Case No: A2/2011/0013
Neutral Citation Number: [2011] EWCA Civ 1256
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR JUSTICE ARNOLD
[2010] EWHC 3287 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 03/11/2011
Before :

LORD JUSTICE RIX
LORD JUSTICE HOOPER
and
LORD JUSTICE STANLEY BURNTON
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Between :

	SERVAAS INCORPORATED	Appellant/ Cross-Respondent	
	- and -		
	(1) RAFIDAIN BANK
(2) MICHAEL DAVID GERCKE
(3) RUSSELL DOWNS
(4) DAVID CHRISTIAN CHUBB	Respondents	
	and		
	THE REPUBLIC OF IRAQ	Interested Party / Respondent / Cross-Appellant	

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Mr Martin Pascoe QC & Mr Richard Fisher (instructed by Addleshaw Goddard LLP, London) for the Appellant
Mr Mark Howard QC & Mr Oliver Jones (instructed by Cleary Gottlieb Steen and Hamilton LLP, London) for the Interested Party/Respondent/Cross-Appellant

Hearing date : 18 May 2011
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Judgment
Lord Justice Stanley Burnton : 
Introduction
1.	SerVaas Inc (“SerVaas”) is the judgment creditor of the Republic of Iraq (“Iraq”). It seeks to execute against moneys due to the Republic of Iraq (“Iraq”) under the scheme of arrangement relating to Rafidain Bank. Arnold J held that those moneys are immune from execution by reason of section 13 of the State Immunity Act 1978 (“the SIA”). SerVaas appeals against that decision. The judge also held that, if those moneys are not immune from execution under the SIA, SerVaas has a real prospect of defeating Iraq’s claim that they are immune from execution by virtue of article 9(1) of the Iraq (United Nations Sanctions) Order 2003 (SI 1519/2003, “the 2003 Order”). Iraq has appealed against that finding. 
2.	On 18 May 2011 we heard SerVaas’s appeal. Time did not permit the Court to hear Iraq’s appeal, which in any event is contingent on SerVaas succeeding in its appeal. We therefore agreed to give judgment on SerVaas’s appeal, since only if it succeeded would it be necessary to hear Iraq’s appeal. This is my judgment on SerVaas’s appeal.
The facts and the proceedings
3.	I can take the facts from Arnold J’s judgment.
4.	On 9 August 1988 SerVaas entered into a contract with the Iraqi Ministry of Industry (“the Ministry”) for the supply of equipment, machinery and related services required for the commissioning of a new copper and brass facility at Iraq’s state-owned Al-Shaheed scrap metal factory in Ameria-Falluja. SerVaas terminated the contract and brought a claim against the Ministry in the Paris Commercial Court for sums due under the contract. The Ministry did not appear, and on 16 April 1991 the court gave default judgment in favour of SerVaas for US$14,152,800 (“the Judgment”).
5.	In the same year, SerVaas obtained US$966,515.90 by partial enforcement of the Judgment in the Netherlands. SerVaas has also recovered US$6,736,285 from the United Nations Claims Commission in July 2002. Apart from those payments, the Judgment remains unsatisfied. As at 18 November 2010, the amount outstanding (including interest and costs) was US$34,481,200.49.
6.	SerVaas has been advised that Iraq is responsible for the debts of the Ministry. On 4 November 2009 SerVaas obtained an order from the High Court of Justice (Queen’s Bench Division) registering the Judgment against the Ministry and Iraq (“the Order”). The Order was served on Iraq on 2 May 2010, and can now be enforced against Iraq in this country. For the purposes of these proceedings it is unnecessary to distinguish between the Ministry and Iraq, and I shall simply refer to Iraq.
7.	Rafidain Bank was a state-controlled Iraqi bank which maintained a branch in (among other places) London. It carried on business as a commercial bank. It has been in provisional liquidation in England since 21 February 1991. Since April 1992 the scope of the provisional liquidation has been limited to assets within England and Wales. The Second to Fourth Respondents are the provisional liquidators. On 3 April 2008, Henderson J sanctioned a scheme of arrangement proposed by the provisional liquidators of Rafidain (“the Scheme”). The Second to Fourth Respondents are also the administrators of the Scheme (“the Administrators”).
8.	The terms of the Scheme provide that:
(1)	A Scheme Claim is, in broad terms, a Liability of Rafidain if the circumstances giving rise to it occurred before or on the Record Date (21 February 1991).
(2)	The provisional liquidators will make payments as paying agents of Rafidain in accordance with the directions of the Administrators.
(3)	The right of any Scheme Creditor is to receive a Distribution in respect of an Admitted Scheme Claim. Scheme Creditors accept their rights under the Scheme in lieu of any entitlement against Scheme Assets.
(4)	The Administrators are entitled to make Distributions on such dates and in such amounts as they consider appropriate whenever there are sufficient funds available for the purpose.
(5)	The Scheme will continue, and the provisional liquidators will remain in office, until all Scheme Assets have been distributed to Scheme Creditors.
(6)	Thereafter the provisional liquidators will vacate office and apply for their release.
9.	Iraq submitted claims in the Scheme. Its claims have been admitted for US$253.8 million (“the Admitted Claims”). Iraq’s Admitted Claims represent the assigned entitlement to claims against Rafidain which were acquired by Iraq as part of an optional reconstruction process entered into between commercial creditors and certain identified Iraqi debtors, including Rafidain. Under this debt purchase scheme, Iraq paid approximately 10.25% on claims which it acquired. 
10.	The debts which constituted the Admitted Claims were purchased either using moneys from the Development Fund for Iraq (“the DFI”) or, in two cases, by means of Iraqi bonds. They were part of a process for dealing with liabilities of Iraq incurred under the Saddam regime. The DFI was set up pursuant to United Nations Security Council Resolution 1483 (“Resolution 1483”), to which I refer below. In the case of the debts purchased by means of bonds, it is Iraq’s case that the interest on the bonds is paid from DFI funds, but according to the Financial Statements of the DFI for 2009 3 coupon payments of US$80,898 each were paid out of the Ministry of Finance’s bank account held at the Central Bank of Iraq. The Admitted Claims purchased by means of bonds are worth about US$109 million or about 43% of the total. 
11.	The Administrators anticipate that claims will be paid at the rate of 53% pursuant to the Scheme. Thus Iraq’s Admitted Claims amount to an asset sufficient to meet the Judgment debt due to SerVaas. 
12.	Distributions are now imminent. On 9 September 2010 the Administrators sent to the US lawyers acting for Iraq by email a request for “Information required to enable distribution to be paid”. It asked for the details of the bank account to which the moneys were to be paid.
