Arab Monetary Fund v Hashim and Others (No. 3)

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Bridge of Harwich,Lord Templeman,Lord Griffiths,Lord Ackner,Lord Lowry
Judgment Date21 February 1991
Judgment citation (vLex)[1991] UKHL J0221-1
Date21 February 1991

[1991] UKHL J0221-1

House of Lords

Lord Bridge of Harwich

Lord Templeman

Lord Griffiths

Lord Ackner

Lord Lowry

Arab Monetary Fund
Hashim and Others
Lord Bridge of Harwich

My Lords,


I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Templeman. I agree with it and for the reasons he gives I would allow the appeal and restore the order of Hoffmann J.

Lord Templeman

My Lords,


An Agreement ("the A.M.F. Agreement") dated 27 April 1976 to which 20 Arab states and Palestine were signatories established an Arab organisation known as "the Arab Monetary Fund" for the purpose of laying the monetary foundations of Arab economic integration and accelerating the process of economic development in all Arab countries. The official English version Articles of Agreement of the A.M.F. Agreement included the following:

"1…. there shall be established an Arab organisation named "The Arab Monetary Fund," hereinafter referred to as "the Fund." 2. The Fund shall have an independent juridical personality and shall have, in particular, the right to own, contract and litigate. J. The Head Office of the Fund shall be located in Abu Dhabi city of the United Arab Emirates, and it may establish agencies and offices under a decision issued by the Board of Governors….

12( a) The authorised capital of the Fund shall be equivalent to 263 [sic] million Arab dinar units of account. … ( c) The capital shall be divided into 5,000 shares each having the value of 50,000 Arab dinar units of account. 13( a) Subscription to the capital shall be made in accordance with the Schedule attached to this agreement….

29. The Fund shall be composed of the Board of Governors, the Board of Executive Directors, the Director-General/President of the Board of Executive Directors, the Loans and Investments Committees and the employees and experts required to carry out the work of the Fund. 30( a) The Board of Governors shall consist of one Governor and one Deputy Governor appointed by each member of the Fund … ( b) The Board of Governors shall be regarded as the General Assembly of the Fund and shall hold all the administrative powers. It may delegate to the Board of Executive Directors, the authority to exercise any of its powers with the following exceptions:

1. Admission of new members; 2. increase of capital; 3. determining the distribution of the net income of the Fund; 4. appointing auditors and approving the final accounts; 5. settling disputes concerning the interpretation of the provisions of this agreement; 6. suspension of a member; 7. definitive suspension of the operations of the Fund and the liquidation of its Funds; 8. amendment of this agreement.

31( a) For the purpose of voting at the Board of Governors' meetings, each member shall have 75 votes, regardless of the number of shares it holds, plus one vote for each share held by the member. … 32( a) The Board of Executive Directors shall exercise the powers vested in it by the Board of Governors and may delegate therefrom to the Director-General, such powers as it deems fit. ( b) The Board of Executive Directors shall be composed of the Director-General as Chairman and of eight resident Members of the Board … elected by the Board of Governors from among the citizens of member States. … 33( a) The Board of Governors shall appoint a Director-General of the Fund from among individuals other than the Governors or Executive Directors or their deputies. … ( e) The Director-General is the head of the staff of the Fund and is responsible to the Board of Executive Directors for all the work of the Fund. He shall be in charge of the technical and administrative organisation of the Fund and will have the right to appoint and dismiss the staff and experts in accordance with the regulations of the Fund. … 34. The Director-General shall set up committees on loans and investments to make recommendations with respect to loan and investment policies and shall examine these policies and submit proposals on them to the Board of Executive Directors….

48( a) A member shall not be responsible, by virtue of its membership, for liabilities of the Fund which are not within the limits prescribed in this agreement….

53. Legal action may be brought against the Fund in a court of competent jurisdiction in the state where its head office is located…."


