Introduction
Investors and funders often rely on the availability of investment protection rights against states as part of their assessment of the bankability of new projects. But if it becomes necessary to resort to those rights, can investors expect to be able to enforce a damages award against the state in question or assign the benefit of the award? A series of key questions relating to enforceability and assignability have been tested before the highest courts in Australia, the United Kingdom and the United States, with significant implications for the commercial viability of enforcing or monetising damages awards against states.
The ICSID Convention Enforcement Regime
Many investment treaties between states provide that investors from one state party to the treaty can enforce the rights guaranteed in the treaty against another state, through international arbitration. When that protection is offered, the forum for such claims to be brought often includes ICSID, the International Centre for the Settlement of Investment Disputes. ICSID was created by and is governed by the ICSID Convention, which provides an independent, enforceable dispute resolution mechanism for foreign investors investing in the territory of member states.
Articles 53, 54, and 55 of the ICSID Convention set out its enforcement architecture. Article 53 confirms that awards are binding and not subject to review in local courts. Article 54 obliges each state to recognise and enforce an award “as if it were a final judgment of a court in that State.” Article 55 preserves the state’s immunity from execution. The system created by the ICSID Convention is, as courts across all three jurisdictions have confirmed, “self-contained.”
Non-ICSID awards are commonly enforced under the New York Convention. Similarly to Article 54 of the ICSID Convention, Article III obliges each Contracting State to recognise arbitral awards as binding and enforce them in accordance with local rules of procedure.
The Energy Charter Treaty (“ECT”) and the Intra-EU objection
Article 26 of the ECT provides that each Contracting Party consents to submit investment disputes to international arbitration. However, the Court of Justice of the European Union (CJEU) held in Moldova v Komstroy LLC (2021) (applying Slovak Republic v Achmea BV (2018)) that investor-State arbitration between EU investors and EU Member States under Article 26 of ECT is incompatible with EU law
EU Member States, including Spain, have relied on the CJEU’s decisions to argue that intra-EU ECT awards are not binding and cannot be enforced (the intra-EU objection). In June 2024, the European Commission published an inter se agreement (signed by all EU members except for Hungary) which states that Article 26 cannot, and never could, serve as a legal basis for intra-EU investment arbitration. However, outside of the EU, the courts of most states have declined to accept this and given precedence to the ECT and ICSID Convention.
Waiver of sovereign immunity: The Central question
States such as Spain will often seek to avoid enforcement of awards made in investor-State arbitration proceedings, requiring that state to pay damages, by asserting immunity from court proceedings in other countries in which orders are made for payment and/or enforcement against assets. Sovereign immunity is governed by legislation which typically provides that foreign states are immune from local court proceedings subject to enumerated exceptions, including where the state has waived its immunity by agreement. Cases across all jurisdictions have tested whether a Contracting State’s ratification of the ICSID Convention or the New York Convention amounts to a waiver of immunity in proceedings for the recognition and enforcement of awards.
Australia
In Kingdom of Spain v Infrastructure Services Luxembourg (2023) 275 CLR 292 (Spain HCA), the High Court (HCA) became the first apex court to hold that ratification of the ICSID Convention constitutes a waiver of sovereign immunity from enforcement proceedings. The HCA found that waiver may arise by necessary implication from an international agreement, and that such a waiver was an “unmistakable” implication of Articles 53–55 (while emphasising that immunity from execution under Article 55 is preserved).
In Blasket Renewable Investments LLC v Kingdom of Spain [2025] FCA 1028 (Blasket FCA), Spain sought to distinguish the proceedings from Spain HCA by arguing that Spain HCA is limited to cases in which there is a “binding” award and disputing the binding nature of the awards in question (relying on the intra-EU objection). The Federal Court applied Spain HCA, rejecting Spain’s submission and endorsing the “closed-loop” characterisation of the ICSID system. The decision is pending appeal.
