The growing trend of states ignoring international arbitration awards is undermining the global investment protection system. Spain has left over 20 rulings totaling €1.6 billion unpaid, while Russia owes around $60 billion related to the Yukos case. An expert warns Poland that the true test for investors is no longer winning a case, but enforcing the award.
For years, investment arbitration was sold to investors as the ultimate guarantee: a state can lose a dispute but must comply with the ruling. Today, the real battle starts after the judgment. Nikolaus Pitkowitz, former president of the Vienna International Arbitral Centre, stresses that the enforcement of awards has become the weakest link in the system.
“An arbitration award was always a passport, not a key to the treasure chest. But the passport was supposed to guarantee entry to court. If states start refusing even that stage, something much deeper changes than enforcement technique” – said Pitkowitz during the Asset Recovery CEE 2026 conference in Warsaw on June 11.
The enforcement crisis
Spain refuses to pay over 20 awards in the renewable energy sector, citing EU law and the case law of the Court of Justice of the European Union. Russia has ignored the Yukos award for years, with the compensation now reaching about $60 billion. The same ruling can be fully enforceable in London but practically unenforceable in Madrid.
“What collapsed is the earlier – often silent – assumption that a valid award and a paid award are the same thing. There have always been two filters: first, the national court must recognise the award; second, you still need to find state assets that can be effectively seized” – explained Pitkowitz. He added that sovereign immunity is not a bug in the system, but a conscious political choice to protect central bank reserves, diplomatic property, and part of public assets.
Lessons for Poland
Central and Eastern European countries, including Poland, rely heavily on foreign investment for economic growth. Pitkowitz warned that a state’s credibility is damaged when it treats a final award as the starting point for new negotiations. The March 2026 ruling by the UK Supreme Court confirmed that Spain cannot hide behind immunity to block registration of awards, but the question of actual seizure of assets remains open.
“The sooner a state resolves the problem and pays, the cheaper it ends up. In Spain’s case, non‑payment led to the emergence of investors and funds that buy such unpaid claims and try to enforce them in various jurisdictions, especially in the US. This became far more costly than simply paying the compensation right away” – said the arbitrator.
Geopolitical fragmentation of justice
Pitkowitz pointed out that the value of an award increasingly depends not on its legal quality, but on geography. Courts in the US or Australia still enforce the same rulings that European courts reject. This patchwork destroys predictability, which is the most valuable asset a government can offer a long‑term investor.
“An investor today must ask from day one: if we win, where exactly will we recover the money? The choice of seat of arbitration is no longer a technical detail – it is the first enforcement decision” – he concluded. For Poland, the key is to ensure constitutional clarity, predictable regulatory changes, and fair compensation when previous commitments are broken.
Źródło: wnp.pl, Fot. Wailani / Shutterstock
