Boru Hatlari Ile Petrol Tasima as and Others (also known as Botas Petroleum Pipeline Corporation) v Tepe Insaat Sanayii as
| Jurisdiction | UK Non-devolved |
| Judge | Lord Mance |
| Judgment Date | 22 October 2018 |
| Neutral Citation | [2018] UKPC 31 |
| Court | Privy Council |
| Docket Number | Privy Council Appeal No 0104 of 2016 |
| Date | 22 October 2018 |
[2018] UKPC 31
Lord Mance
Lord Sumption
Lord Reed
Lord Lloyd-Jones
Lord Briggs
Privy Council Appeal No 0104 of 2016
Privy Council
Michaelmas Term
From the Court of Appeal of Jersey
Appellant
Professor Zachary Douglas QC
Oliver Jones
(Instructed by Simmons & Simmons LLP)
Respondent
Stuart Catchpole QC
Philippa Webb
(Instructed by Pinsent Masons LLP)
Heard on 5 and 6 June 2018
The first appellant Boru Hatlari Ile Petrol Taşima AŞ (Botaş”) and the respondent Tepe İnsaat Sanayii AŞ (“Tepe”), are Turkish companies. A group of Main Export Pipeline (“MEP”) participants led by BP engaged Botaş as main contractor under a Turnkey Contract for the construction and operation of the Baku-Tbilisi-Ceyhan (“BTC”) pipeline. Botaş in turn engaged Tepe and a joint venture between Tepe and the party cited Nacap BV (“TPN JV”) as sub-contractors for parts of the work under a Stations Contract and a Lot A Contract. Nacap BV and TPN JV have assigned their rights under these contracts to Tepe, and need no further mention. Tepe has obtained arbitration awards, which Botaş has failed successfully to challenge in the French courts and failed to pay, under which Botaş is now liable for over USD 100m (including interest).
Tepe seeks to enforce the outstanding awards against shares (“the Shares”) held by Botaş in two Jersey subsidiary companies, Turkish Petroleum International Limited Company (“TPIC”), the second appellant, and Botaş International Limited (“BIL”), the third appellant. The Jersey courts have granted an interim arrêt entre mains in respect of the Shares. Botaş challenges this order on the basis that the Shares were and are immune from any process of enforcement under the State Immunity Act 1978 as extended to Jersey, with minor modifications, by the State Immunity (Jersey) Order, 1985. The challenge failed both in the Royal Court and in the Court of Appeal, albeit by somewhat differing reasoning.
The Act includes the following provisions, modified as required by the Order:
“ Immunity from jurisdiction
1(1) A State is immune from the jurisdiction of the courts of the [Bailiwick] 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.
Exceptions from immunity
…
3(1) A State is not immune as respects proceedings relating to —
(a) a commercial transaction entered into by the State; or
(b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the [Bailiwick]
…
(3) In this section ‘commercial transaction’ means —
(a) any contract for the supply of goods or services;
(b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and
(c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority; …
…
6(1) A State is not immune as respects proceedings relating to —
(a) any interest of the State in, or its possession or use of, immovable property in the [Bailiwick]; or
(b) any obligation of the State arising out of its interest in, or its possession or use of, any such property.
(2) A State is not immune as respects proceedings relating to any interest of the State in movable or immovable property, being an interest arising by way of succession, gift or bona vacantia.
(3) The fact that a State has or claims an interest in any property shall not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts.
(4) A court may entertain proceedings against a person other than a State notwithstanding that the proceedings relate to property —
(a) which is in the possession or control of a State; or
(b) in which a State claims an interest,
if the State would not have been immune had the proceedings been brought against it or, in a case within paragraph (b) above, if the claim is neither admitted nor supported by prima facie evidence.
…
10(1) This section applies to —
(a) Admiralty proceedings; and
(b) proceedings on any claim which could be made the subject of Admiralty proceedings.
(2) A State is not immune as respects —
(a) an action in rem against a ship belonging to that State; or
(b) an action in personam for enforcing a claim in connection with such a ship,
if, at the time when the cause of action arose, the ship was in use or intended for use for commercial purposes.
(3) Where an action in rem is brought against a ship belonging to a State for enforcing a claim in connection with another ship belonging to that State, subsection (2)(a) above does not apply as respects the first-mentioned ship unless, at the time when the cause of action relating to the other ship arose, both ships were in use or intended for use for commercial purposes.
(4) A State is not immune as respects —
(a) an action in rem against a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes; or
(b) an action in personam for enforcing a claim in connection with such a cargo if the ship carrying it was then in use or intended for use as aforesaid.
(5) In the foregoing provisions references to a ship or cargo belonging to a State include references to a ship or cargo in its possession or control or in which it claims an interest; and, subject to subsection (4) above, subsection (2) above applies to property other than a ship as it applies to a ship.
(6) Sections 3 to 5 above do not apply to proceedings of the kind described in subsection (1) above if the State in question is a party to the Brussels Convention and the claim relates to the operation of a ship owned or operated by that State, the carriage of cargo or passengers on any such ship or the carriage of cargo owned by that State on any other ship.
13(1) No penalty by way of committal or fine shall be imposed in respect of any failure or refusal by or on behalf of a State to disclose or produce any document or other information for the purposes of proceedings to which it is a party.
(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) Subsection (2) above does 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.
(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; but, in a case not falling within section 10 above, this subsection applies to property of a State party to the European Convention on State Immunity only if —
(a) the process is for enforcing a judgment which is final within the meaning of section 18(1)(b) below and the State has made a declaration under article 24 of the Convention; or
(b) the process is for enforcing an arbitration award. …
Supplementary provisions
14(1) The immunities and privileges conferred by this Part of this Act apply to any foreign or commonwealth State other than the United Kingdom; and references to a State include references to —
(a) the sovereign or other head of that State in his public capacity;
(b) the government of that State; and
(c) any department of that government,
but not to any entity (hereafter referred to as a ‘separate entity’) which is distinct from the executive organs of the government of the State and capable of suing or being sued.
(2) A separate entity is immune from the jurisdiction of the courts of the [Bailiwick] if, and only if —
(a) the proceedings relate to anything done by it in the exercise of sovereign authority; and
(b) the circumstances are such that a State (or, in the case of proceedings to which section 10 above applies, a State which is not a party to the Brussels Convention) would have been so immune.
(3) If a separate entity (not being a State's central bank or other monetary authority) submits to the jurisdiction in respect of proceedings in the case of which it is entitled to immunity by virtue of subsection (2) above, subsections (1) to (4) of section 13 above shall apply to it in respect of those proceedings as if references to a State were references to that entity.
(4) Property of a State's central bank or other monetary authority shall not be regarded for the purposes of subsection (4) of section 13 above as in use or intended for use for commercial purposes; and where any such bank or authority is a separate entity subsections (1) to (3) of that section shall apply to it as if references to a State were references to the bank or authority.”
There is some common ground between the parties before the Board. First, Botaş, although owned (with the exception of one...
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