WILHELM FINANCE INC V ENTE ADMINISTRADOR DEL ASTILLERO RIO SANTIAGO

[2009] EWHC 1074 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Teare, 19 May 2009

Civil procedure – Whether defendant a separate entity distinct from the executive organs of the state – Whether capable of suing and being sued – Whether a department of government – Executive organs of government – State Immunity Act 1978, sections 12 and 14

In an action on a shipbuilding contract entered into between the claimant and the defendant, the defendant had been served with proceedings. This was the defendant’s application to set aside service of the order of Flaux J, permitting substituted service on the defendant, which was a body created by decree in 1993 to manage or administer the shipyard until it was privatised, described in the shipbuilding contract as a corporation organised and existing under the laws of Argentina. Teare J dismissed the application, holding that whilst the defendant was owned and controlled and financed by the state, its functions and activities appeared to be those of a commercial shipyard which built and repaired ships for both the Argentine Navy and private shipowners. The defendant was capable of suing and being sued: it had been sued in Argentinian courts twice in recent years; it had entered into shipbuilding contracts in its own name; its constitution, function and powers indicated as much; it had a domicile and the power to sign agreements; and it contracted not only with the Argentinian Navy but also with foreign shipowners such as the claimant. The defendant was distinct from the executive organs of the government: the functions of the defendant did not appear to fall within Lord Wilberforce’s description of sovereign or public acts in I Congreso del Partido [1983] 1 AC 244; the work of the defendant was commercial work in pursuance of commercial policy rather than governmental acts. The characteristics making the defendant “of the state” were not sufficient to make it a department of government or an entity indistinct from the executive organs of government. It was therefore a separate entity within section 14 of the State Immunity Act and the service had not been in conflict with section 12 of the Act.