English Commercial Court Rules That Assignment of ICSID Awards is Not Permitted

In a keenly awaited judgment, the English Commercial Court has ruled on appeal that ICSID and ECT arbitration awards are not assignable in the case of Operafund Eco-Invest SICAV plc and another v Spain [2025] EWHC 2874 (Comm).

In this article, we analyse the key issues involved in this case, namely:

1. the issue of estoppel;
2. the issue of assignment; and
3. the effect of registration of the Award in accordance with the Arbitration (International Investments Disputes Act) 1966. 

Notably, the Federal Court of Australia decided at a similar time a similar assignment issue involving overlapping parties, but decided in that case that the award could be assigned (the judgment is subject to appeal). Our Australian colleagues comment on this case in this edition of the IAQ. 

Background

Between 2008 and 2009, Operafund Eco-Invest SICAV PLC and Schwab Holding AG (together, Operafund) invested in a number of solar energy plants in Spain, allegedly relying on representations made on behalf of Spain with respect to minimum tariffs and other incentives to be extended to renewable energy projects in Spain.

Operafund subsequently commenced ICSID arbitration proceedings against Spain whom it alleged had breached the terms of the Energy Charter Treaty 1994 (ECT) by passing legislation which revoked relevant tariffs and incentives causing Operafund substantial loss. Operafund obtained a favourable award against the Kingdom of Spain in the sum of €29.3m (the Award).

Operafund, as existing claimants, and Blasket Renewable Investments LLC (Blasket) brought an application to substitute Blasket as claimant in the proceedings under English Civil Procedure Rule 19.2(4)(a), which provides that a court can order a new party to be substituted for an existing party if the existing party’s interest or liability has passed to the new party. The application was brought on the basis that Blasket and Operafund had entered into an Assignment Agreement dated 31 January 2024 by which Operafund sought to assign its interests in the Award to Blasket. Spain opposed the application on the ground that the Award is not assignable as a matter of international law.

As mentioned, a similar issue had previously arisen between Blasket and Spain in proceedings brought before the Federal Court of Australia (the Australian Proceedings).¹ In the Australian Proceedings, the Federal Court of Australia resolved the assignability issue against Spain and granted the claimants’ substitution application. The ruling of the Australian Proceedings remains subject to an appeal, and is analysed by our Australian colleagues on this edition of the IAQ.

The Estoppel Issue

The Operafund and Blasket (together, the Claimants) argued that the judgment in the Australian Proceedings created an issue of estoppel preventing Spain from arguing on the same point in this application.

In determining the estoppel issue, HHJ Pelling KC considered and applied the principles as summarised by Males LJ in Hulley² and Clarke LJGood Challenger³. Namely, that for an issue of estoppel to arise based on the judgment in the Australian Proceedings, the judgment needed to be fall within English law rules on the recognition of foreign judgments.

Spain contended that the Australian Proceedings judgment was not capable of being registered in England and Wales as the judgment was not final or binding and a final order had not yet been made. HHJ Pelling KC accepted this argument and concluded that the Claimants had failed to establish that Spain was estopped from putting forward arguments on the assignability issue because:

1. the judgment was not final and binding; and
2. by appearing in the Australian Proceedings to assert its state immunity, Spain had not submitted to the jurisdiction of the Australian Courts and therefore, section 33 of the Civil Jurisdiction and Judgments Act 1982 was not satisfied.

The Assignability Issue

The Claimants argued in the alternative that, if estoppel was not available, Spain’s objection to the assignability of the Award should be rejected on its merits.

The Claimants contended that, absent an express prohibition on assignment in either the ICSID Convention or the ECT, and given that there is no other applicable principle of international law prohibiting assignment, non-parties are entitled to seek recognition and enforcement of ICSID awards. Spain argued that, on its proper construction, the ICSID Convention precludes ICSID awards being assignable without the express permission of the relevant state.

