Facilitating compliance and coercive enforcement of foreign investment arbitration awards

Boahene, TS

Abstract

The overall integrity of the investor-state arbitration regime pivots, ultimately on parties’ ability to secure voluntary compliance or enforcement of the resulting arbitral awards. A significant proportion of cases where States have been instructed to pay investors damages have required enforcement proceedings in national courts due to a lack of voluntary compliance. Conversely, these enforcement proceedings unavoidably raise public international law issues of State immunity, precisely immunity from execution. Consequently, instances of investors’ home State intervention – and unavoidably, re-politicisation of the investment dispute – have resurged. Yet, the current discussion about the regime’s future has rarely focused on compliance, enforcement and, more generally, their effectiveness. This thesis fills this gap by investigating the challenges and limitations hindering awards’ implementation under the regime, focusing primarily on proffering alternative solutions to enhance effectiveness.
The main legal hindrance to awards’ implementation against States – State immunity - is explored from theoretical and practical perspectives, including the viability of solutions addressing immunity from execution. It argues that although immunity from execution is seemingly well perforated with exceptions to facilitate awards’ enforcement when voluntary compliance fails, the actual application follows difficulties with predominant deference towards States’ interests. Thus, unless a State willingly complies with an award rendered, executing against its assets is almost impossible. Alternative solutions, therefore, are necessary. Since immunity-related restraints only come into play when voluntary compliance fails, the thesis advances the importance of engaging solutions that encourage voluntary compliance from the very onset. Therefore, with analysis framed in international relations theoretical approaches to compliance in conjunction with some seminal State compliance behaviour under the regime, the thesis also inquired into factors impacting States’ willingness to (not)comply with their obligations to draw workable solutions.
Ultimately, the thesis concludes by suggesting engaging a waiver of immunity from execution and fostering voluntary compliance by increasing transparency and introducing an appellate mechanism under the regime. The latter proposal is partly necessitated by the observation that the absence of an effective review mechanism under the regime makes awards susceptible to post-award attacks. Arguably, non-compliance and subsequent utility of immunity-related defences are sometimes tactical measures States adopt to savage perceived errors in adverse outcomes. However, to be successful for the purpose and guide against abuse of use, an appellate mechanism should come with well-defined conditions that induce voluntary compliance and, ultimately, the awards’ coercive enforcement.

• Thesis Type: Thesis
• Deposit Date: Nov 2, 2022
• Publicly Available Date: Oct 25, 2024
• Award Date: Jun 24, 2022