The enforcement of arbitral awards and defence of sovereign immunity: the crouching tiger and the hidden dragon

Arbitration between a private party and a State is always contentious for one main reason: whether the State in arbitration will raise the defence of sovereign immunity. A private party wants the State to behave like any other commercial partner when entering into a commercial deal. On the other hand, a State keeps its ultimate defence of sovereignty as and when its sovereignty is at stake. During the evolution of arbitration as a method of dispute resolution, a trend was seen that States imposed self restraint in invoking sovereign immunity in arbitration. The equilibrium has been maintained for all these years in international commercial arbitration, and the issue has become almost settled. However, it has recently been resurrected in the Court of Appeal case FG Hemisphere Associates LLC and Democratic Republic of Congo and ors. In this case, the defence of sovereign immunity was raised by the Democratic Republic of Congo (DRC) at the enforcement stage when an arbitral award was brought for enforcement in Hong Kong. Although the case is pending before the Court of Final Appeal for final disposal on the issue, this paper examines the issue of sovereign immunity in the context of enforcement of arbitral awards in general and particularly with reference to Hong Kong, which is a special administrative region of China, which is the sovereign authority for Hong Kong. This paper will first examine the enforcement mechanism for arbitral awards and then examine the position of sovereign immunity in enforcement in arbitration as well as enforcement proceedings. A State and a private party which have agreed to arbitration have the intention to arbitrate, but the same intention is interpreted differently when the award emanating from that arbitration comes up for enforcement. In order to highlight this issue, the paper will show how professional players in the same field – i.e., law – such as scholars and lawyers of public international law, ardent supporters of international commercial arbitration and judges of national courts involved in the enforcement of awards view the issue of sovereign immunity so differently, and invariably through their litigative lens, thus compromising the integrity of the arbitration process as an alternative to litigation. The paper will then argue for the use of the sovereignty defence, particularly the timing or stage of using such a defence, in a consistent manner during the whole arbitration process, including the enforcement of awards