QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Tsavliris Salvage (International) Limited
|- and -
|The Grain Board of Iraq
|2007 Folio No.971
|MINISTRY OF TRADE OF THE REPUBLIC OF IRAQ
|TSAVLIRIS SALVAGE (INTERNATIONAL) LIMITED
|AND IN THE MATTER OF THE ARBITRATION ACT 1996 SECTION 44
|AND IN THE MATTER OF THE ARBITRATION ACT 1996 SECTION 67
|AND IN THE MATTER OF AN ARBITRATION
|Tsavliris Salvage (International) Limited
|- and -
|The Grain Board of Iraq
Mark Hoyle (instructed by Waterson Hicks) for the Defendant
Hearing dates: 15th & 16th October 2007
Crown Copyright ©
The Hon Mr Justice Gross
i) The arbitrator did not have jurisdiction as there was no valid arbitration agreement ("the jurisdiction ground");
ii) The GBI is part of the MOT and was therefore immune from the arbitration proceedings ("the immunity ground").
For the avoidance of doubt, I have sought to describe the applicants for s.67 relief neutrally; my formulation is intended only to introduce the MOT and the GBI and is entirely without prejudice as to which (if either) was a party to the arbitration and as to the status of the GBI.
" The conclusion which emerges is that in considering, under the 'restrictive theory' whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context , be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity."
In the present case, echoes of these thoughts found recurring expression in the parties' rival submissions.
THE FACTUAL HISTORY
"I. Arbitration and the LSSA Clauses: The Contractors' remuneration and/or special compensation shall be determined by arbitration in London in the manner prescribed by Lloyd's Standard Salvage and Arbitration Clauses ('the LSSA Clauses') and Lloyd's Procedural Rules. The provisions of the LSSA Clauses and Lloyd's Procedural Rules are deemed to be incorporated in this agreement and form an integral part hereof. Any other difference arising out of this agreement or the operations hereunder shall be referred to arbitration in the same way.
J. Governing law: This agreement and any arbitration hereunder shall be governed by English law.
K. Scope of authority: The Master or other person signing this agreement on behalf of the property identified in Box 2 enters into this agreement as agent for the respective owners thereof and binds each (but not the one for the other or himself personally) to the due performance thereof.
1. Salvage security. As soon as possible the owners of the vessel should notify the owners of other property on board that this agreement has been made. If the Contractors are successful the owners of such property should note that it will become necessary to provide the Contractors with salvage security promptly in accordance with Clause 4 of the LSSA Clauses referred to in Clause I…..
LLOYD'S STANDARD SALVAGE AND ARBITRATION CLAUSES
In the Agreement and unless there is an express provision to the contrary:
3.3 'Convention' means the International Convention on Salvage 1989 as enacted by section 224, Schedule II of the Merchant Shipping Act 1995….
4. PROVISIONS AS TO SECURITY, MARITIME LIEN AND RIGHT TO ARREST
4.1 The Contractors shall immediately after the termination of the services or sooner notify ….where practicable the Owners of the amount for which they demand salvage security….from each of the respective owners.
4.6 The owners of the vessel….shall use their best endeavours to ensure that none of the property salved is released until security has been provided in respect of that property….
4.7 Until security has been provided as aforesaid the Contractors shall have a maritime lien on the property salved for their remuneration.
4.8 Until security has been provide the property salved shall not without the consent in writing of the Contractors (which shall not be unreasonably withheld) be removed from the place to which it has been taken by the Contractors ….
6. ARBITRATION PROCEDURE AND ARBITRATORS POWERS
6.2 The arbitration shall take place in London… "
"We, as the buyer from the loading port, are also seller of the commodity on board of M/T Altair to 'Grain Board of Iraq, Baghdad' on FOB basis.
Therefore, all risks and responsibilities of the cargo together with the ownership of the cargo are passed to Grain Board of Iraq, Baghdad upon completion of shipment at Rostock, Germany. Please contact the owner of the cargo at the following contact address….."
Various e-mail contact details, all of the GBI, were then provided. However, Clyde & Co.'s efforts to make contact with the GBI proved unavailing.
