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The Problem of Execution Immunities and the ICSID Convention

The prevailing view in international practice is that, by consenting to arbitration, a State does not waive its immunity from execution. Yet, in the context of arbitration administered by the International Centre for Settlement of Investment Disputes (ICSID) – as in the context of arbitration between States and private parties more generally – the problem of execution immunities is a very significant obstacle to the effective implementation of arbitral awards. When immunity from execution allows States to escape obligations they have freely undertaken, and when it withholds from claimants the fruits of a favourable award, the benefits of arbitration become illusory. This article contends that the prevailing view is no longer compelling. We argue that domestic courts can and should uphold the rule-of-law objectives and benefits of the ICSID Convention by adjusting their approach to immunity claims in the arbitral context: consent to arbitration should be interpreted as an implied waiver of immunity from execution.


Introduction
It should come as no surprise to any student of international arbitration that its effectiveness ultimately depends on the enforcement machinery provided by State legal systems. This hard fact can be traced back to the structural weakness of the international legal system's central institutions. In the absence of a truly international alternative, domestic courts have long been looked upon to 'overcome this structural weakness' and to help 'fill the institutional vacuum' .1 In that role, some have come to perceive the domestic court as 'an agent of an emerging international system … an agent that accords precedence to the norms of international law when these norms come into conflict with the dictates of national policy' .2 Without entering the long-standing debate on the relationship between the two, it goes without saying that the domestic court is a place where the national and international legal orders frequently converge. International arbitration is in this respect no exception. Despite aspirations of complete delocalization, domestic courts can intersect with the arbitral process throughout its various phases.3 A particularly striking intersection is seen when an award is rendered, and claimants seek to enforce it. It is here that State institutions may need to lend their sword to ensure the effectiveness and proper functioning of the international system.4 More precisely, using the enforcement mechanisms of a national legal system becomes a necessity if an arbitral award is 'to be more than an unenforceable attempt at conciliation' .5 Maxwell 1986) 231 ('Arbitration tribunals have no sovereign powers equivalent to those of the state with which to enforce their awards; nor do they always have adequate powers to ensure the proper and efficient conduct of arbitration proceedings. For this reason, it has long been recognized that the effectiveness of the arbitral process is dependent upon a defined relationship, often described as a "partnership", between arbitration and the courts' .). 5 William W Park and Jan Paulsson, 'The Binding Force of International Arbitral Awards' (1983) 23 decades, the law of State immunity continues to place a significant obstacle to the effective implementation of mixed arbitral awards.10 What exacerbates this problem is that legislators, judges, and commentators alike wrestle with the current set of criteria under and by which immunities should be recognised or denied.11 As such, the perception of arbitration's transportable enforceability may be fatally flawed in a situation where the foreign private party aims to execute an arbitral award against a recalcitrant State. After all, when immunity from execution allows States to escape their consensually assumed obligations, and when it allows for the fruits of a favourable award to be withheld from claimants, the promise of arbitration becomes, quite simply, a false promise.12 The problem of execution immunities, however, should be distinguished from the related but already resolved question of immunity from jurisdiction. As far as the latter is concerned, the position is clear: a State's consent to arbitration constitutes an implied waiver of any jurisdictional immunity.13 10 The  Alternatively, a better view might well be that there is -by default -no jurisdictional immunity in the context of arbitration, and that speaking of a 'waiver' is therefore misplaced.14 The reason for this is that arbitrators do not exercise their jurisdiction the way domestic courts do: arbitral jurisdiction is a creature of consent and a tribunal should consequently not be treated as a court at the seat of arbitration. If one further characterizes recognition proceedings before domestic courts as being concerned with the arbitral award itself, rather than with the State against which it was rendered, the exercise of such jurisdiction would also leave immunities out of play. Many, by contrast, argue that upholding a State's immunity from execution is 'entirely practical' because, while proceedings leading to a judgment produce 'no immediate hindrance' to the conduct of State affairs, the eventual execution will involve a 'use of force against a foreign state by the seizure of its assets' .15 In the context of arbitration, however, it can be argued that this argument is no longer compelling. Rather, an agreement to arbitrate should ultimately have the effect of waiving immunity from execution as well.
Although far too few commentators, much less judges, view the implied waiver of execution immunities as a favourable solution, it is a real possibility in the contractual context and under the auspices of the New York Convention. Building on this, the present article shows how the separate enforcement mechanism of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States ('the ICSID Convention' or 'the Convention') can be read to align with the implied waiver we propose here. An initial reading of the literature may lead one to believe that participation in the ICSID Convention cannot be interpreted as an implied waiver of immunity from execution because the Convention specifically preserves said immunity.16 But as will be seen, the provisions that do so are also considered to be 'the Achilles heel' of the International Centre for Settlement of Investment Disputes (ICSID) system.17 Against this background, it may be opportune to examine whether an implied waiver of execution immunity can be made compatible with ICSID arbitration, and, if so, whether it may convince domestic courts to change their practice and to lift the execution immunities of foreign States in the arbitral context. In order to answer those questions, this article will first describe the Convention's regime on the recognition and enforcement of awards (Section 2). It will then turn to the problem of execution which has entered the system as a result of the mixed juridical structure it inevitably requires (Section 3). From this, a principled conclusion will be drawn about the system's compatibility with an implied waiver of execution immunity (Section 4). Finally, this article will set out the distinction between recognition and enforcement, on the one hand, and execution, on the other, and discuss why this causes domestic courts to reject the possibility of an implied waiver of immunity from execution (Section 5).

The Recognition and Enforcement of ICSID Awards
If the recognition and enforcement of arbitral awards under the New York Convention is usually rooted in a national law on arbitration, the ICSID Convention, by contrast, 'provides for a comprehensive, self-sufficient system of truly international arbitration' .18 The Convention, seeking to maintain a careful balance between the interests of investors and those of States, prevents domestic courts from asserting jurisdiction or from taking any other action that might interfere with the autonomous and exclusive character of ICSID arbitration procedures. However, while the drafters of the Convention established an exclusive and closed jurisdictional system, insulated from national law, they were faced with the fact that awards resulting from ICSID proceedings would involve parties belonging to different juridical spheres, and that the Convention inevitably required the judicial assistance of domestic courts to recognize and enforce those awards.19 As such, the sole exception to this 'rule of abstention' and, thus, the sole role assigned to domestic courts relates to the recognition and enforcement of awards.20 In this regard, special attention needs to be given to Articles 53, 54 and 55. The first of these articles addresses the binding force of an ICSID award.21 In fact, the language used in Article 53 is nothing but a restatement of the principles of pacta sunt servanda and res judicata.22 Their implementation into the Convention was dictated by a lingering doubt as to the unqualified acceptance of these principles in State practice. And understandably so, since States often questioned or denied the binding force of international undertakings between States and foreign private parties. As losing State parties in State-to-State arbitration had sometimes refused to comply with an award, it was suggested during the Convention's initial discussions that the binding force of arbitration agreements should be recognized in an intergovernmental agreement.23 This suggestion -to recognize the binding force of an arbitration agreement and, as a necessary consequence, the binding force of an award under the Convention -was first formulated in the Working Paper in the Form of a Draft Convention.24 One of the provisions of the Draft Convention stated that an 'undertaking to have recourse to arbitration constitutes a legal obligation and must be carried out in good faith' , while another addressed the parties more specifically, stating that the 'award shall be final and binding on the parties [and that] each party shall abide by and comply with the award 19 See immediately' .25 Though it is true that these two provisions overlap in part, the former enunciating a principle and the latter a specific rule, the binding force of an award, as well as the consequent rule mandating compliance with it, have found expression in all subsequent drafts leading to the Convention.26 Once the Convention had removed any doubt as to the legally binding character of both agreement to arbitrate and award, there was no reason to believe that States would not abide by them.27 Although the legislative history acknowledges the effect of the doctrine of State immunity on the enforcement of awards, there seemed no need to exaggerate the importance of this problem. As Broches put it, the difficulty concerned 'the implementation of agreements to arbitrate rather than refusal to comply with an award once rendered' .28 Besides, in the unlikely event that a State would fail to comply with an award rendered against it, the Convention backed up the binding force of the award with two types of legal sanctions. First, investors could seek the diplomatic protection of their own government and, second, that government could bring an international claim before the International Court of Justice.29 However, as noted by certain Executive Directors, this highlighted a lack of balance; whereas private parties could ensure compliance through the international sanctions under the Convention, a State could not do the same when its private counterpart refused to comply. It was this imbalance, rather than the fear of State non-compliance, that made it necessary to create a special enforcement regime for Convention awards. 30 Article 54, which is one of the Convention's key provisions and one of its most striking innovations, provides for exactly this. It provides for the recognition and enforcement of ICSID awards by the courts of all State parties to the Convention.31 Though it was intended to give recourse against defaulting private parties (ie States would be the main beneficiaries), Article 54 does not distinguish between the enforcement of awards against private parties on the one side, and States on the other.32 Moreover, the obligation to recognize and 'Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought' . 39 art 55 reads as follows: 'Nothing in Article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution' . See also Broches (n 19) 328 (Article 55 provides that 'the rules concerning sovereign immunity from execution that are found in the national law of the enforcing jurisdiction remain applicable' .). to change' the contracting States' domestic laws in relation to immunity.40 Here, two important distinctions need to be made. First, this provision only applies to immunity from execution; the immunity from jurisdiction does not at all arise in the context of the Convention.41 Second, Article 54 rather than Article 55 governs the recognition of an award by a domestic court. Under the combined force of Articles 54 and 55, the law of the enforcing State governs only execution.42 Therefore, State immunity cannot be called upon to thwart the recognition of an ICSID award, but will only come into play when actual measures of execution are taken to enforce an award's pecuniary obligations.
