Problems Concerning the Enforcement of Investment Arbitral Awards

When the host state does not comply with an investment arbitral award, the investor may seek to enforce it in another state. Given that the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, both of which have been ratified by nearly 150 states, obligate contracting states to enforce arbitral awards, these Conventions might be assumed to constitute effective enforcement mechanisms. However, in reality, the rules of sovereign immunity, which make the sovereign property of a state immune from execution in another state, have prevented the enforcement of investment arbitral awards. Furthermore, recent practice indicates that there is an expansive interpretation of what constitutes sovereign property and a restrictive interpretation of a sovereign immunity waiver. This is not a desirable development because it is contrary to investors' expectations. Japanese courts should not follow such practice, and the Japanese government should make further efforts to establish an effective mechanism for the enforcement of investment arbitral awards.