Sovereign State Immunity From Anti-suit Injunctions

• Published date: 30 November 2022
• Subject Matter: Corporate/Commercial Law, Insurance, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Insurance Laws and Products, Sovereign Immunity: Public Sector Government, Trials & Appeals & Compensation
• Law Firm: Norton Rose Fulbright
• Author: Mr Lorcan Treacy

UK P&I Club N.V. & Anor v Republica Bolivariana De Venezuela [2022] EWHC 1655 (Comm) provides guidance on the factors the English courts will consider when deciding whether a state should benefit from state immunity and whether injunctive relief can be granted against a state.

Background

This case concerned the total loss of a Venezuelan navy patrol vessel which sank in 2020 following a collision with a tourist cruise liner, RCGS Resolute. In 2020, Venezuela brought civil claims in the courts of Dutch Curacao and Venezuela against the owners and insurers of the Resolute for the loss. In February 2021, the insurers sought an anti-suit injunction against Venezuela in the English High Court, arguing that the Venezuelan claims in the foreign courts were in breach of the London arbitration clause contained in the insurance contract.

Key arguments

In the High Court, the insurers argued that Venezuela was in breach of the express terms of the insurance contract by pursuing claims outside of London arbitration. The insurers claimed that Venezuela did not have state immunity in this matter, since the exception in s.3(1)(a) of the State Immunity Act 1978 (SIA) applied. This exception provides that a state is not immune from proceedings relating to a commercial (non-sovereign) activity entered into by the state. The claimants also challenged the separate and additional immunity against injunctive relief in respect of a state's non-sovereign activity in s.13(2) SIA. They argued that this immunity was a breach of their rights to a fair trial and access to the courts under art. 6 of the European Convention on Human Rights (ECHR) which could not be justified as proportionate.

In its response, Venezuela contended that the civil claims it sought to bring in Venezuela and Curacao were not commercial in nature as they related to naval activity of the state since the vessel had been on patrol, and accordingly, state immunity applied.

Decision

The court held that Venezuela had no immunity from the English courts' jurisdiction in this matter. Under s.1 SIA, a state is only immune from a jurisdiction provided that an exception contained in the SIA does not apply. In this case, the court found that two exceptions applied; s.3(1)(a), that the claims were commercial in nature (Venezuela's claims were ordinary civil claims in private law), and s.3(1)(b) regarding the terms of the insurance contract. Consequently, the court held that the claims Venezuela sought to advance in the...