Does state immunity prevent you from enforcing an ET or High Court judgment against a sovereign State?

Introduction

Consider the following scenario: you are advising a judgment creditor who successfully brought an Employment Tribunal (“ET”) claim against an embassy of a sovereign State. Despite the judgment creditor succeeding in the ET, the sovereign State decides not to pay up. Subsequently, the judgment creditor instructs a High Court Enforcement Officer (“HCEO”) to apply for a writ of control over the judgment debtor’s assets in their diplomatic premises. The HCEO then informs the judgment creditor that they cannot carry out the writ of control in the diplomatic premises because of state immunity issues. What should the judgment creditor do?

In recent years, there has been a significant number of ET claims against diplomatic missions and a growing number of appellate decisions concerning diplomatic and state immunity in the ET context. However, what is relatively overlooked is what happens when a judgment creditor needs to enforce judgment against a sovereign State.

In this article, I consider: (i) the extent to which state immunity protects a sovereign State’s property from becoming the subject of enforcement action; and (ii) the practicalities of enforcing an ET or High Court judgment against a sovereign State.

State immunity and enforcement of judgment – general principles 

Section 1 of the State Immunity Act 1978 (“SIA 1978” or the “1978 Act”) provides that a State is immune from the jurisdiction of the courts of the United Kingdom, unless if it falls under one of the exceptions set out in the 1978 Act.

Under the SIA 1978:

• A State is not immune in respect of proceedings of which it has submitted to the jurisdiction of the courts of the United Kingdom; section 2(1) SIA 1978.
• However, even where a State has submitted to the jurisdiction of the courts of the United Kingdom, the 1978 Act still imposes restrictions on a judgment creditor’s ability to enforce judgment against the property of a sovereign State.
• Section 13(2)(b) SIA 1978 state that “the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.” This is, however, subject to section 13(4) of the 1978 Act, which states:

“Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; but, in a case not falling within section 10 above [ships used for commercial purposes], this subsection applies to property of a State party to the European Convention on State Immunity only if—

1. the process is for enforcing a judgment which is final within the meaning of section 18(1)(b) below and the State has made a declaration under Article 24 of the Convention; or
2. the process is for enforcing an arbitration award.”

• According to section 17 SIA 1978, “Commercial purposes” means purposes of such transactions or activities as are mentioned in section 3(3) SIA 1978. In particular, section 3(3) states that a “commercial transaction” means:

(a)  any contract for the supply of goods or services;

(b)  any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and

(c)  any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority;

but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual.”

Apart from the 1978 Act, another key piece of legislation is the Diplomatic Privileges Act 1964 (“DPA 1964”). Schedule 1 of the DPA 1964 (which ratifies the Articles of the Vienna Convention on Diplomatic Relations, signed on 1961 (“the Convention”)) contains Article 22 of the Convention, which states:

“1. The premises of the mission shall be inviolable. The agents of the receiving State may not enter them, except with the consent of the head of the mission.

2. The receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity.

3. The premises of the mission, their furnishings and other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.”

As such, the circumstances in which a judgment creditor can enforce judgment against a sovereign State is limited. Unless if the judgment creditor seeks to enforce judgment against property owned by the sovereign State which is for the time being in use or intended for use for commercial purposes, the judgment creditor will face insurmountable obstacles due to state immunity.

Enforcing judgment against property used for commercial purposes

As set out above, a State’s property (except where it is used for commercial purposes) is immune from the process of enforcing judgment.