Some, on the other hand, have regretted the express provision. Their argument is that the concern for effectiveness -to which the Convention bears witness -is strongly counter-balanced, if not eliminated, by the room given to the operation of immunity from execution. To Broches, '[t]hese critics overlook the fact that Article 55 does no more than acknowledge State practice as regards immunity from execution. Accordingly, the scope of Article 54 will evolve along with State practice' .43 To give an example of such criticism, the note written by Professor Oppetit may be highlighted: 'if one may explain the insertion of such a reservation by the concern to facilitate the ratification of the Convention by States, one must on the other hand dread the lack of effectiveness of which the awards may as a result suffer' .44 However, this note is misleading in two ways: the first is the failure to recognise the crucial importance of Article 53 and the corresponding idea that Article 54 forms the basis for enforcement against States especially, and the second is the suggestion that Article 55 constitutes a reservation.45 As Broches clearly explains, the provision 'merely acknowledges the existence of a principle of public international 40 Broches ( law that would govern unless waived … Article 55 was no more than a clarification of what would have been the case in any event' .46 Importantly, however, Oppetit's explanation for the Article's adoption, namely, that it would facilitate ratification of the Convention by States, does hold to some extent.47 Undoubtedly, any attempt to include a multilateral waiver of immunity from execution 'would have run into the determined opposition of developing countries and would have jeopardized the wide ratification of the Convention' .48 Moreover, the suggestion that the Convention were to provide for exactly such an implied waiver was raised only once and the question was barely discussed during the Convention's drafting.49 It was simply impossible at the time of drafting 'to deal with the problem in any significant way through a multilateral treaty' .50 The position that the law of State immunity should remain unaffected was therefore consistently supported and, as a result, the availability and extent of execution now depend entirely on the domestic laws -including those governing State immunity.
If the ICSID Convention, as suggested at the time of drafting, would remove any doubt as to the legally binding character of an agreement to arbitrate, there was no reason to believe that governments would not abide by such undertakings.51 Presumably, the problem as then perceived related to the implementation and enforceability of such agreements, not to the execution of resulting awards. That, however, seems to no longer track reality. Instead, many now acknowledge that the Convention's Achilles heel, its greatest weakness, is a problem of execution. Indeed, the room left by Article 55 for the operation of State immunity laws may be seen as a true flaw in the ICSID system. To illustrate this in more authoritative terms, 'the otherwise effective machinery of arbitration has its weak point when it comes to the actual execution against States of pecuniary obligations under awards' because 'the self-contained nature of the procedure, which excludes the intervention of domestic courts, does not extend to the stage of execution' .52 46 ibid. 47 For a thorough discussion of the Convention's ratification, see Taylor

The Problem of Execution
The view that there is no need to exaggerate the importance of State immunity may have been optimistic to begin with, but is, with the problem of execution immunities brought into the ICSID system, startling at present.53 The reasons for the tendency to do away with an absolute immunity from execution have been repeatedly stated.54 It is unnecessary, in this paper, to elaborate on these reasons in detail. However, the main source of opposition to execution immunity has been the realization that absolute immunity is obsolete and productive of injustice at a time when States enter the commercial sphere, extending their operations beyond political activity. Today, as a result of treaty, statutory and judicial developments, the restrictive doctrine of immunity has gained broad acceptance, especially in countries where the execution of arbitral awards is often sought. Described in simple words, this restrictive approach grants immunity from execution to a State's purely governmental properties, but not to State property with a non-governmental purpose.
The problem with execution based on this restrictive approach is that it relies on a distinction that seems impossible of definition and -given the varying approaches of domestic courts and the inconsistencies in their decisionsof application. The instances where the impact of execution immunities on ICSID awards has materialized show that the likelihood of a successful invocation of immunity from execution is high, and that award creditors should have no illusions as to the effective enforcement of awards by domestic courts. Following the award rendered in LETCO v Liberia, for example, execution against Liberian assets was sought before the US courts.55 The assets in question concerned various registration fees and taxes owed to the Government of Liberia as well as bank accounts of the Liberian Embassy in Washington DC. With regard to both types of assets, the US courts quashed the execution orders because the assets did not fall within the commercial activity exception for which the US Foreign States Immunities Act (FSIA) provides.56 These assets were, in other words, immune from execution because they were sovereign, and not commercial assets. With regard to the Embassy bank accounts in particular, the Court ruled that their incidental use for commercial activities 53 The in support of embassy operations 'did not deprive the entire bank accounts of the mantle of sovereign immunity' .57 The issue of execution also arose in France. In Benvenuti and Bonfant v Congo, attempts to execute against the assets of a Congolese bank allegedly controlled by the Government failed.58 After the Court of Appeal had held that the Convention limits the functions of a recognizing court to ascertaining an award's authenticity, and that the order granting recognition should not concern itself with immunity from execution, the Cour de cassation rendered its decision on the issue of execution. It ruled, in no uncertain terms, that the bank was a separate entity, with its own juridical personality, and that its assets could therefore not be attached in order to satisfy any claim against the Government.59 Execution efforts in another case, SOABI v Senegal, led to similar results.60 On the ground that a lower court's order of exequatur did not in itself amount to an act of execution, the Senegalese Government was ultimately entitled to its sovereign immunity.
