Taurus Petroleum Ltd v State Oilmarketing Company

MR JUSTICE FIELD: I will grant leave to appeal the situs of the debt issue. I refuse leave in respect of the other issues on the basis that I do not consider there to be a real prospect of success upon them. The Privy Council has stated what the approach is now to be in determining whether there is a separate legal entity or whether the entity is part and parcel of the state which created it. Those principles have been applied to the specific facts in this case and a judgment made thereon. I do not think there is a sufficient prospect of the Court of Appeal departing from the judgment made on the facts identified in my decision for it to be appropriate to grant leave.

Further, as to whether or not SOMO was acting as a matter of sovereign authority, I think that there is no real prospect of success in that finding being reversed. So I give leave in respect of the situs of the debt alone, bearing in mind that I did depart from the approach that was taken by the Court of Appeal in Power Curber.

I shall grant a stay pending the determination of the appeal with liberty to SOMO to apply to the Court of Appeal depending on the progress that the appeal is making. Accordingly, if Taurus sit on their leave to appeal and do not prosecute the appeal expeditiously, SOMO will have liberty to apply to the Court of Appeal to have the stay lifted.

I do not give liberty to apply to the Court of Appeal on the sovereign immunity point Mr Sarooshi has taken, but that does not mean to say, of course, that SOMO may not take such course as it is advised to take in respect of this aspect of my decision.

I should say briefly that I do not think that the State Immunity Act prevents the court from making case management orders in the light of leave to appeal having been granted to a party that challenges a decision that the property sought to be the subject of execution is the property of the National Bank of the state, particularly where one of the foundations of that decision flowed out of the interpretation of the letter of credit. If there had not been a joint promise made to the Central Bank of Iraq as well as to SOMO, then no immunity in respect of the property of the Central Bank of Iraq would have arisen, on the analysis that was adopted in the judgment.

Just to repeat, I grant a stay pending determination of the appeal. The stay is made on the basis that the appeal will be expeditiously prosecuted and SOMO will have liberty to apply in respect of the progress in the appeal.

I propose to make an order for costs on an issue basis. As the judgment reveals, there were a number of distinct issues that were identified by SOMO for the assistance of the court in dealing with their application.

SOMO lost on the question as to whether SOMO was a separate entity or part and parcel of the Iraqi state. There was a great deal of evidence adduced in respect of that issue. SOMO lost on the question as to whether it had acted in the exercise of sovereign authority. That was not an argument strongly pursued by Mr Sarooshi; sensibly, because it was an argument that was distinctly weak.

SOMO also adduced very considerable evidence as to Iraqi law, both from an expert who filed two witness statements, and also from individuals who had experience of the management of SOMO and, if I remember correctly, someone from within the Central Bank of Iraq.

It succeeded on one issue that touches sovereign immunity, namely that execution was being sought in respect of property of the Central Bank of Iraq and otherwise as to the true construction of the letter of credit and the scope of CPR part 57.

In those circumstances, I think it just and appropriate to adopt an issue approach and, doing the best I can, I propose to order that Taurus pay 30 per cent of SOMO's costs of the application. That 30 per cent should be subject to the standard assessment if not agreed.