General Dynamics United Kingdom Ltd v State of Libya

JurisdictionEngland & Wales
JudgeLord Lloyd-Jones,Lord Briggs,Lady Arden,Lord Burrows,Lord Stephens
Judgment Date25 June 2021
Neutral Citation[2021] UKSC 22
Year2021
CourtSupreme Court
Supreme Court General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22

2020 Dec 15; 2021 June 25

Lord Lloyd-Jones, Lord Briggs, Lady Arden, Lord Burrows, Lord Stephens JJSC

Arbitration - Award - Enforcement - Claimant obtaining New York Convention arbitration award against foreign state - Judge making order granting permission to enforce award - Whether claimant required to serve order through Foreign, Commonwealth and Development Office or under CPR - Whether permissible to dispense with service - State Immunity Act 1978 (c 33), s 12(1) - Arbitration Act 1996 (c 23), s 101 - Human Rights Act 1998 (c 42), s 3(1), Sch 1, Pt I, art 6 - CPR rr 6.16, 6.28, 62.18

An international arbitration tribunal in Geneva made a New York Convention award of £16m in favour of the claimant company against the defendant foreign state. The defendant made no payment of the sum awarded. In accordance with the procedure set out in CPR r 62.18F1, the claimant issued an arbitration claim form seeking the permission of the Commercial Court under section 101 of the Arbitration Act 1996F2 to enforce the award in the same manner as a judgment or order of the court in England and Wales. Teare J made an order (“the enforcement order”) granting permission to enforce the award under section 101 and dispensing with service of the arbitration claim form and the enforcement order under CPR rr 6.16 and 6.28 respectively, finding that there was significant civil unrest and instability in the defendant state which precluded formal service. The defendant applied to vary the enforcement order so as to require that it be served through the diplomatic process as set out in section 12(1) of the State Immunity Act 1978F3, which provided that any “writ or other document required to be served for instituting proceedings against a state” was to be served by being transmitted through the Foreign, Commonwealth and Development Office to the relevant state’s Ministry of Foreign Affairs, save where the state had agreed an alternative method of service under section 12(6) of that Act. Males LJ made the order sought, holding that section 12(1) was mandatory and so precluded service of the enforcement order being dispensed with. The Court of Appeal allowed the claimant’s appeal and set aside Males LJ’s order, holding that section 12(1) applied neither to the arbitration claim form (since no order had been made requiring its service) nor the enforcement order (since it was not the document which instituted the proceedings for enforcement of the award); that, rather, service was governed by the provisions concerning service on a foreign state set out in CPR r 6.44, which permitted dispensation of service under CPR rr 6.16 and 6.28; and that service of the enforcement order should be dispensed with under CPR r 6.28. The defendant appealed, arguing additionally that section 3(1) of the Human Rights Act 1998F4 required that section 12(1) be read so as to achieve compatibility with its right of access to the court under article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms.

On the appeal—

Held, allowing the appeal (Lord Briggs and Lord Stephens JJSC dissenting), that the sovereign equality of states was a fundamental principle of the international legal order which, in cases where the power of the forum state was to be enlisted to seize assets of a defendant state, was best served by clear procedures whereby that state was given proper notice, in a manner consistent with its sovereign status, of any proceedings brought against it and afforded a fair opportunity to respond, thereby upholding the established principles of international law and the promotion of international comity; that consistent with such considerations and on its clear language, section 12 of the State Immunity Act 1978 established special procedural privileges in all cases where proceedings were commenced against a defendant state, including, by section 12(1), a mandatory requirement for service on the state through the Foreign, Commonwealth and Development Office save where some alternative manner of service had been agreed by that state in accordance with section 12(6); that in the particular context of proceedings to enforce an arbitral award against a state, the need for proper notice and fair opportunity to respond required that the state be served with either the arbitration claim form, in a case where the court required the claim form to be served, or, if it did not so require it, the order granting permission to enforce the award; that in either case that document was a “document required to be served for instituting proceedings against a state” and, absent any section 12(6) arrangement, fell to be served in accordance with section 12(1); that where section 12(1) applied, there was no power in the court to dispense with service pursuant to CPR rr 6.16 or 6.28, nor was section 12(1) to be construed, whether pursuant to section 3 of the Human Rights Act 1998 or the common law principle of legality, as implicitly allowing alternative directions as to service in exceptional circumstances where the claimant’s right of access to the court under article 6 of the Human Rights Convention would otherwise be infringed; and that, accordingly, there had been no ground for impugning Males LJ’s order requiring service of the enforcement order by diplomatic process (post, paras 30, 37, 39, 41, 4344, 59, 60, 62, 76, 81, 8485, 88, 92, 96, 99, 100).

Norsk Hydro ASA v State Property Fund of Ukraine (Note) [2009] Bus LR 558, L v Y Regional Government of X [2015] 1 WLR 3948 and Van Zyl v Kingdom of Lesotho [2017] 4 SLR 849 approved.

Gold Reserve Inc v Bolivarian Republic of Venezuela [2016] 1 WLR 2829 considered.

Dicta of Andrew Henshaw QC in Certain Underwriters at Lloyd’s of London v Syrian Arab Republic [2018] EWHC 385 (Comm) at [25], of Teare J in Havlish v Islamic Republic of Iran [2018] EWHC 1478 (Comm) at [21] and of Master Kaye in Qatar National Bank (QPSC) v Government of Eritrea [2019] EWHC 1601 (Ch) at [70] disapproved.

