Robert Wyld, Consultant
Johnson Winter Slattery, Sydney
robert.wyld@jws.com.au

Jia Lee, Senior Associate
Johnson Winter Slattery, Sydney
Jia.lee@jws.co.au

In an increasingly global economy, transactions (and resulting disputes) commonly transcend borders. Recent Australian court decisions demonstrate a nuanced approach to disputes involving state parties, especially regarding the enforcement of arbitral awards and foreign state immunity. This approach impacts the recovery of assets pursuant to arbitral awards in Australia. This article considers the impact of several recent developments in superior courts in Australia involving state parties and the potential impact on asset recovery against them in Australia.^[1]

Key takeaways:

• Australian courts have demonstrated their stance as an arbitration-friendly jurisdiction by their willingness to recognise and enforce arbitral awards including as against foreign states;
• where States Parties have made commercial reservations as part of their treaty entry, Australia has no obligations to enforce awards that do not arise from commercial transactions;
• foreign state immunity will apply to separate entities of foreign states such as a national airline in insolvency proceedings;
• courts will scrutinise the nature and conduct alleged to constitute commercial conduct when considering whether the commercial transaction exception to foreign state immunity applies; and
• the practicalities of executing enforcement orders against claims of foreign state immunity remains challenging.

Australian state immunity

Under the Foreign States Immunities Act 1985 (Cth) (FSIA), there is a general immunity from jurisdiction for foreign states, ‘except as provided by or under this Act, a foreign State is immune from jurisdiction of the courts of Australia in a proceeding’.^[2] A ‘foreign state’ is defined as ‘a country the territory of which is outside Australia, being a country that is (a) an independent sovereign state; or (b) a separate territory (whether or not it is self-governing) that is not part of an independent sovereign state’.^[3]

This general immunity is extended to a ‘separate entity’ of a foreign state (section 22), which is defined in relation to a foreign state, as a natural person (other than an Australian citizen), or a body corporate or corporation sole (other than a body corporate or corporation sole that has been established by or under a law of Australia) who or that (a) is an agency or instrumentality of the foreign state; and (b) is not a department or organ of the executive government of the foreign state.

The FSIA also contains various exceptions to foreign state immunity, where a legal proceeding concerns^[4]:

• a commercial transaction (being a commercial, trading, business, professional or industrial or like transaction);
• an employment contract made in Australia or to be performed wholly or partly in Australia;
• the death of, or personal injury to, a person;
• an interest in property in Australia; and
• the bankruptcy, insolvency or the winding up of a company or the administration of a trust.

In relation to arbitrations, FSIA provides for an exemption from the general immunity in order that Australian courts can exercise supervisory jurisdiction over an arbitration, including for the recognition and/or enforcement of an arbitral award, wherever made.^[5] It has been in the context of arbitral awards that the more recent cases have been considered by the Federal Court of Australia up to the High Court of Australia.

Kingdom of Spain v Infrastructure Services Luxembourg Sàrl – waiver of foreign state immunity?

Until about 2012, Spain incentivised investment in solar and renewable energy. Investors including Infrastructure Services Luxembourg (the investors) invested in the Spanish renewable energy market. In 2013, the investors commenced proceedings against Spain under the Convention on the Settlement of Investment Disputes between States and Nationals of other States 1956 (‘ICSID Convention’) under the European Energy Charter Treaty (ECT).

The investors were successful in the arbitrations and thereafter, commenced proceedings in the Federal Court of Australia to recognise and enforce the awards in Australia. Spain argued that as a foreign state, it was immune the jurisdiction of Australian Courts under the FSIA. At first instance, the Court found that:

• the ICSID awards were binding on Spain; ^[6] and
• Contracting States of the ICSID must recognise and enforce awards as if those awards were a final judgment of the courts in those states and that in Australia, this is effected by entering a judgment on the award.^[7]

However, the Court distinguished the element of execution from recognition and enforcement. The Court stated that while Article 54 of the ICSID Convention imposed the obligation on Contracting States to enforce an award as though it were a judgment of the states’ courts, Article 55 also preserved any claim to foreign state immunity in relation to any steps to execute a judgment.^[8]

On appeal to the Full Court of the Federal Court of Australia, Spain argued that the proceedings brought by some of the investors were ‘recognition and enforcement proceedings’. Spain argued on appeal that Article 55 preserved its immunity from enforcement. The Full Court found that Spain had waived its foreign state immunity from recognition of the award by reason of entry into the ICSID Convention. However, the Full Court declined to make findings on whether Spain would be immune from enforcement or execution.

