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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Zhongshan Fucheng Investment Co Ltd v Federal Republic of Nigeria [2023] EWCA Civ 867 (20 July 2023) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2023/867.html Cite as: [2023] EWCA Civ 867 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
MRS JUSTICE COCKERILL
Strand, London, WC2A 2LL |
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B e f o r e :
and
LORD JUSTICE UNDERHILL, VICE-PRESIDENT OF THE COURT OF APPEAL, CIVIL DIVISION
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ZHONGSHAN FUCHENG INVESTMENT CO LTD |
Claimant/ Respondent |
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- and - |
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THE FEDERAL REPUBLIC OF NIGERIA |
Defendant/ Applicant |
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Christopher Harris KC and Mark Wassouf (instructed by Withers LLP) for the Respondent
Hearing date: 28 June 2023
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Crown Copyright ©
Sir Julian Flaux C:
Introduction
Factual and procedural background and the judgment below
"The basis of the challenge which the Federal Republic wishes to bring is State Immunity. I should note in passing that the possibility of such an argument being raised was noted in the ex parte application and duly reflected in the order which I made, which provided for a further period for other issues to be raised by way of challenge. I nonetheless granted the ex parte order despite the indication that there might be a state immunity challenge because of what was said there about the arguments which were in play, including their potential merits. That is a not unusual way of proceeding in relation to enforcement applications against state parties, though sometimes the decision is taken that the questions raised are such that there should be no ex parte order but that the application should first be served on the state and the matter brought on for argument."
"4. This Order having been made without notice to the Defendant, the Defendant has the right to apply to set aside or vary this Order, if so advised, within two months and 14 days of the date on which this Order is served on the Defendant.
5. Should the Defendant make an application to set aside this Order on the grounds that it is immune from the Court's jurisdiction, then it shall have a further period of 14 days from the date on which that application is determined within which it may apply to set aside this Order on any other ground."
"None of these cases deal with a situation where a timeline is in place specifically to deal with challenges to enforcement, including state immunity. None of these involved a failure to comply with a court order. None of these are in the situation where there explicitly was an ability to bring arguments as to immunity and a specific timetable geared to arguments of immunity, which has not been used, despite there having been an opportunity to do so."
"To the extent it was submitted (and I think it was submitted) that the enforcement process needs to incorporate a process whereby the court deals with immunity of its own motion, I would be of the view that any further consideration beyond that involved in the application is unworkable. In a number of cases issues will be apparent on the face of the application, and the court may then, as I have indicated, require there to be service of the application before an ex parte order is made. But it is also the case that sometimes immunity arguments are apparent, they are raised, they are described, and a prima facie case for non-application of state immunity is made, and that is regarded as sufficient to give an ex parte enforcement order. That process is not a case of the court disregarding its duty. It would, in my judgment, be entirely unworkable for there to be a responsibility of the court to embark in every case upon a process of considering each State Immunity Act argument which is not taken, rather than simply confining itself to the structure which is in place at the moment."
"Rule 3.1(2)(a) expressly confirms the court's powers to extend time limits even after they have expired. However, in such cases the court decides what, if any, extension to allow in accordance with the principles in Denton."
The grounds of appeal
(1) that the Judge erred in law in refusing to give directions to determine on the balance of probabilities whether an exception to state immunity under section 1(1) of the 1978 Act applied and refusing to stay enforcement pending such a determination (to the extent an enforcement order could have been made at all pending such a determination even subject to a stay).
(2) that the Judge erred in law and fact in finding that Nigeria's application to extend time to apply to vary or set aside the Judge's enforcement order had to satisfy the test in Denton.
(3) to the extent that the Denton test applies, the Judge erred in law and fact in declining to give directions for a determination of state immunity.
(4) there are other compelling reasons for the appeal to be heard, namely the need and general public importance for the Court of Appeal to issue guidance on the issues arising from the Judge's judgment.
The refusal of permission to appeal
"1. It is not arguable that the court is required to schedule a hearing to determine issues of state immunity in every case where it is sought to enforce an arbitration award against a state.
2. The judge complied with section 1(2) of [the 1978 Act] by considering the question of immunity at the time when she made her ex parte order. Having concluded that there was a prima facie case that there was no immunity, she was entitled to make an order for the enforcement of the award coupled with a stay which enabled [Nigeria] to challenge the order, including (if so advised) on the ground that it was entitled to immunity.
3. However, that challenge had to be made in accordance with the timetable set out in the court's procedural rules, which are more generous in the case of states than other litigants.
4. If a claim to immunity had been made within that timetable, the court would have been required to determine it. However, as no such claim was made, the court is entitled to proceed on the basis that there is no applicable immunity in this case and that the initial stay on the order for enforcement should no longer apply.
5. The judge was right to apply the Denton criteria and there is no arguable basis for saying that she applied them incorrectly.
6. In these circumstances an appeal would not have any real prospect of success. I do not accept that there is any general importance in the issues raised which would constitute some other compelling ground for granting permission."
The CPR 52.30 application and the hearing before this Court
Summary of the parties' submissions
"In the upshot, therefore, I am persuaded that whenever the question arises under the Act of 1978 whether a defendant state is immune by virtue of section 1 or not immune by virtue of one of the exceptions, then this question must be decided as a preliminary issue in favour of the plaintiff, in whatever form and by whatever procedure the court may consider appropriate, before the substantive action can proceed."
"I would accept Mr. Pollock's submission that, if proof of the exception to state immunity turned upon issues of fact - as in this case upon the matters dealt with by Staughton J. it did not - the court could give directions for the trial of those issues, including directions for discovery, for the calling of witnesses, and for cross-examination of witnesses upon affidavits. The sovereign state could not be placed under any sanction with reference to discovery but, in deciding issues of fact, the court could have due regard to any failure to disclose relevant documents."
Discussion
"Proceedings brought against a state entitled to immunity are not a nullity. But the court's jurisdiction to entertain the proceedings is limited to examining the basis on which immunity is asserted and determining whether it applies."
"50 There is no doubt that there is a considerable leeway which is given. A court is under a duty, when the issue of state immunity arises, to consider the position carefully and make appropriate inquiries to satisfy itself that the court can properly exercise jurisdiction. It must allow the state to appear and submit evidence and argument with respect to any disputed issues of fact.
51 However, in this case the court did raise the matter of its own motion, and even after the Authority had purported to put in a response on the merits. It also notified the Authority of its initial decision and gave them every opportunity to counter the evidence which had been advanced on behalf of the claimant.
52 It seems to us that this was the equivalent in the Tribunal context to the kind of approach envisaged by the Court of Appeal in the Rayner case. The Authority chose not to take up that opportunity at that time. Not only that but they continued to do nothing in response until some five months after the review application had failed, and after a substantive hearing had been determined against them."
Lord Justice Underhill