L R Avionics Technologies Ltd v The Federal Republic of Nigeria & Anor

Factual and Procedural Background

The Defendant State owns office premises at 56/57 Fleet Street in London, which it has leased to Company A for providing visa and passport services on behalf of the Defendant State's High Commission, alongside other permitted office uses. The Plaintiff, a company registered in Israel, entered into a contract with the Defendant State for military equipment supply governed by Nigerian law and subject to arbitration in Nigeria. Following a dispute, an arbitration award was made in favor of the Plaintiff. After unsuccessful attempts to set aside the award and enforce it in Nigeria, the Plaintiff sought enforcement in England. The Plaintiff obtained permission to enforce the arbitration award and a Nigerian Federal High Court judgment, secured a final charging order over the Fleet Street property, and initiated proceedings for an order for sale of the property. The Defendant contends the property is immune from execution under the State Immunity Act 1978 and seeks to set aside the charging order. Several procedural irregularities occurred during enforcement proceedings, including improper service and timing issues, which the court acknowledged but chose to address the substantive immunity issues first.

Legal Issues Presented

1. Whether the arbitration award can be enforced against the Defendant State in England.
2. Whether the Nigerian Federal High Court judgment can be enforced in England.
3. Whether the Fleet Street property is "in use for commercial purposes" within the meaning of section 13(4) of the State Immunity Act 1978, thereby subject to enforcement.
4. Whether the property forms part of the Defendant State's diplomatic mission, affecting its immunity status.

Arguments of the Parties

Defendant's Arguments

• The Nigerian judgment is not capable of recognition under section 9 of the Administration of Justice Act 1920 as it falls outside the scope of section 31 of the Civil Jurisdiction & Judgments Act 1982.
• The Fleet Street premises are "property of a State" immune from enforcement under section 13 of the State Immunity Act 1978.

Plaintiff's Arguments

• The arbitration award can be enforced under section 101 of the Arbitration Act 1996.
• The Nigerian judgment can be enforced under section 9 of the Administration of Justice Act 1920 because enforcement proceedings "relate to the arbitration" within the meaning of section 9 of the State Immunity Act.
• The Fleet Street property is "in use for commercial purposes" as defined in section 13(4) of the State Immunity Act, making it subject to enforcement via charging order and sale.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
AIC Ltd v Federal Government of Nigeria [2003] EWHC 1357 (QB)	Recognition of foreign judgments against states and immunity considerations under section 9 of the Administration of Justice Act 1920.	Held that judgments against states should not be enforced where immunity applies; however, this was distinguished as non-arbitration related and not challenged by Plaintiff’s counsel.
Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] EWCA Civ 1529, [2007] QB 886	Enforcement proceedings relating to arbitration awards are not immune, but enforcement by execution on state property is immune unless commercial exception applies.	Court adopted the distinction; enforcement of award registration allowed without immunity, but execution on property subject to immunity except under commercial use exception.
NML Capital Ltd v Republic of Argentina [2011] UKSC 11, [2011] 2 AC 495	Clarification that section 9 lifts immunity for enforcement of arbitration awards against states.	Supreme Court approved Svenska Petroleum distinction; confirmed arbitration awards enforcement is not immune.
SerVaas Inc v Rafidain Bank [2012] UKSC 40, [2013] 1 AC 595	Definition and interpretation of "in use for commercial purposes" under section 13(4) of the State Immunity Act.	Court emphasized ordinary meaning of "in use for commercial purposes" and that nature of activity on the property is determinative.
Pearl Petroleum Co Ltd v Kurdistan Regional Government of Iraq [2015] EWHC 2261 (Comm), [2016] 4 WLR 2	Commercial transactions by states may be entered into in exercise of sovereign authority; commercial characteristics alone do not exclude sovereign authority.	Applied to reject narrow view that commercial lease alone determines commercial use; lease may be sovereign act despite commercial features.
Alcom Ltd v Republic of Columbia [1984] AC 580	Contracts for supply of services qualify as commercial transactions even if entered into by a state exercising sovereign authority.	Accepted possibility of contract between state and agent being commercial transaction but distinguished from property use under section 13(4).
Norsk Hydro ASA v State Property Fund of Ukraine [2002] EWHC 2120 (Comm)	Time for acknowledging service under section 12(2) of State Immunity Act; jurisdictional implications of default judgments against states.	Clarified that the critical date for jurisdiction is when judgment is given, not when application is made.

Court's Reasoning and Analysis

The court first addressed whether the arbitration award and Nigerian judgment could be enforced against the Defendant State. It held that, under section 9 of the State Immunity Act 1978, the Defendant State waived immunity for proceedings relating to arbitration, allowing enforcement of the arbitration award under the Arbitration Act 1996. The Nigerian judgment, while not enforceable under the Arbitration Act, could be enforced under the Administration of Justice Act 1920 as part of the arbitration enforcement process, as the court accepted that enforcement proceedings for the judgment "relate to the arbitration."

Regarding the immunity of the Fleet Street property, the court examined section 13 of the State Immunity Act, which protects state property from enforcement unless it is "in use for commercial purposes." The Defendant State's Acting High Commissioner certified the property was used for consular activities, which are immune. The Plaintiff argued the property was used commercially because it was leased to Company A, which conducts visa and passport services and other business activities.

The court analyzed the nature of the use from the perspective of the State, not the lessee. It distinguished between the commercial character of the lessee's activities and the sovereign public function performed on the property—processing visa and passport applications on behalf of the Defendant State. It held that outsourcing this consular function to an agent did not convert the property’s use into commercial use. The lease and fees charged did not alter the fundamental consular nature of the property’s use.

The court further rejected arguments that ancillary activities by the agent or the commercial features of the lease converted the use to commercial purposes, emphasizing that the relevant inquiry is the actual use of the property by the State. It also found no evidence that the property formed part of the diplomatic mission or consular premises under relevant legislation, and thus no additional immunity arose from that status.

Finally, the court noted procedural irregularities in the enforcement process but chose not to decide the case on these grounds, as the substantive immunity ruling rendered enforcement impermissible regardless.

Holding and Implications

The court's final decision was to SET ASIDE the charging orders against the Fleet Street property.

The holding establishes that the property, although leased to a private company performing visa and passport services, is not "in use for commercial purposes" under section 13(4) of the State Immunity Act 1978 because the activities constitute consular functions of the Defendant State. Consequently, the property is immune from enforcement of the arbitration award and related judgment.

This decision directly prevents the Plaintiff from enforcing the judgment against the property in England and upholds the principle that outsourcing consular functions to a private agent does not negate state immunity for property used in those functions. The ruling does not set a new precedent but applies established legal principles to the facts of outsourcing consular services.