Enforcement of Arbitral Awards Against Sovereigns: Challenges and Recent Trends

The 4th ITA Conference on International Arbitration in the Mining Sector was held in Toronto on March 4-5, 2026. The conference panels explored the lifecycle of risk in the mining and natural resources sector – from pre-investment structuring and regional regulatory reform to dispute resolution, parallel proceedings, and enforcement. Topics included critical minerals offtake agreements, early crisis management, industrial and small-scale mining co-existence, and the evolving challenges of enforcing arbitral awards against sovereign states.

Conference Panel Discussion on Enforcement

The second session of the conference focused in particular on one of the most practically challenging aspects of international arbitration: what happens after the award is rendered? The panel was moderated by Ekin Cinar of Dentons Canada LLP in Toronto, and the panelists were Christiane Deniger of Burford Capital in London, Jacques-Alexandre Genet of Archipel in Paris, and Alexis Foucard of Clifford Chance in Paris.

Ms. Cinar opened by asking the panel whether sovereign states are becoming more resistant to enforcement. The panel’s response was unequivocal: states and their lawyers are becoming increasingly skilled at shielding themselves from enforcement of arbitral awards, while lawyers for investors are, in turn, becoming more adept in their efforts to ensure enforcement takes place. For example, previously, all that was required to ensure enforcement was to identify an asset that was important to the president of a given state, attach that asset, and the arbitral award would be quickly paid. However, other creditors with arbitral awards against that sovereign would learn of the importance of that asset, go after it, and then it would become unavailable as a tool for enforcement.

Likewise, the rise in arbitral awards being rendered against EU Member States has resulted in such states changing their laws to prevent final awards from being recognized and enforced. The panel noted that, recently, EU Member States have encouraged their domestic courts, which used to readily recognize and enforce arbitral awards, to review arbitral processes with greater scrutiny, which previously did not occur during the recognition and enforcement stage. The panel further observed that courts are attempting to strike a balance between respecting the finality of arbitral awards and preserving the doctrine of sovereign immunity.

The UK Supreme Court Weighs In

A notable recent development, highlighted during the panel discussion, is the UK Supreme Court’s decision in Kingdom of Spain v Infrastructure Services Luxembourg S.À.R.L. and Republic of Zimbabwe v Border Timbers Ltd (“Spain / Zimbabwe”) (see here). In this decision, the UK Supreme Court unanimously dismissed the appeals of Spain and Zimbabwe, which sought to set aside the registration in the High Court of arbitral awards rendered against them under the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“the ICSID Convention”) on the basis of sovereign immunity. Spain and Zimbabwe argued that, pursuant to section 1 of the State Immunity Act 1978, as foreign states they are immune from the jurisdiction of UK courts and that no exception to state adjudicative immunity applied. The UK Supreme Court rejected this argument, finding that Spain and Zimbabwe had clearly submitted to the jurisdiction of the English courts by prior written agreement, namely by virtue of Article 54(1) of the ICSID Convention which states:

Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.

Accordingly, the exception to foreign state adjudicative immunity under section 2(2) of the State Immunity Act 1978 applied, and Spain and Zimbabwe could not rely on state immunity to oppose the registration of ICSID awards against them.

The UK Supreme Court’s ruling in Spain / Zimbabwe provided much needed clarity and certainty, finding that states “cannot simultaneously agree that the United Kingdom ‘shall’ recognise and enforce an ICSID award rendered against them, whilst also claiming immunity from recognition and enforcement that would prevent the United Kingdom from complying with its own ICSID obligations.” This decision positions UK courts in close alignment with the courts of Australia, New Zealand, Malaysia, and the United States, all of which have interpreted Article 54(1) as a waiver of adjudicative immunity by contracting states.

Despite this encouraging development, this case highlighted a critical caveat: the execution of the award. Notwithstanding the recognition of an ICSID award as a judgment, Article 55 of the ICSID Convention provides immunity from execution. Award creditors must, therefore, undergo the process of identifying state assets that are not immune from execution under domestic law.

Execution Remains a Challenge

Beyond the specifics of the UK Supreme Court decision in Spain / Zimbabwe and Article 55 of the ICSID Convention, the panel identified further challenges associated with execution. For example, the panel noted that countries which hold substantial reserves of lithium and other strategically vital resources are becoming increasingly sophisticated at shielding their assets from attachment –whether by nationalizing reserves or enacting legislation to prohibit the export of such materials. From a practical standpoint, identifying sovereign assets available for execution remains a significant hurdle, often requiring dedicated investigative teams with on-the-ground knowledge of how state wealth is structured and where it is held.

These challenges are not new. Earlier Kluwer Arbitration Blog posts have catalogued the numerous and evolving obstacles associated with enforcement. In an article entitled “LIDW 2024: Arbitration and Enforcement Involving Sovereign States”, the authors identified several additional enforcement challenges, including:

• difficulties in locating a debtor’s assets in jurisdictions that do not provide a discovery process;
• jurisdictions with strict principles of banking secrecy;
• onerous procedures to pierce the corporate veil;
• Interpol red notices;
• demands for banking information; and
• issuance of diplomatic notices indicating that certain assets or entities are immune from attachment or are separate from the State.

Similarly, a post entitled “LIDW 2025: Enforcement of Awards – Evolving Standards and Jurisdictional Tensions” observed that states will at times invoke the defence that enforcing an arbitral award would violate local public policy. While it is understandable that attitudes towards enforcement vary across jurisdictions, as that blog post recognized, such divergences give rise to inconsistencies that undermine the coherence of the international arbitration framework.

How Investors Can Protect Themselves

Ms. Cinar then asked the panel what investors can do at the outset to put themselves in a better position should enforcement subsequently become necessary. Several practical measures emerged from the discussion, including:

• implementing a waiver of sovereign immunity in the contract;
• ensuring that the governing law clause is clearly drafted and does not leave the investor solely reliant on the courts of the host state;
• relying on investment treaties;
• relying on interim measures for emergency arbitration;
• implementing well-drafted arbitration clauses; and
• ensuring that the state itself is named as respondent in any arbitration, rather than a subsidiary ministry that may lack the assets or authority to satisfy an award.

The Future of Arbitral Award Enforcement

Looking ahead, the panel painted the world of arbitral enforcement as remaining in flux, as states continue to enact legislation to close the gaps that creditors exploit for enforcement. The panel also considered that the future of enforcement may involve non-cash settlements, with states offering commodities in lieu of monetary payment. Whether such arrangements would satisfy award creditors, and how they would interact with existing enforcement frameworks, remains an open question.

The panel underscored that arbitral awards against sovereign states ought, in principle, to be enforceable. The UK Supreme Court’s decision in the Spain / Zimbabwe case provides a meaningful step in the right direction, confirming that ratification of the ICSID Convention is a waiver of adjudicative immunity. That decision did not address other possible grounds for waiver such as Spain’s ratification of the Energy Charter Treaty or Zimbabwe’s ratification of the underlying bilateral investment treaty. Notably, two Canadian courts have found that a state’s ratification of a bilateral investment treaty amounts to a waiver of state immunity (see Sunlodges Ltd. v. The United Republic of Tanzania, 2020 ONSC 8201 and Republic of India c. CCDM Holdings, 2024 QCCA 1620). Ratification of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) may also provide a basis for a finding of waiver even though its wording differs somewhat from that of Article 54(1) of the ICSID Convention.