Hispano Americana SA v Central Bank of Nigeria

This is another case arising out of the troubles in Nigeria. In 1975 the port of Lagos was crowded with shipping. It was completely congested. There were 300 or 400 ships waiting outside the port - full of cement - with demurrage running up continually in huge sums.

Orders had been given by the ministries in Nigeria for this cement. It came largely from Europe. Far too much had been ordered. That was why the port was congested with ships.

The transactions were financed by way of letters of credit issued by the Central Bank of Nigeria. We had an instance in Trendtex Trading v. Bank of Nigeria (1977) 1 Queen's Bench 529. That was a letter of credit which was issued on the 24th July, 1975. In this case we have one issued on the 22nd April, 1975. It was issued by the Midland Bank here on the advice of the Central Bank of Nigeria in Lagos. It was an irrevocable letter of credit. It was not confirmed by the Midland Bank here: they were only the correspondents. The Central Bank of Nigeria advised the beneficiaries that they had opened an irrevocable letter of credit in favour of the sellers on account of the Permanent Secretary to the Ministry of Defence in Lagos. It was in the sum of U.S. £14,400,000. There had to be shipment accordingly. Finally they advised: "Settlement under this credit will be by means of our sight draft on New York". The Midland Bank, no doubt, had been put in very considerable funds by the authorities in Nigeria in order to meet these letters of credit when they fell due. The beneficiaries of the letters of credit in these cases have now sued the Central Bank of Nigeria on these letters of credit.

In the Trendtex case the point was taken by the Central Bank of Nigeria that they had sovereign immunity: and thatwas elaborately argued here. They put it on two grounds. First, that the Central Bank of Nigeria was merely an alter ego or an organ of the State of Nigeria. That argument was overruled by the whole of the court, which said that the Central Bank of Nigeria was not a mere alter ego or organ of the State of Nigeria: and for that reason alone would not qualify for sovereign immunity. Apart from that, by a majority of two to one in this court, it was held that in regard to a commercial transaction of this kind (which was within the territorial jurisdiction of the United Kingdom by means of the letters of credit) there was no sovereign immunity.

The decisions on those points are not challenged in the hearing before us to-day. In the Trendtex case the court did grant an injunction (what is often called in these courts a Mareva injunction) to restrain the bank from moving the funds out of the jurisdiction and preventing them from, being disposed of. In the course of my judgment in that case, I said on that point at page 561:

"It was said that the money standing to the credit in the books of the Midland Bank was money belonging to the Federation of Nigeria: and that it was not subject to seizure or to an injunction. This point seems to me to depend on precisely the same grounds as those considered earlier. If the Central Bank is entitled to immunity from being sued, so also can the funds be immune from being seized. Otherwise not". It was the word "not" which applied there. If the bank was not immune from being sued, the funds were not immune from being seized.

Lord Justice Stephenson adhered to that view in his very last sentence. He said: "I do not therefore dissent from Lord Denning M.R. 's opinion on this point that it depends onprecisely the same grounds as those considered earlier and that we should continue the injunctions".

Lord Justice Shaw equally said at the end of his judgment: "If the bank is to be regarded as part of that government yet not immune from suit (and a fortiori if it is not so regarded) it is a reasonable corollary that those funds should be preserved within the jurisdiction so long as there is a possibility that the action may survive and succeed". And he added (because we had some information in that case): "I am much encouraged to this view by the brash intimation given to Trendtex in Lagos in October 1975 that they would not receive any payment. I would continue the injunction".

So the whole court in the Trendtex case granted an injunction to prevent the funds being moved out of England so that the creditors could not get them.

But in the case to-day (which is identical in all material respect to the Trendtex case) Mr. Kemp has come before us and urged that it was not a case for an injunction. He said that the court made a mistake in the Trendtex case in granting the injunction. He said that it is not in conformity with modern law for an injunction to be granted in such a case as this -especially against the funds or property of a central bank.

Mr. Kemp urged that whatever the position was at the date of the Trendtex case, the position to-day is different even in international law because of statutes which have since come into force. On the 21st October, 1976 theForeign Sovereign Immunities Act of 19766 came into force in the United States: and on the 20th July, 1978 theState Immunity Act 19788 of our own Parliament came into force. Mr. Kemp urged that international law has been changed by those statutes: and we oughtto recognise that alteration to-day. He also drew our...