"We have discussed the matter with the Managers in Piraeus, and for the same reasons that your clients have concluded that they cannot enforce their lien in Iraq, our clients cannot interrupt discharge. It has been made very clear to Owners and their protecting agents by local interests that if they did so [i.e., interrupted discharge] it would be regarded as a hostile step; the cargo interests and the Iraqi authorities would compel the discharge to continue. They can and will put severe pressure on the Master and crew, and Owners cannot expose the crew to that or risk further consequences to the vessel and crew. We all recognise that it is an extremely hostile jurisdiction in which to attempt to put pressure on substantial local interests, particularly one controlled by the State/provisional government."
Discharge therefore proceeded without the provision of security for the salvage.
"The reason….is simply that they have submitted by agreement to the jurisdiction of the arbitrator or arbitrators…. "
" The master shall have the authority to conclude contracts for salvage operations on behalf of the owner of the vessel. The master or the owner of the vessel shall have the authority to conclude such contracts on behalf of the owner of the property on board the vessel."
By s.224(1) of the Merchant Shipping Act 1995 ("the MSA 1995"), the provisions of the 1989 Convention have the force of law in the United Kingdom. Against this background, the arbitrator concluded: (1) that the LOF had been agreed by the agents for the owners; (2) that by virtue of Art. 6.2 of the 1989 Convention, they had authority as sub-agents for the GBI (the owner of the cargo) in making the LOF, to which the GBI was accordingly a party.
i) That the GBI was the owner of the cargo at the time of the salvage services;
ii) That the GBI was a party to the LOF;
iii) That he had jurisdiction to determine whether or not the GBI was liable to Tsavliris for salvage and if so in what sum;
iv) That the GBI was a separate legal entity, distinct from the executive organs of the Government of Iraq and capable of suing and being sued.
"DETAILS OF THE COMPANY
Two: The objects of the company: The object of the company is to participate in the support of the national economy in the field of grain supply, in accordance with the development plans and the planning resolutions.
Three: The activities of the company: To engage in the following:
A. To import grain….
B. To purchase grain from peasants and farmers.
C. To market, store and clean the grain and prepare it for grinding, and to engage in all the works relating to the provision of grain to its own mills and those of the private sector who have contracts with the company.
In achieving its objects, the company may engage in the following:
2. To engage in commercial works by way of transporting and storing and insuring and marketing goods…..
7. It may invest its cash surpluses…..
12. It may engage in all legal transactions and enter into such contracts as it deems appropriate for its business."
"THE REPUBLIC OF IRAQ/ MINISTRY OF TRADE/ GRAIN BOARD OF IRAQ (HEREINAFTER CALLED THE BUYER) AND EKSIM (HEREINAFTER CALLED THE SELLER) HAVE MUTUALLY AGREED ON THE FOLLOWING:
FIRST PARTY: (BUYER) MINISTRY OF TRADE/GRAIN BOARD OF IRAQ….
SECOND PARTY: (SELLER) EKSIM…
USD 190.00 per Metric Ton ….FOB
5. DELIVERY PERIOD:
6. METHOD OF ANALYSIS:
The standard method of analysis….or a recognised equivalent to the satisfaction of the Grain Board…
The Iraqi Trade Bank will issue an irrevocable letter of credit in favour of the seller. Contractors whose supplies originate outside of Iraq shall be paid 95% of the contract value against presentation documents. The balance of 5% will be held pending until Grain Board of Iraq accepted the good compliance with contract specification……Any deviation in the payment terms must be approved by the Grain Board of Iraq…."
The contract was signed "For First Party Grain Board of Iraq Director General Khalil Assi Khadum". It may be noted that the parties supplied various contact details, including e-mail addresses. Those e-mail addresses supplied for the "First Party" were all addresses of the GBI.
" 8. The Ministry of Trade guarantees that the commodity Letter of Credit shall be in good order and fully operative in all respects and provided to the Supplier…….so that loading operations can commence immediately after arrival respective ports….
21. SAILING NOTICE AND ESTIMATED TIME OF ARRIVAL
A. Sailing Notice indicating ….should be communicated by Owners or Owners' Agents to:
(1) The Ministry of Trade. Attn: Mrs Feryal/ Mr Khalil…
(2) Star Trading & Marine Inc. Washington DC …..
(3) Star Trading & Marine Inc's representative…Basrah. Iraq….
