General Dynamics had an arbitration award against Libya and permission to enforce it in England. The practical obstacle was serving the enforcement order. Could an English court excuse diplomatic service because it was difficult, even though Libya had not agreed another method?
General Dynamics United Kingdom Ltd obtained an ICC arbitration award in Geneva on 5 January 2016 for £16,114,120.62 plus interest and costs against the State of Libya under a contract for communications systems. Libya made no payment. On 21 June 2018 General Dynamics applied without notice for permission to enforce the award as a judgment under section 101 of the Arbitration Act 1996 and for permission to dispense with service. On 20 July 2018 Teare J granted the enforcement order, dispensed with service because of the conditions in Libya, directed that the documents be couriered to addresses in Tripoli and Paris, and gave Libya two months to apply to set the order aside.
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The decisions below
Libya applied to set aside the dispensation, contending that section 12(1) of the State Immunity Act 1978 required transmission through the Foreign and Commonwealth Office (now the Foreign, Commonwealth and Development Office) to its Ministry of Foreign Affairs. Males LJ accepted that argument. He held that section 12 service is essential whenever the English court is to exercise jurisdiction over a foreign state. In enforcement proceedings the relevant document was the enforcement order (the court having not required service of the arbitration claim form), and it had to be served under section 12. The court therefore had no discretion under CPR rules 6.16 or 6.28 to dispense with service, although he would have done so had the power existed.
The Court of Appeal allowed General Dynamics’ appeal. It held that section 12(1) did not apply to either the arbitration claim form or the enforcement order, so the court could dispense with service in an appropriate case, and that the circumstances were sufficiently exceptional.
The issues and the majority reasoning
Libya appealed. The issues were whether section 12(1) required diplomatic service of the arbitration claim form or the enforcement order; whether the court could nevertheless dispense with service; and whether section 12 had to be read, under the Human Rights Act 1998 or the common-law principle of legality, as permitting alternative service so as to protect the right of access to a court under article 6 of the European Convention on Human Rights.
Lord Lloyd-Jones, with whom Lord Burrows agreed, held that section 12 applies to enforcement as well as adjudication. Under CPR rule 62.18 the application may be made without notice, but the order granting permission must be served and the state given an opportunity to challenge it. That order fell within the statutory description of a document required to be served for instituting proceedings. Subject to a method agreed under section 12(6), the prescribed route was mandatory. Lady Arden concurred in the result.
Rules of court cannot override the statute. CPR rule 6.1 disapplies Part 6 where another enactment makes different provision, and a discretion to dispense with service would contradict the mandatory terms of section 12. The majority also rejected a reading down of section 12. Service through diplomatic channels pursues the legitimate aim of respecting sovereign equality and comity by proportionate means and does not impair the essence of the article 6 right. Exceptional difficulty in one case does not justify disapplying the rule. The Foreign, Commonwealth and Development Office must use its best endeavours to effect service; it has no general discretion to decline to do so.
Lady Arden added that the language of section 12 is mandatory and exclusive, reflecting article 16 of the European Convention on State Immunity as adapted by Parliament. Neither an updating construction nor section 3 of the Human Rights Act 1998 could introduce a power to dispense with or substitute for the prescribed method of service, because that would contradict a fundamental feature of the provision.
The dissent
Lord Stephens (with whom Lord Briggs agreed) would have dismissed the appeal and restored Teare J’s order. In his view section 12 incorporates domestic procedural rules and must be read as “always speaking”. The arbitration claim form instituted the proceedings but was not required to be served, while the enforcement order was required to be served but did not institute them, so neither fell within section 12(1). A purposive construction should facilitate the restrictive doctrine of state immunity and access to justice rather than permit a state to obtain de facto immunity by obstructing service. He considered that a judicial decision to dispense with service meant the document was no longer “required to be served”, and that article 6 would in any event require section 12 to be read as allowing alternative directions where diplomatic service was impossible or unduly difficult.
Verdict: By three votes to two the Supreme Court allowed Libya’s appeal. The enforcement order had to be served through the prescribed diplomatic channel and the court could not dispense with that requirement. The Court left open the position if diplomatic relations had been severed.
Source: General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22
