Spain and Zimbabwe Urge UK Supreme Court to Ax Arbitration Awards

Spain and Zimbabwe have asked the UK Supreme Court to block enforcement of ICSID arbitration awards, challenging the Court of Appeal’s ruling that accession to ICSID waives sovereign immunity (image source)

London — Spain and Zimbabwe have jointly steered a critical legal question to the UK Supreme Court: whether investor–state arbitration awards issued under the ICSID Convention can be enforced in English courts against sovereign states despite claims of immunity under the State Immunity Act (SIA). The ruling is expected to influence London’s arbitration market and shape global approaches to sovereign risk.

The Supreme Court has agreed to hear consolidated appeals involving both governments, following a Court of Appeal judgment that upheld enforcement of the awards. That ruling held that accession to the ICSID Convention constitutes prior agreement to the jurisdiction of English courts for recognition and enforcement under section 2(2) of the SIA. The Zimbabwe matter concerns forestry firms Border Timbers and Hangani Development, while the Spain case arises from Energy Charter Treaty disputes over renewable energy incentives.

The Supreme Court will determine whether Article 54(1) of the ICSID Convention amounts to submission to jurisdiction and, in Spain’s case, whether there exists a valid arbitration agreement sufficient to override immunity. In October 2024, the Court of Appeal dismissed both governments’ challenges, concluding that by ratifying ICSID, Spain and Zimbabwe had effectively waived immunity for recognition of awards. The decision harmonised conflicting Commercial Court precedents and cleared the way for recognition proceedings to advance in London.

Legal analysts note that the Supreme Court’s ruling will significantly influence how London treats ICSID awards. Upholding enforcement would strengthen London’s position as a dependable centre for award recognition, while restricting jurisdiction could prompt investors to reconsider forum strategies and recalibrate political risk. For Zimbabwe, the underlying award concerns land seizure claims; for Spain, the disputes stem from retroactive changes to renewable energy incentive frameworks.

Investor confidence is at stake. A pro-enforcement decision is expected to reinforce London’s role as a cornerstone of ICSID recognition, while a reversal could introduce uncertainty into cross-border investment planning. The case also raises central questions around sovereign immunity, particularly the relationship between Article 54(1) of the ICSID Convention and section 2(2) of the SIA. Policymakers may need to reassess treaty commitments and governance structures depending on the outcome.

The Supreme Court’s case summary highlights two key issues: whether the Court of Appeal erred in finding that Article 54(1) constitutes submission to jurisdiction, and whether Spain had a valid arbitration agreement allowing English courts to exercise adjudicative jurisdiction. Although narrow in framing, these issues will carry broad consequences for the enforceability of investor–state awards in one of the world’s most influential legal forums.

Both Zimbabwe and Spain argue that English court enforcement improperly pierces sovereign immunity, while award creditors maintain that ICSID’s system presumes stable, neutral recognition processes that avoid inconsistent domestic litigation. As the Supreme Court prepares its judgment, investors, states and arbitration practitioners expect a ruling that may reshape treaty drafting, investment structuring, and sovereign litigation strategies for years ahead.