Spain obtained special leave to appeal to the High Court of Australia in Kingdom of Spain v Infrastructure Services Luxembourg Sàrl (Spain v Infrastructure Services). The key issue before the High Court was whether Spain had waived its foreign state immunity by reason of its entry into the ICSID Convention. Spain argued that any waiver of foreign state immunity on its part had to be express and had to be a clear and unambiguous act. According to Spain, entry into the ICSID Convention did not amount to a waiver, notwithstanding obligations under the ICSID Convention which required state parties to recognise and enforce arbitral awards.

According to the High Court:

• Waiver under the FSIA could be inferred or implied by the waiver being ‘derived from the express words of the treaty’.^[9]
• Spain’s waiver of immunity extended to both recognition and enforcement of the arbitral awards.
• The terms ‘recognition’, ‘enforcement’ and ‘execution’ within Articles 53–55 of the ICSID Convention are distinct concepts.
  • ‘Recognition’ is a court’s determination that an arbitral award is to be treated as binding.^[10]
  • ‘Enforcement’ obliges the Contracting Parties to enforce the pecuniary obligations of the ICSID award as if the award was a final judgment of the Contracting State.^[11]
  • ‘Execution’ is the means where a judgment enforcing an arbitral award is given effect which usually involves taking action against the property of the judgment debtor.^[12]

While the High Court rejected Spain’s arguments that Article 55 also safeguarded its immunity against enforcement, the High Court did not make findings in relation to execution against Spain’s assets in Australia with respect to the ICSID Convention in the Spain v Infrastructure Services decision. On a practical level, this High Court’s decision disappointingly leaves unanswered the all-important question of whether recovery by way of a writ of execution against assets of a foreign state in Australia is likely to be successful.

Republic of India v CCDM Holdings LLC

In contrast to the Spain v Infrastructure decision, the Full Court of the Federal Court of Australia in the Republic of India v CCDM Holdings LLC^[13] (India v CCDM), found that India did not waive foreign state immunity by entering into the 1958 New York Convention on the Recognition and Enforcement of Arbitration Awards (the New York Convention).

In India v CCDM, Mauritian investors held shares in an Indian telecommunications company, Devas, which was party to an agreement with an Indian-State owned enterprise of space segment capacity on satellites owned by India. In 2011, the Indian Government annulled the agreement with Devas. The investors then commenced arbitration against India and obtained an award against India under an investment treaty. In 2021, the investors applied to have the arbitral award recognised and enforced in Australia. India argued that it was immune from the jurisdiction of Australian courts under the FSIA.

At first instance in the Federal Court^[14] found that:

• India could not rely on foreign state immunity and that it had waived immunity by ratifying the New York Convention^[15] ; and
• the commercial reservation was not relevant because Australia did not make such a reservation and is the forum in which the recognition and enforcement was sought that was to be applied.^[16]

On 31 January 2025, on appeal, the Full Court found that^[17]:

• India’s commercial reservation was authorised by the Article I(3) of the New York Convention, and, as such, did not require subsequent acceptance by other Contracting States^[18];
• consequently, Australia had no obligation to enforce awards which did not arise from relationships that India did not consider to be commercial;
• when India’s ratification of the New York Convention was considered in conjunction with the commercial reservation, it was difficult to view India as having waived immunity with respect to awards which are outside that reservation as India had made it clear that it would not treat non-commercial disputes as being subject to the New York Convention^[19];
• this case was distinguishable from the High Court decision in Spain v Infrastructure Services as Spain had not qualified its entry into the ICSID Convention in the same way.^[20]

On 8 April 2026, the High Court of Australia unanimously found in favour of the Republic of India, overturning the lower court judgments, holding that the mere act of ratification of the New York Convention did not constitute a waiver of India’s foreign State immunity from jurisdiction for recognition and enforcement of a foreign arbitral award to which India is a party in the courts of other State parties to the New York Convention.^[21] The court found that the terms of the ICSID Convention (in the Kingdom of Spain cases where waived was upheld) were materially different to those of the New York Convention.

Greylag Goose v Garuda

In Greylag Goose Leasing 1410 Designated Activity Co v PT Garuda Indonesia Ltd,^[22] the High Court of Australia confirmed that a separate entity of a foreign state will be immune from bankruptcy, insolvency and winding up proceedings in the same way as the foreign state.

