Qatar National Bank (Q.P.S.C) (Formerly Qatar National Bank (S.A.Q)) v Government of Eritrea
| Jurisdiction | England & Wales |
| Judge | Master Kaye |
| Judgment Date | 27 June 2019 |
| Neutral Citation | [2019] EWHC 1601 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2018-000751 |
| Date | 27 June 2019 |
[2019] EWHC 1601 (Ch)
Master Kaye
Case No: BL-2018-000751
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
7 Rolls Buildings
Fetter Lane, London, EC4A 1NL
Daniel Saoul QC (instructed by Fieldfisher) for the Claimant
The Defendants did not appear and were not represented
Hearing date: 10 May 2019
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.
This is the adjourned hearing of the Claimant's summary judgment application in respect of its claim against the Defendants.
The Claim Form and all subsequent court documents relating to these proceedings including this application had been served on the Defendants by an alternative method pursuant to orders of this court.
The matter was last before me on 8 March when it was adjourned in light of the then recent decision of Lord Justice Males in General Dynamics United Kingdom Limited v State of Libya [2019] EWHC 64 (Comm) (“ General Dynamics”). That decision, amongst other matters, raised an issue about the effectiveness of service by an alternative method where a foreign state was concerned.
On 8 April 2019 the Claimant issued an application for permission to dispense with service of the Claim Form. The application was listed to be heard at the same time as the adjourned summary judgment application.
I am told that an appeal is due to be heard in General Dynamics in June 2019.
Background
This is the Claimant's claim arising under a commercial loan agreement between the Claimant and the First Defendant, as borrower. The Second Defendant is the guarantor. The original loan and guarantee were for the sum of US$30m and were dated 12 and 11 March 2009 respectively. The terms of the loan included a provision for contractual interest and that the loan was repayable on demand (Clause 4c). The loan provided at Clause 11 that the courts of the United Kingdom should have jurisdiction over any dispute arising under the loan agreement and also contained an equivalent governing law clause. The guarantor was jointly and severally liable with the borrower.
The loan was increased to US$ 200m by an addendum dated 17 February 2010. The addendum also increased the contractual interest rate to 7%. Clause 12 of the addendum confirmed that the terms of the original loan agreement remained valid and in full force and effect as long as they did not contradict the clauses and the conditions of the addendum.
On each of 17 August 2011 and 30 November 2011 the First Defendant made repayments of US$19,792,527. The First Defendant made a further payment towards interest of US$ 5,030,600.57 on 31 May 2012. No further repayments of capital or interest were made. The Claimant made a written demand for repayment of the loan in accordance with the loan agreement on 5 July 2017 and again on 31 July 2017. Those demands were acknowledged in writing and the Claimant was asked to delay taking any recovery action.
These proceedings were issued on 3 April 2018. The claim is for repayment of the loan in accordance with its terms. The total sum due to the Claimant as at the date of this hearing is in excess of US$250 million.
Service on a foreign state
The steps that need to be taken to effect service of proceedings on a foreign state are governed by the State Immunity Act 1978 (SIA) and by Civil Procedure Rule (“CPR”) 6.44.
On 9 August 2018 the Claimant was granted an order giving them permission to serve the Defendants out of the jurisdiction pursuant to the SIA and CPR 6.44.
The Claimant sought to take the steps necessary to enable them to serve the Defendants in accordance with CPR 6.44 through the court and Foreign and Commonwealth Office (“FCO”). As the Defendants are not part of the Hague Apostille Convention it was necessary for the court documents to be legalised by the FCO and then to be re-legalised by the Eritrean Embassy in London before the Claim Form could be served in accordance with the SIA and CPR 6.44.
The attempts to have the documents re-legalised by the Eritrean Embassy (and to serve the proceedings and other court documents) are set out in the evidence of Mr Austin, Mr Hagemeyer, Mr Carman and Mr Evans. This is summarised at paragraphs 76–101. Those attempts to have the documents re-legalised to enable service to be effected using the diplomatic route were unsuccessful.
The Claimant sought and obtained an order for service by an alternative method from Deputy Master Jefferis on 26 October 2018 permitting personal service of the Claim Form and associated documents on the Eritrean Embassy in London. A further order from Deputy Master Bowles on 31 January 2019 permitted service by an alternative method of all other documents in the proceedings including the application for summary judgment by personal service on the Eritrean Embassy in London.