HHJ Pelling KC found that there is no consistent practice establishing a customary rule of international law setting out whether or not rights under treaties or conventions are or are not capable of assignable.

HHJ Pelling KC next turned to examining the proper construction of the ICSID Convention and the ECT by reference to the rules of interpretation set out in the Vienna Convention on the Law of Treaties 1969, noting first that the ICSID Convention does not contain an express provision permitting or prohibiting the assignment of ICSID Awards.

The Claimants placed emphasis on the wording of Article 54(2) of the ICSID Convention (set out below) and submitted that the phrase “a party” is used without limitation and therefore a person, other than a party to the dispute, is entitled to seek recognition and enforcement of an ICSID award.

“(2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General.  (…)”    (emphasis added)

HHJ Pelling KC analysed the use of the phrases “the parties” or “a party” throughout the text of the Convention and found that this was used interchangeably with the longer form “party [or parties] to the dispute” where the context in which the phrases are used clearly show that they relate back to or mean the parties to the arbitration in issue.

It was also held that the requirement within Article 54(2) to furnish a copy of the award to the competent court or authority also suggested that it was not contemplated that any party, other than a party to the dispute, would seek recognition and enforcement of an award since on the face of the award it could be binding only on the parties mentioned therein.

Additionally, Spain submitted that Article 15 of the ECT was inconsistent with the notion that the ECT allowed the general assignment of claims, awards, or judgments. Spain argued that if these rights were freely assignable under the ECT or customary international law, there would be no need for a requirement that the relevant Host Party recognise an assignment. The judge accepted that this analysis was correct.

HHJ Pelling KC concluded that as a matter of construction of the ICSID Convention, awards made in ICSID arbitrations are not capable of assignment and there is no customary international law rule, which provides that such awards are either assignable or not assignable.

The effect of registration of the Award in accordance with the Arbitration (International Investments Disputes Act) 1966

Finally, HHJ Pelling KC was asked to consider whether the rights accrued to the claimant from the inception of these proceedings were assignable as a matter of English law.

The Claimants submitted that rights accrued by the claimant following registration of the award under Section 2 of the Arbitration (International Investments Disputes Act) 1966 were rights created pursuant to and governed by English law.

Spain contended that such registration of the award would not accord to the claimant rights that it did not otherwise have under the Award and therefore, rights arising as a result of registration are unassignable. HHJ Pelling KC found that registration under the 1966 Act was not intended to create new substantive rights and thus, the non-assignability of an Award would not be capable of change by registration.

Comment

This judgment casts some doubts over common market practice in assigning pecuniary interests in ICSID or ETC awards to third parties, as HHJ Pelling KC found that rights accruing under the ICSID or ECT award are personal and cannot be passed to a third party- and that this is not overwritten even where the award has been assigned.

In HHJ Pelling KC’s opinion, the English court should give effect strictly to the ICSID Convention’s framework and respect the decision of States to choose to arbitrate with specific investors, rather than the world at large.

1. the English Courts will not uphold the purported assignment of an ICSID or ECT award; and
2. the registration of an ICSID award will not create additional rights under English law, which can be assigned to a third party.

However, similar to the Australian proceedings, this Commercial Court decision is not the end of the saga. The case remains subject to appeal, and as HHJ Pelling KC observed, the judgment does not eliminate the secondary market for ICSID awards—it simply makes it less convenient. Blasket cannot enforce the award directly, but Operafund can still enforce it against Spain, while certain aspects of the assignment agreement between Blasket and Operafund continue to operate to help Blasket recover its investment.

Nina Armangue I Jubert, Trainee Solicitor, assisted in the preparation of this briefing.

Footnotes:

1. Blasket Renewable Investments LLC v the Kingdom of Spain [2025] FCA 1028.
2. Hulley Enterprises Ltd v Russian Federation [2025] EWCA Civ 108.
3. Good Challenger Navegante SA v Metalexportimport SA [2004] 1 Lloyd’s Rep 67.