i Introduction

After the duty of the arbitral tribunal has been completed, another fully fledged battle takes place, where winners and losers face the following question: to annul, to enforce or to obstruct enforcement? And how to do it? These concerns may remain subdued during the proceedings, as litigation attorneys are usually more concerned with procedural and substantive law intricacies while the actual enforcement of the arbitral award seems at times a distant goal.

Annulment proceedings in International Centre for Settlement of Investment Disputes (ICSID) cases have increased over 60 per cent during the past decade. However, as official statistics show,2 less than 5 per cent of them have led to actual annulment of the challenged arbitral award. In terms of the overall defence strategy – especially for the losing party – this shows that the bar for award annulment within the ICSID system is statistically high, hence requiring consideration of counter-enforcement measures in the different nations where assets are recoverable as an alternative path to annulment.

There are currently two main enforcement systems to be taken into consideration. The first is laid down by the 1965 Washington Convention (the ICSID Convention)3 and the second stems from the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).4 The ICSID Convention establishes a multi-layered recognition and enforcement system in Articles 54(1) and 54(3). Article 54(1) states that signatory states should recognise awards as binding, enforcing them as final judgments issued in their own territory. For courts of the host state, this would entail an obligation to proceed to execution of the award as soon as the formal requirements entrenched in Article 54(2) are met.

Article 54(3) of the ICSID Convention, which deals with arbitral awards to be enforced in jurisdictions other than that of the host state, enshrines the law 'in whose territories execution is sought' as the applicable legislation for enforcement purposes. In that context, it is only natural to find restrictions and constraints arising from public policy, a concept inherent to legal systems worldwide. Therefore, as can be seen in the case of countries more prone to an absolute take on state immunity, public policy considerations are frequently mentioned in decisions denying execution of state assets.

The second enforcement system, the New York Convention, focuses on the law of the country where recognition and enforcement is sought, and the law applicable to the agreement as sources of standards for recognition and enforcement. Parties' capacity, the validity of the arbitration agreement and compliance with the rules of due process are considered against the backdrop of procedural rules chosen by the parties, and procedural law of the place where recognition and enforcement is sought.

The law of the country where enforcement is sought may obstruct enforcement in seven instances, as per Article V of the New York Convention: there may be a lack of arbitrability of the matters decided in the award (e.g., the arbitration tribunal ruled on non-pecuniary claims); or a public policy violation.

The New York Convention's system prompts more judicial review if compared with that of the ICSID5 as it centres the enforcement procedure at the place where enforcement is sought. In every jurisdiction where enforcement is sought there is a chance of judicial review of compliance with the seat's rules pertaining the procedure.

ICSID's enforcement standards start from states' commitment to enforce awards, a constitutive element of the Washington Convention. The rules of the seat of arbitration are immaterial to ICSID's awards, whereas the legal system of the enforcement venue is more relevant.

In theory, this could create a distinct treatment in terms of which law to apply when dealing with immunity from execution. Despite that, courts tend to observe their national rules (cumulatively with those of the seat, in non-ICSID cases) irrespective of the 'mode' of investment award, be it ICSID or non-ICSID. This means that aside from considering award recognition formalities, the standard of review will most likely also take into account the domestic threshold for execution of state assets.

Neither one of the systems could be evaluated as better or worse from the standpoint of compliance, as literature6 only refers to the alleged outstanding compliance levels of ICSID awards, without providing official figures or audited statistics. Therefore, it is not the authors' contention that either of the systems enjoys more acceptance than the other.

In common, these conventions leave regulatory space for states to apply domestic rules. In other words, there is not an internationally applicable regime on state immunity, reinforcing the case-by-case profile of enforcement in investment arbitration.

The aim of this article is to reflect on arbitration strategy in light of the prospects for enforcement in different jurisdictions. Comprehending the options and viable ways of entertaining or frustrating enforcement is an exercise that counsel should bear in mind at every moment of contract negotiation or the drafting of arbitration agreements.

ii Methodological note

For the purpose of this analysis, only cases where the respondent is a state will be mentioned, a sample that represents the majority of investment cases. The authors believe that the discussions below are useful for both counsel of an investor-creditor-claimant on execution proceedings and counsel representing a state-debtor-respondent.

Considering enforcement may be broached from the perspective of host country's national courts or that of the countries where the state (respondent) has assets, this chapter analyses the highlights of the three most-demanded host states and three jurisdictions that traditionally receive such requests for enforcement. It will focus on cases where states' assets were called into question. Some of the top jurisdictions in that regard were not mentioned owing to professional reservations of the authors.

iii Jurisdictions of frequently demanded host states

i Argentina

Argentina is one of the states with most investment arbitration cases, featuring in 60 as respondent and only four as claimant. The large demand is a reflection of the increasing number of ratified treaties involving investment arbitration: it signed 61 bilateral investment treaties (BITs) – 55 of which are still active – 18 treaties with investment provisions – with 12 active — and 19 investment-related instruments. Out of the existing cases, 35.9 per cent were decided in favour of the state and 28.2 per cent in favour of the investor, while the remaining had no winner, were discontinued or are pending. Since 2015, Argentina has been condemned in five cases.7 One is AWG Group Ltd v. The Argentine Republic, filed in 2003 with a claim for US$34.1 million in compensation. On 30 July 2010, the arbitral tribunal sentenced Argentina to pay US$21 million in liability matters.8

On 6 July 2015, after presenting the calculations and the liquidated amount, Argentina presented in the Columbia District Court in the United States a petition to vacate the arbitration award, invoking the 1958 New York Convention.9 On 30 September 2016, Judge Beryl A Howell presented the memorandum opinion, dismissing the arguments challenging one of the arbitrators (which had been appointed by Argentina), and confirming the arbitral award.10 On 3 July 2018, the Court of Appeals for the District of Columbia issued its final judgment.11 At the moment, there is no information on the execution of the values to which the state was condemned.

Another case, HOCHTIEF Aktiengesellschaft v. Argentine Republic, shares similarities with those mentioned above.12 Having started in 2007, the decision on liability was published on 29 December 2014.13 Two years later, on 19 December 2016, the arbitral tribunal rendered an award,14 later contested by the state, which requested its annulment on 25 April 2017.15 At the present time, the request is pending decision.

In Suez, Sociedad General de Aguas de Barcelona, SA and Interagua Servicios Integrales de Agua, SA v. Argentine Republic, started in 2003, the respondent challenged a member of the arbitral tribunal twice. After the award, Argentina acted in the same way as in the previous cases and filed a petition for annulment. The final judgment was published on 14 December 2018.16

Another case involving the Suez companies started in the same year but together with Vivendi Universal, SA. Claimants requested US$834.1 million in damages, and the arbitral tribunal rendered an award granting damages in the amount of US$383.6 million.17 As in the previous case, Argentina challenged a member of the arbitral tribunal, managing to suspend the proceeding until its request was analysed, which took place on 22 October 2007.18 Again, the challenge was denied and on 9 April 2015 an award was rendered condemning the state to indemnify the claimants. Acting with the same strategy, Argentina then started annulment proceedings arguing the impediment of an arbitrator.19 On 5 May 2017 the ad hoc ICSID Committee formed to decide on the annulment proceeding reaffirmed the competence of the arbitrator.20 Dissatisfied with the decision, Argentina appealed to the Columbia Court of Appeals in the United States and again the court ruled that 'Argentina has not satisfied the Act's or the New York Convention's elements required to vacate the award.'21

In Autobuses Urbanos del Sur SA, Teinver SA and Transportes de Cercanías SA v. Argentine Republic, the arbitral tribunal condemned the state in the payment of a US$320.8 million in damages. After the award was issued on 21 July 2017 the state once again sought its annulment. So far, there has been no decision on the matter.22,23,24

The five cases have undeniable similarities, mainly the state's strategy to postpone the end of the dispute and, consequently, the enforcement of the award. In addition, all cases arose under the ICSID Convention, pertaining to controversial BITs signed in the early 1990s, a period in which Argentina was believed to undergo an 'economic miracle'. Finally, after the awards were rendered, the state began annulment proceedings arguing the partiality or lack of independence of one of the arbitrators.

