A. Introduction
Immunities have long played a role in the adjudicative processes of national courts. In the Arrest Warrant decision, Judge Rezek noted that “no immunity is absolute . . . an immunity must necessarily exist within a particular context, and no subject of law can enjoy immunity in the abstract. Thus, an immunity might be available before one national court but not before another.”Footnote 1 At the same time, this does not speak to whether immunity is an “exception to jurisdiction or a principle of law in its own right, so forming part of, rather than exception, to, jurisdiction.”Footnote 2 One might ask the question of why—in what context—would such a determination matter.
This Article seeks to address that question by arguing that the international legal principle of state immunity is emerging as a rule lex specialis to a more general set of rules or principles concerning “enforcement jurisdiction” of national courts in respect of international arbitral tribunals. No distinction will be made between “rules” and “principles” in this work. Rather, the “rules” are understood as norms which guide a solution to legal problems finally—that is, without any room for argument either way—while “principles” bring out arguments in favour of one way or another and thus do not determine a solution finally.Footnote 3 Both will be assumed as binding as a matter of law.
“Enforcement jurisdiction” is being defined herein as the power of states to induce or compel compliance, including through their courts. This notion of ‘compliance’ is reflected as a norm which underpins inter-state relations more generally, ensuring a state’s compliance with international law norms.Footnote 4 It is also reflective of private international law approaches, for example the regulation of enforcement of foreign judgments, such as in the Brussels I (Recast) Regulation.Footnote 5 In the arbitration context, this would include any measures which seek to induce or compel the state’s compliance with the international arbitral process or award.Footnote 6 Conversely, in traditional public international contexts, “enforcement jurisdiction” is considered more narrowly as the authority to compel or coerce the state to do something.Footnote 7 Here, it is being considered as a power which includes inducing compliance of the state with foreign laws, including international law, insofar as it is part of that law. Thus, where “enforcement jurisdiction” is mentioned herein, it will connote this wider concept unless otherwise identified as relating to the narrower public international law concept.
The international legal principle of immunity provides that a state may not exercise its jurisdiction in the territory of another state because that would be a breach of the foreign state’s sovereignty.Footnote 8 The tool of “lex specialis” as a mechanism for placing special “secondary” rules within the context of a more general set of rules has been explored by Simma and Pulkowski in their article “Self-Contained Regimes in International Law.”Footnote 9 This is generally the idea that there may be “special” regimes of law which operate within the context of a more general set of rules, with the consequence that that general set of rules applies residually when the special set of rules are at play.
The emergence of any such rules or principles—which would oblige a national court to exercise enforcement jurisdiction in respect of international arbitral tribunals—has important analytical and practical consequences for court proceedings related to international arbitrations. Two of the largest arbitration awards in history, rendered in the Yukos and Stati decisions, have led to protracted enforcement litigation across the globe. Many of the problems encountered relate to whether states could rely on the international principle of immunity to exclude the enforcement jurisdiction of national courts, including when a valid arbitration award had been rendered.
