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M. Nikita Kondrashov

Associate - Luther (Hamburg)

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Sovereign Immunity from Execution (in Enforcement)

I. Definition

1.

Under the broad concept of sovereign immunity, a State cannot be subjected to the jurisdiction of the courts and tribunals of another State without the express agreement of the former State. Sovereign immunity from execution, as an element of the overarching concept of sovereign immunity,1 precludes authorities of one State, from taking measures of constraint against the property of another State to satisfy the demands of creditors under court decisions, arbitral awards, and similar instruments.

2.

In the investor-State arbitration context, the question of immunity from execution arises, depending on domestic law, at the stage of recognition and enforcement of an arbitral award against the respondent-State, or at the stage when execution against specific property of that respondent-State is sought.

II. History and development

3.

The concept of immunity from execution developed alongside the overarching concept of sovereign immunity. Akin to sovereign immunity, the concept of immunity from execution can be derived from the principle of sovereign equality of States in international law, characterized by the latin maxim par in parem non habet imperium.2

4.

Based on the principle of sovereign equality, a State could not be sued, and its assets could not be used for enforcement of judgments, absent its explicit consent. This status quo was, for the most part, prevalent until the second half of the XX century. The situation started to change gradually in the second half of the XX century. One of the most widely known expression of that change is the 1976 U.S. Foreign Sovereign Immunities Act. This act was one of the first statutes to codify the functional approach to sovereign immunities, distinguishing between situations when a state invoked this privilege for public and commercial purposes. Since then, the functional approach to sovereign immunities in general and immunities from execution, in particular, has been rapidly developing and is nowadays reflected in the domestic laws of most of the developed States.3

III. Distinction from other types of sovereign immunities

5.

Unlike immunity from jurisdiction, which precludes courts of one State from assuming jurisdiction over claims brought against another State,4 immunity from execution protects the property of a State from being used to satisfy the debts of that State to third parties. The latter goes further than immunity from jurisdiction: even if a State could not enjoy immunity from jurisdiction.5

IV. Effect

6.

Assets of a State, which are protected by sovereign immunity from execution, cannot be used to satisfy the debts of that State to its creditors. Those assets usually encompass:6

  • property (including bank account) used for diplomatic and consular purposes;
  • military property;
  • central bank accounts;
  • property forming part of the cultural heritage of the State; and
  • property forming part of an exhibition of objects of scientific, cultural or historical interest.

V. Sources of law governing sovereign immunity from execution and its scope

7.

The sources of immunity from execution are distinct from the sources of immunity from jurisdiction.7

8.

Rules of customary international law govern sovereign immunity from execution.8 There are only a few international or regional treaties that address the issue of sovereign immunity from execution.9 The 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property, which has been established on the basis of the work of the International Law Commission10 and addresses some aspects of State immunity from execution (or from measures of constraint),11 is not yet in force; however, the Convention reflects, at least in part, customary international law.12 The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is silent on the issue of sovereign immunity from execution. Article 55 of the ICSID Convention specifically provides that the Convention does not derogate from the relevant domestic law concerning immunity from execution.13

9.

Several States have adopted domestic legislation to give effect to immunity from execution.14 In other States, courts and tribunals have implemented the scope and limits of claims to sovereign immunity.15

VI. Functional and absolute immunity from execution

10.

In the past, vast majority of jurisdictions followed the concept of absolute immunity of sovereign property.16 At that time, all assets held by a foreign State were immune from actions aimed at executing court decisions, arbitral awards and similar instruments.

11.

Today, the concept of functional immunity prevails in customary international law17 and in most domestic laws.18 Under this approach, assets of a foreign State, which are not used for official State purposes (acta jure imperii) are not covered by immunity against execution or measures of constraint. See domestic laws regulating issues of immunity19 and court decisions applying the concept of functional immunity.20 

VII. Waiver of immunity from execution

12.

Normally, a State can waive its immunity from execution by an international agreement, written contract, or by a declaration before the competent authority of another State handling the relevant proceeding. Domestic laws usually provide that the terms of a waiver have to be clear and unequivocal21 or even "express and specific."22 The interpretation of the terms of a waiver and its scope vary across jurisdictions. See further Waiver of immunity.

13.

Under Article 55 of the ICSID Convention, participation in an ICSID arbitration does not by itself constitute a waiver of immunity of execution.23

14.

Generally, exceptions from jurisdictional immunity, such as exception for commercial activities (acta jure gestionis), as well as waivers of jurisdictional immunity, do not automatically result in waiver of immunity from execution against specific property.24 After a creditor succeeds with recognition and enforcement of an arbitral award, it must go through the hurdle of identifying specific State property that is free from immunity and can be used for the execution of the decision. In other words, the creditor would need to show that an exception from immunity from execution applies to specific property or that the State validly waived its immunity in respect of that property in order to execute the award against that property.

Bibliography

Stoll, P. T., State Immunity, in Wolfrum (ed.), The Max Planck Encyclopedia of Public International Law, 2012.

Badr, G.M., State Immunity: An Analytical and Prognostic View, 1984.

Cosnard, M., La soumission des États aux tribunaux internes: Face à la théorie des immunités des États, 1996.

Fox, H., and Webb, P., The Law of State Immunity, 3rd ed., 2013.

Yang, X., State Immunity in International Law, 2012.

Poulain, B., L’arbitrage transnational et le droit français des immunités de l’Etat étranger, in Leben, C. (dir.), Droit international des investissements et de l’arbitrage transnational, 2015, pp. 967 et seq. 

Malet-Deraedt, F., The New French Legislation on State Immunities from Enforcement, ASA Bulletin 36:2, 2018, p. 332.

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