Summary

Background to the Appeals

These appeals concern whether the Kingdom of Spain and the Republic of Zimbabwe, each the subject of arbitration awards rendered pursuant to the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("the ICSID Convention"), can rely on their sovereign immunity to set aside the registration of those awards in the High Court under the Arbitration (International Investment Disputes) Act 1966 ("the 1966 Act").

Section 1 of the State Immunity Act 1978 ("the SIA 1978") gives foreign states immunity from the jurisdiction of courts of the United Kingdom, except as provided for in sections 2 to 11 of the SIA 1978. The exceptions relevant in these appeals are sections 2 and 9. Section 2(2) provides that a state is not immune regarding proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom by a prior written agreement. Section 17 of the SIA 1978 explains that an agreement includes international treaties. Section 9(1) provides that a state is not immune, if it has agreed in writing to submit a dispute to arbitration, as respects proceedings which relate to arbitration.

Infrastructure Services Luxembourg S.À.R.L. and Energia Termosolar BV (together "Infrastructure") are companies domiciled in Luxembourg and the Netherlands respectively.

Infrastructure claimed that changes made by Spain to its regulatory regime governing its energy market breached the Energy Charter Treaty ("the ECT") in respect of their investments in renewable energy facilities in Spain. Arbitration proceedings commenced in 2013. By an award dated 15 June 2018, Spain was ordered to pay 112 million in compensation (later reduced by 11 million).

Separately, the case against Zimbabwe arises out of investments in land made by Border Timbers Ltd and Hangani Development Co. (Private) Ltd, which Zimbabwe later expropriated without compensation. The companies initiated arbitral proceedings against Zimbabwe pursuant to a bilateral investment treaty with Switzerland, which provided for the submission of disputes to arbitration under the ICSID Convention. Arbitration proceedings were commenced and, in an award dated 28 July 2015, the arbitral tribunal ordered Zimbabwe to pay US$124m together with interest, and a further US$1m in moral damages and costs.

The companies involved in the arbitration with Spain and Zimbabwe respectively successfully applied to the High Court of England and Wales to register the relevant award under the 1966 Act as if it were a final judgment of the High Court. The states in both cases applied to set aside the registration order on the basis that they were immune from the adjudicative jurisdiction of the English courts under section 1(1) of the SIA 1978.

In relation to Spain, on 24 May 2023 Fraser J held that, by virtue of consenting to article 54(1) of the ICSID Convention and article 26 of the ECT, Spain had submitted to the jurisdiction of English courts by prior written agreement under section 2(2) of the SIA 1978. In the alternative, Spain was precluded from contesting the existence of an arbitration agreement between itself and the companies, such that section 9(1) of the SIA 1978 was automatically satisfied.

In relation to Zimbabwe, on 19 January 2024 Dias J held that article 54(1) of the ICSID Convention constituted a general waiver of immunity but did not meet the elevated threshold of submission to jurisdiction for the purposes of section 2(2) of the SIA 1978. The judge also held that section 9 of the SIA 1978 required the English court to make its own determination of whether Zimbabwe had agreed to arbitration. In any event, the judge held that registration of an ICSID award is a purely administrative act and therefore not an exercise of adjudicative jurisdiction, such that the SIA 1978 did not apply at all to registration proceedings under the 1966 Act.

Both Spain and Zimbabwe appealed the decisions against them. The Court of Appeal held that registration of an ICSID award under section 1 of the 1966 Act engages the adjudicative jurisdiction of the English courts. In relation to section 2(2) of the SIA 1978, the Court of Appeal held that article 54(1) of the ICSID Convention constitutes a prior written agreement by which the contracting states to the ICSID Convention submitted to the jurisdiction of the courts of other contracting states. Article 54(1) was a sufficiently express and clear submission to the jurisdiction to satisfy section 2(2) and displace the immunity afforded by section 1(1) of the SIA 1978 in respect of each appellant state.

The Court of Appeal considered it unnecessary to decide whether section 9 applied, but it indicated that it was difficult to interpret that provision as other than imposing a duty on the English court to satisfy itself that the state in question has in fact agreed in writing to submit the dispute in question to arbitration. Spain and Zimbabwe now appeal to the Supreme Court.