CL-2021-000481 - [2025] EWHC 2874 (Comm)

As will be apparent from what I have said so far, I do not consider any relevant ambiguity arises, nor do I consider the outcome to be commercially or in any other way absurd. It was submitted by Mr Miles that if and to the extent there was any ambiguity then it was to be resolved by reference to principles of customary international law, to be derived from other judicial decisions concerning the same provisions by other courts in other jurisdictions and from the writing of scholars of public international law. This involves an examination of judicial decisions at domestic and international level and the writing of reputed scholars in the field of public international law. The key to an understanding of customary public international law is it depends upon the existence of a broad consensus as to the principle being considered – see Benkharbouche v Embassy of the Republic of Sudan [2019] AC 777 per Lord Sumption at [31], where he held that:

“To identify a rule of customary international law, it is necessary to establish that there is a widespread, representative and consistent practice of states on the point in question, which is accepted by them on the footing that it is a legal obligation (opinio juris): see conclusions 8 and 9 of the International Law Commission’s Draft Conclusions on Identification of Customary International Law (2016). There has never been any clearly defined rule about what degree of consensus is required. The editors of Brownlie’s Principles of Public International Law, 8th ed (2012), p 24, suggest that “Complete uniformity of practice is not required, but substantial uniformity is”. This accords with all the authorities. ”

What is required therefore is for such material to establish a “widespread, representative and consistent practice” – see General Dynamics United Kingdom Ltd v State of Libya[2021] UKSC 22, [2022] AC 318 per Lord Lloyd-Jones at [51]. For the reasons that follow, I have concluded that the material relied on does not establish a principle to the effect that rights under an award made in an ICSID Convention arbitration are either assignable or not assignable. The issue is therefore one that depends exclusively on the construction of the ICSID Convention.

One scholar on which Spain placed significant reliance was Lord McNair and his work The Law of Treaties published by the Clarendon Press in 1961. This work was cited by Mummery J. in IRC v Commerzbank AG [1990] STC 285 in terms that were approved by the Court of Appeal in Ben Nevis (Holdings) Limited v. HMRC [2013] EWCA Civ 578. Lord McNair was a former president of both the International Court of Justice and the European Court of Human Rights, as well a Professor of International law. In my judgment his work is to be regarded as forming part of the corpus of scholarly work on which reliance can and should be placed.

Lord McNair considers the assignment of treaty obligations in Chapter 28 of his book. What is set out in that chapter does not assist on the issue I am concerned with. The opening words of the chapter show that Lord McNair was considering the assignment of rights under treaties by and between states. It was in that context that Lord McNair concluded that there was “… no existing rule of international law permitting a State to assign … rights which it holds under a treaty…” and that he could “… find no basis in principle for the validity of such an assignment.”

Spain also relied on the conclusion of RSJ Martha in “The Financial Obligation in International Law”, Chapter 12 (entitled “Assignment”), that:

“Given that other than by virtue of customary international law a State or other international person cannot incur obligations towards a party without its consent, it would be difficult to accept the proposition that a creditor under a money judgment or award may assign its judgment/award benefits to a third party who would be able to exercise the same enforcement rights as the assignor. These benefits hail from international law and can thus not be treated as if they have emancipated from the very legal order that gives rights to them and that regulates their validity as well as their extinction. Hence, no conclusion can be drawn one way or the other from the fact that under domestic law award/judgment creditors may assign their benefits. Under international law, it remains a truth that no debtor–creditor relations can be imposed on either a State or an international organization unless a governing inter­national legal instrument so permits.”

Mr Miles submits that the material referred to above and a limited number of other commentaries to similar effect “… supports a consistent conclusion: if an ICSID award creditor that is a natural or juridical person is to be given a right to assign rights arising pursuant to an ICSID award, this can only be done by way of a specific grant of right or capacity…” and that “… the position could not be clearer”.

Whilst I accept that this material is consistent with the effect of the commentaries on the ICSID Convention and with the effect of the ICSID Convention as I construe it, I am not able to accept the very broad submission that Mr Miles makes. Firstly, none of the material relied on by Spain before me was cited on behalf of Spain to Stewart J in the FCA proceedings. That suggests that Spain’s advisors in that case did not consider that the point now being relied on was realistically arguable. Secondly, much the same point can be made in respect of Blue Ridge Investments LLC v Republic of Argentina(Memorandum Opinion & Order), 10 Civ. 153 (PGG) (“Blue Ridge”) a decision of the United States District Court for the Southern District of New York to which I refer in more detail below. It is close to inconceivable that Argentina would not have relied in that case on a proposition of customary international law to the effect that rights under an ICSID Convention award were not assignable had it been considered such a point is arguable. Thirdly, none of the commentaries on the ICSID Convention address head on the availability of assignment by reference to any propositions of customary international law. They each proceed by reference to their understanding of the true meaning and effect of Article 54(2). The same is true of the commentaries referred to above. Fourthly, Lord McNair’s analysis as I have explained is concerned with whether a state can assign to a third party state a right it has or has acquired against another state under a treaty. In my judgment that is different from the situation that arises in the context of a commercial relationship.

I accept Mr Miles’ submission that the conclusions in favour of the availability of assignment in other courts in other jurisdictions appears to be founded on earlier authorities that at least realistically arguably do not support the proposition for which they are cited. In CC/Devas (Mauritius) Ltd. v Republic of India (No 2) [2023] FCA 527 (as case relied on by Stewart J in the FCA proceedings) Jackman J held that:

“There is no international law rule prohibiting the assignment of an award between a private party and a state: Global Distressed Alpha Fund I LP v Red Sea Flour Mills Co Ltd, 725 F. Supp. 2d 198 (D.D.C. 2010); Belize Social Development Ltd v Government of Belize, 5 F. Supp. 3d 25 (D.D.C. 2013). Third, there are no rules of international law on the assignability or assignment of awards or other choses in action; it is the role of municipal law to fill this gap as a general principal of law widely accepted across different municipal systems: see Statute of the International Court of Justice, Art 38(1)(c). Absent any rule, the Court must apply the law of the forum.”

Mr Miles submitted that none of these authorities assisted. I agree. Global Distressed Alpha Fund I LP v Red Sea Flour Mills Co Ltd (ibid) was not an ICSID Convention case but a case concerning enforcement under the New York Convention. I cannot detect anything in the judgment cited to me that assists on the issues that now arise. Belize Social Development Ltd v Government of Belize (ibid) is of limited assistance too because it was not an ICSID case but was concerned with the assignment of a foreign arbitral award against the Government of Belize. The challenge was not concerned with any principles of public international law – see [11] – [12] of the Judgment.

I agree with the third point made by Jackman J in CC/Devas quoted above. The material deployed before me does not satisfy me that there is a rule or principle of public international law that either supports or prohibits the assignment of awards made in ICSID awards. The only principle that I can be reasonably sure of is the principle identified by Lord McNair but that is confined to the assignment of treaty rights by sovereign states to third part sovereign states. It is not concerned with rights under arbitration awards against sovereign states in favour of juridical persons other than states.

It was submitted on behalf of the claimants and Blasket that I should conclude positively that assignment of ICSID Convention awards is permissible as a matter of customary international law. I am not satisfied that this is so or that the issue is one that can be determined other than by construing the ICSID Convention as a whole.

In support of their submission, the claimants and Blasket place significant reliance on the judgment in Blue Ridge and the decision of Stewart J in the FCA proceedings. Both are first instance judgments. It is highly questionable whether the judgments in those cases can be said to represent a “… widespread, representative and consistent practice of states on the point in question…”.

In Blue Ridge, the United States District Court for the Southern District of New York was concerned with an application by Blue Ridge (as assignee of the Award) to confirm an ICSID award against the Republic of Argentina. Argentina applied to dismiss the application for want of jurisdiction. There is a difficulty in relation to this authority in so far as it is concerned with the interpretation of the ICSID Convention, because it focuses exclusively on United States law relating to the interpretation of statutes. There is nowhere any mention of the Vienna Convention even though that Treaty is binding on all states in relation to the true meaning and effect of treaties.

At Section 2 in the judgment the Judge refers to Article 54(2) of the ICSID Convention. The Judge’s analysis that follows focuses on the meaning of the word “party” in that Article. He draws attention to various other Articles in the ICSID Convention where language has been used that restricts or confines the scope of the word “party” or the phrase “parties”. The Judge concludes as I have so far that:

“In those Articles in which “party” or “parties” is not qualified or restricted, it is generally abundantly clear from context how these terms should be construed. For example, in Chapter IV Section 3, of the Convention – entitled “Powers and Functions of the Tribunal” – there are references to “party to the dispute,” but also references simply to “a party.” Compare ICSID Convention, Arts. 41, 42 with ICSID Convention, Art. 45. In those instances in which “party” or “parties” is not qualified or restricted, it is clear from context that these terms refer to a party or parties to the arbitration. For example, Article 43 provides: “[e]xcept as the parties otherwise agree, the Tribunal may, if it deems it necessary at any stage of the proceedings, (a) call upon the parties to produce documents or other evidence, and (b) visit the scene connected with the dispute, and conduct such inquiries there as it may deem appropriate.” ICSID Convention, Art. 43 (emphasis added). Read in context, it is clear that “the parties” refers to “a party to the arbitration,” because this section addresses rules applicable to the arbitration proceeding.”

