Enforcing arbitral awards against sovereign states

334 Pages·2015·1.37 MB·English

Joemrith, Khanpoj (2015) Enforcing arbitral awards against sovereign states : The
validity of sovereign immunity defence in investor -state arbitration. PhD Thesis. SOAS, 
University of London 
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ENFORCING ARBITRAL AWARDS
AGAINST SOVEREIGN STATES

THE VALIDITY OF SOVEREIGN IMMUNITY DEFENCE
IN INVESTOR-STATE ARBITRATION

KHANAPOJ JOEMRITH

Thesis submitted for the degree of PhD in Law

2015

School of Law, Faculty of Law and Social Sciences,
School of Oriental and African Studies (SOAS), University of London.
Enforcing Arbitral Awards Against Sovereign States
Declaration for SOAS PhD thesis

I have read and understood regulation 17.9 of the Regulations for students of the SOAS,
University of London concerning plagiarism. I undertake that all the material presented
for examination is my own work and has not been written for me, in whole or in part, by
any other person. I also undertake that any quotation or paraphrase from the published or
unpublished work of another person has been duly acknowledged in the work which I
present for examination.

Signed: ____________________________ Date: _________________

Khanapoj Joemrith 2
Enforcing Arbitral Awards Against Sovereign States
Thesis Abstract

This thesis concerns the inter-relationship between international investment law and the
law of sovereign immunity focusing on the enforcement of arbitral awards against
sovereign states. The core hypothesis is that investor-state arbitration is severely
hampered in its role of providing a remedy to foreign investors for losses to their
investments caused by the breaches of International Investment Agreements by host
states. In particular, there exists the risk that an arbitral award against the respondent state
can be undermined by the respondent state’s use of the sovereign immunity doctrine
against execution as a defence against the payment of compensation.

Accordingly, this leads to the main research question: Whether the defence of sovereign
immunity doctrine should be fully available to a state in order to refuse the enforcement
of arbitral awards, or should it be subject to limitations specified in the municipal
sovereign immunity law of the country, in which the enforcement is sought? The major
problem of investor-state arbitration is the extent to which the consent of a state to waive
its immunity from enforcement and execution in both arbitration clauses and municipal
sovereign immunity laws actually exists in any given case.

The thesis argues that international investment law is a hybrid law displaying both private
and public law characteristics. This can influence the development of rules concerning
immunity from execution. Accordingly, the balancing of state obligations and investor
rights under a proportionality analysis could be considered as an effective tool to promote
the investment and to protect the interests for both investors and host countries towards a
fair and impartial forum, where such immunity is in issue. Lastly, this attempt could not
be effective without the development of international conventions and municipal laws on
sovereign immunity in parallel to secure the execution of arbitral awards before a
municipal court as well as to support the applicability of international conventions. Thus,
this would limit the excessive or unjustified claims of sovereign immunity as a defense
against the enforcement of arbitral awards in which state responsibility could not be
avoided for a breach of investment treaty obligations towards private investors.
Khanapoj Joemrith 3
Enforcing Arbitral Awards Against Sovereign States
Acknowledgments

Firstly, I would like to express my gratitude to my supervisor, Professor Peter Muchlinski
for his kind support in providing me a useful guidance and comment on my thesis as well
as a moral support to encourage me to overcome the difficulties over four years of my
PhD study, even during his health concern. It has been my great pleasure to work with
him, as he is one of the leading scholars in this area of my study. This thesis would not
have been possible without him.

Also, I would like to thank my second supervisor, Dr.Emilia Onyema, for supervising and
giving me a valuable comment on my thesis, especially in a commercial arbitration
aspect. I would like to convey my gratitude to Professor Dr. Sompong Sucharitkul, who
shares his experiences and practical considerations in this field. In addition, my PhD
thesis may not be successful without the help and assistance from the staffs and the
librarians of SOAS, Institute of Advance Legal Studies and London School of Economics
and Political Science.

Lastly, I am also grateful to all my family and friends for their unconditional loves and
considerable supports everyday and night during my time in London.

This thesis is dedicated to JOEMRITH family.

Khanapoj Joemrith
London, United Kingdom

April 2015

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Enforcing Arbitral Awards Against Sovereign States
Table of Contents

Abstract 3
Acknowledgements 4
Table of Cases 9
Table of Legislations and other Materials 17

PART I INTRODUCTION
Chapter 1 : Introduction
1. Brief synopsis 20
2. Structure 28
3. Methodological Framework 29
(a) Doctrinal Issues 30
(b) Legislative Practice 31
(c) Judicial Decisions and Arbitral Awards 35
4. Concluding Remarks 39

PART II THEORETICAL FRAMEWORK
Chapter 2 : International Investment Law as
a Regime of Public International Law and its related Doctrines
1. Introduction 42
2. International Investment Law as a Regime of Public International Law 43
3. The Fragmentation or Defragmentation of International Law 53
4. Doctrines relating to Investor-State Dispute Settlement 57
(a) The Doctrine of Treaty Interpretation 57
(b) The Doctrine of State Responsibility 64
5. Concluding Remarks 72

