Absolute sovereign immunity? The Colombian Supreme Court’s denial of recognition of the Rusoro Mining v Venezuela Award

Introduction

In a previous article[1] we reviewed a 2022 Colombian Supreme Court decision that rejected an application for recognition of an ad hoc investment arbitral award against the Kingdom of Spain for lack of jurisdiction resulting from jurisdictional immunity. In that article we posed the question of whether the Colombian Supreme Court might take a different approach towards sovereign immunity should an application for recognition of an ICSID award be brought in the future.

While not rendered under the ICSID rules, but under the ICSID Additional Facility Rules, a recent decision by the Colombian Supreme Court in Rusoro Mining Limited v Bolivarian Republic of Venezuela, ICSID Case No ARB(AF)/12/5, Award, 22 August 2016 ('Rusoro Mining Limited v Bolivarian Republic of Venezuela')[2] is worth analysing. The Supreme Court denied recognition of an arbitral award rendered in favour of the Canadian company Rusoro Mining Limited against Venezuela, invoking the principle of sovereign immunity from execution. This ruling once again highlights the tension between State sovereign immunity and the enforceability of international investment arbitration mechanisms, raising questions over how to interpret sovereign immunity under the current case law of the Colombian Supreme Court.

Sovereign immunity generally shields a State from being sued or having its property seized in the courts of another State; however, no universal supranational mechanism compels uniform implementation, with the extent of immunity ultimately being determined by domestic law.[3] A key distinction is made between immunity from jurisdiction – protecting States from legal claims – and immunity from execution, which limits the attachment of State assets.[4] These two forms of immunity, though interrelated, are not interchangeable: a waiver of jurisdictional immunity does not inherently entail a waiver of execution immunity. In other words, when a State consents to litigation or arbitration, it may lose its shield against being sued; yet, without a distinct and explicit waiver in connection with enforcement, its assets ultimately remain protected from seizure. Immunity from execution is typically subject to stricter scrutiny. International practice has generally moved away from the doctrine of absolute immunity by narrowing protection to actions that are uniquely sovereign in nature (jure imperii).[5]

This article analyses both the Supreme Court's decision and the approach taken by local domestic courts in the United States and England in similar circumstances, aiming to spark reflection on the path forward for Colombia's recognition of investment awards against foreign States.

Factual background to Rusoro Mining v Venezuela

Between 2006 and 2008 Rusoro Mining Limited invested in gold mining operations in Venezuela, acquiring control of companies that held a total of 58 mining concessions and contracts for the exploration, development and exploitation of gold. The Venezuelan government nationalised the country's gold mining industry in 2011, expropriating Rusoro's investments. Rusoro initiated arbitration proceedings under the ICSID Additional Facility Rules, arguing that Venezuela had violated the bilateral investment treaty (BIT) between Canada and Venezuela.

The tribunal issued an award in favour of Rusoro on 22 August 2016,[6] ordering Venezuela to pay over USD 1.2 billion in compensation. Venezuela sought to annul the award in the French courts, but the Paris Court of Appeal upheld the award in June 2022. Rusoro then sought recognition and enforcement of the award in various jurisdictions, including the United States and Colombia.

Unlike the Colombian Supreme Court, the United States District Court for the District of Columbia recognised and enforced the award. The court granted Rusoro's petition to confirm the arbitral award and denied Venezuela's motion to dismiss or stay enforcement, concluding that Venezuela failed to establish any grounds under the New York Convention to deny confirmation of the award. The court also declined to stay enforcement pending the outcome of annulment proceedings in France, basing itself on factors that weighed in favour of immediate enforcement. The decision underscores the United States judiciary's supportive approach to the enforcement of international arbitral awards, even in the face of sovereign-immunity arguments, provided that the requirements under the Federal Arbitration Act and the New York Convention are met.[7]

Colombia's legal framework for recognition of foreign awards

The recognition and enforcement of international arbitral awards in Colombia is primarily governed by the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ('New York Convention'), adopted in Colombia through Law 39 of 1990 and further regulated by Law 1563 of 2012.

