ICSID awards not assignable without debtor state’s consent

The Court of Appeal has held that an ICSID award cannot be assigned by an investor without the consent of the debtor state. The consequence of this is that an assignee of an award where the debtor state has not consented to the assignment cannot obtain its recognition or enforcement in England and Wales.

ICSID Convention rights

The Court was considering an appeal of a first instance decision which held that Blasket Renewable Investments LLC could not enforce a 2019 ICSID award against the Kingdom of Spain. Blasket had acquired the award under an assignment from investors in a renewable energy scheme in Spain who had brought proceedings and obtained the award under the Energy Charter Treaty (ECT) and ICSID Convention. The investors successfully claimed that changes made to renewable energy incentives had prejudiced their investments in breach of the ECT.

In Blasket Renewable Investments LLC v Kingdom of Spain the appeal from the decision at first instance was dismissed. The Court held that, under customary international law, treaty rights are not assignable without the consent of the obligor state and that position is equally applicable to rights under an ICSID award. As Foxton LJ noted, “It might be thought somewhat surprising if rights created by an agreement between two or more states could not be assigned by any state right-holder, but could be assigned by non-parties to the treaty on whom direct rights were conferred.”

Blasket relied on various decisions from first instance courts in New York and the Federal Court of Australia, which held that the absence of a specific prohibition on ICSID award assignment in international law meant that such awards were assignable. However, the Court was not persuaded of that, finding that “international law has yet to achieve any substantial uniformity of practice on the assignability of investor rights under investment treaties”.

The Court held that Article 54(2) of the ICSID Convention permitted only one of the original parties to an ICSID award to seek its recognition or enforcement, and not an assignee. The ICSID Convention also did not devolve questions concerning the assignability of ICSID awards to the domestic law of its Contracting States.

International consensus?

The Court noted that a House of Lords judgment from 2006 stated that "It is not for a national court to 'develop' international law by unilaterally adopting a version of that law which, however desirable, forward-looking and reflective of values it may be, is simply not accepted by other states." Males LJ, in a short concurring judgment also noted that “it may be desirable as a matter of international law that an ICSID Convention award against a contracting state such as Spain should be assignable”, before concluding that this was not the current state of international law on the issue.

While the judgment departs from first-instance decisions in the United States and Australia and an interim Dutch decision, all three judges were unanimous on their interpretation of international law. Males LJ expressed the hope that the judgment would contribute to an eventual international consensus, observing that this “should not be a field in which the concept of ‘first seised’ carries undue weight”. As several related decisions are pending appeal in courts in other jurisdictions, it remains to be seen what weight the Court’s decision will carry internationally.

Blasket has sought leave to appeal the decision to the Supreme Court of the United Kingdom.

Simmons & Simmons LLP, led by partners Jayne Bentham and Basil Woodd-Walker and associate, Eliza Jones, acted for the Kingdom of Spain.