Finally, in the decision of the English High Court in AIG Capital Partners v Kazakhstan, the broad immunity from execution of foreign central bank assets was decisive.61 The Claimants attempted to enforce an ICSID award by obtaining a third-party debt and ordering execution against assets held by various London banks but belonging to the National Bank of Kazakhstan. The High Court granted the National Bank's request to discharge the orders based on the UK State Immunity Act (SIA), which provides that '[p]roperty of a State's central bank or monetary authority shall not be regarded … as in use or intended for use for commercial purposes' .62 As a result of this wording, the English Court found that the question of the intended use of the central bank's property was irrelevant: if the central bank and the State of that central bank have an interest in the same property, 'the relevant property is immune … whether the property concerned is in use or intended for use for commercial purposes or not' .63 In effect, these decisions achieve the same result as those reached in the large number of cases that deal with the execution of non-ICSID awards.64 Though it is beyond the scope of this paper to provide an in-depth analysis of non-ICSID cases, an overview may be provided by the literature in supra n 10. By making it virtually impossible for investors to prove that State property is, or may be, used for commercial activities, 'these decisions restore, for all practical purposes and for the benefit of foreign States, the absolute doctrine of immunity that modern immunity rules are intended to supersede' .65 In the case of ICSID, as in other cases, it may thus become necessary -in order to overcome the burden of near-absolute execution immunities -to turn to waivers of immunity. When consenting to submit disputes to ICSID arbitration, parties have the opportunity to provide that the State involved waives its immunity from execution in connection with the enforcement of the award.66 Despite the many variations among legal systems, these waivers are most often required to be express.67 Short of earmarking specific assets for commercial purposes, there is thus no complete assurance that this type of waiver will always accomplish its intended purpose.68 An important question, therefore, is whether submission to arbitration can be regarded as an implied waiver of immunity. As far as jurisdictional immunities go, an affirmative answer is given by most treaty and statutory provisions as well as judicial decisions. In some countries, however, certain jurisdictional considerations condition such a waiver upon the existence of a territorial or other nexus between the arbitration and the forum.69 With regard to immunity from execution, the clear and prevailing view in current practice is that, by consenting to arbitration, a State does not waive this immunity. In other words, renunciation by a foreign State to its immunity from execution must arise out of a separate, specific, and unequivocal consent.70 In this respect, the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property (UNCSI) deserves brief consideration, as it has aimed to assist in the transition of a law of State immunity based on the positions of the world's preferred forums to a more generally accepted law.71 Though it may seem improbable that the UNCSI will come into force in the near future, and though it remains debatable whether all provisions of the Convention reflect customary international law, it is relevant in the search for an international consensus on the fundamental questions of State immunity, 'bearing in mind [their] day-to-day practical importance' .72 Under the Convention's provisions, entering into an arbitration agreement will 'waive immunity from the jurisdiction of a court, but it will not waive a foreign state's immunity from execution against its assets' .73 So, for the sake of clarity, whether it concerns pre-judgment or post-judgment measures of constraint, waiving immunity from execution under the UNCSI requires express consent by international agreement, by an arbitration agreement, or by a declaration from the State directly before the courts.74 But unless and until the UNCSI enters into force, it remains a proposed reflection of State practice, and, thus, the rules of State immunity as they have been developed in national courts and statutory provisions will continue to prevail. Some courts, however, have been willing to interpret consent to arbitration more broadly. In a sign that views on State immunity continue to change, these courts have taken a first step in holding that consent to arbitration implies a State's waiver of immunity from execution as well as from jurisdiction.75 In this context, no decision has taken the matter further than that of the French Cour de Cassation in Creighton Ltd v Qatar.76 The case involved the execution of an award under the ICC Rules against Qatar, after it expelled Creighton from a construction project. The Court relied on Article 24(2) of the 1988 ICC Arbitration Rules, and recognized that an agreement to arbitrate under these rules constituted not only a waiver of immunity from jurisdiction, but also a waiver of immunity from execution.77 Though the Court ruled on an arbitration agreement under the ICC Rules, its solution was broad enough to cover agreements referring to any arbitration rules containing a similar obligation.78 In support of this, Lady Hazel Fox has suggested that arbitration agreements under rules such as those of the ICC or commitments to other instruments, which impose obligations on parties to honour an award rendered, argue for 'an even stronger case of implied waiver of immunity from execution of the award' .79 French commentators, however, have long been divided as to the wisdom, legal grounds, and scope of this liberal solution.80 So, '[t]hough welcomed as honouring the principle of good faith and strengthening resort to arbitration, it has been criticized as contrary to the earlier ruling of the Court of Cassation in Eurodif, and as undermining the requirement that waiver of immunity be express and certain' .81 As things stand now, these cases, which significantly rely on the principle of good faith and recognize the possibility of a double waiver, are still the exception to the rule. The view that immunity from execution is a separate affair, even when States consent to arbitration, continues to dominate the practice.82 In addition, the argument is normally presented in a contractual context and under the auspices of the New York Convention; in the context of ICSID arbitration, the argument for an implied waiver of execution immunities is normally rejected.83 Understandably, this problem was impossible to deal with at the time of drafting the Convention. Any attempt to lay down a multilateral rule of waiver of immunity from execution 'would have encountered objections from all sides' .84 And admittedly, the solution suggested here, 80 See namely, the assimilation of a foreign State's agreement to ICSID arbitration with a waiver of its immunity from execution, appears on the face of it to be far-reaching and drastic. Yet, the harsh reality for creditors of ICSID awards is that they are burdened with an unworkable immunity doctrine and with a system that preserves it.

