Knowledge Counsel London
"The immunity of states in international law is not absolute but is subject to a number of exceptions."
State immunity – arbitration
The Supreme Court has given the final word as to whether ratifying the ICSID Convention constitutes a submission to the jurisdiction of the English courts by prior written agreement under section 2(2) of the State Immunity Act 1978. The decision reached the Supreme Court after differently reasoned first instance decisions in cases where Spain and Zimbabwe challenged the registration of ICSID arbitration awards as judgments of the English High Court. The Court of Appeal dismissed the appeals. Article 54 of the ICSID Convention provides that contracting states will enforce awards under the Convention as if it were a final judgment of its courts. The Supreme Court held that this was a prior agreement by each contracting state that awards to which it was a party being recognised and enforced in other contracting states. It was a clear agreement from the clause and did not require any implied terms. This provision applies to awards against states as well as investors. The court dismissed the appeal and held that state immunity did not prevent registration of the awards against Spain and Zimbabwe.
Landlord and tenant
The Upper Tribunal held that where a lease required audited accounts, that requires external scrutiny. It is not sufficient for the landlord or management company to carry out an internal review. The audit would usually be carried out by accountants. The Tribunal also confirmed that the requirement for audited accounts was a precondition for the leaseholders’ liability to pay a balancing charge at the end of the service year.
Miah v Anchor Court Management (Ipswich) Ltd [2026] UKUT 98 (LC), 3 March 2026
Enforcement – arbitration
The Commercial Court has given judgment against the Russian Federation (“Russia”) by way of enforcement of three arbitration awards under the New York Convention. The original dispute arose out of the OAO Yukos Oil Company, its oil assets in Russia and assertions by the majority shareholders that those assets had been expropriated. The shareholders commenced arbitration for damages for breach of Russia’s obligations under the Energy Charter Treaty. The arbitration in the Netherlands resulted in three arbitration awards against Russia of over US$50bn. The shareholders sought to enforce those awards in England and Russia challenged those proceedings with allegations of bribery, corruption and fraud, both when Yukos was acquired and operated, and during the arbitration proceedings. The court emphasised the fact that the purpose of the New York Convention was to enforce arbitration awards and so there were minimal grounds and a high threshold for any challenges to enforcement. The court held that Russia had not established that enforcement of the awards would be contrary to public policy and ordered enforcement of the damages awards but not the costs awards.
Hulley Enterprises Ltd v Russia [2026] EWHC 456 (Comm), 2 March 2026
Maritime
The Commercial Court has rejected a challenge brought by the buyers of ten newbuild ships to arbitration awards which held that the buyers were not entitled to loss of bargain damages. The shipyard had failed to obtain refund guarantees within 120 days as required by the contracts and the buyers had exercised their contractual rights of cancellation. The challenge brought under section 69 of the Arbitration Act 1996 concerned whether the provision requiring refund guarantees was a condition or an innominate term. Confirming that it was a question of construction of the contract, the court held that the tribunal had not misstated the applicable legal principles and was correct in concluding that the provision was not a condition. There was no clear wording indicating that the parties intended the clause to be a condition and no factors of commercial and practical significance in the contractual scheme which required it to be a condition. Any delay in providing the refund guarantees would not derail performance of the shipbuilding contracts. The yard was still under an obligation to build the vessels even if it did not provide the refund guarantees. The buyer was not obliged to pay instalments without the guarantees and so they would not be left unsecured.
SLB and others v PAK and others [2026] EWHC 449 (Comm), 2 March 2026
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