This report provides an in-depth analysis of the critical intersection between the doctrine of sovereign immunity and the practice of third-party funding (TPF) in international arbitration. It examines the fundamental conflict between a state's right to immunity and a funded claimant's ability to secure and enforce an arbitral award. Through a comparative analysis of legal frameworks, recent case law, and institutional rules, the report identifies the primary challenges—from jurisdictional disputes and security for costs applications to the significant hurdle of immunity from execution. It concludes by proposing a multi-faceted solution, including model treaty provisions and best practices for claimants, funders, and arbitrators, to foster a more predictable and balanced legal environment.

Sovereign Immunity, Third-Party Funding, International Arbitration, Investor-State Dispute Settlement (ISDS), Enforcement of Arbitral Awards, Immunity from Execution, Foreign Sovereign Immunities Act (FSIA), ICSID Convention, New York Convention, Security for Costs.

Legal Instruments and Institutional Rules

Arbitration (International Investment Disputes) Act 1966 (UK)

Arbitration and Mediation Act, 2023 (Nigeria)

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958

Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), 1965

Energy Charter Treaty (ECT)

Foreign Sovereign Immunities Act (FSIA) (US)

Foreign State Immunities Law (FSIL) (PRC)

IBA Guidelines on Conflicts of Interest in International Arbitration, 2014

IBA Rules on the Taking of Evidence in International Arbitration, 2020

ICC Rules of Arbitration, 2021

ICSID Arbitration Rules, 2022

Sheriffs and Civil Process Act (SCPA) (Nigeria)

State Immunity Act 1978 (SIA) (UK)

UNCITRAL Model Law on International Commercial Arbitration, 1985 (with 2006 amendments)

UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, 2014

Case Law

9REN Holding S.A.R.L. v. Kingdom of Spain, No. 19-cv-2907 (D.D.C.)

AES Solar et al. v. Kingdom of Spain (now Blasket Renewable Investments LLC v. Kingdom of Spain)

Alcom Ltd. v. Republic of Colombia AC 580

Antin Infrastructure Services Luxemburg S.à.r.l. & Energia Termosolar B.V. v. Kingdom of Spain, ICSID Case No. ARB/13/31

Border Timbers Ltd & Anor v. Republic of Zimbabwe EWHC 58 (Comm)

General Dynamics United Kingdom Ltd v. The State of Libya EWHC 472 (Comm)

Infrastructure Services Luxembourg Sarl v. Kingdom of Spain EWHC 1226 (Comm)

Infrastructure Services Luxembourg S.À.R.L. & Anor v. Kingdom of Spain EWCA Civ 1257

LETCO v. Liberia, 659 F. Supp. 606 (D.D.C. 1987)

LIAMCO v. Socialist People’s Libyan Arab Jamahiriya

Micula & Ors v. Romania UKSC 5

NextEra Energy Global Holdings B.V. v. Kingdom of Spain, No. 19-cv-1618 (D.D.C.)

NextEra Energy v. Spain, No. 23-7038 (D.C. Cir. 2024)

RSM Production Corporation v. Saint Lucia, ICSID Case No. ARB/12/10

Rusoro Mining v. Venezuela, Colombian Supreme Court, Judgment No. SC1453-2024

S&T Oil Equipment & Machinery v. Romania, ICSID Case No. ARB/07/13

South American Silver v. Bolivia, PCA Case No. 2013-15

The Schooner Exchange v. McFaddon, 11 U.S. 116 (1812)