A Principled Call for the Implied Waiver
The following conclusions may provisionally be drawn from what has been said in the preceding sections of this paper: (1) the Convention prevents domestic courts from taking any action that might interfere with the exclusive and autonomous character of ICSID arbitrations, and requires them to treat awards rendered pursuant to it as a final judgment; (2) this comprehensive and self-sufficient system does not, however, extend to the execution of such awards, which leaves the availability and extent of execution completely dependent on the domestic laws of State immunity; (3) in so far as these two stages are separated, the general problem of execution immunities enters the Convention and -given the unworkable nature of the restrictive approachcan be pointed to as the system's true Achilles heel; and (4) it has already been suggested outside the ICSID system that a realistic solution to this problem would be to interpret a State's consent to arbitration as an implied waiver of its immunity from execution. The practical consequence following from these conclusions would seem to involve acceptance of that same solution, and to justify a call for recognition of the implied waiver of execution immunities in the context of ICSID arbitrations. Though many believe it to be impossible due to the Convention's preservation of the immunity doctrine, this end can be achieved by a departure from the existing practice of domestic courts or, what is one and the same thing, by a change in their view of State immunity laws.85 This contention 85 The argument is, in effect, to shift the default position: consent to arbitration should be deemed a clear evidence of waiving immunity from execution -that is, unless this presumption can be rebutted. Additionally does not have to be perceived as 'an undue predominance' of the protection of private justice over the dignity and sovereign authority of States; it should rather be seen as 'the reasonable consequence of the legal -and moralobligation to respect the rule of law to which the sovereign itself defers' .86 In that direction, so far as contractual arbitration agreements under the New York Convention are concerned, reasons have been given why, subject to certain safeguards, domestic courts can be incited to further encroach on the execution immunities of foreign States.87 It may now be convenient to outline the principled reasons why this can also be done under the ICSID system. Firstly, the Convention neither grants nor confirms immunity. The statement in Article 55 is purely negative. This must mean two things. First, as has already been discussed, the availability and extent of execution depends on the domestic law and its application by the courts. An award becomes a final judgment by virtue of the self-sufficient ICSID system but, like other judgments, it will only be executed to the extent that immunity from execution is not granted or that execution is limited under the local law of the State where it is sought.88 The second -more important -consequence of this negative formulation is that it does not freeze the local laws on State immunity.89 The Convention's drafter has explained that 'Article 55 does no more than acknowledge state practice as regards immunity from execution. Accordingly, the scope of Article 54 will evolve along with state practice' .90 To the extent that immunity from execution evolves over time, the possibilities for the execution of ICSID awards against States evolve as well. So, the Convention may safeguard the operation of domestic law recognizing immunity from execution, but it cannot prevent that law from undergoing changes.
Secondly, as the Convention allows for such change to occur, the competing interests of State sovereignty and private justice can be more readily accommodated than they currently are -both in judicial decisions and in legislation. As was successfully argued in respect of jurisdictional immunities, it is undeniable that an absolute rule of immunity from execution is incompatible with 86 Carlo the subjection of a sovereign State to the rule of law.91 As to its alternative, considering the wide coverage of the shift towards a restrictive approach, it suffices to say that there is no consensus in current State practice as to the proper characterization of governmental and non-governmental activities. In fact, as Brownlie rightly observed, there is a logical contradiction in seeking to distinguish them: 'the concept of acts iure gestionis, of commercial, nongovernmental, or less essential activity requires value judgments, which rest on political assumptions as to the proper sphere of state activity and of priorities in state policies' .92 Hence, the many accounts of issues arising out of this commerciality exception illustrate that it may have been right to say that an approach based on this distinction is impossible of definition and, therefore, of application.93 That is why the question of whether 'the uncertainty by [domestic court] decisions, the inconsistencies, and the resulting absence of an ascertainable standard capable of general application ought to be perpetuated' should, persuasively, be answered in the negative.94 That is not to say, however, that these problems under the restrictive approach are to be disregarded altogether. But in the context of international arbitration, the law on execution immunities should -and can -be placed on a footing different from both the absolute doctrine and the existing concession that subjects investors to an unworkable distinction. The call for an implied waiver, if accepted, would do away with the presumption of State immunity and, as such, it would do away with the effectively absolute barrier to execution. An implied waiver would effectively shift the default position and create more transparency: consent to ICSID arbitration should be deemed to constitute clear evidence of waiving immunity from execution -that is, unless this presumption can be rebutted by the State.
