General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22

General Dynamics sought to enforce an ICC arbitration award against Libya in England. The key issue was whether service of enforcement proceedings against a foreign state must comply with section 12(1) of the State Immunity Act 1978, requiring transmission through diplomatic channels even when such service is impossible or unduly difficult.

Facts

General Dynamics United Kingdom Ltd obtained an ICC arbitration award of over £16 million against the State of Libya in 2016 relating to a contract for communications systems. Libya made no payment. General Dynamics applied without notice to the High Court for permission to enforce the award under section 101 of the Arbitration Act 1996. Teare J granted the enforcement order and dispensed with service due to exceptional circumstances in Libya, including civil unrest, violence, and the closure of the British Embassy. Libya applied to set aside the order, arguing that section 12(1) of the State Immunity Act 1978 mandatorily required service through the Foreign, Commonwealth and Development Office (FCDO) to the Libyan Ministry of Foreign Affairs.

Issues

Issue 1

Whether the arbitration claim form or enforcement order constitutes a ‘writ or other document required to be served for instituting proceedings against a State’ under section 12(1) SIA 1978, thus requiring diplomatic service.

Issue 2

Whether the court can dispense with service under CPR rules 6.16 and 6.28 notwithstanding section 12(1) SIA 1978.

Issue 3

Whether section 12(1) must be construed under section 3 of the Human Rights Act 1998 or common law principles to allow alternative service where a claimant’s right of access to court under Article 6 ECHR would otherwise be infringed.

Judgment

The Supreme Court was divided. Lord Lloyd-Jones (with whom Lord Burrows agreed) and Lady Arden held that section 12(1) SIA 1978 applies to enforcement proceedings and is mandatory and exclusive, subject only to section 12(6). The enforcement order, being the document giving notice of the proceedings, falls within section 12(1). Lord Lloyd-Jones stated:

“The procedure for service in accordance with section 12 SIA is required to be followed in all cases where proceedings are commenced against a defendant state.”

Lord Lloyd-Jones rejected the argument that CPR rules could override the statutory requirement, stating:

“Rules of court could not override primary legislation.”

On Article 6 ECHR, Lord Lloyd-Jones held that the diplomatic service requirement pursues a legitimate objective by proportionate means and does not impair the essence of the Article 6 right of access to court.

Lord Stephens (with whom Lord Briggs agreed) dissented, holding that section 12(1) did not apply because the arbitration claim form was not required to be served and the enforcement order did not institute proceedings. Lord Stephens emphasised:

“I consider that it is a complete subversion of the purpose of section 12(1) SIA 1978 to treat the requirement for diplomatic service as enabling a State which is not (or arguably not) immune nonetheless to obtain it de facto by being obstructive about service.”

Lady Arden agreed with Lord Lloyd-Jones that section 12 establishes a mandatory and exclusive procedural requirement.

Implications

This case clarifies that service of enforcement proceedings against a foreign state must comply with section 12(1) SIA 1978, requiring transmission through the FCDO to the defendant state’s Ministry of Foreign Affairs. The court cannot dispense with this requirement under CPR provisions. However, the FCDO is obliged to use its best endeavours to effect service and has no general discretion to decline service. The case highlights tension between state immunity procedures and access to justice, particularly where diplomatic service is practically impossible. The decision reinforces the mandatory nature of diplomatic service requirements while acknowledging their facilitative purpose under the restrictive doctrine of state immunity.

Verdict: Appeal allowed. The Supreme Court (by majority: Lord Lloyd-Jones, Lord Burrows, and Lady Arden) held that section 12(1) of the State Immunity Act 1978 requires service of the enforcement order through the FCDO and this requirement cannot be dispensed with under CPR rules. The order of Males LJ was restored, setting aside Teare J’s order dispensing with service.

Source: General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22