Orascom Telecom Holding SAE v Republic of Chad & Ors

Under the State Immunity Act 1978, property of a foreign State is liable to execution where it is, at the relevant time, used or intended for use for commercial purposes. The question is the purpose for which the property is held, assessed by reference to the statutory definition in section 17(1) and section 3(3). An account established and maintained specifically to receive and channel proceeds from commercial oil contracts, or to facilitate repayment of commercial loans, may satisfy section 13(4). It is unnecessary to show the precise transactions to which each sum would ultimately be applied. A diplomatic certificate is not conclusive and may be displaced by evidence showing the contrary.

Orascom obtained an ICC arbitration award against Chad for more than £3.7 million. It sought a final Third Party Debt Order against funds held for Chad by Citibank in London. Following concessions and interventions by the World Bank and the European Investment Bank, the application concerned only Chad’s Borrower’s Account, whose contents had been transferred to a Citibank money-market account.

The principal issue was whether the account was property used or intended for use for commercial purposes under section 13(4) of the State Immunity Act 1978. A further issue was whether Chad had waived immunity from execution by submitting to ICC arbitration rules. The court decided the first issue and considered the second unnecessary to resolve.

1. Commercial-purpose exception. Section 13(2)(b) of the State Immunity Act 1978 generally protects State property from execution, but section 13(4) permits execution against property used or intended for use for commercial purposes. Section 17(1) adopts the transactions and activities identified in section 3(3) as the relevant measure.
2. The Borrower’s Account was established and operated under the Revenue Management Program to receive oil revenues arising from contracts for the supply of goods or services and to form part of a system for repayment of loans made to Chad by the World Bank and other financial institutions. Those purposes fell within section 3(3)(a) and (b), regardless of whether the transactions were entered into in the exercise of sovereign authority.
3. Account character and admixture. The rule in Alcom Ltd v Republic of Colombia did not prevent execution. That case concerned an indivisible current account used for both diplomatic and commercial expenditure. Here, the relevant account was separately maintained and the funds said to be admixed had already been placed in a different account. The issues of dormancy and the mere investment or trading of funds considered in AIC Ltd v The Federal Government of Nigeria and AIG Capital Partners Inc v Republic of Kazakhstan did not arise.
4. The Ambassador’s certificate under section 13(5) had little persuasive force because it was vague, inaccurately described the accounts, and was contradicted by the evidence. In any event, Orascom had proved the contrary.
5. Orascom therefore succeeded on the first issue. The court made the final Third Party Debt Order against Citibank in respect of the Borrower’s Account for £3,980,410.38, together with Orascom’s costs subject to assessment.
6. The waiver issue was not resolved. The court considered authorities including Creighton Ltd v Qatar and Walker International Holdings Ltd v The Republic of Congo, but was unwilling, without fuller evidence of foreign law, to import their reasoning so as to expand the statutory exception in England and Wales.