Sovereign immunity from enforcement of arbitral awards

A claimant who obtained an arbitral award against a state has been permitted to enforce it against property belonging to that state in the UK, after the Court of Appeal held sovereign immunity to execution had been waived.  The case is notable for its interpretation of the ICC arbitration rules, which are widely incorporated into contracts with state-owned entities.

In General Dynamics UK Ltd v The State of Libya [2025] EWCA Civ 134 the claimant had been awarded £16m by an ICC arbitral tribunal seated in Geneva and sought to enforce that through a final charging order over a London property owned by Libya. There was no dispute that Libya had waived sovereign immunity as to the adjudicative jurisdiction of the arbitral tribunal and of the courts of the UK in relation to that arbitration by entering into a written agreement to submit disputes to arbitration, within the meaning of section 9 of the State Immunity Act 1978. However, sovereign immunity can be claimed separately against execution and Libya sought to assert it here.

"Wholly enforceable"?

The dispute resolution clause under which the parties agreed to arbitrate disputes stated that "Both parties agree that the decision of the arbitration panel shall be final, binding and wholly enforceable". Libya argued that this was a waiver of immunity only as regards adjudication, the enforcement of an award being the subject of separate proceedings and requiring a separate waiver of immunity from execution.

This issue divided the Court, though the three Lords Justice were unanimous on the outcome. Zacaroli and Lewison LJs found it to be sufficient in of itself to waive immunity from enforcement. On the other hand, Phillips LJ, giving the lead judgment, noted that if the case as to consent to execution was based solely on the words "final, binding and wholly enforceable", he would have been inclined to find them insufficient for that purpose. However, the agreement between the parties also incorporated the ICC Rules of Arbitration. Article 28(6) of the applicable 1998 ICC Rules (35(6) in the 2021 Rules) states:

"Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can be validly made."

The Court noted that this had previously been held to be a waiver of immunity from execution by the Cour de Cassation in France in 2000 and in the US Court of Appeals (5^th^ Circuit) in 2004. When taken in combination with the wording that an award would be "wholly enforceable", Phillips J held that Libya had waived immunity from execution.

What this means

Prior to this decision, there was no binding authority on the effect of the ICC Rules on waiver of execution. What is now clear is that they could weigh heavily in favour of an argument that immunity to execution has been waived. Any party that is entering into an arbitration agreement incorporating the ICC rules with a state party should consider whether that clause may also be deemed to give rise to a waiver of immunity from the enforcement of an arbitral award.