13.	On 29 September 2010, SerVaas applied to the Companies Court for an order lifting the stay on proceedings against Rafidain under section 130(2) of the Insolvency Act 1986 and an order restraining the provisional liquidators and the Administrators from making any payment under the Scheme to Iraq. On 7 October 2010 Mann J made the order sought by SerVaas, but subject to SerVaas issuing its proposed application for a Third Party Debt Order ("TDPO")
14.	On 11 October 2010, Iraq’s US lawyers responded to the email of 9 September 2010, stating that payment should be made to the account in the name of the DFI with the Federal Reserve Bank of New York.
15.	On 13 October 2010 SerVaas, as judgment creditor, issued an application for a TPDO relating to “the debt owed by [Rafidain] to the Judgment Debtors”, i.e. to the Ministry and Iraq. In addition, the injunction restraining the provisional liquidators and Administrators from making any payment to Iraq or the Ministry was continued pending further order.
16.	On 11 November 2010, Iraq and the Ministry issued an application to set aside the injunction on the ground that the moneys due to them were immune from execution because they were not used or intended for use for commercial purposes.
17.	On 30 November 2010, the Chargé d’Affaires of the Embassy of Iraq in London and Head of Mission of Iraq signed a certificate that:
“1. The Admitted Scheme Claims of Iraq under the Scheme [of arrangement in respect of Rafidain] have never been used, are not in use, and are not intended for use, by or on behalf of the State of Iraq for any commercial purpose.
2. Any assets or distributions received in respect of any Admitted Scheme Claim of Iraq under the Scheme are not intended for use by or on behalf of the State of Iraq for any commercial purpose.
3. The State of Iraq had directed the Scheme Administrators, and intends to continue to so direct the Scheme Administrators, to transfer any assets or distributions in respect of the Admitted Scheme Claims of Iraq under the Scheme to the Development Fund for Iraq.”
Iraq’s Admitted Scheme Claims are all the moneys payable to Iraq under the Scheme, i.e., the moneys that SerVaas seeks to have paid to it by the TPDO for which it has applied.
18.	Arnold J had before him Iraq’s application to discharge the injunction on the ground that the property in question was immune from execution and SerVaas’s applications for the continuation of the injunction and for a TPDO requiring payment to it of the moneys owing by Rafidain to Iraq. 
The DFI
19.	For the purposes of this appeal, it is unnecessary to discuss in any detail the status of the DFI. Its purpose can be seen from some of the paragraphs of United Nations Security Council Resolution 1483 of 22 May 2003 set out in Arnold J’s judgment:
“The Security Council
…
Acting under Chapter VII of the Charter of the United Nations,
…
12. 	Notes the establishment of a Development Fund for Iraq to be held by the Central Bank of Iraq and to be audited by independent public accountants approved by the International Advisory and Monitoring Board of the Development Fund for Iraq and looks forward to the early meeting of that International Advisory and Monitoring Board, whose members shall include duly qualified representatives of the Secretary-General, of the Managing Director of the International Monetary Fund, of the Director-General of the Arab Fund for Social and Economic Development, and of the President of the World Bank;
13. 	Notes further that the funds in the Development Fund for Iraq shall be disbursed at the direction of the Authority, in consultation with the Iraqi interim administration, for the purposes set out in paragraph 14 below;
14. 	Underlines that the Development Fund for Iraq shall be used in a transparent manner to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq’s infrastructure, for the continued disarmament of Iraq, and for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq;
15. 	Calls upon the international financial institutions to assist the people of Iraq in the reconstruction and development of their economy and to facilitate assistance by the broader donor community, and welcomes the readiness of creditors, including those of the Paris Club, to seek a solution to Iraq’s sovereign debt problems;
…
20. 	Decides that all export sales of petroleum, petroleum products, and natural gas from Iraq following the date of the adoption of this resolution shall be made consistent with prevailing international market best practices, to be audited by independent public accountants reporting to the International Advisory and Monitoring Board referred to in paragraph 12 above in order to ensure transparency, and decides further that, except as provided in paragraph 21 below, all proceeds from such sales shall be deposited into the Development Fund for Iraq until such time as an internationally recognized, representative government of Iraq is properly constituted; …”
20.	Security Council Resolution 1546, adopted on 8 June 2004, includes the following:
“The Security Council
…
Recognizing the benefits to Iraq of the immunities and privileges enjoyed by Iraqi oil revenues and by the Development Fund for Iraq, and noting the importance of providing for continued disbursements of this fund by the Interim Government of Iraq and its successors upon dissolution of the Coalition Provisional Authority,
…  
Acting under Chapter VII of the Charter of the United Nations,
…
24.	Notes that, upon dissolution of the Coalition Provisional Authority, the funds in the Development Fund for Iraq shall be disbursed solely at the direction of the Government of Iraq, and decides that the Development Fund for Iraq shall be utilized in a transparent and equitable manner and through the Iraqi budget including to satisfy outstanding obligations against the Development Fund for Iraq, that the arrangements for the depositing of proceeds from export sales of petroleum, petroleum products, and natural gas established in paragraph 20 of resolution 2483 (2003) shall continue to apply, that the International Advisory and Monitoring Board shall continue its activities monitoring the Development Fund for Iraq …”
21.	The Coalition Provisional Authority was dissolved with effect from 30 June 2004, and power transferred to the Iraqi Interim Government, by Coalition Provisional Authority Order Number 100 dated 28 June 2004. Accordingly, since then funds in the DFI have been disbursed at the sole direction of Iraq, albeit subject to the restrictions contained in Resolution 1483 and its successors, including the oversight of the International Advisory and Monitoring Board. Prior to disbursement the funds are held in accounts at the Federal Reserve Bank of New York in the name of the Central Bank/the DFI.   
22.	Resolution 1483 was given effect in the United Kingdom by the 2003 Order, which was made under section 1 of the United Nations Act 1946. Article 4 of the 2003 Order defines “Development Fund for Iraq” as meaning “the Development Fund for Iraq referred to in resolution 1483 of the Security Council of the United Nations adopted on 22nd May 2003”. Article 9 provides as follows:
“(1) 	Except as provided in paragraph (2), the Development Fund for Iraq, its property and assets wherever located and by whomsoever held (including any rights or obligations owned by or to the Development Fund for Iraq), shall have the like privileges and immunities as the United Nations under Part II of the United Nations and International Court of Justice (Privileges and Immunities) Order 1974.
