The English High Court has ruled that awards issued under the ICSID Convention are not assignable, a holding that strikes directly at the secondary market in which investors buy and sell claims against sovereign states.

The decision resolves a question that has shadowed enforcement practice for years: can a creditor who wins an ICSID award against a state transfer that award — in whole or in part — to a third party, such as a litigation funder or a distressed-debt investor? The High Court's answer is no. The award, in the court's view, does not circulate as an ordinary chose in action.

What did the court decide?

The court held that ICSID awards are not assignable instruments. The finding turns on the character of the award itself and the framework of the ICSID Convention, under which the award binds only the parties to the proceeding and enforcement runs through a distinct international mechanism rather than ordinary commercial assignment doctrine.

The practical effect is immediate. Any transaction premised on taking an assignment of an ICSID award — a sale to a fund specialising in sovereign recovery, a security arrangement with a funder, or a portfolio transfer — now faces a serious defect at its core under English law. The assignee does not step into the shoes of the original award creditor.

Why does this matter for the secondary market?

A secondary market for sovereign arbitral awards has developed because ICSID awards against states are often hard to collect. Original award holders, frequently cash-constrained after years of arbitration, sell their recovery rights at a discount to investors with the patience and resources to pursue enforcement across multiple jurisdictions.

That market now has a legal problem at its foundation in one of the world's leading arbitration and enforcement venues. Market participants who structured purchases as assignments of ICSID awards will need to reassess those structures. Pending and future deals will have to be re-engineered or abandoned.

What are the options for practitioners?

Practitioners advising buyers and sellers of sovereign claims will need to consider alternatives. These may include:

• Structuring transactions around the underlying investment or claim before the award issues, at a stage where different rules apply.
• Basing transfers on the proceeds and recovery rights associated with the award rather than the award itself.
• Pursuing enforcement in the name of the original award creditor under funding or profit-sharing arrangements that stop short of assignment.

Each route carries its own risks, and none replicates the clean transfer of rights that buyers in this market have sought.

How firm is the ruling?

The decision comes from the English High Court, and its reasoning binds lower courts and shapes practice in England and Wales, a jurisdiction of central importance to international arbitration. Whether an appellate court will revisit the question remains to be seen. Parties with significant exposure through assignment-based structures will now be weighing appeal prospects alongside restructuring options.

For now, the message to the market is clear: under English law, an ICSID award is not a tradable asset. Investors, funders, and states alike will be adjusting their positions accordingly.