Immunity from Execution of Central Bank Assets

Abstract

Central bank assets located in a foreign country make an attractive target for creditors seeking to satisfy a judgment against a state or its central bank. Over the past few decades important cases and legislation from around the world have considered the immunity from enforcement to which foreign central banks assets are entitled. This paper analyzes those developments and their significance for customary international law. It draws five conclusions. First, there is an overall — although not entirely uniform — trend toward more generous and more specific immunity from execution for the property of foreign central banks, including in Argentina, Belgium, China, France, Japan, and Russia. Second, customary international law requires that forum states provide immunity from execution for the currency reserves of foreign central banks, and arguably requires near absolute immunity for all central bank assets. Third, there is also a trend toward reciprocity, related to successful efforts by China and Russia to increase global protection from enforcement measures for central banks assets. Fourth, in the pending case by Iran against the United States before the International Court of Justice (Certain Iranian Assets), the United States will lose on the issue of the immunity from enforcement measures due the assets of Bank Markazi under customary international law, although the Court may resolve the case on other grounds. Fifth, the issue of central bank immunity from enforcement measures is likely to be of growing importance, in part because economic activity and investments by central banks are changing. A revised version is now posted, including coverage of India and South Korea.