(2) 	The Development Fund for Iraq shall not have immunity from suit and legal process concerning liability for damages in connection with an ecological accident, including an oil spill, which occurs after 22nd May 2003.”
23.	Part II of the United Nations and International Court of Justice (Privileges and Immunities) Order 1974 (SI 1974/1261, “the 1974 Order”) includes the following provisions:
“5.	The United Nations shall have the legal capacities of a body corporate.
6.	Except in so far as in any particular case it has expressly waived its immunity, the United Nations shall have immunity from suit and legal process. No waiver of immunity shall be deemed to extend to any measure of execution.”
24.	For present purposes, it is sufficient to note that SerVaas accepts that moneys held by DFI are not for that reason alone used for commercial purposes within the meaning of the SIA. The purposes of the DFI are clearly non-commercial.
The applicable provisions of the SIA
25.	Sections 1 and 3 of the SIA are as follows:
“1. General immunity from jurisdiction.
(1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act.
(2) A court shall give effect to the immunity conferred by this section even though the State does not appear in the proceedings in question.
3. Commercial transactions and contracts to be performed in United Kingdom.
(1)A State is not immune as respects proceedings relating to—
(a) a commercial transaction entered into by the State; or
(b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.
(2) …
(3) In this section “commercial transaction” means—
(a) any contract for the supply of goods or services;
(b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and
(c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority;
but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual.
27.	Section 13 provides, so far as is relevant, as follows:
“(2) 	Subject to subsections (3) and (4) below—
(a) 	relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and
(b) 	the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.
…
(4) 	Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; …
(5)	The head of a State’s diplomatic mission in the United Kingdom, or the person for the time being performing his functions, shall be deemed to have authority to give on behalf of the State any such consent as is mentioned in subsection (3) above and, for the purposes of subsection (4) above, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.”
28.	Section 17(1) defines “commercial purposes” to mean “purposes of such transactions or activities as are mentioned in section 3(3)”. Section 3(3) defines “commercial transaction” to mean:
“(a) 	Any contract for the supply of goods or services;
(b) 	Any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation;
(c) 	Any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority”.
There is a for present purposes irrelevant exception for “a contract of employment between a State and an individual”.
The parties’ contentions
29.	It is common ground that the moneys payable under the Scheme to Iraq are a debt and a chose in action, and as such property within the meaning of section 13 of the SIA.
30.	The principal contentions of the parties can be shortly stated. For SerVaas, Mr Pascoe QC submitted that the origin of the debt was commercial, and that it was, at the relevant date, being the date of the application for the TPDO, “for the time being in use … for commercial purposes”. He eschewed any contention that the moneys in question were intended for such use.
31.	I have to say that I have some difficulty in identifying the commercial purpose that SerVaas contends this debt was being used for. SerVaas contends that the use of the debt was to be found in the transactions that gave rise to it: the acquisition by Iraq of the debts due from Rafidain to commercial creditors. In paragraphs 42 and 43 of SerVaas’s skeleton argument it is said:
“42. … SerVaas’s case was … that the current use of the debt (i.e. the right to receive the monies) could only be ascertained from the underlying commercial transaction which would culminate in final payment of the debt. 
43. If Section 13(4) is to have any application to the vast majority of commercial debts at all (most of which will not have an identified or identifiable use for the proceeds following satisfaction of the debt), it must be possible to describe a debt as being in use for some purpose. The only logical purpose which can be identified is the completion of the commercial transaction which gives rise to the debt itself. The current use of the Admitted Claims cannot be separated from the underlying transactions by which Iraq acquired those claims.”
32.	The difficulty with SerVaas’s case is that the SIA distinguishes between transactions, which if commercial are subject to the adjudicative jurisdiction of the Court, and property, which may be subject to the process of execution. The fact that property, here a debt, arises from a commercial transaction does not inform the question whether that property was, at the relevant time, used for a commercial purpose. 
33.	The leading authority on the application of section 13 is the decision of the House of Lords in Alcom Ltd v Republic of Columbia [1984] AC 580. As is well known, the House of Lords held that money in a bank account used to meet the expenditure incurred in the day-to-day running of Columbia’s diplomatic mission was not within the exception. Lord Diplock (with whom Lords Fraser of Tullybelton, Keith of Kinkel, Roskill and Templeman agreed) said at 602F-603D and 603H-604E:
“The crucial question of construction for your Lordships is whether a debt which has these legal characteristics falls within the description contained in section 13(4) of ‘property which is for the time being in use or intended for use for commercial purposes.’ To speak of a debt as ‘being used or intended for use’ for any purposes by the creditor to whom the debt is owed involves employing ordinary English words in what is not their natural sense, even if the phrase ‘commercial purposes’ is given the ordinary meaning of jure gestionis in contrast to jure imperii that is generally attributed to it in the context of rights to sovereign immunity in public international law; though it might be permissible to apply the phrase intelligibly to the credit balance in a bank account that was earmarked by the state for exclusive use for transactions into which it entered jure gestionis. What is clear beyond all question is that if the expression ‘commercial purposes’ in section 13(4) bore what would be its ordinary and natural meaning in the context in which it there appears, a debt representing the balance standing to the credit of a diplomatic mission in a current bank account used for meeting the day-to-day expenses of running the mission would fall outside the subsection. 
‘Commercial purposes,’ however, is given by section 17(1) the extended meaning which takes one back to the comprehensive definition of ‘commercial transaction’ in section 3(3). Paragraph (a) of this tripartite definition refers to any contract for the supply of goods or services, without making any exception for contracts in either of these two classes that are entered into for purposes of enabling a foreign state to do things in the exercise of its sovereign authority either in the United Kingdom or elsewhere. This is to be contrasted with the other paragraph of the definition that is relevant to the instant case, paragraph (c), which on the face of it would be comprehensive enough to include all transactions into which a state might enter, were it not that it does specifically preserve immunity from adjudicative jurisdiction for transactions or activities into which a state enters or in which it engages in the exercise of sovereign authority, other than those transactions that are specifically referred to either in paragraph (a) or in paragraph (b), with the latter of which the instant appeal is not concerned. 
…
My Lords, the decisive question for your Lordships is whether in the context of the other provisions of the Act to which I have referred, and against the background of its subject matter, public international law, the words ‘property which is for the time being in use or intended for use for commercial purposes,’ appearing as an exception to a general immunity to the enforcement jurisdiction of United Kingdom courts accorded by section 13(2) to the property of a foreign state, are apt to describe the debt represented by the balance standing to the credit of a current account kept with a commercial banker for the purpose of meeting the expenditure incurred in the day-to-day running of the diplomatic mission of a foreign state. 
Such expenditure will, no doubt, include some moneys due under contracts for the supply of goods or services to the mission, to meet which the mission will draw upon its current bank account; but the account will also be drawn upon to meet many other items of expenditure which fall outside even the extended definition of ‘commercial purposes’ for which section 17(1) and section 3(3) provide. The debt owed by the bank to the foreign sovereign state and represented by the credit balance in the current account kept by the diplomatic mission of that state as a possible subject matter of the enforcement jurisdiction of the court is, however, one and indivisible; it is not susceptible of anticipatory dissection into the various uses to which moneys drawn upon it might have been put in the future if it had not been subjected to attachment by garnishee proceedings. Unless it can be shown by the judgment creditor who is seeking to attach the credit balance by garnishee proceedings that the bank account was earmarked by the foreign state solely (save for de minimis exceptions) for being drawn upon to settle liabilities incurred in commercial transactions, as for example by issuing documentary credits in payment of the price of goods sold to the state, it cannot, in my view, be sensibly brought within the crucial words of the exception for which section 13(4) provides.”
34.	As can be seen, it was not suggested by Lord Diplock that if the moneys in the bank account resulted from commercial transactions, that might be relevant to the question whether the account was used or intended for use for commercial purposes. It is evident to me that it could not be relevant. If the moneys in the bank account of Columbia had been derived from the sale of goods, or shares, or bonds, that could not have affected the fact that the account was used and intended to be used to finance the expenses of the embassy. 
35.	I accept that the concept of the use of a debt may have difficulties. But what is relevant is not only the use of property but also its intended use. There may be no current use of a debt, just as there was no current use of the dormant bank accounts considered by me in AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB). If the moneys represented by a debt are to be used for trading, then clearly the debt is intended to be used for commercial purposes. If they have been used for trading, as where a bank account has been drawn upon for that purpose, the inference may be drawn that the debt is being used for commercial purposes. 
36.	In my judgment, the debt that is the subject of these proceedings was not, when the application for the TPDO was issued, being used at all. The evidence is that it was intended to pay it to the DFI. It is not suggested that that intention was an intention to use the debt for a commercial purpose. 
37.	The conclusion that the debt was not used or intended for use for commercial purposes is fortified by the certificate of the Chargé d’Affaires, and section 13(5) requires us to accept his certificate as sufficient evidence unless the contrary is proved. In his reply, Mr Pascoe suggested that the email of 11 October 2010 may have been sent as a response to SerVaas’s application for an injunction. This suggestion did not appear in SerVaas’s grounds of appeal, or in its skeleton argument and was not put forward by Mr Pascoe in opening its appeal. A suggestion is not evidence. It remains the fact that there is no evidence before the Court that, if accepted, would prove that the debt due to Iraq was being used for a commercial purpose. 
38.	In paragraph 29 of his judgment, Arnold J said:
“In my view SerVaas’s argument wrongly conflates the transactions by which Iraq acquired the debts that are the subject of the Admitted Claims with the intended use of those assets. Iraq is not presently using those assets, but intends to pay the dividends on them to the DFI. That property is not being used to provide finance to Iraq, and it is immaterial that that property was acquired by means of bonds in the cases where the consideration took the form of bonds. Nor is the property being used or intended to be used for transactions “otherwise than in the exercise of sovereign authority”. Iraq has decided to transfer the distributions to the DFI in the exercise of its sovereign authority, albeit constrained in this respect by Resolution 1483, for the purposes set out in the resolution. I therefore conclude that Iraq’s Admitted Claims are entitled to immunity from execution by virtue of section 13(2)(b) of the 1978 Act.”
39.	I agree with his conclusion and his reasons. I would dismiss SerVaas’s appeal.
Lord Justice Hooper: 
40.	I have had the benefit of reading the draft judgments of Rix LJ and Stanley Burnton LJ.  I agree with Stanley Burnton LJ that the appeal should be dismissed for the reasons given by him, which include his agreement with the conclusion and reasons of Arnold J. I also adopt the abbreviations used by Stanley Burnton LJ. 
41.	Rafidain, a state controlled Iraqi bank in provisional liquidation in England since 1991, owed significant sums to various creditors particularly in respect of letters of credit issued by Rafidain during the Saddam Hussein era. After sovereignty was transferred in June 2004 to what was then the Transitional Government of Iraq, Iraq voluntarily decided to offer to settle a large number of Saddam Hussein era debts, including debts owed to governments (some $51 billion) and commercial debts owed by public sector obligors, such as Rafidain. The decision to offer to settle these commercial debts was publicly announced on July 26 2005, Iraq having decided in late 2004 to settle the debts.  Iraq had agreed with the Paris Club, an informal group of creditor governments from major industrialised countries, that it would treat its other external creditors on terms comparable to those agreed with the Paris Club.
42.	The July 26 press announcement stated, in part:
Iraq announces terms of commercial debt settlement offer
Baghdad, Iraq:  The Republic of Iraq today announced its intention to offer to settle outstanding Saddam-era commercial claims against Iraq and Iraqi public sector obligors through a cash buyback (for claimants holding a relatively small aggregate amount of registered claims) and a debt-for-debt exchange (for claimants with a larger aggregate amount of registered claims).  The total amount of Saddam-era claims against Iraq held by both commercial and bilateral creditors has been estimated at more than $125 billion.  Of this amount, commercial creditors are believed to hold claims totalling approximately $20 billion, although firm figures will not be known until the reconciliation process is complete.
...
The cash purchase price for reconciled eligible claims held by claimants eligible for the cash buyback will equal 10.25% of the reconciled outstanding amount of those claims (including principal and accrued interest calculated pursuant to the Reconciliation Methodology posted on Iraq’s debt reconciliation website) on the date of repurchase by Iraq.
Iraq’s cash buyback offer is expected to take the form of an invitation to Tender Claims that will be addressed individually to claimants eligible for the cash buyback with respect to claims that have been reconciled by Ernst & Young.  Holders electing to tender their reconciled claims pursuant to Iraq’s invitation will agree, in return for a cash payment of the purchase price, to the full cancellation and discharge of all amounts due in connection with the tendered claims.
Closings of the cash offer are expected to occur periodically during 2005 and early 2006 as eligible claims become reconciled and are tendered pursuant to subsequent invitations to claimants to tender their reconciled claims under this offer.
43.	The invitation to tender claims for cash purchase was issued in May 2006 with a closing date.
44.	Subsequently Iraq paid Rafidain creditors 10.25% of the debt including accrued interest as it had announced it would in the press announcement and in line with its agreement with the Paris Club. Iraq also took an assignment of the debt owed to the Rafidain creditors by Rafidain (see B/3, page 760). 
45.	The debts were purchased using monies from the Development Fund of Iraq (“DF”) and, in two cases, by means of Iraqi bonds. I agree with Rix LJ to this limited extent - the fact that bonds were used does not help SerVaas.
46.	Rafidain has now entered into an approved scheme of arrangement whereby its creditors will receive partial payment of debts owed to them by Rafidain. The scheme was published in early 2008, sanctioned by the High Court and became effective in April 2008, some three years after the public announcement of Iraq’s intention to settle Saddam Hussein era debts. Under the scheme Iraq’s claims in an amount of $253.8 million have been admitted.  Iraq will receive some 53% of the total owed by Rafidain to Iraq in respect of the debts purchased by Iraq from Rafidain creditors.   
47.	But for the intervention by SerVaas, the $253.8 million would have been transferred to the account of the DFI in New York within a matter of days of that intervention, instructions to that effect having been given on 11 October 2010.
48.	SerVaas, so we are told, declined to enter into a voluntary arrangement with Iraq of the kind that many other creditors did. 
49.	In his first witness statement Mr Buchheit sets out the history of the settlement of Saddam Hussein era debts (paragraphs 62-72):
After sovereignty was transferred from the CPA to the Transitional Government of Iraq on June 28, 2004, Iraq moved swiftly to resolve claims held by governmental and commercial Saddam-era creditors.
In mid-2004, the Paris Club, an informal group of creditor governments from major industrialised countries, held a plurality of the outstanding claims against Saddam’s Iraq (approximately US$51 billion).
Iraq entered into negotiations with its Paris Club creditors during the summer of 2004 and an agreement in principle with the Paris Club for the restructuring of Iraq’s Paris Club debt was signed on 21 November 2004 (the “Agreed Minute”).
Immediately after the signing of the Agreed Minute, Iraq commenced a comprehensive debt restructuring programme which sought to resolve the Saddam-era claims held by individual Paris Club countries, non Paris Club countries and commercial creditors.  As part of the Agreed Minute, Iraq was obligated to adhere to the Paris Club’s requirement to treat all of its external creditors in a manner comparable (in a net present value sense) to the terms of the Agreed Minute.
Iraq pursued a rigorous programme to identify all bilateral and commercial creditors of the Saddam period, and Iraq has offered to settle the reconciled claims of those creditors on terms that are comparable (in a net present value sense) to those agreed with the Paris Club.
Iraq signed bilateral debt restructuring agreements with each of the 18 members of the Paris Club, thereby settling more than US$51.1 billion of Saddam-era debts owed to these countries.
Iraq has also settled an additional US$19.5 billion of claims dating from the Saddam-era owed to non Paris Club bilateral creditors.
In December 2004, Iraq invited all commercial entities holding contractual claims against Iraqi public sector obligors to register those claims with Iraq’s debt reconciliation agent (Ernst & Young); see pages 132 to 135 for a press release detailing the terms of the commercial debt settlement offer.  Following a debt reconciliation process (and in some cases an arbitration process to determine the validity of claims that could not be reconciled), Iraq made offers to settle the reconciled Saddam-era claims held by each of these creditors on financial terms that were comparable, in a net present value sense, to those agreed with the Paris Club.
A total of 576 commercial creditors have accepted Iraq’s settlement offer.  In excess of 13,160 individual claims have been settled to date worth in aggregate more than US$20.9 billion.  The vast majority (by number) of these claims were purchased from the holders using cash sourced from the DFI.  The rest were exchanged for new Republic of Iraq bonds.
Approximately $7-8 billion of outstanding court judgments and arbitral awards were cancelled by this programme.
Iraq’s commercial claim settlement process is ongoing.
50.	This history does not seem to be in dispute.
51.	It is conceded that the debt now owed to Iraq by Rafidain Bank is not “property which is ... intended for use for commercial purposes”. SerVaas however submits that the debt as at 13 October 2010 was “property which is for the time being in use ... for commercial purposes”, as defined by section 17(1) and section 3(3). Section 17(1) defines “commercial purposes” to mean “purposes of such transactions or activities as are mentioned in section 3(3)”. Section 3(3)(c) refers to –
“Any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority”.
52.	Is there any real prospect of SerVaas, at trial, rebutting the presumption created by the certificate of the chargé d’ affaires?
53.	Rix LJ states in his draft judgment (paragraph 75) that the commercial debt was bought by Iraq in the first place in order that it could secure its value by way of dividend in the scheme of arrangement. This being so, “the linchpin of Iraq’s argument fails”.
54.	Before Arnold J counsel for SerVaas argued that it may be inferred that Iraq acquired the claims in order to make a profit and submitted that “Iraq’s entitlement to payment is the result of debt arbitrage for profit, which is a straightforward commercial transaction” (paragraph 27). In its skeleton argument for the Court of Appeal, Servaas submitted:
40.       In this case, the debts in question are clearly commercial debts acquired by the Republic as a form of debt arbitrage (i.e. acquisition for profit) .  The transaction entered into is in substance no different to any private law assignment, and did not involve any exercise of sovereign power.
55.	The respondent denies these allegations but submits that this is irrelevant.  
56.	Arnold J did not deal with the issue of why Iraq bought the debts saying that:
SerVaas’s argument wrongly conflates the transactions by which Iraq acquired the debts that are the subject of the Admitted Claims with the intended use of those assets. (Paragraph 29).
57.	Mr Harrison, solicitor for the appellant, explains why in his view Iraq’s claim in the scheme of arrangement is property for the time being in use for commercial purposes:
48.       Servaas considers that the Republic’s claim in the Scheme falls within this exception because:
48.1 It arose in connection with the restructuring of Iraq’s non-governmental commercial debts, and those of connected entities such as Rafidain via the IDRO programme, which had the expressed aim of returning Iraq to normal relations with the international financial community.  As such, the asset arises because of a transaction for the provision of finance.
48.2 Rafidian’s activities were of a commercial, not a sovereign, nature.  The business of its London branch primarily involved advising, confirming and reimbursing letters of credit.  Furthermore, Rafidian was not a central bank.  I note that the Central Bank of Iraq is itself a claimant in the Scheme.
