SerVaas v. Rafidian Bank & Others, UK Supreme Court, [2012] UKSC 40

SerVaas sought to recover money due to it under an agreement that it had entered into with the State of Iraq relating to the commissioning of a copper and brass processing factory in Iraq. It obtained a judgment against Iraq in the Paris Commercial Court and then obtained a Third Party Debt Order in England against the debts payable by the Rafidian Bank in London to Iraq. Iraq applied to discharge the Third Party Debt Order, claiming that the funds were immune from execution as they were not property that was “in use or intended for use for commercial purposes” in accordance with Sections 13(2)(b) and 13(4) of the State Immunity Act.

The Supreme Court unanimously dismissed the appeal. The Court did not consider that the origin of the funds was relevant, only how the State intended to use the property. In light of a certificate signed by the Iraqi ambassador in London that stated that the funds would not be used for any commercial purpose, the Court held that there was a presumption (which SerVaas had not rebutted) that the funds were subject to immunity, in accordance with Sections 13(2)(b) and 13(4) of the State Immunity Act.

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