Previously considered an economic powerhouse until a few years ago, the country has since turned victim of a growing economic recession. This has led to legislative changes. Provisions on arbitration and their enforcement in the legal sphere are, more often than not, influenced by politics, and the change from an unorthodox government to an orthodox one has directly impacted arbitration legislation in Argentina. On 1 August 2015, at the end of the mandate of then President Cristina Kirchner, the new Civil and Commercial Code entered into force and changed other laws of civil practice. With the election of the current President Mauricio Macri, legislation was altered once again. With the entry into force of Law No. 27449, which regulates international commercial arbitration, some provisions of the Civil and Commercial Code and the Civil and Commercial Procedure Code were also amended.25

On September 2017, before the new law entered into force, the Minister of Justice and Human Rights, Germán Garavano, announced that the new regulations constituted a fundamental tool to attract foreign investment. The change in the standards would allow Argentina to have uniform rules adapted to international trade, giving legal certainty and incorporating universally accepted principles in arbitration. In the same note, the Minister argued that the resolution of conflicts in international trade needs flexible, fast and reliable tools for the parties, and that the use of state justice is very onerous and slow, and discourages investments when facing market globalisation, which has modified the rules of international competition.26,27

The new legislation regulating private–public contracts, Law No. 27328, provides that cases opting for arbitration with extension of jurisdiction must be expressly approved by the national executive power and communicated to Congress. The contract may provide that liabilities that should be performed by the contractor must be effective, although not discussed in the arbitration proceeding. In this case, assuming that the administration or the technical consultant designated for that purpose verifies that the contractor has duly fulfilled his or her contractual obligations, all resources obtained by the controversy shall be deposited by the contractor in an escrow account until a final decision is issued on which party is entitled to the values.28

Changes in a short time span make it difficult to understand the new mechanisms created, which can ultimately influence their effectiveness. It is impossible to know whether the recent changes in Argentine law will be sufficient to ensure enforcement in cases where the state is condemned. However, they can potentially attract foreign investors and consequently reduce the economic problems that the country – and investors – has been facing.

ii Russia

Russia has not been considered – since the turmoil surrounding the Yukos case and all arbitration proceedings stemming from it – an arbitration-friendly venue concerning the recognition and enforcement of foreign arbitral awards. However, despite the Yukos ruckus, Russia is still an investment-gathering country, as for most investors the benefits seem to outweigh the risks. In this sense, it is useful for those doing business with Russia to be aware and prepared for the possible challenges they might face when enforcing their arbitral awards in Russian courts.

Russia's international arbitration law (No. 5338-1) was enacted on 7 July 1993, with its latest amendment on 25 December 2018, which added text to Article 7 (on the definition, form and interpretation of arbitration agreements). This text is largely an adaptation of the 1985 UNCITRAL Model Law on International Commercial Arbitration and governs international commercial arbitration throughout the Russian territory.

In the international trade area, Russia is a party to 79 BITs, 63 of which are in force as at the time of writing. Though signed, the other 16 BITs are not yet in force. Historically, Russia has terminated 5 BITs.29

On the matter of recognition and enforcement of arbitral awards, Russia is a party to the New York Convention and the 1961 European Convention on International Commercial Arbitration.30 Russia (at the time, the USSR) made a reservation in 1960 that the application of the provisions of the New York Convention would only apply to non-parties that granted reciprocal treatment.31 Moreover, despite having signed the ICSID Convention in 1992, Russia is not a contracting party, as it did not ratify the Convention.

Internally, the recognition and enforcement of foreign arbitral awards is a task for Russia's commercial courts, following the provisions of Chapter 31, Articles 241 through 246 of the Arbitrazh Procedural Code (No. 95-FZ) (APC) of 24 July 2002 and its amendments. The legal basis for the enforcement of such awards is the New York Convention. According to Article 244 of the APC, a commercial court may deny recognition and enforcement of a foreign court decision (including arbitral awards) fully or in part if:

  1. the decision on the law of the state in whose territory it is made has not entered into legal force;
  2. the party against which the decision was taken was not timely and properly notified of the time and place of consideration of the case, or, for other reasons, could not submit explanations to the court;
  3. consideration of the case in accordance with international treaties or federal law refers it to the exclusive competence of Russian courts;
  4. there is a court decision in Russia that has entered into legal force, which is a dispute between the same persons, on the same subject and on the same grounds;
  5. a Russian court is analysing a case on a dispute between the same persons, about the same subject and on the same grounds that was initiated before the initiation of proceedings in a foreign court, or the court in Russia was the first to take a production statement on the dispute between the same persons, on the same subject and on the same grounds;
  6. the statute of limitations for enforcing a foreign court decision has expired, and this term has not been restored by the arbitral tribunal; or
  7. the execution of a foreign court decision would be contrary to the public policy of Russia.

A recent study by the Russian Arbitration Association32 provides a general overview of the enforcement proceedings in Russian courts, such as their success rate and the most common grounds for rejection. According to this study, between 2008 and 2017, Russian courts received 472 requests for recognition and enforcement of arbitral awards. From this total, 378 were granted, 45 rejected and 49 were not considered owing to various – mostly procedural – reasons. The most cited grounds under Article V of the New York Convention were: violation of public policy (42 cases); lack of proper notice or inability to present the case (34 cases); and excess of mandate by arbitrators (13 cases). These numbers show that Russia could be considered an arbitration-friendly venue when recognising and enforcing arbitral awards. However, as in all statistical analysis, the conclusions must be taken with a grain of salt.

Analysing the rate of granted and rejected applications for recognition and enforcement as it relates to the amount in dispute,33 a tendency can be found in Russian courts of granting mostly lower amount awards. In cases amounting to less than €1 million, out of the 358 cases judged in Russian courts, 333 were granted recognition, leading to a 93 per cent success rate. However, as the amount in dispute rises, the number of granted applications plummets. When considering amounts between €1 million and €10 million, Russian courts granted 35 applications out of 46 (success rate of 76 per cent). When values were over €10 million, they granted 10 out of 19 applications (success rate of 52.6 per cent).

On top of that, when considering investment arbitration cases, Russia seems to have failed to honour all publicised awards rendered against it. Further, Russia has challenged the awards at the seat of arbitration and resisted seizure of its assets. Russian officials have also condemned, on the grounds of sovereign immunity, the enforcement of awards against Russian state assets in other jurisdictions.34

Therefore, considering the low success rates of enforcement in Russia regarding high-value arbitrations, parties should prepare themselves to be confronted by common defences raised in the enforcement phase: (1) violation of public policy; and (2) lack of proper notice or inability to present the case. This is especially true of investment arbitrations, as those proceedings tend to involve larger amounts and are, thus, less likely to be enforced.

To avoid possible arguments on violation of public policy, it is useful to: at the contract signature stage, negotiate agreements compliant with provisions of Russian law that could be viewed by Russian courts as mandatory, especially Russian corporate law concerning governance of Russian-based companies,35 even if Russian law is not the applicable law to the contract. Then, if a dispute arises, consider accepting the application of those same Russian law provisions, in place of or jointly with the applicable law to the contract. The same advice goes to the arbitral tribunal. A failure to apply provisions of Russian law deemed mandatory by Russian courts might later negatively affect recognition and enforcement proceedings.

Moreover, to avoid arguments on the lack of proper notice or inability to present the case, it is useful for parties to always keep original delivery receipts of the notice of arbitration and any other key documents of the proceedings sent to the Russian party (or state). A person must assure that documents are sent to both the registered address in the proceedings and the most recent address of the party registered in the Joint State Register of Companies. This correspondence can also be sent directly by a Russian lawyer, who could ask for an official stamp and signature to prove due delivery of the documents. Additionally, it is important to ask for the counterparty to provide an original or certified copy of the power of attorney granted to its lawyer, making sure that the powers contained therein cover all actions made by their counsel, including the receipt of documents.

