SerVaas Incorporated v Rafidian Bank & Ors (Rev 1)

Summary

Trinity Term
[2012] UKSC 40
On appeal from: [2011] EWCA Civ 1256

JUDGMENT

SerVaas Incorporated (Appellant) v Rafidian Bank and others (Respondents)

before

Lord Phillips, President
Lady Hale
Lord Clarke
Lord Sumption
Lord Reed

JUDGMENT GIVEN ON

17 August 2012

Heard on 28 and 29 May 2012

Appellant
Martin Pascoe QC
Richard Fisher
Charlotte Cooke
(Instructed by Addleshaw Goddard LLP)

Respondent
Mark Howard QC
Oliver Jones
Robert McCorquodale
(Instructed by Cleary Gottlieb Steen & Hamilton)

LORD CLARKE (WITH WHOM LORD PHILLIPS, LADY HALE, LORD SUMPTION AND LORD REED AGREE)

Introduction

The question in this appeal is what is the true construction of the expression "property which is for the time being in use or intended for use for commercial purposes" in section 13(4) of the State Immunity Act 1978 ("the Act").

The facts

On 9 September 1988 the appellant ("SerVaas"), which is a company incorporated in Indiana, entered into an agreement ("the Agreement") with the Iraqi Ministry of Industry ("the Ministry") for the supply of equipment, machinery and related services required for the commissioning of a state owned copper and brass processing factory in Iraq. On 2 August 1990 Iraq invaded Kuwait and on 4 August 1990 the assets of Rafidain Bank ("Rafidain") in the United Kingdom were frozen in accordance with the United Nations ("UN") sanctions regime established under UN Security Council Resolution 661. On 13 August 1990 SerVaas terminated the Agreement and on 25 January 1991 it commenced proceedings in the Paris Commercial Court against the Ministry in order to recover money due to it under the Agreement. On 21 February 1991 provisional liquidators ("the Provisional Liquidators") were appointed in respect of Rafidain on a winding up petition presented by the Bank of England.

On 16 April 1991 the Paris Commercial Court gave judgment in default in favour of SerVaas in the sum of US$14,152,800 ("the Judgment") in respect of money due under the Agreement. On 10 July 1991 the Judgment was recognised in the Netherlands and shortly thereafter SerVaas recovered US$966,515 by partial enforcement of the Judgment in the Netherlands against Iraq's assets. On 1 October 1991 the judgment was recognised in Germany and on 2 April 1992 Mummery J ordered that the provisional liquidation be limited to those assets of Rafidain situated in England and Wales. On 4 June 1996 the Bank of England's petition was adjourned generally. In July 2002 SerVaas received US$6,736,285 from the UN Claims Commission by way of compensation for losses caused by Iraq as a result of the invasion of Kuwait.

In May 2003 the regime of Saddam Hussein in Iraq fell. On 22 May 2003 the Security Council passed Resolution 1483 which established the Development Fund for Iraq ("DFI"). On 28 July 2003 Lewison J made an order permitting the Provisional Liquidators to collect the assets of Rafidain's London Branch and to agree claims against Rafidain. On 21 November 2004 Iraq made a debt cancellation agreement with government creditors comprising the Paris Club. In December 2004 Iraq began a…

JUDGMENT