Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l.

The Kingdom of Spain was engaged in an arbitration with Infrastructure Services Luxembourg S.à.r.l. before the International Centre for Settlement of Investment Disputes (ICSID). Following the arbitration, Infrastructure Services Luxembourg sought recognition and enforcement of the award under section 35(4) of the International Arbitration Act 1974 (Cth). The dispute reached the Federal Court of Australia, where the Kingdom of Spain contested the enforcement on the grounds of sovereign immunity, invoking the Foreign States Immunities Act 1985 (Cth). The primary issue before the court was the interaction between the Foreign States Immunities Act and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, specifically whether the Kingdom of Spain's consent to ICSID arbitration constituted a submission to jurisdiction that would waive its immunity under section 10 of the Immunities Act.

The court examined the provisions of the ICSID Convention, particularly Article 54(2), which deals with the recognition and enforcement of awards, and Article 55, which addresses execution and immunity from execution. The court concluded that Article 54(2) of the ICSID Convention did not unequivocally constitute an agreement to submit to jurisdiction within the meaning of section 10 of the Immunities Act. The court held that the ICSID Convention does not explicitly exclude claims for foreign state immunity in proceedings for the recognition and enforcement of an award, and that Article 55 preserves the immunity from execution as provided by the domestic law of contracting states. Therefore, the court found that the Kingdom of Spain had not waived its immunity from the enforcement of the ICSID award.

In light of the above findings, the appeal was allowed, and the orders made on 24 February 2020 were set aside. The appeal was stood over for further argument on the form of order for recognition of the award and the disposition of the appeal, including the question of costs. The parties were directed to confer and formulate draft orders for the delivery of written submissions on these issues, limited to 10 pages per submission.