Disputes with states: sovereign immunity and investment arbitration

A state, a ministry, a state-owned company or a central bank is not an ordinary defendant. In the United States the Foreign Sovereign Immunities Act decides whether a court can hear the case at all and which assets, if any, can be reached; abroad, a bilateral investment treaty or an ICSID clause decides whether there is a tribunal to go to. Counsel on both sides of this line — for investors and for states — is what lets a claim be built so that the award can actually be collected.

Typical situations

An investment expropriated, re-licensed or taxed out of existence by a government
An arbitral award against a state the state refuses to pay
A contract with a state-owned company that stopped performing after a change of government

Scope of work

Investment treaty arbitration under ICSID and UNCITRAL rules; commercial arbitration with state parties under the ICC rules
Litigation under the Foreign Sovereign Immunities Act in U.S. federal courts, including the Eleventh Circuit
Enforcement of awards and judgments against sovereign assets: which assets are immune, which are not
Defense of states and state entities against claims that do not meet the treaty or the statute

What decides the outcome

Which exception to immunity applies — arbitration, commercial activity, expropriation — and whether the facts actually fit it
Whether the entity is the state itself or a separate legal person — the alter ego question that recent U.S. decisions keep reshaping
Service on a foreign state: a procedural step that has sunk otherwise good cases

Questions clients ask

Can a U.S. court hear a claim against a foreign government?

Only within the FSIA exceptions — most often the arbitration, commercial-activity and expropriation exceptions. Whether one applies is the first question, and it is answered before anything is filed.

We have an ICSID award. Why is it not paid?

Because an award is a right, not money. Converting it into money means finding assets that are not immune and a jurisdiction willing to act on them — in the U.S., through recognition under the ICSID Convention and the FSIA.

Do you represent states as well?

Yes. Experience as counsel to sovereigns in ICSID, UNCITRAL and ICC proceedings is part of why investor claims are built the way they are.

Disputes with states: sovereign immunity and investment arbitration

Typical situations

Scope of work

What decides the outcome

Questions clients ask

Related notes

Other practice areas