Under Law 1563 of 2012, the Colombian Supreme Court's Civil Chamber has subject-matter jurisdiction over the recognition of foreign arbitral awards involving private parties, while the Council of State handles cases involving Colombian public entities. Article 111 of Law 1563 requires a formal application for recognition, accompanied by the necessary documentation, without addressing the merits of the award at this stage. Article 112 lists the grounds for denying recognition, which mirror those of Article V of the New York Convention, including public policy reasons.

The Colombian Supreme Court's decision

In its judgment dated 20 June 2024, the Supreme Court denied Rusoro's application for recognition of the award issued against Venezuela. The court held that granting recognition would contravene the principle of sovereign immunity from execution, which is strict as well as protected under Colombian law. Notably, the court did not consider the fact that the award was rendered under the ICSID Additional Facility Rules. Instead, and remarkably, the analysis appears to be based on the mistaken understanding that the Rusoro award was an ICSID award, stating the following:

The rules of the ICSID Convention cannot override customary international law's principle of immunity from execution, according to Colombia's concept of international public order. Consequently, recognition of the award is denied.^[8]

The Supreme Court emphasised that, although Colombia is a signatory to the ICSID Convention – which obliges signatories to recognise and enforce ICSID awards – Article 55 of the Convention itself preserves States' immunity from execution. The court underscored that Colombia lacks domestic legislation specifying exceptions to sovereign immunity from execution, noting that the United Nations Convention on Jurisdictional Immunities of States and Their Property of 2004 has not been ratified.

The decision leaves open the question of whether, had the Supreme Court taken into account that the ICSID rules did not apply to this case, it should have based its analysis on the New York Convention – and whether that could have potentially changed the outcome of the decision.

Distinguishing between immunity from jurisdiction and immunity from execution

The Supreme Court differentiated between immunity from jurisdiction and immunity from execution, acknowledging that, while immunity from jurisdiction has evolved to be somewhat less rigid – allowing exceptions when a State engages in commercial activities (acta jure gestionis) – immunity from execution remains absolute under customary international law:

Regardless of the various global dynamics of immunity from jurisdiction, so-called immunity from execution has been preserved much more strictly. Even if it is accepted that a State has waived its immunity from jurisdiction, it cannot be accepted that this implies a waiver of immunity from execution.

This interpretation reflects a stance of absolute immunity from execution, asserting that, in the absence of explicit domestic legislation, Colombia cannot enforce arbitral awards against sovereign States' assets without their express consent.

The English Court of Appeal's approach

Leaving the discussion of the Colombian Supreme Court's factual misunderstanding to one side for the moment, a recent English Court of Appeal decision provides an interesting contrast in approach. In Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. v The Kingdom of Spain and Border Timbers Limited and Hangani Development Co. (Private) Limited v Republic of Zimbabwe,[9] the English Court of Appeal adopted a less absolute interpretation of State immunity.

Factual background

The case involved claimants seeking to enforce ICSID awards in England against foreign states: (i) Infrastructure Services v Spain: the claimants sought to enforce an ICSID award requiring Spain to pay EUR 101 million in compensation, while Spain contended that it retained immunity under the State Immunity Act 1978 ('SIA') and that the exceptions to immunity did not apply; and (ii) Border Timbers v Zimbabwe: the claimants sought to enforce an ICSID award against Zimbabwe, while Zimbabwe raised similar immunity arguments, asserting that it had not consented to the jurisdiction of the English courts for enforcement purposes.

The Court of Appeal held that Section 1(1) of the SIA applies to the recognition and enforcement of ICSID awards against foreign States. However, it determined that the exceptions to immunity under Sections 2 and 9 of the SIA applied.

The Court of Appeal concluded that, by signing the ICSID Convention, Contracting States – including Spain and Zimbabwe – have agreed in writing to submit to the jurisdiction of the courts of other Contracting States for the purposes of enforcing ICSID awards:

On a straightforward reading of Article 54(1) of the Convention, each Contracting State has agreed with all other Contracting States that each will enforce ICSID awards, in the context that a Contracting State will necessarily be a party to each award [...] Such a treaty or convention will often be made between multiple states and will provide for events many years into the future. Provisions for submission to the jurisdiction of contracting parties in such treaties and conventions will necessarily not identify the parties to the dispute or any other details. Yet they are expressly recognised as agreements for the purpose of Section 2(2) of the SIA.

