Summary

PRESS SUMMARY - 22 October 2024

(1) Infrastructure Services Luxembourg S.a.r.l (2) Energia Termosolar B.V. v The Kingdom of Spain; (1) Border Timbers Limited (2) Hangani Development Co. (Private) Limited v Republic of Zimbabwe [2024] EWCA 1257

On appeal from [2023] EWHC 1226 (Comm) and [2024] EWHC 58 (Comm)

Court of Appeal (Civil Division): Sir Julian Flaux (Chancellor of the High Court), Lord Justice Newey, Lord Justice Phillips

BACKGROUND

These two appeals concern whether foreign states can rely on the principle of state immunity to set aside the registration in England of an international investment arbitration award under the Arbitration (Investment Disputes) Act 1966 (the "1966 Act"). The appeals were heard, and judgment was given, together.

Infrastructure Services & Anor v Spain

In 2018, Infrastructure Services Luxembourg S.a.r.l and Energia Thermosolar B.V. (the "ISL claimants") obtained an arbitral award worth 101 million against Spain under the Energy Charter Treaty ("ECT") for changes to Spain's tariff advantage scheme for solar energy (the "ISL Award"). The arbitral award was issued by the International Centre for Settlement of Investment Disputes ("ICSID") under the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "Convention").

In June 2021, Cockerill J granted the ISL claimants' application under the 1966 Act to recognise the ISL Award in England as if it had been a judgment of the High Court. Spain applied to set- aside the order on grounds of state immunity under section 1 of the State Immunity Act 1978 (the "SIA"). In May 2023, Fraser J held that Spain was not entitled to claim state immunity under the 1966 Act and dismissed its application. Spain appealed to the Court of Appeal.

Border Timbers & Anor v Zimbabwe

In 2015, Border Timbers Limited and Hangani Development Co. (Private) Limited (the "Border claimants") secured an ICSID arbitral award against Zimbabwe under a bilateral investment treaty between Zimbabwe and Switzerland (the "Zimbabwe-Switzerland BIT") for expropriation of their land (the "Border Award"). The Border Award required Zimbabwe to reinstate the properties to the Border claimants and pay $29 million or, alternatively, $123 million plus, in either event, $1 million in moral damages.

In 2021, the Border claimants obtained an order recognising the Border Award under the 1966 Act, which Zimbabwe applied to set-aside also on grounds of state immunity. In 2024, Dias J reached the same conclusion as Fraser J and dismissed the application. Zimbabwe appealed.

JUDGMENT

The Court of Appeal unanimously dismissed the appeals by holding neither defendant state was entitled to defend the recognition claims by reference to state immunity. The Court of Appeal did, however, remit Zimbabwe's application to set-aside to the Commercial Court for directions as regards its non-immunity defences.

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