United Kingdom / 13 November 2006 / England and Wales, Court of Appeal / Svenska Petroleum Exploration AB v. Government of Lithuania and AB Geonafta / B6/2005/2737
| Country | United Kingdom |
| Court | England and Wales, Court of Appeal |
| Date | 13 November 2006 |
| Parties | Svenska Petroleum Exploration AB v. Government of Lithuania and AB Geonafta |
| Case number | B6/2005/2737 |
| Source |
[2006] EWCA Civ 1529, [2007] QB 886 | online: BAILII |
| Languages | English |
| Summary | Svenska, a Swedish company, entered into a joint venture agreement relating to oil reserve exploitation with a Lithuanian State-owned entity. The agreement was governed by Lithuanian law and provided for arbitration in Denmark under the rules of the International Chamber of Commerce. It also contained an express irrevocable waiver of all sovereign immunity rights by the Lithuanian government and the State-owned entity. While the Lithuanian government was not a party to the agreement, it had manifested its intention in writing to be bound as if it were a signatory. The State-owned entity was later privatized. A dispute arose, which Svenska referred to arbitration against both the newly privatized entity and the Lithuanian government. The tribunal’s interim award held that the Lithuanian government was bound by the arbitration agreement and that the tribunal had jurisdiction. The final award was issued in favour of Svenska. Svenska obtained an order granting leave to enforce the final award in the United Kingdom under section 101 of the Arbitration Act 1996 (U.K.) (providing for the enforcement of NYC awards as judgments). The High Court refused an application to have the order set aside made by the Lithuanian government on the basis of sovereign immunity. The Court of Appeal held that the Lithuanian government was bound by the arbitration agreement. The Court arrived at this conclusion by analyzing the parties' common intentions, which it considered the correct approach under the applicable Lithuanian law. The Court further held that, under section 9 of the State Immunity Act 1978 (U.K.), a State is not immune in U.K. court proceedings relating to arbitration when it has agreed to arbitrate in writing. Section 9's scope included proceedings to enforce a NYC award. In so ruling, the Court noted an argument by counsel that Parliament was unlikely to have intended otherwise, in light of the passing of the Arbitration Act 1975 (U.K.) a few years prior, giving effect to the NYC. Accordingly, the Court concluded that the Lithuanian government was not immune from the enforcement proceedings. |
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