48.3 The debts which the Republic purchased under the IDRO scheme were commercial debts owed to commercial creditors.  Indeed, the IDRO scheme was not open to any party other than commercial creditors.  I note that a press release dated 18 July 2006 (pages 128 to 129 of JEH2) issued by the Ministry of Finance of the Republic of Iraq which was headed “Iraq Announces Conclusion of Commercial Debt Settlement” contains the following statement: 
“The Republic of Iraq today announced the conclusion of the program to restructure Saddam-era commercial debt with payments that were made to holders of small claims against Iraq and Iraqi public sector entities…a total of $19.7 billion of commercial claims against Iraq have been settled over the past eleven months as part of the Government of Iraq’s program to address the huge debt stock accumulated by the Saddam regime.”  

The press release also notes that “491 commercial claimants participated in the program”.
58.	What Mr Harrison is saying is that the debts which Iraq acquired being commercial debts, the exception is satisfied. In my view the right question to ask is whether the debts were acquired in the exercise of sovereign authority. It seems to me to be unarguable, given the history of the restructuring of the debts, that Iraq did not acquire them in the exercise, and only in the exercise, of its sovereign authority.
59.	What is the evidence which supports the submission accepted by Rix LJ that “the commercial debt was bought by Iraq in the first place in order that it could secure its value by way of dividend in the scheme of arrangement”?  It seems to come from Mr Harrison who wrote:
The IDRO programme was not a transaction which was carried out in the exercise of sovereign authority, and therefore assets arising as a result fall expressly within the definition of commercial purposes.  The IDRO programme was commercial in nature, allowing the Republic to purchase a bundle of commercial debts at a discount, with the result that it secured a favourable return through the programme.  They had a clear, commercial purpose in doing so; having brought these claims at approximately 10.25 cents to the dollar, they stand to receive between 55 and 58 cents on the current dividend estimates, after only 2 years. 
60.	In my view not only is there is no evidence to support the proposition that Iraq bought the Rafidain debts in order to make a profit, but the evidence points overwhelmingly against it.  The Rafidain debts were only a small part of the Saddam Hussein era debts which Iraq voluntarily decided to settle. The offer of 10.25% was in accordance with the agreement Iraq had entered into with the Paris Club. The debts were bought by Iraq, in the exercise of its sovereign authority, as part of a huge international restructuring of debts incurred  in the Saddam Hussein era. 
61.	To succeed the appellants must show that there is a real prospect of SerVaas, at trial, rebutting the presumption created by the certificate of the chargé d’ affaires that the current use of the property is not for a commercial purpose. There is, in my view, no evidence to support the proposition that the current use is for a commercial purpose.  The fact that the debts acquired were commercial debts is not relevant on the facts of this case. I agree with Arnold J  (paragraph 29) that the property is being used for (and only for) transactions in the exercise of sovereign authority. 
Lord Justice Rix:
62.	I am most grateful to Stanley Burnton LJ for setting out the material facts in this case. However, I regret that I am unable to arrive at the same conclusion as my Lords.
63.	The issue in this case is whether the asset or property in question, namely Iraq’s admitted claim as a scheme creditor to a dividend in the scheme of arrangement of Rafidain Bank, falls within that exception to the general immunity of state property from execution which is contained in section 13(4) of the State Immunity Act 1978 (the “Act”) when the property concerned is “property which is for the time being in use or intended for use for commercial purposes”. Section 17(1) defines “commercial purposes” to mean “purposes of such transactions or activities as are mentioned in section 3(3)”; and section 3(3) refers inter alia and most generally in its sub-section (c) to –

“Any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority”.

64.	Thus the question becomes whether Iraq’s admitted claim to a dividend is “for the time being in use or intended for use” for the purposes of a “transaction or activity into which a state enters or in which it engages otherwise than in the exercise of sovereign authority”. Moreover, since the chargé d’affaires of the embassy of Iraq in London has signed a certificate stating that the “Admitted Scheme Claims of Iraq…have never been used, are not in use, are not intended for use, by or on behalf of the State of Iraq for any commercial purpose”, and section 13(5) of the Act provides that such a certificate of the head of a state’s diplomatic mission in the United Kingdom, certifying that “any property is not in use or intended for use by or on behalf of the State for commercial purposes”, shall be accepted as “sufficient evidence of that fact unless the contrary is proved”, the question in this litigation and on this appeal has become whether there is a real prospect of SerVaas proving at trial (for the judge below and we on this appeal are only concerned with summary proceedings) that the chargé d’affaires is wrong or mistaken to assert that the property in question is not in use or intended for use for commercial purposes, in the sense stated above.
65.	It is common ground that the background to Iraq’s admitted claim to a dividend in Rafidain Bank’s scheme of arrangement is that of a commercial transaction. It is also common ground that the future intended use of the dividend when distributed by the provisional liquidators is for it to be received by the DFI (the Development Fund of Iraq) and used by it for state purposes. It is therefore common ground that the property’s intended use is not for commercial purposes. The sole issue between SerVaas and the Government of Iraq is whether the property concerned is “for the time being in use…for commercial purposes”. It is common ground that in this connection the critical date is the date on which SerVaas applied against the provisional liquidators for a Third Party Debt Order (TPDO) in execution of its French judgment against Iraq which has been registered and recognised for enforcement in this country. The date of that application is 13 October 2010. Two days earlier, on 11 October 2010, Iraq’s US lawyers asked the scheme administrators, which had earlier requested details of the bank account into which the dividend should be paid, to pay it into an account in the name of DFI held with the Federal Reserve Bank of New York
66.	The issue therefore is whether the right to payment of the dividend was on 13 October 2010 in use for commercial purposes, that is to say for the purposes of a commercial transaction.
67.	SerVaas submits that the answer to that question is that the property was then in use for the purposes of a commercial transaction. The right to the scheme dividend was being used for the purposes of the final working out of the debt purchase transaction by which Iraq had bought the commercial claims of various commercial creditors against the Rafidain Bank at 10.25% of their value. Iraq was using its purchased debt in order to obtain the dividend to which it was entitled in the scheme administration of the Bank. Every aspect of those transactions from beginning to end was commercial
68.	Iraq on the other hand submits that the background to Iraq’s admitted claim to a dividend in the scheme administration is entirely irrelevant. That all lies irredeemably in the past. Iraq’s claim must be regarded as being entirely similar to a dormant bank account. In any event Iraq’s claim had no current use at all. Therefore the sole remaining question was what its intended use was, and that was for the sovereign purposes of the DFI, into whose possession the dividend would come upon distribution. It was common ground that that intended use was not for commercial, but for sovereign purposes.
