Lorem ipsum
Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna
Lorem ipsum
Lorem ipsum dolor sit amet, consectetuer adipiscing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna
Playing for time – claiming to be a sovereign state
This case arises from a settlement agreement entered into in June 2020. Surinam Airways (“SLM”) agreed to pay AELF MSN 242, LLC $4,125,000.00 by monthly instalments and in exchange, AELF MSN 242, LLC agreed to release its claim for breach of an aircraft lease agreement return conditions and a claim for a much larger amount.
The excuse for non-payment was the Covid-19 pandemic - see Frustration of Contract and Covid.
SLM requested, and AELF agreed, that payments would begin in December of 2020, which gave SLM a payment “holiday” for six months, during Covid. SLM failed to make payments when due.
AELF issued proceedings in the Commercial Court in London.
In response to AELF’s claim, SLM raised a very technical argument that the airline was not served correctly under the English State Immunity Act because the airline is, according to the airline, a sovereign state.
This argument was wholly without merit.
SLM’s own evidence in support of its application, the witness statement of its chief legal officer, clearly states that SLM is an entity that is separate from the state.
Even if the airline were a state, it would not have immunity in relation to commercial activities.
The aircraft lease agreement, from which this dispute stems, contains an express waiver of sovereign immunity.
Even if SLM were a state and needed to be served in a specific way, the airline consented to service of process by the bailiff in Suriname.
It was clear that SLM was merely playing for time.
At the end of the day, regardless of whether service of process was or may need to be effectuated by a particular method, SLM breached its obligations to AELF. For that, SLM has offered no defence because it has none. To the contrary, the CEO has been quoted in the media as saying, “"I'm going to solve the problem with the leasing company and this debt is just a legacy from the past of the previous management.”
It had obligations, which it was continuously failing to meet.
AELF took SLM’s breach of its contractual obligations and these delay tactics seriously: it had also instituted proceedings against SLM in Suriname to freeze assets in order to satisfy the judgment which AELF believes it will secure before the English court.
The English Court decided to “dismiss SLM’s application challenging the Court’s jurisdiction on the ground that it had submitted to the Court’s jurisdiction and, if applicable, on the ground that it had appeared in the proceedings within the meaning of section 12(3) of the State Immunity Act 1978.”
To deal with a further argument made by the airline that a state cannot submit to the jurisdiction by a common law waiver, the next stage of the proceedings was a hearing which determined whether SLM was a state and, even if it were a state (which it was clearly not), whether it consented to service by collection of the documents initiating the proceedings from the bailiff in Surinam by the Manager of Legal Affairs of SLM pursuant to an appointment made by exchange of emails.
The judgment is AELF MSN 242, LLC (a Puerto Rico limited liability company) v. De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways Neutral Citation Number: [2021] EWHC 3482 (Comm)
It will be interesting to see how the tactics of SLM in this case impact on that company’s ability to transact future business with third parties.
Judgment was then given on the issue as to whether or not the Defendant is a state and on the method of service. The case is AELF MSN 242, LLC (a Puerto Rico limited liability company) v. De Surinaamse Luchtvaart Maatschappij N.V. D.B.A. Surinam Airways Neutral Citation Number: [2022] EWHC 544 (Comm).
As indicated above, in response to AELF’s claim, SLM raised a very technical argument that the airline was not served correctly under the English State Immunity Act because the airline was, according to the airline, a sovereign state. I suggested that this argument was wholly without merit and that even if SLM were a state and needed to be served in a specific way, the airline had consented to service of process by the bailiff in Suriname.
After considering all the arguments in detail, Peter MacDonald Eggers QC (sitting as a Deputy Judge of the High Court) concluded as follows,
(1) SLM was not entitled to be served with the Claim Form in accordance with section 12(1) of the State Immunity Act 1978, because SLM was a “separate entity” and a separate entity is not entitled to the privilege granted by section 12(1).
(2) If this conclusion is wrong, SLM nonetheless agreed to be served in the way it was served and so such service was effective in accordance with section 12(6).
(3) It follows that SLM’s application contesting jurisdiction must be dismissed on these grounds in addition to its submission to jurisdiction and appearance within the meaning of section 12(3).
There was then the question as to whether the airline would seek to contest the case on its merits. There had been no indication as to what such defence might be especially given the CEO’s statement to the press that, “I’m going to solve the problem with the leasing company and this debt is just a legacy from the past of the previous management.”
However, the airline then appealed.
It sought permission to appeal to appeal on three grounds, as follows: –
Ground 1
That “appears in proceedings” in section 12(3) of the SIA must refer to any act of waiver, whether of the common law or statutory type, which disables the defendant from disputing jurisdiction.
Ground 2
The Judge erred in law in concluding that SLM was not entitled to be served with the Claim Form in accordance with section 12(1) of the SIA because:
2.1. SLM was a “separate entity” and a separate entity is not entitled to the privilege granted by section 12(1).
2.2. SLM’s entry into the agreement which gives rise to these proceedings was not an act in the exercise of Suriname’s sovereign authority.
Ground 3
Even if section 12(1) of the SIA does apply to SLM, SLM agreed to accept service in an alternative manner within the meaning of section 12(6) of the SIA.
Phillips LJ, who dealt with the application without a hearing, pithily refused permission to appeal for the Reasons set out below.
“In view of the clear wording of s.14 of the State Immunity Act 1978, it is not remotely arguable that the service provisions in s. 12(1) of that Act extend to separate entities such as the defendant/applicant. The view of Butcher J in Dynasty Co for Oil and Gas Trading Ltd v Kurdistan Regional Government of Iraq [2021] EWHC 952 (Comm) is plainly right.
Ground 2 of the appeal therefore has no real prospect of success. As grounds 1 and 3 would only arise if the applicant were to succeed on ground 2, it is not appropriate to grant permission to appeal.”
The next step in the proceedings was the hearing of a summary judgment application.
The next step in the proceedings was a hearing of a summary judgment application. SLM failed to file any evidence, indicated that it would not attend the hearing and its solicitors came of the record two days before the hearing.
The judge awarded AELF the full amount of the claim (several million US dollars) plus interest and costs. So far, no payment of the judgment has been received and execution procedures will be followed.
Steven Loble represented AELF with Hannah Brown KC
International & Commercial Litigation
Depositions, enforcment of foreign judgments, public and private international law
StevenLOBLE