The Greylag companies leased aircraft to Garuda. Garuda is the national airlines of the Republic of Indonesia and is registered as a foreign company in Australia under the Corporations Act 2001 (Cth). Greylag commenced proceedings in the Supreme Court of New South Wales in Australia seeking that Garuda be wound up in insolvency. Garuda argued that the Supreme Court of NSW had no jurisdiction over it under sections 9 and 22 of the FSIA. Greylag argued that sections 14(3)(a) of the FSIA provided an exception to Garuda’s immunity as the winding up proceedings related to the dissolution of a corporate entity. Relevantly, section 14(3)(a) of the FSIA provided that ‘A foreign state is not immune in a proceeding in so far as the proceeding concerns … bankruptcy, insolvency or the winding up of a body corporate’ (emphasis added). Greylag was unsuccessful at first instance in the Supreme Court of NSW and on appeal to the NSW Court of Appeal.

On appeal to the High Court of Australia, Greylag contended that Garuda was exempt from foreign state immunity pursuant to section 14(3)(a) of the FSIA as the term ‘body corporate’ included all corporate entities, including the separate entity of a foreign state. Garuda argued that the term ‘body corporate’ excluded foreign states and or a separate entity of the foreign state. The majority of the High Court found that:

• ‘Body corporate’ referred to an entity that is distinct from the foreign state’s separate entity^[23];
• the exception in section 14(3)(a) of the FSIA only applies when the bankruptcy, insolvency and winding up proceedings concern a ‘body corporate’ that is distinct from the foreign state’s separate entity^[24];
• the purpose of section 14(3)(a) of the FSIA was to enable Australian court to adjudicate on the proprietary interests of all the interested parties, including the proprietary interests of a foreign state in bankruptcy, insolvency and winding up proceedings^[25]; and
• Garuda, being a separate entity of a foreign state and the subject of the winding up proceedings was entitled to immunity.

Greylag Goose v Garuda indicates that creditors of separate entities of foreign states should note that winding up proceedings in Australia may not be the best choice to recover debts from assets held by foreign states.

DHI22 v Qatar Airways Group QCSC

In DHI22 v Qatar Airways Group QCSC (No 2),^[26] the Full Court of the Federal Court of Australia confirmed a decision of the Federal Court of Australia, finding that foreign state immunity applied to Qatar Civil Aviation Authority (QCAA), which was a separate entity of Qatar.

By way of background, several women boarded a Qatar Airways flight bound for Sydney in Doha. The women were then directed to disembark the aircraft and subjected to invasive body examinations without their consent upon discovery of a newborn baby in the airport bathrooms. At first instance in the Federal Court of Australia, the Court found that foreign state immunity applied to QCAA as a separate entity of a foreign state, and that the commercial transaction exception in section 11 of the FSIA did not preclude the QCAA from foreign state immunity. Section 11 of the FSIA states that a foreign state is not immune in a proceeding as far as the proceeding concerns a commercial transaction.

The Full Court of the Federal Court of Australia agreed with the decision at first instance and recognised that:

• the QCAA has prima facie foreign state immunity under section 9 of the FSIA, as a separate entity of Qatar;^[27] 
• the QCAA’s conduct in the alleged participation in, or failure to prevent the police and Qatari authorities’ conduct in body examinations, could not be characterised as a commercial transaction^[28] which would have enlivened the exception under section 11 of the FSIA;
• the QCAA’s operation and management of the airport could not be characterised as a commercial transaction as QCAA was carrying out functions that were governmental in nature such as regulation of safety and security and supervision of air navigation services and airports.

Lessons for enforcing arbitral awards in Australia

These decisions provide significant insight into how Australian courts balance the recognition and enforcement of arbitration awards with the principle of foreign state immunity. The key takeaways from these decisions are that:

• Australian courts are generally willing to recognise and enforce of arbitral awards, particularly in the context of commercial transactions.
• Assertions of foreign state immunity will undergo rigorous scrutiny by the courts.
• Where States Parties have expressly made commercial reservations as part of their entry into treaties and conventions, it is likely that Australian courts will be less likely to make orders for recognition or enforcement for issues that are not considered to be commercial.
• From a practical perspective, the enforceability of an ICSID Convention award against a foreign state’s property located in Australia remains a critical consideration.
• As separate entities of foreign states will be afforded foreign state immunity in Australia, creditors should note that winding up proceedings for those separate entities registered in Australia may not be the best option of recovery.
• While section 11 of the FSIA provides a commercial transaction exception to foreign state immunity, Australian courts will thoroughly examine whether the conduct is genuinely commercial. If it is determined that the separate entity was performing sovereign or governmental functions, the exception may not apply.