In Yukos, the Russian company obtained three arbitration awards worth $50 billion against the Russian state pursuant to the Energy Charter Treaty. Having been set aside by the Moscow Arbitrazh court, Yukos sought to enforce the award in a number of other municipal courts. These courts have refused to recognize the award as enforceable, adopting interpretations of national state immunity laws—which give effect to the international legal principle of state immunity—to exclude the jurisdiction.Footnote 10 Similarly, in Stati, Moldovan creditors sought to enforce a $500 million award obtained in Sweden against Kazakhstan. Although attachment was successful in the Swedish court,Footnote 11 there are outstanding proceedings arising out of prior failed attachments in other courts, including in the UK and US. For example, in one recent decision of the UK court, attachment against assets for which Dutch and Belgian orders had already been made, was refused by the court.Footnote 12 Thus, there is protracted litigation on the issue of enforcement of arbitral awards and differing approaches under national laws. This is despite the fact that this issue — of which court, and on what basis, ought to have jurisdiction — crosses borders since the arbitration may occur outside the jurisdiction of the enforcing court.Footnote 13
I. Methodology
From the perspective of public international law, adjudicative jurisdiction is no more than a facet of a state’s prescriptive jurisdiction—its authority to adopt laws.Footnote 14 Any wider contribution of national courts to international law beyond interpreting national laws thus may be doubted, at least from the perspective of viewing national courts decisions as merely interpretative or declaratory of international law.Footnote 15 The same approach is taken in private international law, where court jurisdiction is usually analyzed from the internal perspective of the sovereign state. This concerns the question of whether that court may apply a foreign law or extend its jurisdiction over a foreign situation.Footnote 16 From this perspective, the interaction between arbitration and immunity is unclear.Footnote 17 For example, in the principal textbook on state immunity, Fox and Webb have analyzed the extent to which national court decisions have expressly stated that particular powers are available.Footnote 18 This does not analyze the wider question of whether adjudicative jurisdiction—the power of states to exercise decision-making authority through their courts—may be a manifestation of any consistent rules or principles of enforcement jurisdiction.
This article instead takes an approach which cuts across public and private international law,Footnote 19 considering the extent to which adjudicative jurisdiction may be declaratory of norms of enforcement jurisdiction from the perspective of “harmonization” of law. “Harmonization” for these purposes is “the process of ascertaining the admitted limits of international unification but does not necessarily amount to a vision of total uniformity.”Footnote 20 In this context, national court approaches to their enforcement jurisdiction from the private international law perspective will be considered a source of any potential public international law “rule” or “principle.” This approach will be developed throughout this Article with a view to demonstrating its utility in understanding the scope of enforcement jurisdiction of states, as exercised through their courts, in the context of international arbitration.
Moreover, this Article adopts the functional comparative method to identify any consistent practice between the chosen courts.Footnote 21 Ralf Michaels has implied that the use of the functional comparative method is less useful for achieving unity in law than it is for understanding and comparing laws. Considering adjudicative jurisdiction as enforcement, this Article instead suggests that the functional comparative method may be useful for identifying commonalities and trends at the intersection between state immunity and arbitration.
There are various harmonizing instruments relating to the scope of enforcement powers of national courts in the context of international arbitrations, whether between private parties or states: The United Nations Commission on International Trade Law (‘UNCITRAL’) Model Law on International Commercial Arbitration—as amended in 2006—Footnote 22the Convention on the Recognition and Enforcement of Arbitral Awards,Footnote 23 and the UN Convention on Jurisdictional Immunities of States and Their Properties.Footnote 24 To examine the harmonization of any common national court approaches, the extent to which four representative state approaches to adjudicative jurisdiction are reflective of any enforcement norms will be examined in light of these harmonizing instruments: UK (as a non-federal common law State), US (federal common law), France (non-federal (civil law), and Germany (federal civil law and UNCITRAL Model Law).
II. Structure
This Article is structured according to different enforcement powers which national courts may exercise in respect of international arbitral tribunals: supervisory jurisdiction, such as interim measures and measures to compel the arbitration to proceed; recognition and review jurisdiction, to declare any rendered award enforceable or to review its validity in accordance with the applicable law; and execution jurisdiction, to ensure that assets against which enforcement is sought may be attached.
B. Supervisory Jurisdiction
The main harmonizing instrument for interim relief and other measures which seek to support the international arbitration proceeding is the UNCITRAL Model Law. Legislation based on the Model Law has been adopted by eighty-three states of the total 116 Contracting States. In respect of interim relief, Article 17 J provides: “A court shall have the same power of issuing an interim measure in relation to arbitration proceedings, irrespective of whether their place is in the territory of this State.”