It would be cynical to defend a State that 'screens itself behind the shield of immunity in order to defeat a legitimate claim' , but a balance or safeguard can nevertheless be struck with regard to the dignity of foreign States. of accepting the restrictive approach as a sole and sufficient basis for future law, it would be preferable to salvage from it what appears to be sound and practicable. One could argue that the rules needed to achieve this, namely, that certain categories of State property must remain non-executable, is already in place. Practically every legal system accepts that, for example, warships and other military property, central bank property, and the property in use by diplomatic missions are given a reinforced immunity.96 With the interest of States in mind, the reinforced immunity would be a proportionate and already accepted limitation to the scope of the solution proposed, as it places a burden of proof on the States, while providing them with all the dignity and protection they can legitimately and in good faith expect when they have agreed to arbitrate and to abide by the resulting decision.97 Thirdly, in order to successfully call for an implied waiver of execution immunities under the ICSID Convention, such waiver, too, must be derived from a State's consent to arbitration. When considering the opposing view, it must now be clear that, though immunity is preserved, its availability and extent may evolve over time. The other element on which the main opposition rests is that participation in the Convention cannot be interpreted as an implied waiver.98 This, admittedly, is true. Participation, on the part of a contracting State, is 'only an expression of its willingness to make use of the ICSID machinery' .99 It does not, as such, constitute an obligation to use that machinery. As a matter of fact, a State would be perfectly free to sign the ICSID Convention without ever intending to refer to it. In this respect, the importance of consent to the arbitration itself -in addition to the State's consent to the ICSID Convention -cannot be overemphasized.100 Only after a State 96 In particular relation to embassy bank accounts, see the following: specifically agrees to submit itself to arbitration under the Convention can the obligation to make use of its machinery arise.101 To say of arbitration that it is consensual is of course commonplace. A claimant initiates arbitration because it has agreed with the defendant to resolve any dispute between them accordingly. The ICSID Convention, too, was intended to serve this traditional vision: for parties to submit to arbitration, Article 25 requires them to 'consent in writing' and holds consequently that, once they have given their consent, 'no party may withdraw its consent unilaterally' .102 Yet, in the world of investment arbitration, parties need not have a direct contractual relationship to establish an agreement to arbitrate. Even without a contract, the State may have previously given its consent through either a unilateral promise contained in a national investment law or provisions in bilateral and multilateral investment treaties. This principle, namely, that national investment legislation or treaty may contain an 'offer to arbitrate' is well-known.103 However, it bears repeating that, on its own, the offer does not constitute an agreement to arbitrate; the private investor must still accept it. By simply initiating the ICSID arbitration, the investor is able to formally manifest its consent. Only then is there 'a perfected agreement to arbitrate between a qualified investor and the host state' .104 The essence of such direct action is that it allows the true claimant to face the true defendant. Consent to ICSID arbitration therefore has the immense merit of clarity and realism, which are obvious prerequisites of confidence in the legal process.105 The aim, as illustrated by Paulsson, is not to take anything away from States, but to ensure there is faith in their promises: 'The objective is not arbitration that favors the foreigner, but one that simply favors 101  neutrality' .106 By contrast, the idea of a neutral arbitration does not always correspond with reality. In practice, it can so happen that creditors of ICSID awards, having put all their efforts in the arbitration and in securing an order to enforce the favourable award, are left empty-handed when States claim their immunity from execution.107 Even in those States where the restrictive doctrine, based on the distinction between governmental and non-governmental matters, is applied -that is, if these tests are functional at all -it appears to favour States. The paramount consideration of neutrality is, in other words, overshadowed by an archaic deference to State immunity. So, unless the position of investors improves by way of a general waiver of immunity implied from consent to arbitration 'the main principle governing the commercial world, pacta sunt servanda, will always and undoubtedly be violated, and this confused and confusing situation will be perpetuated' .108 Therefore, once a State agrees to arbitration, 'it must be deemed to have accepted all its consequences, including compliance with an unfavourable award' .109 Put differently, consent to arbitration should ultimately have the effect of waiving immunity from execution; it is nothing but an application of the principle of pacta sunt servanda.

5
Is There a Way Forward?
