Abstract

Investment arbitration is a game of two halves. The second half begins when a successful investor seeks to convert a favourable award into actual monetary compensation. When the state fails to voluntarily comply with the award, the investor is forced to avail itself of enforcement mechanisms. When faced with enforcement efforts by investors, states often exercise sovereign immunity to shield their sovereign interests. Sovereign immunity remains fragmented, and there is no uniformity in its scope of application or in the nature and manner of its waiver. This article analyses the Indian approach to sovereign immunity. In doing so, it argues against the implied waiver of immunity from execution, which appears to have been adopted by the High Court of Delhi in KLA Const Technologies v Embassy of Islamic Republic of Afghanistan. The article argues that (a) the High Court of Delhi failed to appreciate the distinction between the standards applicable to immunity from execution and immunity from jurisdiction; (b) the requirement of an express waiver of immunity from execution maintains a balance between the interests of parties from different juridical spheres, and efforts should instead be focused on streamlining the application of the restrictive theory of immunity to further India’s pro-enforcement outlook; and (c) there are alternatives available to direct enforcement that investors may resort to when faced with a legitimate sovereign immunity defence.