The following should be noted:

• It is not possible to obtain a third-party debt order against an embassy’s current account with a bank, in circumstances where the embassy uses the bank account to discharge normal expenses of the embassy. In those circumstances, the debt represented by the credit balance on the account is not property which is “in use or intended for use for commercial purposes”; see Alcom v Republic of Colombia [1984] A.C. 580 at pp 602-604.
• Execution may be issued against a credit balance of a bank account kept by a foreign State where the account was earmarked for the discharge of liabilities incurred in commercial transactions. Whether funds are “in use” for commercial purposes depends on their use by the State at the time of the attempted execution; see Alcom (cited above) and SerVaas Inc v Rafidan Bank [2012] UKSC 40 at §§16-19.
• Proceeds of oil sales in a borrower's account for the purpose of making repayments to the World Bank were commercial assets within s.13(4) SIA 1978 (and was therefore not immune from enforcement action); see Orascom Telecom Holding SAE v Republic of Chad [2008] 2 CLC 296.
• A certificate of the ambassador of a sovereign State to the effect that the property in question is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact, unless if the contrary is proved; see section 13(5) SIA 1978 and Orascom v Chad (cited above) at §24(iii).
• There is a strong presumption that the property of a state-owned company is not the asset of the State for enforcement purposes; La Generale des Carrieres et des Mines v FG Hemisphere Associates LLC [2012] UKPC 27 at §29-30.
• The SIA 1978 provides absolute immunity from the enforcement against the balances of bank accounts held in the name of a State’s central bank. Under section 14(4) of the 1978 Act, the State's central bank or other monetary authority's property is never to be regarded as in use for commercial purposes and so never liable to attachment or other enforcement action. Even if it is a separate entity, its property benefits from the protections of section 13 of the 1978 Act; see, for example, Taurus Petroleum Ltd v State Oil Marketing Co of the Ministry of Oil, Iraq [2017] UKSC 64 at §146.

Practicalities of enforcing judgment against a sovereign State

In an ordinary case, a judgment creditor could seek an order against the judgment debtor under CPR 71 to compel the judgment debtor to attend court and disclose information regarding their means and any other information needed to enforce judgment. This would then assist the judgment creditor in taking the necessary steps to enforce judgment.

However, pursing an order under CPR 71 against a diplomatic mission of a sovereign State is futile, since diplomatic missions (and their agents) enjoy immunity from the civil and administrative jurisdiction of the UK courts and could simply choose to ignore the order. In those circumstances, a court would not have any effective means to compel compliance or sanction non-compliance due to state and diplomatic immunity.

In light of the above, what should a judgment creditor do in circumstances where they are seeking to enforce a judgment debt against a sovereign State? Practically speaking, there are two solutions:

• Investigate property and company registers, or other public records to identify assets owned by the sovereign State and their uses. 
• It is also possible to seek disclosure from third parties under CPR 31.17 to assist in the enforcement of judgment. Examples of this includes seeking an order against banks or tenants that may hold information about assets or properties used for commercial purposes by the sovereign State (provided that those third parties are themselves not entitled to state immunity). It might be, however, too premature to seek an order under CPR 31.17 if the judgment creditor isn’t sure which third parties are likely to hold such information. Much will depend on what the judgment creditor is able to unearth in the investigation into the sovereign State’s assets.

It is of note that a lot of the case law concerning enforcement of judgment against sovereign States concerns high value commercial disputes, in which the judgment creditor is often very well resourced. By contrast, a judgment creditor seeking enforcement of an ET judgment against a sovereign State will almost invariably have limited resources given that the judgment creditor in this scenario will be a former embassy worker. 

This is significant, as in practice, a former embassy worker will not have the means to fund an asset tracing investigation firm to trace the assets owned by a sovereign State (which is something regularly done when a judgment creditor seeks to enforce a high value High Court judgment or arbitral award against a sovereign State). 

As such, enforcing judgment against a sovereign State is often easier said than done. Much will largely depend on whether the judgment creditor has the resources to instruct expert forensic investigators to ascertain whether the sovereign State owns any properties used for commercial purposes. Without a forensic investigator, identifying assets which are not covered by state immunity can be very difficult to achieve.

Lucas Nacif is a specialist employment and business disputes barrister at 42BR with prior experience in dealing with state immunity issues in the context of enforcing an ET judgment against a sovereign State.

Please contact Lucas’ clerks at 42BR Barristers ([email protected], [email protected] or [email protected]) should you wish to instruct him.

18th Jul 2025

Lucas Nacif

Call 2021