General Dynamics United Kingdom Limited v. The State of Libya

At a glance

Parties

General Dynamics United Kingdom Limited v. the State of Libya

Case no.

Court of Appeal No. A4/2019/0283, [2019] EWCA Civ 1110; High Court No. CL-2018-000422, [2019] EWHC 64 (Comm)

Court

High Court (Commercial Court), Males LJ; Court of Appeal (Civil Division), Sir Terence Etherton MR, Longmore LJ and Flaux LJ

Underlying award(s)

ICC Case No. 19222/EM, award of 5 January 2016 (seat Geneva)

Forum and rules

Enforcement of a New York Convention award under section 101 of the Arbitration Act 1996 and CPR 62.18; State Immunity Act 1978, section 12

Sector

Defence; communications systems supply

Outcome

The High Court held that the order permitting enforcement had to be served on Libya through the FCO and that service could not be dispensed with. The Court of Appeal allowed General Dynamics' appeal and restored Teare J's order dispensing with service.

Amount

Award: £16,114,120.62, plus EUR 115,293.98, £990,089.58, CHF 631,332.24 and US$62,200.15, and interest (£4,019,700.50 to 21 June 2018, then £2,207.41 a day). Costs: Libya to pay £60,000 for the enforcement application and £200,000 for the set-aside application and the appeal.

The dispute

General Dynamics United Kingdom Limited, part of the General Dynamics defence group, obtained an ICC award in Geneva on 5 January 2016 against Libya. The award concerned a contract for the supply of communications systems. Libya did not pay. On 20 July 2018, on a without-notice application under section 101 of the Arbitration Act 1996, Teare J gave permission to enforce the award and entered judgment. Because of the conflict in Libya, his order dispensed with formal service and instead required the documents to be couriered to three addresses, including the Ministry of Foreign Affairs in Tripoli. Libya applied to set aside the parts of the order on service. It argued that section 12(1) of the State Immunity Act 1978 required the document instituting the proceedings to be served through the Foreign and Commonwealth Office (FCO), and that the court had no power to dispense with that service, or should not have used it.

Key holdings

1. High Court: section 12 assumes that some document must always be served to institute proceedings against a State. Where the arbitration claim form is not ordered to be served, the order granting permission to enforce the award is that document, and it must be served through the FCO. High Court ¶¶ 38–44, 78
2. High Court: the court has no power to dispense with service required by section 12, because this would go against the section's mandatory terms. Males LJ declined to follow Certain Underwriters at Lloyd's v Syria, Havlish v Iran and Teare J's ruling in this case. He set aside paragraphs 4 and 5 of Teare J's order. The time for Libya to apply to set it aside would run from two months after service on the Ministry of Foreign Affairs. High Court ¶¶ 79–80, 90
3. Court of Appeal: section 12(1) must be read according to English procedural law. Under that law, the arbitration claim form institutes the proceedings but need not be served. The enforcement order must be served, but it is not the instituting document. Section 12(1) therefore applies to neither document. The same was true of the procedure in force in 1978, and Article 16 of the European Convention on State Immunity does not justify a strained reading. Court of Appeal ¶¶ 30–42, 51–52, 55–60
4. Court of Appeal: the court can dispense with service of the enforcement order under CPR 6.16 and/or 6.28. The State should still be notified, but notification is not alternative service. Where the order is the State's first notice of the enforcement attempt, the court should apply the 'exceptional circumstances' test. The normal period for a State to apply to set aside should be two months, by analogy with section 12(2), but the statute does not require it. Court of Appeal ¶¶ 51, 60–61
5. Obiter: if section 12 did require service through the FCO, the court could not dispense with it. The contrary view in Certain Underwriters at Lloyd's v Syria (¶ 25) is not good law. Court of Appeal ¶¶ 62–63
6. Exceptional circumstances existed. The evidence showed civil unrest, armed militia in Tripoli, a closed British Embassy, and the FCO's view that service was too dangerous and likely to take over a year. Impossibility of service is not required. The Court of Appeal declined to interfere with the judge's assessment. High Court ¶¶ 82–89; Court of Appeal ¶¶ 64–70
7. Disposal: the appeal was allowed and Teare J's order restored, with paragraphs 6 and 7 varied to allow for a possible application by Libya for permission to appeal to the Supreme Court. Libya's application for permission to appeal was refused. Libya must pay costs of £200,000. Court of Appeal ¶ 71 and Order

Procedural history

1. 2013ICC arbitration commenced. Libya was represented by the Sefrioui Law Firm of Paris.
2. 5 January 2016ICC tribunal in Geneva awarded £16,114,120.62 plus interest and costs to General Dynamics (ICC Case No. 19222/EM).
3. April 2016US recognition and enforcement proceedings were delivered to the Ministry of Foreign Affairs in Tripoli. General Dynamics did not pursue them because there appeared to be no US assets.
4. 20 July 2018Teare J gave permission to enforce, entered judgment and dispensed with service. The arbitration claim form was dated 21 June 2018.
5. 19 September 2018Libya applied to set aside the parts of the order on service.
6. 18 January 2019High Court (Males LJ) granted Libya's application and held that service through the FCO was mandatory and could not be dispensed with.
7. 13 June 2019Court of Appeal hearing.
8. 3 July 2019Court of Appeal allowed General Dynamics' appeal, restored Teare J's order and refused Libya permission to appeal.

Tribunal, counsel and experts

Decided by

• Terence Etherton Judge, Court of Appeal (Civil Division) (Master of the Rolls)

For the claimant

Reed Smith LLP

For the respondent

Curtis, Mallet-Prevost, Colt & Mosle LLP · Sefrioui Law Firm

Run a conflict check on these names →

Keywords

• State immunity
• State Immunity Act 1978 section 12
• service on a foreign State
• Foreign and Commonwealth Office
• dispensing with service
• CPR 6.16
• CPR 6.28
• CPR 62.18
• enforcement
• New York Convention
• Arbitration Act 1996 section 101
• exceptional circumstances
• European Convention on State Immunity
• Libya civil conflict
• ICC award
• Van Zyl v Lesotho
• Norsk Hydro

Summary generated with AI from the published documents — refer to the award for the authoritative text.