La Générale des Carrières et des Mines v FG Hemisphere Associates LLC (Jersey)

For immunity, liability and enforcement, a state-owned corporation with separate juridical personality is presumed distinct from the state, particularly where formed for commercial or industrial purposes. State ownership, governmental control, public functions or participation in state projects is insufficient by itself.

The court must examine constitutional arrangements as applied, actual control, activities and functions, and whether the entity has effective separate existence. Assimilation requires extreme circumstances showing that the entity and state are so intertwined and confused that neither can properly be regarded as distinct for any significant purpose. Corporate veil lifting is a tailored remedy and does not automatically make a state-owned corporation liable for all state debts.

FG Hemisphere Associates LLC, assignee of two arbitration awards against the Democratic Republic of the Congo, sought enforcement in Jersey against assets of Gécamines, a DRC state-owned mining corporation. The Royal Court upheld the claim, treating Gécamines as an organ of the DRC. The Court of Appeal of Jersey affirmed by majority, with Pleming JA dissenting.

The appeal concerned whether Gécamines and its assets could be equated with the DRC for liability and enforcement, and whether state control, governmental functions, mining-contract revisions and the Sicomines project displaced Gécamines’ separate corporate personality.

Lord Mance delivered the judgment of the Board. The appeal was allowed and the orders of the Royal Court and the majority of the Court of Appeal were set aside.

1. The current international and domestic approach requires recognition of the separateness of state-owned juridical entities, particularly those formed for trading or industrial purposes. The distinction applies to immunity, substantive liability and enforcement. Legal personality is relevant but not conclusive. Constitution, control and functions remain material.
2. There is a strong presumption that a separate commercial entity and the state forming it do not bear each other’s liabilities. Displacement requires extreme circumstances. The constitutional arrangements as applied in practice, state control, activities and functions must show that the entity has no effective separate existence, or that its affairs and those of the state are so closely intertwined and confused that it cannot properly be regarded as distinct for any significant purpose.
3. Governmental control, performance of public functions, or use of corporate assets for state purposes does not alone establish that an entity is an organ of the state. The relevant activity must, in its whole context, be sovereign in nature or acta jure imperii. Governmental purpose or motive does not convert ordinary commercial activity into sovereign activity.
4. Corporate veil lifting is a tailored remedy. Conduct justifying making the state liable for a corporation’s debts does not automatically justify making the corporation liable for the state’s debts. Any remedy must be fitted to the circumstances and purpose requiring it.
5. Gécamines was a real, functioning corporation with substantial assets, business, borrowings, debts, accounts and joint ventures. Its involvement in the mining review and Sicomines project, even if substantially directed by the DRC and beneficial to state infrastructure, did not meet the threshold for general assimilation. Gécamines was not an organ of the DRC and its assets were not answerable for the arbitration awards.

The Board invited written submissions on the form of the order and costs.

• Privy Council: Appeal allowed. The orders below were set aside.
• Court of Appeal of Jersey: On 14 July 2011, the majority affirmed the Royal Court’s decision; Pleming JA dissented.
• Royal Court of Jersey: On 27 October 2010, the claim to enforce the DRC arbitration awards against Gécamines’ assets was upheld.