General Dynamics United Kingdom Ltd v State of Libya

Proceedings to enforce an arbitral award against a foreign state fall within section 12(1) of the State Immunity Act 1978. The document which first gives the state notice of those proceedings must be served through the Foreign, Commonwealth and Development Office. It will be the arbitration claim form if the court requires that form to be served; otherwise, it will be the enforcement order.

This statutory method is mandatory and exclusive unless the state has agreed to another method. The court cannot use its procedural powers to dispense with service. The requirement is a proportionate procedural privilege serving international law and comity. It does not violate the right of access to a court and cannot be read down under section 3 of the Human Rights Act 1998 or the common law principle of legality.

An ICC tribunal in Geneva awarded General Dynamics more than £16 million against Libya under a communications-systems contract. General Dynamics obtained an order permitting enforcement under section 101 of the Arbitration Act 1996. Teare J also dispensed with formal service because instability in Libya made diplomatic service exceptionally difficult.

Males LJ, sitting in the Commercial Court, set aside the dispensation: [2019] 1 WLR 2913. The Court of Appeal reversed that decision and restored Teare J’s order: [2019] EWCA Civ 1110; [2019] 1 WLR 6137.

Libya’s appeal raised whether the claim form or enforcement order fell within section 12(1) of the State Immunity Act 1978; whether the court could dispense with the statutory method of service; and whether article 6 or the principle of legality required an exceptional alternative.

By a majority of three to two, the appeal was allowed. Lord Lloyd-Jones gave the leading judgment, with which Lord Burrows agreed. Lady Arden agreed with Lord Lloyd-Jones and supplied the third vote. Lord Stephens, with whom Lord Briggs agreed, dissented.

1. Section 12(1) of the State Immunity Act 1978 applies to proceedings invoking either adjudicative or enforcement jurisdiction. Proceedings to enforce a New York Convention award under section 101 of the Arbitration Act 1996 are distinct court proceedings against the state. The state must receive notice before enforcement can proceed and before it loses the opportunity to assert immunity from execution.

2. The document required to give that notice is a document served for instituting proceedings within section 12(1). It is the arbitration claim form where the court directs service of that form. Otherwise it is the order granting permission to enforce. The statutory language should be read broadly in the light of its purpose, international law and comity.

3. Subject to section 12(6), the method prescribed by section 12(1) is mandatory and exclusive. Service must be transmitted through the Foreign, Commonwealth and Development Office to the defendant state’s Ministry of Foreign Affairs. CPR rules 6.16 and 6.28 cannot authorise the court to dispense with a requirement imposed by primary legislation. Earlier first-instance statements that such dispensation was consistent with section 12(1) were disapproved.

4. The Department’s function is to act as the statutory channel of communication. It may exercise practical judgment about how and when service can be achieved, but it has no general discretion to refuse service. It must use its best endeavours to effect it.

5. No customary international-law rule requires diplomatic or agreed service in every case. Nevertheless, diplomatic service protects both parties, avoids interference with diplomatic premises or representatives, and gives the state clear notice and adequate time to respond. Those considerations strongly supported Parliament’s chosen procedure.

6. The service requirement pursued a legitimate objective by proportionate means and did not impair the essence of access to a court under article 6. There was therefore no basis for reading down section 12(1) under section 3 of the Human Rights Act 1998 or the common law principle of legality.

Lord Stephens and Lord Briggs would have dismissed the appeal. In their view, section 12(1) applied only to a document which both instituted proceedings and was required by current procedural law to be served. Neither document satisfied both conditions.

• United Kingdom Supreme Court: By [2021] UKSC 22, allowed Libya’s appeal by a majority of three to two and reversed the Court of Appeal’s conclusion that service could be dispensed with.
• Court of Appeal: By [2019] EWCA Civ 1110; [2019] 1 WLR 6137, allowed General Dynamics’ appeal and restored Teare J’s dispensation from service.
• Commercial Court: Males LJ, sitting at first instance, set aside the provisions dispensing with service and requiring courier delivery: [2019] 1 WLR 2913.
• High Court: Teare J granted permission to enforce the arbitral award and dispensed with service because of the exceptional conditions in Libya.