First-Ever Malaysian Court Decision Recognising an ICSID Award

On 17 February 2023, in Elizabeth Regina Maria Gabrielle von Pezold & 7 Ors v Republic of Zimbabwe (unreported), for the first time in Malaysia, its High Court recognised an award by the International Centre for Settlement of Investment Disputes ("ICSID") against a foreign government, which involved a sum over US$200 million ("ICSID Award"), pursuant to section 3 of the Convention on the Settlement of Investment Disputes Act 1966 ("ICSID Act").

Facts of the Case

Between 2000 and 2007, the Plaintiffs' properties and their associated assets were expropriated without compensation by the Republic of Zimbabwe ("Zimbabwe") pursuant to Zimbabwe’s Land Reform Programme. In 2015, a tribunal at the International Centre for Settlement of Investment Disputes ("ICSID Tribunal") found, among others, that the said expropriation of the Plaintiffs' properties by Zimbabwe constituted a breach of the bilateral investment treaties entered into by Zimbabwe with Switzerland and Germany, respectively, and accordingly awarded, among others, damages exceeding US$200 million in favour of the Plaintiffs ("ICSID Award"). In 2018, an application for annulment filed by Zimbabwe to annul the ICSID Award was dismissed by the relevant ICSID Tribunal ("Decision on Annulment").

The Plaintiffs subsequently commenced actions before the High Court of Malaya at Kuala Lumpur seeking, among others, the recognition of the ICSID Award and the Decision on Annulment in Malaysia.

Key Findings of the High Court

Some of the key findings of the High Court are set out below.

1. The Court is mandated under the ICSID Act to recognise the ICSID Award, provided the requirement of Article 54(2) of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States ("ICSID Convention") is satisfied, namely, furnishing a copy of the ICSID Award certified by the Secretary-General of ICSID.
2. Sovereign immunity cannot be used to prevent recognition of the ICSID Award. According to the ICSID Convention, the consideration of sovereign immunity is limited to the execution stage after the recognition of the ICSID Award in the final judgment. Further, the High Court found that the Republic of Zimbabwe had, through its conduct, submitted to the jurisdiction of the courts of every contracting state to the ICSID Convention where the ICSID Award is recognised. Accordingly, the Republic of Zimbabwe was considered to have waived immunity.
3. The absence of a specific procedural framework for the enforcement of ICSID awards in Malaysia did not preclude the High Court from exercising its substantive powers under the ICSID Act, and it could adapt its own procedures to give effect to such powers.
4. The absence of any reservation made to restrict the terms of the ICSID Convention was significant, as it means that an ICSID Award could be enforced in any ICSID contracting state.
5. Identification of the assets of the Republic of Zimbabwe within Malaysia was irrelevant and not required at the recognition stage.

The matter is currently pending appeal before the Court of Appeal. Christopher & Lee Ong is acting for the Plaintiffs in this case.