Enforcement of an ICSID award pending annulment
Journal Title: ADR. Arbitraż i Mediacja - Year 2015, Vol 2, Issue 30
Abstract
Enforcement of arbitral awards rendered by investment tribunals has become an important issue recently, mostly due to the ruling made by a tribunal sitting under Permanent Court of Arbitration in a case initiated by a majority shareholder of Yukos against Russian Federation . It is a common knowledge that winning is only the first step in investment arbitration. First, Russia has right to file an application for setting aside the arbitral award at the seat of arbitration . Second, the decision is worthless until its enforcement in a state where the loosing respondent state has assets that are not immune from execution. As it already happened in the past, enforcement could create serious, often insurmountable obstacles for winning parties . But those recent events are not the subject of this paper. To the contrary, it aims at delivering a short overview of interplay between possibility of annulment of an arbitral award rendered under auspices of International Centre for Settlement of Investment Disputes (“ICSID”) and a rule of automatic enforcement of ICSID arbitral award. Art. 52 of the ICSID Convention (“Convention” ) specifies the grounds for annulment of arbitral awards as well as time limits and applicable procedure. A particular feature of investment arbitration under the auspices of the ICSID is that an award is automatically enforceable in any contracting state. Pursuant to Art. 53 (1) of the Convention, an ICSID award is binding on the parties and they must comply with it “except to the extent that enforcement shall have been stayed pursuant to the relevant provision of this Convention”. In the light of Art. 54 of the Convention, each contracting state “shall recognize an award (…) as binding and enforce the pecuniary obligations (…) as if it were a final judgement of a court in that state”. A question arises how to reconcile finality of an award and its immediate and automatic enforceability with possibility to seek its annulment under Art. 52 of the Convention. In answer to this question, a special mechanism was provided for in Art. 52 (5) of the Convention. It enables applying for a stay of enforcement pending annulment proceedings. The mere existence of on-going annulment proceedings does not suspend enforcement of an award according to Art. 52 of Convention . If an ad hoc committee, which is, according to ICSID Convention, empowered to whether to annul an award or not (“committee”) grants a stay, an award cannot be enforced pursuant to Art. 54 of the Convention pending the annulment proceedings . This paper provides a brief overview of the existing state of law and de facto semi-automatic practice of committees to the issue of stay of enforcement (I). Then, it focuses on conditioning a stay of enforcement upon requirement of posting security (II). Third, emphasis is put on recent instances of refusal of upholding the provisional stay (III), which is a much welcome departure from the previous approach.
Authors and Affiliations
Katarzyna Barbara Szczudlik
Keywords
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