There are many other ways of increasing the 'success rate' of enforcement of awards in Russian courts. The examples presented are only meant to shed some light on the matter.

An alternative to avoid difficulties in recognising and enforcing an award in Russian courts is to avoid Russian courts completely. A considerable number of parties seeking to enforce their awards, especially in foreign investment arbitrations, look for assets of the counterparty outside its home state.36

In Everest et al. v. Russia, Ukrainian companies in the real estate business initiated an ad hoc arbitration proceeding under the 1976 UNCITRAL Arbitration Rules against Russia based on the 1998 Russian Federation–Ukraine BIT. The companies alleged that Russia had expropriated their properties following the 2014 Russian annexation of Crimea. Russia did not participate in any step of the proceedings, instead sending a letter to the Permanent Court of Arbitration stating that it 'does not recognize the jurisdiction of an international arbitral tribunal at the Permanent Court of Arbitration in settlement of [the claimants' claims]'.37 However, the arbitral tribunal informed Russia of every procedural act, including the hearing, sent it all relevant documents, including the minutes of the hearing, and offered it the opportunity to submit its comments. On 2 May 2018, the arbitral tribunal rendered its award on the merits, recognising that Russia had illegally expropriated the property of the Ukrainian investors in violation of Article 5 of the 1998 Russian Federation–Ukraine BIT. The Ukrainian investors were awarded approximately US$130 million.

The recognition and enforcement proceedings took place in Ukrainian courts. On 5 September 2018, the Kiev Court of Appeal arrested or prohibited the sale of Russian and Russian companies' shares in financial institutions (especially investment banks) in Ukraine. On 25 September 2018, the Kiev Court of Appeal decided to recognise and enforce the arbitral award. The decision stresses that the issue of recognition and enforcement of a foreign arbitral award does not allow the court to analyse the merits of the case or make any changes in its content, but only to assess if the award is in accordance with the procedural law of the territory in which recognition and enforcement are sought. The Kiev Court of Appeal found no ground to refuse recognition and enforcement of the award under either the New York Convention or Ukrainian law. Russia, represented by its Ministry of Justice, did not file a statement of objection to the court, but again sent a letter restating that the it did not recognise the jurisdiction of the arbitral tribunal or its award.

The financial institutions that had part of their shares arrested or were prohibited to sell them in the market – and against whom Ukrainian investors were enforcing their award – appealed to both decisions of the Kiev Court of Appeal. Inter alia, the enforced parties argued that the shares belonged to state-owned companies, and not the Russia.

The case was taken up to the Ukrainian Supreme Court, which issued a decision on 25 January 2019 denying most of the grounds for appeal. It understood that, as the shares of the financial institutions in question were held by state-owned or joint-stock companies, ultimately held by Russia, they could be the target of execution during enforcement of the arbitral award. In the matter of sovereign immunity, the Supreme Court held that Russia had waived its immunity of execution when it signed and ratified the Russian Federation–Ukraine BIT. However, the Supreme Court highlighted that the only shares associated with Russia were amenable to seizure, so as not to interfere with the individual rights of Ukrainian nationals or other foreign parties holding shares in the specific financial institutions. In this sense, the Ukrainian Supreme Court decided that the arbitral award was to be enforced against Russia through the assets it held in the financial institutions established in Ukraine, excluding from it the remaining assets held by Ukrainian nationals or other foreign parties in those institutions.

iii Venezuela

Venezuela has seen a dramatic rise in investment arbitration proceedings against it after President Hugo Chávez initiated, in 2007, a series of nationalisations of foreign-owned investments in key sectors of the country's economy, notably oil and mining, but including industries in a variety of areas as well.38 Until then, the country had been called as a respondent in only four investment arbitration proceedings, even though most of its BITs had entered into effect during the 1990s, at a time when a more mainstream economics-oriented stance was adopted by the Venezuelan government. Only 12 years later, 41 proceedings have been initiated against it – so far.

Though at the beginning of his expropriation agenda Chávez seemed willing to compensate foreign investors, the situation changed as the country's debt continued to increase, and payments for expropriations and other debts (such as bonds and other loans) began to default.39 The scenario worsened in 2013, after Hugo Chávez died and was replaced by Nicolás Maduro.40

As prospects for payments plummeted and Maduro began talks of debt restructuring,41 investors began movements to seize Venezuela's state-owned assets located in foreign jurisdictions – especially in the United States and Caribbean countries, where the country owns many oil storage and refinement facilities.42 The Venezuelan government's two most important foreign assets are in the oil sector: domestic Petróleos de Venezuela SA (PDVSA) and Houston-based Citgo Petroleum Corporation (Citgo).43 Citgo operates refineries and gas stations in the United States and is Venezuela's largest foreign asset. Investment award claimants thus find themselves against a larger backdrop of different modalities of creditors – as discussed below – seeking to seize Venezuelan property in foreign nations, in what has been dubbed by observers a 'race to the bottom' for the declining Venezuela's assets.44

More recently, in late 2018, Maduro was re-elected president for a second six-year term, in an election process whose legitimacy was questioned by the opposition and dozens of foreign spectators.45 The leader of the opposition at the Venezuelan National Assembly46 Juan Guaidó has proclaimed himself president with the support of the US government, many Latin American countries47 as well as the European Union.48

Foreign recognition notwithstanding, de facto power remains in Maduro's hands, who currently has support from the Venezuelan military.49 In addition, Maduro enjoys the support of Russia and China, major oil-for-loan creditors that may stand to lose if a successor government decides to question the legality of such deals and thus default on their payment.50 All of this results in a complex web of obligations with important consequences for the liquidity of Venezuela's assets, and thus for investors' ability to reach them through judicial proceedings in either the United States or the Antilles.

Before discussing the impacts of this scenario on the enforcement of investment arbitration awards, however, the variety of credits owed by Venezuela and their relation to the country's assets must be understood. Only then can the rationale behind the current strategies adopted by investors and the venues available for potential litigants be understood.

As mentioned above, the Venezuelan government is the sole owner of PDVSA, and seemingly exercises direct political control of the company. This means that the socialist-inspired policies enacted by Chávez and Maduro have also had direct impact upon the obligations incurred by PDVSA, leading to claims of contract breach that have since given rise to multiple commercial arbitration proceedings. This has led to International Chamber of Commerce awards favourable to companies such as Dutch ConocoPhillips, which managed in May 2018 to obtain favourable rulings in Dutch Caribbean courts (famously asset-seizure friendly) attaching PDVSA's assets in the region – comprising a number of refineries and oil storage facilities.51 This led to energetic reactions by the Venezuelan government – at the time, PDVSA even withdrew its vessels from Caribbean waters. Months later in August, ConocoPhillips was able to strike a US$2 billion settlement deal with the Venezuelan company,52 although it is unclear whether PDVSA has been honouring this agreement.53

This matters for ICSID award creditors not only because it suggests Venezuela's Dutch assets are a surefire way to get it to sit at the negotiating table, but also because such assets are likely to be once again pursued by ConocoPhillips as it decides to enforce its recent US$8 billion ICSID award54 or if the above settlement goes awry – something creditors who have yet to pursue claims or award enforcement proceedings against the country ought to keep in mind, as what little liquid assets it has may soon become unreachable.

