General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22
Citation:General Dynamics United Kingdom Ltd v State of Libya [2021] UKSC 22.
Subjects invoked: 1. 'Nation'.15. 'Contract'.
Rule of thumb: Can you sue another country's Government in the UK Courts? No, as a general rule of thumb, you cannot. A UK Court cannot enforce a contract against a foreign country’s Government - these contracts are worth very little legally. If the foreign Government has ratified the Treaty recognising the rights of foreign Courts to give Judgments against them this is a bit different. In these circumstances, the UK Courts can give recommendation opinion Judgments against foreign Governments if they have ratified this Treaty, however the UK Courts cannot authorise enforcement action against another country’s Government as such, meaning that even in these circumstances the Judgment will have very little weight.
Background facts:
This case invoked the subject of international law and state immunity.
The facts of this case were that General Dynamics did 16 million pounds worth of work for the Libyan Government laying telecommunications equipment in Libya - piping and satellites etc. Before doing this work general electric agreed a contract with the Libyan Government, it was agreed that this contract would be binding and allow general electric to undergo arbitration in London, and appeal the matter to the UK courts, if the Libyan Government did not comply with the terms of it. A dispute arose, and The Libyan Government did not comply with the terms of the contract and General Dynamics could not get their 16 million pounds they were owed for their work. The matter therefore went to Court in the UK.
General Dynamics argued that the principle of contract interpretation principle of ‘meaning of terms as understood by reasonable businessmen’ applied. General Dynamics argued that they had fulfilled all of the conditions required of them under contract, and this meant that they should be paid the remuneration stated in the contract. General Dynamics further argued that under the law of public procurement, Governments could not be held to the terms of contract. They therefore argued that the Libyan Government should be ordered by the UK courts to comply with the terms of the agreement - ordered to pay the 16 million pounds they were owed. The Libyan Government argued that under the principle of ‘state immunity’ law they could not be ordered to do anything by the UK courts. The Libyan Government argued that the position in law was that international law applied and that only diplomacy could be used by General Dynamics to get the money they believed they were owed. The Libyan Government therefore argued that the contract presented by General Dynamics had no legal validity whatsoever. The Libyan government concluded that they could not be ordered or obliged by the UK Courts to do anything under that contract.
Judgment:
The UK Court held that the Libyan Government were correct in law and that they could not be legally ordered to pay the money owed. The UK court affirmed that state immunity applied, and it was affirmed that various diplomacy protocols had to be followed by General Dynamics if they wanted to try and get paid the money they believed they were owed. In short, the ‘contract’ which General Dynamics had with the Libyan Government was not worth the paper it was written on. The Libyan Government won this case and the UK court did not order the Libyan government to pay the 16 million they owed General Dynamics. The Court in this case broadly held that where countries have not entered into and ratified public procurement then any contracts which private cannot have its terms applied. Due to the international law principle of state immunity a foreign country’s Government cannot be ordered to do anything by the UK Courts, such as following terms in a contract.
Ratio-decidendi:
‘49. On behalf of Libya, Mr Matovu QC submits that there exists a rule of customary international law to the effect that, whenever a State is directly impleaded before the courts of another State, service of documents instituting the proceedings must be effected through the diplomatic channel or in a manner agreed to by the defendant state. This submission is founded essentially on article 22 of the United Nations Convention on Jurisdictional Immunities of States and Their Property, 2 December 2004 (“UNCSI”)… 50. The UNCSI is yet to enter into force. It requires 30 ratifications before it can come into force. As at the date of this judgment, it has been signed by 28 States but only 22 States are parties. The United Kingdom has signed the UNCSI but has not yet ratified it; Libya has done neither. Certain of its provisions may, nevertheless represent rules of customary international law binding generally on all States… 59. The sovereign equality of States is a fundamental principle of the international legal order. This is reflected in the rules of international law governing State immunity from the jurisdiction of the courts of other States. Although the immunity of States is not absolute this is nevertheless an area of considerable sensitivity… 84. In this case we are not directly concerned with a state’s immunity from the adjudicative or enforcement jurisdiction of another State but with an attendant procedural privilege accorded to States by the SIA…. Service through diplomatic channels is a well-established procedure for service of States which, although not universal, is required by a large number of States and is the required method of service on a defendant state under the UNCSI and the ECSI’, Lord Lloyd Jones, ‘The sovereign equality of States is a fundamental principle of the international legal order. This is reflected in the rules of international law governing State immunity from the jurisdiction of the courts of other States. Although the immunity of States is not absolute this is nevertheless an area of considerable sensitivity… Service through diplomatic channels is a well-established procedure for service of States which, although not universal, is required’, Lord Lloyd Jones at 59-84,
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.