The claimant company obtained a New York Convention award in its favour in an arbitration against the defendant foreign state. When the defendant failed to pay the sum awarded, the claimant applied without notice pursuant to CPR r 62.18 and section 101 of the Arbitration Act 1996 for permission to enforce the award and for judgment in its terms. The judge made an order granting permission to enforce the award and entering judgment against the defendant in the terms of the award. Further, by paragraphs 4 and 6 of his order he: (i) dispensed with service of the arbitration claim form and the order, pursuant to CPR rr 6.16(1) and 6.28(1); and (ii) gave the defendant two months from the date of the order to set it aside. The defendant applied: (i) to set aside paragraph 4 of the order, contending that the order was a “writ or other document required to be served for instituting proceedings against a state”, within section 12(1) of the State Immunity Act 1978, with the result that by section 12(1) it had to be served through the Foreign and Commonwealth Office on the defendant state’s ministry of foreign affairs; and (ii) to vary paragraph 6 so that the two-month period for applying to set aside the order ran from the date of service of the order, contending that that was required by section 12(2) of the 1978 Act. The claimant opposed the application, arguing that section 12 of the 1978 Act did not apply because neither the order nor the arbitration claim form fell within section 12(1) since the order was not the document that had instituted the proceedings and the claim form, which had instituted the proceedings, was not required to be served. The judge granted the application, holding that the mandatory terms of section 12(1) of the 1978 Act required service of a document where the English court contemplated proceedings against a foreign state; that either the arbitration claim form or the permission order was the requisite document to be served; and that the court had no power to dispense with service under the Civil Procedure Rules although, if such a power existed, the circumstances were sufficiently exceptional to justify dispensation.
On appeal by the claimant—
Held, appeal allowed. Section 12 of the State Immunity Act 1978, on its plain and natural meaning, had to be read in accordance with English procedural law as it existed from time to time, and references to legal terms and phrases, such as “writ”, “service” and “rule of court”, could only be understood by reference to that law. The legislature in 1978 had to have known that there was a procedure for instituting registration of both foreign judgments and foreign awards without requiring service of the initiating document, and a foreign state was not immune to proceedings in respect of commercial transactions and/or arbitrations, nor was any immunity conferred in respect of enforcement. An order permitting enforcement of an award as a judgment still required service, and that order would give the state two months to set it aside with no risk of execution meanwhile as envisaged by CPR r 62.18(9). While there was no requirement or provision for the entry of an appearance or an acknowledgment of service of a registrable foreign judgment or arbitration award unless the court specified that the document instituting proceedings needed to be served, the correct procedure under rule 62.18 was that the order permitting enforcement of the award as a judgment had to be served and set a period within which the state might apply to set it aside and provide for it not to be enforced. In the case of a foreign state such period should normally be two months by analogy with section 12(2), but there was no statutory requirement that that period had always to be given. Nor, since the order permitting the enforcement of the award was not the document instituting the proceedings, was the order required to be served through the Foreign and Commonwealth Office. Because the 1978 Act was more comprehensive than the European Convention on State Immunity 1972, applied worldwide and not just to European states and was never intended to replicate the Convention, it was inappropriate to give section 12 a strained meaning. In the circumstances, it was not mandatory that either the arbitration claim form or the order permitting the enforcement of the award as a judgment had to be served through the Foreign Office, though the order permitting enforcement required service under the Rules. If it was an appropriate case to dispense with service pursuant to CPR rr 6.16 and/or 6.28, it would always be proper to notify the state that the order had been made and so that arrangements could be made for notification to the organs of state responsible for honouring the award. Such notification did not amount to alternative service and could not be used as a proxy for such service where the defendant was a state. If the enforcement order was to be the first time the foreign state received notice of a claimant’s attempt to enforce an award, it was right and proper that the court applied the test of exceptional circumstances to the question of dispensing with service which the judge correctly found he would have applied (paras 30–31, 41–43, 49, 51–52, 55–56, 59–61).
Daniel Toledano QC and James Ruddell (instructed by Reed Smith llp) for the claimant.
Huw Davies QC and Lucas Bastin (instructed by Curtis, Mallett-Prevost, Colt & Mosle llp) for the defendant.