The Naiguat': High Court Upholds Prohibition On Injunctions Against States

• Published date: 13 July 2022
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Constitutional & Administrative Law, Arbitration & Dispute Resolution, Human Rights
• Law Firm: Quadrant Chambers
• Author: Ms Poonam Melwani QC and Jamie Hamblen

OVERVIEW

In a recent High Court judgment concerning an application for an anti-suit injunction against the Bolivarian Republic of Venezuela, Sir Ross Cranston has held that the granting of injunctive relief against states is impermissible pursuant to section 13 of the State Immunity Act 1978 and rejected an argument to the effect that such prohibition must be read down on Human Rights grounds. The judgment provides important guidance on enforcement mechanisms available against state entities and the circumstances in which the European Convention of Human Rights may require the State Immunity Act 1978 to be read down.

On 28 June 2022 the High Court found injunctive relief was unavailable against the Bolivarian Republic of Venezuela on the basis of s.13(2)(a) of the State Immunity Act 1978 ("SIA") which provides that "relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property."

The underlying proceedings arose out of the total loss of a Venezuelan navy patrol vessel, the BVL Naiguat' GC-23, in early 2020, following a collision with the RCGS Resolute, an ice-classed cruise liner, which engaged in tourism to Antarctica. Following the collision, Venezuela brought civil proceedings against the owners of the Resolute and the party believed to be vessel's insurers, the UK P&I Club, in both Venezuela and Curacao. The relevant contract of insurance included a "pay to be paid clause" and an arbitration agreement in favour of London arbitration.

In March 2021, HHJ Pelling QC sitting in the High Court granted an ex parte anti-suit injunction against Venezuela on the grounds that: (a) Venezuela was bound to arbitrate its claims against the insurers named in the foreign proceedings, applying the conditional benefit analysis (b) there was no immunity from jurisdiction pursuant to the SIA and (c) s.13 SIA, which would otherwise preclude the granting of injunctive relief, fell to be read down pursuant to s.3 of the Human Rights Act 1998, following the approach in Benkharbouche v Secretary of State for Foreign and Commonwealth Affairs [2017] UKSC 62, as the proceedings related to a commercial transaction and not a sovereign act by Venezuela.

By way of his judgment dated 28 June 2022, Sir Ross Cranston agreed with HHJ Pelling QC that Venezuela was bound to arbitrate its claims against the clubs and that Venezuela had no immunity from the court's adjudicative jurisdiction on the basis of ss.3...