Case BriefsForeign Courts

Federal Court of Australia: While deciding the instant appeal dealing with interpretational technicalities associated with international arbitration, the Court clarified the principles and distinctions between recognition and enforcement of arbitral awards vis-à-vis the ICSID Convention. The Court also clarified the legal position over the question that whether the ICSID Convention excludes any claim for foreign state immunity in proceedings for the recognition and enforcement of an award.

Facts: The dispute between the parties is related to the investment by the Respondents of EUR139,500,000 into solar power generation projects within the territory of Spain. The respondents were encouraged to do so by a subsidy program put in place by Spain, which was subsequently withdrawn. The Respondents alleged that the withdrawal of the subsidy program was a contravention of the Energy Charter Treaty (ECT). Pursuant to Article 26(3)(a) of the ECT, Spain agreed that it gave its unconditional consent to the submission of the dispute to international arbitration and, by the virtue of Article 26(4)(a) it agreed to an international arbitration under the auspices of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). The arbitrators eventually awarded the Respondents EUR101,000,000 with interest. The respondents applied to the Federal Court at first instance for an order that Spain pay it that amount with interest. Spain filed a notice contesting the jurisdiction of the Federal Court of Australia on the basis that it was immune from suit as a foreign state under S. 9 of the Foreign States Immunities Act 1985.

Issues: The following key issues were involved in the dispute-

  • Whether the ICSID Convention excludes any claim for foreign state immunity in proceedings for the recognition and enforcement of an award.
  • Meaning of recognition and enforcement in Art 54 and execution in Art 55 of ICSID Convention.
  • Whether Spain’s accession to the ICSID Convention constitutes submission to the jurisdiction of the Federal Court.

Contentions: Spain put forth the following arguments-

  • The word ‘execution’ in Article 55 must be understood as including a proceeding to ‘enforce’ an award (the reasons for this are, to an extent, complex and discussion of this issue may be postponed for now).
  • Even if ‘execution’ in Articles 54(3) and  55 does not mean ‘enforcement’, nevertheless, the question of the proper construction of Art 55 can only be definitively resolved by the International Court of Justice. Until then it is arguable Spain’s accession to Articles 54 and 55 cannot represent its clear agreement to submit to jurisdiction of Federal Court.

Relevant statutes: The case revolves around the interpretation of Articles 54 and 55 of the ICSID Convention. Article 54 deals with the recognition and enforcement of the pecuniary obligations imposed by the award. Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought. Article 55 states that –“Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution”.

The other statutory provisions that were highlighted in the case were Sections 3, 9 and 10 of the Foreign States Immunity Act, 1985. The provisions respectively deal with interpretation of an agreement (including international treaties and agreement); immunity of a foreign state from the jurisdiction of the courts of Australia; and, instances wherein a foreign state has to submit to the jurisdiction of the Australian law and courts.

Observations: The Court noted that, “The principal difficulty at the centre of the debate is linguistic or semantic” – (Allsop, CJ.,). With the parties to the dispute seeking lucidity on the aforementioned provisions, the Court examined them and made the following observations, with Perram, J., elucidating the key aspects of the provisions in question-

Regarding Articles 54 and 55

  • It was noted that ‘recognition’, ‘enforcement’ and ‘execution’ are concepts predating and existing outside of the ICSID Convention. Broadly “recognition refers to the formal confirmation by a municipal court that an arbitral award is authentic and has legal consequences under municipal law. Enforcement refers to the process by which a successful party seeks the municipal court’s assistance in ensuring compliance with the award (as recognised) and obtaining the redress to which it is entitled. Execution refers to the formal process by which enforcement is carried out”.
  • Since the issue at hand orbits around ICSID provisions, therefore the concepts must be interpreted accordingly. Perram, J., noted that under Art. 54 the Contracting States are required to recognise an award. It also permits a party having the benefit of an award to apply to a competent court for its recognition. It also permits a party to apply for the enforcement of the award by application to a competent court. “As such the Article explicitly contemplates two distinct applications to the competent court (or other authority). If enforcement in Art 54(2) were synonymous with recognition this distinction would appear to be pointless. The Article therefore recognises the distinction between the two applications and requires applications for both to be made to the ‘competent court’”.
  • The Judge further pointed out that Article 54(1) imposes two obligations on a Contracting State, first, recognition of the award as binding; and, secondly, (implicitly in relation to an award which has been recognised), enforcement of the pecuniary obligations imposed by the award ‘as if’ it were a final judgment of a domestic court. Article 54 does not contemplate the enforcement of awards which have not been recognised.
  •  “Article 55 does not refer to recognition and there can be no warrant for reading it as if it did”. Interpreting the Article along with the preceding provision (Article 54), the Court stated that the combined effect of Article 54 is that a Contracting State is required to recognise an award when a certified copy of the award is furnished to the competent court (or other authority).
  • If ‘execution’ were construed to include ‘recognition’ in Article 55 there could be no circumstance in which the recognition application expressly contemplated by Art 54(2) could ever be made against a Contracting State. This would render the recognition procedure in Art 54(2) perpetually unavailable against a Contracting State and would have the consequence that the obligation to recognise an award in Art 54(1) as binding could never be engaged. “It may be noted that the fact that recognition is wholly distinct from enforcement (including, if necessary, execution) is also reflected in the heading to Section 6: ‘Recognition and Enforcement of the Award’ where Art 54 and Art 55 are contained. For those reasons, Art 55 does not apply to recognition proceedings and is unavailable to modify the meaning of Art 54(1) and (2) in relation to such proceedings”.

