FFF Sovereign Immunity Series ' Part VIII: England & Wales

• Law Firm: Cadwalader, Wickersham & Taft LLP
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Financial Services, Sovereign Immunity: Public Sector Government, Fund Finance
• Author: Ms Samantha Hutchinson, Laurence Sappa Cohen and Jonathan Byrne-Leitch
• Published date: 24 April 2023

For our eighth installment in the FFF Sovereign Immunity Series, we consider the doctrine of sovereign immunity in England & Wales.

We begin with our usual disclaimer that sovereign immunity is a complex legal and tax issue, and it is vital that legal advice is sought when considering its implications. This article provides a high-level summary of the doctrine under the laws of England & Wales (or, in the case of taxation, the United Kingdom) and each sovereign entity's status must be analysed on a case-by-case basis.

Sovereign immunity under English law

Sovereign immunity is the principle that a state (whether the sovereign, the government, a department of the government or any separate entity acting under sovereign authority) can claim immunity from enforcement action on the grounds that the counterparty does not have jurisdiction over it. In other words, a state actor should not be judged by the laws of another state.

Under English law, different rules determine whether (i) a dispute involving a state entity can be adjudicated and (ii) the judgment arising from that adjudication can be enforced.

Immunity from adjudication

The general principle is that the UK courts have no jurisdiction to adjudicate disputes against sovereign entities unless one or more of the following exceptions applies:

• the state entity has submitted to the jurisdiction of the English courts (e.g., by prior written agreement or by submitting to the jurisdiction after a claim has been brought);
• the proceedings relate to a contractual obligation on the state that is to be performed wholly or substantially in the UK;
• the state entity has agreed to submit to arbitration (e.g., through an arbitration provision in a contract) or
• the proceedings relate to a commercial transaction entered into by the state entity (e.g., a financing transaction).

Immunity from enforcement

Under English law, a party can be prevented from obtaining an injunction against a state entity and enforcing any judgment or arbitration award against the property of such entity. This principle, again, is subject to certain exceptions, as follows:

• the state entity provides its written consent to any relief or process (e.g., an explicit waiver of immunity as to enforcement); and
• with specific reference to judgments or arbitration awards such judgments or awards may be enforced against property that is in use or intended for use for commercial purposes.

While this article focuses on the English law approach to...