General Dynamics United Kingdom Ltd v The State of Libya
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton MR,Lord Justice Longmore,Lord Justice Flaux |
| Judgment Date | 03 July 2019 |
| Neutral Citation | [2019] EWCA Civ 1110 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A4/2019/0283 |
| Date | 03 July 2019 |
[2019] EWCA Civ 1110
THE MASTER OF THE ROLLS
THE RIGHT HONOURABLE Lord Justice Longmore
and
THE RIGHT HONOURABLE Lord Justice Flaux
Case No: A4/2019/0283
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE LORD JUSTICE MALES
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Daniel Toledano QC & Mr James Ruddell (instructed by Reed Smith) for the Appellant
Mr Huw Davies QC & Mr Lucas Bastin (instructed by Curtis, Mallet-Prevost, Colt & Mosle) for the Respondent
Hearing date: 13 th June 2019
Approved Judgment
Sir Terence Etherton MR, Lord Justice Longmore and
Introduction
How as a matter of English law is an award made against a foreign state to be enforced? When the State Immunity Bill was first introduced to Parliament, the answer was clear. The exceptions to immunity specified in the bill (including that for commercial transactions) did not extend to enforcement because clause 14 provided that there was to be no execution against the property of a foreign state except against commercial ships or cargoes. That provision was dropped from what in due course became the State Immunity Act 1978 (“the 1978 Act”).
In this case Teare J made an order on 20 th July 2018 giving permission to the claimant to enforce an arbitration award made by an ICC arbitral tribunal in Geneva. The order was in what would have been a conventional form in a case between two commercial parties save perhaps that the order dispensed with the need for formal service although it provided for notice of the order to be given in such a way as would bring notice of the order to the respondent. The dispute which was the subject of the award was not, however, a dispute between ordinary commercial parties since the respondent was a sovereign state, namely the state of Libya (“Libya”). Libya has applied to set aside those parts of Teare J's order which dispense with service and provide for notice to be given to it, on the basis that section 12(1) of the 1978 Act requires service through the Foreign and Commonwealth Office (“the FCO”) of
“any writ or other document required to be served for instituting proceedings against a State”.
Since no service in this manner of either the arbitration claim form or the judge's order giving permission to enforce the award has occurred, Libya asserts that the judge's order must be set aside and that the award cannot be enforced until service in that manner is achieved. Any assets of Libya in England, pending such service and pending any further dispute about enforcement of the award, cannot therefore be used to satisfy the award.
It might be thought that this is a comparatively academic application since service through the FCO should be straightforward but Libya is in turmoil. The Government of National Accord in Tripoli is the only government recognised by the United Kingdom but there is a parallel government based in Tobruk (known as the House of Representatives). The evidence established that armed militia groups are active in Tripoli endangering the lives and safety of civilians with a real risk of full scale civil war. The view of the FCO is that service of documents on the Ministry of Foreign Affairs is not straightforward, too dangerous and, even if possible at all, likely to take over a year.
The question whether service of the judge's order is required is therefore by no means academic and is likely to be of practical relevance whenever there is to be service on a state which is suffering internal conflict or for some other reason service through the FCO and indeed any formal service is likely to be difficult.
The application to set aside the relevant parts of the order of Teare J came before Males J as he then was. Males LJ, as he later became, decided that the order of the judge had to be served through the FCO, and that there was no jurisdiction to dispense with such service. Had there been such jurisdiction he would have upheld the judge's order dispensing with service but, in the absence of such jurisdiction, the result was that the award cannot currently be enforced in England at all. He concluded his judgment by saying, with King David (who, he apparently thought, wrote Psalm 146), that those who put their trust in princes are liable to be disappointed. The claimant, in whose favour the award was made, now appeals.
Background to appeal
(1) Facts
The claimant is a United Kingdom company which is part of the General Dynamics group, a global military defence conglomerate. The award which it seeks to enforce was made on 5 th January 2016 by an ICC arbitral tribunal in Geneva. The arbitral proceedings were commenced in 2013 and Libya was legally represented throughout by the Sefrioui Law Firm of Paris. The dispute related to a contract between the parties for the supply of communications systems. The tribunal awarded £16,114,120.62 in favour of the claimant, together with interest and costs.