As is the case with Citgo, PDVSA's Caribbean assets are highly valuable to Venezuela, serving as an intermediary point in its oil supply chain to China and India. Ownership of these facilities is, however, also under PDVSA, and not the sovereignty of Venezuela directly. As such, the legal hurdles creditors must overcome to reach them are not significantly more burdensome than those who target Citgo. The main difference is in forum, as Dutch Caribbean assets fall within Dutch jurisdiction, which is apparently more investor-friendly than US courts. As such, though the specifics of investment award enforcement in the US shall be discussed below, the specifics of the Dutch legal system will not be covered.55

As with its Antilles assets, the Venezuelan government has remained intent on maintaining control of Citgo in the United States. In late 2016, Citgo and its controlling companies carried out a series of financial acts that seemingly had the net effect of transferring US$3 billion in Citgo assets to Venezuela via PDVSA, as well as pledging 49.9 per cent of PDV Holding Inc's interest in Citgo to Russian state-owned Rosneft in exchange for a US$2.8 billion loan.56 The remaining 50.1 per cent of Citgo, in turn, was used to secure PDVSA's 2020 bonds. The net effect of this has been to take Citgo further outside the reach of potential investors, as both the 2020 bondholders and the Russian government have a competing claim over Citgo shares against other asset-seizing creditors. This set of financial moves were questioned in multiple fronts by investment award creditors keen on executing Citgo, including Canadian-based Crystallex57 and Rusoro Mining.58

Next to (secured and unsecured) bond and promissory note holders,59 Russia and China, stand the 14 or so creditors of ICSID awards against Venezuela – as well as, potentially, the claimants in the 12 currently pending ICSID proceedings,60 and a number of other investors hurt by expropriation bills who have not yet initiated proceedings against Venezuela. For the latter three categories, the path to enforcement has additional hurdles. For BIT creditors, the only appropriate respondent in an enforcement proceeding before municipal courts is the Venezuelan government – and not PDVSA or Citgo, both of which enjoy a presumption of separateness arisen from their corporate independence.61 This drastically reduces the number of foreign assets a priori amenable for seizure.62 Moreover, as Venezuela is a sovereign entity in public international law, it enjoys immunity against the execution of its assets located in foreign states. The same is true for the foreign assets of its 'instrumentalities' – namely, PDVSA. Most, if not all, municipal legal systems grant such immunity, and this is the case with US and Caribbean courts.

Faced with the intricate scenario above, an equally complex legal strategy has been employed by ICSID creditors in enforcement attempts, beginning with Crystallex in 201763 and later followed by both Rusoro Mining in 201864 and OI European Group in 2019.65 In an oversimplification, this strategy works by asserting a claim of PDVSA as Venezuela's 'alter ego', thus overcoming the presumed separation between the two legal entities. In addition, the immunity PDVSA enjoys as an 'instrumentality' of Venezuela must be overcome. Both steps are outlined in greater detail below in the analysis of the US BIT award enforcement system.

Another aspect of this discussion is how the Venezuelan legal system treats sovereign immunity. Although state parties may not claim jurisdictional immunity before Venezuelan courts, state assets seemingly enjoy de facto (if not de jure) immunity from execution, requiring the observance of procedural rules entailing a notice to the Venezuelan Attorney General, followed by a 90-day suspension of the enforcement proceeding and the enactment of a 'plan to ensure the continuity of functionality of the State entity'.66 No reports of enforcement efforts before local courts were found in the authors' research – which is of little surprise given Venezuela's stance on foreign enforcement courts.

iv Jurisdictions frequently sought for recognition and enforcement of foreign arbitral awards

i United States

Though governments usually grant each other sovereign immunity as a rule, there is no unified treaty concerning the subject,67 and as such, legal systems have treated immunity in different ways. In general, it is possible to distinguish between absolute and restrictive sovereign immunity. On one hand, a legal system may grant all property owned by a foreign sovereign found inside its territory absolute immunity from enforcement, regardless of the nature or character of the use to which such property is put – such is the case of China, for instance.68 On the other hand, a restrictive immunity system – as in the United States, United Kingdom and most Western nations – customarily works by attempting to outline a principled distinction between assets employed by the foreign government as a sovereign and those exploited in a commercial manner.

According to the 1976 US Foreign Sovereign Immunities Act (FSIA),69 any 'foreign state shall be immune from the jurisdiction of the courts of the United States'. For this reason, all factual disputes regarding a sovereign immunity defence should be overcome by the court from the outset of an enforcement case – and before any discussions on its merits can occur.70 Exceptions to this general presumption are laid out in Sections 1605 to 1607 of the FSIA. Section 1605 is particularly interesting to this discussion. Notably, a foreign sovereign is not immune from US jurisdiction:

  1. if it has waived its immunity;
  2. if the action is based:
    • 'upon commercial activity carried on in the US by the foreign state';
    • 'upon an an act performed in the United States in connection with a commercial activity of the foreign state elsewhere'; or
    • 'upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States'; or
  3. if the situation involves 'rights in property taken in violation of international law' and that said property (or its substitute) is:
    • present in the United States 'in connection with a commercial activity carried on in the United States by the foreign state'; or
    • 'owned or operated by an agency or instrumentality of the foreign state', which is 'engaged in a commercial activity in the United States'.71

Other exceptions include situations involving damages to assets located in the United States,72 actions seeking the recognition of arbitration awards73 and situations linked to terrorism.74 Exception (c) above (the expropriation exception) is particularly relevant here, as it likely encompasses all cases in which there has been an award recognising expropriation as unlawful (e.g., one of Venezuela's). Still, determining that a potential enforcement target's assets are employed in 'commercial activity' remains a necessity for BIT creditors before US courts. Most systems under a restrictive sovereign immunity regime work with distinctions such as this. The problem is, as always, in the details, and specific systems vary in how they procedurally define 'commercial' and 'sovereign' property usage in enforcement actions. Further, it is not always straightforward in practice to distinguish between the two, as often an asset may either have mixed uses75 or its commercial use may be too tied to the exercise of sovereign power by the foreign country. In Venezuela's case, PDVSA also enjoys sovereign immunity in virtue of its being an instrumentality of Venezuela under the FSIA.76

More often than not, however, sovereign entities do not hold assets under their own name in foreign countries. As mentioned above, Venezuela holds little more than diplomatic assets in the United States. Its economic interests there are exerted indirectly through its control of PDVSA, which in turn controls PDV Holding Inc, a US-based company who owns all of the interest in Citgo. To reach Citgo's assets, its BIT creditors must also pierce through PDVSA's corporate veil. One strategy for this, adopted successfully by Crystallex and others, consisted of claiming PDVSA functions effectively as Venezuela's alter ego. Briefly, an alter ego claim is possible under two circumstances: when a 'corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created', (an extensive control prong), or when the sovereign has 'abused the corporate form, or where recognizing the instrumentality's separate status works a fraud or an injustice'77 (the fraud or injustice prong).

In its claim, Crystallex pursued both arguments, though it only succeeded in meeting the burden to establish its extensive control alter ego allegation. With regard to PDVSA's involvement in the expropriation process, mentioned by the Canadian company as evidence for its fraud or injustice argument, Judge Leonard P Stark of the Delaware District Court found that its allegations did 'not sufficiently allege that Venezuela used PDVSA as an instrument to defraud Crystallex', as Venezuela could have acted in the same manner regardless of PDVSA's involvement or existence.78

As for its successful extensive control claim, Crystallex was able to demonstrate that Venezuela 'used PDVSA's property as its own', that it 'ignored PDVSA's separate status' and that it required PDVSA to 'obtain approvals for ordinary business decisions', showing the instrumentality's lack of 'independence from close political control'. These and other closely related factors were sufficient to rebut, before a US district court, a Bancec presumption of separateness. They are not exhaustive, of course. A footnote in Judge Stark's ruling is enlightening in this regard:

The pertinent factors are not exhaustive – the Court can (and does) consider other factors, and not every factor need be present – nor are they mutually exclusive, as many of them overlap. Reasonable minds will differ as to the category into which to place any specific allegation or evidence.

Although other strategies for piercing the corporate veil of a foreign state's instrumentality may be available, the alter ego claim has been employed with success by Venezuela's BIT creditors in the United States. Both Crystallex79 and Rusoro were able to strike payment agreements with Venezuela after attaching Citgo's assets. In their particular cases, it is unclear yet whether this will suffice, as Crystallex has raised a breach claim against Venezuela after PDVSA filed an appeal against the Citgo attachment80 – its counsel alleging that 'PDVSA is not a party to a settlement with Crystallex'. On the other front, Venezuela's payment of Rusoro's agreement has been hampered – ironically – by US sanctions against Venezuela.81 Additionally, the aforementioned securitisation of Citgo's shares to bondholders and Rosneft – both of which have asked to intervene in various of these enforcement proceedings – place doubt on the ultimate efficacy of attaching assets that have been previously used to secure other deals.

ii United Kingdom

Restrictive immunity is a standard in the United Kingdom as per its 1978 State Immunity Act. Granting or refusing to grant the execution of an asset owned by a foreign state will depend largely on the underlying transaction that originated the dispute and the arbitral award thereafter. In addition, the 1982 Civil Jurisdiction and Judgment Act82 sets out further conditions for the enforcement of foreign judgments via a multi-tier test.

