In SerVaas Incorporated v Rafidain Bank & Republic of Iraq & Ors  EWCA Civ 1256 the Court of Appeal (Stanley Burnton LJ and Hooper LJ, Rix LJ dissenting) has maintained the immunity of Iraqi assets held in London that are intended for use for the Development Fund for Iraq from execution under the State Immunity Act 1978.
In October 2010 SerVaas issued an application for a Third Party Debt Order in relation to certain claims held by Iraq in the Scheme of Arrangements of Rafidain Bank (an Iraqi state-owned entity). Those claims had been acquired as a result of the worldwide process of sovereign debt restructuring that has been taking place since the fall of the Saddam regime. It was intended that any money realised from the claims would be paid to the Development Fund for Iraq, a fund established by the United Nations Security Council and intended for use for the benefit of the Iraqi people.
At first instance Arnold J held that Iraq's claims in the Scheme were immune from execution because they were not in use or intended for use for commercial purposes, so as to come within the exception to the immunity established by the 1978 Act. The Court of Appeal has upheld that conclusion. Giving the leading judgment, Stanley Burnton LJ held that the question of whether or not property was acquired as part of a commercial transaction did not inform the question of whether it was currently in use for a commercial purpose. Rix LJ, dissenting, considered that it was at least arguable that the debt was in use for a commercial purpose, namely the working out of the debt-purchase investment that had led to Iraq's acquisition of a claim in the Scheme.
SerVaas' application for permission to appeal to the Supreme Court was rejected.
The judgment is here.
Mark Howard QC and Oliver Jones appeared on behalf of the Republic of Iraq.