Summary
In a judgment handed down on 14 March 2022, the High Court has decided that the defendant national flag carrier of Suriname (referred to as “SLM”) was not entitled to be served with a Claim Form by transmission through the Foreign, Commonwealth and Development Office to the Ministry of Foreign Affairs of Suriname, in accordance with section 12 of the State Immunity Act 1978 (the “Act”). The Court held that SLM was a “separate entity” and a separate entity is not entitled to the privileges granted under section 12 of the Act.
Assuming that conclusion was wrong, the Court considered that SLM had in any event agreed to an alternative means of service and such alternative service was valid and effective under section 12(6) of the Act. As a result, SLM’s application contesting the Court’s jurisdiction was dismissed. A full copy of the judgment is available here.
Factual and procedural background
In an earlier judgment, the Court dismissed a jurisdictional challenge made by SLM based on CPR r.11(1). For the purposes of determining SLM’s application for permission to appeal that judgment, the Court considered whether there were further grounds to justify its earlier dismissal order.
The claimant (“AELF”), an aircraft leasing company, commenced proceedings against SLM alleging that it had breached a Settlement Agreement and Termination Deed (the “Settlement Agreement”) pursuant to which the parties had agreed to settle AELF’s claim against SLM - in excess of US$23 million - arising under the terms of an aircraft lease agreement. The Settlement Agreement contained an exclusive English jurisdiction clause.
SLM challenged the Court’s jurisdiction on the basis that the Claim Form had been defectively served. SLM’s application asserted that it had been entitled to be, but was not, served with the Claim Form in accordance with the procedure contained in section 12(1) of the Act and because the claim related to an act done in the exercise of the Republic of Suriname’s sovereign authority.
Section 12 of the Act provides that “Any writ or other document required to be served for instituting proceedings against a State shall be served by being transmitted through the Foreign, Commonwealth and Development Office to the Ministry of Foreign Affairs of the State and service shall be deemed to have been effected when the writ or document is received at the Ministry.”
Although SLM accepted that it was not a State, it contended that it was a separate entity for the purposes of section 14(1) of the Act and, therefore, it should have been served with the Claim Form in accordance with the procedure in section 12. Notably, section 14(1) of the Act provides that:
“The immunities and privileges conferred by this Part of this Act apply to any foreign or commonwealth State other than the United Kingdom; and references to a State include references to—(a) the sovereign or other head of that State in his public capacity; (b) the government of that State; and (c) any department of that government, but not to any entity (hereafter referred to as a “separate entity”) which is distinct from the executive organs of the government of the State and capable of suing or being sued.”
The key issues before the High Court
The two key issues for the Court to consider were: (i) whether SLM was entitled to rely on section 12(1) of the Act; and (ii) if so, whether service of the Claim Form had been effected in a manner which was agreed in accordance with section 12(6) of the Act.
The High Court’s judgment
The High Court confirmed that SLM was a separate entity and concluded that SLM was not entitled to be served with proceedings in accordance with the procedure prescribed in section 12 of the Act. The Court reached this conclusion by what it described as a simple exercise of statutory interpretation of the Act. The Court emphasised that the structure, language and effect of the Act was readily discernible. Specifically, the Court held that:
- Section 12(1) expressly provides that it is applicable to proceedings against States. There is no reference in that provision to a separate entity whatsoever.
- Section 14(1) identifies what is included within the meaning of the term a “State” and, further, references to a State do not include any entity which is separate from the executive organs of the government of the State and capable of suing or being sued. The Court concluded that SLM was such a separate entity, which SLM itself acknowledged.
- By way of contrast, section 14(2) provides that a separate entity is immune from the jurisdiction of the English courts if, and only if, the proceedings relate to anything done by it in the exercise of sovereign authority and the circumstances are such that the State would have been so immune.
- The Court held that reference to "privileges" in section 14(1) must be referring to something other than immunity from jurisdiction, and would include the right to be served as per section 12(1).
- Section 14(2) makes provision for separate entities – such as SLM - to be immune from jurisdiction in certain circumstances which did not apply to this case.
- Under section 2(1) of the Act, a State is not immune to proceedings where it has submitted to the Court’s jurisdiction. Given the Court’s earlier judgment that SLM had submitted to the jurisdiction of the English courts, the effect of section 2(1) of the Act when read together with section 14(2) is that SLM enjoys no immunity in respect of AELF’s claim.
- Moreover, and as submitted by AELF, if the legislative intention had been to extend the privileges granted by section 12(1) to a separate entity, there would have been express provision in the Act to that effect.
- The Settlement Agreement was not an act in the exercise of Surinames’s sovereign authority given the commercial nature of the Settlement Agreement. Rather, it was a compromise of claims in respect of the commercial aircraft leasing agreement between the parties.
Whilst the Court had concluded that section 12(1) did not apply to SLM it nevertheless also considered, obiter, the application of section 12(6) of the Act (assuming that section 12(1) did in fact apply to SLM).
Section 12(6) provides that a State may agree to an alternative means of service than that prescribed in section 12(1) of the Act. The Court concluded that service of the Claim Form in the proceedings was undertaken further to SLM’s agreement to an alternative means of service pursuant to section 12(6) of the Act, with the result that service of the Claim Form was valid and effective. In reaching this conclusion, the Court rejected SLM’s submissions that section 12(6) would only apply if the agreed alternative means of service had been agreed in the exercise of Suriname’s sovereign authority or that the Republic of Suriname had to agree to that alternative method of service to engage section 12(6) of the Act.
Key Take Aways
The judgment confirms that separate entities are not States for the purposes of the service procedures in section 12(1) of the Act and, therefore, separate entities are not entitled to service using that process. SLM’s application was premised on it being “entitled” to be served in accordance with the section 12 procedure and, arguably, the use of the term “entitled” may not fully reflect the mandatory nature of the service provisions in the Act. Failing an agreement between the State and a prospective claimant, the service procedure under section 12 of the Act is a mandatory procedural “requirement” that must be adhered to, as confirmed by the Supreme Court in General Dynamics v Libya [2021] UKSC 22.
It would appear that a challenge by a separate entity to the Court’s jurisdiction on grounds that it had not been served in accordance with the section 12 procedure would likely fail. However, the judgment is a useful reminder that separate entities do benefit from jurisdictional immunity on the grounds provided for in section 14(2) of the Act. Therefore, such entities should be cautious when proceedings are commenced against them to ensure that they do not inadvertently submit to the Court’s jurisdiction.
Aelf MSN 242, LLC (a Puerto Rico limited liability company) v De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways [2022] EWHC 544 (Comm).
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