Mustafaen Kamal1
The modern system of international investment arbitration is built on a simple expectation: when an arbitral tribunal renders an award, it will be respected. Investors, after all, turn to this system precisely because it offers something domestic courts and political channels often cannot: neutrality, predictability, and protection against the very thing they fear most: the unchecked power of a state. But the moment an investor tries to enforce an award in a national court, they confront an ancient doctrine with a long shadow: state immunity. And so the question arises: should immunity really trump all?
The recent judgment of the English Court of Appeal in the conjoined appeals ISL v. Spain and Zimbabwe v. Border Timbers (a case which has since been heard in the Supreme Court and final judgment is expected in March 2026) has become a focal point in this debate. The Court held that, at least for the purposes of registering an ICSID award in the UK, state immunity does not prevail. Far from being a technical point about English statutory interpretation, this decision marks a broader stance on how states must behave once they bind themselves to a treaty designed to depoliticise investment disputes. The judgment also places the UK squarely in line with a growing international consensus.
To appreciate what is at stake, it helps to remember why ICSID exists. When the Convention was drafted in the 1960s, its architects knew that investors were reluctant to pour capital into countries where courts might be partial, institutions weak, or political winds unpredictable. So they built a system deliberately insulated from local interference. Awards would be final, not open to review by national courts. And states would be required to treat them as if they were their own court judgments. The key bargain was neutrality in exchange for enforceability.
But that bargain only holds if domestic courts uphold their side. If a state could rely on immunity to avoid even recognising an award, ICSID would be little more than a ceremonial gesture. For years, this was not a problem because states, by and large, paid. Yet the tide began to turn as awards grew larger and political narratives hardened. Spain’s resistance to dozens of renewable‑energy awards, and Zimbabwe’s refusal to satisfy compensation claims for land seizures, exemplify a new reality: states sometimes resist until they are made to comply. And so the enforcement machinery has become the true testing ground for ICSID’s credibility.
The English Court of Appeal understood this context. It rejected the argument that registering an ICSID award is a mere administrative act to which state immunity does not even apply. But crucially, it held that immunity cannot be invoked because states have already agreed, through Article 54 of the ICSID Convention, to let courts of any other Convention state recognise and enforce awards against them. In other words, by ratifying the Convention, a state consents in advance to a very specific form of jurisdiction: one aimed solely at turning an award into a local judgment.
This reasoning reflects a deeper question about the role of immunity in the modern order. Immunity is not designed to let states escape the consequences of promises they freely made. International law has long accepted that immunity gives way where a state behaves as a commercial actor or voluntarily submits to adjudication. It would be strange indeed if a state’s immunity were strongest when its conduct has already been judged unlawful by a neutral tribunal.
The UK is not alone in taking this view. Courts around the world have confronted the same tension, and many have resolved it the same way. Australia’s High Court, dealing with the same Spanish award that featured in ISL, held that Spain had waived its immunity simply by joining ICSID; no further formality was required. New Zealand reached a similar conclusion when Hungary tried to avoid recognition of an ICSID award arising from changes to tax legislation. Malaysia too, in the von Pezold litigation against Zimbabwe, ruled that being an ICSID state meant accepting that domestic courts of all other Convention states could recognise an award, regardless of any assertion of sovereign privilege. Even courts in the United States, traditionally cautious on sovereignty questions, have endorsed the view that the ICSID Convention itself contains the necessary submission to jurisdiction.
This emerging convergence matters. Investment arbitration only works if investors know that their awards can be recognised somewhere, if not in the state that lost the case, then in another state where it holds assets. If courts diverged wildly, enforcement would become a strategic game, with claimants hunting for favourable jurisdictions and states shopping for sympathetic courts to shield them. The Court of Appeal’s decision avoids that outcome by reinforcing a global baseline: immunity cannot be used to stop an ICSID award from being recognised.
Yet the decision should not be misunderstood as a complete victory over immunity. The ICSID Convention itself preserves immunity from execution. Even if an award is recognised, seizing state assets remains another matter entirely, and domestic laws often protect everything except commercial property. States may lose the shield at the recognition stage, but they retain it where the stakes are highest: over their valuable assets. That balance is deliberate. The drafters of ICSID accepted that forcing execution against sovereign property would be a step too far. But this does not diminish the importance of ensuring that awards can be recognised without obstruction. Recognition is the gateway to negotiation, diplomacy, or, in some cases, commercial leverage. It is the step that transforms an arbitral award from an abstract declaration of rights into a judgment with real legal weight.
The deeper principle flowing from the Court of Appeal’s judgment, and from the international cases that echo it, is this: immunity is not a trump card. It is not a doctrine that sits above the commitments states make to one another. When a state enters ICSID, it promises a kind of legal openness. It accepts that it may be brought before an international tribunal and that the resulting award can follow it around the world. That is the price of attracting investment and participating in a system intended to prevent disputes from descending into political confrontation. To let immunity override that promise would be to hollow out the entire regime.
The UK’s decision therefore does more than settle a point of statutory construction. It affirms a vision of international law in which states are held to the bargains they make, and in which immunity is respected without becoming a refuge from responsibility. It recognises that the legitimacy of the system depends not merely on how tribunals decide cases, but on whether courts give those decisions practical effect. And by aligning itself with courts in Australia, New Zealand, Malaysia, France, and the United States, the UK reinforces the idea that ICSID is not fragmented across national boundaries but supported by a shared, global commitment.
So should immunity trump recognition? The Court of Appeal’s answer, like that of many courts worldwide, is a principled no. Immunity remains a vital doctrine, but not a shield against obligations voluntarily undertaken. Not when the very point of the ICSID system is to prevent political influence from undermining legal commitments. And not when refusing enforcement would turn investment arbitration into a hollow exercise. States can still assert immunity to protect their embassies, their warships, their central bank reserves. But when it comes to acknowledging that a neutral tribunal has spoken, and that its award deserves the status of a judgment, immunity must yield. Anything else would be a retreat from the rule of law in the very arena where it is most needed.
ISL and Border Timbers have now been appealed to the Supreme Court (alongside a case which gives rise to similar issues). The outcome will be closely watched. It sits at the intersection of treaty obligations, sovereign equality, and the practical enforceability of international arbitration awards.
Please watch out for an article that will update HIALSA readers on developments following the imminent UK Supreme Court judgment.
- Mustafaen Kamal, LLM (2022, Harvard) is an Associate in the International Arbitration Group at Baker McKenzie in London.
Baker McKenzie represented Border Timbers Limited in the aforementioned enforcement proceedings in the UK. The views expressed in the article are the author’s own, and should not be attributed to Baker McKenzie. ↩︎