General Dynamics United Kingdom Limited v The State of Libya

A state’s agreement that an arbitral award is final, binding and wholly enforceable may constitute written consent to enforcement against its assets under State Immunity Act 1978, section 13(3). No prescribed form of words is required. The agreement must be construed under its governing law and in its commercial and factual context. Adjudicative immunity and enforcement immunity are distinct. Consent to arbitration or to recognition of an award does not, without more, waive immunity from execution. However, wording which would otherwise have no meaningful contractual effect may properly be understood as waiving enforcement immunity. The waiver’s territorial operation remains subject to the law of the state where enforcement is sought.

General Dynamics United Kingdom Limited obtained an arbitral award against the State of Libya arising from a commercial supply contract. The award was recognised and enforceable as a judgment under section 101 of the Arbitration Act 1996. An interim charging order was then made over a London property owned by Libya.

Libya applied to discharge the order, relying on immunity from execution under section 13(2)(b) of the State Immunity Act 1978. General Dynamics relied on the contract’s agreement that arbitral decisions would be final, binding and wholly enforceable. The central issue was whether that wording amounted to written consent to enforcement against state property under section 13(3).

1. Application dismissed. The interim charging order was made final.
2. The State Immunity Act 1978 is a complete code. It distinguishes adjudicative jurisdiction from enforcement jurisdiction. Submission to adjudicative jurisdiction or agreement to recognition of an arbitral award does not itself waive immunity from execution.
3. No special or prescribed words are required for written consent under section 13(3). The question is whether the agreement, properly construed, amounts to consent to enforcement.
4. The contract was governed by Swiss law. Swiss law supplied the rules of construction, including consideration of the wording, circumstances, purpose and subsequent conduct, and, absent proof of subjective intention, an objective good-faith assessment of what the parties could and should have intended.
5. Read in its commercial context, the phrase wholly enforceable could not sensibly be confined to adjudicative immunity. That construction would make the final sentence largely devoid of content because the contract had already provided that awards were final and binding. The better construction was that the parties intended awards to be enforceable against each other in the same way as in a commercial agreement between non-state parties, subject to the law of the enforcing jurisdiction.
6. The court rejected Libya’s circular construction and treated the contractual wording as written consent to enforcement against its assets. The additional Creighton argument was unnecessary to decide and, had it required determination, would have been resolved against General Dynamics.