The HCA’s subsequent decision in CCDM Holdings v Republic of India [2026] HCA 9 (India HCA) drew the limits of the waiver principle into sharp relief. The HCA unanimously held that, in contradistinction to the ICSID Convention, ratification of the New York Convention alone does not constitute a waiver of sovereign immunity. It identified three structural distinctions. First, unlike the New York Convention, the ICSID Convention is expressly concerned with State parties and the official records of the Convention considered sovereign immunity. Second, Article 55’s express preservation of immunity from execution supports the inference of a waiver of adjudicative immunity. Third, Article III of the New York Convention requires enforcement in accordance with local rules of procedure, incorporating local rules of sovereign immunity.
United States
In the United States, the DC Circuit’s decision inNextEra v Spain (2024) is reshaping the enforcement landscape for ICSID awards. The DC Circuit declined to resolve whether ratification of the ICSID Convention amounted to a waiver of immunity, instead holding that jurisdiction existed under the arbitration exception in the Foreign State Immunities Act. Critically, the DC Circuit held that jurisdiction turns on the existenceof an arbitration agreement, not its scope, and that Spain’s intra-EU objection concerned the scope of the agreement, not its existence. District Courts have since enforced ICSID awards against Spain on the merits, holding that ICSID awards receive “full faith and credit” as final judgments and that US courts are barred from re-examining the ICSID tribunal’s jurisdiction.
In May 2025, Spain filed a petition for certiorariseeking Supreme Court review. In October 2025, the Supreme Court invited the views of the Solicitor General. Notably, the US Government had previously supported Spain before the DC Circuit and the Solicitor General’s current position remains unknown. If the Supreme Court grants review, its decision could provide the definitive word on the enforceability of intra-EU arbitration awards in the United States
United Kingdom
In Kingdom of Spain v Infrastructure Services Luxembourg [2026] UKSC 9 (Spain UKSC), the Supreme Court unanimously held that by ratifying the ICSID Convention, each Contracting State consents to all other States undertaking the same enforcement obligation: a mutual, reciprocal acceptance from which waiver of immunity follows. The UKSC engaged with the Convention’s official records, noting that Article 55 was included not to create a new immunity but “to leave no doubt” that the law on immunity from execution remained unaffected, and concluded that Spain’s agreement constituted a “submission to the jurisdiction” within the meaning of section 2 of the State Immunity Act 1978.
Enforcement versus execution
The cases discussed above draw a sharp distinction between enforcement (from which immunity may have been waived) and execution against state property (which remains subject to local sovereign-immunity protections). Enforcing the award is therefore the first step; actual recovery remains practically and legally challenging
A recent thesis proposed by Phillipa Webb argues that a state’s waiver of adjudicative immunity ought to entail a corresponding waiver of immunity from execution, collapsing the traditional two-step regime into a “double waiver”. She grounds this argument by reference to pacta sunt servanda, the need for State accountability and a community-interest model of international law. Her survey of 20 jurisdictions identifies six that accept double waiver, undermining the claim that the current position constitutes settled custom. Whether the convergence on the “first waiver” may over time generate momentum toward the “second” remains to be seen, particularly given the English Court of Appeal’s willingness in General Dynamics v Libya (2025) to find that broadly drafted waiver clauses may provide for waiver of immunity from both enforcement and execution.
Assignment of Awards – another new frontier?
Given the challenges of enforcement and recovery touched on above, investors often look to assign the benefit of their award to a third party to secure partial recovery and shift the enforcement risk. There is currently conflicting authority on whether this is permissible for ICSID awards. In Blasket FCA, Stewart J held that “party” in Article 54(2) includes an assignee and that there is no public international law prohibition on assignment. Conversely, in Operafund v Spain [2025] EWHC 2874 (Comm) HHJ Pelling KC reached the opposite conclusion, holding that “a party” refers only to a party to the arbitration and that ICSID awards are not assignable. Both decisions are pending appeal. Whether this divergence persists and the outcome of these cases will have significant implications for the growing secondary market in arbitral awards.
