Home Information Cases NML Capital Ltd v Argentina (2011)

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NML Capital Ltd v Argentina (2011)

Summary

Under the Civil Jurisdiction and Judgments Act 1982 s.31, a state did not enjoy immunity in respect of proceedings to enforce a foreign judgment against it where the normal conditions for recognition of judgments were fulfilled and the state would not have been immune had the foreign proceedings been brought in the United Kingdom.

 

Facts

The appellant hedge fund (N) appealed against a decision ((2010) EWCA Civ 41, (2011) QB 8) that it could not enforce a foreign judgment against the respondent state, Argentina, because of state immunity. Argentina had declared a moratorium on bonds it had issued. N purchased the bonds and obtained judgment on them in New York. It sought to enforce that judgment in England. The issues for determination were whether (i) the enforcement proceedings were "proceedings relating to a commercial transaction" within the State Immunity Act 1978 s.3 and therefore not subject to immunity; (ii) Argentina was prevented from claiming state immunity by the Civil Jurisdiction and Judgments Act 1982 s.31; (iii) the bonds contained a submission to the jurisdiction of the English court within s.2 of the 1978 Act; (iv) at the inter partes hearing of its application for permission to serve Argentina outside the jurisdiction, N had been entitled to raise two grounds for alleging that Argentina did not enjoy immunity which it had not relied on in its ex parte application, or whether it was prevented from doing so by the rule in Parker v Schuller (1901) 17 TLR 299.

Held

(Lord Phillips (President) and Lord Clarke J.S.C. dissenting on effect of s.3 of the 1978 Act) (1) It stretched language beyond the admissible to read "proceedings relating to a commercial transaction" as covering proceedings relating to a judgment which itself related to a commercial transaction. However, the improbability of such a construction could not be supported on the basis of an implied limitation of s.3(1)(a) to commercial transactions with a domestic nexus, or of a potential overlap with s.9, AIC Ltd v Nigeria (2003) EWHC 1357 (QB), Independent, July 28, 2003 overruled andSvenska Petroleum Exploration AB v Lithuania (No2) (2006) EWCA Civ 1529, (2007) QB 886 considered. At the time the 1978 Act was enacted it would not have been envisaged that s.3 would have applied to the enforcement of a foreign judgment against a foreign state based on a commercial transaction, because the rules of court did not then allow a defendant outside the jurisdiction to be served in an action on a foreign judgment (see paras 84-98, 112-116 of judgment). (2) The natural meaning of s.31(1) of the 1982 Act was to require recognition and enforcement of a foreign judgment against a foreign state if the normal conditions for the recognition and enforcement of judgments were fulfilled and the foreign state would not have been immune if the proceedings had been brought in the United Kingdom. There was nothing to support the Court of Appeal's conclusion that s.31 did not affect the law of immunity and so had no discernible purpose (paras 118-119; see also paras 44-54). (3) The bonds had provided that any related judgment would be binding on Argentina and could be enforced in any court to whose jurisdiction Argentina could be subject by a suit upon the judgment. If state immunity was the only bar to jurisdiction, an agreement to waive immunity was tantamount to submission to the jurisdiction. The provision in the bonds was both an agreement to waive immunity and an express agreement that the New York judgment could be sued on in any country that, state immunity apart, would have jurisdiction. England was such a country, so the provision constituted submission to the jurisdiction (paras 57-61, 127-130). (4) The point in Parker did not arise in the instant case. CPR r.6.37(1)(a) provided that an application for permission to serve outside the jurisdiction had to set out the ground relied on. If there was such a rule as the so-called rule in Parker, it was that the court had to decide an application on the basis of the cause of action expressly mentioned in the pleadings, and the claimant would not be allowed to rely on an alternative cause. There was no analogous rule relating to the exceptions to state immunity. Where Parker might apply, the court had power to grant permission to serve out on a fresh basis and dispense with re-service. Parker was no longer to be followed, Parker overruled (paras 131-137; see also paras 65-81).

Appeal allowed

Supreme Court
Lord Phillips (President), Lord Walker JSC, Lord Mance JSC, Lord Collins JSC, Lord Clarke JSC
Judgment date
6 July 2011
References

​LTL 6/7/2011 : Times, July 8, 2011 : [2011] UKSC 31