UK P&I Club N.V. & Anor v Republica Bolivariana De Venezuela [2022] EWHC 1655 (Comm) provides guidance on the factors the English courts will consider when deciding whether a state should benefit from state immunity and whether injunctive relief can be granted against a state.

Background

This case concerned the total loss of a Venezuelan navy patrol vessel which sank in 2020 following a collision with a tourist cruise liner, RCGS Resolute. In 2020, Venezuela brought civil claims in the courts of Dutch Curacao and Venezuela against the owners and insurers of the Resolute for the loss. In February 2021, the insurers sought an anti-suit injunction against Venezuela in the English High Court, arguing that the Venezuelan claims in the foreign courts were in breach of the London arbitration clause contained in the insurance contract.

Key arguments

In the High Court, the insurers argued that Venezuela was in breach of the express terms of the insurance contract by pursuing claims outside of London arbitration. The insurers claimed that Venezuela did not have state immunity in this matter, since the exception in s.3(1)(a) of the State Immunity Act 1978 (SIA) applied. This exception provides that a state is not immune from proceedings relating to a commercial (non-sovereign) activity entered into by the state. The claimants also challenged the separate and additional immunity against injunctive relief in respect of a state's non-sovereign activity in s.13(2) SIA. They argued that this immunity was a breach of their rights to a fair trial and access to the courts under art. 6 of the European Convention on Human Rights (ECHR) which could not be justified as proportionate.

In its response, Venezuela contended that the civil claims it sought to bring in Venezuela and Curacao were not commercial in nature as they related to naval activity of the state since the vessel had been on patrol, and accordingly, state immunity applied.

Decision

The court held that Venezuela had no immunity from the English courts' jurisdiction in this matter. Under s.1 SIA, a state is only immune from a jurisdiction provided that an exception contained in the SIA does not apply. In this case, the court found that two exceptions applied; s.3(1)(a), that the claims were commercial in nature (Venezuela's claims were ordinary civil claims in private law), and s.3(1)(b) regarding the terms of the insurance contract. Consequently, the court held that the claims Venezuela sought to advance in the foreign courts must instead be brought in London arbitration, as per the insurance contract.

However, although Venezuela was not immune from jurisdiction, the court concluded that Venezuela did have immunity from injunctive relief under s.13(2)(a) SIA, and s.13(2)(a) was not contrary to art 6. ECHR. The court therefore refused to grant a permanent anti-suit injunction. 

The court noted that interference with an art. 6 right could be justified if it pursued a legitimate objective by proportionate means. Both customary international law and domestic policy could provide such justification. The court held that s.13(2) lay within the range of possible rules consistent with international standards and pursued legitimate domestic objectives. The court considered there to be a consensus under international law that even if a court orders measures such as injunctive relief, a state will be immune to any criminal or financial penalties should it fail to comply. Moreover, the court considered that despite the ECHR, remedies of a personal nature such as injunctions, are not appropriate against states due to international sensitivity.

Key Takeaways

The court's decision serves as guidance for future cases, demonstrating that anti-suit injunctions cannot be granted against sovereign states, even in respect of a state's non-sovereign activities.

Similarly, this case serves as a reminder that if a state is engaged in commercial activities (rather than sovereign activities), the state will not have jurisdictional immunity.

With thanks to Stephanie Allen for her assistance in preparing this post.

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