Conclusion
The enforcement of ICSID awards against states has moved from procedural afterthought to a key battleground in the enforcement of investor protections and commercial certainty of state commitments. At its centre lies an increasing consensus that ratification of the ICSID Convention operates as a waiver of adjudicative immunity. The apex courts of Australia and the United Kingdom, together with the US Courts of Appeals, have each arrived at the same conclusion, and Spain’s intra-EU objection has been uniformly rejected by non-EU courts. That convergence is significant and is reinforced by the contrast drawn in India HCA, which confirms that the ICSID Convention’s structural architecture is critical to the waiver analysis.
However, the divergence between Blasket FCA and Operafundon whether assignees may enforce awards threatens to fragment the enforcement landscape, with significant commercial implications. Meanwhile, the gap between enforcement and execution means that creditors should adopt robust execution strategies, potentially involving multiple jurisdictions.
For practitioners and investors, the message is clear: risk assessment needs to go beyond winning the award. Often, the real contest now lies in closing the enforcement loop
Issue 24
A Journey in Law: In conversation with Duncan Bagshaw, KC
When Duncan Bagshaw was appointed King’s Counsel, it marked a significant milestone in his legal career
The long arm of American enforcement: Recent judicial decisions fortify the US’s status as a premier forum for enforcing arbitral awards against sovereigns
The United States is widely considered a preferred jurisdiction for the enforcement of arbitral awards against sovereigns – with good reason
A rise in M&A arbitrations: Key considerations at the start of a dispute
In the last half-decade, dealmakers have had to grow accustomed to living in “unprecedented times”, facing increased geopolitical volatility and seismic shifts in global markets
The resilience of international commercial arbitration in an era of political upheaval
Businesses are experiencing a period of geopolitical friction. Sanctions regimes and trade restrictions are expanding, supply chains are being regionalised and states are increasingly prepared to prioritise strategic and political interests over legal and institutional consistency
Price adjustment provisions for long-term technology supply agreements in uncertain economic times
Commercial parties value certainty. Yet certainty can come at a cost: a fixed price or pricing model that is commercially acceptable to both sides at the time of contracting may become financially unsustainable if market conditions change or the customer’s use or reliance on the products or services changes over time
Consolidation in international arbitration: Avoiding the pitfalls
Consolidation—the merging of two or more arbitral proceedings into one—is a deceptively simple concept
Who decides who decides? Australian court reaffirms kompetenz-kompetenz principle
The “kompetenz-kompetenz” doctrine provides that an arbitral tribunal has jurisdiction to rule on its own jurisdiction. The competence principle, as it is sometimes known, is enshrined in Article 16 of the UNCITRAL Model Law on International Commercial Arbitration (Model Law) and is given the force of law in Australia by Sections 16(1) and 21 of the International Arbitration Act 1974 (Cth) (IAA)
Critical minerals: Energy transition or energy security?
When the Paris Agreement was signed in 2015, its aims were clear: reduce carbon emissions and limit global warming to no more than 1.5°C above pre-industrial levels
Mass arbitration in the United States: A new frontier in dispute resolution
Mass arbitrations—in which dozens or hundreds of legally identical arbitrations are filed against a corporate respondent—can result in multi-million-dollar upfront fees before an arbitrator ever sees the case
AI in IA: Ethics concerns for arbitrators
Generative AI has changed what arbitrators can do in seconds: summarize a voluminous record, prepare a first draft of the procedural history section of an award, or stress-test legal reasoning
Dealing with disruption: An overview of current issues arising from Middle Eastern conflicts
The crisis in the Middle East has created a landscape of uncertainty for businesses with interests in the Gulf States and beyond
Contacts
Tamlyn Mills
Partner
Emailtamlyn.mills@nortonrosefulbright.com
T:+61 2 9330 8906
Duncan Bagshaw KC
Partner
Emailduncan.bagshaw@nortonrosefulbright.com
T:+44 (20) 74445728
Olivia Peck
Associate
Emailolivia.peck@nortonrosefulbright.com
T:+44 (20) 74445663
