Court finds rights in ICSID arbitration award non-assignable

Operafund Eco-Invest Sicav Plc & another -v- The Kingdom of Spain [2025] EWHC 2874 (Comm)

In a dispute arising out of the recognition and enforcement of an ICSID arbitration award, the English Court has held that the judgment creditor under the award was not, as a matter of international law, entitled to assign its rights under the award to an interested third party.

The background facts

Between July 2008 and July 2009, Operafund Eco-Invest Sicav Plc and Schwab Holding AG (claimants) invested in a number of solar energy plants in the Kingdom of Spain (Spain) allegedly in reliance upon representations made on behalf of Spain as to minimum tariffs and incentives which would be extended to renewable energy projects in Spain.

The claimants subsequently alleged that between November 2010 and June 2014, Spain passed legislation revoking those tariffs and incentives, which the claimants alleged breached the terms of the Energy Charter Treaty 1994 (ECT) and caused the claimants substantial losses.

On 31 July 2015, the claimants commenced arbitration against Spain seeking damages pursuant to Article 26 of the ECT. The arbitration was conducted under the rules applicable to ICSID Convention arbitrations.

On 6 September 2019, the Tribunal published the arbitration award (Award) in which it found in favour of the claimants and ultimately awarded them €29.3m.

On 9 August 2021, the claimants applied without notice under s.1(2) of the Arbitration (International Investment Disputes) Act 1966 (1966 Act) for an order registering the Award in England & Wales.

On 14 September 2021, the Court made the order sought. By operation of s.2(1) of the 1966 Act, the effect of registration was that the Award had the same force and effect for the purposes of execution as if it was a judgment of the High Court.

On 6 January 2023, Spain applied to have this order set aside on a number of grounds, including state immunity. The Court dismissed the set aside application apart from the state immunity ground. In an earlier case, Infrastructure Services Luxembourg Sarl -v- The Kingdom of Spain [2024] EWCA Civ 1257, the Court of Appeal had resolved the state immunity issue against the position adopted by Spain.

The Supreme Court decision in Infrastructure is pending. Consequently, the set aside application in this case has been adjourned pending the Supreme Court decision on the state immunity issue. In the meantime, the Court of Appeal decision in Infrastructure is binding unless and until it is reversed by the Supreme Court.

Substitution application

The claimants, together with Blasket Renewable Investments LLC (Blasket) applied for an order that Blasket be substituted for the claimants as claimant in these proceedings.

The application was made pursuant to CPR 19.2(4)(a) on the basis that the claimants purported to assign their interests in the Award pursuant to an assignment agreement (Assignment Agreement) between the claimants and Blasket dated 31 January 2024. Spain contended that the jurisdictional requirements under CPR 19.2(4)(a) had not been met because the Award was not assignable as a matter of international law.

A similar issue arose in proceedings between Blasket and Spain in the Federal Court of Australia in Blasket Renewable Investments LLC-v- The Kingdom of Spain [2025] FCA 1028 (FCA proceedings). In those proceedings Blasket had been substituted on the basis that the making of that order would not prevent Spain from disputing the validity or efficacy of the purported assignment at trial. The assignability issue was resolved against Spain in the FCA proceedings.

Spain has indicated that it intends to appeal this decision. In the meantime, Blasket argued that the FCA proceedings created an issue estoppel that precluded Spain from arguing the same point in these proceedings.

The Court in this case decided it should resolve as a matter of law on the balance of probabilities whether an ICSID Convention award is assignable.

The Commercial Court decision

The Issue Estoppel Argument

Under the common law, for there to be issue estoppel based on a foreign judgment, that judgment must be given by a court of a foreign country with jurisdiction to give it and must also be final and conclusive on the merits.

In this case, a final order had not yet been made in the FCA proceedings and, as a matter of Australian law, the FCA judgment was not yet final or binding. Unless and until such a final order was made, the FCA judgment was not a foreign judgment which was final and conclusive on the merits and could not, therefore, be registered in England and Wales.

Spain also highlighted that a foreign judgment against a (non-state) judgment debtor cannot be recognised and enforced in England and Wales unless the judgment debtor was present in the foreign country when the proceedings were commenced and submitted to the jurisdiction of the foreign court.

This defence is equally available to a state, pursuant to s.31 of the Civil Jurisdiction and Judgments Act 1982 (CJJA), which sets out additional requirements for recognition and enforcement of a foreign judgment against a state. Spain contended that it appeared in the FCA proceedings solely to contest the jurisdiction of the Court. The claimants and Blasket disputed Spain’s position.

The Court accepted that Spain had appeared in the FCA proceedings solely to contest the FCA’s jurisdiction and it had not thereby submitted to the jurisdiction of the Australian courts. That prevented the judgment in the FCA proceedings being recognised or enforced in England, applying s.33 of the CJJA.

In conclusion, the claimants and Blasket had failed to establish that Spain was estopped from advancing its substantive arguments on the assignability issue.

The Assignability Issue

The claimants and Blasket submitted that even if issue estoppel was not available, the assignability objection ought to be rejected on its merits. In the alternative, they argued that following registration of the Award, a new and free-standing group of rights arose that were capable of assignment as a matter of English law even if the Award itself was incapable of being assigned.

The ICSID Convention contains no express provision either permitting an investor to assign an award or precluding the assignment of an award. Whether an assignment of an award was permitted depended, therefore, on the true meaning and effect of the ICSID Convention and the ECT provisions, applying the Vienna Convention principles of construction.

In respect of the ECT, it was not alleged that the ECT contains a provision that positively permits assignment of rights. The Court considered that the correct analysis of the ECT, applying Article 31 and 32 of the Vienna Convention, meant that claims and awards concerning claims under the ECT are not assignable as a matter of construction of the ECT even if other claims in arbitrations under the ICSID Convention may be.

The Court considered the relevant provisions in the ICSID Convention, specifically those dealing with recognition and enforcement of an award. It referred in particular to Article 54(2), which states: “(2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.”

The Court also reviewed commentaries on the ICSID Convention.

It decided that the ICSID Convention contemplated that only a party to the ICSID arbitration would initiate the procedure for having an award recognised and enforced. This would exclude action by an interested third party.

The Court concluded that as a matter of construction of the ICSID Convention, awards made in arbitrations convened in accordance with the ICSID Convention are not capable of assignment, and that there is no rule of customary international law that provides either that such awards are assignable or not assignable.

Additionally, the Court dismissed the argument that registration of the Award created or was intended to create new substantive rights. If the Award was non-assignable, that could not be changed by registration. Such an outcome would create an entirely random outcome in which assignability of an award might become assignable depending on which jurisdiction in the world it might be registered or might give rise to an undesirable possibility that the effect of registration might permit assignment in some jurisdictions but not others.

Comment

The Supreme Court appeal in Infrastructure is due to be heard in early December 2025. We will report on that decision as soon as a judgment becomes publicly available.

In the meantime, this is a useful decision on the assignability of ICSID/ECT arbitration awards.