Pocket Kings Ltd v Safenames Ltd [England, High Court, Chancery Division]
| Jurisdiction | England & Wales |
| Judge | Michael Furness |
| Judgment Date | 16 October 2009 |
| Court | Chancery Division |
| Date | 16 October 2009 |
England, High Court, Chancery Division
(Michael Furness QC, Deputy High Court Judge)
States Federal States Constituent territories United States of America Whether States of the Union are sovereign Whether entitled to State immunity Whether governmental acts enforceable in foreign State Commonwealth of Kentucky
State immunity Jurisdictional immunity Entitlement to immunity Federal States Whether constituent territory of federal State entitled to State immunity Whether exercising sovereign authority State Immunity Act 1978 Service of process upon constituent territory The law of England
Summary: The facts:Pocket Kings Limited (Pocket Kings), an English company, licensed the use of an Internet domain name for the purpose of online gambling. Safenames Limited (Safenames) was the registrar of that domain name. The Commonwealth of Kentucky (Kentucky), a state of the United States of America (USA), obtained from the Kentucky courts an order for the civil forfeiture of the domain name on the basis that the name was being used for unlawful online gambling activities in Kentucky. Pocket Kings brought proceedings in the English courts against Safenames and Kentucky, seeking an order restraining Safenames from complying with the forfeiture order and a declaration that English courts would not give effect to the forfeiture order on the ground that to do so would constitute the enforcement of a foreign State's penal or public law. Kentucky was served with the proceedings by means of the procedure laid down in Section 12 of the State Immunity Act 19782 but did not acknowledge service. Pocket Kings applied for summary judgment.
Held:The application for summary judgment was granted.
(1) Kentucky was not a State entitled to State immunity under the State Immunity Act 1978. Section 14(1) and (5) of the Act3 defined a State in
such a way as to exclude the constituent territories of a federal State unless the relevant provisions of the Act had been extended to them by Order in Council. There was no such Order in Council with respect to the states of the USA. In contrast to the position at common law,4 an entity which was a constituent territory of a foreign State could not itself be a foreign State (paras. 912).
(2) Kentucky was not entitled to State immunity as a separate entity under Section 14(2) of the State Immunity Act 1978.5 A separate entity was entitled to immunity only if, and to the extent that, it acted in the exercise of sovereign authority. The term sovereign authority referred to the sovereign authority of the recognized foreign State, which was an actor on the international plane and which therefore benefited from the principle of sovereign equality of States under international law. In this case that State was the USA. Kentucky had not, however, acted in the exercise of the sovereign authority of the USA but had acted pursuant to its own authority under United States constitutional law (paras. 1324).
(3) Kentucky had been properly served. The requirements for service of process were laid down by English law, specifically by Sections 12(1) and 14(5) of the Act, which required that a constituent territory of a foreign State had to be served by the transmission of the relevant documents to the foreign ministry of the foreign State of which it was a constituent territory. In the present case, all relevant documents had been transmitted by the British Embassy in Washington to the State Department. The fact that the State Department had refused to accept them did not invalidate the service (paras. 258).
(4) Pocket Kings was entitled to the relief sought. Although the procedures in the Kentucky courts had been civil proceedings, the forfeiture order was such as to be penal in character. The fact that Kentucky was not a sovereign State did not prevent the order from being governmental in character (paras. 2941).
The following is the text of the judgment of the Court:
1. This is an application by the claimant, Pocket Kings Ltd (Pocket Kings), for summary judgment in default of acknowledgement of service by the second defendant, the Commonwealth of Kentucky (Kentucky). The first defendant, Safenames Ltd (Safenames), is willing to submit to judgment on agreed terms provided that Pocket Kings obtains judgment in default against Kentucky.
2. The factual basis of Pocket Kings' claim is succinctly pleaded in the particulars of claim the material parts of which I quote below.
3. The particulars of claim go on to allege that Pocket Kings will suffer serious and irreparable harm if Safenames transfers the domain name to Kentucky or otherwise takes any other step that interferes with Pocket Kings' use and enjoyment of the domain name. It is then pleaded that the seizure order (whether in the original or amended form) should not be recognised or enforced by this court on the basis that (a) the enforcement of the seizure order would amount to the exercise of the sovereign authority of Kentucky within this jurisdiction and would amount to the enforcement of the penal or public law of a foreign state, or (b) the enforcement of the seizure order within this jurisdiction would be contrary to public policy because the Kentucky proceedings breached all known principles of natural justice. It is also pleaded for the same reasons that this court should not recognise or enforce any order for forfeiture of the domain names that is made in the Kentucky proceedings.
4. The only relief claimed in the prayer for relief against Kentucky is a declaration that this court will not recognise or enforce the orders currently made in the Kentucky proceedings or any subsequent order for the seizure or forfeiture of the domain name.
5. Since the commencement of these proceedings there has been a further significant development in the Kentucky proceedings, in that the Kentucky Court of Appeals, on the application of a number of domain name owners (but not Pocket Kings), has ruled that an Internet domain name is not a gambling device, and therefore the seizure order was wrongly made. A further appeal by Kentucky to the Kentucky Supreme Court is still pending. As I understand the position Pocket Kings does not have the benefit of the Court of Appeals' ruling because it was not one of the appellants, so the seizure order against its domain name remains in force. Beyond serving the seizure order on Pocket Kings, no attempt has been made to enforce that order to date.
6. These proceedings were issued on 3 October 2008. On 3 December 2008 Warren J granted permission to serve the claim on Kentucky out of the jurisdiction in accordance with the requirements of the State Immunity Act 1978. Pursuant to that order the claim was served on Kentucky by means of service at the United States Department of State. The time for acknowledgement of service expired on 15 May 2009 and the application for judgment in default was issued on 9 June 2009. On 12 June 2009 directions were given by Floyd J for the service of the application for judgment in default on Kentucky. Service was effected in accordance with those directions on 24 June 2009.
7. Although, as appears below, Kentucky are well aware of these proceedings and this application, they have chosen neither to appear nor to make any submissions in writing as to why a judgment should not be entered against them. There are, nonetheless, a number of issues on which I must satisfy myself before giving judgment against Kentucky. In considering these issues I am indebted to Mr Tager QC who has taken me through them carefully and indicated the possible lines of argument which Kentucky might have taken had it chosen to appear. It is, nonetheless, regrettable that this court is obliged to give rulings on some important issues concerning state immunity without the benefit of adversarial argument. The issues which I need to consider are as follows. (a) Is Kentucky entitled to state immunity under the 1978 Act? If it is, then unless one of a number of exceptions in the Act applies to these proceedings, judgment may not be entered against it. (b) If Kentucky is not a state within the meaning of the Act, has it been properly served both with the proceedings and with this application? (c) Do the facts of the case justify the granting of the declaratory relief which Pocket Kings claims against Kentucky?
8. Before considering this question I will set out the relevant provisions of the Act:
To continue reading
Request your trial