State immunity: English court considers service of proceedings on a State in times of political unrest, and questions relating to enforcement of a foreign judgment against a State

In the recent decision of Certain Underwriters At Lloyds London v Syrian Arab Republic & Ors [2018] EWHC 385 (Comms) the English Commercial Court (the Court) considered the difficulties which may be encountered in trying to serve on a State. The Court also considered whether a state had submitted to the jurisdiction of a foreign court for the purposes of recognition and enforcement of the foreign judgment under the Civil Jurisdiction and Judgments Act 1982 (the CJJA).

This decision demonstrates the Court's willingness to take a pragmatic approach when dealing with service of documents on a foreign State in situations where service through standard diplomatic channels may be difficult or inappropriate in the prevailing political climate. The decision also provides useful guidance regarding the requirements to be satisfied should a party wish to enforce a foreign judgment against a State in the English courts.

Background

The Claimants comprised a number of companies who were insurers of an aircraft which was destroyed in a hijacking in 1985 while bound from Athens to Cairo.

Between 2010 and 2012, the Claimants brought proceedings in the US District Court for the District of Columbia (the US Court). The US Court found, among other things, that the hijacking caused the destruction of the aircraft for which the three Defendants (namely the Syrian Arab Republic, Syrian Air Force Intelligence (SAFI) and General Al Khuli (the Chief of SAFI)) were liable.

The Claimants brought proceedings against the Defendants in England on the basis of the US Judgment. The Court considered whether the Defendants: (i) were properly served in accordance with the requirements of the UK State Immunity Act 1978 (the SIA) or, alternatively, whether service should be dispensed with; and (ii) had submitted to the jurisdiction of the US Court.

Decision

Was there valid service: Interpretation of section 12 SIA

Section 12 of the SIA provides that:

"12(1) 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 and service shall be deemed to have been effected when the writ or other document is received at the Ministry."

Conventional means of service were not possible given the withdrawal of UK diplomatic personnel from Syria, and so the FCO arranged for service on the Syrian Ministry of Foreign Affairs ("Syrian MFA") via DHL courier. The Syrian MFA, however, apparently aware that the documents were from the FCO, refused to accept them and insisted that they be removed from the premises. The Claimants took a number of other steps to bring the proceedings to the Defendants' attention, including by notification to the Defendants' former US attorneys, by email to the MFA's email address on its website, and by alternative courier.

The Court considered whether DHL having taken the documents to the Syrian MFA on behalf of the FCO meant that they were "transmitted through the [FCO] to the [Syrian MFA]" and "received at the Ministry" within s12 of the SIA.

The SIA contains no definition of the words "transmitted" or "received" in s12, but the Court reasoned that "received" must be intended to indicate that the documents must actually reach the relevant Ministry - it is not enough that the documents are merely dispatched. However, while the documents had to reach the relevant Ministry, they did not have to be accepted otherwise a recipient could evade service by declining to accept delivery.

In the present case, the Court found that the documents actually arrived within the Ministry's premises: service for the purposes of s12 of the SIA was complete when DHL proffered the package to the Ministry's representative, notwithstanding that he refused to accept them. There was no further step which could have been taken and none which needed to be taken.

The Court also considered the Claimant's alternative application for an order dispensing with service. English Civil Procedure Rules 6.16(1) and 6.28(1) permit service of a claim form and other documents to be dispensed with by the court where the circumstances are exceptional. The Court held that, in the alternative, service of proceedings and other documents could be dispensed with given the truly exceptional circumstances of the withdrawal of UK diplomatic personnel from Syria, the Syrian MFA's refusal to accept delivery of the relevant documents (even where its representative knew or believed they had come from the FCO), and the fact that there were no further steps which the Claimants could reasonably be expected to take to effect service. The Court also considered as a relevant factor that the steps the Claimants had already taken were likely to have brought the proceedings to the Defendants' attention.

Had the Defendants submitted to the jurisdiction of the US Courts for the purposes of enforcement in England and Wales?

In the absence of a treaty providing for mutual recognition of judgments, a foreign judgment can be recognised only if it was delivered by a court which had jurisdiction according to the rules of English private international law. Accordingly, where (as here) the Defendants were not present in the US, had not claimed or counterclaimed in the relevant US proceedings, and had not previously agreed to submit to the US Court's jurisdiction, then the Claimant would have to establish that they voluntarily submitted to the US Court's jurisdiction.

In addition, section 31(1) of the CJJA provides in relation to a judgment against a State:

"A judgment given by a court of an overseas country against a State other than the United Kingdom or the State to which that court belongs shall be recognised and enforced in the United Kingdom if, and only if

(a) it would be so recognised and enforced if it had not been given against a State; and

(b) that court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the State Immunity Act 1978".

Section 31 provides a separate gateway for enforcement against a State, over and above those in the SIA (NML Capital v Argentina [2011] 2 AC 495). In the present case both s31(1)(a) and s31(1)(b) of the CJJA (via, in this case, s2 of the SIA, providing that a State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the UK courts), meant the Claimants needed to show that the Defendants had submitted to the US Court's jurisdiction.

The Court reviewed and assessed the key steps in the US proceedings relating to the submission to the US jurisdiction, including as a matter of US federal law. It then considered the various English and EU cases pertinent to the question of whether there had been a submission for the purposes of the enforcement of a foreign judgment in England under English law, including the question of whether a defendant could contest jurisdiction as well as the substance of the claim.

The Court concluded on the basis of this analysis that the Defendants had submitted to the jurisdiction of the US courts, and that the US judgment qualified for enforcement in England and Wales under s31(1) of the CJJA. For example, Syria appealed the final US judgment on its merits without expressing any reservation as to jurisdiction or raising a sovereign immunity argument. Further, it was only in January 2013 that immunity arguments were raised, and the Court found that by this point Syria had already submitted to the jurisdiction of the US courts. The Court relied on a number of other facts relating to their participation in the US proceedings to reach the conclusion that the second and third Defendants had also submitted to the US Court's jurisdiction.

The Court was also satisfied that the US judgment satisfied the requirements of common law in that it was (i) final and conclusive on the merits; (ii) it was for a definite sum of money (not being a sum payable in respect of taxes or a fine or penalty); and (iii) it was not impeachable on the basis of fraud, contrary to public policy or obtained in proceedings which were contrary to natural justice.

Comment

The circumstances in this case were described as "truly exceptional". However, the case nonetheless illustrates both the potential difficulties in serving proceedings on a foreign state in times of political upheaval as well as the Court's approach in addressing these difficulties under the SIA, CJJA and the Civil Procedure Rules in a pragmatic way.

For further information, please contact Andrew Cannon, Partner, Adam Johnson, Partner, Hannah Ambrose, Professional Support Consultant, or your usual Herbert Smith Freehills contact.