Moreover, there is a general principle in Article 8 Model Law which provides that an action before a court which has been subject to an arbitration agreement must be referred by that court to arbitration unless it finds that the agreement is “null or void, inoperative or incapable of being performed.” This also reflects the principal exception for refusing to enforce an arbitration agreement within the meaning of Article II(3) New York Convention.
The availability of supportive forms of jurisdiction in respect to international arbitrations is generally important in a number of common scenarios which may arise: the arbitral tribunal might not yet be constituted and thus parties might need to apply to a national court for interim relief, the case might be one of “urgency” such that the arbitral tribunal cannot act swiftly enough,Footnote 25 or where the particular measure sought can only be sought in a particular national court.Footnote 26
Article 17 J Model Law clearly places an obligation on all national courts—regardless of where they are located—to exercise jurisdiction to grant interim relief. UK, US, and French private international law rules follow this approach more widely in relation to different forms of supervisory jurisdiction including orders to compel the arbitration to proceed, stays,Footnote 27 and prejudgment attachment. Examples in the UK, US, and French courts will be taken in turn as examples which illustrate different powers encompassed by the notion of “supervisory jurisdiction.”
Section 2(3) English Arbitration Act (EAA) provides that interim measures are available “even if the seat of arbitration is outside England and Wales or Northern Ireland.” The availability of such relief regardless of any private international law link between the territory of the court and the arbitration has been recognized, for example, in the Pearl Petroleum decision.Footnote 28 This is representative of the wider UK court approach in this area, where various forms of supportive relief have been granted or recognized as available regardless of any territorial connection to the court or in respect to a foreign State.Footnote 29 In an ongoing London Court of International Arbitration (LCIA) arbitration against the Kurdistan Republic, a Swiss company applied to a UK court for a peremptory order. This is a particular form of supportive relief which is issued by courts to ensure compliance with the arbitral tribunal’s instructions. Even though the measure was sought in respect to a foreign state, to which the principle of state immunity might ordinarily apply given that a foreign state was being brought before a UK court, the court exercised its jurisdiction to grant the measure in accordance with Section 44(5) EAA. This provides that a court may act to the extent that an arbitral tribunal is unable to act effectively. Thus, by exercising its decision-making authority to grant the peremptory order as to the foreign state, the exercise might be viewed as implicit acceptance that the particular form of enforcement—supportive relief—falls within the scope of the court’s authority.
There is no comparable express provision in the US Federal Arbitration Act (FAA).Footnote 30 However, consistent practice of US courts demonstrate that supportive forms of jurisdiction are available regardless of any territorial connection to the jurisdiction. The 2011 decision in Republic of Ecuador v. Chevron Corporation Footnote 31 Is illustrative of this approach. Chevron Corporation invoked arbitration against Ecuador pursuant to a bilateral investment treaty (BIT) between the United States and Ecuador. Concurrently, a group of Ecuadorian individuals filed claims in Ecuador against Texaco Petroleum Company (TexPet), a wholly owned subsidiary of Chevron, for environmental damage allegedly caused by its activities in Ecuador, known as the Lago Agrio litigation. In the arbitration, Chevron asserted that any judgment against it in the Lago Agrio litigation would violate the terms of a settlement agreed upon between Ecuador and TexPet. The question as to whether the initiation of the BIT arbitration breached the Lago Agrio litigation came before the US court. While acknowledging its parallel power to stay the arbitration proceedings,Footnote 32 the court found that Chevron was not estoppedFootnote 33 from relying on its right to arbitrate by virtue of its initiation of the