The English court rejected the notion of absolute immunity from both jurisdiction and enforcement in the context of ICSID awards, emphasising that such an interpretation would undermine the efficacy of the ICSID Convention and the mutual obligations of Contracting States.

Conclusions

The Colombian Supreme Court's decision underscores the challenges and complexities inherent to enforcing arbitral awards against sovereign States, particularly in jurisdictions that interpret sovereign immunity strictly. By taking the absolute immunity stance, Colombia has diverged from international trends that seek to balance State sovereignty with effective enforcement of arbitral awards.

Moreover, the Supreme Court missed an opportunity to engage in a nuanced analysis of whether Colombia's international obligations could provide a basis for recognising and enforcing the award, notwithstanding domestic legal limitations. In order to align with international practices and promote investor confidence, Colombia could consider adopting interpretations that harmonise domestic and international obligations, taking into account the purposes and principles of treaties like the ICSID Convention and the New York Convention.

References

• S. Cruz Mantilla and E. Lagos-González, 'Decoding the Colombian Supreme Court Ruling denying the recognition of the PV Investors v Kingdom of Spain Award: at the crossroads of investor protection' (2023) 12 International Arbitration Outlook, Uría Menéndez.
• Judgment of the Colombian Supreme Court of Justice, Rad. no. 11001-02-03-000-2022-03860-00, 20 June 2024.
• Rusoro Mining Limited v Bolivarian Republic of Venezuela, ICSID Case No ARB(AF)/12/5, Award (22 August 2016).
• Ruiz García, M. 'Enforcement of ICSID Awards: Immunity from Execution Revisited' (2023) 34(4), The American Review of International Arbitration, pp 605-632.
• J. Crawford, Brownlie's Principles of Public International Law (Oxford University Press: 2019).
• W. Shan and P. Wang, 'Divergent Views on State Immunity in the International Community' in T. Ruys, N. Angelet and L. Ferro (eds.), The Cambridge Handbook of Immunities and International Law (Cambridge University Press: 2019).
• Y. Dautaj, 'Sovereign Immunity from Execution of Foreign Arbitral Awards in India: The “New" Kid on the (Super) Pro-Arbitration Block' (2024) 15 Arbitration Law Review, 19.
• Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. v The Kingdom of Spain and Border Timbers Limited and Hangani Development Co. (Private) Limited v Republic of Zimbabwe, English Court of Appeal (England & Wales), [2024] EWCA Civ 1257, Judgment (22 October 2024).

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[1] S. Cruz Mantilla and E. Lagos-González, 'Decoding the Colombian Supreme Court Ruling denying the recognition of the PV Investors v Kingdom of Spain Award: at the crossroads of investor protection' (2023) 12 International Arbitration Outlook, Uría Menéndez.

[2] Judgment of the Colombian Supreme Court of Justice, Rad. no 11001-02-03-000-2022-03860-00, 20 June 2024. Reporting Justice: Francisco Ternera.

[3] J. Crawford, Brownlie's Principles of Public International Law (Oxford University Press: 2019).

[4] W. Shan and P. Wang, 'Divergent Views on State Immunity in the International Community' in T. Ruys, N. Angelet and L. Ferro (eds.), The Cambridge Handbook of Immunities and International Law (Cambridge University Press: 2019).    

[5] Y. Dautaj, 'Sovereign Immunity from Execution of Foreign Arbitral Awards in India: The “New" Kid on the (Super) Pro-Arbitration Block' (2024) 15 Arbitration Law Review, 19.

[6] Rusoro Mining Limited v Bolivarian Republic of Venezuela, ICSID Case No ARB(AF)/12/5, Award (22 August 2016).

[7] Rusoro Mining Limited v Bolivarian Republic of Venezuela, Civil Action No 16-2020 (RJL), Memorandum Opinion, p 13 (D.D.C. 2 March 2018).

[8] See paragraph 4 of the judgment cited in footnote 4.

[9] Infrastructure Services Luxembourg S.à.r.l. and Energia Termosolar B.V. v The Kingdom of Spain and Border Timbers Limited and Hangani Development Co. (Private) Limited v Republic of Zimbabwe, English Court of Appeal (England & Wales), [2024] EWCA Civ 1257, Judgment (22 October 2024).