Enforcement immunity

Domestic law

Describe domestic law governing the scope of enforcement immunity.

Pursuant to section 13 of the Act, state assets ‘shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for [their] arrest, detention or sale’ unless the state has provided its written consent (see, for example, Gold Reserve Inc v Venezuela [2016] EWHC 153 (Comm), finding that Venezuela had submitted to arbitration in writing by entering into a bilateral investment treaty (BIT) with Canada) or the assets in question are ‘in use or intended for use for commercial purposes’ (section 13(2)-(4)). These provisions apply in respect to states alone as defined in section 14 of the Act, and do not, therefore, extend to separate entities (see question 8).

A party seeking to enforce the decision of an overseas court over a foreign state will also need to consider section 31 of the Civil Jurisdiction and Judgments Act 1982, which allows the UK courts to enforce a foreign judgment against a foreign state ‘if, and only if’ it would be so recognised and enforced if it had not been given against a state; and the court would have had jurisdiction in the matter if it had applied the jurisdictional immunity rules contained in sections 2 to 11 of the Act. In NML Capital Ltd v Republic of Argentina [2011] UKSC 31, the Supreme Court held by majority that Argentina could not invoke enforcement immunity in respect of proceedings to enforce a New York judgment because the requirements under section 31 were satisfied. That judgment had been rendered after NML had commenced proceedings in New York against Argentina under the fiscal agency agreement and the Argentinian sovereign bonds (which were both governed by the law of New York). It suffices to note that in that case, the ‘waiver and jurisdiction clause’ in the bonds provided that a judgment ‘shall be conclusive and binding upon [Argentina] and may be enforced in any Specified Court or in any other courts to the jurisdiction of which the Republic is or may be subject . . . by a suit upon such judgment’.

Application of civil procedure codes

When enforcing against a state, would debt collection statutes and the enforcement sections of civil procedure codes or similar codes also apply?

Yes, to the extent enforcement immunity would not be applicable. For example, in AIG Capital Partners Inc v Republic of Kazakhstan [2005] EWHC 2239 (Comm), the English High Court discussed in length third-party debt and charging orders but rejected them on the basis of the central bank or monetary authority exception (see question 21).

In Orascom Telecom v Chad [2008] EWHC 1841 (Comm), the English High Court granted a third-party debt order against a government bank account, in which proceeds of oil sales were held for the purpose of making repayments to the World Bank (in connection with an oil pipeline project that the World Bank had financed).

Consent for further enforcement proceedings

Does a prior submission to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?

A provision merely submitting to the jurisdiction of a court or tribunal does not constitute consent to further enforcement proceedings against state assets (see section 13(3) of the Act).

Where a state has expressly agreed to submit a dispute to arbitration, it will be treated as having waived jurisdictional immunity. In accordance with section 9 of the Act, a state would also not be immune ‘as respects proceedings in the courts of the United Kingdom which relate to the arbitration’. In this respect, seeking to have an arbitral award recognised in the UK is distinct from seeking to enforce by execution against state assets to collect under that award. The former relates to jurisdictional immunity whereas the latter to enforcement immunity.

Property or assets subject to enforcement or execution

Describe the property or assets that would typically be subject to enforcement or execution.

The property or assets that would typically be subject to enforcement and execution would be property used or intended for use for commercial purposes, including movable and immovable property and choses in action (such as debts owed to a state by third parties in relation to commercial transactions).

Assets covered by enforcement immunity

Describe the assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations adopted by the courts.

The UK Supreme Court has determined that the original source of the funds in a state’s bank account is not conclusive. Rather, whether such funds are in use or intended for use for commercial purposes is considered at the time of the attempted execution. As explained above, in Orascom, the English High Court considered that proceeds of oil shares held in account, which were held for the purpose of making repayments to the World Bank, did not attract immunity. That said, under section 13(5) of the Act, the head of a state’s diplomatic mission in the UK may issue a certificate to the effect that any property is not ‘in use or intended for use by or on behalf of the state for commercial purposes’, which ‘shall be accepted as sufficient evidence of that fact unless the contrary is proved’.

In LR Avionics Technologies Ltd v The Federal Republic of Nigeria and another [2016] EWHC 1761 (Comm), premises used for the performance of consular activities (such as passport and visa applications) were found to be immune from enforcement by execution, even though the premises in question had been leased to a privately owned company that carried out the relevant consular activities on the state’s behalf (such as a liaison office). In Alcom v Republic of Colombia [1984] AC 580, the House of Lords held that enforcement action by execution could not be taken against a bank account that was used to make payments in relation to both commercial transactions and more general purposes (‘mixed’ embassy account) by Colombia’s diplomatic mission in the UK.

Explain whether the property or bank accounts of a central bank or other monetary authority would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes.

Pursuant to section 14(4) of the Act, ‘[p]roperty of a State’s central bank or other monetary authority shall not be regarded . . . as in use or intended for use for commercial purposes’ and ‘where any such bank or authority is a separate entity . . . that section shall apply to it as if references to a State were references to the bank or authority’. This provision has been interpreted to mean that central banks enjoy absolute immunity from enforcement, regardless of whether their acts are in the exercise of sovereign authority, whether they are separate entities or whether assets are held for commercial purposes.

Test for enforcement

Explain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted.

No further test has been developed.

Service of arbitration award or judgment

How is a state served with process or otherwise notified before an arbitration award or judgment against it (or its organs and instrumentalities) may be enforced?

Service of process is effected in the same way as described above.

History of enforcement proceedings

Is there a history of enforcement proceedings against states in your jurisdiction? What part of these proceedings is based on arbitral awards?

Yes, there is a long and ever-increasing line of cases relating to proceedings against states or state entities in the UK. A significant number of these proceedings are for the enforcement and execution of both commercial and investor-state awards.

Public databases

Are there any public databases through which assets held by states may be identified?

Yes, assets held by states may be identified by undertaking a variety of searches of public information, including, inter alia, searches for real property through the land registry, the Companies House or the UK Register of Civil Aircraft.

Court competency

Would a court in your state be competent to assist with or otherwise intervene to help identify assets held by states in the territory?

In principle yes, but in Koo Golden East Mongolia v Bank of Nova Scotia and others [2007] EWCA Civ 1443, the Court of Appeal refused to grant a Norwich Pharmacal order for disclosure against the agent of the central bank of Mongolia, holding that state immunity prevented the claimant from obtaining such relief.