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Enforcing Arbitral Awards Against Sovereign States
Chapter 3 : The Progressive Restriction of Sovereign Immunity Law
and its Relevance to Investment Treaty Arbitration
1. Introduction 74
2. The Evolution of Restrictive Sovereign Immunity 79
(a) Foundations of Modern Sovereign Immunity Doctrine 79
(b) The Effect of State Trading 82
(c) The Shift to Restrictive Immunity 86
3. The Commercial Activity Exception
and its Relevance to Investment Treaty Arbitration 91
(a) Immunity from jurisdiction 93
(b) Immunity from enforcement and execution 99
4. Concluding Remarks 111

PART III THE ENFORCEMENT AND EXECUTION OF ARBITRAL AWARDS
Chapter 4 : International Conventions on the Enforcement
and Execution of Arbitral Awards in Municipal Courts Jurisdictions
1. Introduction 114
2. The ICSID Convention 117
(a) Background 117
(b) The Enforcement of ICSID Arbitral Awards 119
3. The New York Convention 126
(a) Background 126
(b) The Enforcement of the New York Convention Awards 127
4. The Main Distinction between the ICSID and New York Convention
on the Enforcement of Arbitral Awards 129
(a) The Applicable Law
Goverining the Enforcement of Arbitral Awards 132
(b) The Finality and the Review of Aribitral Bwards
in Domestic Courts 139
(c) The Claim of “Public Policy” 148
(d) Conclusion: A Value of Arbitral Awards 151
and its Alternative to Enforcement
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5. Concluding Remarks 154

Chapter 5 : The Impact of International Arbitration Conventions
on an Agreement to Arbitrate before Municipal Courts
1. Introduction 156
2. Immunity from Jurisdiction 158
3. Immunity from Enforcement and Execution 170
4. The Impact of International Arbitration Conventions 179
(a) The ICSID Convention 180
(b) The New York Convention 185
(c) Institutional Arbitration Rules 192
5.Concluding Remarks 203

PART IV CHALLENGES AND LIMITATIONS
Chapter 6 : Challenges and Limitations to
Enforcing Arbitral Awards Against Foreign States
1. Introduction 206
2. Execution against Mixed Purposes
and Specially Protect Foreign State Properties 209
(a) Bank Accounts Held by Diplomatic Missions
in The Executing Country 209
(b) Central Bank Funds 227
(c) Specially Protected Property 233
(d) Concluding Remarks 235
3. The Nexus Requirement 236
4. Concluding Remarks 244

PART V CONCLUSIONS
Chapter 7 : Practical Considerations and A Way Forward
1. Introduction 247
2. Practical Considerations 251
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Enforcing Arbitral Awards Against Sovereign States
(a) Amendment to International Conventions
and Investment Treaties to include an Express Waiver
of Sovereign Immunity from Execution 253
(b) Development in the Interpretation of Municipal Law
on Sovereign Immunity 262
3. A Way Forward : Reform and the use of Proportionality? 265
4. Concluding Remarks 281

Chapter 8 : Concluding Remarks 283

Bibliography 292

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Enforcing Arbitral Awards Against Sovereign States
Table of Cases

AD HOC ARBITRATIONS
British Petroleum Exploration Co. v Libyan Arab Republic (1973) 53 ILR 297

Saudi Arabia v Arabian American Oil Co. (ARAMCO) [1958] 27 ILR 117

EUROPEAN COURT OF HUMAN RIGHTS
Al-Adsani v United Kingdom, ECtHR Application no. 35763/97, Judgment, 21 November
2001

Cudak v Lithuania, ECtHR Application no.15869/02, Judgment, 23 March 2010

Fayed v United Kingdom, Judgment, ECtHR Application no. 17101/90, Judgment, 21
September 1990

Forgarty v United Kingdom, ECtHR Application no. 37112/97, Judgment, 21 November
2001

Golder v United Kingdom, ECtHR Application no. 4451/70, Judgment, 21 February
1975

Hornsby v Greece, ECtHR Application no. 18357/91, Judgment, 19 March 1997

James and others v the United Kingdom, ECtHR Application no. 8793/79, Judgment, 21
February 1986

Lithgow and Others v. United Kingdom, ECtHR Application no.9006/80; 9262/81;
9263/81; 9265/81; 9266/81; 9313/81; 9405/81, Judgment, 8 July 1986

McElhinney v Ireland, Judgment, ECtHR Application no. 31253/96, Judgment, 21
November 2001

Waite and Kennedy v Germany [GC], ECtHR Application no. 26083/94, Judgment, 18
February 1999

Sporrong & Lonnroth v. Sweden, ECtHR Application no. 7151/75; 7152/75, Judgment,
23 September 1982.

FRANCE
Bevenuti & Bonfant v. Congo, Judgment of December 23, 1980, Tribunal de Grande
Instance de Paris; See also 108 Journal Du Droit International 843 (1981).
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