litigation in Lago Agrio.Footnote 34 Conversely, the court would be obliged to enforce the valid arbitration agreement to which the parties consented under the BIT because this constitutes an “agreement in writing” for the purposes of Article II New York Convention.Footnote 35 Article II(3) provides that courts must refer parties to arbitration where there is an arbitration agreement unless that agreement is “null, void, inoperative or incapable or being performed.” The court found that it could uphold the arbitration agreement and the questions of waiver and estoppel relating to the Lago Agrio litigation were threshold issues for the arbitral tribunal.Footnote 36 Consequently, in effect, the exercise of decision-making authority with respect to the foreign state—Ecuador—upheld the arbitration proceeding regardless of the principle of immunity.Footnote 37
The Soguipêche decisionFootnote 38 demonstrates the French approach. This concerned an ongoing arbitration under the International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). Atlantic Triton sought an arbitration against the Republic of Guinea which had issued a legislative decree entrusting certain vessels due to Atlantic Triton instead to Société guinéenne de pêche (Soguipêche). The Court at Rennes had granted Atlantic Triton a security measure attaching three vessels of Guinea in France. Guinea challenged this decision. The French Cour de Cassation (Supreme Court) annulled the decision on the ground that a party which consents to ICSID excludes the supportive jurisdiction of national courts. According to Article 26 ICSID, consent to arbitration under the ICSID Convention shall be deemed consent to the exclusion of any other remedy. However, the court does not exclude—and in fact implicitly accepts through exercise of its decision-making authority—that such jurisdiction would not be excluded, in principle, with respect to a foreign state. This is because its jurisdiction is not considered as ipso facto excluded by principles of immunity but instead is a question which the court may review in accordance with the applicable arbitration rules which the parties have selected. In this case, because the parties selected ICSID—to which a special rule excluding supportive jurisdiction applied—the jurisdiction was interpreted as excluded. However, outside ICSID, the general approach of French courts has—like the United Kingdom and United States court approaches—been to render supportive forms of relief regardless of any link to the jurisdiction.Footnote 39
This set of consistent practice between the representative courts demonstrates the general availability of forms of supportive relief in respect to international arbitrations regardless of any link to the jurisdiction, or where one of the parties is a state. In this context, the international principle of immunity has been interpreted as inapplicable to the question of court jurisdiction. According to the practice examined, this would include pre-judgment attachment orders, review of awards in the context of setting aside proceedings, orders to compel an arbitration to proceed and peremptory orders. These measures merely seek to support the arbitral proceeding and do not coerce a foreign state in any way.Footnote 40
C. Recognition and Review Jurisdiction
Once the award has been rendered, states must generally comply. However, not infrequently, these awards must be converted into national court judgments such that they can be used to force states to comply with the award via execution measuresFootnote 41 such as third-party debt orders should they fail to comply.Footnote 42 The question arising in this part is whether there is now a more general set of practices which suggests that any national court may exercise that power even when there is no connection to their territorial jurisdiction.
Article I(1) New York Convention provides the obligation on contracting states to recognize and enforce arbitration awards “made in the territory of a State other than the State where the recognition and enforcement of such awards are sought.” This implies that any court may, in principle, have jurisdiction to “recognize and enforce” arbitration awards irrespective of where they are made.
Two questions arise from this formulation. What is meant by “recognize and enforce”? And to what extent does state immunity play a role in limiting any such jurisdiction?