Based on the observations above, an implied waiver of execution immunities can be made compatible with ICSID arbitration -something which in itself is an important conclusion. As a preceding section supports in more detail, Article 53 'establishes a complete parallelism' between, on the one hand, the legally binding nature of the arbitration agreement and the obligation to comply with the award, and 'the possibility of the enforcement of that obligation through domestic courts' , on the other.110 Thus, a use of the Convention's enforcement mechanism inevitably means one of two parties to the arbitration has failed to comply with its obligation. But it was assumed at the time that States would comply. The current problem of execution immunities produces results that, when it comes to the effectiveness of ICSID awards, were not intended nor foreseen by the drafters. Fortunately, in inciting domestic courts to broaden their interpretation, '[t]he obligation of governments to abide by awards remains unaffected by the limitations on their forcible execution' .111 It is, in other words, the international origin of the system that must take back all its importance.112 Admittedly, however, such a change in the interpretation of domestic courts has not yet taken place. As things stand now, the view that immunity from execution is a separate affair, even when States consent to arbitration, continues to dominate the practice.113 The instances in which courts have recognized the possibility of a double waiver remain the exception to the rule.114 Entering into an arbitration agreement will, in other words, 'waive immunity from the jurisdiction of a court, but it will not waive a foreign state's immunity from execution against its assets' .115 The current reluctance of domestic courts to expand the scope of existing restrictions of State immunity seems to be grounded in political and economic considerations, and is part and parcel of the various conceptualizations of a restrictive approach.116 It is, in that respect, a reflection of the idea that the pronouncement of a judgment is much less of an interference with a foreign State's freedom to manage its own affairs than is enforcement against its property.117 The reluctance to change may also be explained in part by the prevailing distinctions between 'recognition' , 'enforcement' , and 'execution' .118 The three terms are often used interchangeably in practice, though they describe 111  distinct steps in the final phases of the arbitral process.119 Some, for example, assimilate 'enforcement' to 'recognition' and use the terms more or less synonymously.120 However, even those with the most intimate knowledge of the Convention's drafting are not entirely clear on the subject. As noted by Schreuer, Broches seems in one place to suggest that enforcement covers both recognition and execution, while dismissing that idea in a different context.121 That is not to say that the different uses are inherently correct or incorrect, but categorising these terms is a necessary step in the search for an accurate and coherent understanding of the arbitral process and the place State immunities have therein.
Recognition is generally accepted to be the stage in the process that accords res judicata to an award and that precedes enforcement.122 Yet, when it comes to the stage of enforcement, there is disagreement as to whether -for the purposes of the ICSID Convention -it is the same as execution, or whether there exists a distinction between these stages.123 A notable example of the former view is presented by Schreuer, who argues that enforcement and execution are identical under the Convention. 124 Broches, on the other hand, makes a distinction between the two, holding that a slightly different formulation of the Convention 'would have brought out more clearly the distinction between enforceability which is governed and decreed by the Convention and its implementation by execution which is governed by domestic law' . 125  commentators have since followed this position and separate enforcement from execution. As such, '[t]he two terms -recognition and enforcementtend to be used in a single phrase that broadly refers to all steps leading up to, but stopping short of, actual execution of an award' . 126 To a similar effect, many court decisions have found a distinction between the enforcement and the execution of ICSID-awards.127 In Benvenuti and Bonfant, for example, the investor turned to the French courts in an attempt to have a favourable award enforced and executed against the recalcitrant State party. At first instance, the Tribunal de grande instance of Paris granted an order of exequatur, which contained the following restriction: 'No measure of execution, or even a conservatory measure, shall be taken pursuant to the said award, on any assets located in France, without the prior authorization of this Court' .128 Claimants thereupon seized the Court of Appeal, which reformed the earlier decision by deleting the above-quoted limiting language.129 On appeal, the Court held that an order granting recognition is not in itself an act of execution, and that the lower court had thus exceeded its authority by dealing -at that stage of the proceedings -with matters of immunity from execution.130 More specifically, after quoting Article 54, the Court held that the restriction made in the order should be deleted since it was directly contrary to the simplified proceedings laid down under this provision of the ICSID Convention. 131  Courts in the United States, too, have been presented with the issue of recognition and enforcement of ICSID awards. 133 In the case of LETCO v Liberia, the Liberian Government moved to vacate the judgment entered by the Federal District Court for the Southern District of New York or, in the alternative, vacate the order of execution permitting LETCO to begin enforcing that judgment. 134 The Court, however, denied the motion to vacate. First, it reasoned that Article 54 of the Convention obliges the United States -as it obliges any other contracting State -'to recognize and enforce the pecuniary obligation of the award' .135 Second, the Court held that 'Liberia, as a Convention signatory, waived its sovereign immunity with respect to recognition of any arbitration award entered pursuant to the Convention' , because, third, having regard to Article 54, 'Liberia clearly contemplated the involvement of the courts of any of the Contracting States, including the United States as a signatory to the Convention, in enforcing the pecuniary obligations of the award' .136 These court decisions draw a clear distinction between the recognition and enforcement of awards, on the one hand, and their actual execution, on the other. To that extent, there is no State immunity with respect to the recognition or enforcement of an ICSID award, and issues of immunity from execution can only arise under Article 55 when actual execution measures are taken.137 As a matter of great practical significance, and regardless of the exact definitions given to the different enforcement stages, the combination of Articles 54 and 55 means two things: first, a recognized ICSID award becomes a valid title on whose basis measures of execution can be taken, provided, second, that where such measures are directed at State property, execution is possible under the law of the contracting State in which execution is sought.138 A distinction that is intimately linked -if not the same in this context -is the distinction between jurisdictional immunity and immunity from execution.139 In so far as one accepts the predominant tendency in domestic and international practice that a waiver of execution immunity is required to be express, 'it becomes self-evident that a waiver of the immunity from jurisdiction, whether express or implicit, does not in itself mean that the State has also waived its immunity from execution' .140 It becomes clear, in other words, that when a State enters into an ICSID arbitration agreement, it waives any jurisdictional immunity with respect to the enforcement of the resulting award, but keeps its immunity from any measures of execution.
