The High Commissioner for Pakistan in the United Kingdom v National Westminster Bank Plc & Ors

The court’s power under CPR rule 38.4(1) to set aside a notice of discontinuance is a broad discretion governed by the overriding objective. Abuse of process remains a powerful consideration, but is neither a necessary nor exclusive condition. A claimant state that institutes proceedings submits to the jurisdiction; that submission is irrevocable for those proceedings and covers procedural steps, including interpleader and determination of competing beneficial claims. A notice served to recover sovereign immunity and frustrate that adjudication is an abuse and should be set aside. Interested persons may be joined after discontinuance where needed to resolve connected disputes, and must be joined for a non-party costs application. Plainly unsustainable claims unnecessarily pursued may attract indemnity costs.

Pakistan brought proceedings against National Westminster Bank Plc for payment of a disputed fund, asserting legal and beneficial entitlement. The fund had been the subject of earlier litigation involving the Nizam of Hyderabad and Pakistan, culminating in the House of Lords decision in Rahimtoola v Nizam of Hyderabad [1958] AC 379.

The Bank sought relief concerning Pakistan’s conversion and related claims and intended to interplead the competing claimants. The Princes and India sought joinder and relief following Pakistan’s notice discontinuing the action. The central issues were whether the Interested Parties could be joined and heard, whether the notice should be set aside, and what effect Pakistan’s submission to the English jurisdiction had on its sovereign immunity.

The applications succeeded. The Interested Parties were joined, the Notice of Discontinuance was set aside, and Pakistan was ordered to pay the Bank’s costs of the unsustainable direct claims on the indemnity basis if not agreed.

1. Discontinuance. CPR rule 38.4(1) confers a discretion to set aside a notice of discontinuance. The discretion must be exercised to further the overriding objective. Abuse of process remains a powerful factor, but it is not a necessary or exclusive criterion. The court should consider the circumstances in which the notice was served, what the claimant sought to achieve, and whether unconditional permission to discontinue would have been granted. The approach in Castanho v Brown & Root (UK) Ltd [1981] AC 557 remained relevant, while Sheltam Rail Co Ltd v Mirambo Holdings Ltd [2008] EWHC 829 (Comm) confirmed the broader CPR discretion.
2. Joinder. Service of the notice did not automatically terminate the proceedings for the purposes of the Bank’s application or costs. Under CPR rule 19.2(2), it was desirable to join the Princes and India so that the discontinuance issue and the underlying beneficial-ownership dispute could be resolved. They also had to be added for the purposes of any costs application under CPR rule 46.2. The general case-management power in rule 3.1(2)(m) independently supported allowing them to address the court.
3. State immunity. Under sections 1 and 2 of the State Immunity Act 1978, Pakistan was deemed to have submitted to the jurisdiction by instituting the action. That submission was irrevocable and extended to procedural steps and interim orders within the same proceedings, the adjudication of beneficial title, and any appeal. Enforcement remained subject to section 13. The interpleader procedure under RSC Order 17 and CPR Part 23 formed part of the existing action rather than fresh proceedings.
4. Pakistan’s principal purpose in discontinuing was to recover its immunity and reinstate the former stalemate. That was an attempt to obtain a collateral tactical advantage after voluntarily submitting to adjudication. It constituted an abuse of process. Unconditional discontinuance would have been impermissible, and the appropriate result was to set the notice aside.
5. The conversion claim was legally unsustainable because the debt represented by money in a bank account was a chose in action, applying OBG Ltd v Allan [2007] UKHL 21. Pakistan had acted unreasonably in pursuing the direct claims despite being given an explanation of their defects. Indemnity costs were therefore justified.

Further directions for the future conduct of the proceedings were to be given after judgment.

This was a first-instance decision on interlocutory applications in the 2013 Chancery proceedings. The judgment records that Upjohn J’s decision in the earlier litigation, reported at [1957] Ch 185, was reversed by the Court of Appeal and upheld by the House of Lords in [1958] AC 379. No appellate history of the present decision is stated.