Border Timbers Ltd v Republic of Zimbabwe
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Dias DBE |
| Judgment Date | 19 January 2024 |
| Neutral Citation | [2024] EWHC 58 (Comm) |
| Year | 2024 |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2021-000541 |
[2024] EWHC 58 (Comm)
Mrs Justice Dias DBE
Case No: CL-2021-000541
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, WC4A 1NL
Christopher Harris KC and Rumen Cholakov (instructed by Baker & McKenzie LLP) for the Claimants
Salim Moollan KC, Benedict Tompkins and Andris Rudzitis (instructed by Gresham Legal) for the Defendant
Hearing dates: 31 October, 1 November 2023
INTRODUCTION
The matter before me arises out of an arbitration award dated 28 July 2015 made under the auspices of the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”). The arbitration in question was brought by the Claimants against the Defendant, the Republic of Zimbabwe (“Zimbabwe”) and related to the alleged expropriation of the Claimants' land in Zimbabwe. By the award, Zimbabwe was ordered to pay to the Claimants some US$124 million plus interest, together with a further US$1 million in moral damages and costs.
Zimbabwe applied to have the award annulled by means of a process provided for in the ICSID Convention itself. That application was dismissed by the ICSID annulment committee on 21 November 2018 with further costs ordered to be paid by Zimbabwe. The award was not satisfied and on 15 September 2021, the Claimants applied to the English court without notice under CPR Part 62.21 for registration and entry of judgment on the award in England pursuant to section 2 of the Arbitration (International Investment Disputes) Act 1966 (the “1966 Act”). That application was granted by Mrs Justice Cockerill on 8 October 2021, who ordered that the award be recognised and entered as a judgment by the High Court in the same manner and with the same force and effect as if it were a final judgment of this court.
Cockerill J's order was served on Zimbabwe on 27 May 2022. On 25 July 2022, Zimbabwe applied to set it aside on the grounds that Zimbabwe was immune from the jurisdiction of the UK courts by virtue of section 1(1) of the State Immunity Act 1978. In response, the Claimants argued that Zimbabwe fell within one or both of the exceptions to immunity set out in sections 2 and 9 of the 1978 Act on the basis that it had submitted to the jurisdiction by virtue of its agreement to the ICSID Convention and/or had agreed to submit the underlying dispute to ICSID arbitration and so was not immune in respect of proceedings in the United Kingdom relating to that arbitration.
In these circumstances, it was directed by Jacobs J on 27 January 2023 that the following preliminary issues (in essence) be determined in advance:
(a) Whether Zimbabwe was entitled to claim state immunity in relation to these proceedings;
(b) Whether Zimbabwe had waived such immunity under section 2 of the State Immunity Act by operation of the ICSID Convention;
(c) Whether the English court was bound for the purposes of section 9 of the State Immunity Act by the determination of the ICSID tribunal and the annulment committee as to the jurisdiction of the tribunal;
(d) Whether Cockerill J's order should in any event be set aside for breach of the Claimants' duty of full and frank disclosure in failing to draw the attention of the judge in the without notice application to potential arguments on state immunity and/or in failing to establish any legal basis for an exception to immunity.
This is the hearing of those issues.
I mention one point at the outset in order to dispose of it. On behalf of the Claimants, Mr Christopher Harris KC made much of the fact that Zimbabwe had participated fully in the ICSID arbitration but had failed in its defence before a vastly experienced tribunal. Its attempt to have the award annulled had likewise failed on all points, yet it was now resisting enforcement of the award on substantially the same grounds as had been advanced and rejected previously (albeit with the addition of one further ground). He observed that it was now 10 years since the original award was issued and the Claimants were still no closer to receiving the damages awarded to them.
I have no doubt that this protracted chronology is a source of immense frustration to the Claimants and that in their eyes the present application is no more than a further attempt by Zimbabwe to frustrate and obstruct the enforcement of the award so as to avoid having to meet its obligations. Whether true or not, however, it is irrelevant to the question I have to decide, which is whether Zimbabwe is entitled to have Cockerill J's order set aside on the grounds asserted or not.
THE LEGISLATIVE FRAMEWORK
The starting point is the State Immunity Act 1978. Prior to 1978, England was almost alone in continuing to adopt a pure, absolute doctrine of state immunity in all cases: I Congreso del Partido, [1983] AC 244 at 261. Any waiver had to be declared in the face of the court, for example by pleading a defence to a claim: Mighell v Sultan of Johore, [1894] 1 QB 149. Moreover, an agreement to arbitrate did not amount to a submission to the jurisdiction: Duff Development Co. Ltd v Government of Kelantan, [1924] AC 797.
The common law rules were, however, replaced and restated in the 1978 Act which provides in material part as follows:
“ 1. General immunity from jurisdiction
(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act.
(2) A court shall give effect to the immunity conferred by this section even though the State does not appear in the proceedings in question.
2. Submission to jurisdiction
(1) A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom.
(2) A State may submit after the dispute giving rise to the proceedings has arisen or by a prior written agreement; but a provision in any agreement that it is to be governed by the law of the United Kingdom is not to be regarded as a submission.
(3) A State is deemed to have submitted –
(a) if it has instituted the proceedings; or
(b) subject to subsections (4) and (5) below, if it has intervened or taken any step in the proceedings.
(4) Subsection (3)(b) above does not apply to intervention or any step taken for the purpose only of:
(a) claiming immunity; or
(b) asserting an interest in property in circumstances such that the State would have been entitled to immunity if the proceedings had been brought against it.
(5) Subsection (3)(b) above does not apply to any step taken by the State in ignorance of facts entitling it to immunity if those facts could not reasonably have been ascertained and immunity is claimed as soon as reasonably practicable.
(6) A submission in respect of any proceedings extends to any appeal but not to any counter-claim unless it arises out of the same legal relationship or facts as the claim.
…
9. Arbitrations
(1) Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.
(2) This section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between States.
…
13. Other procedural privileges
…
(2) Subject to subsections (3) and (4) below —
(a) relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and
(b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.
…
(3) Subsections (2) and (2A) above do not prevent the giving of any relief or the issue of any process with the written consent of the State concerned; and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.
…
17. Interpretation of Part I
…
(2) In sections 2(2) and 13(3) above references to an agreement include references to a treaty, convention or other international agreement.
…”
The following were common ground before me:
(a) The default position under the 1978 Act is that a foreign state is entitled to blanket immunity from the jurisdiction of the UK courts except as provided in Part I of the Act.
(b) The Act is a complete code, and a state is therefore immune unless one of the exceptions applies: Benkharbouche v Embassy of the Republic of Sudan, [2017] UKSC 62; [2019] AC 777 at [39].
(c) The applicant bears the burden of proving the application of an exception on the balance of probabilities: Al Masarir v Saudi Arabia, [2022] EWHC 2199 (QB); [2022] PIQR P3 at [8].
(d) The court is bound to give effect to any sovereign immunity of its own motion; the point cannot escape scrutiny sub silentio.
The ICSID Convention
The Preamble to the ICSID Convention provides as follows:
“ Preamble
The Contracting States
Considering the need for international cooperation for economic development, and the role of private international investment therein;
Bearing in mind the possibility that from time to time disputes may arise in connection with such investment between Contracting States and nationals of other Contracting States
Recognizing that while such disputes would...
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