Commercial Disputes Weekly – Issue 2235 November 2024

Arbitration – Sovereign Immunity
The Court of Appeal has rejected claims by Spain and Zimbabwe that they were entitled to assert state immunity to resist registration and enforcement of ICSID arbitration awards against them. Article 54 of the ICSID Convention provides that “Each Contracting State shall recognize and award rendered pursuant to this Convention as binding and enforce…”. As contracting states, both Spain and Zimbabwe had submitted to the jurisdiction of the English courts by virtue of article 54. Although the general state immunity under section 1 of the English State Immunity Act 1978 (“SIA 1978”) applied to the registration of an ICSID award (as a clear case of the English court exercising adjudicative jurisdiction over a foreign state), article 54 fell within an exception from immunity in section 2 SIA 1978. Both Spain and Zimbabwe had agreed in the ICSID Convention to submit to the jurisdiction of the UK courts as per section 2.
Infrastructure Services Luxembourg SARL and another v The Kingdom of Spain; Border Timbers Limited and another v Republic of Zimbabwe [2024] EWCA Civ 1257, 22 October 2024

Construction – Adjudication
The Technology and Construction Court (“TCC”) has criticised the parties for inappropriately assuming that a claim was “adjudication business” simply because it had an adjudication background, even though it did not fall within the types of matter identified in the TCC Guide (such as an application in response to an anticipated enforcement application). The result was an expedited hearing where there was no other reason for an expedited hearing and witness statements that were not compliant with PD 57AC. The parties should have applied to the court for guidance on whether a Part 7 or Part 8 procedure was appropriate. Although the judge decided the application, it was not dealt with in the most efficient or proportionate way as a result of these errors.
Workman Properties Ltd v Adi Building and Refurbishment Ltd [2024] EWHC 2627 (TCC), 21 October 2024

Jurisdiction
In a dispute arising out of an interest rate swap under an ISDA Master Agreement, the court held that the bank had a good arguable case that its claim against the Italian company borrower was governed by an English jurisdiction agreement. The borrower argued that it lacked capacity under Italian law to enter into a speculative derivatives transaction and commenced proceedings in the Italian court to invalidate the transaction. The jurisdiction clause was exclusively in favour of the English courts and was binding on the borrower. A lack of capacity to enter into the derivatives transaction did not mean a lack of capacity to enter into the Master Agreement. Even if the jurisdiction agreement was non-exclusive, the agreement also contained a waiver of any suggestion that England was not a convenient forum and this strengthened the argument that the English courts had jurisdiction to deal with the claim.
Dexia Credit Local SA v Patrimonio del Trentino SpA [2024] EWHC 2717 (Comm), 25 October 2024

Insurance – COVID 19
The Court of Appeal has rejected a claim by insurance policyholders that they were entitled to be reimbursed under a business interruption insurance policy for losses during the pandemic. The decision involved interpretation of the ‘Non-Damage Denial of Access’ clause in the policy. The entertainment venues were closed as a result of regulations made by the Secretary of State for Health and Social Care in March 2020. The clause required the business to be prevented or hindered by “any policing authority” and the Secretary of State did not fall into that category. The question was one of objective interpretation according to what a reasonable person would have understood the language to mean. It would be an unnatural meaning to regard the Secretary of State as a “policing authority”. The claims were dismissed.
International Entertainment Holdings Ltd v Allianz Insurance PLC [2024] EWCA Civ 1281, 28 October 2024

Should you wish to discuss any of these cases in further detail, please speak with a member of our London dispute resolution team below, or your regular contact at Watson Farley & Williams: