ENFORCEMENT OF AN ARBITRATION AWARD: PROSECUTION OF THE STATE’S ASSETS AND OTHER OPTIONS
By: Ereblinda Sadiku, Legal Counsel at the Thailand Arbitration Center
After the recent ruling of the Supreme Administrative Court of Thailand on the 4th of March 2022, the Hopewell Holdings Limited (hereinafter referred to as “Hopewell”) case raises new legal concerns, as it kept on doing for the past thirty years. According to the latest Court’s decision, the ruling was in favor of the Ministry of Transport and the State Railway of Thailand by granting them a right to a retrial with Hopewell. This decision is due to a decision of the Constitutional Court in June 2021 concluding that the Supreme Administrative Court’s 2002 resolution was invalid.
The outcome of this jurisdictional case is not yet to be known. Nevertheless, from an arbitration law point of view, the Arbitral Award of the Thailand Arbitration Institute has been annulled by the Central Administrative Court of Thailand in 2014 for prescription reasons, which means that the award ceases to have legal existence under the laws of Thailand, and therefore can be considered as null.
Nevertheless, despite the decision of the Central Administrative Court of Thailand annulling the Arbitral Award of the Thailand Arbitration Institute of 2014, it would have been interesting to focus on what would’ve been Hopewell’s options to enforce the award against a State or a State entity. More specifically, in a case where the State, being the losing party, refuses to carry out its duty in accordance with the award, it is interesting to ask oneself if the State’s asset can be enforced by the winning party, as it would be the case for private parties’ litigation.
- The enforcement of assets as a tool against the non-conciliatory party
As a last resort option, an award can be enforced by proceedings in a national court. In most cases, the enforcement is done against assets.  National legal systems have four options to enforce the arbitral award. The first way happens when the award is deposited or registered with a court or other authority, which gives it similar power as a judgment of that court. The second option arises if the laws of the country of enforcement allow the direct enforcement of the award without any need for deposit or registration. The third occurs when the enforcement process is used as a form of recognition or exequatur,and finally, the fourth is used to sue on the award as evidence of a debt.
The procedure to follow in such cases is governed by the Thai Arbitration Act B.E. 2545 (2002), which contains the recognition and enforcement rules of arbitral awards in Thailand. As for domestic arbitration awards, which is the case in Hopewell’s case, they are considered binding expressly on both of the parties and enforceable in the domestic courts on application by one of the parties, as stated in Section 41 of the Thai Arbitration Act.
The rule of enforcement as stated in Section 41 of the Thai Arbitration Act is applicable regardless of if the losing party is a private party, a State, or a State entity. Therefore, the private party, in this instance Hopewell, could have used this mechanism if their wish was to enforce the award. Nevertheless, in practice, it didn’t. We could find different explanations. The most plausible one could be the one explaining that because of the interconnection of both the arbitrational and jurisdictional procedure, the process was made more complicated. When facing negotiations in front of the arbitrational procedure, Hopewell was hoping for the State entities, in this case, the Ministry of Transports and the State Railway of Thailand, to enter negotiations. Yet, the State entities were waiting for the jurisdictional decision in order to annul the arbitrational award and in a second time, to give them the right to retrial the case. This correlation of cases made the usage of the rule of enforcement more complicated.
- Other options than the enforcement of assets?
Another option Hopewell could have tried is to bring the arbitrational award in front of a foreign court for it to be recognized. Indeed, even if the national court of Thailand has annulled the arbitrational award, there is a new doctrinal and jurisprudential movement toward the recognition by foreign courts of the award annulled in the seat. If brought in front of a Hong Kongese court, for instance, since Hopewell Holdings are based in Hong Kong, the outcome of the issue might have been different.
As a last option, in terms of enforcing the State’s assets, it is almost mandatory to think of the Sedelmayer v. Russian Federation case. In that litigation, after the International Court of Arbitration of Stockholm issued an arbitrational award in July 1998 condemning the Russian Federation, the Kremlin decided not to honor that decision. As a result, Franz Sedelmayer decided to do his own justice and he repeatedly sued Russia’s assets in order to get his money back. If this option is costly, it was effective in Sedelmayer’s case.
This article didn’t include an analysis of another scourge that private parties have been facing when having litigation with a State or State’s entity: State immunity. This topic seems to be a less and less frightening subject since more and more countries tend to shake up the protection of State immunity when it comes to the enforcement of awards. As an example, we can bring the decisions of the Supreme Court of Switzerland.
If in most of the cases playing with the country’s reputation would’ve been enough for the State actor to surrender in front of political pressure, this was not the case in this litigation. Both parties are certain that they should win the case. The outcome of this litigation is not known yet, but the pressure against reputation as a tool was not a success.
Nevertheless, from an arbitrational law perspective, Hopewell’s case had many procedural options available in order to disrupt the ending of this litigation. The best option would probably be the enforcement of the State’s assets. If the usage of this option could have been more complicated in the early days of arbitration in Thailand, it seems to be no longer the case. If this case would’ve been the best one to practice this theory, we can only look forward to its usage soon in a case that the THAC would be pleased to lead.
 https://www.thaipbsworld.com/will-3-decades-of-hopewell-horror-show-have-a-shock-happy-ending-for-thailand/; for more details about the annulment: http://arbitrationblog.kluwerarbitration.com/2014/10/09/thai-administrative-court-overturns-an-arbitration-award-against-the-government/.
 Gary B. Born, International Arbitration : Law and Practice, p. 407, 3rd ed., 2021.
 Nigel Blackaby, Constantine Partasides QC, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration, par. 11.12, 6th ed., 2015.
 Idem, par. 11.13.
 Idem, par. 11. 14.
 Andreas Respondek, Somruetai Wisalaporn and Savitree Kuwangkhadilok, Asia Arbitration Guide, par. 21.19, 6th ed., 2019.
 Gary B. Born, op. cit., p. 407.
 Sandrine Giroud, Enforcement against State Assets and Execution of ICSID Awards in Switzerland: How Swiss Courts Deal with Immunity Defences, in: ASA Bulletin 4/2012 (December).