Regarding Spain’s submission to Federal Court’s Jurisdiction: Deliberating upon the question that whether Article 54(1) and (2) constitute Spain’s agreement to submit to the jurisdiction of the Federal Court in a recognition proceeding, the Court answered in affirmative. Article 54(2) is in terms Spain’s agreement with Australia that the Respondents may apply to a competent court for recognition and the Federal Court has been designated as a competent court for the purposes of Article 54. Spain has therefore agreed to submit to the jurisdiction of this Court in relation to a recognition proceeding. Article 55 can have no impact on that conclusion because it has no application to recognition proceedings.

Making an interesting observation, the Court pointed out that the ICSID Convention had been done in English, Spanish and French. Article 33 of the Vienna Convention provides that where ‘a treaty has been authenticated in two or more languages, the text is equally authoritative in each language’; where a difference in meaning emerges which cannot otherwise be resolved by ordinary principles of interpretation ‘the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted.’ Allsop, C.J., noted that the relationship between recognition and enforcement can be seen by the wording of the ICSID Convention itself. “Whether the French and Spanish languages have a penumbra or range of meaning in the words exécution and ejecutar to encompass a non-execution procedure of enforcement would be a matter of evidence. I am unconvinced that the question of resolution of the meaning of the English, French and Spanish texts can be done in ignorance of the content by way of evidence of two of the three languages”.[Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. [2021] FCAFC 3, decided on 01-02-2021]


Sucheta Sarkar, Editorial Assistant has put this story together.

COVID 19Op EdsOP. ED.

The emergence, subsequent inter-continental spread and the inevitability of the ensuring mounting death toll across almost every region of this planet has exposed the spectacular lack of preparedness of many Governments in facing the COVID-19 pandemic. Notably, up until the middle of January 2020, the novel Coronavirus was not even considered sophisticated enough for human to human transmission and yet by the end of February 2020 continental Europe had been ravaged. In the consequent incursion into and subjugation of the United States of America (USA), the novel coronavirus achieved that which no invading army ever could.

As a direct result of the same and almost without exception, the world, led by America, clamoured to fix culpability upon Communist China. However, it need not be reiterated that no pre-eminent global power in the post-WW2 decades has ever of its own accord ever submitted to the jurisdiction of international law. The western nations, short of bilateral or multilateral reprisals (the validity and legality of which under international law would be questionable at the very least), are therefore wholly bereft of an effective means of bringing the ‘guilty’ to book. Regardless, remedial inadequacy has not deterred those seeking reprisal against the People’s Republic of China (PRC), from filing suits and petitions against PRC’s communist leadership, its armed forces as well as the Institute of Virology situated at Wuhan. These however are nothing but, as the Solicitor General so deftly put it in another context, ‘self-employment generating petitions’.

Succinctly stated, the concept of ‘State responsibility’ vis-à-vis international law arises primarily under three scenarios; (1) breach of obligations arising out of treaties and/or contracts, and (2) international delinquencies. There’s a third area of study i.e. international criminal law, however, that pertains to individual criminal liability and has been discussed separately below. It must also be borne out that though the conceptualisation of ‘sovereignty’ has undergone a transformation in the post-WW2 period of the 20th century, yet devoid of any supranational agency, ‘State responsibility’ in consonance with international law must be tempered by the sovereign autonomy of a nation State.

Insofar as the COVID-19 pandemic is concerned, there evidently does not exist any treaty obligation governing the manner of transaction between the world and the PRC. Thus the discussion surrounding ‘State responsibility’ must revolve around the idea of international delinquency whereby culpability can be attributed to a State in connection with its non-contractual international law obligations. Quite interestingly, in most cases of such nature, responsibility arises as a result of injury suffered by the citizens abroad i.e. aliens in the host nation. However, a key constituent of ‘international delinquency’ is ‘imputability’. Consonantly, if a certain State-action resulting in injury to an alien cannot be directly attributed to an agency of the host State (for instance China in the current scenario) then the same may not amount to fixation of responsibility unto the said host. Naturally thus, no act of a private citizen resulting in injurious consequences for an alien can be termed an ‘international delinquency’.

If one is to consider the present scenario wherein claims against the PRC are sought to be brought forth, no case of international delinquency is made out short of the international community being able to conclusively prove that the Communist Party of China in cohorts with its armed forces and/or other agencies of the State sought to inflict the alleged harm and injury to the global population. It is further imperative to take note of the fact that ‘force majeure/fortuitous event’ presents itself as a complete defence to any such action of State responsibility.

