Legal development

High Court of Australia unanimously recognises and enforces investment arbitration award

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    What you need to know

    • Investment treaty arbitration is a form of dispute settlement between States and foreign investors. It is commonly conducted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) and governed by the ICSID Convention,  which is given force of law in Australia by the International Arbitration Act 1974 (Cth) (Arbitration Act).
    • The High Court of Australia has recognised and enforced an ICSID investment arbitration award against the Kingdom of Spain in the first contested application of its kind in Australia.
    • The Court held that Spain waived foreign State immunity from proceedings in the courts of Australia by entering into the ICSID Convention. However, the Court confirmed that States can still rely on immunity from "execution" of an award against their property. This means that, although the Court held that Spain had waived its immunity from the award being recognised and enforced, the investors could not go further and apply for the award to be executed against Spain's property in Australia to satisfy the award.
    • The decision reinforces that Australian courts continue to provide high quality decisions that respect and support the role of international arbitration, including investment arbitration. The Court's decision provides certainty to investors that their investment arbitration awards may be recognised and enforced by Australian courts. Spain's resistance to the jurisdiction of Australian courts to recognise and enforce the award was rejected at first instance by the Federal Court of Australia, on appeal by the Full Federal Court of Australia and finally by the High Court.
    • The decision also provides clear guidance to investors as to the application of the ICSID Convention in Australia.


    International investment treaties are entered into by States to promote and encourage foreign investment. They commonly confer certain standards of protection on foreign investments in a host State and then grant the foreign investors the right to bring claims directly against the host State where those protections are breached through investor-State dispute settlement.

    Disputes are often resolved through investment treaty arbitration (with the resulting awards then being capable of being enforced globally). Certainty of the enforceability of investment treaty arbitration awards can promote foreign direct investment because this permits foreign investors to mitigate sovereign risk with respect to their investments.

    On 12 April 2023, the High Court delivered its judgment in Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. & Anor [2023] HCA 11. The decision concerns the interaction between the Foreign States Immunities Act 1985 (Cth) (Immunities Act) and the ICSID Convention . The Court held that Spain could not rely on State immunity from jurisdiction to resist the investors' application for the recognition and enforcement of an arbitration award, affirming the previous decisions of the Federal Court and the Court of Appeal.

    The decision is significant because it is the first contested application for the recognition and enforcement of an investment treaty arbitration award in Australia. The Court's decision provides certainty to investors that their investment arbitration awards may be recognised and enforced by Australian courts.

    However, the decision also confirms that there is a separate process of executing the award against the property of an award debtor and that States may be immune from that separate process. As a consequence, absent some other exception to foreign State immunity, the award creditor will likely still need to rely to some extent on the award debtor's voluntary compliance with the judgment to actually recover the award debt.


    The dispute

    The proceedings before the High Court arose from awards issued in separate ICSID arbitrations between Spain and foreign investors (from Luxembourg and the Netherlands) concerning Spain's breaches of its obligations under a multilateral treaty.

    In summary:

    • Between 1997 and 2011, Spain introduced a regime of financial incentives to encourage investment into Spain's renewable energy sector that Spain reduced and eventually withdrew from between 2012 and 2014.
    • In 2013, the investors commenced arbitrations against Spain in accordance with the ICSID Convention, claiming that the withdrawal constituted breaches of Spain's obligations under the Energy Charter Treaty (ECT). The respective arbitral tribunals ordered that Spain pay compensation to the investors amounting to approximately EUR 240 million (the ICSID Awards).
    • Article 53 of the ICSID Convention provides for the binding nature of an award made pursuant to the ICSID Convention. Article 54 of the ICSID Convention provides that each Contracting State shall recognise an award as binding and enforce the pecuniary obligations "as if it were a final judgment of a court in that State". Article 54 is subject to Article 55, which preserves any immunity that a State has "from execution". 

    First instance and appeal decisions

    In 2019, the investors applied to the Federal Court of Australia for orders to recognise and enforce the ICSID Awards.

    Spain resisted the applications arguing that it was immune from the jurisdiction of the Court under the Immunities Act. Section 9 of the Immunities Act provides that a foreign State is immune from jurisdiction of Australian courts in a proceeding. Section 10 of the Immunities Act provides that a foreign State is not immune in a proceeding in which it has submitted to jurisdiction.

    The Federal Court held that Spain had waived reliance on foreign State immunity in respect of recognition and enforcement (but not execution) of the ICSID Awards because it had submitted to the jurisdiction of the Australian courts under section 10 of the Immunities Act by becoming a party to the ICSID Convention.

    Upon Spain's appeal in respect of one of the ICSID Awards, the Full Federal Court agreed with the Federal Court's conclusion that Spain had waived reliance on foreign State immunity, but considered that the proceedings sought recognition of the award rather than recognition and enforcement.

    A more detailed background to the proceedings is available in Ashurst's previous International Arbitration Update here.

    High Court decision

    Spain then appealed the decision of the Full Federal Court to the High Court. Spain argued that it had not waived immunity by Articles 53–55 of the ICSID Convention or that, if it had, it had only waived immunity from court processes relating to recognition of the ICSID Award. The High Court unanimously dismissed Spain's appeal.

    The High Court held that the effect of Spain's agreement to Articles 53–55 of the ICSID Convention amounted to a waiver of foreign State immunity from the jurisdiction of the courts of Australia to recognise and enforce the ICSID Award. However, the High Court held that there had been no waiver by Spain of any immunity from execution.

    In reaching these conclusions, the Court explained that the Immunities Act contains a general regime of immunity from jurisdiction so that Australian courts "will not by their process make the foreign State against its will a party to a legal proceeding".  A further and separate regime in the Immunities Act concerns immunity from any process or order of an Australian court in respect of execution over property, including "for the satisfaction or enforcement of a judgment, order or arbitration award".