The Claimant's evidence sets out the difficulties they experienced when attempting to serve the court documents personally at the Eritrean Embassy. On 21 February 2019 Deputy Master Bowles granted an order permitting service by a different alternative method of first class tracked post to the Embassy in London and email to the personal email of the Ambassador's personal assistant, Ms Teklu.
In advance of the hearing listed on 7 March 2019 the Claimant filed evidence confirming that all the documents relating to the proceedings including the Claim Form and the application for summary judgment had been served in accordance with the various orders for alternative service.
Was service of the Claim Form by an alternative method valid?
Service of court proceedings on a foreign state is governed by section 12 SIA which provides so far as is relevant:
“(1) Any writ or other document required to be served for instituting proceedings against a State shall be served by being transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs of the State and service shall be deemed to have been effected when the writ or document is received at the Ministry. (my emphasis)
(2) Any time for entering an appearance (whether prescribed by rules of court or otherwise) shall begin to run two months after the date on which the writ or document is received as aforesaid.
…
(4) No judgment in default of appearance shall be given against a State except on proof that subsection (1) above has been complied with and that the time for entering an appearance as extended by subsection (2) above has expired.
(5) A copy of any judgment give against a State in default of appearance shall be transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs of that State and any time for applying to have the judgment set aside (whether prescribed by rules of court or otherwise) shall begin to run two months after the date on which the copy of the judgment is received at the Ministry.
(6) Subsection (1) above does not prevent the service of a writ or other document in any manner to which the state has agreed and subsections (2) and (4) above do not apply where service is effected in any such manner….”
CPR 6.44 provides:
(1) This rule applies where a party wishes to serve the claim form or other document on a State.
(2) In this rule, ‘State’ has the meaning given by section 14 of the State Immunity Act 1978.
(3) The party must file in the Central Office of the Royal Courts of Justice –
(a) a request for service to be arranged by the Foreign and Commonwealth Office;
(b) a copy of the claim form or other document; and
(c) any translation required under rule 6.45.
(4) The Senior Master will send the documents filed under this rule to the Foreign and Commonwealth Office with a request that it arranges for them to be served.
(5) An official certificate by the Foreign and Commonwealth Office stating that a claim form or other document has been duly served on a specified date in accordance with a request made under this rule is evidence of that fact.
The Claimant obtained an order permitting service out of the jurisdiction in accordance with the SIA and CPR 6.44. Attempts to serve the Claim Form in accordance with section 12 SIA and CPR 6.44 within the validity of the Claim Form were not successful because of the need for the Claim Form and other documents which were required to be served to be re-legalised by the Eritrean Embassy in London before the FCO would arrange for service through the diplomatic route.
Section 12 SIA is mandatory in its language. Males LJ in General Dynamics having considered both Westminster City Council v Government of the Islamic Republic of Iran [1986] 1 WLR 979 (“ Westminster”) and Kuwait Airways Corporation v Iraqi Airways Co [1995] 1 WLR 1147 (“ Kuwait Airways”) concluded that it is not possible to serve a Claim Form on a foreign state by an alternative method given the mandatory nature of the language in section 12 SIA.
The House of Lords in Kuwait Airways approved the statement by Evans J at first instance that
“In my judgement, the requirement of service at, not merely “on” the Foreign Ministry of the Defendant State is no less than the plain words of section 12 (1) demands. Service is effected by transmission to the Ministry and takes effect when the document is received at the Ministry. In no sense is a diplomatic mission in a foreign State the same as the Ministry of Foreign Affairs of the sending state.”
Following those authorities, I agree that the mandatory wording of section 12 is such that where there is a document that is required to be served under ...
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General Dynamics United Kingdom Ltd v State of Libya
...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 decli......
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...UK Ltd v State of Libya [2019] EWHC 64 (Comm), [2019] 1 WLR 2913 [83], as applied in Qatar National Bank v Government of Eritrea [2019] EWHC 1601 (Ch) 45 In relation to other documents: CPR 6.28 provides a similar power to dispense with “ service of any other document which is to be serv......