Infrastructure Services Luxembourg and the State Immunity Act Section 9 Question

On 4 March 2026, the UK Supreme Court delivered its decision on the long-running, multi-jurisdictional case of Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l [2026] UKSC 9 (“ISL”). It concluded that a state’s ratification of the International Centre for Settlement of Investment Disputes (“ICSID”) Convention (“the Convention”) amounts to a “prior written agreement” under section 2(2) of the State Immunity Act 1978 (“SIA”), displacing sovereign immunity to enforce an underlying ICSID award. While the decision clarified the threshold for the immunity exception to apply, it left the scope of SIA’s section 9 — the arbitration exception — unresolved. This post illustrates the consequences of this gap for enforcement of non-ICSID awards in England, especially in light of the Energy Charter Treaty’s (“ECT”) sunset clause.  

Background

The dispute concerns investments made in 2011 by a Luxembourg company (“the claimants”) in Spanish power generation under the ECT, relying on Spain’s incentive regime. In 2013, Spain replaced the regime, significantly reducing the value of the claimants’ investments. The claimants subsequently commenced arbitration, alleging a breach of the fair and equitable treatment obligation under Article 10(1) of the ECT, and were awarded €101 million.

In 2021, the claimants sought to register the award in England. Spain applied to set aside the registration order, asserting immunity under section 1(1) of the SIA, contending that the section 2(2) exception was inapplicable. Section 1(1) of the SIA affords general immunity to states from adjudicative jurisdiction of the English courts, while section 2(2) is an exception to this general rule, removing immunity where a state has submitted to that jurisdiction by prior written agreement. Under Pinochet (No 3), a waiver of state immunity by treaty must be express and unequivocal. Therefore, the question was whether Spain’s accession to the Convention could amount to such an agreement.

A similar question was raised in parallel proceedings of Border Timbers Ltd v Republic of Zimbabwe (“Border Timbers”). The two judges reached the same result at first instance, albeit by different routes. Fraser J in ISL held that section 1(1) of the SIA should not be engaged during award registration at all, and even if it did, the section 2(2) exception would be satisfied via Article 54(1) of the Convention. On the other hand, Dias J in Border Timbers held that while Article 54(1) was not sufficiently clear for section 2(2) to apply, award registration did not engage adjudicative immunity in any case. Heard separately at first instance but conjoined on appeal, the Court of Appeal dismissed the immunity defence on section 2(2) grounds, agreeing with Fraser J’s conclusion. Spain appealed this decision.

Supreme Court’s Analysis

In the joint appeal of ISL and Border Timbers, the Supreme Court was required to determine two questions. Firstly, whether the states, by their assent to Article 54(1) of the Convention, had submitted to the jurisdiction of English courts within the meaning of section 2(2) of the SIA. If not, whether they had agreed to arbitration within the meaning of section 9(1) of the SIA, which also displaces adjudicative immunity.

The answer to the first question required determining the valid test for “prior written agreement” as in section 2(2) and whether Spain had met it. In formulating the test, the Court concluded that express consent does not need to explicitly include words such as “waiver” or “submission”. The test is “whether the words used necessarily lead to the conclusion that the state has submitted to the jurisdiction”.

In examining whether Article 54(1) of the Convention met this test, the Court applied Article 31 of the Vienna Convention on the Law of Treaties  and interpreted the provision in light of its object and purpose. It held that even though Article 54(1) of the Convention contains no explicit reference to waiver or submission, each contracting state’s mutual obligation under it to recognise and enforce ICSID awards as final domestic judgments necessarily entails a waiver of adjudicative immunity. A state cannot agree that other states will enforce awards while refusing to do so itself. Further, the Court relied on the Convention’s object and purpose, emphasising the value of parity between investors and states, sustained by a reciprocal enforcement system that prevents states from avoiding responsibility and accountability. Finally, while Article 55 preserves immunity from execution against state assets, the Court found no evidence in the travaux préparatoires suggesting that adjudicative immunity could similarly protect a state from recognition and enforcement of an award.

Since section 2(2) was satisfied, the Court found it unnecessary to address the second question and left the scope of section 9 open.

