Australian High Court reinforces its pro-arbitration position in European dispute

In April 2023, the High Court of Australia (HCA) unanimously upheld the decision of the Australian Federal Court to enforce an arbitral award of €101 million in favour of Infrastructure Services Luxembourg S.à.r.l. (ISL) against the Kingdom of Spain (Spain).

This decision makes clear that:

• arbitral awards made against foreign states under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (ICSID Convention) may be recognised and enforced in Australia; as
• foreign state immunity (the principle whereby a foreign State is immune from the jurisdiction of the courts of Australia, except where an exception applies) may be waived by way of by implications inferred from the express words of a treaty in their context and in light of their purpose,

and cements Australia’s standing as a pro-arbitration jurisdiction.

Facts

The arbitration was commenced in accordance with the ICSID Convention by ISL in respect of its investment in solar projects, made in reliance on assistance from Spain by way of an energy subsidy program – which was later rolled-back by the Spanish government. It was alleged by ISL in the arbitration that the removal of the subsidy program following their own sizeable investment commitment was in breach of their Energy Charter Treaty…