Although these distinct regimes explain the reluctance of domestic courts to follow the interpretation of an implied waiver, it does not make the question of its possibility less relevant.141 If anything, the preceding sections have highlighted a renewed emphasis in scholarship and in case law on the question of State immunity in international arbitration. While it is beyond the scope of this article to examine in more detail why the possibility of an implied waiver has not led to a broader acceptance thereof, a few remarks are in order. First, most analyses of execution immunity focus on the nature of a foreign State's assets along the lines of the restrictive doctrine, and much less attention is paid to the nature of the forum State's exercise of such execution jurisdiction.142 This, however, is slowly changing. For example, though the concept of jurisdiction was traditionally considered purely a question of the rights and powers of States, it has been suggested that it requires reconceptualization.143 Moreover, in light of international arbitration more specifically, this reconceptualization continues to be subject to two contrasting and incompatible readings -the first reflecting arbitration as a form of alternative dispute resolution backed up by domestic courts but lacking any normative power of its own; the second implying an international and separate form of ordering, alongside and competing with domestic courts.144 Finally, and closely related to this reconceptualization, the broader developments in State immunity law and international adjudication indicate a willingness of domestic courts to prioritize the autonomy of arbitration over the immunity claims brought before them. Together with other second-generation adjudicatory mechanisms, ICSID arbitration has contributed significantly to the development of the field of modern State immunity laws.145 Yet, as mentioned above, remarkably little attention has been devoted to the rules governing the execution stage of the arbitral process as distinct from the execution stage of the judicial process. It remains to be seen whether or not a growing practice in relation to execution jurisdiction will suggest, as a separate matter from the execution of courts' judgments, a natural extension of a domestic court's power to enforce an arbitral award.146

Conclusion
Interpreting consent to arbitration as an implied waiver of immunity from execution should be seen as the reasonable consequence of legal obligations which the State voluntarily undertakes. Yet, while the system of mixed arbitration ultimately depends on domestic courts for the enforceability of awards, these courts are caught in a past where deference to immunity claims thwarts the objectives of the system. Such is the weight of history on the law of State immunity. No matter how justified such deference may seem in the short run, it comes at a heavy cost: '[i]t acts to increase moral hazard and to create disincentives for further transboundary investments, thus undermining one of the major political and economic goals of the international system' .147 The problem of immunity from execution, therefore, can no longer be ignored. Though the drafters of the Convention may not have been able to foresee it, the many accounts of issues arising out of the doctrine clearly indicate its current practical relevance. Notably, several domestic courts have taken a praiseworthy first step in holding that consent to non-ICSID arbitration implies a waiver of immunity from execution. A similar judicial development could also take place in the specific context of ICSID arbitration. Notwithstanding the well-rehearsed objections, the relevant provisions do not make an implied waiver incompatible with the Convention. Rather, the possibility of the implication relies on three principles: the impracticability of both the absolute and the restrictive doctrines of State immunity; the primacy of arbitration's consensual nature; and the origin, purpose, and obligations imposed by the Convention read as a whole.
Though the implied waiver of execution immunities remains rare in this as in other contexts, and though it may take time for this interpretation to gain enough traction, the necessary room for change is clearly there. The approach that has prevailed up to now is grounded in political and economic considerations and is increasingly fragmented. As such, its preservation weakens the international rule of law and the effectiveness of arbitral awards. That is why the nature of the execution stage and the waiver mechanism more specifically needs further exploration. The Convention has intentionally left the execution of awards outside its scope, assuming that States, given their dignity and legal obligations, would comply as a matter of course. More importantly, nothing in the Convention prevents the laws of State immunity from evolving over time. If domestic courts want to prevent a return to the situation that ICSID was intended to overcome, the weight of arbitration's autonomy should incite them to interpret consent as an implied waiver of the immunity from execution.

Biographical Note
Mees Brenninkmeijer is an associate with the Private Justice and the Rule of Law Research Group. He has obtained his LL.B. from the University of Amsterdam, where he currently pursues an LL.M. in public international law.
Professor Fabien Gélinas, Ad. E., is Sir William C. Macdonald Professor of Law at McGill University. Formerly General Counsel of the ICC International Court of Arbitration, he is a member of the Quebec Bar and acts as arbitrator, expert and consultant on dispute resolution and legal reform.