B. As vessel passes Gibraltar, and upon nomination of discharging port, Master is to communicate to Ministry of Trade Baghdad, Receivers and Port Authority……
24. Notification of vessel's readiness to discharge must be delivered in writing at the office of the Receivers/The Ministry of Trade…..
29. FREIGHT PAYMENT
C.….90% of freight is collectible upon signing/releasing the original Bills of Lading marked 'Freight payable as per Charter Party' and the 10% balance of freight is collectible upon completion of discharge operations.
D. The …10%..balance of freight will be released upon completion of discharge and after final settlement of freight account against discharging laytime statements as prepared by Owners and approved by The Ministry of Trade, Baghdad….
36. Any claims, disputes arising from this contract and any damages, losses…occurring to the cargo or any similar cases to be settled either amicably or to be referred to arbitration or courts between The Ministry of Trade/Receivers and Owners/Disponent Owners.
40. Owners shall not ….sub-contract of sub-let the whole or any part of this contract of affreightment to another Owner or operator without first obtaining the written approval of the Charterers, the Ministry of Trade."
i) Mrs Feryal, appears to be the same person who signed the application for the letter of credit and, as will be seen, the Letter of Indemnity, dealing with delivery of the cargo without production of the bills of lading;
ii) Mr. Khalil, appears to be the same person who signed the supply contract;
iii) The e-mail addresses supplied were all GBI e-mail addresses.
THE s.67 APPLICATION
i) The jurisdiction ground; and
ii) The immunity ground.
The challenge was advanced pursuant to s.67 of the AA 1996, no doubt to be read with ss. 66(3) and 72(2)(a) thereof. I shall take the two grounds in turn.
i) Issue (I): Whether the owners of the cargo were bound by the LOF?
ii) Issue (II): Whether the GBI was the owner of the cargo?
i) As already recorded, pursuant to s.224 of the MSA 1995, the provisions of the 1989 Convention have the force of law in the United Kingdom.
ii) Art. 2 of the 1989 Convention provides as follows:
" This Convention shall apply whenever judicial or arbitral proceedings relating to matters dealt with in this Convention are brought in a State Party."
iii) Cl. I of the LOF (set out above) provides for arbitration in London. The United Kingdom is a "State Party" to the 1989 Convention. Accordingly, that Convention applies to the LOF arbitration proceedings.
iv) It is irrelevant that Iraq has neither ratified nor acceded to the 1989 Convention; insofar as the MOT/GBI sought to contend otherwise, that is not the test for the application of the provisions of the 1989 Convention.
v) Art. 6.2 of the 1989 Convention (the full terms are set out above) provides, inter alia that:
"….the master or the owner of the vessel shall have the authority to conclude….[contracts for salvage operations]…on behalf of the owner of the property on board the vessel. "
As it seems to me, the provisions of Art. 6.2 are clear. They give to the master and owner express and wide authority to conclude salvage contracts on behalf of the owners of cargo; thereby, they effectively serve to reverse the decision of the Court of Appeal in The Choko Star  1 Lloyd's Rep. 516 - confining the master's authority to bind cargo interests to a contract of salvage within the limits of a true agency of necessity – and so to dispose of the practical difficulties to which that authority had given rise: Kennedy & Rose, The Law of Salvage (6th ed., 2002), at para. 832. It may be noted that the provisions of Art. 6.2 are reinforced or echoed by the terms of cl.K of the LOF (set out above).
vi) In the present case, there is no reason to doubt that the employee of the managers who concluded the LOF on behalf of owners and purportedly on behalf of the owners of cargo, had the requisite authority from the owners to do so. In my judgment, Art. 6.2 of the 1989 Convention is applicable and the owners of the cargo are accordingly bound to the LOF.
