THE AUTHOR:
Taimoor Raza Sultan, Arbitration Attorney at Sultan & Sultans Law Chambers (“SSLC”)
Certainty of enforcement remains one of the central anxieties of investment arbitration. In ICSID (International Center for Settlement of Investment Disputes) arbitration, which calls for automatic and self-contained enforcement of awards, this concern is even more significant. In the course of such proceedings, sovereign states frequently attempt to delay or impede the enforcement process by raising the defense of immunity or public policy objections like intra-EU plea, or by entirely relocating or restructuring assets. As a result, the voluntary compliance rate in investment arbitration, according to a survey, can plummet to as low as 30% for sovereign states, in contrast with commercial arbitration, where the figure still hovers around 70%. Given this, the private investors commonly prefer to immediately monetize the award at a reduced rate by transferring the legal right to enforce it to a third-party (the assignee or funder), rather than undertaking a lengthy, expensive, and above all, uncertain process of enforcement on their own.
This article argues that the ICSID awards should be assignable as a matter of treaty interpretation, doctrinal coherence, and sovereign risk mitigation. It begins by examining the conceptual basis for assignment before critically assessing the conservative approach adopted by the English High Court in OperaFund v. Kingdom of Spain [2025] EWHC 2874 (Comm).
Understanding the Legal Basis for ICSID Award Assignment
Contextual Reading of the ICSID Convention
The Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (“ICSID Convention”) is silent on the assignability of awards; however, the arguments below demonstrate that assignment is entirely consistent with the structure and purpose of ICSID.
- Firstly, Article 54 provides only one criterion for the enforcement of an award: that it be “rendered pursuant to the convention,” irrespective of the enforcing authority. The identity of the party is irrelevant as long as it has the valid right of enforcement. The provision neither restricts enforcement to the original claimant nor excludes assigned awards from its scope.
- Secondly, the drafters of the Convention have intentionally expanded the legal standing of the parties to seek enforcement of an ICSID award, by using the phrases ‘the parties’ and ‘a party’ in articles 53(1) and 54(2) respectively to mean any party possessing a valid legal right to enforce an award, including an assignee, who derives such a right from an assignment agreement. Contrastingly, articles 25 and 32 of ICSID, which pertain to the pre-award proceedings, adopt the expression “a party to the dispute” denoting original parties to the arbitration agreement and exclude assignees or any other third party. Had the drafters intended similar provisions for the enforcement of awards, they could have explicitly referred to the disputing parties in articles 53 and 54 as well.
- Thirdly, the parties in arbitration proceedings do not automatically become parties to the subsequent enforcement proceeding. Both phases are separate and serve distinct objectives; therefore, it is not necessary for the same parties to pursue the entire process. For instance, the mandate of article 25 (tribunal jurisdiction) is different from article 54 (court enforcement), which indicates that original parties are not necessarily required to carry the award into enforcement. This distinction enables assignment, by which an assignee may pursue enforcement in place of the original claimant. The award debtor may also challenge enforcement on the basis that it never consented to arbitrate the dispute with the assignee. This argument has, nonetheless, the following limitations:
- Consent to arbitration is relevant only prior to and during the arbitral proceedings, not at the time of enforcement.
- Consent cannot be revisited for enforcement proceedings.
- The question of consent is a merit issue and is irrelevant for enforcement proceedings
- Fourthly, the unique enforcement architecture of the ICSID Convention under Article 54(2) only requires the presentation of a certified copy of the award for enforcement, unlike Article 4(2) of the New York Convention (1958) (“NYC”), which also requires the submission of arbitration agreement to which assignee is generally not a party. This implies that enforcing an ICSID award establishes a self-standing international obligation and does not require contractual privity as under the NYC.
Legal Claims Assignable but Awards Not: Is It Improbable?
In Daimler v. Argentina, the tribunal in para 145 held that ICSID claims are at least in principle separable from their underlying investments. The separability of legal claims enables their transferability absent any clear textual bar. The decision acknowledges this in para 144, stating that legal claims to be either sold along with or reserved separately from the underlying assets from which they are derived……. greatly facilitates and speeds the productive re-employment of assets in other ventures. Where a claim is transferable, the corresponding award determining that claim and vesting in the creditor the legal right to enforce it should likewise be assignable.
