General Dynamics United Kingdom Ltd v State of Libya

This was an appeal by Libya from a decision ([2019] EWCA Civ 1110; [2019] 2 CLC 18) that s. 12(1) of the State Immunity Act 1978 did not require an arbitration claim form or order enforcing an award to be served on Libya through the Foreign, Commonwealth and Development Office as a document ‘instituting proceedings’, and that the court had jurisdiction in an appropriate case to dispense with service in accordance with CPR r. 6.16 and/or r. 6.28.

The respondent company had obtained an ICC arbitration award against Libya and sought to enforce it in England.

The court made a without notice order granting permission to enforce the award as a judgment pursuant to the Arbitration Act 1996, s. 101, and permission to dispense with service of the arbitration claim form and enforcement order, on the basis that exceptional circumstances existed in Libya which justified that order (see [2018] EWHC 1912 (Comm)).

After an inter partes hearing the permission to dispense with service was set aside on the basis that the arbitration claim form or enforcement order had to be served on Libya through diplomatic channels as required by s. 12 of the 1978 Act, and that the court did not have a discretion to dispense with service.

The Court of Appeal reversed that decision and Libya appealed.

The respondent argued that, if s. 12 was construed in way that did not allow for alternative directions as to service in exceptional circumstances, that would be inconsistent with a claimant's right of access to the court under the ECHR, art. 6.

Held, allowing the appeal by a majority (Lord Briggs and Lord Stephens dissenting):

1. Where the jurisdiction of the UK courts was invoked in respect of a defendant state, it would always be necessary to give notice of the institution of the proceedings to the defendant state. There would always be a document requiring to be served and the wording of s. 12(1) was intended to make clear that, subject only to the exception in s. 12(6) in the case of service in a manner to which the defendant state had agreed, service through the FCDO was required, whatever the nature of the document. In particular, s. 12 applied to proceedings to enforce an arbitral award under the New York Convention pursuant to s. 101 of the Arbitration Act 1996 and CPR, r. 62.18. Where proceedings were instituted to enforce an arbitration award against a defendant state, and where no order had been made for the service of the application for permission to enforce the award, the order for enforcement was a ‘document required to be served for instituting proceedings against a State’ and s. 12(1) required, subject only to s. 12(6), that service be effected through the FCDO to the Ministry of Foreign Affairs of the defendant state. (PCL v Y Regional Government of X[2015] EWHC 68 (Comm); [2015] 1 WLR 3948andVan Zyl v Lesotho[2017] SGHC 104; [2017] 4 SLR 849applied.)

2. In the present case, the court did not have a power to dispense with service. The CPR could not give the court a discretion to dispense with a statutory requirement and in light of r. 6.1(a) did not purport to do so. The procedure in s. 12(1) was intended to be a mandatory and exclusive procedure in the cases to which it applied, subject only to s. 12(6). (Kuwait Airways Corp v Iraqi Airways Co[1995] CLC 1065considered; dicta in Certain Underwriters atLloyd's London v Syria[2018] EWHC 385 (Comm), Havlish v Iran[2018] EWHC 1478 (Comm)andQatar National Bank (QPSC) v Eritrea[2019] EWHC 1601 (Ch)disapproved.)

3. There was no obligation on states in international law to accord to other states the privilege of service of initiating process through the diplomatic channel as provided for in s. 12(1). However, that privilege pursued a legitimate objective by proportionate means and did not therefore impair the essence of the art. 6 right of access to the court. Service through diplomatic channels was a well-established procedure for service on states which, although not universal, was required by a large number of states and was the required method of service on a defendant state under the UN and European conventions on state immunity. In view of the fact that it was the only permitted method of service on a state under the European Convention on State Immunity, which was a Council of Europe treaty, compliance with that provision could hardly be considered a violation of art. 6 of the ECHR. Although exceptional circumstances prevented the effective operation of the procedure in the present case, that was not a sufficient basis for impugning the entire procedure.