On 19 January 2024, the High Court of Justice of England and Wales (the “High Court”) dismissed Zimbabwe’s application to set aside an order enforcing an arbitral award, holding that immunity from jurisdiction could not be claimed at that stage of the proceedings.
The award in question, issued under the auspices of the International Centre for Settlement of Investor-State Disputes (“ICSID”), was rendered following a dispute relating to the expropriation, in 2005, by Zimbabwe of properties owned by the claimants, two Zimbabwean companies, as a result of a land reform programme in the interest of the country’s indigenous population. On 28 July 2015, the arbitral tribunal found that the land had been illegally expropriated and ordered Zimbabwe to return the legal titles and pay the claimants the equivalent of $125 million in damages.
In 2021, as the award had still not been paid, the claimants applied to register the award in England under Section 2 of the Arbitration (International Investment Disputes) Act 1966. When this application was granted, Zimbabwe applied to set aside the registration order on the grounds that Zimbabwe was immune from jurisdiction in the UK courts by virtue of Section 1 of the State Immunity Act 1978.
The High Court followed a “novel” line of reasoning, in support of which it admitted that there was no “direct authority”, and held that a State is not a defendant until it has been served with the arbitral award, and that the doctrine of immunity does not come into play at the registration stage.
Indeed, it is only at the stage of service that the State is formally implicated and that the jurisdiction of the national courts is formally asserted. The State further retains the possibility of asserting its immunity before any attempt is made to enforce its assets.
In contrast, the registration of an award only requires the court to perform an “essentially ministerial act”, in accordance with the international obligations of the UK. Such an act merely recognises the binding nature of the award, which the State has already undertaken to do under Article 54(1) of the ICSID Convention.
Although this solution is not surprising, the High Court’s reasoning deserves attention as it refuses to follow existing English and international case law, which instead analyses the issue of whether the ICSID agreement constitutes an effective waiver of jurisdictional immunity (see, in particular, Infrastructure Services Luxembourg Sarl v. Spain [2023] EWHC 1226).
Citation: Border Timbers Ltd v Republic of Zimbabwe [2024] EWHC 58