The consistent approaches of UK, US, French, and German courts have been clear in this regard. Beginning with the civil law states, the approach of their courts more directly considers the interaction between the international principle of state immunity and the scope of its courts’ recognition jurisdiction within the meaning of Article I(1) New York Convention. A good example of this approach is the decision in Société Européenne d’Etudes.Footnote 43 Société Européenne d’Etudes (SEEE) entered into an agreement with the Yugoslav Government for construction of a railway. When SEEE claimed additional payments and Yugoslavia refused to pay, SEEE sought an arbitration against Yugoslavia in Switzerland. An award was rendered against the Yugoslav Government. SEEE applied to the Tribunal de Grande Instance in Paris for leave to enforce the award. Leave to enforce is the equivalent of recognition and enforcement within the meaning of Article I(1) New York Convention as it ensures that the award is declared enforceable—though is not actually enforced against assets which is a separate power to be discussed below. The Yugoslav Government tried to invoke its jurisdictional immunity in an attempt to argue that recognition could not be granted with respect to the particular claims—relating to public works which it stated were intended to ensure the function of a traditional mission of the state being the constructor of a railroad. The court considered this question under the head of “immunity from jurisdiction,” considering whether its jurisdiction would be excluded by the international legal principle of immunity. This is because in France, public international law relating to immunity is a direct source of the court’s authority.Footnote 44 There is no specific national legislative act enacting immunity rules as part of the state’s national law. Consequently, the court had the opportunity to directly consider the question of the scope of its recognition jurisdiction. In this regard, it found that it was sufficient that the Yugoslav Government consented to the arbitration in its private capacity; the content of those obligations was irrelevant.Footnote 45 The court does consider the nature of the contract—whether it is public or private—which might imply that such a finding would change the scope of the court’s power to recognize the award.Footnote 46
However, a further set of consistent practice, to the effect that it is not the nature of the contract but the parties’ particular consent to arbitration, which is conclusive for the exclusion of state immunity, is clear. For example, in the 2018 Société FG Hemisphere Associates decision, which is exemplary of this consistent approach, the question came before the Cour de Cassation as to whether it would violate Article 1699 Code Civile (civil code) for an arbitration award, recognized in Zurich, to be enforced against the Democratic Republic of Congo in France. Article 1699 provides the assignor of a debt the right to be released from that debt when the assignee pays the actual price of the assignment and interest. The court considered that its right to review this point of law arose in application of Articles 1520 and 1525 Code de procédure civile (CPC) which provide limitations on the power of French courts to review arbitration award. These are broadly reflective of those grounds found in Article V New York Convention. They include review based on procedural deficiencies in the arbitration (Article 1520(1)-(2)), that the tribunal acted beyond its powers (Article 1520(3)), and that the award was contrary to international public policy (Article 1520(5)). In this decision, the court determined that its scope of power to review the award was limited by these provisions. Thus, it could examine, in accordance with the French Civil Code, whether the decision on payment under the award violated Article 1699. By considering this question, the French court accepts that such a power, arising under Articles 1520 in respect of domestic arbitrations, also extends to arbitrations against states. Consequently, such powers of review—relating to the enforceability of the award—come within the scope of international adjudicative authority of the French court.Footnote 47 The term ‘international adjudicative authority’ is being used here simply to connote how the jurisdiction is treated by the French court: since the public international law norm of state immunity is directly a source of the court’s authority, the court deems itself as exercising its ‘international’Footnote 48 judicial competence to decide on the enforceability of the award.Footnote 49
Similarly, the German approach can be illustrated by the decision in Walter Bau for what the court said (i.e., its reasoning) and not merely the effect of the decision (that is, the fact of its exercise ‘in the public sphere’, or in respect of the foreign State).Footnote 50 As with the French approach, German courts directly consider the question of their own jurisdiction in light of the international legal principle of immunity. This is, again, because there is no special national immunity law: international law is directly the source of the court’s authority in accordance with §20(2) Courts Constitution Act and Article 25 Federal Constitution. Article 20(2) provides that German jurisdiction shall not apply to persons insofar as they are exempt therefrom according to “general rules of international law or on the basis of international agreements or other legislation.” Walter Bau concerned the enforcement of an award rendered in Switzerland under a 2002 BIT between Thailand and Germany. Walter Bau, a German company, had invested in a project for construction of a tollway from Bangkok to Don Muang Airport. When Walter Bau was declared bankrupt, its liquidator, Werner Schneider, brought a claim to arbitration against Thailand based on the arbitration clause in the 2002 BIT, alleging that it had breached Walter Bau’s