Moreover, in Saipem v. Bangladesh, the tribunal went one step further in para 127 and ruled that the awards are assets with an economic value that can be treated like an investment. Therefore, assigning the benefits or rights arising from a valid award, or assigning the award itself, is essentially the assignment of a financial claim, which is a well-established legal practice.
Assignment of Awards for Sovereign Risk Mitigation
Sovereign states have a greater likelihood of refusing to pay, unduly delaying compliance with the award, or interfering with the enforcement proceedings. This power asymmetry in favor of sovereigns can be attributed to two reasons:
- firstly, states as sovereign entities have enhanced procedural control; and
- secondly, the enforcement laws are more favorable towards them as compared to private investors.
Thus, enabling award assignment is essential to countering the sovereign risk inherent in enforcement against states. The award creditors may lack either the capacity or the incentive to commit funds to pursue multi-jurisdictional asset tracing, sovereign immunity claims, and years of enforcement proceedings. Specialized funders have an international enforcement network, asset-tracing teams, and the capacity to endure prolonged litigation. In this way, the assignment of awards not only neutralizes the associated economic risk but also places the enforcement of awards in the hands of those entities that are best positioned to secure recovery. It also reinforces the principles of equity and fairness by democratizing justice and preventing economic constraints from preventing powerful entities from being held accountable.
English High Court’s Decision in Operafunds v. Spain
The Claimants Operafunds reached out to the court in an ICSID-ECT award for the substitution of Blasket as claimant under Civil Procedure Rules (“CPR”) Rule19.2(4)(a). The court ruled that, in particular, the assignment of an ECT award is invalid under Customary International Law (“CIL”) and the treaty. The court judgement can be analyzed on three main grounds, as follows:
Incoherent Construction of the ICSID Convention
The court reasoned that article 53 (1) establishes the award as final and binding only on the original parties; therefore, article 54(2) must be construed consistently with the preceding provision. However, as discussed above article 53 and 54 refer to parties in broad and non-specific terms, reflecting an intentional expansion beyond original parties to include those holding valid enforcement rights.
Furthermore, since Article 54(2) conditions enforcement on submitting ‘a copy of the certified award’ which names only the original parties to the arbitration proceedings, it can be reasonably assumed that only those parties are contemplated to have legal standing to seek enforcement. The court’s reasoning does not withstand legal scrutiny.
- Firstly, upon assignment of the award, the role of the original party ends, and pre-award duties (i.e., establishing legal standing, proving the breach of rights) are exhausted. The post-award enforcement obligations, being separate and distinct, are transferred to the assignee through a valid assignment agreement, making it ‘a party seeking recognition and enforcement’ under article 54(2).
- Secondly, the purpose of presenting the award is for the court to satisfy itself that a valid monetary obligation has accrued against the award debtor, regardless of who holds the right of enforcement.
On the applicability of Article 31 of the Vienna Convention on the Law of Treaties (1969) (“VCLT”), the court held that the words of the treaty ought to be interpreted in a specific context and in alignment with its overall purpose. The overarching purpose of the ICSID Convention is to ensure investor protection and the effective enforceability of awards. The court itself is standing in disregard of this purpose by preventing the assignment of awards, thereby obstructing recovery and making the investor even more vulnerable.
Subrogation under Article 15 of the Energy Charter Treaty
With respect to the Energy Charter Treaty (1995) (“ECT”), the court reasoned that Article 15 only recognizes one form of assignment i.e., statutory subrogation, where state indemnifiers automatically acquire investor rights upon payment (cession legis). However, it addresses public indemnity scenarios, and operates under legal principles distinct from voluntary and commercial transfer of awards. The court specifically held that the enactment of this provision would be unnecessary if general assignment were permitted.
Firstly, the court’s interpretation discloses a fatal inconsistency. The phrase ‘a party’ in Article 54(2) of ICSID is narrowed by implication to original parties only. Yet, express subrogation under Article 15 of ECT is expanded into comprehensive exclusivity over general private commercial assignment. The reasoning cannot have it both ways, i.e., reading in restrictions (Art. 54) while reading out permissions (Art. 15).
