Originally from The American Review of International Arbitration (ARIA)

PREVIEW PAGE

Given the lack of clear and uniform rules regarding the application of the exceptions to immunity from execution, enforcing an award against a sovereign state depends on the nuances of the law of the state where an award debtor happens to have assets. Unsurprisingly, there have been several notable cases in which states have prevented enforcement of an adverse award through a plea of immunity from execution. Authors have proposed solutions to this situation that range from amending the ICSID Convention to include a waiver of immunity from execution to implementing a model law on sovereign immunity. These solutions do not seem viable in the medium term and arguably fail to consider the policy objective behind immunity from execution, which is to prevent interference with governmental functions.

This article argues that one viable improvement to the relationship between sovereign immunity and the enforcement of ICSID awards is the gradual harmonization of domestic law regarding the exception to immunity from execution for a state’s commercial property. This article surveys and comments on the different approaches domestic courts have taken regarding the application of this exception to identify common trends and propose avenues for convergence.

This article concludes that the tests courts apply to decide whether the conditions for the application of the commercial exception have been met are inadequate. Instead of mechanically focusing on the nature or purpose of the property at issue, courts should focus on the rationale behind immunity from execution. Using a sliding-scale approach, courts should analyze whether attaching state property would directly interfere with an overarching public purpose. To the extent that this interference jeopardizes a state’s governmental functions, courts should uphold the state respondent’s immunity from execution. The use of this approach would provide much needed clarity and uniformity to the application of the law on sovereign immunity to the enforcement of ICSID awards.