Thai -Lao Lignite (Thailand) Co Ltd & Anor v Government of the Lao People's Democratic Republic

A freezing order must respect the separate immunity of a central bank under the State Immunity Act 1978. Where a central bank is a separate entity, its property cannot be subjected to enforcement process without that bank’s written consent. A claimant must frame any order so as to protect that immunity; a blanket order freezing all accounts in the bank’s name, subject only to a later declaration, is impermissible. Serious non-disclosure on a without-notice application does not automatically require discharge of the whole order. The court must assess the connection between the breach and the relief sought and apply a proportionate remedy. A credible, non-futile claim of loss is sufficient to justify an inquiry under a cross-undertaking. Further fortification cannot ordinarily be imposed retrospectively because the undertaking is voluntary and forms part of the price of obtaining relief.

The claimants obtained an arbitral award against the Government of Laos and subsequently entered judgment in England. Simon J granted a domestic freezing order against the Government. The order also required banks holding accounts in the name of the Bank of the Lao PDR to freeze those accounts unless a sworn declaration established that the Government had no beneficial interest.

The Central Bank, which had not been served with the order, applied to discharge it or remove provisions 6 and 19. It relied on its separate legal personality, immunity under the State Immunity Act 1978, disruption to its ordinary central banking operations and resulting losses. It also sought an inquiry under the cross-undertaking and further fortification. The issues were whether the order unlawfully affected immune central bank property, whether the claimants’ non-disclosure justified discharge of the order against the Government, and whether an inquiry and further fortification should be ordered.

1. Central bank immunity. The Central Bank was a separate entity within section 14(1) of the State Immunity Act 1978. By sections 13(2)(b), 13(3) and 14(4), its property was immune from enforcement process unless the Central Bank itself gave written consent. A waiver by the Government could not waive the Central Bank’s separate immunity.
2. Scope of property and order. Property was construed broadly and included any legal, equitable or contractual right or interest. A bank account in the Central Bank’s name therefore enjoyed immunity at least because the bank had a contractual interest as account holder. Paragraphs 6 and 19 were impermissibly wide: they applied to all Central Bank accounts, without limit as to type, location or amount, and required freezing first with immunity demonstrated later. The provisions were deleted.
3. Non-disclosure. The claimants had seriously failed to explain and justify the effect of paragraphs 6 and 19 and had not fairly presented the waiver issue. Applying the principles in Brink’s Mat Ltd v Elcombe & ors and Memory Corporation Plc v Sidhu (No.2), the breaches did not require discharge of the entire order. They related only to the deleted provisions, were not deliberate, conferred no continuing benefit and had no logical relevance to continuation of the order against the Government. The freezing order was therefore continued in varied form.
4. Inquiry. The Central Bank was within the intended class protected by the cross-undertaking. Under Yukong Line Ltd v Rendsburg Investments Corporation, credible evidence showing that an inquiry was not clearly futile or disproportionate was sufficient. An inquiry into loss was ordered.
5. Fortification. Following Commodity Ocean Transport Corporation v Basford Unicorn Industries Ltd (“The Mito”), approved in Miller Brewing Company v The Mersey Docks and Harbour Company, the court could not impose further fortification retrospectively. Fortification was part of a voluntary undertaking and the price for obtaining or continuing relief. The application for further fortification was refused.

First-instance decision. The judgment itself records that Simon J had granted the freezing order on 4 July 2013. This court continued it in varied form.