Ramifications

Evidently, the only reason Article 54(1) cleared the established test was because the Supreme Court’s interpretation was anchored to features specific to the Convention’s design. The values of reciprocal obligation and equality between investors and states are rooted in the Convention’s travaux préparatoires, grounding the purposive reading in the instrument itself. However, the reasoning’s advantages cannot be extended beyond the Convention.

For investors who arbitrated under non-ICSID regimes, the section 2(2) route post-ISL offers little assistance. Article III of the New York Convention (“NYC”) is equivalent to Article 54(1) of the Convention and preserves state immunity through the forum’s domestic law. Neither Article III’s text nor its drafting suggests an intention to preclude immunity-based arguments. The Court of Appeal confirmed this in CC/Devas (Mauritius) Ltd. v Republic of India, holding that ratification of the NYC does not satisfy section 2(2) of the SIA. The appellants had argued that Article III’s opening words mirror the operative wording of Article 54(1), hence the ISL reasoning should be read across. In rejecting this, Phillips LJ applied the ISL interpretive exercise of contextualising the Conventions in light of their object and purpose, concluding that the two treaties differ fundamentally. The NYC exists to facilitate international arbitration by promoting enforcement of foreign awards generally, while the Convention exists to promote investment through mutual enforcement of awards to which a state is necessarily a party. Dias J flagged this concern in Border Timbers, questioning whether the SIA’s section 2(2) reasoning developed for Article 54(1) of the Convention could be sustained without extending it to NYC’s Article III. By determining that it cannot, the Court of Appeal has now foreclosed section 2(2) of the SIA for non-ICSID awards, leaving section 9 of the SIA as the only remaining pathway for their enforcement in England.

For section 9 of the SIA to apply and waive immunity, the court must satisfy itself that the foreign state agreed to submit the specific dispute to arbitration. In CC/Devas, however, both Phillips LJ and Lewison LJ proceeded from the premise that where an arbitration agreement exists, section 9 will automatically be engaged. For instance, Lewison LJ stated that the section 2(2) question “will normally not arise” because by being party to an arbitration agreement, the state would have already submitted to the adjudicative jurisdiction of English courts. Neither judge outlined exactly how a court should satisfy itself that such an agreement exists. In ISL, this inquiry would have required verifying the validity of Article 26 of the ECT as the arbitration agreement underlying this award. The Court of Justice of the European Union’s decisions in Achmea and its extension to the ECT through Komstroy, which hold intra-EU investor-state arbitration under the ECT incompatible with EU law, would have made that validity difficult to establish. This may explain why the scope of section 9 has remained largely undefined by both the Court of Appeal and the Supreme Court. Nevertheless, since every non-ICSID award must now proceed via section 9, that silence can no longer be sustained.

The asymmetry this produces is evident and not confined to England. The ECT provided investors a choice of arbitral regimes, and those who chose between the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) or Stockholm Chamber of Commerce (“SCC”), against the same state, for the same breach of the same treaty, face an immunity barrier that their ICSID counterparts do not. This pattern can also be seen in the enforcement proceedings in the United States. In Mercuria Energy v Poland, the District of Columbia District Court refused to enforce an SCC-seated award annulled by the Svea Court of Appeal on Achmea/Komstroy grounds, while parallel ICSID actions faced no equivalent obstacle. Although the mechanisms of domestic law differ across jurisdictions, the route of enforcing a non-ICSID award arising from an intra-EU ECT dispute produces the same enforcement disadvantage. The inequality operates not on the merits but on a procedural choice made years before its consequences could have been anticipated. As the ECT’s sunset clause in Article 47(3) generates a growing pipeline of non-ICSID awards seeking enforcement in London, the absence of definitive guidance on section 9 is becoming a pressing problem.

Conclusion

The Supreme Court’s decision leaves a structural gap on which silence is untenable. It remains to be seen whether closing the gap requires the English courts to confront the intra-EU objection and the validity of Article 26 of the ECT directly, or whether section 9 of the SIA can be read more narrowly as concerned solely with the existence of a written agreement to arbitrate rather than its validity under a body of law that no longer binds the English courts.