In addition to the above enunciation of State responsibility, it is notably that the clamour to fix criminal liability under international law vis-à-vis the top leadership of the Communist Party of China, makes it crucial that the phrase ‘crimes against humanity’ is understood in terms of its specific legality vide the Rome Statute for International Criminal Court[1]. The Rome Statute under Article 7 explicitly defines ‘crimes against humanity’ as being in the nature of murder, extermination, enslavement, deportation, torture, rape, etc. coupled with an element of systemic attack against any civilian population[2].

Additionally, although the International Criminal Court (ICC) has the jurisdiction to try everyone equally regardless of any official position held thereof, such jurisdiction can only arise by way of (1) the accused person being a national/citizen of a State party to the Rome Statute, (2) the alleged crime of most serious concern to the international community having been committed on the territory of a State party to the ICC, and (3) referral of a matter from the United Nations Security Council (UNSC).

In that regard, fastening of criminal liability unto any Chinese State official is bleak to say the least for not only is PRC a veto-wielding member of the UNSC, it not a State party to the Rome Statute and thus does not recognise the jurisdiction of the ICC. Furthermore, as would become manifest from the definition above, there exists no intelligible and coherent evidence as to satisfy the threshold of international criminal law.

In conclusion, it becomes important to analyse the complaint forwarded before the United National Human Rights Council, Geneva (UNHRC) by the International Council of Jurists. Regardless of the allegations made thereby, it must be understood that though the UNHRC has a very wide ambit and scope to entertains such complaints, it has one of the weakest mechanisms under international law to provide any remedy. No recommendation of the UNHRC has any binding force upon the member States. At the most, a mere cognizance of the matter can be taken by the Human Rights Council and recommendations forwarded thereof to the governing executive of the d State concerned.

An inward looking world as at present will surely find a way to penalise the commissions and omissions of the PRC in due time. Rest assured it will not be by means of the numerous yet woefully inadequate international law remedial instruments at the disposal of the international res publica.


*The Author is a practising Advocate in Delhi

[1] The Rome Statute of the International Criminal Court was adopted on 17th July 1998 at the United Nations Diplomatic Conference of Plenipotentiaries on the Establishment of an International Criminal Court and it came into force on 1st July 2002 upon being ratified by at least 60 signatory nations.

[2] ‘Crimes against Humanity’; Article 7 of Rome Statute

Conference/Seminars/LecturesLaw School News

The International Law Society, KIIT School of Law is organized the 4th KIIT National Conference on International Law from 12th January to 13th January 2019 to encourage discussion and deliberation on essential and contemporary issues pertaining to public and private international law. The objective of this conference is to foster the interest and explore the contemporary areas in public international law. Inaugural Ceremony commenced on 12th January, 2019 from 11 AM. The conference comprised of two events. Firstly, the symposium on International Law and secondly the Treaty Negotiation Competition.  The symposium consisted of three themes, namely, International Commercial Arbitration, International Human Rights and Terrorism Law & International Trade and Investment  Law. The Treaty Negotiation Competition which aims to spread awareness about the importance of the treaty-making process among the participants. The Competition helps in honing the negotiation skills of the participants at international level, given the fact that they will be representing a nation on the table. The format of the Treaty Negotiation Competition was based on the workings of various bodies and agencies of United Nations as well as other independent organizations which  cater  to  the  treaty  negotiation  process  in  various  global  spheres.  The key objective of this Competition is to inculcate in participants the sense of innovation along with negotiation skills which are essential in a lawyer. Students from various universities participated in the event.

List of Resource Persons:

  1. (Dr.) Srikrishna Deva Rao, Vice Chancellor of National Law University, Orissa.
  2. Suruchi Suri, Partner of Suri and Co.
  • S.G.Srijeeth, Vice Dean and Executive Director Centre for International studies, Jindal Global University .
  1. Ananya Chakraborty, Assistant Professor at National Law University, Orissa.
  2. AlipakBannerjee, Leader International Litigation & Dispute Resolution Practice, Nishith Desai Associates.
  3. AnubhabSarkar, Co-Founder of Triumvir Law

Winners:

  1. Paper Presentation:
  2. Best Paper- Ms.KanikaLahoti, Christ University.
  3. Second Best Paper- Mr.ShubhamBiswal, Tami Nadu National Law University.

  1. Treaty Negotiation Competition:
  2. Winners- Mr. AnindyaBebartaPattnaik ,Mr. Parthsarthi Srivastava, National Law University Odisha, Cuttack.
  3. Runners Up- Mr. Aniket Pandey, Mr. VivaswanDeekshit, Maharashtra National Law University, Nagpur
  • Best Framework Agreement- Mr. Anupam Pandey, Mr. Samrat Banerjee, Hidayatullah National Law University, Raipur.

Organising Team-

  • Pooja Sah, President of International Law Society
  • PurbodayPatitunda, Vice- President, International Law Society
  • Mitul Dutta, Faculty Advisor of International Law Society

AchievementsLaw School News

Ms Kanika Lahoti of III BBA LLB (Hons.) of School of Law, CHRIST wins the Best Paper Award at the recently held National Conference on International Law at KIIT University, Odisha on 13 January 2019.