A commercial debt due to the claimant from the former Iraqi government, and for which judgment had been obtained in France, had been bought from receivers by the new Iraqi Development fund. The appellants sought to secure their judgment in full by a Third Party Debt Order. The respondents had certified it to be a state debt and immune under section 13 of the 1978 Act. The claimants appealed against rejection of their request.
Held: The claim failed. The Act required the claimant to show a current or intended commercial use. An historical use was insufficient.
Rix LJ said: ‘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.’
Judges:
Rix, Hooper, Stanley Burnton LJJ
Citations:
[2011] EWCA Civ 1256
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
At Commercial Court – Servaas Incorporated v Rafidain Bank and Others ComC 14-Dec-2010
The claimant had supplied a factory to Iraq, but remained unpaid. Assets had been frozen in the respondent Iraqi bank, and with the new government, the liquidators were to pay assets to a fund who were, in turn to discharge debts pro rata. The . .
Cited by:
Appeal from – SerVaas Incorporated v Rafidian Bank and Others SC 17-Aug-2012
The appellant had contracted to construct a factory in Iraq. On the imposition of sanctions, the respondent bank’s assets were frozen. The appellant sought to recover the sums due to it, and obtained judgment in France. After the fall of Hussain, . .
Lists of cited by and citing cases may be incomplete.
International, Commercial
Updated: 26 September 2022; Ref: scu.448139