Eiser Infrastructure Ltd v Kingdom of Spain: The ICSID Convention, Sovereign Immunity, and Federal Court of Australia Dealing with a Supposed 'Zombie Judgment

• Author: Ylli Dautaj
• Pages: 147-165

Eiser Infrastructure Ltd v Kingdom of Spain: The

ICSID Convention, Sovereign Immunity, and

the Federal Court of Australia Dealing with a

Supposed “Zombie Judgment”

Y

LLI

D

AUTAJ

*

Abstract

This extended case note underscores a perplexing contemporary issue of public

international law as it interacts or intersects with international arbitration law.

The Federal Court of Australia was recently tasked to adjudicate an issue that once

again exposed the nuanced question of whether the ICSID Convention preserves

immunity from enforcement and execution, or only for the latter. The international

case law on this point has been sparse, whereas one of the leading cases in

comparative international law dates back to 1986 and comes from the Southern

District of New York—the case of Liberian Eastern Timber Corporation (LETCO)

v. The Government of the Republic of Liberia.

This note deals with the case between Eiser Infrastructure (later Infrastructure

Services Luxembourg) and the Kingdom of Spain, which invited a nuanced

comparative analysis of whether an ICSID award-debtor state can invoke the plea of

sovereign immunity to shield against enforcement. Spain submitted that it would be

futile for the court to convert an ICSID award into a judgment only to have that

judgment rendered unenforceable on the grounds of immunity when execution is

sought. According to Spain, a “zombie judgment” would be constituted.

The first instance of the Federal Court of Australia, like the Southern District of

New York, clarified and approved the distinction between enforcement and

execution. But the second instance did not, and instead reasoned that making a

judgment of the award was considered to fall within recognition proceedings.

Conclusively then, the second instance deviated in reasoning from the first instance

(and LETCO) but got the holding right.

Thus, the Federal Court of Australia has both clarified the subject-matter and

added confusion to it simultaneously. This author makes the point that recognition

and enforcement are categorically and unequivocally pre-execution matters that fall

within the realm of a local courts’ jurisdictional ambit by submission (or waiver).

This note makes the broader point that judicial decisions stemming from the

Australian courts, like French, U.S., and other trade-friendly nations’ courts, have

a prominent role to play as subsidiary means of determining rules of public

* Adjunct Professor, Penn State Law, US. Managing Partner, DER Juridik, Stockholm,

Sweden. PhD Candidate, University of Edinburgh, UK. Author can be contacted at

ylli.dautaj@derjuridik.se.

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148 THE INTERNATIONAL LAWYER [VOL. 55, NO. 1

international law. Thus, the outcome in the Federal Court of Australia plays an

important role in international comparative law.Spain also submits that if the

applicants’ contention, that the effect of Arts 54(3) and 55 is to limit consideration

of immunity to the time after a Centre award is registered as a judgment, was

accepted it would lead to an absurdity – the court would be engaged in an exercise in

futility by converting a Centre award into a judgment only to have that judgment

rendered unenforceable on the grounds of immunity when execution is sought.

Spain submits that, in other words, a “zombie judgment” is created and that it

cannot have been the intention of the legislature to create a scheme in which the

courts would participate in such an absurdity.

1

I. Introduction

This extended case note walks the reader through a particular

contemporary issue of international law and arbitration law that was

adjudicated in (initially) Eiser Infrastructure Ltd. (Eiser) and the Kingdom

of Spain (Spain); that is, whether the International Centre for Settlement of

Investment Disputes (ICSID) Convention preserves immunity from

enforcement and execution, or only for the latter.

2

The interpretation and

application rests on the linguistic and semantic understanding of the

concepts recognition, enforcement, and execution, in general, and as those

pertain to the ICSID Convention, in particular.

The case at hand neatly underscores the perplexing interaction and

intersection between international arbitration law and sovereign immunity

law. More specifically, the case invited a nuanced comparative analysis of

whether an ICSID award-debtor state can invoke the plea of sovereign

immunity to shield against enforcement of an arbitral award, namely, the

converting of an award into a judgment of the court.

1. Eiser Infrastructure Ltd. v Kingdom of Spain, [2020] FCA 157, ¶ 103 (24 February 2020)

(Austl.).

2. For scholarly works on this topic, see e.g., Aron Broches, Awards Rendered Pursuant to the

ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution, 2 ICSID R

EV

.—

F

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D.M. L

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(1st ed. 2003); L

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., G

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(1st ed. 2004); Matthew Saunders & Claudia Salomon, Enforcement of Arbitral

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57 (Catherine Titi ed., 2021).

THE INTERNATIONAL LAWYER

A TRIANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW

PUBLISHED IN COOPERATION WITH

SMU DEDMAN SCHOOL OF LAW