Factual and Procedural Background
The dispute concerns control over the accounts of the Libyan embassy in London held with the Plaintiff, Company A. The Defendant is the National Transitional Council (NTC) of the State of Libya, which was recognised by Her Majesty's Government on 27 July 2011 as the sole governmental authority in Libya. The Foreign & Commonwealth Office (FCO) participated in the hearing, while legal representatives of the previously recognised government were given an opportunity to attend but ultimately did not appear due to inability to obtain instructions.
The Plaintiff operates a bank in London providing services in the Middle East and North Africa region and had long-standing accounts with the Libyan embassy, formerly known as the People's Bureau of the Great Socialist People's Libyan Arab Jamahiriya. These accounts have been used to fund various expenses, including substantial monthly payments for student grants to Libyan students studying in the UK.
Following political disturbances in Libya and the imposition of international sanctions, the UK government recognised the NTC as the legitimate government, leading to conflicting instructions received by the Plaintiff from representatives of the former regime and the NTC regarding the operation of the embassy accounts. The Plaintiff sought urgent declaratory relief under Part 8 CPR to clarify its position and enable continued payments to students dependent on the funds.
The proceedings were issued on 19 August 2011. The Plaintiff sought a declaration that it was entitled to act on instructions from the embassy established by the NTC in relation to nine accounts held for the Bureau. The previously recognised government did not appear at the hearing after requesting an adjournment but failing to secure instructions. The NTC acknowledged service, supported the Plaintiff's application, and did not raise state immunity as a defence.
The urgency of the matter was emphasised due to the financial reliance of over 2000 Libyan students on the funds disbursed from these accounts, with the Plaintiff receiving numerous inquiries and facing potential hardship for the students if payments were delayed.
Legal Issues Presented
- Is the court satisfied that the NTC is, and the former regime is not, the Government of Libya?
- Does the Libyan embassy and its Chargé d'Affaires constitute the accredited diplomatic mission of Libya to the United Kingdom?
- Can the embassy give instructions to the Plaintiff in relation to the accounts?
- Is it appropriate to grant the Plaintiff the declaration it seeks?
- Should the hearing be adjourned to enable the former regime to be present?
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Republic of Somalia v Woodhouse & Carey (Suisse) S.A. [1993] QB 54 |
Approach to recognition of foreign governments by courts and investigation of factual position regarding legitimacy. |
Distinguished on facts as the current case involved a government recognised by Her Majesty's Government; no factual investigation was necessary beyond official recognition. |
| Sierra Leone Telecommunications Co Ltd v Barclays Bank plc [1998] All ER 821 |
Similar approach to recognition of governments and factual inquiries by courts. |
Distinguished for same reasons as Somalia; official recognition by UK government was decisive. |
| Gur Corporation v Trust Bank of Africa Ltd [1987] 1 QB 599 |
Recognition of foreign governments is conclusive in UK courts; the Crown speaks with one voice in foreign relations. |
Foreign Secretary's certificate was conclusive that NTC is the legitimate government, binding on the court. |
| The Arantzazu Mendi [1939] AC 256 |
Principle that the State cannot speak with two voices; executive recognition is binding on the judiciary. |
Supported the conclusive effect of the Foreign Secretary's certificate regarding government recognition. |
| Khurts Bat v The Investigating Judge of the German Federal Court [2011] EWHC 2029 |
Acceptance of accreditation to a permanent diplomatic mission is a matter of Royal Prerogative and a fact of state. |
Confirmed that the accreditation of the Chargé d'Affaires by the UK government is a matter for the executive and accepted by the court. |
| Alcom Ltd v Republic of Colombia [1984] AC 580 |
Diplomatic mission accounts are indivisible and held for the mission; immunity principles apply to such accounts. |
Supported finding that all nine accounts were held as accounts of the diplomatic mission and should be operated by those accredited to it. |
| City of Berne v Bank of England (1804) 9 Ves. Jun. 346 |
An unrecognised state cannot sue or be sued in English courts. |
Supported rejection of locus standi for the former regime and refusal to adjourn the hearing. |
Court's Reasoning and Analysis
The court began by considering whether the NTC is the legitimate government of Libya. It held that the Foreign Secretary's certificate, issued under the Royal Prerogative, conclusively established the NTC as the sole government recognised by the UK, and that the former regime was no longer recognised. This principle is grounded in the constitutional doctrine that the Crown speaks with one voice in foreign relations, and the judiciary must defer to the executive's recognition decisions.
Next, the court addressed whether the Libyan embassy and its Chargé d'Affaires constituted the accredited diplomatic mission to the UK. Although the certificate did not explicitly address this, the court relied on letters from the Foreign & Commonwealth Office confirming the accreditation of the Chargé d'Affaires appointed by the NTC. The court treated this as a "fact of state," a matter exclusively within the executive's discretion, which the court accepted.
The court then examined whether the embassy could give instructions to the Plaintiff bank regarding the accounts. It found that the nine accounts were held in the name of the Libyan People's Bureau, the diplomatic mission, and thus should be operated according to the instructions of those accredited to the mission. Since the UK government no longer recognised the former regime but recognised the NTC and its Chargé d'Affaires, the bank could, in principle, act on instructions from the NTC's representatives. However, the bank must ensure it has a properly given mandate before executing instructions.
Regarding the appropriateness of granting declaratory relief, the court noted that while such claims are unusual, the exceptional circumstances and urgency justified a declaration. The declaration would enable the bank to act safely on instructions from the newly accredited head of mission, facilitating payments critical to the welfare of Libyan students in the UK.
Finally, on whether to adjourn the hearing to allow the former regime to participate, the court rejected this on discretionary grounds due to the urgency and because the former regime lacked locus standi in English courts following the Foreign Secretary's certificate. The court emphasized that unrecognised governments cannot sue or be sued in the courts.
Holding and Implications
The court granted the Plaintiff a declaration that it is entitled to act on the instructions of the embassy established by the National Transitional Council of the State of Libya in respect of the nine accounts held with the Plaintiff.
Holding: The National Transitional Council is the sole legitimate government of Libya recognised by the UK, and its accredited embassy representatives have authority to operate the embassy accounts held by the Plaintiff.
The decision resolves the immediate impasse regarding the operation of embassy accounts, enabling the continuation of payments to Libyan students dependent on these funds. No new precedent was established beyond applying settled principles of recognition, diplomatic accreditation, and state immunity within the context of urgent declaratory relief.