Court rules on India’s arbitration immunity

In a landmark judgment handed down by the High Court of Justice in the Business and Property Courts of England and Wales on 17 April 2025, the court addressed critical issues regarding sovereign state immunity in relation to the enforcement of arbitration awards. The case, entitled "CC/Devas (Mauritius) Ltd & Ors v Republic of India," raised complex questions surrounding the applicability of United Kingdom’s State Immunity Act (SIA) in the context of international arbitration and India's obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).

The case arises from arbitration awards made in favour of the Claimants, which included CC/Devas (Mauritius) Ltd and other entities, against the Republic of India due to India’s alleged wrongful termination of a contract. The critical legal question was whether India's ratification of the New York Convention constituted a “prior written agreement” to the jurisdiction of English courts, therefore waiving its sovereign immunity in this case.

Central to the deliberations was Section 2(2) of the SIA, which stipulates that a state may waive its immunity if it has submitted to the jurisdiction of the courts by prior written agreement. India contended that mere ratification of the New York Convention could not be seen as such a waiver. In arguing its case, India articulated that the Convention’s wording does not expressly contain a waiver of immunity and instead upholds the state's right to sovereign immunity, particularly when stating that obligations are enforceable only “in accordance with the rules of procedure of the territory where the award is relied upon.”

Moreover, the judgment noted that India had reservations when ratifying the New York Convention, asserting that it would only apply to disputes considered “commercial” under Indian law, which the Claimants contended the arbitration awards did not meet. The court emphasised that the intrinsic nature of state immunity is a substantive matter, reflecting the state’s sovereign rights rather than merely a procedural barrier.

Furthermore, the court highlighted the importance of distinguishing between adjudicative and enforcement jurisdiction. The Claimants argued for the prompt enforcement of arbitration awards, free from delays induced by claims of state immunity. They underscored the extraordinary delays experienced in various jurisdictions related to the enforcement of arbitration awards.

In its concluding remarks, the High Court ruled that India had not submitted to the jurisdiction of the English courts by its ratification of the New York Convention, meaning that state immunity still applied in this instance. The court clarified that the consent to enforce awards must derive from a valid arbitration agreement, underscoring the necessity for a clear and express waiver of state immunity.

This judgement holds significant implications for international arbitration, particularly concerning how states navigate their sovereign immunity in the context of enforcing foreign arbitral awards. It reiterates the vital need for explicit agreements when engaging in international contracts and arbitration, illustrating how treaties like the New York Convention must be interpreted aligned with national laws governing state immunity. As countries increasingly engage in cross-border investments, this ruling serves as a critical reminder of the intricate balance between state sovereignty and investor rights on the international stage