    The Court also addressed what is required of a sufficiently expressed waiver for the purposes of section 10(2) of the Immunities Act. It held that a waiver of immunity from jurisdiction "by agreement" could occur either explicitly or by implication, noting that waiver is rarely accomplished by implication, only arises where the waiver was unmistakable, and that the words said to evidence waiver by implication must be construed narrowly.  If the word "waiver" is not expressly used, the inference that an express term involves a waiver of immunity may be drawn if the implication is clear from the words used and the context.  In this case, Spain's accession to the ICSID Convention (and agreement to the regime of recognition and enforcement in Articles 53–55) constituted a waiver of its immunity under the Immunities Act for the purposes of recognition and enforcement of the ICSID Award. The Court also confirmed that separate conduct amounting to a waiver of immunity was not required before an award can be recognised and enforced.

    In construing Articles 53–55, the High Court considered the meaning of "recognition", "enforcement" and "execution". The Court described these concepts as follows (adopting the definitions in the recently approved version of the proposed Restatement of the Law: The US Law of International Commercial and Investor-State Arbitration):

    • Recognition: the court's determination that an international arbitral award is entitled to be treated as binding, involving the court's acceptance of the award's binding character and its preclusive effects.
    • Enforcement: the legal process by which an international award is reduced to a judgment of a court that enjoys the same status as any judgment of that court.
    • Execution: the means by which a judgment enforcing an international arbitral award is given effect, commonly involving measures taken against the property of the judgment debtor by a law-enforcement official acting pursuant to a writ of execution.

    The Court said that, in the English language version of the text of the ICSID Convention, Articles 53-55 draw a clear distinction between each concept and that it is clear that Article 55 preserves immunity of a State in respect of execution only.

    The Court considered that this position was not changed by the conflation of the words "enforcement" and "execution" in the French and Spanish texts (which are equally authoritative as the English text). The Court held that the French and Spanish texts were not intended to mean anything different from the English text.

    Having considered the text, background and purpose of the ICSID Convention, the High Court concluded that there was a waiver of immunity against recognition and enforcement proceedings. Further, the High Court held that the orders made in the courts below were "properly characterised as orders for recognition and enforcement" and upheld the orders made by the Full Federal Court that recognised the ICSID Award and entered judgment for the sums awarded in the award.

    Finally, the Court held that the effect of the Court of Justice of the European Union's (CJEU) decision in Republic of Moldova v Komstroy LLC [2021] 4 WLR 132 was not applicable to this case. In Komstroy, the CJEU applied its earlier decision of Slovak Republic v Achmea BV [2018] 4 WLR 87 to decide that the agreement to arbitrate in the ECT must be interpreted as not being applicable to "intra-EU" disputes between a European Union (EU) member state and an investor from another EU member state. In this case, the relevant agreement to arbitrate arose from Spain's entry into the ICSID Convention.


    This decision is another high quality decision of an Australian court that respects and supports the role of international arbitration, including now with respect to investment arbitration. The Court's decision provides certainty to investors that their investment arbitration awards may be recognised and enforced by Australian courts, and has also provided clear guidance as to the application of the ICSID Convention in Australia for those seeking to enforce ICSID (and other investment treaty) awards in the Australian courts.

    In this regard, an important aspect of this case is that the investors were asking the Australian courts to enter judgment and make orders giving effect to the ICSID Awards, but did not seek execution of the awards against the property of Spain in Australia. Investors seeking similar relief in respect of their investment arbitration awards can be assured that this relief will generally be granted by Australians courts. However, investors who seek to go further and to execute upon their investment arbitration awards should be aware that their ability to do so may be affected by a separate immunity against execution that is available to foreign States under the Immunities Act. Investors will need to establish an exception to this immunity (such as executing against commercial property of the foreign State) in order to successfully recover against an investment arbitration award made against a foreign State.

    The High Court's decision contributes to a growing body of international law regarding investment treaty arbitrations, which are in turn a growing part of the dispute resolution landscape. The agreement of investment treaties has significantly increased since the 1980s, with many bilateral and multilateral treaties being concluded with protections for foreign investments to promote and attract foreign direct investment. These treaties commonly include provisions allowing a foreign investor to commence arbitration directly against a host State if they believe those protections have been breached. In line with the increasing number of investment treaties, the number of investment treaty arbitrations has increased significantly since the 1980s. In 2022 alone, ICSID administered 346 arbitrations – close to 40% of the 888 cases administered since the first ICSID arbitration was registered in 1972.

    Investment arbitration is a developing and at times complex area of law that can give rise to significant protections for foreign investors, but equally create uncertainties for them too. This is demonstrated, for example, by the fact that several EU member states are in the process of withdrawing from the ECT. For more information on this trend see our article here. There is also uncertainty about the effectiveness of "intra-EU" arbitrations arising out of the ECT. Recently, the US District Court for the District of Columbia refused to enforce an award against Spain rendered pursuant to the ECT. The court held that the ECT was not a valid agreement to arbitrate between Spain and the relevant investors, thereby giving effect to CJEU decisions in Achmea and Komstroy that held that bilateral and multilateral investment treaties like the ECT are incompatible with EU Law. The US District Court's decision reached the opposite conclusion to previous decisions of that court as well as courts of other jurisdictions and arbitral tribunals.

    The International Arbitration Group at Ashurst works as one team world-wide and has significant experience advising on investment treaty protections and investment treaty arbitrations.

    Authors: Adam Firth, Partner; Luke Carbon, Senior Associate; Prajesh Shrestha, Senior Associate; and Christina Han, Lawyer.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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