States are afforded particular protections in English litigation. They not only have the benefit of various immunities (albeit subject to exceptions), but also other procedural privileges – including as regards the service of documents upon them.
Pursuant to Section 12(1) of the State Immunity Act 1978 ("SIA"), unless the State has agreed otherwise under Section 12(6), "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...".
In General Dynamics United Kingdom Ltd v Libya  EWCA Civ 1110 however, the English Court of Appeal (overturning the decision at first instance) decided that service on a State of an order, obtained "without notice" and giving permission to enforce an arbitration award, could be dispensed with in "exceptional circumstances". The discretion to do so was exercised in this case in view of the civil unrest in Libya.
The Court of Appeal reached that conclusion on the following basis:
- Section 12 of the SIA did not contemplate that there will always be some document which is required to be served for the purpose of instituting proceedings and that such document (absent the State's agreement to the contrary) must be served through the Foreign and Commonwealth Office ("FCO").
- Indeed, if a foreign State had fully participated in (or deliberately declined to participate in) proceedings in litigation or arbitration, it did not obviously need the protection afforded by Section 12.
- An order giving permission to enforce an arbitration award did not therefore constitute a "writ or other document required to be served for instituting proceedings against a State" for the purposes of Section 12(1). It was therefore not mandatory to effect service of that document through the FCO on the relevant Ministry of Affairs as a consequence of Section 12(1).
- Pursuant to Rule 62.18(2) of the English Civil Procedure Rules ("CPR") the arbitration claim form did not have to be served unless the Court so ordered, which it had not in this case, and consequently neither Section 12(1) nor CPR 6.44 had any application to that document.
- Pursuant to CPR 62.18(8)(b) and 6.44, the order prima facie had to be served and any service of the order did have to be via the FCO. However, in the absence of a statutory obligation – in this case by reason of Section 12(1) of the SIA – to effect service of a document (and do so via the FCO), the Court had a discretion in an appropriate case to dispense with service in accordance with CPR 6.16 or 6.28.
- Since the order permitting the enforcement of an arbitration award was not a "claim form" for the purposes of CPR 6.16, it could be said that the Judge had a general discretion to dispense with service of that document under CPR 6.28 which was not subject to the "exceptional circumstances" pre-requisite that applied in respect of CPR 6.16.
- However, as the order permitting enforcement was to be the first time the foreign State received notice of the claimant's attempt to enforce an award, it was nevertheless "only right and proper" to apply the test of "exceptional circumstances".
- The impossibility of service was not a condition of "exceptional circumstances", and in the case at hand the Judge had found that test was met since service was not straightforward, was too dangerous and, if possible at all, would take a significant period of time, and he had therefore not accorded much weight to the fact that there had been no attempt to serve through the FCO. In all those circumstances, it was not appropriate for the Court of Appeal to differ from the Judge on what was effectively an exercise of discretion.
The Court of Appeal also said that:
- where service of such documents on a State was dispensed with, it would always be appropriate to make arrangements (as the Judge had done in this case) to notify the State in question in such a way as will come to the attention of the organs of state which will be responsible for honouring the award;
- such notification, however, would not constitute "alternative service" and must not be used as a proxy for such service which cannot be used where the respondent is a State.
Whilst this Judgment could be of assistance to an entity seeking to enforce an arbitration award (or register a foreign Court judgment) against a State in circumstances in which service is difficult (for example where the State is suffering internal conflict), States will argue that it undermines the SIA protections they are afforded. It is not yet clear whether there will be an appeal to the Supreme Court.
However, it is important to bear in mind that the decision does not serve to relax the mandatory effect of Section 12 of the SIA in respect of the service on a State of proceedings:
- to determine an underlying dispute; or
- to enforce a foreign Court judgment by means of a claim made on the judgment debt (rather than via a registration process).
Rather, it significantly undermines certain other first instance Judgments to the effect that service in those cases can be dispensed with.
Originally published Mayer Brown, May 2020
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