General Dynamics United Kingdom Ltd v State of Libya

The Supreme Court held that section 12(1) of the State Immunity Act 1978 requires service through the Foreign, Commonwealth and Development Office (FCDO) of any "writ or other document required to be served for instituting proceedings against a State". In proceedings to enforce a New York Convention award under section 101 of the Arbitration Act 1996, where the court does not require the arbitration claim form to be served, the enforcement order that gives permission to enforce is a document required to be served for instituting proceedings and therefore falls within section 12(1) SIA. The court concluded that the section 12(1) procedure is mandatory and exclusive, subject only to service by a method agreed with the State under section 12(6).

The majority rejected the respondent’s argument that the Civil Procedure Rules (notably the powers to dispense with service under CPR rr.6.16 and 6.28) can be applied to displace the statutory requirement; the Rules cannot override primary legislation. The court also held there is no rule of customary international law that diplomatic transmission is the only permissible method of service, but international comity and the purpose of section 12 support its broad application. On article 6 ECHR and the Human Rights Act 1998, the court found the procedural privilege in section 12 pursues a legitimate aim by proportionate means and does not require reading-down of the statutory provision.

Background and parties:

• General Dynamics (claimant/ respondent) obtained an ICC award of £16,114,120.62 against the State of Libya (appellant) and applied to enforce it in England under section 101 of the Arbitration Act 1996.
• On a without-notice application Teare J granted permission to enforce and dispensed with service of the arbitration claim form and the enforcement order, directing courier transmission of documents to addresses in Tripoli and Paris and allowing Libya two months to apply to set the order aside.

Procedural history:

• Males LJ (Commercial Court) set aside those parts of Teare J’s order dispensing with service, holding that section 12(1) SIA requires service through the FCDO of the document instituting proceedings (Males LJ: [2019] 1 WLR 2913).
• The Court of Appeal allowed General Dynamics’ appeal and restored Teare J’s order ([2019] 1 WLR 6137).
• Libya obtained permission to appeal to the Supreme Court. The Supreme Court allowed Libya’s appeal (majority) and held section 12(1) applied to the enforcement order; the majority would therefore displace the Court of Appeal’s decision.

Nature of the claim / relief sought:

• Application for permission to enforce a New York Convention award under section 101(2) and (3) Arbitration Act 1996; consequential seeking of judgment and permission to dispense with service of the claim form and other documents.

Issues framed by the court:

1. Does section 12(1) SIA require service by transmission through the FCDO of the arbitration claim form or of the enforcement order in proceedings to enforce an arbitral award under the 1996 Act?
2. If section 12(1) applies, can the court nevertheless, in exceptional circumstances, dispense with service under CPR rr.6.16 and/or 6.28?
3. Must section 12(1) be read compatibly with article 6 ECHR (via the Human Rights Act 1998) or the common-law principle of legality so as to permit alternative service in exceptional circumstances?

Court’s reasoning (concise):

• Statutory construction: section 12(1) is intended to provide a mandatory and exclusive procedure for service on a State "in cases to which it applies"; its wording must be read having regard to purpose, legal context and procedural rules in force in the relevant part of the United Kingdom.
• Application to enforcement proceedings: where a claimant does not serve an arbitration claim form, the enforcement order is the document by which notice of the court proceedings is given to the State and therefore is a document "required to be served for instituting proceedings" within s.12(1).
• Rules cannot displace primary legislation: the court cannot use CPR powers to displace the statutory requirement where section 12(1) applies; the CPR cannot confer a discretion that overrides a statutory mandate; accordingly the power to dispense with service under CPR rr.6.16/6.28 is not available where section 12(1) requires diplomatic transmission, although the court observed that, had it had such a discretion, the exceptional facts (instability in Libya and practical impossibility/danger of diplomatic service) would have justified dispensation.
• International law and comity: there is no customary international law rule making diplomatic transmission the only permissible method of service; nonetheless s.12 embodies considerations of comity and is appropriate for the protection of both parties and the forum state.
• Human rights / legality: the majority concluded section 12(1) is compatible with article 6 and need not be read down; the procedural privilege is proportionate and not inconsistent with the essence of the right of access to court.

Appeal allowed. The Supreme Court (majority) held that section 12(1) State Immunity Act 1978 applies to proceedings to enforce a New York Convention award: where the arbitration claim form is not required to be served, the enforcement order is the "document required to be served for instituting proceedings against a State" and must be transmitted through the FCDO to the Ministry of Foreign Affairs. The court concluded that the CPR powers to dispense with service cannot override the mandatory statutory procedure; international law does not compel a different result and article 6/HRA does not require reading-down of section 12(1).

First-instance enforcement order by Teare J granting permission to enforce and dispensing with service (20 July 2018). Males LJ (Commercial Court) on application to set aside set aside parts of Teare J’s order concerning dispensation of service ([2019] 1 WLR 2913). Court of Appeal allowed General Dynamics’ appeal and restored Teare J’s order ([2019] 1 WLR 6137). Libya obtained permission to appeal to the Supreme Court which allowed the appeal ([2021] UKSC 22).