State Immunity And Enforcement: Why Arbitral Proceedings Should Be Carefully Considered

Summary and implications

In L R Avionics Technologies Ltd v The Federal Republic of Nigeria & Anor [2016] EWHC 1761 (Comm), a recent judgment in the High Court in London, Mr Justice Males considered the application of sections 9 and 13 of the State Immunity Act 1978 which deal with immunity in relation to arbitration proceedings and for relief and enforcement against the state, respectively.

The case concerned the enforcement of an arbitral award, and also a Nigerian judgment recognising the arbitral award, for some $5m against real estate in the City of London belonging to the Federal Republic of Nigeria.

The court held that section 9 of the State Immunity Act applied to both an arbitral award and also to the Nigerian judgment in relation to that same arbitral award. The Nigerian judgment could only be enforced at the discretion of the court under the Administration of Justice Act 1920. The court held that it was appropriate to exercise that discretion as on the facts the Nigerian judgment was part of the process of enforcing the arbitration award.

Section 9 provides that:

where a state has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the state is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration; and this section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between states. Nigeria had leased the premises of its building to a company to which it had also outsourced the job of dealing with visa applications. Section 13 of the State Immunity Act provides that there may be no enforcement against a state's real estate, subject to an exception in section 13(4). The issue considered by the court was whether the exception in section 13(4) of the State Immunity Act was relevant. This exception does not...