69.	The judge agreed with Iraq. He set out Iraq’s submission for himself
“28. Counsel for Iraq submitted that SerVaas had no real prospect of establishing that the Admitted Claims fell within the exception. He argued…

iii) Accordingly, it is simply irrelevant, even if true, that the debts acquired by Iraq were commercial debts or that Iraq stands to make a profit on the transactions. The key question is what the present use or intended use is of the property in question, namely the assets which are the subject of the Admitted Claims.

iv) There can be only one answer to that question. At present the assets are not in use at all. As and when the Administrators make distributions, both the Certificate and Iraq’s uncontradicted evidence on this application establish that it is intended to pay the distributions to the DFI. They will then be mixed with the DFI’s other funds and applied for the various purposes set out in Resolution 1483 (as to which, see below), which are not for commercial purposes.”

70.	The judge accepted Iraq’s submissions there set out. He said:
“29. In my judgment SerVaas has no real prospect of successfully rebutting the presumption created by the Certificate for the reasons given by counsel for Iraq. In my view SerVaas’s argument wrongly conflates the transactions by which Iraq acquired the debts that are the subject of the Admitted Claims with the intended use of those assets. Iraq is not presently using those assets, but intends to pay the dividends on them to the DFI…Iraq has decided to transfer the distributions to the DFI in the exercise of its sovereign authority, albeit constrained in this respect by Resolution 1483, for the purposes set out in the resolution.” 
71.	Iraq has repeated those submissions on this appeal, that is to say that it submits that the admitted claim has no current use, that the matter is therefore decided by its intended use, and that the judge is right for the reasons which he gave.
72.	In my judgment, however, the matter is far from cut and dried. As matters stand, I would be inclined to say that SerVaas is correct to submit that Iraq’s property in question is currently being used for the purposes of a commercial transaction, and that it is only its intended use which falls outside the exception created by section 13(4). However, I do not have to go that far. It is sufficient to say that there is a real prospect of SerVaas’s argument proving correct. 
73.	There are a number of strands in the argument.
74.	First, the statutory exception is a wide one. It is wide for several reasons and in several respects. Thus, the definition of a commercial transaction (section 3(3)) is wide in itself, see in particular section 3(3)(c). The exception from immunity from execution (as distinct from adjudicative jurisdiction) of course depends on the property in question and its use, rather than the section 3(1) question of whether the proceedings are “proceedings relating to…a commercial transaction”. However, the concept of use is itself a wide one: if the property’s use is for the purposes of a commercial transaction, then it lies outside the general immunity. Moreover, either current use or intended use (for commercial purposes) will bring the property in question within the exception. That is why Iraq wishes to show (in order to displace the argument deployed by SerVaas to rebut the certificate’s assertion) that the property in question has no current use, thus leaving only intended use in question.
75.	Secondly, it is difficult to see that the property in question, the admitted claim, has no current use. It is in use in order to secure the scheme dividend. Of course, the dividend, when secured, might be put to any of the uses to which money funds might be put, either by being expended or by being invested. For the present, however, until the dividend is paid, the claim’s obvious use and purpose, I would have thought, was to be the means by which the claim’s owner, Iraq, seeks to secure its value by way of a dividend in the scheme of arrangement. That is what the commercial debt was bought for in the first place, and, until the scheme of arrangement (or, in its absence, a liquidation) has been brought to fruition, the owner holds the debt for the purpose of seeking payment of its claim. For these purposes, Iraq is just like the holder of any commercial debt. As purchaser of the debt, it merely stands in the shoes of the merchants and other commercial parties who were the original owners of the debt in question. If those parties were still holders of the debt, it would not be said that they held it for no current purpose. It seems to me to be at least highly arguable that Iraq is in the same position. On this basis, the linchpin of Iraq’s argument fails.
76.	Thirdly, the argument that Iraq’s property in question has no current use appears to be premised on the analogy of a dormant bank account. For these purposes Iraq relied on AIC Ltd v. Federal Government of Nigeria [2003] EWHC 1357, where Stanley Burnton J (as he then was) held that a bank account which had been dormant for at least 18 months had no current use. My Lord said:
“58. A mere statement that an account is dormant begs the question of the duration of the dormancy. In this case, however, the period of dormancy is specified in the certificate of the High Commissioner. If an account has been dormant for at least 18 months, it cannot be said to be presently used for any relevant purpose, and the previous use is weak evidence of the present intention as to its use. In this case, that evidence is insufficient to disprove the statement in the High Commissioner’s certificate.”
77.	However, in my judgment that example has no affinity for the present case. A claim to a dividend in a scheme of arrangement, in which the scheme creditor is actively pursuing its rights as the owner of commercial debt, is to my mind totally unlike money in a bank account, let alone money left fallow in a dormant bank account. I intend to throw no doubt on the decision in AIC v. Kazakhstan itself, but it seems to me that it might be necessary to be cautious about proceeding from lack of activity regarding a bank account (or any other asset) to a conclusion that the asset in question had no current use. It seems to me that much would inevitably depend on context. It might be that it could be hard to say that a dormant bank account was being used for any current purpose. But suppose that bank account when last used had been a trading account of an enterprise in state ownership (and had been dormant because it had dropped out of sight in favour of some new account): would it not be said that the money in that account (which presumably would be reflected somewhere in the accounts of the enterprise) was currently in use for the purposes of the enterprise? In any event, is an account on which (let us suppose) interest is being paid “dormant”, or is it an investment of some kind being maintained for the purpose of investment, and in this respect also being coloured as to the proper description of its use by the business or other context of its ownership? Suppose we are talking not about money in an account, but about an investment in shares or debt: such an investment might be of long standing and untouched, but one would not for that reason call it “dormant” or be inclined to say that it had no current use, or to say that its use (as an investment vehicle) was entirely divorced from the background and context which had led to its establishment. I would therefore be cautious and sceptical about the judge’s acceptance of Iraq’s argument that the background to the acquisition of Iraq’s debt and Iraq’s role as a scheme creditor was “simply irrelevant” or “immaterial”. I do not see how that can be right. 
