In 2016 an international arbitration tribunal in Geneva made an award of £16m in favour of the claimant company against the defendant foreign state. The state made no payment of the sum awarded. In 2018 the claimant issued an arbitration claim form asking the Commercial Court in London for an order under CPR r 62.18 and section 101 of the Arbitration Act 1996 allowing the enforcement of the award as a judgment or order of the court in England and Wales (“the enforcement order”) and additionally sought an order under CPR rr 6.16 and/or 6.28 to dispense with service, on the ground that there was significant civil unrest and instability in the defendant state which, it claimed, precluded formal service. The court granted the enforcement order and dispensation from service, albeit requiring informal delivery of the claim form and order by courier to the state’s Ministry of Foreign Affairs and a firm of its lawyers in Paris, and allowing the state two months to apply to set aside its order. The state duly applied to a judge of the Commercial Court to vary the order so as to require formal service through the diplomatic process as set out in section 12(1) of the State Immunity Act 1978, which provided that any “writ or other document required to be served for instituting proceedings against a state” was to be served by the Foreign, Commonwealth and Development Office on 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. The judge held that section 12(1) was applicable and mandatory and so precluded any exercising of discretion to dispense with service, whether under CPR r 6.16 on the ground of exceptional circumstances, or under r 6.28, and which he otherwise would have done. He therefore made an order requiring service in accordance with section 12(1). On the claimant’s appeal, the Court of Appeal held that the proceedings were not governed by section 12(1) but, rather, by the CPR provision for service on a foreign state, which was subject to the court’s discretion to dispense with service in accordance with CPR rr 6.16 and/or 6.28. Having found that it was not appropriate to interfere with the judge’s conclusion that if there was power to dispense with service the circumstances were sufficiently exceptional to justify dispensation, it allowed the appeal. On the state’s appeal to the Supreme Court on the ground that section 12(1) required formal service on it as a sovereign state through the diplomatic process, the claimant raised an additional argument, that section 3(1) of the Human Rights Act 1998 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, appeal allowed (Lord Briggs and Lord Stephens JJSC dissenting). 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. 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). 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. 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). 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. Accordingly, there had been no ground for impugning the judge’s order requiring service of the enforcement order by diplomatic process (paras 30, 37, 39, 41, 43–44, 59, 60, 62, 76, 81, 84–85, 88, 92, 96, 99, 100).
Harry Matovu QC and Lucas Bastin (instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP) for the defendant.
Daniel Toledano QC and James Ruddell (instructed by Reed Smith LLP) for the claimant.