It is well established that the State Immunity Act 1978 (“SIA”) draws a distinction between the adjudicatory and enforcement jurisdictions of the English court. This case is a tale of the two jurisdictions; expansionist in respect of the adjudicatory jurisdiction and restrictive in relation to the enforcement jurisdiction. It relates to the enforcement of: (i) an arbitral award; and (ii) a judgment issued in Nigeria enforcing the same arbitral award against the Nigerian State.
First, in relation to the adjudicatory jurisdiction, section 9 of the SIA sets out the arbitration exemption from state immunity; namely where the state has agreed to arbitration, it is not immune from proceedings before the English courts “which relate to the arbitration”. Males J confirmed that proceedings under the Arbitration Act 1996 to recognise an arbitral award and enter judgment in its terms fall within the section 9 exception (following the Court of Appeal Svenska Petroleum Exploration AB v Government of the Republic of Lithuania  EWCA Civ 1529).
However, Males J appears to expand the reach of section 9 of the SIA beyond previously decided case law in finding that a Nigerian court judgment enforcing the same arbitral award is also not barred by state immunity given that it is part of the process of the enforcement of the award. While not specifically stated, the rationale of Males J appears to be that proceedings to recognise and enforce the Nigerian court judgment fall within section 9 of the SIA because they are also: “proceedings which relate to the arbitration”.
Second, in relation to the enforcement jurisdiction, without clear evidence the court was reluctant to go beyond a certificate issued by the Nigerian High Commissioner under section 13(5) of the SIA in relation to a Fleet Street property. The effect was that no execution proceedings could be taken against the property.
A section 13(5) certificate is sufficient evidence that the property certified is being used for commercial purposes unless the contrary is proved. In this case, while the Nigerian High Commission had rented out the relevant property to a private company, that same company was directed to use it primarily for consular purposes (i.e. to process Nigerian visa and passport applications). The court held that in the circumstances there was insufficient evidence to show the property is in use for a commercial purpose rebutting the existence of a section 13(5) certificate.
Given the use for which the property was put (for consular purposes), it is not surprising that the claimant did not succeed on this point. Where the State issues a section 13(5) certificate, the terms of that subsection (in essence) raise a rebuttable presumption in favour of the State. This is coupled with the fact that the court held that it is the perspective of the State that counts; namely was the property in commercial use from the State’s perspective? The certificate underscores the position of the State. The result is that clear and compelling evidence that property is being used, or is intended to be used, for commercial purposes is likely to be required in circumstances where a section 13(5) certificate has been issued.
This case concerned the enforcement of: (i) an arbitral award issued in an arbitration conducted under the Nigerian Arbitration and Conciliation Act 1998 (the “Arbitral Award”); and (ii) a judgment from the Nigerian Federal High Court recognising and enforcing the same award in the same manner as a judgment (the “Nigerian Judgment”).
When the Federal Republic of Nigeria failed to pay the US$ 5 million due to L R Avionics (“Avionics”) under the Arbitral Award and the Nigerian Judgment, Avionics obtained orders from the English Court that: (i) the Arbitral Award be recognised and enforced pursuant to section 101 of the Arbitration Act 1996; and (ii) the Nigerian Judgment be recognised and enforced under section 9 of the Administration of Justice Act 1920.
The critical issue in this case related to whether property on Fleet Street owned by the Federal Republic of Nigeria but leased to a private company called Online Integrated Solutions Ltd (“OIS”) was immune from any process for the enforcement of the Arbitral Award or the Nigerian Judgment under the SIA. The Federal Republic of Nigeria had leased the premises to OIS for the purpose of providing visa and passport services in exchange for an annual rent of £150,000.
Males J considered whether the Federal Republic of Nigeria was immune from proceedings under the SIA, and a related issue as to whether the property formed part of the Nigerian diplomatic mission to the United Kingdom that would have afforded it protection. In so doing, Males considered three principal matters:
First, Males J confirmed that proceedings under section 101 of the Arbitration Act 1996 fall within section 9 of the SIA. Section 9 of the SIA is the arbitration exemption from immunity. It applies where a State has agreed in writing to submit a dispute that has arisen, or may arise, to arbitration. In those circumstances, the State is not immune in respect of proceedings before the courts of the United Kingdom “which may relate to arbitration”. Males J confirmed section 101 enforcement proceedings are “proceedings which relate to arbitration”.
Second, adopting the submissions of Avionics, Males J held that an application to enforce a judgment, which is in effect an arbitral award that has been converted into a judgment, is part of the process of the enforcement of an award. Consequently, sovereign immunity was no bar to the court’s exercise of its broad discretion under section 9 of the Administration of Justice Act 1920.
Third, enforcement by execution on State-owned property is governed by section 13 of the SIA which, in essence, provides that the relevant property will be immune from execution proceedings unless there has been an express waiver by the relevant State (section 13(3) of the SIA) or the relevant property “is for the time being in use or intended for use for commercial purposes…” (Section 13(4) of the SIA). There was no express waiver in the case, so the focus of the court’s inquiry was whether the Fleet Street property was commercial property.
The starting point in the analysis was the fact that the Acting High Commissioner of the Nigerian High Commission in London had issued a certificate under section 13(5) of the SIA certifying that “the property is part of the Nigeria High Commission of the Federal Republic of Nigeria in the United Kingdom and it is in use for Consular activities”. The effect of a certificate being issued pursuant to section 13(5) is that it is deemed to be “sufficient evidence” of the fact that the property is not in use, or intended to be in use, by or on behalf of the State for commercial purposes unless the contrary is proved.
Males J then went on to consider whether there was sufficient evidence to show that the property is in use for commercial purposes, notwithstanding the existence of the certificate. He concluded not for the following reasons:
- the “commercial purposes” referred to in section 13(4) of the SIA were those of the State against whose property is sought (as is implicit from the State certification process in section 13(5) of the SIA);
- “in use for commercial purposes” should be given its ordinary and natural meaning having regard to its context, and in this instance the primary use of the Fleet Street property was the processing of Nigerian visa and passport application which is the performance of a public function on behalf of the defendant State; and
- the lease to a private company was not the relevant transaction; the Fleet Street property was being used not merely to earn rent but also to provide consular services, which is what the Acting High Commissioner had certified.
Males J also noted that section 16 of the SIA preserves immunities available to the a State under the Diplomatic Privileges Act 1964 (which may be engaged had the Fleet Street property been deemed to be the premises of the Nigerian High Commission) and the Consular Relations Act 1968 (which may be engaged in the event the Fleet Street property were deemed to be consular premises). However, no evidence was adduced by the Federal Republic of Nigeria that either were engaged.