News

Enforcement of arbitration awards against States: issues of service

General Dynamics United Kingdom Limited v The State of Libya [2019] EWCA Civ 1110

The Court of Appeal has allowed General Dynamics’ appeal in the above proceedings, holding that it need not serve any document on the State of Libya before it can enforce a New York Convention arbitral award. The decision upholds the public policy in favour of the speedy enforcement of arbitral awards.   

In July 2018, General Dynamics obtained an ex parte order from Mr Justice Teare giving it permission to enforce a New York Convention award, in accordance with CPR 62.18. It also sought, and was granted, dispensation from the need to serve the relevant documents under CPR r.6.16 and r.6.28, as a result of the challenging political and security situation in Libya.

Libya applied to set aside the service aspect of Teare J’s order, which came before Males LJ in December 2018. Males LJ held that section 12 of the State Immunity Act 1978 applied to the order giving permission to enforce the award, which therefore had to be served through the Foreign and Commonwealth Office on the Ministry of Foreign Affairs in Libya. His Lordship came to this conclusion notwithstanding that, as the Foreign and Commonwealth Office had indicated, service by that method was not straightforward, dangerous, and (assuming it to be possible at all) likely to take over a year.

The Court of Appeal has now overturned the judgment of Males LJ, holding that section 12 of the State Immunity Act does not apply to orders enforcing arbitral awards obtained ex parte under CPR 62.18. This is because such orders are not documents “required to be served for instituting proceedings”, as required by section 12, on the proper interpretation of those words. The Court concluded that this interpretation is consistent with the procedural background against which the State Immunity Act 1978 was enacted and the public policy in favour of enforcement. The Court of Appeal also held that it was appropriate to dispense with service in the case before it, finding no error in the Judge’s conclusion that the situation on the ground in Libya was “exceptional”, as required by CPR r.6.16.

The Court of Appeal’s judgment means that a creditor may, in appropriate circumstances, avoid serving via the Foreign and Commonwealth Office when seeking to enforce an award. This is particularly important in claims against states which are facing internal conflict or which have attempted to frustrate attempts at formal service.

The judgment can be found here.

Daniel Toledano QC and James Ruddell appeared for General Dynamics, instructed by Reed Smith LLP.