The United Arab Emirates ("the U.A.E.") is an independent Sovereign federal state. By the constitution of the U.A.E. dated 18 July 1971, a treaty entered into by the U.A.E. becomes binding on and within the U.A.E. after confirmation of the treaty by the Council of Ministers and ratification by decree of the Supreme Council, followed by signature and promulgation of the decree by the President, and publication of the decree in the official gazette. The A.M.F. Agreement was duly confirmed and ratified by decree. The decree was duly signed and promulgated and was published on 16 April 1977 in the official gazette as Federal Decree No. 35 for 1977 with the Articles of Agreement of the A.M.F. Agreement attached. All these matters were the subject of uncontradicted expert evidence given in an affirmation by Mr. Hamza, legal advisor to the Ministry of Foreign Affairs of the U.A.E. He concluded that the Fund:

"had conferred on it by publication of Federal Decree No. 35 independent legal personality and the capacity to sue and be sued in U.A.E. law."


Thus the Fund was created a corporate body by the U.A.E. and corresponds roughly to an English company limited by shares with the member states as the shareholders, a board of governors which represents the shareholders, a board of executive directors and a director-general corresponding to a managing director.


I am unable to agree with my noble and learned friend, Lord Lowry, that Federal Decree No. 35 only recognised an international organisation and did not create a corporate body. When the promoters of a company enter into an agreement to incorporate a company and the agreement takes the form of a memorandum and articles of association of the company, that agreement does not create a corporation. When the memorandum and articles are registered under the Companies Act of 1985, that registration does not recognise a corporation but creates a corporation. Similarly, when sovereign states enter into an agreement by treaty to confer legal personality on an international organisation, the treaty does not create a corporate body. But when the A.M.F. Agreement was registered in the U.A.E. by means of Federal Decree No. 35 that registration conferred on the international organisation legal personality and thus created a corporate body which the English courts can and should recognise. The expert evidence which I have quoted states that Federal Decree No. 35 conferred legal personality on the Fund and in the face of that evidence I cannot agree with Lord Lowry that the effect of the decree was only to recognise an international organisation.


The A.M.F. Agreement came into force on 13 February 1977 and the headquarters of the Fund were duly established at Abu Dhabi in the U.A.E. The first respondent to this appeal, Dr. Hashim, was appointed Director-General of the Fund and occupied that position between 1977 and 1982. For the purposes of this appeal it must be assumed, as the Fund alleges, that while acting as Director-General of the Fund Dr. Hashim stole about U.S.$50m. from the Fund and that the respondent banks enabled him to launder a substantial part of the money through numbered accounts. By a statement of claim served on 25 January 1989, the Fund sought to recover from the respondents the sums embezzled by Dr. Hashim or the assets representing those sums. Dr. Hashim, his wife and two sons, a Liechtenstein Anstalt which is the alter ego of Dr. Hashim and the respondent banks applied to strike out the statement of claim. On 14 November 1989, Hoffmann J. dismissed the applications. On 9 April 1990, the Court of Appeal (Lord Donaldson of Lymington M.R. and Nourse L.J., Bingham L.J. dissenting) struck out the statement of claim "on the ground that the plaintiff lacked capacity to sue." The Fund now appeals.


Although a treaty cannot become part of the law of the United Kingdom without the intervention of Parliament, the recognition of foreign states is a matter for the Crown to decide and by comity the courts of the United Kingdom recognise a corporate body created by the law of a foreign state recognised by the Crown.


As early as 1728 in an action begun by the Dutch West India Company, the defendants argued unsuccessfully in this House:

"that no recognisance in England could be given to this generalis privilegiata Societas Belgica ad Indos Occidentales negotians, for that the law of England does not take notice of any foreign corporation, nor can any foreign corporation in their corporate name and capacity maintain any action at common law in this kingdom, and therefore the recognisance was void in law:" Henriques and others v. The Dutch West India Co. (1728) 2 Ld. Raym. 1532 at 1535.


In that case judgment was recovered by the Dutch company by producing in evidence the proper instrument whereby according to the law of Holland they were effectually created a corporation there. In the present case the Federal Decree with the Articles of Agreement annexed suffices to prove incorporation of the Fund in the U.A.E.


In Lazard Bros v. Midland Bank [1933] A.C. 289, Lord Wright said at p. 297:

"English courts have long since recognised as juristic persons corporations established by foreign law in virtue of the fact of their creation and continuance under and by that law. Such recognition is said to be by the comity of nations."


In Gasque v. C.I.R. [1940] 2 K.B. 80, Macnaghten J. held that a limited company was capable of having a domicile. Its domicile is the place of its...

To continue reading

Request your trial
20 cases

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT