English Commercial Court Determines That A State-Owned Airline Is Not Entitled To Be Served In Accordance With The State Immunity Act

• Published date: 31 March 2022
• Subject Matter: Transport, Aviation
• Law Firm: Herbert Smith Freehills
• Author: Mr Andrew Cannon and Hannah Ambrose

In 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), the English Commercial Court (the "Court") considered whether the national flag carrier of Suriname ("SLM") was entitled to be served with proceedings in accordance with s12(1) of the State Immunity Act 1978 (the "SIA"). The SIA confers certain general immunities and privileges on foreign States and prescribes a mandatory process for the service of documents instituting proceedings "against a State". SLM argued that even though it was not an executive organ of the State (but instead a State-owned "separate entity", as described in s14 SIA), it should be served in accordance with the SIA. However, the Court held that separate entities are not entitled to be served with proceedings in the manner that States are required to be served under s12(1) SIA.

What are the practical implications of this case?

S12(1) SIA prescribes a mandatory process for the service of documents instituting proceedings "against a State". S12(1) SIA provides:

"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."

The decision confirms that s12(1) SIA's plain meaning precludes its application to separate entities, which, as in this case, may include State-owned companies. This means that those seeking to institute English court proceedings against separate entities need not - and should not - rely on transmission through the Foreign Commonwealth & Development Office ("FCDO") to effect the service of claim forms. Similarly, State-owned entities which are distinct from a State's executive organs should not expect to be served in accordance with this provision.

What was the background?

The case arose after the claimant, an aircraft leasing company, brought proceedings against SLM, for sums allegedly due under a settlement agreement containing an exclusive English jurisdiction clause. As outlined on our Litigation Notes blog, the Court had already held that the defendant had waived its right to object to the Court's jurisdiction in a December 2021 judgment.

SLM sought permission to appeal, arguing that the waiver could not prevent its reliance on s12(1) SIA...