GENERAL DYNAMICS UNITED KINGDOM LIMITED v THE STATE OF LIBYA

An applicant seeking relief ex parte must make full, frank and fair disclosure of all material facts. Materiality is assessed objectively by the court, and the applicant must make proper inquiries. A breach does not automatically require discharge: the court retains a discretion to continue or re-grant relief, having regard to the seriousness of the breach, the strength of the underlying case and the consequences of discharge.

Where a State has agreed to arbitration, the agreement may remove adjudicative immunity for proceedings recognising and enforcing the award as a judgment. Immunity from execution against State property is a separate issue, ordinarily arising when particular assets and enforcement methods are identified. Non-disclosure of that immunity will not necessarily justify setting aside recognition of the award.

General Dynamics obtained an arbitral award against Libya and, on an ex parte application, obtained permission under sections 101(2) and 101(3) of the Arbitration Act 1996 to enforce the award and enter judgment in its terms. The order also dispensed with service under section 12 of the State Immunity Act 1978.

The service provisions were subsequently set aside by the Supreme Court. Libya then applied to set aside the remaining recognition and judgment provisions, alleging failures of full and frank disclosure concerning State immunity and the existence of two Libyan governments. The central issue was whether those omissions were sufficiently material to justify setting aside the orders under the Arbitration Act 1996.

1. Duty of disclosure. The duty on an applicant seeking relief without notice is strict. It extends to material facts known to the applicant and facts which proper inquiries would have disclosed. Materiality is determined objectively by the court. The extent of the necessary inquiries depends on the nature of the case, the order sought, its probable effect, the urgency and the time available. A breach does not automatically require discharge; the court may continue or re-grant relief where justice requires.
2. State immunity. It would have been preferable for General Dynamics to identify Libya’s immunity under section 1 of the State Immunity Act 1978 and explain the section 9 exception. However, Libya had no adjudicative immunity preventing orders under sections 101(2) and 101(3) of the Arbitration Act 1996, because its agreement to arbitrate engaged section 9 of the State Immunity Act 1978. The immunity from execution under section 13 was distinct and ordinarily arose later, when particular assets and enforcement methods were identified.
3. The possibility of a later writ of control did not materially increase the need for disclosure at the recognition stage. Any attempt to execute against State property would require the issue of immunity to be brought to the court’s attention, and the identification of assets at the recognition stage would generally be premature.
4. The alleged omission concerning two Libyan governments related only to service. It was not relevant to the substantive entitlement to recognition and judgment under the Arbitration Act 1996. The application to set aside the recognition and judgment provisions was therefore refused. The order was set aside only as to costs, and General Dynamics was deprived of its costs of the original application.

• Supreme Court: allowed Libya’s appeal concerning service and restored the order requiring diplomatic service, thereby setting aside the service provisions of the Teare J Order.
• Court of Appeal: unanimously allowed General Dynamics’ appeal and restored the service provisions.
• High Court (Commercial Court): refused to set aside the substantive recognition and enforcement orders, but set aside the costs provision.