rights in the tollway. Once an award was obtained against Thailand, Werner Schneider applied for a declaration of enforceability (Vollstreckbarerklärung) in the German court. The court expressly stated the German position with respect to the Vollstreckbarerklärung, which it distinguished from the Zwangsvollstreckung (execution or compulsory enforcement proceeding). The question pertained to availability of the jurisdiction according to applicable international law norms, including those of state immunity. Consequently, the interaction between the court’s jurisdiction and international principles of state immunity was directly considered by the decision. The court found that because the parties had consented to recognition and enforcement of the arbitration award under §1061 German Civil Procedure Rules (‘ZPO’), which gives effect to Article I(1) New York Convention as part of German law as well as under its consent to arbitrate in the BIT, then immunity could not exclude German jurisdiction.Footnote 51 This was on the ground that, should recognition be disallowed, this would contradict the very object and purpose of the Treaty upon which consent to the arbitration is based which included the obligation that the arbitration award would be enforced. The court ultimately granted the declaration of enforceability against the foreign state, which is representative of the general German court approach to this form of jurisdiction against states.Footnote 52
Conversely, the UK and US approaches arise at the intersection between their national state immunity laws—the UK State Immunity Act (SIA) and the US Foreign Sovereign Immunities Act (FSIA)—which make their identification more complex. Instead of only looking at what courts have stated in their decisions, one must additionally take into account the effect of the decisions in light of the relevant applicable international law principles. This includes the principle of enforceability found in Article I New York Convention as well as the general principle that state immunity excludes enforcement jurisdiction insofar as such jurisdiction would breach the foreign state’s sovereignty. Section 9 SIA and §1605(6) both provide the exception from a state’s otherwise available immunity with respect to court proceedings relating to arbitration. English courts have consistently declared awards enforceable against foreign states stating that such power falls within the section 9 exception.Footnote 53 This practice, which also encompasses the power of courts to review the award under the applicable law, is nicely demonstrated by the Svenska Petroleum decision.Footnote 54 Svenska received an arbitral award against the Republic of Lithuania in an ICC Tribunal sitting in Denmark which arose out of the failed exploitation of its oil fields in Lithuania.Footnote 55 Lithuania applied to appeal a decision declaring the award obtained against it as enforceable on the basis of its immunity. Svenska claimed that Lithuania had waived its entitlement to rely on immunity by agreeing to arbitration, enforcement of the award in domestic courts being a corollary of this agreement which was excluded from the scope of the SIA 1978 under section 9. In reviewing whether Lithuania was entitled to immunity, the UK court considered this as a preliminary question concerning its own jurisdiction. It reviewed the arbitral tribunal’s decision under the applicable Lithuanian law.Footnote 56 The exercise of the court’s decision-making authority to examine this question demonstrates that immunity does not exclude its power to at least declare an award enforceable. Consistent exercises to this effect in UK courts are generally reflective of the approach of UK courts that at least their power to declare the award enforceable within the meaning of section 101 EAA is not excluded by principles of immunity.Footnote 57
Similarly, United States’ courts have rendered decisions against states to confirmed arbitration awards, finding that the jurisdiction to do so falls within §1605(a)(6) FSIA and thus is not excluded by the principle of immunity. For example, in the 1995 Creighton Limited decision, Creighton commenced proceedings in United States court for confirmation of an award rendered against the State of Qatar in France.Footnote 58 The court considered the question of its own jurisdiction within the scope of the FSIA finding that, both as a matter of precedent as well as principle, the provision would not, in principle, exclude the court’s jurisdiction to confirm the award. This principle applied regardless of whether Qatar was signatory to the New York Convention or not. This point was later appealed in the 1999 Creighton decision which found that the court lacked sufficient contacts as a matter of private international law to exercise jurisdiction.Footnote 59 However, this decision ought to be viewed as an anomaly in light of the wider consistent practice of United States’ courts, to the effect that recognition and review jurisdiction is generally available regardless of the principle of immunity and regardless of the particular treaty or set of arbitration rules which govern the parties’ agreement.Footnote 60
D. Execution Jurisdiction
The treaty basis for execution jurisdiction—that is, the power to execute against assets pursuant to an award—is less clear. The obligation to recognize and enforce arbitral awards under the New York Convention is generally interpreted as a source for court power to declare the award enforceable but not to execute against assets.Footnote 61
However, there is a growing harmonized approach as between the examined courts that execution against commercial assets of a foreign state falls within the scope of a court’s international adjudicative authority—that is, irrespective of any link to the jurisdiction. This is evidenced, again, by exercises of decision-making authority of national courts and decisions to this effect, for example, for what they say.
