Final charging order not prevented by state immunity

Use of specific words to allow enforcement of obligations by each party against the other cannot be explained away by state immunity. The High Court has considered contractual wording when making a final charging order in General Dynamics United Kingdom Ltd v The State of Libya [2024] EWHC 472 (Comm). By a contract of 5 May 2008, the parties entered into an agreement for the supply by the claimant to the defendant of a tactical communication and information system at a price of more than £84m. They agreed that the contract would be exclusively governed by the laws of Switzerland, and clause 32 provided that all disputes which could not be settled by mutual agreement would be settled under international arbitration and an award would be final, binding on the parties and wholly enforceable. A dispute between the parties was referred to arbitration under the ICC Rules, and by an award of 5 January 2016 the claimant was awarded more than £16m. Permission was given to enforce the award as a judgment. In February 2023, the claimant obtained an interim charging order over property owned by the defendant at Winnington Close, London, W2, and sought to make the order final. The defendant sought the discharge of the ICO on the basis that the property was immune from execution by operation of section 13(2)(b) of the State Immunity Act 1978, which provides that the property of a state shall not be subject to any process for the enforcement of a judgment or arbitration award unless it consents in writing to be so subject and no prescribed wording is required. The claimant submitted that the defendant’s agreement in clause 32 that the decision of the arbitration panel should be final, binding and wholly enforceable constituted the written consent of the defendant to the enforcement of a judgment or award against its property. The contract was a commercial agreement between the parties. The court concluded that applying Swiss law principles and a good faith principle, a reasonable person with all the relevant knowledge of the parties would conclude that the parties’ intention was that each should be able to enforce its obligations against the other in accordance with their agreement, which included obligations arising from an arbitration award. Use of the word “wholly” emphasised the parties’ intention that the word “enforceable” was not to be regarded as limited in effect, particularly given inclusion of the words “final” and “binding” which preceded it. Louise Clark is a property law consultant and mediator