L R Avionics Technologies Ltd v The Federal Republic of Nigeria and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Males |
| Judgment Date | 15 July 2016 |
| Neutral Citation | [2016] EWHC 1761 (Comm) |
| Docket Number | Case No: CL-2015-000283 |
| Court | Queen's Bench Division (Commercial Court) |
[2016] EWHC 1761 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Males
Case No: CL-2015-000283
Ms Zahra Al-Rikabi (instructed by Anthony Seddon Solicitors) for the Claimant
Ms Hilda Ephraim-Adejumo (instructed by Gromyko Amedu Solicitors) for the Defendants
Hearing date: 8 th July 2016
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.
The issue
If a state were to use its own premises in order to carry out consular activities such as the handling of passport and visa applications, it could not be said that the premises were "in use … for commercial purposes" within the meaning of section 13(4) of the State Immunity Act 1978. The premises would therefore be immune from any process for the enforcement of a judgment or arbitration award against the state under that section (quite apart from the immunity which attaches to "consular premises"). But what is the position if, instead of handling the applications itself, the state grants a lease of the premises to a privately owned company to which it outsources this task?
That is what has happened in this case. The Federal Republic of Nigeria is the registered proprietor of the freehold interest in office premises at 56/57 Fleet Street in London. It has granted a lease of the premises to a company called Online Integrated Solutions Ltd ("OIS") for the purpose of providing visa and passport services (although other office use is also permitted) in exchange for an annual rent of £150,000. OIS, which describes itself as an official partner of the Nigerian High Commission, provides Nigerian visa and passport services on behalf of the High Commission.
The claimant has obtained permission to enforce in this country an arbitration award made against the Federal Republic together with a judgment of the Nigerian Federal High Court which was entered by way of enforcement of the award in Nigeria. It has also obtained a final charging order in respect of the Fleet Street property and has issued proceedings in the Chancery Division for an order for sale of the property. The defendants contend that the property is immune from execution and apply to have the charging order set aside. That is the application which is currently before me, although the arguments of Ms Hilda Ephraim-Adejumo for the defendants also challenged the permission granted to enforce the award and the Nigerian judgment in this country.
The arbitration
The claimant is a company registered in Israel. On 22 October 2002 it entered into a contract with the Federal Republic of Nigeria for the supply of military equipment. The contract was governed by Nigerian law and was subject to arbitration in Nigeria in accordance with the Nigerian Arbitration and Conciliation Act 1998. In due course a dispute arose and on 31 January 2012 Mr Babajide Ogundipe, a Nigerian barrister, was appointed as sole arbitrator by the Chief Judge of the Federal High Court of Nigeria. On 8 February 2013 the arbitrator awarded US $5 million to the claimant as damages for breach of the contract, together with costs of Naira 4.71 million (equivalent to about £26,500). The award did not carry interest.
Proceedings in Nigeria
On 17 March 2013 the defendant state, represented by the Attorney General, applied to the Federal High Court in Abuja to set aside the award. That application failed.
The claimant then applied to the Federal High Court for leave to enforce the award. On 30 June 2014 the Federal High Court granted leave to recognise and enforce the award in the same manner as a judgment and entered judgment ordering the defendants (the Federal Government and the Attorney General) to pay the sums awarded together with interest at the prevailing bank rate from 11 March 2013.
Proceedings in England
The Government did not comply with the order of the Nigerian court so the claimant sought to enforce the award in this country. On 4 March 2015 it made a without notice application to register the award under section 101 of the Arbitration Act 1996 and also to register the Nigerian judgment under section 9 of the Administration of Justice Act 1920. Phillips J made both orders on 14 April 2015 and also gave permission for service of the claim form, the witness statement in support of the application and the order itself on the defendants out of the jurisdiction through diplomatic channels under section 12 of the State Immunity Act. These were duly served on 24 June 2015.
Phillips J's order provided that the defendants had permission to apply to set aside the registration within two months after service of the notice of registration and that enforcement would not be commenced until after the expiry of that period. That, as Ms Zahra Al-Rikabi accepts on behalf the claimant, was a mistake. What the order should have said was that the defendant had two months and 22 days after service within which to enter an acknowledgment of service: see section 12(2) of the State Immunity Act which provides that the time for acknowledging service begins to run two months after the date of receipt of the claim form at the Ministry of Foreign Affairs of the defendant state.
Despite being properly served, the defendants did not acknowledge service.
On 25 August 2015 (and thus before the period of two months and 22 days had expired) the claimant applied for a charging order in respect of the property. An interim charging order was made by Master Kay QC on 17 September 2015. This was after expiry of the period of two months and 22 days, albeit not by very much. Section 12(3) of the State Immunity Act provides that no judgment in default shall be given against a state except on proof that the time for acknowledging service has expired. This has been described as a matter going to the court's jurisdiction (see Norsk Hydro ASA v State Property Fund of Ukraine [2002] EWHC 2120 (Comm) at [24] to [26]), but the critical date is the date when judgment is given and not the date when an application for such judgment is issued.
The interim charging order was served on the defendants through diplomatic channels on 26 October 2015. However, no permission had been granted to serve this order out of the jurisdiction. Such service was therefore invalid. Again the defendants did not acknowledge service.
The claimant's application for a final charging order came before Master Kay QC at a hearing on 6 November 2015. This was only 11 days after the (invalid) service of the interim order, although the rules provide that there should be a period of not less than 21 days between a defendant's receipt of an interim order and the hearing of an application for a final order: see CPR 73.7(5). Nevertheless the Master made a final charging order which provided that the defendants had 21 days from receipt to apply to vary it or set it aside. This order provided for service by email as well as diplomatic channels. Service by email was effected on 10 November 2015 and by diplomatic channels on 19 January 2016.
On 5 February 2016 the claimant issued a Part 8 claim form in the Chancery Division seeking an order for sale of the property. This was served on the defendants, again through diplomatic channels, although no permission for such service had been granted.
It appears to have been the service of this application which finally prompted the defendants into action. On 12 May 2016 they issued an application to discharge or set aside the final charging order and sought an extension of time within which to make that application.
The claimant resists that application and seeks to cure the procedural errors identified above, either by retrospective validation of such errors or by orders dispensing with the need for service.
The parties' submissions
I deal first with the issue of substance whether the property is immune from execution under the State Immunity Act. On behalf of the defendant Ms Ephraim-Adejumo contends that:
a. in accordance with the decision of Stanley Burnton J in AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB) the Nigerian judgment was not capable of being recognised under section 9 of the Administration of Justice 1920 because it does not fall within the scope of section 31 of the Civil Jurisdiction & Judgments Act 1982; and
b. the premises at 56/57 Fleet Street are "property of a State" which is immune from enforcement of a judgement or arbitration award pursuant to section 13 of the State Immunity Act.
On behalf of the claimant Ms Al-Rikabi accepts that the Nigerian judgment does not fall within the scope of section 31 of the Civil Jurisdiction & Judgments Act 1982, but she submits that the award can be enforced pursuant to section 101 of the Arbitration Act 1996 and that the Nigerian judgment can be enforced under section 9 of the 1920 Act because in both cases proceedings for such enforcement "relate to the arbitration" within the meaning of section 9 of the State Immunity Act, with the consequence that the defendants are not immune to such enforcement proceedings.
Ms Al-Rikabi contends also that the property is "in use … for commercial purposes" within the meaning of section 13(4) of the Act and is therefore susceptible to enforcement by way of a charging order and an order for sale.
Accordingly three issues of substance arise, namely (a) whether the award can be enforced against the defendant state, (b) whether the Nigerian judgment can be enforced and (c) whether the property is...
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