Litigation, Insights

An Appraisal of Defence of Sovereign Immunity in the Enforcement of Foreign Arbitral Awards

As the global landscape evolves and international trade flourishes, arbitration has emerged as a preferred mechanism for resolving international commercial disputes, providing parties a neutral forum and a streamlined process. Some international economic activities engage active participation of sovereign States in partnership with private investors. In some economic arrangements, sovereign states offer consent to arbitration in their contract/agreement with an entity as a means of resolving disputes that may arise therefrom.

The enforcement of arbitral awards, both domestic and foreign, is crucial to maintaining the credibility and effectiveness of the arbitral system. Yet, when it comes to enforcement of foreign arbitral awards against sovereign states, challenges may arise due to the concept of sovereign immunity. Sovereign immunity is a fetter to consent for enforcement proceedings of an arbitral award. If the coercive instrument of a foreign court cannot be invoked against a State party in the enforcement of an award, it does suggest that the party has not freely given consent to the processes leading to the award. It is an albatross to parties’ consent inherent in arbitration and the resultant award…

 

 

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