In addition, the United Kingdom is also a contracting state of the 1972 EU Convention on State Immunity. The cases selected for this overview relate to both intra-EU83 disputes and disputes between EU and non-EU members.

In NML v. Republic of Argentina,84 the UK Supreme Court revisited the tenets of the State Immunity Act to determine whether enforcement admissibility required an analysis of legality of the foreign judgment itself (according to English standards) or of the underlying transaction. Justice Blair, recounting the historical development of the doctrine of execution of foreign awards, implemented a test based on Article 32 of the 1982 Civil Jurisdiction and Judgment Act.85 If and only if the award is equally admissible against a hypothetical private party, may any such award be enforced. Those conditions were satisfied and, as a result, by majority, the New York judgment was enforced against Argentinian assets in the United Kingdom.

In deciding which type of asset is subject to enforcement, in the Orascom case86 the English court asserted that oil shares held in an account were not immune to execution. As pointed out by observers,87 UK case law88 underpins the necessity of separating which assets are used to carry out consular, governmental or other sovereign activities of the state, and which ones are employed in commercial use.

Mixed use of the same bank account for commercial and sovereign uses, for instance, has raised major concerns. In the United Kingdom, the High Court in the Alcom v. Republic of Colombia89 case did not execute such accounts, in accordance with Article 14 of the State Immunity Act, which proscribes execution of a number of properties from the list of executable items.

In ICSID case Micula v. Romania,90 investors filed for enforcement at the High Court in London after untroubled proceedings. Nevertheless, Romania and the European Commission attempted to set aside the enforcement on the ground that the award would not be compatible with EU law.

Romania became a Member State of the European Union in 2007. The 2013 award ruling in the claimant's favour would allegedly amount to 'state aid'. This final understanding of the European Commission was appealed by Swedish company Micula and final review is still pending. The vexata questio was the following: should enforcement attempts be halted until the General Court of the European Union's decision?

iii France

France evolved from an absolute approach to state immunity to a more restrictive approach. Aside from the 1972 European Union Convention on State Immunity, other provisions on that subject are found in the Sapin II Law91 and in the French Monetary and Financial Code.

France is also a contracting party to the 2004 UN Convention, which the Court of Cassation has been citing as a source even though it has not yet entered into force.92 Traditionally a favor arbitrandum jurisdiction, France has a cautious approach with respect to the execution of state-owned assets, with a certain degree of fluctuation. In the case Commisimpex v. Democratic Republic of Congo, the French Supreme Court93 reinstated the necessity of not only referring to an explicit prior consent by the state regarding execution, but also drawing a specific list of assets that may be subject to recovery. The underlying assumption is that any waiver of rights should be clearly stated and this standard of interpretation, which may be found in private matters, should also be extended to foreign states (Article L.111-1-2, Sapin II Law).

At last, the French Supreme Court has reverted the stay in the enforcement of an arbitral award issued under an Energy Charter Treaty (ECT) bilateral investment agreement between Ukraine and Moldova in an April 2018 ruling. No mention to EU law was made, as the main issue was the Paris Court of Appeal's attempt to extend the definition of the ECT under the treaty.

v EU Law compatibility with dispute resolution in investment cases post-Achmea

The discussion is not new and since 2015 the European Commission has been targeting Intra-EU BITs, in an effort to persuade states to terminate them. Currently, there are currently approximately 190 intra-EU BITs.94 Infringement proceedings were launched against the Netherlands, Sweden, Slovakia, Austria and Romania to frame those countries for continuing to use the BIT investment regime and, in 2018, the European Court of Justice completed the circle, via its decision of Slovak Republic v. Achmea case.95 Confirming the European Commission's understanding, the European Court of Justice stated that arbitral tribunals cannot ensure a stable and uniform interpretation of the principles governing allocation of powers in the European Union.

The investment arbitration model created by said intra-EU BITs, in that sense, would be in violation of Article 344 of the Treaty on the Functioning of the European Union. Deferring jurisdiction to arbitral tribunals was not deemed an acceptable way to ascertain rights and obligations in a fully effective manner under EU law.96

As a consequence, even an arbitral tribunal's decision, despite all textbook characteristics normally attributed to an arbitral award, started to be challenged and reviewed by the European Commission. This is the situation in Micula, in which the European Commission is seeking to prevent Romania from collecting any amount of the award under the argument that any such payments would constitute illegal state aid according to EU law.97

Legal certainty is a major concern for investors as the process of regulatory enlargement of the European Union seems to be taking a toll on investor–state arbitration's efficiency. In this context, the proposal of the creation of a multilateral investment court, which should in the near future replace the investment arbitration system by a European-based model, fits the European Commission's ambition to perfection.

Though it may seem reasonable to conclude that the scope of a full-blooded European system of dispute resolution would only cover intra-EU investments, it remains to be seen whether a multilateral investment court will not outgrow its competence – as the European Commission's brief explanation suggests – and institutionalise the application of EU law beyond its borders. It is also subject to much speculation whether the court will have any competence in respect of enforcement initiatives, something that has the potential to completely deplete the sovereign powers of EU Member States regarding execution of state-owned assets.98 There are striking policy concerns, both for EU Member States and developing countries, involved in the supranational effects of this multilateral court.

In the coming months, more mobilisation around this theme is expected. However, for the time being – at least in Europe – the effects of the Micula and Achmea cases have only gone as far as to halt proceedings in countries where enforcement of intra-EU BITs awards were sought.

vI Conclusion

Regarding the recognition and enforcement of arbitral awards in foreign forums, companies (especially their counsels) must always be aware of the political and economic circumstances surrounding their case, as those may play an important role in the success rate of their enforcement attempt. Moreover, alternative strategies, such as executing the counterparty's assets outside its home state should also be taken into consideration.

Most companies believe that, in the realm of international arbitration (be it commercial or investment), after a dispute with a business partner arises, reaching a final decision on the matter – and getting your rights recognised – would lead to a peaceful resolution. However, as can be seen from the issues and cases presented above, recognising and enforcing an arbitral award in another jurisdiction can prove to be a rather difficult journey.

This is the reason why private entities should carefully consider not only their choice of counsel in the arbitration proceedings and their appointed arbitrator, but also their counsel on the recognition and enforcement proceedings. These often-forgotten individuals are a key component in the attainment of the companies' rights and, of course, their money.


1 Luiz Olavo Baptista is the CEO, Adriane Nakagawa Baptista is executive director and Caique Bernardes Magalhães Queiroz is a researcher at Atelier Jurídico. The authors wish to express their gratitude for the work from Rafael Viana Ribeiro and Anna Cortellini.

2 International Centre for Settlement of Investment Disputes. The ICSID Caseload – Statistics (Issue 2018-2). Available at: https://icsid.worldbank.org/en/Pages/resources/ICSID-Caseload-Statistics.aspx. Accessed on 12 Jan. 2019.

3 Convention on the Settlement of Investment Disputes Between States and Nationals of other States. International Centre for Settlement of Investment Disputes, done in Washington, DC, on 18 March 1965, 575 U.N.T.C. p. 159.

4 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done in New York City, NY, on 10 June 1958, 330 U.N.T.C. p. 38.

5 Tonova, Sylvia and Baetens, Freya and Vasam, Bayu, 'Compliance and Enforcement of Awards: Is There Really a Practical Difference between ICSID and Ad Hoc Arbitration?' – notes from a panel discussion – Investment Treaty Arbitration and International Law.

