State Immunity & Forum Non Conveniens

23 April, 2021

Judgment was handed down on 23 April 2021 by Mr Justice Butcher in the Commercial Court in Dynasty Company for Oil and Gas Trading Limited v (1) The Kurdistan Regional Government of Iraq; and (2) Dr Ashti Hawrami [2021] EWHC (Comm) 952.

The case concerned a US$ 1.682 billion claim brought by Dynasty, an Iraqi oil and gas company, against the Kurdistan Regional Government of Iraq and Dr Ashti Hawrami, who was until July 2019 the KRG’s Minister of Natural Resources.

Dynasty alleged that the KRG, acting through Dr Hawrami, wrongfully refused to approve a change of control, from a subsidiary of the oil major, Repsol, to Dynasty, of companies operating two oil and gas fields in the Kurdistan Region of Iraq.  Those companies were parties to Production Sharing Contracts with the KRG.

The KRG has not been served with the claim.  Dr Hawrami was served in person at Heathrow Airport, and subsequently made a challenge to the jurisdiction of the English Court, contending (amongst other things) that he is immune from the Court’s jurisdiction under the State Immunity Act 1978, and that the claim should be stayed under the doctrine of forum non conveniens in favour of the courts of the Kurdistan Region of Iraq.

Butcher J upheld Dr Hawrami’s challenge to the jurisdiction, which was heard over 4 days in February 2021, and involved the cross-examination of experts on the Iraqi Constitution.  He held that:

  • Dr Hawrami was entitled to state immunity under section 14(2) of the State Immunity Act 1978, on the basis that (1) the acts of the KRG which the proceedings related to (namely, the entry by the KRG into the Production Sharing Contracts, and the granting by the KRG of consent to a change of control of the counterparties to those contracts) constituted an exercise of the sovereign authority of the State of Iraq; and (2) Dr Hawrami had been acting as the servant or agent of the KRG at the relevant time, and was thus protected by the immunity to which the KRG was entitled.
  • The Brussels Recast Regulation did not apply to the proceedings, because the proceedings were not a ‘civil or commercial matter’ for the purposes of Article 1 of the Recast Regulation.  In consequence, the Court had a discretion to stay the proceedings on the grounds of forum non conveniens.  Exercising that discretion, Butcher J determined that the Courts of the Kurdistan Region of Iraq, rather than the Courts of England and Wales, were the appropriate forum for the determination of the dispute.

Graham Dunning QC, Anton Dudnikov and Catherine Jung acted for Dr Hawrami, the Second Defendant, instructed by Duncan Speller and Michael Howe of Wilmer Cutler Pickering Hale and Dorr LLP.