To demonstrate this approach, the decision in Creighton v. Qatar Footnote 62 is a useful starting point because, as explained above, immunities are a direct source of jurisdiction in the civil law states examined. Thus, the decisions, for what they say—and not merely their effect—are also representative of the approach being examined herein. Creighton, a French company, obtained an award against the Government of Qatar and sought to enforce against assets of Qatar in France. The question of whether the court could order the execution measure was one which arose “in light of principles of public international law concerning immunities of the foreign state.” The court ultimately ordered the execution measure against the assets of Qatar, which were held for commercial purposes, finding that was sufficient once “the arbitral award [became] definitive.” Consequently, provided that the award has passed through the recognition and review process—for example, it is valid in accordance with the standards of the New York Convention—the French approach is that execution against commercial assets is generally permitted as an aspect of the court’s international adjudicative authority.Footnote 63
Similarly, consistent statements by German courts confirm the general availability of execution jurisdiction (Zwangsvollstreckung) as an aspect of the court’s international adjudicative authority. For example, in the Walter Bau decision discussed above, though it concerned recognition jurisdiction, the court also made a clear statement with regard to the availability of its jurisdiction in respect of execution:
German jurisdiction does not extend to foreign insofar as they enjoy immunities. Consequently, the limits of immunity are different in respect of recognition and compulsory enforcement—for example, execution—proceedings depending on their effects…with regard to recognition proceedings, immunity is available according to general public international law insofar as the sovereign activities of the foreign state are affected by the legal dispute whereas immunity in execution proceedings is determined according to the capacity in which the foreign State possesses the asset.Footnote 64
There is consistent practice to the effect that German courts have granted execution against commercial assets of the foreign State.Footnote 65 By virtue of that exercise of jurisdiction in respect of the foreign state, the courts have thus consistently accepted that such jurisdiction is not excluded by international principles of immunity.
The UK approach arises under Section 72.2 CPR Rules which provides UK courts with the power to issue third-party debt orders to enforce against assets which are “due or accruing due by the third-party to the judgment debtor.” UK courts have consistently interpreted this provision in the context of international arbitrations to order execution against commercial assets within the jurisdictionFootnote 66 and has implied it would also have the power to grant such an order against assets outside the jurisdiction where such an order would be recognized by the foreign state’s law.Footnote 67 This latter question arose in the decision of Société Eram which was not itself an arbitration case, but was later relied on in the context of whether an attachment order could be granted against Iraqi assets in the Taurus Petroleum decision which did concern execution against assets of a foreign State pursuant to an arbitral award.Footnote 68 In Société Eram, the assets with respect to which a garnishment order was sought to discharge a debt owed to the Romanian shipping company, Société Eram, were located in Hong Kong. Although the court ultimately found it lacked jurisdiction to grant the order, it did so on the basis that the law which governed the debt, Hong Kong law, would not recognize such an order and thus it would be rendered ineffective. Thus, it was a matter of practicality rather than principle that the order was not made. In principle, the court did not exclude that a third-party debt order could be granted in circumstances in which such a debt would be discharged in the foreign jurisdiction. In Taurus Petroleum, for example, the court relied on this principle to find that the UK court would have jurisdiction, in principle, to issue a third-party debt order against the State of Iraq in respect to assets owed by it under a letter of credit to a Swiss company under an arbitration award. The court exercised jurisdiction on this basis regardless of the manner in which the assets were held. This implies that, similar to the German approach, execution jurisdiction is an available aspect of court’s international adjudicative authority and the question of whether the particular assets may be executed against is a sui generis question relating to the law of state immunity.
