Execution of Arbitral Awards Against Sovereign Wealth Fund Assets: Enforcement Against States and the Supreme Court’s Decision in Ascom

Abstract

A party alighting victorious from arbitration realises soon enough that if payment is not forthcoming, the award will only be as effective as its opportunities for being enforced. If the award is against a sovereign State – as it commonly will be in investment treaty arbitration – this complicates things. Enforcing in the respondent State’s jurisdiction may present difficulties. However, the competence of foreign courts and authorities to enforce the award is subject to the respondent’s sovereign immunity. An award creditor seeking to enforce its claim against a sovereign State must, therefore, not only ensure the recognition of its title to execution in a jurisdiction that is the location of suitable assets but must also ensure that these assets are not protected by State immunity.
            In November 2021, the Swedish Supreme Court (the ‘Swedish Supreme Court’ or ‘Court’) issued an important clarification of the law on sovereign immunity from execution in Ascom and Others v. Republic of Kazakhstan and National Bank of Kazakhstan (the ‘Ascom’ case). Adhering to the restrictive theory of sovereign immunity in respect of enforcement measures, the Court acknowledged the legitimate interest of an award debtor to have the award satisfied and denied immunity from execution of assets held for purposes of general State saving and investment. The decision confirms that Sweden is a favourable jurisdiction for the enforcement of arbitral awards against States.