Sovereign immunity from execution of foreign arbitral awards in the 21st century

Abstract

This dissertation navigates the intersection between international arbitration law and the law of sovereign immunity. More specifically, it deals with the back-end of the arbitral procedure where an award-creditor is seeking to liquidate the arbitral award against a reluctant award-debtor State.

It is argued that for investor-State dispute settlement, in general, and investment treaty arbitration, in particular, to remain a reliable and effective transnational dispute resolution regime, the norm of voluntary compliance must remain intact. And, when award-debtor States default, the enforcement of foreign arbitral awards must be sanctioned with coercive force. It is in that light that the doctrine of sovereign immunity presents a serious obstacle.

It can be observed that the law on immunity from execution remains a rather unchartered territory and one that remains in a state of flux, which includes the context of enforcing international arbitral awards. As a result, courts in various jurisdictions have battled with the doctrine for many years. Nonetheless, the obstacles and issues remain largely unresolved.

The research question in this dissertation is thus whether the doctrinal understanding of sovereign immunity from execution and its interpretation and application in the international arbitration context sit well with a 21st century global marketplace? To answer the question, this dissertation investigates (A) whether and how domestic legislators and courts have contributed to shaping the law on sovereign immunity from execution, in general, and in the arbitration context, in particular. Following the exploration of the substantive law, this dissertation explores (B) whether and how domestic legislators and courts have facilitated award execution through its procedural rules. Finally, this dissertation explores (C) whether and how non-legal solutions can assist an award-creditor when the award-debtor State refuses to comply voluntarily with a pecuniary award.

To answer the questions forensically, this dissertation employs the doctrinal and comparative law methodologies. Through a doctrinal methodological study, the author analyzes and maps the doctrinal understanding of sovereign immunity and the interpretation and application of its sources, in general, and in the jurisdictions of China, France, India, Russia, Sweden, U.K., and U.S., in particular. Through a comparative law methodology, the author compares and contrasts various domestic and international approaches in order to see whether and what theories, principles, rules, and doctrines have emerged and whether these can (or should) be crystallized and consolidated into customary international law.

This dissertation will divide the comparing objects’ doctrinal understanding and application and interpretation of sovereign immunity from execution of foreign arbitral awards into four levels: Level 0, Level 1, Level 2, and Level 3. Each level will have a color assigned to it: Red, Orange, Yellow, and Green, in that order. Red list countries are those that adhere to absolute immunity from execution. The said approach is “non-liberal” towards award-creditors. Orange list countries are those that adhere to restrictive immunity from execution in theory but not necessarily in practice or that the situation is not clearly mapped. The said approach is “quasi-liberal” towards award creditors. Yellow list countries are those that adhere to restrictive immunity from execution in theory as well as in practice from a substantive law point of view. The said approach is “liberal” towards award creditors. Green list countries are those that, like the yellow list, adhere to restrictive immunity from execution in theory as well as in practice. In addition to the yellow list, green countries not only adhere to restrictive immunity with respect to the substantive law, but also provides award-creditors with procedural tools that makes award execution possible. The said approach is “liberal” and “pragmatic” towards award creditors.

Chapter 1 is the introduction, outlining the research question, methodology, delimitations, and sources. Chapter 2 deals with the role of investment treaty arbitration in enforcing private interests and a global rule of international investment law. Chapter 3 deals with the theory and sources of the substantive law on sovereign immunity. Chapter 4 analyzes domestic case law and legislation in the jurisdictions chosen (i.e., the comparable objects). Chapter 5 distill rules, theories, doctrines, and equivalent from the doctrinal understanding outlined in chapter 3 and the interpretation of the doctrinal sources as conducted in chapter 4, in order to offer possible solutions to the problems underscored in chapter 2. In Chapter 6, the author presents his conclusions and findings.