Recognition and Enforcement of Investment Arbitral Awards under International Economic Sanctions

The large-scale expansion of international economic sanctions, most visibly the comprehensive measures adopted by the European Union and the United States against Russia since 2014, has introduced a form of external legal intervention that the drafters of the ICSID Convention and the New York Convention did not anticipate. When a sanctioned State or State-owned entity appears as the award debtor, asset freezes, financial restrictions, and the criminalisation of sanctions violations may render the act of enforcement itself unlawful, or in practice impossible. This creates a normative conflict that existing scholarship has not yet systematically theorised: treaty law requires the award to be enforced, while domestic sanctions law prohibits its enforcement. This thesis addresses a central question: in what sense, and through what mechanisms, do international economic sanctions structurally affect the recognition and enforcement of investment arbitral awards? A subsidiary question follows: can the existing enforcement framework absorb the systemic disruption caused by sanctions, or have its design assumptions ceased to fit the contemporary international legal environment? The central argument is that the impact of sanctions is structural in nature. Sanctions unsettle three institutional assumptions on which the enforcement system has long depended: the assumption of legality in the enforcement environment, the assumption of neutrality in the adjudication and execution of awards, and the assumption of practical enforceability against the debtor’s assets. Three propositions follow. First, sanctions may render enforcement itself unlawful, distinguishing them in kind from traditional obstacles such as State immunity. Second, enforcement failure is often not the product of bad faith by the award debtor State but of the breakdown of the framework’s underlying assumptions; the problem is institutional rather than behavioural. Third, in a sanctions context, recognition and enforcement can, and should, be treated as two legally separable stages, an approach consistent with the Higher Regional Court of Cologne’s 2024 decision, the Ninth Circuit’s reasoning in Cubic Defense Systems, and the French Court of Cassation’s Bank Sepah ruling. This study is confined to the post-award stage and focuses on comprehensive EU and US sanctions, with comparative reference to the Iran and Venezuela regimes. Judicial practice is drawn principally from France, Germany, the United Kingdom, and the United States, with Switzerland as a reference point for licensing mechanisms. Three methods are combined: doctrinal analysis of Articles 54 and 55 of the Washington Convention and Article V(2)(b) of the New York Convention; comparative analysis of divergent national approaches (notably the tripartite classification of the Paris Court of Appeal and the conflicting Cologne and Stuttgart decisions); and empirical analysis of case law involving sanctioned entities. The thesis is organised in four Parts and seven Chapters. Part I introduces the problem and analytical framework. Part II examines the enforcement architecture and the threefold legal character of sanctions. Part III develops the core analysis along the recognition and enforcement. Part IV evaluates institutional responses and assesses the prospects for reform, offering an explanatory framework capable of diagnosing the problem with accuracy and opening the way toward more developed proposals.