Republic of Argentina v NML Capital Ltd

A claimant seeking to sue a foreign state in England must establish both a service-out gateway and a good arguable case that the state is not immune on the specific statutory basis advanced. If that basis is wrong, the permission order is made without jurisdiction. The defect cannot be cured at the inter partes hearing by substituting a different basis; a fresh application is required.

Section 31 of the Civil Jurisdiction and Judgments Act 1982 concerns the merits of recognising and enforcing a foreign judgment. It does not create an additional exception to the general immunity rule in the State Immunity Act 1978. A contractual waiver of immunity is not necessarily a submission to jurisdiction. On the wording used, the bond terms waived immunity but did not submit the state to the English court’s adjudicative jurisdiction.

NML Capital obtained a summary judgment in the United States District Court for the Southern District of New York against Argentina for approximately US$284 million under sovereign bonds. It sought permission to issue and serve proceedings in England to recognise and enforce that judgment.

David Steel J granted permission. Argentina challenged the English court’s jurisdiction on sovereign-immunity grounds. Before Blair J, NML abandoned the immunity arguments advanced in its original application and relied instead on section 31 of the Civil Jurisdiction and Judgments Act 1982 and the bond terms. Blair J rejected the challenge: [2009] EWHC 110 (Comm.).

The appeal concerned whether NML could rely on those new bases at the inter partes hearing, whether section 31 displaced the State Immunity Act 1978, and whether the bonds constituted a submission to the English court’s jurisdiction.

1. Appeal allowed. The order granting permission to issue and serve proceedings on Argentina was set aside. The court declared that the English courts had no jurisdiction to entertain proceedings for recognition and enforcement of the New York judgment.
2. Per Aikens LJ, with Elias and Mummery LJJ agreeing, the application to serve proceedings against a foreign state had to satisfy two distinct requirements: the claim had to fall within a procedural service-out gateway, and there had to be a good arguable case that the state was not immune under the particular exception identified. The duty in section 1(2) of the State Immunity Act 1978 meant that the court could not exercise jurisdiction without that information.
3. An incorrect identification of the basis of non-immunity was not a mere procedural error. It went to the foundation of the court’s jurisdiction over the sovereign. The court therefore had no discretion under CPR rule 3.10 to cure the defect at the inter partes hearing. NML could proceed only by making a fresh application under section 12 of the State Immunity Act 1978 on a properly arguable basis.
4. Section 31(1) of the Civil Jurisdiction and Judgments Act 1982 imposed conditions for recognition and enforcement on the merits. It did not create an additional exception to section 1(1) of the State Immunity Act 1978. The United Kingdom court first had to be satisfied that one of the exceptions in sections 2 to 11 of that Act applied. Section 31(1)(b) referred to the foreign court’s own rules corresponding to those exceptions, including an analogous connection with the state in which that court sat.
5. Section 31(4) applied the procedural requirements and privileges in sections 12, 13 and 14(3) and (4) of the State Immunity Act 1978 to recognition and enforcement proceedings. It did not answer the prior question of jurisdiction. The distinction between adjudicative jurisdiction and enforcement jurisdiction also meant that section 13(2)(b) was directed to enforcement against state property after judgment, not to the action required to turn a foreign judgment into an English judgment.
6. A waiver of immunity did not necessarily amount to a submission under section 2 of the State Immunity Act 1978. The bond terms had to be construed precisely under their governing law. The first paragraph merely provided for enforcement in another court if Argentina was otherwise subject to that court’s jurisdiction. The second paragraph waived immunity and, at most, addressed enforcement jurisdiction. It did not submit Argentina to the English court’s adjudicative jurisdiction for recognition proceedings.

1. Court of Appeal (Civil Division): Appeal allowed. The permission order was set aside and a declaration was made that the English court had no jurisdiction to entertain the proposed proceedings.
2. High Court, Queen’s Bench Division (Commercial): Blair J rejected Argentina’s jurisdictional challenge and declined to set aside the permission order: [2009] EWHC 110 (Comm.).
3. High Court: David Steel J granted permission for the claim form and particulars of claim to be issued and served out of the jurisdiction under CPR rule 6.20(9).