6 Khanat, Dany, 'Enforcement of ICSID Awards in Investment Arbitration'. Available at: https://www.mayerbrown.com/en/perspectives-events/publications/2011/12/enforcement-of-awards-in-icsid-arbitration. Accessed on 10 March 2019.

7 United Nations Conference on Trade and Development, International Investment Agreements Navigator. Available at: https://investmentpolicyhub.unctad.org/ISDS. Last consulted on 14/03/2019.

8 United Nations Conference on Trade and Development, Investment Dispute Settlement – SWG v. Argentina. Available at: https://investmentpolicyhub.unctad.org/ISDS/Details/122. Last consulted on 14/03/2019.

9 United States District Court for the District of Columbia, ICSID Case No. ARB/03/19 Petition to Vacate Arbitration Award. AWG v. The Argentine Republic, 2015. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw6302.pdf. Last consulted on 14/03/2019.

10 United States District Court for the District of Columbia, Civil Action No. 15-1057 (BAH) Memorandum Opinion, The Republic of Argentine v. AWG, 2016. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw7610.pdf. Last consulted on 14/03/2019.

11 United States District Court for the District of Columbia, Case No. 16-7134 Appeal. Republic of Argentina v. AWG, 2018. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw9844.pdf. Last consulted on 14/03/2019.

12 United Nations Conference on Trade and Development, Investment Dispute Settlement – HOCHTIEF v. Argentina. Available at: https://investmentpolicyhub.unctad.org/ISDS/Details/282. Last consulted on 14/03/2019.

13 Lowe, V, Brower C. N., Thomas, J. C., ICSID Case No. ARB/07/31 Award. HOCHTIEF AG v. The Argentine Republic, 2016. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw8135_8.pdf. Last consulted on 14/03/2019.

14 ibid.

15 Hochtief AG v. The Argentine Republic, ICSID Case No. ARB/07/31. Available at: https://www.italaw.com/cases/538. Last consulted on 14/03/2019.

16 Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No. ARB/03/17. Available at: https://www.italaw.com/cases/1048. Last consulted on 14/03/2019.

17 United Nations Conference on Trade and Development, Investment Dispute Settlement – Suez and Vivendi v. Argentina (II). Available at: https://investmentpolicyhub.unctad.org/ISDS/Details/121. Last consulted on 14/03/2019.

18 ICSID Case No. ARB/03/17. Decision on the Proposal for the Disqualification of a member of the Arbitral tribunal, 2007. Available at: https://www.italaw.com/sites/default/files/case-documents/ita0824.pdf. Last consulted on 14/03/2019.

19 Sachs, K, Blanco, R. O. Carmichael, T. ICSID Case No. ARB/03/19. Decision on Argentina's Application for Annulment. 2017. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw8783.pdf. Last consulted on 14/03/2019.

20 ibid.

21 United States Court of Appeals, Appeal from the United States District Court for the District of Columbia (No. 1:15-cv-01057), 2018. Available at: https://www.italaw.com/sites/default/files/case-documents/italaw9845.pdf. Last consulted on 14/03/2019.

22 International Centre for Settlement of Investment Disputes Washington, D.C., Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. (claimants) and The Argentine Republic (respondent) (ICSID Case No. ARB/09/1). Available at: https://www.italaw.com/sites/default/files/case-documents/italaw9235.pdf. Last consulted on 14/03/2019.

23 Urbanos del Sur S.A., Teinver S.A. and Transportes de Cercanías S.A. v. Argentine Republic, ICSID Case No. ARB/09/1. Available at: https://investmentpolicyhub.unctad.org/ISDS/Details/335.

24 Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. Argentine Republic ICSID Case No. ARB/09/1. Available at: https://jusmundi.com/fr/document/opinion/en-teinver-s-a-transportes­-­de-cercanias-s-a-and-autobuses-urbanos-del-sur-s-a-v-argentine-republic-dissenting-opinio­n-of-kamal-hossain-thursday-13th-july-2017. Last consulted on 14/03/2019.

25 Argentina, Ley de Arbitraje Comercial Internacional (Ley 27449). Available at: http://servicios.infoleg.gob.ar/infolegInternet/resaltaranexos/310000-314999/312719/norma.htm. Last consulted on 14/03/2019.

26 Aceris Ley LLC, 'Reforma de arbitraje en América Latina: La ley de arbitraje internacional de nueva Argentina y Uruguay', 2018. Available at: https://www.international-arbitration-attorney.com/es/arbitration-reform-in-latin-america-argentina-and-uruguay-new-international-arbitration-laws/. Last consulted on 14/03/2019.

27 Ministerio de Justicia y Derechos Humanos, 'El Congreso Aprobó la Ley de Arbitraje Comercial Internacional', 2018. https://www.argentina.gob.ar/noticias/el-congreso-aprobo-la-ley-de­-arbitraje-comercial-internacional. Last consulted on 14/03/2019.

28 Argentina, Contratos de Participación Público - Privada. (Ley 27328) http://servicios.infoleg.gob.ar/infolegInternet/resaltaranexos/265000-269999/268322/texact.htm. Last consulted on 14/03/2019.

29 Investment Policy Hub - UNCTAD. International Investment Agreements Navigator. Available at: https://investmentpolicyhub.unctad.org/IIA/CountryBits/175#iiaInnerMenu. Last consulted on 14/03/2019.

30 United Nations. Commercial Arbitration in European Convention on International Commercial Arbitration. Geneva, April 21, 1961. Available at: https://treaties.un.org/doc/Treaties/1964/01/19640107%2002-01%20AM/Ch_XXII_02p.pdf. Last consulted on 14/03/2019.

31 United Nations. 'The Union of Soviet Socialist Republics shall apply the provisions of this Convention in respect of arbitral awards made in the territories of non-contracting States only to the extent to which they grant reciprocal treatment.' Russia: 1960. Available at: http://newyorkconvention1958.org/index.php?lvl=cmspage&pageid=11&menu=604&opac_view=-1. Last consulted on 14/03/2019.

32 Russian Arbitration Association. 'Application of the New York Convention in Russia'. Russia: 2018. Available at: https://arbitration.ru/en/press-centr/news/application-of-the-new-york-convention-in-russia/. Last consulted on 14/03/2019.

33 Excluding the set of 49 cases that were not considered by courts because of various reasons.

34 Global Arbitration Review. 'Investment Treaty Arbitration'. Russia: 2018. Available at: https://globalarbitrationreview.com/jurisdiction/1005360/russia. Last consulted on 14/03/2019.

35 Karabelnikov, Boris. Pellew, Dominic. 'Enforcement of International Arbitral Awards in Russia – Still a Mixed Picture'. ICC International Court of Arbitration: 2018, Vol. 19, No. 1, p.83.

36 Olson, Cody. Note and comment: 'Enforcement of International Investment Arbitration Awards Against The Russian Federation' in American Review of International Arbitration: 2011.

37 Permanent Court of Arbitration. 'Arbitration between Everest Estate Llc and Others as Claimants and the Russian Federation'. Netherlands: 2016. Available at: https://pcacases.com/web/sendAttach/1856. Last consulted on 14/03/2019.

38 Reuters. 'Factbox: Venezuela's Nationalizations under Chavez'. 8 Oct. 2012. Available at: www.reuters.com/article/us-venezuela-election-nationalizations/factbox-venezuelas-nationalizations-under-chavez-idUSBRE89701X20121008. Accessed 3 Mar. 2019.

39 Estimates place Venezuela's outstanding debt around US$140 billions at the end of 2018, and includes public and private bonds, as well as legally questionable loans by Russia and China. cf. Deutsche Welle. 'How to Resolve the Venezuelan Debt Conundrum'. 13 Feb. 2019. Available at: www.dw.com/en/how-to-­resolve-the-venezuelan-debt-conundrum/a-47483575. Accessed 4 Mar. 2019.

40 Euronews. 'Venezuelan Elections: “People Still Believe in Chavismo but Don't Support Maduro”'. 16 May 2018. Available at: https://www.euronews.com/2018/05/16/venezuelan-elections-people-still-believe-in-chavismo-but-don-t-support-maduro-. Accessed 4 Mar. 2019.

