An arbitration award is enforceable against the property of a foreign state if the property is being used or intended for use for commercial purposes.
The High Court has considered such an issue when making a final charging order in Zhongshan Fucheng Industrial Investment Co Ltd v The Federal Republic of Nigeria [2024] EWHC 1503 (Comm).
The case concerned whether or not interim charging orders over two properties in Liverpool owned by the defendant should be made final. Interim charging orders were made in 2023. The claimant had the benefit of a final arbitral award including costs and interest of around £59.6m. The properties were worth between £1.3m and £1.7m.
Neither property was recorded as diplomatic or consular premises or premises of the mission, but the defendant had provided a certificate that both properties were to be available to provide consular services to Nigerians in north-west England. The defendant objected to the application on various grounds relating to the procedure and state immunity.
The court may make a charging order under CPR 73 and has a discretion to make an interim order final. The State Immunity Act 1978 gives any foreign state immunity from the jurisdiction of the UK courts save as provided for in the Act. Section 13 provides that the property of a state shall not be subject to any enforcement process save where it is in use or intended for use for commercial purposes and the process is for enforcing an arbitration award. A certificate by the head of a state’s diplomatic mission that property is not in use or intended for use for commercial purposes is sufficient evidence of that fact unless the contrary is proved.
The claimant provided evidence that both properties were rented out at market rents to individuals who had no relationship with Nigeria and argued that they were being used for commercial purposes. The court accepted on the balance of probabilities that at the time of the application the properties were let for residential tenancies.
This was inconsistent with Nigeria’s certificate and its evidence that the properties were to be available as consular premises. Consequently, the claimant had rebutted the presumption created by the certificate and enforcement against the properties was not barred by state immunity.
The court exercised its discretion to make the final charging orders as the judgment debt was very significant and the value of the properties was a small proportion of it.
Louise Clark is a property law consultant and mediator
