UK P&I Club N.v v. República Bolivariana De Venezuela

Hearing dates: 6–8 December 2023

APPROVED JUDGMENT

This judgment was handed down remotely by circulation to the parties' representatives by email and by release to the National Archives. The date and time for hand-down is deemed to be 10.00am on 20 December 2023

Sir Geoffrey Vos, MASTER OF THE ROLLS:

Introduction

Section 13(2)(a) of the State Immunity Act 1978 (the SIA) provides that “relief shall not be given against a State by way of injunction”.Article 6(1) of the European Convention on Human Rights (the ECHR) provides that “[i]n the determination of his civil rights and obligations …, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”.

Moreover, it is well established, as Sir Ross Cranston (the judge) said in effect at [97], that article 6(1) is not an absolute right. A domestic court may, in general terms, make orders that limit its effect provided that the order made: (a) does not impair the very essence of the claimant's right to a fair trial, (b) is made in pursuit of a legitimate aim, and (c) is proportionate to achieving that legitimate aim (see Ashingdane v. United Kingdom (1985) 7 EHRR 528 at [57], Z and others v. United Kingdom (2002) 34 EHRR 3 at [93], Alassini v. Telecom Italia SpA (Joined Cases C-317/08, C-301/08, C-319/08 and C-320/08) [2010] 3 CMLR 17 at [63], and Churchill v. Merthyr Tydfil[2023] EWCA Civ 1416 at [54]).

Against that background, the essential question in this case is whether the judge was right to refuse to grant the Clubs a permanent anti-suit injunction restraining Venezuela (a sovereign state) from pursuing proceedings against them in Venezuela and Dutch Curaçao. His main ground for refusing the injunction was that article 6(1) was satisfied because section 13(2)(a) lay “within the range of possible rules consistent with current international standards” [116].

In this context, it is perhaps important to understand at the outset what the judge decided. The judge dealt with Venezuela's defence of state immunity after he had considered the evidence and the nature of the proceedings brought by Venezuela in Venezuela and Dutch Curaçao. He decided first that Venezuela did not have immunity from the English Court's adjudicative jurisdiction under section 1 of the SIA, because the commercial exception in section 3(1)(a) of the SIA 1 applied. Moreover, Venezuela was to be treated as having agreed in writing to submit the relevant disputes to arbitration in London within the meaning of section 9 of the SIA.

At [89], the judge recited the Clubs' submission as being that section 13(2)(a) could not be justified as pursuing a legitimate object by proportionate means because it exceeded the requirements of customary international law as found in the restrictive doctrine of state immunity applied by the Supreme Court in Benkharbouche v. Secretary of State for Foreign and Commonwealth Affairs[2017] UKSC 62, [2019] AC 777 ( Benkharbouche). The judge decided at [91] that, given what Lord Diplock had said in Alcom Ltd v. Republic of Colombia[1984] AC 750 ( Alcom) at 600F: “any submission that section 13(2) [was] not about enforcement immunity [was] untenable”. He held at [96] that article 6 was engaged, and moved to consider whether section 13(2)(a) could be justified as an interference with article 6 on the principles I have already mentioned.

At [106], the judge concluded that the restrictive doctrine of state immunity applied in Benkharbouche related to bars on the adjudicative jurisdiction of the court, but was not “determinative in the separate area of enforcement immunity” under section 13(2)(a).

The judge then decided at [107]–[116] that there was no widespread, representative and consistent practice of states which was accepted by them on the footing that it was a legal obligation, regarding injunctions and orders for specific performance as part of the restrictive doctrine. In other words, different states adopted different practices as to whether they regarded injunctions as part of their adjudicative jurisdiction or part of their enforcement jurisdiction. The judge held at [116] that in enacting section 13(2)(a), the UK was certainly not an outlier.

The judge then held at [117]–[118] that section 13(2)(a) could be justified also by legitimate domestic policy, if pursued by proportionate means (relying on what Lord Sumption said at [68] in Benkharbouche and General Dynamics United Kingdom Ltd v. Libya[2021] UKSC 22, [2022] AC 318 at [57]–[62] and [76(5)] ( General Dynamics)).

At [120]–[124], the judge held that section 13(2)(a) pursued legitimate domestic objectives by proportionate means and did not impair the essence of the article 6 right. His four reasons were: (i) the Lord Chancellor's rationale to Parliament to the effect that personal remedies like injunctions and specific performance were not appropriate against states, because the processes for punishing contempt could not be used; (ii) injunctions were even more internationally sensitive than the service issue in General Dynamics: the fact was that “many jurisdictions and writers do not countenance orders, especially coercive orders against states, in particular the anti-suit injunction”; (iii) considerations of comity, procedural propriety and international law were even more important in a state's enforcement jurisdiction (see General Dynamics at [59], [62] and [84]); and (iv) the lack of an injunction did not render worthless the Clubs' declared right to have Venezuela's claims determined by way of London arbitration. Compensation for breach of the arbitration agreement and declaratory relief in the arbitration could be relied upon to resist enforcement of judgments obtained by Venezuela in its proceedings.

Finally, the judge said at [125]–[128] that if he were wrong in concluding that section 13(2)(a) stands intact from the article 6 attack, it could not be “read down” under section 3 of the Human Rights Act 1998 (the HRA) to remove the alleged incompatibility with article 6.

The Clubs have challenged the judge's judgment on four grounds. First, they say that the judge was wrong to conclude that an infringement of article 6 could be justified if section 13(2)(a) fell “within the range of possible rules consistent with international practices”. The test, they argued, was whether the domestic rule was required by customary international law, or possibly reflected a tenable view of what it required. Secondly, the judge was wrong to hold that anti-suit injunctions were part of the court's enforcement jurisdiction. They were part of its adjudicative jurisdiction, and immunity from them in international law was governed by the restrictive doctrine. Thirdly, the judge ought to have held that the infringement of article 6 was not justifiable as a proportionate restriction by legitimate domestic policy and impaired the essence of the Clubs' article 6 right. Fourthly, section 13(2)(a) ought to have been read down so as to remove its incompatibility with article 6.

I have decided that the judge was right broadly for the reasons he gave. I will explain why I have reached that conclusion under the following heads: (i) the outline factual background, (ii) Benkharbouche, (iii) whether the judge was wrong to say that an infringement of article 6 could be justified if section 13(2)(a) fell “within the range of possible rules consistent with international practices”, (iv) whether the judge was wrong to hold that anti-suit injunctions were part of the court's enforcement jurisdiction, (v) whether the judge ought to have held that the infringement of article 6 was not justifiable as a proportionate restriction by legitimate domestic policy and impaired the essence of the Clubs' article 6 right, and (vi) whether, if section 13(2)(a) would otherwise be incompatible with article 6, it ought to have been read down so as to remove the incompatibility.

Outline factual background

I take the factual background from [1]–[29] of the judge's judgment.

On 30 March 2020, a Venezuelan navy patrol vessel, the BVL Naiguatá GC-23 (the Naiguatá), sank as a result of a collision with the RCGS Resolute (the Resolute), an ice-classed cruise liner. The collision occurred after the Naiguatá had been sent to intercept the Resolute, and an altercation had taken place. There is no agreement as to the events which followed or whether they occurred in territorial or international waters. After the collision, the Resolute sailed to nearby Curaçao, where it arrived on 31 March 2020. The Resolute was insured by the first claimant, UK P&I Club NV, a subsidiary of the second claimant, United Kingdom Mutual Steam Ship Assurance Association Limited.

Venezuela has brought claims in Dutch Curaçao for some €125 million and in Venezuela for some €300 million against the Resolute, its owners and head...