Foreign Sovereign Immunity in the Enforcement of Investor-State Awards

Abstract

This essay looks at the enforcement of investor-State arbitral awards under the U.S. Foreign Sovereign Immunities Act (FSIA). Part I considers immunity from suit, which tends not to be an obstacle because of the arbitration exception to immunity found in Section 1605(a)(6). Part II turns to the FSIA’s rules on venue, which, as currently interpreted, seem to require an initial action in the District of Columbia to reduce the arbitral award to judgment, followed by a second action to execute that judgment where the foreign State has assets. Part III discusses the FSIA’s provision on service of process, which sets forth four methods for serving foreign States that must be followed strictly and in order. Finally, Part IV considers the FSIA’s rules on the immunity of a foreign State’s property from execution. Although Section 1610(a)(6) contains an arbitration exception to immunity from execution that is parallel to Section 1605(a)(6)’s exception to immunity from suit, the property to which the exception applies is limited. Specifically, an investor can enforce its award only against property that is in the United States, is owned by the foreign State itself, and is used by the foreign State for a commercial activity in the United States. In the end, it is the immunity of a foreign State’s property from execution that poses the biggest obstacle to enforcing investor-State awards.

Keywords: Investor-State Arbitration, Arbitration Awards, Foreign Sovereign Immunities Act, FSIA