In June 2024, the ICSID Secretariat published a report that examines the provisions of the ICSID Convention regarding the binding nature of awards, their recognition, and enforcement. The Convention establishes that awards are final, not subject to appeal, and must be complied with by the parties, without the possibility of national judicial reviews. The enforcement of awards is limited to pecuniary obligations and depends on local laws, which include protections such as sovereign immunity, limiting the ability to seize certain state assets.

Compliance and enforcement in practice:

The ICSID study indicates that most awards are complied with voluntarily or settled through post-award agreements. According to ICSID, only a small fraction of awards go to enforcement proceedings in national courts. Of the awards that do proceed to enforcement, most are successfully resolved, although some are hindered by immunities or difficulties in the execution of assets.

Regarding compliance statistics, 66% of awards with pecuniary obligations are voluntarily complied with or resolved through post-award agreements, while 31% are subject to enforcement proceedings. In cases where enforcement was necessary, the success rate was 73%, with 27% of cases where enforcement was unsuccessful.

Cost awards have a lower compliance rate due to involving smaller amounts. Approximately 30% of cost awards are not enforced because the amounts are insufficient to justify the cost of the process. However, 83% of cost awards are complied with when considering voluntary compliance and successful enforcement.

This analysis highlights that, although enforcement in domestic courts faces some challenges, particularly regarding sovereign immunity, according to ICSID, most awards are satisfactorily complied with without the need for forced enforcement.

Access the full report here.