Cyber conduct, ICSID enforcement and conspiracy claims: sovereign and diplomatic insights
Insight
State immunity: Supreme Court set to right the ship
Last November, the UK Supreme Court heard landmark state immunity appeals from three states in a single week, signalling a decisive moment for sovereign litigation in the UK. These hearings mark the denouement of two long-running sagas that have unsettled the sovereign community, as several years of unorthodox lower court decisions reach their final judicial reckoning.
Shehabi v Kingdom of Bahrain: cyber conduct and section 5 SIA
The Court of Appeal’s decision in Shehabi is widely regarded as transformative. The court held that remotely installing spyware on devices located in the UK constitutes an “act in the United Kingdom” for the purposes of section 5 of the State Immunity Act 1978 (SIA), thereby disapplying immunity for claims in respect of personal injury caused by alleged transboundary actions. The court recognised psychiatric harm caused by digital surveillance as 'personal injury' under section 5, expanding the scope of non immune civil claims against states in cyber contexts.
If the Supreme Court upholds Shehabi, expect an avalanche of novel litigation against states in London in 2026, likely raising diplomatic sensitivities due to the perception of the UK as an outlier internationally.
Spain & Zimbabwe: ICSID registration and immunity
Following Shehabi, the Supreme Court heard appeals concerning the interaction between state immunity and International Centre for Settlement of Investment Disputes (ICSID) award enforcement. The Court of Appeal held in late 2024 that Article 54 of the ICSID Convention operates as a submission for the purpose of the registration of ICSID awards, thereby waiving adjudicative immunity under section 2 SIA. A reversal by the Supreme Court would reintroduce immunity hurdles unseen since the ICSID Convention came into force in 1966, reshaping enforcement strategies for investors and states and altering the UK’s alignment with emerging international practice. Conversely, an affirmance would consolidate the UK’s position as a pro registration jurisdiction for ICSID awards.
In recent years, the Supreme Court has tended toward a more orthodox reflection of public international law than some lower court judgments. 2026 will likely confirm whether that remains the court’s approach.
Other state immunity issues set to crystallise in 2026
2026 is also likely to bring more certainty on some other key immunity issues. Lorenzo v Spain opened the door to nationals of sending states being able to sue their own missions – something that has never before been possible in the UK without waivers. Conversely, Alhayli v Saudi Arabia appeared to close the door on the use of psychiatric injury as a basis of claims against states in the Employment Tribunals.
Other issues that will go before the courts in 2026 will include whether states can be impleaded into conspiracy allegations and clarifying what the obligations are on states when served by the Foreign, Commonwealth & Development Office (FCDO).
All in all, 2026 promises to be a pivotal year for the application of public international law in the UK.
Significant legal developments are anticipated in 2026, amid economic turbulence, the growing influence of AI and heightened public scrutiny. To help you prepare, our experts have produced key litigation-related insights across areas including arbitration, commercial litigation, contentious trusts & estates, family disputes, and more.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, January 2026
