Kingdom of Spain v Infrastructure Services Luxembourg S.A.R.L. & Anor

The applicant, the Kingdom of Spain, sought special leave to appeal to the High Court of Australia concerning the sovereign immunity of states. The dispute arose from an application for the recognition and enforcement of an arbitral award rendered under the International Centre for Settlement of Investment Disputes (ICSID) Convention. The respondents were Infrastructure Services Luxembourg S.A.R.L. and Energia Termosolar B.V.

The core legal issues before the High Court were whether sovereign immunity could be waived other than by a clear and unambiguous action of a state, and whether Spain's accession to the ICSID Convention constituted such a waiver. Specifically, the Court was asked to consider the interpretation of Articles 54 and 55 of the ICSID Convention in light of section 35 of the International Arbitration Act 1974 (Cth). The applicant argued that the Full Court's interpretation, which found a dichotomy between recognition and enforcement/execution, incorrectly diminished the application of Article 55, which preserves immunity.

The applicant contended that sovereign immunity is a fundamental principle of customary international law, given domestic effect by the Foreign States Immunities Act 1985 (Cth). It argued that accession to the ICSID Convention, by itself, does not amount to a sufficiently clear and unambiguous waiver of immunity. The applicant further submitted that the Full Court erred in its interpretation of Articles 54 and 55 of the ICSID Convention, asserting that there is no textual basis for a strict dichotomy between recognition and enforcement/execution. The applicant highlighted that Article 55, on its proper construction, applies to both recognition and enforcement, thereby preserving Spain's immunity. The applicant also referred to academic commentary and decisions from other jurisdictions, such as the United Kingdom Supreme Court and the European Court of Justice, to support its interpretation that a distinction between recognition and enforcement/execution is not sustainable and that accession to the ICSID Convention does not automatically waive sovereign immunity.

The respondents, in turn, argued that the issues were not ripe for special leave, asserting that there was no reason to doubt the correctness of the Full Court's decision. They contended that the Full Court had unambiguously determined that Spain's agreement for ICSID dispute resolution necessarily involved an acceptance of the jurisdiction of other contracting states' courts for the purpose of enforcement. The respondents pointed to the specific wording of the orders made by the Full Court, which they argued recognised and enforced the award while also preserving immunity from execution, demonstrating a proper grappling with the relevant legal principles.