The enforcement of arbitration awards under the ICSID Convention presents unique challenges and opportunities in China. As a signatory to the ICSID Convention, China is obligated to recognise and enforce awards rendered by the International Centre for Settlement of Investment Disputes (“<span class="news-text_medium">ICSID</span>”). However, the practical application of these obligations, particularly concerning the execution of awards against state assets, involves navigating a complex legal landscape. This article examines China's legal framework for enforcing ICSID awards, exploring key aspects such as the role of Chinese courts, state immunity considerations and the methods available for executing ICSID awards.
The enforcement of ICSID arbitration awards in China operates under a complex framework that includes both international obligations and domestic laws. While China is a party to the ICSID Convention, no specific national legislation has been enacted to implement its provisions. Nevertheless, as a ratified treaty, the ICSID Convention forms part of Chinese law, making it unnecessary for China to introduce separate legislation.
Investment treaty arbitration, typically known as investor-state dispute settlement (“<span class="news-text_medium">ISDS</span>”), resolves disputes between foreign investors and host states concerning alleged breaches of investment protection agreements. The majority of such cases are heard under the ICSID Convention, which provides a neutral forum for resolving such disputes. Unlike other arbitration systems, ICSID arbitrations do not have a designated seat and national courts have limited jurisdiction over the proceedings.
Under Article 54 of the ICSID Convention, contracting states are obligated to recognise and enforce ICSID awards as binding, treating them as final judgments. The execution of these awards, however, remains subject to the laws of the state where enforcement is sought and specific national laws may affect how the awards are executed.
One of the key issues in enforcing ICSID awards in China is the doctrine of state immunity. While the ICSID Convention shields awards from review by national courts, it does not waive a state's immunity from execution. This means that enforcement of an ICSID award against state assets in China could be challenged by the host state's claim of sovereign immunity. China's approach to state immunity has evolved, particularly with introducing the Foreign State Immunity Law in 2024, which adopted a restrictive immunity model. This shift allows for exceptions where foreign state assets are used for commercial purposes, enabling the enforcement of ICSID awards against such assets.
The enforcement process in China begins with an application to the relevant court. Typically, a party seeking enforcement of a foreign arbitral award may apply to the Intermediate People's Court (“<span class="news-text_medium">IPC</span>”) in the jurisdiction where the debtor is domiciled or where the assets are located. While no specific court is designated for ICSID cases, general provisions for enforcing foreign arbitral awards are expected to apply.
The enforcement application must include the original or a certified copy of the ICSID award and any necessary translations, along with an identification certificate and power of attorney. The court will then decide on the recognition and enforcement of the award, subject to any objections raised by the party against whom enforcement is sought.
Although Chinese law does not provide explicit grounds for refusing enforcement of ICSID awards, the country’s courts will follow international treaties and the principle of reciprocity in handling such applications. Under the ICSID Convention, ICSID awards are typically enforceable without objection, provided that the relevant procedures are followed.
If a debtor fails to comply with the award, the applicant may seek an asset preservation order to freeze the debtor’s assets. This order is subject to the applicant providing security. Once an award is recognised, the court may issue an execution order that can include actions such as seizing or selling the debtor’s assets, including funds, stocks and other properties.
Until recently, China adhered to the doctrine of absolute state immunity, meaning foreign states were immune from both jurisdiction and execution in Chinese courts. However, with the enactment of the Foreign State Immunity Law in 2024, China has shifted to a more restrictive immunity model, which allows for exceptions in cases where foreign states engage in commercial activities. This law enables Chinese courts to recognise and enforce ICSID awards against foreign state assets used for commercial purposes.
The enforcement of ICSID arbitration awards in China remains a complex process, influenced by both international treaty obligations and domestic laws. While China has ratified the ICSID Convention, the lack of specific national legislation leaves some uncertainty regarding the practical application of enforcement procedures. However, recent developments in state immunity law suggest a more flexible approach, particularly in cases involving foreign state assets used for commercial purposes. As such, enforcement of ICSID awards in China is expected to be increasingly feasible, with a clearer path forward for parties seeking to execute these awards.
