In a recent decision,1 the English High Court has confirmed that the injunction cannot be granted against States, even if this restriction interferes with Article 6 (right to a fair trial) of the European Convention on Human Rights (“ECHR”). This decision provides valuable insight into the circumstances in which a state will benefit from state immunity and the interim relief available to parties litigating against state entities.
In March 2020, a Venezuelan Navy patrol boat, the BVL Naiguatá GC-23, sank following a collision with an ice-classed cruise liner, the RCGS Resolute.
Following the total loss of the Naiguatá, Venezuela filed civil suits in the Dutch courts of Curaçao and Venezuela against the Resolute, its owners and key managers, and its protection and compensation (“IP”) insurers for a cumulative total of approximately 425 million euros.
P&I insurers sought an anti-suit injunction against Venezuela in the English High Court on the grounds that Venezuela’s claims in the Dutch Curaçaoan and Venezuelan courts were, in substance, claims to enforce the terms of the insurance contract. insurance for the Resolute. As a result, the P&I insurers argued that Venezuela was bound by the terms of the contract, which included arbitration clauses in London and English law.
In deciding whether or not to grant the anti-prosecution injunction, the court considered two central questions: (1) did Venezuela enjoy immunity from the jurisdiction of the English court and (2) did Venezuela enjoy additional immunity from the injunction.
In an interim hearing, the court granted the anti-suit injunction requested by the P&I insurers, finding that Venezuela was neither immune from the court’s jurisdiction nor from an anti-suit injunction.
At the final hearing, although the court agreed that Venezuela was not immune from jurisdiction, it concluded that Venezuela could not be subject to an injunction. In reaching this decision, the court made the following key findings:
1. There is no general state immunity from the jurisdiction of the English court. Under section 1 of the UK State Immunity Act 1978 (“AIS”), a State enjoys immunity from jurisdiction only to the extent that one of the exceptions contained in the SIA does not apply. In this case, the judge held that two exceptions applied: (a) commercial activity exception (s.3(1)(a) SIA) – Venezuela’s claims were commercial in nature and were ordinary commercial claims brought in civil courts; and (b) the arbitration exception (art. 9 SIA) – Venezuela had agreed in writing to submit the dispute to arbitration, after adopting the terms of Resolute’s insurance contract.
2. With respect to immunity from injunctions, under Article 13(2)(a) SIA, a State is immune from various “procedural privileges”, including injunctions. Although this interferes with a party’s right to a fair trial under Article 6 ECHR, the court held that this interference was justified because the restriction pursues “thelegitimate national objectives by proportionate means and does not affect the essence of that objective [Article 6] right”. Especially:
a. Under international law, there seems to be a consensus that even when a court orders a coercive measure such as an injunction, a state will be immune from any criminal or financial penalty if it does not does not comply.
b. English domestic politics justifies interference with the ECHR in this case. Remedies of a personal nature such as injunctions and specific enforcement orders are not appropriate against States and this is an area of considerable international sensitivity, raising questions of comity2 and due process. In addition, there may be other remedies available to a party seeking an injunction against a state, such as, in this case, compensation for breach of an arbitration agreement or a declaratory judgment.
3. Even if there were an unjustified interference with Article 6 ECHR, Article 13(2)(a) SIA could not be interpreted (“read down”) to effectively exclude anti-prosecution injunctions and thus become compatible with Article 6 ECHR. . This exercise would involve changing the law, which the courts are not allowed to do.
This decision provides a succinct summary of English law on state immunity as it relates to jurisdiction and the possibility of injunctive relief against states. Subject to any appeal, it appears that English courts will not grant injunctions against a state, even in cases where the state is engaged in non-sovereign activities (eg commercial).
This will be good news for states involved in litigation in England; for those litigating against states, the decision may in some cases require a reassessment of their litigation strategy.
Dechert’s international litigation team has extensive and deep experience in dealing with matters of jurisdiction and state immunity, as well as prosecuting and defending the full range of interim measures available in the English courts.