Libya has made no payment or proposals for payment of the sum awarded. It is a reasonable inference that it does not intend to meet its obligation to pay. The claimant sought initially to enforce the award in the United States. Proceedings there for recognition and enforcement were delivered to the Ministry of Foreign Affairs in Tripoli in April 2016. It appears that there was no difficulty in serving the proceedings at that time. However, the claimant has not pursued the United States enforcement proceedings because it appears that there are no assets in the United States against which the award could be enforced. Instead it seeks to enforce in this country where it believes that there are or may be such assets.
(2) Attempts to enforce
The award is a New York Convention award enforceable pursuant to section 101 of the Arbitration Act 1996 (“the 1996 Act”). This provides:-
“101. (1) A New York Convention award shall be recognised as binding on the persons as between whom it was made, and may accordingly be relied on by those persons by way of defence, set-off or otherwise in any legal proceedings in England and Wales or Northern Ireland.
(2) A New York Convention award may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
…
(3) Where leave is so given, judgment may be entered in terms of the award.”
In accordance with the procedure set out in CPR 62.18, the claimant's application was made without notice in an arbitration claim form. That led to a (without notice) oral hearing before Teare J as a result of which he made the following order:-
“(1) Pursuant to section 101(2) of the Arbitration Act 1996, the claimant is given permission to enforce the arbitration award made on 5 January 2016 in ICC Case No. 19222/EM (“the Award”) against the Defendant in the same manner as a judgment or order of the Court and to the same effect.
(2) Pursuant to Civil Procedure Rule 62.19, such leave shall include interest accruing in the following amounts:-
a) interest at the annual rate of 5%, accruing in relation to the sum of £16,114,120.62, from 26 June 2013 until 21 June 2018, in the amount of £4,019,700.50; and
b) interest on the same sum thereafter at a daily rate of £2207.41.
(3) Pursuant to section 101(3) of the Arbitration Act 1996, judgment be entered against the Defendant in the terms of the Award, and comprising the following sums:-
a) the sum of £16,114, – 120.62, as prescribed in the Award;
b) the sums of EUR 115,293.98, £990,089.58, CHF 631,332.24 and US$ 62,200.15. as prescribed in the Award;
c) interest accruing from 26 June 2013 until 21 June 2018, in the amount of £4,019,700.50; and
d) interest thereafter at a daily rate of £2,207.41.
(4) Pursuant to Civil Procedure Rules 6.16 and 6.28, the Claimant has permission to dispense with service of the Arbitration Claim Form dated 21 June 2018, any Order made by the Court and other associated documents.
(5) The Claimant is to courier the Arbitration Claim Form, this Order and the associated documents to the following addresses:
a) Interim General Committee for Defence, Ghaser Bin Gashour, Tripoli, Libya;
b) The Ministry of Foreign Affairs, Ash Shatt St, Tripoli, Libya; and
c) Sefrioui Law Firm, 72 Boulevard de Courcelles, 75017 Paris, France.
(6) The Defendant may, within two months of the date of this order, apply to set aside this Order and the Award shall not be enforced until after the expiration of that period, or, if the Defendant applies to set aside this order within two months of the date of this Order, until after the application has been finally disposed of.
(7) Pursuant to CPR r.44.7 the Defendant shall pay the Claimant's costs of and incidental to this application, summarily assessed in the amount of £60,000.00.”
It will be observed that the order not only gave permission to enforce the award, but also (as contemplated by section 101(3) of the 1996 Act) entered judgment in terms of the award. It contemplated that there would be no service of any kind on the defendant state, but ensured that Libya would be made aware of the proceedings and of the order by the couriering of documents to three addresses, one of which was the address of the Ministry of Foreign Affairs in Tripoli. (All three addresses were associated with the Government of National Accord, the recognised government of Libya). The order provided also that the defendant state could apply to set it aside, the period for doing so within which the award was not to be enforced being a period of two months from the date of the order.
The effect of this order was that in the absence of any such application within the specified period the claimant would be entitled to enforce the judgment thus entered against any property of...
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