Al Saud & Anor v Apex Global Management Ltd

The Court of Appeal dismissed the appeal by two Saudi princes seeking sovereign (head of state) immunity from an unfair prejudice petition under section 994 of the Companies Act 2006. The court considered two principal issues of law: (1) the meaning of "members of his family forming part of his household" in section 20(1)(b) of the State Immunity Act 1978 and whether it should be given a wider meaning for heads of state than for diplomats; and (2) whether the Article 31.1(c) commercial exception of the Vienna Convention (as incorporated by the Diplomatic Privileges Act 1964 and applied to heads of state by section 20(1) subject to "any necessary modifications") should be read so as to exclude commercial activity worldwide rather than only "in the receiving State".

The court held that the phrase "forming part of his household" in section 20 should not be interpreted more widely for heads of state than it has been understood in the diplomatic context; extension beyond the settled diplomatic meaning would require a modification that was not shown to be necessary. On the second issue the court rejected the judge's view that the words "in the receiving State" should be excised as a necessary modification; the court was not satisfied Parliament must have intended that modification. On the facts (Vos J), neither prince proved they were part of King Abdullah's household and a late witness statement asserting full‑time royal duties was disbelieved. The court also held that a letter from the Saudi ambassador was not conclusive evidence of household status in the absence of a Secretary of State certificate under the Diplomatic Privileges Act 1964.

This appeal arose from an application by two Saudi princes for head of state immunity from proceedings in an unfair prejudice petition brought by Apex Global Management Limited in relation to the affairs of an English company, Fi Call Limited. The applications were dismissed by Vos J in the High Court and the princes obtained leave to appeal.

The appellants sought a declaration that they were immune under section 20(1)(b) of the State Immunity Act 1978 on the basis they were members of the household of King Abdullah of Saudi Arabia. Apex opposed immunity and advanced an alternative construction of the "household" concept limiting it to close, dependent family members resident in the head of state's household; Apex also contended that even if the princes formed part of the household their alleged activities fell within the commercial exception derived from Article 31.1(c) of the Vienna Convention as applied to heads of state under section 20(1), and that exception should extend to commercial activity worldwide if necessary.

The issues framed by the Court were:

• whether the phrase "members of his family forming part of his household" in section 20(1)(b) of the State Immunity Act 1978 should be given a broader meaning for heads of state than for diplomatic agents;
• whether the commercial exception in Article 31.1(c) should be modified when applied to heads of state so as to exclude commercial activity anywhere in the world (i.e. whether the words "in the receiving State" should be removed as a necessary modification); and
• what weight should be given to a letter from the Saudi ambassador concerning household status in the absence of a certificate from the Secretary of State under the Diplomatic Privileges Act 1964 section 4.

The Court of Appeal reasoned that Parliament, by using the same formulation in section 20 as in the Vienna Convention, must be taken to have intended the same conventional meaning that applied to diplomats; the settled diplomatic understanding (spouse, dependent children, and, in exceptional cases, other dependents forming part of the household) was the correct starting point. The court rejected a broader construction based on Sir Arthur Watts' lecture (advancing that adult family members assisting in constitutional or representational functions might be part of the household) because the functional rationale for extending immunity to household family members is to protect the head of state’s ability to perform his functions, not to protect third parties for their own offices; once wider categories are contemplated there is no principled boundary; and any broader modification would fail the statutory "necessary modifications" test.

On the commercial exception, the court concluded that it could not be satisfied Parliament must have intended the Article 31.1(c) exception to have the words "in the receiving State" excised when applying it to heads of state; that modification failed the necessity test. The court therefore would not extend the commercial exception to worldwide non‑official commercial activity as a matter of interpretation.

On evidence, the court upheld the judge's factual findings that neither prince formed part of King Abdullah's household (each had separate households and responsibilities) and rejected the submission that a foreign ambassador's letter, absent a Secretary of State certificate under the DPA, should be treated as conclusive; ambassadorial statements may be important but are not necessarily conclusive. The remedy sought was refusal of immunity and continuation of the unfair prejudice proceedings; the appeal was dismissed.

Appeal dismissed. The Court of Appeal held that (i) the phrase "members of his family forming part of his household" in section 20(1)(b) of the State Immunity Act 1978 is to be given no wider meaning for heads of state than its conventional diplomatic meaning; (ii) the proposed excision of the words "in the receiving State" from Article 31.1(c) when applied to heads of state did not satisfy the statutory "necessary modifications" test and therefore the commercial exception was not widened to cover commercial activity worldwide as a matter of statutory interpretation; and (iii) in any event, on the judge's factual findings neither prince proved he formed part of King Abdullah's household. A diplomatic letter from the Saudi ambassador was not conclusive evidence in the absence of a Secretary of State certificate under the Diplomatic Privileges Act 1964.

Appeal from the High Court of Justice, Chancery Division, Companies Court (Vos J), case no. 10850/2011; leave to appeal granted. Reported here: [2013] EWCA Civ 642.