Neil Newing examines a landmark decision in the UK Supreme Court confirming no state immunity defence to registration in Thomson Reuters PLC Magazine

The UK Supreme Court ("UKSC") recently delivered a landmark judgment concerning whether foreign states can rely on state immunity to set aside the registration of an ICSID arbitral award in England and Wales.

In Republic of Zimbabwe v Border Timbers Ltd and Another [2026] UKSC 9, the UKSC upheld an earlier Court of Appeal decision that Spain and Zimbabwe (in a conjoined appeal) could not invoke state immunity to oppose the enforcement of ICSID arbitral awards, confirming that foreign states cannot claim sovereign immunity to avoid registration of such awards in the English courts.

Background

The case relates to two separate investor-State disputes, in respect of which arbitral awards were rendered pursuant to the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("the ICSID Convention") in favour of the respective investors, awarding compensation totalling €120m against Spain, and $124m against Zimbabwe respectively.  Separately, the investors applied to have these awards registered in the English courts under the Arbitration (International Investment Disputes) Act 1966, which gives effect to the UK’s obligations under the ICSID Convention.

The awards were each registered in 2021 and both Spain and Zimbabwe sought to challenge the respective registrations on the basis that they were immune from the adjudicative jurisdiction of the English courts under section 1(1) of the State Immunity Act 1978 ("SIA 1978").  Spain's challenge was dismissed in May 2023 by Mr Justice Fraser, and Zimbabwe's challenge was dismissed in January 2024 by Mrs Justice Dias, albeit on differing grounds.

Spain and Zimbabwe separately appealed the respective decisions against them, and their appeals were heard together by the Court of Appeal.  In October 2024, the Court of Appeal dismissed their appeals and rejected both states’ claims to immunity, finding that their agreement to article 54(1) of the ICSID Convention amounted to a submission to jurisdiction before the English courts under section 2(2) of the SIA 1978.

Spain and Zimbabwe appealed that decision to the UKSC.

Decision

In its judgment, the UKSC noted that it had been asked to rule on two issues: (1) whether, in agreeing to be bound by article 54(1) of the ICSID Convention, the appellant states had submitted to the jurisdiction of the English courts by agreement within the meaning of section 2(2) of the SIA 1978 such that they do not enjoy immunity from adjudicative jurisdiction; and (2) whether the states had validly agreed to arbitrate with the investors within the meaning of section 9(1) of the SIA 1978 such that they do not enjoy immunity from adjudicative jurisdiction.

In a unanimous ruling, the UKSC upheld the Court of Appeal’s decision that article 54(1) of the ICSID Convention constituted a submission to jurisdiction by prior written agreement, and so dismissed the appeals, confirming that Spain and Zimbabwe could not use arguments of state immunity to avoid registration of the awards.

The UKSC first determined that, for a prior written agreement to qualify as a submission to jurisdiction, it was necessary that there was a "clear and unequivocal expression of the state's consent to the exercise of jurisdiction."  Importantly, however, this "does not require explicit words such as waiver or submission", but rather "the test is whether the words used necessarily lead to the conclusion that the state has submitted to the jurisdiction."

Having decided on the appropriate test, the UKSC then turned to consider the proper interpretation of Articles 53 to 55 of the ICSID Convention, and particularly Article 54(1) to see whether it satisfied this test.

In this regard, Article 54(1) of the ICSID Convention provides that "Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State […]."

The UKSC noted that Article 53 (1) of the ICSID Convention contains an agreement (in writing) by each contracting party that awards rendered under the ICSID Convention shall be final and binding, and that they "shall abide by and comply with the terms of the award."  The UKSC found that “Article 54 then imposes the obligation to recognise and enforce arbitral awards as final and binding without any distinction being drawn between awards against private investors and against host contracting states.”

In particular, the UKSC considered that, on the ordinary meaning of the words, "each contracting state therefore agrees by article 54(1) not only that it will recognise and enforce awards, but also that awards to which it is a party will be recognised and enforced in other contracting states which have undertaken the same obligation."

This decision was further reinforced by the fact that Articles 54(3) and 55 expressly preserved state immunity in respect of execution against assets, but there was no such preservation in respect of adjudicative immunity.

In reaching its decision, the UKSC noted that the ICSID Convention was set up to encourage a free flow of private investment in sovereign states by affording investors a dispute resolution mechanism to mitigate against political risk.  If state parties were subsequently able to rely on an immunity not available to private investors, then this purpose would be frustrated.

The UKSC held that both countries had therefore submitted to the jurisdiction of the English courts under section 2(2) of the SIA 1978 by virtue of Article 54(1) of the ICSID Convention and, consequently, they could not rely on state immunity to oppose the registration of ICSID awards against them.

Having dismissed the appeals on the basis of this first issue, the UKSC did not address the second issue concerning section 9(1) of the SIA 1978.

Comment

In dismissing the appeal, the UKSC has confirmed that by signing the ICSID Convention, states waive their right to immunity regarding the adjudicative jurisdiction of the English courts.  As such, states cannot rely on arguments of state immunity in order to seek to prevent registration of ICSID awards in the English courts.

The UKSC judgment adds to the international consensus that ICSID awards must be complied with and enforced by signatory states, and brings the English courts in line with recent decisions in the USA, Australia, New Zealand and Malaysia which have all interpreted article 54(1) as a waiver of adjudicative immunity.

The UKSC decision also serves as an important affirmation of the pro-arbitration approach of the English courts.  Going forwards, it should ensure that ICSID awards can be registered for enforcement purposes in an efficient and straightforward manner, and in doing so, avoid the cost and delay involved in having that registration challenged.  As noted by the UKSC, however, this does not affect a state's right to claim that particular assets may be immune from execution.