Finally, United States’ courts have adopted an approach whereby execution may generally be ordered against assets within the jurisdiction pursuant to Federal Rule of Civil Procedure (FRCP) 69(a)(1) because such jurisdiction falls within the court’s jurisdiction. This can be demonstrated by the decision in Ocean Warehousing. Footnote 69 An award had been obtained in Dutch arbitration proceedings and an ex parte attachment had been granted by a United States’ court against the debtor’s assets in the United States. On appeal, the United States court affirmed the decision pursuant to FRCP 64 together with Article 62 New York Civil Practice Law.Footnote 70 FRCP 69 is a more general provision with regard to execution under a money judgment, whereas FRCP 64 allows an individual state’s court within the United States to grant a remedy for seizure of a person or property to secure satisfaction of a judgment. Article 62(5) New York Civil Practice Law provides that “full faith and credit” should be given to provide for attachment based on a judgment which qualifies for recognition under Article 53. Article 53 allows for the recognition of foreign country judgments. This is reflective of a wider approach which treats execution jurisdiction as a generally available aspect of the court’s international adjudicative authority because it is consistent in cases where there is no link between the court’s territorial jurisdiction and the arbitration.Footnote 71
It is necessary again to consider whether this norm would breach the international principle of state immunity according to which a state may not exercise jurisdiction over a foreign state insofar as it breaches the foreign state’s sovereignty.Footnote 72 Execution measures may be perceived as more coercive in their intended effects than supportive or recognition measures. However, they ultimately embody a converted arbitral award. Put differently, provided that the arbitral award is found valid under the applicable law—an additional step to the enforcement process which is currently found at the recognition stage—then execution against assets within the state where execution is sought ought to be justified on the basis of that decision where the assets are also held for commercial purposes.Footnote 73
E. Conclusions
This Article has demonstrated that a common approach has emerged concerning the scope of national court “enforcement jurisdiction” in respect of international arbitral tribunals. This has been achieved, in part, in adopting a wider definition to “enforcement jurisdiction” than is usually used in public international law — as not merely compelling a state to do something, but also inducing its compliance. The analysis has also been based on decisions from representative states: United Kingdom, United States, France, and Germany. These are ‘representative’ in the sense that they are one non-federal common law, one federal common law, one non-federal civil law and one civil law court.
According to this set of practice, the international principle of state immunity does not prima facie exclude the jurisdiction but merely operates as an exception to it. This is because, as demonstrated by the consistent approaches of the representative courts, this approach arises as an aspect of the court’s adjudicative authority, irrespective of any link to the jurisdiction. Furthermore, as demonstrated by this Article, this practice is in accordance with the applicable international principles relating to arbitration and state immunity found in various international and national harmonizing instruments. This is because it was only analyzed insofar as it was consistent with those instruments which apply to the scope of court enforcement jurisdiction.
The identification of this practice suggests that amendments should be made to various harmonizing laws to reflect the changing law. For example, Article 17 UNCSI provides an “arbitration exception” from a state’s otherwise available immunity which is said to derive from the “effect of the arbitration agreement.” This exclusion of immunity is stated to extend only to proceedings relating to “(a) the validity, interpretation or application of the arbitration agreement; (b) the arbitration procedure; or (c) the confirmation or the setting aside of the award.” Apart from the fact that the idea of immunity as the rule—rather than the exception to the rule in the context of arbitration-related court proceedings—is being contested as a point of principle throughout this Article,Footnote 74 Article 17 also does not encompass the full extent of national court enforcement authority which is available with respect to international arbitrations. As demonstrated by the last section, it also extends to execution proceedings to enforce against assets of the foreign state provided these are held for commercial purposes. Put differently, national courts ought to be obliged to exercise these forms of enforcement jurisdiction irrespective of immunities. Further work could examine the more precise content of any such principles or rules and the extent to which they may be regarded as a possible source of public international law.Footnote 75
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