Embarrassing a foreign state

Korea National Insurance Corporation v Allianz Global Corporate & Speciality AG CA TLR 22 December

There was no authority to support the judge’s view that, where, in a commercial context, allegations are made against a foreign state not in relation to some sovereign act carried out in its own jurisdiction, but in relation to acts which affected the rights of a party under a commercial contract, the court should exercise restraint to the extent of not being prepared to decide the issue, at least without some indication from the executive whether a decision would embarrass diplomatic relations between the UK and that state. If a foreign state were an insured under an insurance contract, the insurers could not be precluded from alleging a fraudulent claim simply because that might embarrass the foreign state. It would not be any different if a state entity made the claim and it was asserted that both that entity and the state owner were involved in the fraud.