78.	Fourthly, the analogy of a bank account, albeit not a dormant one, has also been deployed by Iraq in the argument by reference to Alcom Ltd v. Republic of Columbia [1984] AC 580. Stanley Burnton LJ has already set out critical parts of the speech of Lord Diplock, and I will not do so again. However, what it seems to me was essential in the rationale of that case was that the bank account in question was that used to meet the day to day running of a diplomatic mission. Therefore, the obvious current use of that account was for the purposes of the running of a diplomatic mission, which is plainly for a sovereign and not a commercial purpose. That would remain the case even if individual moneys were expended on ordinary purchases of food and utilities and the like. As Lord Diplock said, it might nevertheless be in theory possible to show that such a bank account was earmarked by the state for exclusive use for commercial transactions (acta iure gestionis). However, that would be a most unlikely scenario. Subject to that, the account as a whole was not to be “susceptible of anticipatory dissection” into the various uses to which the moneys in the account might be put. That is a matter of categorisation. In the present case, the question of categorisation is how to describe the use to which Iraq’s admitted claims were being put at the relevant time. Is it to be said: “to no current use”? In my judgment, no, or, at least, very arguably no. It seems to me that the decision of Burton J in Orascom Telecom Holding SAE v. Republic of Chad [2008] EWHC 1841 (Comm), [2008] 2 CLC 296 supports that conclusion. He was there influenced inter alia by the fact that the bank account in question had been established and operated specifically for the purposes of a commercial transaction (at [23]).  
79.	Fifthly, it seems to me that SerVaas’s argument is assisted by the distinction which Mr Martin Pascoe QC has drawn on its behalf between on the one hand the property in question, the admitted claim, which brings with it a right to the dividend distribution owed to Iraq, and whose current use is intimately connected with the working out of the debt transaction under which Iraq has bought Rafidain Bank’s commercial debt for the purpose of obtaining from the Bank in its administration or liquidation just such a dividend: and on the other hand the dividend which in due course might be paid to the DFI, and which becomes in its hands its property, in cash, which might be held by it in its account whether at the Federal Reserve Bank of New York or at Iraq’s central bank. That dividend is of course a different asset from the property in question in this case. Mr Pascoe submits that it is therefore only that property’s intended use, and not its current use which can be described, through DFI’s intervention, as being intended for sovereign and not commercial purposes.
80.	It seems to me that that distinction is assisted, at any rate for the present, by the judge’s own decision on the second point which is before us, but which we have currently adjourned, on Iraq’s cross-appeal. That is the question of whether the property in question is immune from execution by reason of DFI’s ownership of it and the immunity which DFI obtains under article 9 of Resolution 1483 (see under paras 22/23 above). As it is, the judge decided that point in SerVaas’s favour (see at his [42]).
81.	Sixthly, the argument has I think been obscured to some extent by SerVaas’s subsidiary or alternative submission that it can bring its case under the section 13(4) exception by reason of the fact that 43% of the admitted claims was bought by Iraq (not with cash but) with bonds which it has issued to the sellers of the debt in question. SerVaas submits that the issue of such bonds was a finance transaction within the meaning of section 3(3)(b) (apart from sub-section (c)), and that therefore the right to the dividend earned by that percentage of the overall admitted claims (which would be more than enough to discharge SerVaas’s claim) was property in use or intended for use for the purposes of that kind of commercial transaction (irrespective of the question of whether or not there was a purpose “otherwise than in the exercise of sovereign authority” under sub-section (c)). It is not submitted, however, that the bonds in question are supported by the relevant part of the dividend. It seems to me that in this respect, therefore, the fact that part of the debt was financed by the issue of bonds is mere background, it is water under the bridge. It cannot add to the general situation. It would or might have been different if the dividend to be earned by the debt was hypothecated to the repayment of the bonds. As it is, the issue of bonds is simply an alternative to the use of cash for the purpose of the purchase of the debt from its commercial holders. However, the failure of that subsidiary or alternative argument does not, as it seems to me, impinge in the least on the validity of SerVaas’s wider submission. In either event, whether the debt is purchased with cash or bonds, the purchase is a commercial transaction, and its purposes do not expire with the purchase itself.
82.	Seventhly, the width of the section 13(4) exception in its alternative language (“which is for the time being in use or intended for use”) presents intriguing aspects. It might have been thought that the exception might have been made out only if both current and intended use was for commercial purposes. That is not, however, what the statute says: either current or intended use for commercial purposes will suffice to make good the exception. It is possible to think of problematic examples to test this wording. Suppose a passenger liner, owned by a state, is in commercial use but is due to be requisitioned at the end of her current voyage, and that a claimant seeks to execute on the liner while she is still performing her passenger voyage on a visit to Southampton. Her current use is for commercial purposes, but her intended use is for sovereign purposes. It would appear that the exception from immunity would be made out. Suppose a world famous painting, the pride of a state’s national collection, is sent to England for restoration. Three years later a large bill is due for the restoration, and the restorer seeks to lien or execute upon the painting for his fee. Its current use might be said to be for commercial purposes, but its intended use is to be put up again for public viewing in the state’s national gallery. Such examples demonstrate that current use and intended use might exist side by side, and yet push in opposite directions. It might be the case, however, that the alternative of “intended for use” is only meant to come into question where there is no current use: in which case there could be no such tension. Or it might be that questions of categorisation enter here. The submissions before us did not consider these problems.
83.	This case, as it seems to me, presents something of the tension of those examples. The property in question, the admitted claim giving a right to a dividend (not the dividend itself), was as it seems to me very arguably “for the time being in use” for commercial purposes, namely the working out of the debt purchase investment or speculation leading to Iraq’s claim to share in the distribution of the Bank’s assets. It can however already be foreseen that the dividend when paid is to become part of the assets of the DFI, which assets are held, rather like a diplomatic mission’s bank account, for purposes iure imperii not iure gestionis. It may be that in due course the parties would reformulate their submissions (there were occasional glimpses of this): Iraq will say that current as well as intended use was for the purposes of the DFI, rather than that there was no current use; while SerVaas will say that the intended use spoken of was that of DFI’s use of the dividend after it had been paid, rather than the intended use of the admitted claims at a time before the dividend had been paid. In any event, it seems to me that there is more than enough here to merit a trial. If, however, it were said that this was simply a matter of legal categorisation on which it ought to be possible to give a definitive answer at this stage, I would be compelled to say that I thought that SerVaas had rebutted the presumption created by the certificate of the chargé d’affaires. As it is, I would prefer to say that the matter ought to go to trial. 
84.	I should also say that I have had the benefit of reading Lord Justice Hooper’s judgment in draft. He finds that the background to Iraq’s debt purchase and thus its entitlement to a dividend in the scheme of arrangement is relevant, or at any rate that, if relevant, it is in any event sovereign and not commercial in its purposes. That, however, was not the judge’s finding or rationale, and to my understanding is not consonant with the way in which this appeal was argued. In any event, my Lord’s approach to my mind emphasises the need for a trial.
85.	In sum, I would have allowed this appeal and sent this matter to trial. In the light of my Lords’ judgments, however, this appeal will be dismissed.