However in relation to Article 54 the Judge concludes that this is not so and is to be distinguished from what has gone before because Article 54 is “… is part of a section dealing with “Recognition and Enforcement of the Award,” and perforce addresses events after the arbitration proceeding is entirely complete and there has been a final award.” The judge refers to a “… basic canon of [United States] statutory interpretation, which is equally applicable to interpreting treaties, is to avoid readings that ‘render statutory language surplusage’ or ‘redundant.’”. Respectfully, this ignores the points made earlier concerning the true meaning and effect of Article 54(2) when read in its correct context. It also placed undue weight on the need to avoid surplusage – an argument that was rejected by the High Court of Australia in terms approved by the Court of Appeal as stated above.

The judge concludes that “(c)onsidering the Convention as a whole, and how the terms “party” and “parties” are used, the decision not to modify or restrict the term “party” in Article 54(2) undermines Argentina’s argument that “a party” must mean “a party to the arbitration.” The Court concludes that “a party” as used in Article 54(2) is ambiguous…”. I respectfully disagree with this analysis for the reasons set out above. In my judgment this conclusion is too heavily influenced by United States principles of construction and not at all by the Vienna Convention principles and on that account cannot safely be regarded as being a representative statement of customary international law.

The Judge further concludes that the ICSID Convention permits or requires contracting states to apply their own laws in enforcing ICSID awards, that there was nothing in US domestic law that suggested that only a party to a ICSID arbitration could enforce an ICSID award and that “… nothing in the ICSID Convention, in Congress’s legislation implementing ICSID, or in New York law prevents an assignee from seeking recognition and enforcement of an ICSID Convention award.” It was this analysis that led Jackman J to conclude in CC/Devas (ibid) that it was the role of municipal law to provide an answer. As I have explained, respectfully I consider that to be incorrect because the answer is provided by the construction exercise set out earlier.

Aside from this point, in my judgment it is implausible that the authors of the ICSID Convention could have intended that the assignability of an award made pursuant to it would be left to the random effects of local law with the result that whether an award was assignable would depend on which state the award was being enforced in with the very real possibility that assignment may be permitted in some jurisdictions where enforcement was sought but not others. It is in order to avoid such outcomes that issues concerning assignability depend on the governing law of the contract or in this case Convention – that is in this case the ICSID Convention and the ECT. Further, the principles that I consider below in relation to the claimants’ and Blasket’s alternative case suggest that resort to local law at the place where enforcement is sought is wrong in principle.

In his judgment in the FCA proceedings, Stewart J considered the effect of Blue Ridge at [307] and following of his judgment. He concluded at [309] that:

“… His Honour’s decision may have ultimately turned on municipal law, but only after concluding that “[n]othing in Article 54(2) suggests that it was intended to communicate that only a ‘party to the arbitration’ can seek enforcement of an ICSID Convention award, nor does any other provision in the Convention suggest such a restriction”. In other words, it was certainly not the case that no attention was given to the relevance of public international law as contained in the treaty terms on the question of assignability. As discussed immediately below and following, there is no basis in public international law to read into the ICSID Convention a prohibition on assignment. … On that basis, the assignee, relevantly Blasket, has the right of recognition and enforcement under the ICSID Convention itself, which is an answer to Spain’s argument regarding standing.”

I conclude that I should not follow what Stewart J has stated for the reasons identified earlier. His judgment is not representative of the current state of international law. To the extent that the Judge relied on CC/Devas (Mauritius) Ltd. v Republic of India (ibid), Global Distressed Alpha Fund I LP v Red Sea Flour Mills Co Ltd (ibid) and Belize Social Development Ltd v Government of Belize (ibid) I do not consider they contain any leaning that assists in resolving the assignability issue.

In the result, I conclude that as a matter of construction of the ICSID Convention, awards made in arbitrations convened in accordance with it are not capable of assignment and that there is no rule of customary international law that provides either that such awards are either assignable or not assignable. The issue depends on the construction of the ICSID Convention applying the Vienna Convention principles of construction.