Secondly, by Omissio non est exclusion, (silence should not be automatically taken as exclusion), the absence of an express provision authorizing general assignment does not imply prohibition unless it is expressly given.
Practical Workaround – Alternative Model
The court instead provided a functional workaround for the enforcement of awards without direct assignment. The court suggested, albeit obiter, that Blasket could still recover money without substituting the original party by entering into a private contractual arrangement with Operafunds. Nevertheless, it fails to account for certain relevant situations.
- Firstly, in the event that the claimant goes bankrupt, the award would remain part of its estate as an asset. The funder, whose rights arise solely from contract, may be treated as an ordinary unsecured creditor, while the liquidator might seize the award proceeds to pay the preferential creditors, like tax authorities or employees, first. Whereas, the assignment of the award entirely divorces it from the claimant’s estate, and consequently from its liabilities.
- Secondly, the host state would likely negotiate with the claimant, who holds legal title to the award, for an undervalued settlement offer. An impoverished claimant may be tempted to accept, leaving the funder with a breach of contract claim against the claimant with practically no recoverable assets. The funder cannot legally prevent the settlement as they are not a party to the dispute. Conversely, an assignment places the assignee in direct control of enforcement proceedings and may effectively preclude such settlements.
- Thirdly, a private contract creates rights in personam, i.e., between the funder and the claimant, and not in rem. The right to enforce against the debtor’s assets remains vested in the claimant because the court requires legal title. If the claimant refuses, dissolves, or loses its corporate status, the funder is powerless. While the funder may remain subject to the discretion of an uncooperative claimant, the assignees can enforce the award directly.
- Fourthly, no third-party would finance the enforcement efforts of the creditor through a private contract without having direct control over the proceedings because it limits its autonomy to act and formulate a strategy. Also, strategic disagreements between the funder and assignee could potentially delay or possibly frustrate the enforcement proceedings.
Comparative Recognition of ICSID Award Assignment
In Blasket v Spain [2025], involving the same parties, the Federal Court of Australia (“FCA”) held that the assignments by RREEF and Watkins Holdings of their award rights and entitlements to Blasket Renewable Investments were valid and enforceable, finding that assignment is not prohibited under customary international law or the ICSID Convention and that, as a matter of Australian domestic law, enforcement rights arising from an arbitral award constitute choses in action capable of assignment, including under New South Wales law pursuant to s 12 of the Conveyancing Act 1919 (NSW), which operates as federal law by virtue of s 79 of the Judiciary Act 1903 (Cth).
Similarly, the United States District Court for the Southern District of New York (“SDNY”) in Blue Ridge Investments v. Argentina [2012] held that the ICSID implementing statute doesn’t limit enforcement to a party to the arbitration and requires that ICSID awards be enforced with “the same full faith and credit” as a final judgment of a state court. Once treated as a domestic judgment, an ICSID award is governed by applicable state law. Under New York state law, specifically section 13–103 of the General Obligations Law, a money judgement is transferable, with ‘transfer’ broadly includes sale, assignment, conveyance, deed and gift. In short, 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.
Conclusion
ICSID awards should be assignable. Both the Blue Ridge case in the United States and the Blasket in Australia recognize the assignment of ICSID awards, while OperaFund stands as an anomaly that not only misreads the text of the Convention, but also defies its pro-enforcement mandate that a private contractual arrangement cannot cure. It remains to be seen whether this ruling will withstand appellate scrutiny. However, London may undermine its reputation as a leading destination for the enforcement of awards and ultimately drive award creditors and funders toward other jurisdictions that are more hospitable to the assignment of awards.
ABOUT THE AUTHOR
Taimoor Raza Sultan is an arbitration attorney from Pakistan, currently practicing at Sultan & Sultans Law Chambers (“SSLC”). He holds an LL.M. in International Commercial Arbitration from Stockholm University. He has experience in both domestic and international arbitration, focusing on investment treaty disputes, commercial arbitration, and enforcement of awards. His research interests include the intersection of arbitration and sovereign immunity, assignment of arbitral awards, and emerging trends in cross-border dispute resolution.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
