Coreck Maritime v Sevrybokholodflot
| Jurisdiction | Scotland |
| Judgment Date | 19 March 1993 |
| Date | 19 March 1993 |
| Court | Court of Session (Outer House) |
(Lord Cameron of Lochbroom)
State immunity — Jurisdictional immunity — State entity — Former State enterprise — Enterprise transformed into joint stock company with majority of shares held by private individuals — State retaining minority shares and control over management — Arrest of ship owned by company — Whether company entitled to State immunity in respect of ship
State succession — Treaties — Russian Federation — United Kingdom State Immunity (Merchant Shipping) (Union of Soviet Socialist Republics) Order 1978 granting immunity from arrest in respect of ships owned by USSR and used for commercial purposes — Distinction between succession to privileges under treaties and succession to privileges under Order — Whether ship owned by Russian Federation can be regarded as ship owned by USSR for purposes of Order — The law of Scotland
Summary:The facts:—Coreck Maritime GmbH (‘Coreck’) claimed damages against Sevrybokholodflot, a Russian company, for breach of a charterparty. A warrant for the arrest of a ship owned by Sevrybokholodflot was issued and executed in Scotland. Sevrybokholodflot challenged the arrest of the vessel, claiming that State immunity applied. It relied on the Protocol to the Treaty on Merchant Navigation between the United Kingdom and the Union of Soviet Socialist Republics, 1968 (‘the Protocol’)1 and the State Immunity (Merchant Shipping) (Union of Soviet Socialist Republics) Order 1978 (‘the 1978 Order’), which waived the terms of Section 13(4) of the State Immunity Act 1978 and rendered State immunity applicable in respect of ships owned by the USSR which were used for commercial purposes.2 Sevrybokholodflot maintained that the Russian Federation, which continued the legal personality of the USSR, had succeeded to the treaty privileges and obligations of the USSR, as had been recognized by the Foreign and Commonwealth Office (‘the FCO’). Sevrybokholodflot, formerly a State enterprise, had been transformed into a joint stock company in 1992. Of the shares in the company, 51 per cent were held by private individuals, the State retaining 49 per cent of the shares and continuing to control the management of the company. Sevrybokholodflot claimed that, notwithstanding the changes in 1992, it remained a State-owned company and was an organ of the Russian State entitled to State immunity, including immunity from arrest of its ships. Coreck contended that it was not certain that the Russian Federation was entitled to the same benefits as the USSR under the Protocol and 1978 Order and that, in any event, the vessel in question could not be regarded as State-owned. Coreck claimed that a distinction had to be made between the Protocol and the 1978 Order. Coreck maintained that a treaty had effect in municipal law only in so far as it had been incorporated and that the 1978 Order, which did
have effect in municipal law, waived the terms of Section 13(4) of the State Immunity Act only in respect of ships ‘owned by the USSR’ and not in respect of ships owned by the Russian Federation. Coreck also claimed that Sevrybokholodflot was not a State entity for the purposes of the State Immunity Act.Held:—The motion was refused.
(1) Prima facie the 1978 Order did not apply to the Russian Federation. Thus, notwithstanding the FCO's statements, it was not established that Sevrybokholodflot, even if it could be regarded as a State organ, could rely on the provisions of the 1978 Order (pp. 661–5).
(2) Sevrybokholodflot had been privatized and private stockholders held the majority of the stock in the company. Since that transformation, the ship had been owned by a joint stock company which was distinct from any State organization, did not exercise governmental functions and had independent legal personality. The ship could not be said to be owned by the Russian Federation and could not, from any perspective, be regarded as a ship owned by the USSR, even if the Russian Federation had succeeded, in other circumstances, to the rights and immunities conferred by the 1978 Order (pp. 665–6).
The following is the text of the judgment of the Court:
The continued motion to recall the arrestment of the vessel Matochkin Shar came before me on 19 March 1993. At the conclusion of the hearing I refused the motion.
The action is an admiralty action in personam. It concerns a charterparty into which the pursuers entered on 10 July 1991 in respect of a vessel Karl Liebknecht which is said to belong to the defenders. The charterparty concerned the carriage of a cargo of groundnuts from the Chinese port of Quingado to Rotterdam...
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