Full and frank disclosure in the context of state immunity and recognition of arbitral awards
In General Dynamics v Libya  EWHC 501 (Comm), the English High Court has considered the degree to which issues of state immunity needed to be raised in a without notice application for permission to enforce a New York Convention award, as opposed to when actual execution steps are taken.
General Dynamics (“GD”) (a global military defence conglomerate) has been attempting to enforce, in England, an ICC arbitration award (Geneva seat) that it obtained, in 2016, against Libya. Under s.101 of the Arbitration Act 1996 (“AA”) and CPR 62.18, one route for initiating this process, which GD followed, is to, without notice, obtain permission to enforce the award and enter judgment in its terms.
The method for serving Libya with notice of those steps has already been subject to litigation before the UKSC (see our previous post). That having taken place, Libya now returned to court to take further issue with GD’s initial application.
In short, when litigants in England apply to the court “without notice”, they are (as the other party is not present) under a duty to disclose any facts material to the application. Libya claimed that GD had not met this obligation of “full and frank” disclosure in its s.101 AA application as it did not refer to any immunity Libya might have under the State Immunity Act 1978 (“SIA”). Under the SIA a State is generally immune from the adjudicative jurisdiction of the UK courts, except as provided in one of the exceptions described in ss. 2-11 SIA (of particular relevance to this case being s.9 which applies to proceedings relating to arbitration). Even if susceptible to adjudicative jurisdiction, however, a State may also benefit from immunities against certain types of execution (see s.13 SIA).
Did “full and frank” require reference to state immunity in GD’s application?
The judge rejected any complaint raised by Libya on this basis and refused its application to set aside the order. The court’s reason for this lay in the context of GD’s application and the aforesaid distinction between adjudicative and execution immunity. As to the first, previous authority had established that s.9 SIA covers s.101 AA proceedings for permission to enforce an award and for judgment in terms of the award (Svenska Petroleum Exploration AB v Lithuania (No. 2)  QB 886). So, Libya would not be entitled to adjudicative immunity.
Furthermore, as to execution immunity, in the usual case this would also not be relevant to such an application because it would generally be “premature” to deal with such immunity at that stage. Citing recent NZ authority, the judge noted that recognition of the award should be a straightforward process; whereas execution immunity should be considered later in the context of specific execution steps and assets. Whilst the judge indicated that different action would be needed if matters proceeded to an execution step and the court had still not been addressed on the SIA, such a stage had not yet been reached.
Taking the above into account, therefore, GD’s omission was not of significant importance to its application.
Comment and conclusions
This court’s decision is a pragmatic one which acknowledges that recognising an international arbitral award should be a straightforward step and that in this context, generally speaking, any issues of state immunity may largely be confined to execution steps.
However, whilst the decision might be welcomed by parties making without notice applications under s.101 AA against a state, it would still be advisable for them to carefully consider the degree to which immunity issues should be addressed in the application (even if to note that they are not relevant). Despite finding for GD, the judge did remark that it would have been preferable if GD had expressly mentioned in its application the immunity accorded to Libya under s.1 SIA - coupled with an explanation of its inapplicability. And, also, this was a “straightforward” case; parties making a without notice application in situations where they have cause to doubt that their situation is the same may well, in line with the “full and frank” disclosure obligation, be faced with more substantive issues to disclose and discuss.
Click here for the judgment.
Madeline Chan would like to thank Tanya Kalyanvala for her assistance in preparing this article.