A recent Court of Appeal ruling underlines the limits of the protection afforded by sovereign state immunity in arbitration proceedings. Ned Beale reports
Sovereign state immunity is a hot topic in international commercial arbitration, especially in the growing field of investment treaty disputes. Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] EWCA Civ 1529, [2006] All ER (D) 156 (Nov) is the latest judgment addressing this issue.
Svenska Petroleum Exploration AB (Svenska) attempted to enforce an arbitral award made in Denmark under the rules of the
International Chamber of Commerce (ICC) in England. The dispute arose out of a 1993 joint venture agreement (JVA) between Svenska and AB Geonafta (Geonafta) for the exploration of Lithuania’s Genciai oilfield. JVA, Art 9 provided that Svenska and Geonafta would submit all disagreements to either the courts of Lithuania, or ICC arbitration in Denmark. The government of the Republic of Lithuania (the state) was not a party to the JVA, but the JVA stated: “The Government of the Republic of Lithuania hereby approves the above agreement and acknowledges itself to be legally and contractually bound as