vii) I am unable to accept the MOT/GBI submission that Art. 6.2 only applies when the salvage contract is concluded by the master or owner personally, or by employees of the owners, rather than by an employee of the managers (as here) or by other agents acting on behalf of the owners. While it will of course be a question of fact in each case whether those purporting to act on behalf of owners have the necessary authority to do so, I do not think it can have been intended to limit the application of Art. 6.2 in the manner contended. Insofar as the contrary is suggested by Brice On Maritime Law Of Salvage (4th ed., 2003), at para. 5-41, I respectfully disagree. There will be many instances in practice where the master will not himself conclude the LOF (or other salvage contract). As to the ship owners, it must be most unusual to find an owner personally concluding such a contract. Still further, there are likely to be a good many one ship companies who will not have in-house employees; necessarily, employees of agents or managers will act on their behalf. The restriction on the application of Art. 6.2 advocated by the MOT/GBI would import a practical difficulty and an area of uncertainty into a beneficial provision of an international convention, designed to encourage certainty and remove or reduce delay and haggling. There can in any event be little attraction in a proposed construction of Art. 6.2 which would leave salvors potentially exposed to the vagaries of ship owners' corporate structures.
viii) For completeness, no conflict of laws problem arises, given that the putative proper law of the LOF is English Law: see cl. J, set out above.
ix) In summary, I agree - and without any real hesitation – with the conclusion on this issue arrived at by the experienced arbitrator.
"The main function and purpose of the ….[GBI]…is to purchase the grains (rice and flour) necessary for citizens after importing them from abroad or purchasing them from farmers inside Iraq……."
Given both the existence of the GBI with separate legal personality and its function and purpose, it would strike me as surprising if nonetheless it was not the owner of the cargo and the MOT was.
" 1. (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.
9. (1)Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration.
10. (1) This section applies to –
(a) Admiralty proceedings; and
(b) proceedings on any claim which could be made the subject of Admiralty proceedings.
(2) A State is not immune as respects –
(a) an action in rem against a ship belonging to that State;
(b) an action in personam for enforcing a claim in connection with such a ship,
if at the time when the cause of action arose, the ship was in use or intended for use for commercial purposes.
(4) A State is not immune as respects –
(a) an action in rem against a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes; or
(b) an action in personam for enforcing a claim in connection with such a cargo if the ship carrying it was then in use or intended for use as aforesaid.
14. (1) The immunities and privileges conferred by this Part of this Act apply to any foreign or commonwealth State other than the United Kingdom; and references to a State include references to –
(b) the government of that State; and
(c) any department of that government,
but not to any entity (hereafter referred to as a 'separate entity') which is distinct from the executive organs of the government of the State and capable of suing or being sued.
(2) A separate entity is immune from the jurisdiction of the courts of the United Kingdom if, and only if –
(a) the proceedings relate to anything done by it in the exercise of sovereign authority; and
(b) the circumstances are such that a State ….would have been so immune."
i) The GBI was a "separate entity" and therefore not entitled to immunity under s.14(1);
ii) Furthermore, the GBI was not entitled to immunity under s.14(2), because the proceedings did not relate to "anything done by it in the exercise of sovereign authority"; it was the character not the purpose of the act in question which mattered;
iii) If right so far, then that was an end to the GBI's challenge to the award on the ground of state immunity, save only for any questions going to enforcement, dealt with below;
iv) But if Mr. Hill was wrong on either argument under s.14, then in any event, Tsavliris was entitled to defeat any claim to immunity, indeed whether advanced by the GBI or the MOT, under either or both (1) s.9(1) or (2) s.10(4)(b). As to s.9(1), Mr Hill contended that the agreement which bound the GBI (as owners of the cargo to LOF) was an agreement in writing sufficient for the purposes of s.9(1). As to s.10(4)(b), the reference to "such a cargo" in that sub-section related only to the cargo "belonging to that State" in sub-section (a); it was irrelevant whether or not the cargo was "commercial" or not. Ex hypothesi, if s.10(4)(b) was reached, the cargo belonged to the state of Iraq. But, be that as it may, the cargo was a commercial cargo.
i) There can be no or no real doubt that signature of a LOF, on behalf of a party bound by that signature, will amount to a submission to arbitration, serving to exclude state immunity: see, Kennedy & Rose, The Law of Salvage (6th ed., 2002), at para. 1174.
ii) As I have already held, by virtue of the operation of Art. 6.2 of the 1989 Convention, the managers, as agents of the owners, concluded the LOF on behalf of the GBI (as owners of the cargo).
iii) There can be no or no sensible dispute that the LOF was agreed in writing.
iv) It follows that the GBI agreed in writing to arbitration in accordance with cl. I of the LOF – and to the other provisions contained in the LOF.
v) This agreement to submit the matters contained in cl. I of the LOF to arbitration was an express agreement, albeit an agreement made through others acting on GBI's behalf.
vi) It would be curious if the GBI was bound to the LOF and hence a party to the arbitration and yet somehow was held not to have "agreed in writing" to submit a dispute to arbitration for the purposes of s.9(1). I do not think there could be a half way house of this nature – in particular under English law, given its broad and permissive view of the requirement that an arbitration agreement should be in writing. In this regard, s.5 of the AA 1996 provides as follows:
" (1) The provisions of this Part apply only where the arbitration agreement is in writing….