41 Financial Times. 'Venezuela Aims to Restructure All Foreign Debt'. 3 Nov. 2017. Available at: www.ft.com/content/a1d3a502-c02a-11e7-9836-b25f8adaa111. Accessed 4 Mar. 2019.

42 CBC News. 'To understand Venezuela's future, look to the bond market, not politics and protest'. 21 Sept. 2018. Available at: www.cbc.ca/news/world/venezuela-oil-debt-refugees-bonds-maduro-1.4807633. Accessed 4 Mar. 2019.

43 Citgo is controlled via Houston-based Citgo Holding, in turn wholly owned by PDV Holding Inc, a Houston-based subsidiary of PDVSA. This chain-like ownership structure becomes important below.

44 See Cooper, Richard and Morag, Boaz S., 'Start Your Engines: Are We Going to See More Creditor Recovery Efforts in Venezuela?' (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3186831 and http://dx.doi.org/10.2139/ssrn.3186831.

45 Reuters. 'Venezuela's Maduro Re-Elected amid Outcry over Vote'. 21 May 2018. Available at: https://www.reuters.com/article/us-venezuela-election/venezuelas-maduro-re-elected-amid-out cry-over-vote-idUSKCN1IL05U. Accessed 5 Mar. 2019.

46 Currently, the National Assembly is void of de jure political authority after political maneuvers by Maduro replaced it with a new, loyalist legislative house. See The Washington Post. 'Venezuela's pro-Government Assembly Moves to Take Power from Elected Congress'. 18 Aug. 2017. Available at www.washingtonpost.com/world/venezuelas-pro-government-assembly-moves-to-take-power-from-elected-congress/2017/08/18/9c6cd0a2-8416-11e7-9e7a-20fa8d7a0db6_story.html?noredirect=on&utm_term=.b07f3b68dec3. Accessed 4 Mar. 2019.

47 Bloomberg. 'Map: All the Countries Recognizing Guaido as Venezuela's New President'. 24 Jan. 2019. Available at www.bloomberg.com/news/articles/2019-01-24/trump-support-sparks-global-backing-of-venezuela-s-guaido-map. Accessed 4 Mar. 2019.

48 Pompeo, Michael R. 'Recognition of Juan Guaido as Venezuela's Interim President by Several European Countries'. U.S. Department of State, 4 Feb. 2019. Available at www.state.gov/secretary/remarks/2019/02/288744.htm. Accessed 3 Mar. 2019.

49 Euronews. 'Why the Army's Loyalty Is Key in Venezuela's Crisis'. 25 Feb. 2019. Available at www.euronews.com/2019/02/07/why-the-army-s-loyalty-is-key-in-venezuela-s-crisis. Accessed 3 Mar. 2019.

50 Although Guaidó has signaled he intends to honor the government's deals with China – Venezuela's biggest oil consumer market – no such promise has been made to Russia. cf. CBCnews. 'To understand Venezuela's future, look to the bond market, not politics and protest'. 21 Sept. 2018. Available at: www.cbc.ca/news/world/venezuela-oil-debt-refugees-bonds-maduro-1.4807633. Accessed 1 Mar. 2019.

51 Bloomberg. 'How Conoco's Fight With Venezuela Landed in Curacao: QuickTake'. 18 May 2018. Available at: www.bloomberg.com/news/articles/2018-05-18/how-conoco-s-fight-with-venezuela-landed-in-curacao-quicktake. Accessed 3 Mar. 2019.

52 Bloomberg. 'Conoco to Recover $2 Billion in Agreement With Venezuela'. 20 Aug. 2018. Available at: www.bloomberg.com/news/articles/2018-08-20/conocophillips-to-recover-2-billion-in-settlement-with-pdvsa. Accessed 1 Mar. 2019.

53 Reuters. 'Conoco Waiting for Venezuela to Pay $2 Billion Settlement: CEO'. 5 Sept. 2018. Available at: www.reuters.com/article/us-conocophillips-pdvsa/conoco-waiting-for-venezuela-­to-pay-2-­billion-settlement-ceo-idUSKCN1LL24Z. Accessed 5 Mar. 2019.

54 Reuters. 'Venezuela Must Pay Conoco over $8 Billion: World Bank'. 8 Mar. 2019. Available at: www.reuters.com/article/us-conocophillips-venezuela/venezuela-must-pay-conoco-over-8-billion-world-bank-idUSKCN1QP20V. Accessed 1 Mar. 2019.

55 But see Krestin, Marc, and Marc Noldus. 'Netherlands' The International Arbitration Review - Edition 9. The Law Reviews, Aug. 2018. Available at: www.thelawreviews.co.uk/edition/the-international-­arbitration-review-edition-9/1171755/netherlands. Accessed 2 Feb. 2019.

56 Paraskova, Tsvetana. 'Russia's Rosneft Says Venezuela's PDVSA Still Owes It $2.3B.' 5 Feb. 2019. Available at: www.oilprice.com/Latest-Energy-News/World-News/Russias-Rosneft-Says-Venezuelas­-PDVSA-Still-Owes-It-23B.html. Accessed 3 Mar. 2019.

57 Latin American Herald Tribune. 'Owed $1.4 Billion by Venezuela, Crystallex Sues Russia's Rosneft & PDVSA Bondholders for CITGO'. 10 Jan. 2017. Available at: www.laht.com/article.asp?ArticleId=2428463&CategoryId=10717. Accessed 3 Mar. 2019.

58 Rusoro Mining Ltd. 'Rusoro Mining Files New Proceedings to Enforce US$1.34 Billion Award Against Venezuela.', 8 May 2018. Available at: www.newswire.ca/news-releases/rusoro-mining-files-new-proceedings-to-enforce-us134-billion-award-against-venezuela-682103322.html. Accessed 2 Mar. 2019.

59 In late 2018, unsecured bondholders started legal moves against Venezuela's defaults, cf. Reuters. 'Venezuela Creditors Demand Payment on Defaulted $1.5 Billion Bond.' VOA News, 17 Dec. 2018. Available at: www.voanews.com/a/venezuela-creditors-demand-payment-on-defaulted-1-5-billion-bond/4704550.html. Accessed 4 Mar. 2019.

60 United Nations Conference on Trade and Development. 'Venezuela, Bolivarian Republic of | as Respondent State.' Investment Dispute Settlement Navigator. Available at: https://investmentpolicyhub.unctad.org/ISDS/CountryCases/228?partyRole=2. Accessed 4 Mar. 2019.

61 As per First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 627 (1983) (Bancec): '[D]uly created instrumentalities of a foreign state are to be accorded a presumption of independent status'.

62 Indeed, Bolivia has few foreign assets in its name. Its US assets, for instance, are mostly employed for diplomatic uses, which therefore makes them immune as per FSIA.

63 cf. Cooper, Richard and Morag, Boaz S., 'Start Your Engines: Are We Going to See More Creditor Recovery Efforts in Venezuela?' (May 29, 2018). Available at SSRN: https://ssrn.com/abstract=3186831 and http://dx.doi.org/10.2139/ssrn.3186831.

64 Jones, Tom. 'ICSID Creditor Targets Venezuelan “Alter Egos”.' Latin Lawyer, 15 May 2018. Available at: https://latinlawyer.com/article/1169564/icsid-creditor-targets-venezuelan-“alter-egos” Accessed 3 Mar. 2019.

65 Reuters. 'U.S. glass firm sues Venezuela to collect $500 million expropriation award'. 12 Feb. 2019. Available at: www.reuters.com/article/idUSKCN1Q1061. Accessed 3 Mar. 2019.

66 For further details, see Saghy, Pedro. Venezuela | Arbitration - Country Guides. International Bar Association, Jan. 2018. Available at: www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/Arbcountryguides.aspx. Accessed 3 Mar. 2019.

