The Commercial Court decision in Certain Underwriters at Lloyd’s v Syrian Arab Republic highlights some key procedural issues that arise in litigation against rogue states. It also reminds us that having a judgment in your favour does not always equate to cash in hand. Would-be litigants should always think “Can I collect? How?” and “What will it cost?” when commencing proceedings and they should be alert as to how that position might change over time.
The claimant underwriters insured the hull of an aircraft which was completely destroyed during the EgyptAir flight hijacking in November 1985. After the loss had been paid, they brought subrogation proceedings against the defendants in the United States. A US Federal Court found the defendants liable and, in 2012, awarded the claimants a final judgment for over $50m.
The underwriters wanted to enforce their judgment in England but no treaty exists to recognise US judgments in the UK. Accordingly, they had to bring proceedings under English common law in order to obtain an English judgment which reflected the US decision and which could be enforced in the UK. The proceedings were brought under Civil Procedure Rule (CPR) 8, which enables a party to obtain a judgment “on a question which is unlikely to involve a substantial dispute of fact.” Here, the facts had already been decided in the US.
Before a judgment could be obtained, the underwriters had to show that the proceedings had been properly served on the defendants, that the defendants had submitted to the jurisdiction of the US court such that the US judgment was binding on them, and that it was appropriate for the English court to hear the case without the defendants or any representatives being present.
In most civil actions, a claim form is deemed to be served on the defendant on the second business day after completion of the relevant step under rule CPR 7.5(1). Because of the nature and identity of the defendants in this case, however, the claimants were required to serve proceedings on them in accordance with the provisions of the State Immunity Act 1978 (the Act). Although this is unlikely to arise in typical civil claims, it is not unusual for insurers to provide cover to sovereign states and so it may be helpful for London market insurers to be aware of the requirements of the Act
The Act requires court documents to be served on state entities through the UK’s Foreign and Commonwealth Office on its counterpart in the defendant state. In this case, however, the Syrian Foreign Ministry refused to accept service of the documents. The court considered that refusal to be irrelevant because if a recipient could evade service simply by ignoring the postman, the legal system could not function. Just in case that eminently sensible conclusion was incorrect, however, the judge also ordered that given the facts in this case and the extraordinary situation in Syria, service could be dispensed with altogether.
As to the second question, the court held that the defendants had submitted to the jurisdiction of the US court because they took steps to appeal the US judgment. Although here the court considered the Civil Jurisdiction and Judgments Act 1982 and principles of US Federal Law, the same reasoning would apply for English jurisdiction and defendants must be mindful not to inadvertently submit to a jurisdiction. If a defendant wishes to contest jurisdiction, it should do so when acknowledging service of the claim.
None of the defendants – the Syrian Arab Republic, the Syrian Air Force Intelligence or General Muhammed Al Khuli, Chief of Syrian Air Force Intelligence – attended or were represented at the hearing. The court concluded that it was nonetheless appropriate to proceed because:
- all reasonable steps had been taken to give them sufficient notice of the hearing (as well as of the proceedings) and the defendants had been given ample opportunity to attend;
- there was no reason to believe that an adjournment would be likely to result in the defendants attending the hearing at a later date;
- there was no reason to believe that any of the defendants wished to be represented at the hearing; and
- although the matters raised were serious, there was a public interest in the matter proceeding without further delay.
Would-be litigants should note that there are special procedures and considerations when claiming against a state, and, regardless of who the defendant is, should consider whether they will actually be able to collect any money awarded – including their costs – after a favourable judgment, and if so, the likely cost of that enforcement process. One assumes that in this case the claimants were satisfied that there were Syrian assets in the UK against which an English judgment could be executed but that may not always be the case.