(2) There is an agreement in writing –
(a) if the agreement is made in writing (whether or not it is signed by the parties)
(c) if the agreement is evidenced in writing"
" The cardinal question is whether the Central Bank is properly to be regarded as a department of the Government of Nigeria in the guise of a bank, or whether it is in truth a bank to which the execution of specific aspects of government control of finance has been delegated. In the first case the Central Bank may be entitled to immunity from suit in the courts of this country; in the second case it can claim no such immunity….
Whether a particular organisation is to be accorded the status of a department of government or not must depend on its constitution, its powers and duties and its activities. These are the basic factors to be considered. The view of the government concerned must be taken into account but is not of itself decisive….; it does not relieve a court before which the issue of sovereign immunity arises of the responsibility of examining all the relevant circumstances…."
"….The respondents [Rolimpex] are an organisation of the state. Under Polish law they have a legal personality. Though subject to directions by the appropriate minister who can tell them 'what to do and how to do it', as a state enterprise they make their own decisions about their commercial activities. They decide with whom they will do business and on what terms and they have considerable freedom in their day to day activities. They are managed on the basis of economic accountability and are expected to make a profit. They arbitrators …rightly found as a fact that the respondents were not so closely connected with the government of Poland as to be precluded from relying on the ban imposed by the decree as government intervention.
The appellants also asserted that the respondents bought and sold for the state. This while no doubt true, does not…help the appellants. The facts found by the arbitrators…..show that they were not a department of the government but have a separate identity. They were, it was found as a fact, employed as 'a commission merchant' to sell sugar intended for export on behalf of Sugar Industry Enterprises which were also state enterprises. "
See too, per Lord Salmon, esp. at p.369G.
" State-controlled enterprises, with legal personality, ability to trade and to enter into contracts of private law, though wholly subject to the control of their state are a well-known feature of the modern commercial scene. The distinction between them, and their governing state, may appear artificial: but it is an accepted distinction in the law of England and other states: see Czarnikow v Rolimpex…..Quite different considerations apply to a state-controlled enterprise acting on government directions on the one hand, and a state, exercising sovereign functions, on the other."
" (a) The characterisation of a party to proceedings as department of the government of a foreign sovereign State depends not on any single factor, but on a consideration of all relevant circumstances.
(b) The status of the party under the law of its home state is one relevant factor but is not decisive. Nor is the presence of separate legal personality itself decisive against characterising a party as a department of government.
(c) A detailed analysis of the constitution, function, powers and activities of the party of its relationship with the state is likely to be essential. The existence of State control is not, however, a sufficient criterion.
(d) The courts are likely to exercise caution before treating a party having separate legal personality as a department of government….."
The authors go on to say that there should not be a "judicial no-man's land"; the principles to be applied in determining whether an entity is a "department of government" should mirror those for determining whether the entity is a "separate entity". In that regard, the authors comment as follows (at para. 4.102):
" As for the requirement that the entity be distinct from the executive organs of government, this would appear to require a careful examination of the entity's constitution, functions, powers and activities and its relationship with the State in order to determine whether the required degree of separation exists…"
i) There is or can be no realistic dispute that the GBI is a public, state owned, company incorporated pursuant to Art. 1 of Law No. 22. More specifically, the GBI is owned by the MOT. Its capital is determined by the Council of Ministers. Art. 1 refers to public companies in the following terms:
" Public company: A self-financing economic unit which is fully owned by the State, has a juristic person [? personality] and financial and administrative independence, and operates in accordance with economic principles. "
ii) Pursuant to Art. 20 of Law No. 22, the GBI has a "board of management" (apparently akin to a board of directors, "the board"), with a "General Manager" as Chairman. According to Dr. Flwreda, whose evidence I accept:
" The Board of Directors of the GBI is responsible for putting down the administrative, financial and regulatory policies and plans that are necessary to perform the duties of the company and achieve its objectives and to supervise and follow up the implementation thereof.