Per Lord Lloyd-Jones JSC. There is no general discretion in the Foreign, Commonwealth and Development Office to decline to effect service. It is obliged to use its best endeavours to effect service in accordance with section 12 (post, para 33).

Decision of the Court of Appeal [2019] EWCA Civ 1110; [2019] 1 WLR 6137; [2020] 2 All ER 888 reversed.

The following cases are referred to in the judgments:

AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB); 129 ILR 571

Al-Adsani v United Kingdom (Application No 35763/97) (2001) 34 EHRR 11, ECtHR(GC)

Alcom Ltd v Republic of Colombia [1984] AC 580; [1984] 2 WLR 750; [1984] 2 All ER 6; [1984] 2 Lloyd’s Rep 24, HL(E)

Ashingdane v United Kingdom (Application No 8225/78) (1985) 7 EHRR 528, ECtHR

Attorney General v Edison Telephone Co of London Ltd (1880) 6 QBD 244

Banque Commerciale Arabe SA v Popular Democratic Republic of Algeria (1977) 65 ILR 412

Barker v Wilson [1980] 1 WLR 884; [1980] 2 All ER 81, DC

Barton v Wright Hassall LLP [2018] UKSC 12; [2018] 1 WLR 1119; [2018] 3 All ER 487, SC(E)

Belfast City Council v Miss Behavin’ Ltd [2007] UKHL 19; [2007] 1 WLR 1420; [2007] 3 All ER 1007, HL(NI)

Belhaj v Straw [2014] EWCA Civ 1394; [2017] AC 964; [2015] 2 WLR 1105; [2016] 1 All ER 121, CA; [2017] UKSC 3; [2017] AC 964; [2017] 2 WLR 456; [2017] 3 All ER 337, SC(E)

Benkharbouche v Embassy of the Republic of Sudan [2017] UKSC 62; [2019] AC 777; [2017] 3 WLR 957; [2017] ICR 1327; [2018] 1 All ER 662, SC(E)

Boru Hatlari Ile Petrol Taşima AŞ v Tepe Insaat Sanayii AS [2018] UKPC 31, PC

Chapman v Kirke [1948] 2 KB 450; [1948] 2 All ER 556, DC

Cudak v Lithuania (Application No 15869/02) (2010) 51 EHRR 15, ECtHR(GC)

Director of Public Prosecutions v McFarlane [2019] EWHC 1895 (Admin); [2020] 1 Cr App R 4, DC

European Union v Syrian Arab Republic [2018] EWHC 181 (Comm)

European Union v Syrian Arab Republic [2018] EWHC 1712 (Comm)

FG Hemisphere Associates LLC v Democratic Republic of the Congo [2010] HKCA 19; 142 ILR 216; [2011] HKCFA 41; 147 ILR 376

Federal Comr of Taxation v ICI Australia Ltd (1972) 127 CLR 529

Firebird Global Master Fund II Ltd v Republic of Nauru [2015] HCA 43

Garden Contamination Case (No 1) (1989) 80 ILR 367

Ghaidan v Godin-Mendoza [2004] UKHL 30; [2004] 2 AC 557; [2004] 3 WLR 113; [2004] 3 All ER 411, HL(E)

Gold Reserve Inc v Bolivarian Republic of Venezuela [2016] EWHC 153 (Comm); [2016] 1 WLR 2829; [2016] 1 Lloyd’s Rep 483

Golder v United Kingdom (Application No 4451/70) (1975) 1 EHRR 524, ECtHR

Havlish v Islamic Republic of Iran [2018] EWHC 1478 (Comm)

Heiser (Estate of) v Islamic Republic of Iran [2019] EWHC 2074 (QB)

Holland v Lampen-Wolfe [2000] 1 WLR 1573; [2000] 3 All ER 833, HL(E)

International Schools Service v Government of Iran (1981) 505 F Supp 178

Jones v Ministry of the Interior of the Kingdom of Saudi Arabia [2006] UKHL 26; [2007] 1 AC 270; [2006] 2 WLR 1424; [2007] 1 All ER 113, HL(E)

Jurisdictional Immunities of the State (Germany v Italy) [2012] ICJ Rep 99

Kuwait Airways Corpn v Iraqi Airways Co (unreported) 16 April 1992, Evans J; [1995] 1 WLR 1147; [1995] 3 All ER 694; [1995] 2 Lloyd’s Rep 317, HL(E)

L v Y Regional Government of X [2015] EWHC 68 (Comm); [2015] 1 WLR 3948; [2015] 1 Lloyd’s Rep 483

La Générale des Carrières et des Mines v F G Hemisphere Associates LLC [2012] UKPC 27; [2013] 1 All ER 409; [2013] 1 All ER (Comm) 753; [2012] 2 Lloyd’s Rep 443, PC

Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327

Lloyd’s of London (Certain Underwriters at) v Syrian Arab Republic [2018] EWHC 385 (Comm)

London Steam-Ship Owners’ Mutual Insurance Association Ltd v Kingdom of Spain (The Prestige) [2020] EWHC 1920 (Comm); [2020] 1 WLR 5279; [2021] 3 All ER 660; [2020] 2 Lloyd’s Rep 356

Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America) [1986] ICJ Rep 14

Nationwide Access Ltd v Customs and Excise Comrs [2001] V & DR 31

New England Merchants National Bank...

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