General Dynamics United Kingdom Ltd v State of Libya
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males |
| Judgment Date | 18 January 2019 |
| Neutral Citation | [2019] EWHC 64 (Comm) |
| Docket Number | Case No: CL-2018-000422 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 18 January 2019 |
Lord Justice Males
Case No: CL-2018-000422
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS OF ENGLAND & WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Huw Davies QC (instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP) for the Defendant
Daniel Toledano QC and James Ruddell (instructed by Reed Smith LLP) for the Claimant
Hearing date: 18 December 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Can an arbitration award against a state be enforced by court proceedings in this country without service on that state of any formal court document? Service of court proceedings on states is governed by section 12 of the State Immunity Act 1978 which provides for service through the Foreign & Commonwealth Office of “any writ or other document required to be served for instituting proceedings against the State”. The claimant says that this section does not apply because arbitration enforcement proceedings are instituted by the issue of an arbitration claim form which is not required to be served on a defendant and that the order granting permission to enforce the award, which is required to be served, is not the document which institutes the proceedings. It says, therefore, that section 12 does not apply to service of an order granting permission to enforce an award and that the court has an unfettered power to dispense with service of the order under CPR 6.28.
The question whether the court has power to dispense with such service and, if so, whether that power was rightly exercised, arises on an application by the State of Libya to set aside those parts of the order made by Teare J on 20 July 2018 which dispensed with service of the order for enforcement and provided that the defendant state should have two months from the date of the order within which to apply to set it aside.
The claimant's application to dispense with service was made to Teare J, in part at least, on the basis that there are two competing governments in Libya, namely the Tripoli based Government of National Accord and a parallel government based in Tobruk and known as the House of Representatives, and that there was some room for doubt as to which of the rival Ministries of Foreign Affairs is the relevant institution for service for the purpose of section 12. Teare J alluded to the fact that there are two entities claiming to be the Government of Libya in his short ruling, but (as I read it) did not base his decision on that fact. Nevertheless it is important to say at the outset that the Government of National Accord is the only government in Libya which is recognised by the United Kingdom, as well as by other states and international bodies, and that there is no doubt that the Ministry of Foreign Affairs in Tripoli is the relevant Ministry for the purpose of section 12.
Background
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 January 2016 by an ICC arbitral tribunal in Geneva. The arbitral proceedings were commenced in 2013 and the defendant state 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.
The defendant state 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 were no difficulties 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.
The order of Teare J
The award is a New York Convention award enforceable pursuant to section 101 of the Arbitration Act 1996.
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 an 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 £2207.41.
(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 r44.7 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 the defendant 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. (I note in passing that all three addresses were associated with the Government of National Accord; whatever may have been said in the claimant's evidence and submissions about the existence of two rival governments, it is clear from the order that it was the Government of National Accord which this court was invited to and did regard as the recognised government of Libya). It was not suggested that this couriering of documents would constitute good service. 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 the State of Libya in this jurisdiction “which is for the time being in use or intended for use for commercial purposes”: see section 13 of the 1978 Act.
The defendant's application
The proceedings did come to the attention of the defendant state which has now applied (within the specified two-month period) to set aside paragraphs 4 and 5 of the order and to vary paragraphs 6 and 7 so that the period for any application to set aside paragraphs 1 to 3 will run from the date of service of the order pursuant to section 12 of the State Immunity Act. This would mean that, in the meanwhile, the award will not be enforceable here.
Section 1 of the State Immunity Act 1978 provides that:
“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.”
Thus the default rule is that a state is entitled to immunity, but this is subject to a number of stated exceptions. The exceptions include “proceedings relating to a commercial transaction entered into by the State” (section 3) and proceedings which relate to an arbitration to which the state has agreed (section 9).
Service of court proceedings on states is governed by section 12 of the Act which provides, so far as relevant:
“(1) Any writ or other document required to be served for instituting proceedings against a State shall be served by being transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs...
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