The Board of Directors enjoys the widest powers in this respect. Moreover, the Board of Directors has the right to vest in the Manager of the GBI all the powers that the Board deems fit in accordance with Art. 19 of …[Law No.22]…
The Board of Directors is free to set the budget of the GBI provided that the budget is aimed at achieving the objectives of the Company…. The Company remains under the supervision of the Board of Supreme Audit (article 42 of …[law No. 22]) "
iii) The main function and purpose of the GBI is, as already discussed, to purchase the "grains necessary for citizens after importing them from abroad or purchasing them from farmers inside Iraq". It is fair to note that, according to Dr. Flwreda, the GBI is not "required" to make a profit.
iv) Again as already discussed, it is not in dispute that the GBI enjoys separate legal personality. I therefore readily conclude (it is unclear whether or not Mr. Hadid disputes this) that the GBI is entitled to enter into contracts in its own name, as is indeed apparent from the terms of the certificate (set out above).
v) Subject to such limits on his authority as are imposed on him by the board, the General Manager of the GBI is entitled enter into contracts without referring to the MOT for approval. Again, Dr. Flwreda has said this and I seen no reason to doubt her evidence. Mr. Hadid's position on this topic was unclear.
vi) The experts were asked this question:
"What overall control does the Government of Iraq have over the GBI and how is this exercised?"
Mr. Hadid did not answer this question. Dr. Flwreda's answer, with reference to various Articles of Law No.22, was as follows:
"(1) Given that the GBI is a public company, the Government's control is found in the following:
(2) The GBI is fully owned by the state….
(3) The company's capital is entirely financed by the Public Treasury…
(4) The incorporation of the GBI is pending the approval of the Council of Ministers…
(5) The company shall not be liquidated save by a resolution issued by the Council of Ministers…..
(6) The company's activities are controlled by the Board of Supreme Audit….
However provided the GBI acts within the powers given to it, and performs the functions assigned to it, it is controlled by the General Manager and not the Government."
vii) In this review, I do not overlook one of Mr. Hadid's answers, which requires mention, albeit not directed to the particular question posed. In dealing with the management of the GBI, he said it could be compared to the "management of private companies which have a specific administration headquarters in one location and open a number of branches and offices in other locations." He went on to extend the analogy by reference to a "foreign company which opens a branch in some country and is issued a permit to register that branch which is given status as a legal entity". With respect, however the analogy requires caution, as so much, whether domestically or internationally, depends on the precise arrangements made. For instance, there are countless examples of foreign subsidiaries or "branches" which are undoubtedly self standing to the extent that the holding company will not be liable for the acts of the subsidiary. Mr. Hadid's example must therefore be taken as confined to such cases where the branch, even if enjoying separate legal personality, is not truly autonomous from "head office". Whether that example meets the facts of the present case is another matter.
viii) Dr. Flwreda's conclusion may, I think, be summarised as follows. Though state established, capitalised and owned and though its employees are hired in accordance with the law governing the civil service:
"…the GBI possesses a separate identity as well as financial and administrative independence which is prescribed by the Articles of Association and Articles of Incorporation."
" The actions of the GBI in acquiring grain had a clear and pure governmental interest, as opposed to a commercial interest, considering the food distribution in place for the grain. In fact, both the nature and motive of the actions of GBI were such that had the MOT….directly carried out the same actions and transactions it would have done so in a public function with sovereign authority and not like a private person under private law. Therefore the GBI should be entitled to the same immunity which would be afforded to MOT in the circumstances. "
" ….in considering whether acts done by a separate entity are or are not acts done by it in the exercise of sovereign authority under section 14(2)(a), it would….be appropriate to have regard to the English authorities relating to the distinction between acta jure imperii and acta jure gestionis as adopted from public international law, including the statement of principle by Lord Wilberforce in the I Congreso del Partido  1 AC 244…..
