards is, as a rule, subject to the law of
the place of enforcement and, where applicable, to international treaties, including
the New York Convention.5 The enforcement of arbitral awards rendered in
institutional -- ICC,6 LCIA,7 SCC8 etc. -- or ad hoc arbitration proceedings
between states and private entities follows the same rule. The enforcement of
arbitral awards pursuant to the ICSID Convention9 is the exception.10 The ICSID
self-contained system provides for a special feature for awards rendered under the
ICSID Convention: these awards are to be treated and enforced by the ICSID
Contracting States as final judgments of the courts of the state of enforcement.11
This makes it impossible "for a State to rely on defenses such as those contained
in the New York Convention."12 It does not, however, eliminate the applicability
of the New York Convention when the enforcement is sought in a non-contracting
State to the ICSID Convention. The fact that the ICSID Convention provides for a
particular system for the enforcement of arbitral awards does not exclude the risk
that a state will rely on immunity from execution in order to escape from
compliance with an ICSID award.