Originally from Czech and Central European Yearbook of Arbitration - 2012: Party Autonomy versus Autonomy of Arbitrators

In the Sedelmayer case, the Swedish Supreme Court affirmed its unequivocal endorsement of restrictive immunity in enforcement proceedings against sovereign states. Although the Swedish Supreme Court’s rationale went so far as to suggest that restrictive sovereign immunity is universally accepted as customary international law, that view was soon dismissed when the highest court in Hong Kong ruled in favor of absolute immunity in FG Hemisphere Associates. In stark contrast to the Hong Kong decision, the Swedish Sedelmayer decision incorporates a very liberal commercial exception that places the burden on the state to prove that the property against which enforcement is sought is used for "official purposes" only. The Swedish Sedelmayer decision is noteworthy in that: (1) it continues to give credence to the UN Convention on Sovereign Immunity despite the Convention not being ratified, and (2) it establishes the temporal link that "use and intended use" are to be determined exclusively with reference to the time of the enforcement proceedings. In light of these divergent rulings, this article deduces that the tensions between the absolute and restrictive doctrines to sovereign immunity are real. Until the UN Convention is in a position to reconcile any such conflicts, this article proposes the use of party autonomy as an alternative to resolving any future conflicts. By exploring the gaps in codified international law on sovereign immunity, the article concludes that bilateral investment treaties (BIT) are an ideal mechanism to clarify and set out the party intent on the scope of commercial activity, which can be immune from enforcement.