English Courts dealt with the question in Svenska Petroleum Exploration v Lithuania.12 The point turned on the construction of Section 9 (1) of the 1978 State Immunity Act, which reads:
“Where a State has agreed in writing to submit to a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.”
Counsel for Lithuania argued that “proceedings which relate to the arbitration” within the meaning of Section 9 of the 1978 State Immunity Act, are concerned only with proceedings relating to the conduct of the arbitration itself and do not concern proceedings to enforce any award which may result from it. His reasoning understood by proceedings to enforce, those including the proceedings to turn the award into an order of the court on which the execution could be levied. The Court of Appeal rejected this. It held that an application for leave to enforce an award as a judgment is the final stage in rendering the arbitral procedure effective and that it falls within section 9(1) of the State Immunity Act. That is, that such proceedings are jurisdictional in nature.
The correctness of that approach has been recently tested in the Jurisdictional Immunities case, where the ICJ held that the court seized of an application for exequatur of a foreign judgment rendered against a State has to ask itself “whether the respondent State enjoys immunity from jurisdiction.”13
As English Courts continue to be busy with regards to the enforcement of foreign arbitral awards, issues of State immunity tied to issues of procedure, may increasingly come centre-stage as in the recent case of The Gold Reserve Inc v The Bolivarian Republic of Venezuela, decided on 2 February by the High Court. Gold Reserve Inc v The Bolivarian Republic of Venezuela
The High Court in London issued a judgment in respect of an application made by the Republic of Venezuela to set aside an order made ex parte granting leave to enforce an arbitration award against Venezuela. The order had been obtained by Gold Reserve Inc (“GRI”), seeking to enforce an arbitral award issued under the Additional Facility rules of the International Centre for Settlement of Investment Disputes (“ICSID”) on 22 September 2014, by a tribunal with seat in Paris.14 The arbitration referred to mining concessions and mining rights in the Brisas Project, originally held by a Venezuelan company, acquired in 1992 by Gold Reserve de Venezuela, a subsidiary of Gold Reserve Corp, a company incorporated in the US, whose parent company since October 1998 had been GRI, a Canadian company. The tribunal had found Venezuela in breach of a Bilateral Investment Treaty between Canada and Venezuela, in detriment of GRI, and had ordered Venezuela as a consequence, to pay US$713 million to GRI plus interests and costs.
In its application to set the ex parte order aside, Venezuela submitted that the Court “had no power to make an order against Venezuela” by reason of state immunity. In particular, it argued that it was immune from the jurisdiction of the English courts, and had not lost that immunity, because it had not agreed to arbitrate with the party who had sought permission to enforce the award, Gold Reserve Inc. In other words, Venezuela’s central point on immunity was that no waiver of jurisdictional immunity had taken place. In addition, Venezuela maintained that the arbitration claim form ought to have been served pursuant to section 12 of the 1978 State Immunity Act15 (it was not), and that there was no-disclosure of material matters by GRI when applying ex parte.
In its judgment of 2 February, Mr. Justice Teare upheld the ex parte order. In a key passage of its judgment he stated: