THE APPLICATION OF ‘SOVEREIGN IMMUNITY DOCTRINE’ IN INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENTS DISPUTE (ICSID) ARBITRATION

Abstract

The invocation of sovereign immunity by States had been a recurring event in international commercial arbitration and enforcement of awards arising therefrom. This was also an issue in ICSID arbitration. This work aimed at examining the provisions of ICSID Convention relating to sovereign immunity of a State Party both as it related to immunity from jurisdiction and immunity from execution. The objectives of this work were to identify those challenges encountered in the arbitration of investment disputes involving a State Party under the ICSID Convention as well as the execution of the resulting award and to recommend ways of overcoming the challenges. This work used doctrinal method of data gathering and in effect primary sources of law notably the ICSID Convention, the United Nations Convention on Jurisdictional Immunities of States and Their Property and relevant case laws were consulted. Secondary sources like relevant law textbooks and journal articles were also consulted. This study found that the problem of invocation of sovereign immunity by a State party in ICSID arbitration had been eliminated by the ICSID Convention since the consent of a Contracting State to submit to ICSID arbitration meant an irrevocable waiver of jurisdictional immunity. This work however found that sovereign immunity from execution was still a major challenge in ICSID arbitration as the ICSID Convention preserved the law of Contracting States relating to immunity from execution which might lead to an invocation of sovereign immunity that might defeat an ICSID award at the enforcement stage. The work also found that such invocation of sovereign immunity could trigger the institution of international claim and restoration of diplomatic protection by the Contracting State whose national was an award creditor in favour of such national against the defaulting State party. The work recommended that should any opportunity arise for amendment of the ICSID Convention, the article of the Convention dealing with immunity from execution should be amended and streamlined in line with the relative theory of customary international law on sovereign immunity from execution incorporating the right of a State party to waive its immunity from execution, and also stipulating that the property of a State in use or intended use for commercial purposes in relation to the proceedings should not be exempted from execution.