NML Capital Ltd v The Republic of Argentina

Section 31 of the Civil Jurisdiction and Judgments Act 1982 provides a comprehensive regime for recognising and enforcing foreign judgments against states. It applies to a common-law action on a foreign judgment. The foreign judgment is enforceable if the foreign court would have had jurisdiction under rules corresponding to sections 2 to 11 of the State Immunity Act 1978, and the judgment would otherwise be enforceable. A contractual provision that makes a final judgment enforceable in other courts may go beyond a waiver of immunity and amount to submission to their jurisdiction. An innocent mistake about the legal basis for excluding state immunity gives the court a discretion, rather than an obligation, to set aside permission to serve out. Non-justiciability does not bar enforcement of a judgment debt arising from commercial sovereign borrowing.

NML Capital Limited sought to enforce in England a judgment of the United States District Court for the Southern District of New York for approximately US$284 million arising from Argentina’s default on sovereign bonds.

Permission to serve the proceedings out of the jurisdiction had been granted without notice. Argentina applied to set aside that order and sought a declaration that the English court lacked jurisdiction. NML accepted that the immunity arguments originally advanced were legally incorrect, but relied instead on s.31(1) of the Civil Jurisdiction and Judgments Act 1982 and on the terms of the bonds. Argentina also alleged non-disclosure and argued that enforcement was non-justiciable because it concerned sovereign legislative and policy decisions.

1. State immunity and foreign judgments. The claim was a common-law action on the New York judgment. Section 31(1) of the Civil Jurisdiction and Judgments Act 1982 comprehensively governs recognition and enforcement in the United Kingdom of a foreign judgment against a state, including the jurisdictional immunity issue. The relevant question was whether the New York court would have had jurisdiction under rules corresponding to sections 2 to 11 of the State Immunity Act 1978. Argentina had submitted to the New York jurisdiction and the bond transactions were commercial transactions within section 3(3). The statutory conditions were therefore satisfied.
2. Procedural privileges. Section 31(4) preserves the state’s procedural privileges under sections 12, 13 and 14(3) and (4) of the State Immunity Act 1978. Those privileges, particularly in relation to execution, are distinct from jurisdictional immunity.
3. Bond terms. The bond provisions did more than waive immunity. They made a final New York judgment conclusive and binding and provided that it could be enforced in any court to whose jurisdiction Argentina was or might be subject. A suit on the judgment in the English court fell within that provision. Construed in their commercial context, the provisions supplied an independent basis on which Argentina could not invoke jurisdictional immunity.
4. New immunity arguments. The mistake in the without-notice application gave the court a discretion to set aside permission, particularly where there had been deliberate non-disclosure or misleading conduct. The jurisdictional-gateway authorities concerning new causes of action or gateways did not apply automatically to a mistaken legal analysis of state immunity. There was no defect in the cause of action, no deliberate misleading, and no useful purpose in requiring a fresh application and re-service.
5. Non-disclosure and justiciability. The alleged errors and omissions did not justify setting aside the order. The claim concerned enforcement of a regularly entered judgment debt, not review of Argentina’s restructuring policy. The non-justiciability principles in Buttes Gas & Oil Co v Hammer and Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 & 5) did not apply to a commercial bond claim capable of determination by ordinary judicial standards. The application was dismissed.

First-instance decision. No appellate history was stated in the judgment.