In Wilhelm Finance Inc v Ente Administrador Del Astellero Rio Santiago [2009] EWHC 1074 (Comm) in which Reed Smith acted for Wilhelm Finance, the Defendant shipyard applied to set aside an order permitting substituted service on the Defendant’s solicitors. The Defendant appealed on the ground that it was a state-owned company and thus fell within the definition of a State for the purposes of the State Immunity Act 1978. Service on a state is only permitted via the method prescribed in s12 of the State Immunity Act 1978 and Rule 6.44 of the CPR. The Commercial Court had to consider whether the Defendant shipyard which built ships for the Argentine navy but which also took on commercial contracts, was a state or a separate entity for the purposes of s14 of the State Immunity Act 1978.
The Defendant argued that it was not a separate entity as it was financially dependent upon the Argentine state and lacked the capacity to sue and be sued. The Defendant relied upon a 2006 decision where an Argentine court considered whether a purchaser who had obtained a London arbitration award against the Defendant could enforce that award against the Province of Buenos Aires. The Argentine court had held that the award was enforceable, notwithstanding that Counsel for the Province had argued that, having regard to the terms of the 1993 decree creating the shipyard, the Defendant was "an entity separate from the provincial state, that the Yard has legal capacity and its own assets (Article 9), and accordingly cannot be equated with the province".
Teare J held despite the fact that the Defendant was largely controlled and financed by the state, it appeared to operate as a commercial shipyard, building and repairing ships for both the Argentine navy and private shipowners. The 1993 decree creating the Defendant seemed to have created an entity distinct from the state organs. Its activities were not typically governmental. The nature of its business and its ability to make contracts with state and private entities indicated that it had the capacity to sue and be sued. An order for substituted service on the Defendant’s solicitors was not in conflict with s12 of the Act as the Defendant was a separate entity within the terms of s14 of the Act.
