Zhongshan Fucheng Industrial Investment Co Ltd v The Federal Republic of Nigeria

A charging order may be made against a foreign state's property where the property is currently used or intended for use for commercial purposes. The court must identify the relevant use and transaction at the time of enforcement. A property’s connection with a commercial transaction is insufficient; the focus is on what is actually being done with the property.

A certificate under section 13(5) of the State Immunity Act 1978 creates a rebuttable presumption, but the judgment creditor may displace it on the balance of probabilities. Profit-making is not an essential element of a commercial transaction, and the use of rental income is irrelevant where the property itself is the subject of enforcement.

Zhongshan obtained an arbitral award against Nigeria and permission to enforce it in England as if it were a judgment of the High Court. Nigeria had made no payment. Zhongshan sought final charging orders over two Liverpool properties owned by Nigeria.

Nigeria objected on grounds including defective service under section 12(1) of the State Immunity Act 1978, the section 13(5) certificate concerning non-commercial use, alleged failure of full and frank disclosure, and the existence of other enforcement measures. The central issues were whether the charging-order application required service through diplomatic channels, whether the properties were in use or intended for use for commercial purposes, and whether final charging orders should be made.

1. Service. Section 12(1) of the State Immunity Act 1978 did not apply. An application for an interim charging order was a further step in existing arbitral-award enforcement proceedings, not a document instituting new proceedings. Master Sullivan adopted the reasoning in GPGC Limited v The Government of the Republic of Ghana.
2. Relevant statutory test. Under sections 13(2)(b) and 13(4), enforcement against state property was permitted only if the property was, at the relevant time, in use or intended for use for commercial purposes. The relevant inquiry concerned the nature and character of the activity actually conducted on the property, and the transaction for which it was used. It was insufficient that the property merely related to or was connected with a commercial transaction.
3. Certificate and evidence. The section 13(5) certificate created a rebuttable presumption that the properties were not used for commercial purposes. The certificate required no further particulars, and gaps in it did not justify adverse inferences. The presumption was nevertheless displaced on the balance of probabilities by evidence showing that both properties were let to residential tenants unconnected with Nigeria or its mission.
4. The residential leases were capable of being commercial transactions under section 3(3)(c). The properties had not been used for consular purposes for approximately 34 years, were not presently available for the purposes identified in the certificate, and the condition of Beech Lodge was inconsistent with the asserted maintenance purpose. A below-market rent did not prevent a transaction from being commercial, since profit was not part of the statutory definition.
5. The court was not misled at the interim stage, and there was no failure of full and frank disclosure. The existence of other enforcement measures did not justify refusing final orders. The properties represented only a small proportion of a substantial unpaid judgment debt.
6. The interim charging orders were made final.