Qatar National Bank (QPSC) v Government of Eritrea & Anor

Although service of proceedings on a foreign state is ordinarily governed by the mandatory diplomatic route in section 12 of the State Immunity Act 1978, the court may dispense with service under CPR 6.16 where dispensing with service means that no document is required to be served. The power is exceptional. The court should be slow to exercise it and must consider the steps taken to effect service, the foreign state’s conduct, the need for respectful dealings between states, and the competing interests of access to justice and formal notification. Where exceptional circumstances are established and the defendant has had a fair opportunity to participate, the court may permit summary judgment despite the absence of an acknowledgement of service.

The claimant sought repayment of a commercial loan and guarantee totalling approximately US$252 million. The defendants were the Government of Eritrea and the State of Eritrea. The agreements contained United Kingdom jurisdiction and governing-law clauses.

Service through the Foreign and Commonwealth Office was unsuccessful because the Eritrean Embassy did not re-legalise the documents. The claimant obtained orders for alternative service, but such service was held ineffective. The claimant therefore applied retrospectively to dispense with service of the Claim Form under CPR 6.16, for permission to pursue summary judgment without an acknowledgement of service, and for summary judgment on the debt.

The central issues were whether the court had power to dispense with service on a foreign state, whether exceptional circumstances existed, and whether the claimant was entitled to judgment on the merits.

1. Power to dispense with service. Service of a Claim Form on a foreign state by an alternative method was invalid because section 12(1) of the State Immunity Act 1978 requires diplomatic transmission through the Foreign and Commonwealth Office. However, the words requiring a document to be served were sufficiently broad to permit an order under CPR 6.16 where, following dispensation, no document was required to be served. The court declined to follow the contrary analysis in General Dynamics United Kingdom Limited v State of Libya [2019] EWHC 64 (Comm).
2. Exceptional circumstances. The test is broad and flexible, but the court should be slow to dispense with service on a foreign state. Relevant matters included the claimant’s persistent attempts to use the diplomatic route, the defendants’ awareness of the proceedings, the Embassy’s failure to cooperate with re-legalisation, the defendants’ contractual choice of United Kingdom jurisdiction, the need for respectful dealings between sovereign states, and the risk that refusal would prevent the claimant commencing proceedings altogether. Exceptional circumstances were established.
3. Permission for summary judgment. The defendants had been given ample notice and opportunity to participate. There was therefore no reason to prevent the claimant pursuing summary judgment rather than default judgment. The court granted permission under CPR 24.
4. Merits. The evidence established the loan, guarantee, drawdowns, partial repayments, written demands and outstanding balance. The defendants had identified no defence. Applying the summary judgment test, they had no real prospect of successfully defending the claim and there was no compelling reason for trial.
5. The court dispensed with service of the Claim Form, directed notification of that order to the defendants and relevant Eritrean authorities, granted permission to pursue summary judgment, and entered summary judgment for the claimant. Enforcement was deferred until the notification period had expired.