67 Proposed in 2004, the United Nations Convention on Jurisdictional Immunities of States and Their Property sets a more restrictive standard for the recognition of sovereign immunity. However, this treaty has yet to come into force, requiring the ratification of 30 countries. See United Nations. United Nations Treaty Collection: United Nations Convention on Jurisdictional Immunities of States and Their Property. Available at: https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=III-13&chapter=3&lang=en. Accessed 3 Mar. 2019.

68 See Sun, Huawei, and Lei Zhang. GAR Know How: Enforcement – 'China'. Global Arbitration Review – GAR, 17 Oct. 2017. Available at www.globalarbitrationreview.com/jurisdiction/1004822/china. Accessed 3 Mar. 2019. Other countries such as Brazil, Ecuador, Venezuela, Poland and Japan also famously follow absolutist-type immunity doctrines, cf. Matute, Claudio. 'Forum Shopping in the Execution of ICSID Awards:  Is It Time to Revive the UN Convention on State Immunity?' Kluwer Arbitration Blog, Wolters Kluwer, 24 June 2016. Available at: arbitrationblog.kluwerarbitration.com/2016/06/24/preventing-foru­m­-shopping-in-the-execution-of-icsid-awards-is-it-time-to-revive-the-un-convention-on-state-immunity/. Accessed 6 Mar. 2019.

69 Codified at Title 28, §§ 1330, 1332, 1391(f), 1441(d), and 1602–1611 of the United States Code.

70 This has been made clear by the US Supreme Court in Venezuela v. Helmerich & Payne International (581 U.S. (2017): '[S]imply making a nonfrivolous argument [that a case falls within a FSIA exception] is not sufficient . . . a court should resolve any factual disputes about a foreign sovereign's immunity defense as near to the outset of the case as is reasonably possible.'

71 Numbers between parentheses match those of statutory text.

72 28 U.S. Code § 1605 (a)(5).

73 28 U.S. Code § 1605 (a)(6).

74 28 U.S. Code § 1605A and 1605B.

75 One famous example is the Swedish Supreme Court ruling that denied recognition of immunity to a set of apartments owned by the Russian government in Högsta Domstolens Beslut [Supreme Court Decision] Ö170-10 in 2011. Although some lots were used to house diplomats and state documents, most were rented for profit, leading to the asset being considered sufficiently 'commercial' in usage, and therefore not immune and thus amenable to seizure. cf. Hofverberg, Elin. 'Sweden: Supreme Court Rejects State Immunity Claim Against Enforcement Measures | Global Legal Monitor', The Library of Congress, 19 Oct. 2011. Available at: www.loc.gov/law/foreign-news/article/sweden-supreme-court-rejects-­state-immun­i­ty-claim-against-enforcement-measures/. Accessed 6 Mar. 2019.

76 As per the FSIA, (28 U.S. Code § 1603 (b)): 'An “agency or instrumentality of a foreign state” means any entity – (1) which is a separate legal person . . . (2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof' (3) who is not a citizen of the United States. For this reason, US-based subsidiaries of PDVSA PDV Holding Inc and CITGO Holding, are not immune under the FSIA.

77 Letelier v. Republic of Chile, 748 F.2d 790, 794 (2d Cir. 1984).

78 See Justice Stark's August 9, 2018 Opinion for United States District Court for the District of Delaware - Case 1-17-mc-00151-LPS (14 August 2017).

79 Houston Chronicle. '$1.4 Billion Deal Allows Venezuela to Keep Citgo's Three U.S. Refineries'. 29 Nov. 2018. Available at: www.chron.com/business/energy/article/1-4-billion-deal-allows-Venezuela-to-­keep-13423303.php. Accessed 6 Mar. 2019.

80 Gordon, Meghan. 'Citgo's Fate Back in Jeopardy after Canadian Miner Calls off Settlement'. S&P Global, 12 Dec. 2018. Available at: www.spglobal.com/platts/en/market-insights/latest-news/oil/121218-citgos-fate-back-in-jeopardy-after-canadi­an-miner-calls-off-settleme­nt. Accessed 6 Mar. 2019.

81 Rusoro Mining Ltd. 'Rusoro Mining Provides Update on Initial Payment from Bolivarian Republic of Venezuela'. 18 Dec. 2018. Available at: www.rusoro.com/s/News_Releases.asp?ReportID=842258. Accessed 3 Mar. 2019.

82 United Kingdom. Civil Jurisdiction and Judgments Act (1982 Chapter 27). Available at: https://www.legislation.gov.uk/ukpga/1982/27/contents. Accessed on Dec. 3. 2018.

83 As at the time of writing, the United Kingdom is still member of the European Union.

84 NML v. Republic of Argentina [2011] UKSC 31.

85 The following is said provision in full: '(1) A judgment given by a court of an overseas country against a state other than the United Kingdom or the state to which that court belongs shall be recognised and enforced in the United Kingdom if and only if: (a) it would be so recognised and enforced if it had not been given against a state; and (b) that court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the State Immunity Act 1978.'

86 Orascom Telecom Holding SAE v. Republic of Chad, Citibank NA (third party), International Bank for Reconstruction and Development and Another (intervening) EWHC [2008] 1841.

87 Jagusch, Stephen and Repousis, Odysseas, Sovereign Immunity in Getting the Deal Through (ed. Tai Heng Cheng and Odysseas Repousis). Available at: https://www.harriskyriakides.law/sites/default/files/2018-09/Sovereign%20Immunity%202018.pdf. Accessed on 2 Mar. 2019.

88 LR Avionics Technologies Ltd v. The Federal Republic of Nigeria and another [2016] EWHC 1761 (Comm) and Alcom v. Republic of Colombia [1984] AC 580

89 Alcom v. Republic Of Colombia and Others. [1984] 1 Lloyd's Rep. 368. Court of Appeal.

90 Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania, ICSID Case No. ARB/05/20.

91 Loi n° 2016-1691 du 9 décembre 2016 relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique. Available at https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000033558528&categorieLien=id. Accessed on 2 Feb. 2019.

92 The same seems to be true of Dutch courts, even though the Netherlands have not signed the UN Convention.

93 Ordonez, Melissa, 'Late twist to the Commisimpex saga as French Supreme Court reverses its position on state immunity from execution' in Kluwer arbitration blog. Available at: http://arbitrationblog.practicallaw.com/late-twist-to-the-commisimpex-saga-as-french-supreme-court-reverses-its-position-on-state-immunity-from-execution/. Accessed on 12/03/2019.

94 Lenaerts, K.; et al. Achmea B.V. v. The Slovak Republic, PCA Case No. 2008-13 (formerly Eureko B.V. v. The Slovak Republic). European Court of Justice: Kirchberg, March 6, 2018. Available at: https://www.ilsa.org/ILW/2018/CLE/Panel%20%2314%20-%20CJEU%20-%20Slovak%20Republic%20v%20Achmea.pdf. See also: Davoise, Marie; Birgstaller, Markus. 'Another One BIT the Dust: Is the Netherlands' Termination of Intra-EU Treaties the Latest Symptom of a Backlash Against Investor-State Arbitration?' Kluwer Arbitration Blog: August 11, 2018 Available at: http://arbitrationblog.kluwerarbitration.com/2018/08/11/another-one-bit-dust-netherlands-termination-intra-eu-treaties-latest-symptom-backlash-investor-state-arbitration/.

95 Slowakische Republik (Slovak Republic) v. Achmea BV (Case C-284/16), 2018. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62016CJ0284&from=EN. Accessed on 28 February 2019.

96 Para 60, Slovak v. Achmea, above note 14.

97 Commission Decision (EU) 2015/1470 of 30 March 2015 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania – Arbitral award Micula v. Romania of 11 December 2013 (notified under document C(2015) 2112). See also: 'Lavranos, Nikos, A new Micula-type case on the horizon?'. Thomson Reuter's blog. Available at: http://arbitrationblog.practicallaw.com/a-new-micula-type-case-on-the-horizon/. Accessed on 12 Mar. 2019.

98 Multilateral investment cfourt. European Commission's website. Available at: http://trade.ec.europa.eu/doclib/press/index.cfm?id=1608. Accessed on 11 Mar. 2019.