It is apparent from Lord Wilberforce's statement of principle that the ultimate test of what constitutes an act jure imperii is whether the act in question is of its own character a governmental act, as opposed to an act which any private citizen can perform. It follows that, in the case of acts done by a separate entity, it is not enough that the entity should have acted on the directions of the state, because such an act need not possess the character of a governmental act. To attract immunity under section 14(2), therefore, what is done by the separate entity must be something which possesses that character……
….in the absence of such character, the mere fact that the purpose or motive of the act was to serve the purposes of the state will not be sufficient to enable the separate entity to claim immunity under section 14(2) of the Act."
See too, for interest, Lord Hope, Voices from the past,  123 LQR, at pp.566-568, including a fascinating account of Lord Wilberforce's contribution to the passage of the (then) State Immunity Bill.
i) As I understood Mr. Hoyle's submissions, he, very properly, did not dispute that the vessel was in use for commercial purposes. Furthermore and equally properly, he disclaimed any suggestion that the cargo was an "aid" cargo; there was simply no evidence to such effect. As it seems to me, it follows that at the time of the salvage, the cargo was "in use" for commercial purposes; it was at that time a commercial cargo. It had been bought from Eksim (and for that matter, shipped) commercially; it seems hopeless to me to contend otherwise. State immunity accordingly does not apply.
ii) As to Mr. Hoyle's submission that the cargo was intended for use as part of the PDS, even if well-founded, that cannot affect the cargo's "status" as a commercial cargo at the time of the salvage. But in any event – and though it is unnecessary to reach a conclusion – I am far from persuaded that intended subsidised distribution in the future, would entitle the MOT/GBI to succeed in a claim for immunity under this sub-section. The evidence does not go so far as to suggest intended donation of the cargo to Iraqi recipients free of charge. It is also perhaps noteworthy that there is, I think, no evidence as to what actually happened to the cargo after its discharge.
i) First, I have regard to the language of s.10(4). As a matter of first impression, the words "such a cargo" in s 10(4)(b) appear to relate back to the words "a cargo belonging to that State" in s. 10(4)(a). If that is right, then the only requirement for the application of s.10(4)(b) would be that the cargo "belonged to that State". On the hypothesis that s.10 needs to be considered at all (i.e., that the MOT/GBI have had some success under s.14), that requirement would be satisfied.
ii) Secondly, as a matter of the language of s.10(4) considered with s.10(2), Mr. Hill's construction would fit in neatly with the obvious construction to be given to the words "such a ship" in s.10(2)(b). In s.10(2)(b), the words "such a ship" plainly relate back to the words "ship belonging to that State" in s.10(2)(a).
iii) The rationale for Mr. Hill's construction is not unattractive – if not, if I may say so, conclusive. Whereas a state enjoys immunity from an action in rem unless the cargo is a "commercial cargo" (s.10(4)(a)), it has no need for an immunity in respect of an action in personam even against a "non-commercial" cargo. An action in personam could proceed, without delay to the cargo but without the claimant being in a position to obtain security by way of an arrest.
THE APPLICATION TO ENFORCE THE AWARD
"…if a state has agreed to submit to arbitration, it has rendered itself amenable to such process as may be necessary to render the arbitration effective."
Svenska (supra), at . As observed by Moore-Bick LJ (ibid), an application for leave to enforce an award as a judgment is the final stage in rendering the arbitral procedure effective; however, enforcement by execution on property belonging to the state is another matter, as s.13 of the Act makes clear. For his part, Mr. Hill made it plain that he was not, at least for the moment, seeking execution, so that (even had Tsavliris been confined to reliance on s.9 alone) no question under s.13 arose on this application.
THE APPLICATION FOR A FREEZING INJUNCTION
i) The resolute refusal of the GBI to furnish security pursuant to the LOF, either before or after discharge of the cargo – even on a without prejudice basis.
ii) The GBI's refusal to participate in the arbitration.
iii) The absence prior to the hearing before me of any offer by the GBI to honour the award on a basis which protected its position for the purposes of the hearing.
iv) The absence, throughout the hearing before me, of any offer of an undertaking to honour the award in the event that the GBI failed in its arguments before this court.
In expressing these views, I have not lost sight of Mr. Hoyle's point that the initial hearing was on notice; but matters have moved on since then and the reality of enforcement is now upon the parties. In the circumstances, I have come to the conclusion already outlined as to the risk of dissipation.