Enforcing arbitral awards against the property of a central bank

Author: | Published: 1 Dec 2005
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Baker Botts




+44 207 726 3412


+44 207 726 3512

In, AIG Capital Partners v Kazakhstan (October 2005), AIG attempted to proceed against the Kazakh Central Bank's (NBK) assets (consisting of cash accounts and securities) held by a London custodian (AAMGS) in an enforcement action of an arbitral award made in its favour against the Republic of Kazakhstan (RoK).

AIG sought to enforce the award by obtaining third party debt and charging orders against AAMGS, which held assets for and on behalf of NBK. AIG contended that the cash and securities were RoK's assets and could be the subject of such orders. The respondents argued that the cash accounts represented a debt due by AAMGS to NBK, and as such did not constitute a "debt due or accruing due to" the judgment debtor (that is, RoK) for the purposes of CPR Pt 72.2. The respondents also invoked section 14(4) of the UK State Immunity Act, 1978 (SIA). Section 14(4) provides that the property of a state's central bank shall not be regarded for certain purposes as "in use or intended for use for commercial purposes." The SIA considers such assets immune from enforcement. Therefore, the respondents claimed, immunity barred enforcement of the award against the central bank.

The High Court (Aikens J) found that the cash accounts constituted a debt owed by AAMGS to NBK, and that RoK had no contractual rights to that debt against AAMGS. The court therefore held it had no power under CPR Pt 72.2(1)(a) to make a third party debt order in respect of the cash accounts since there was no debt owed to the judgment debtor. The Court further found that NBK's assets were the "property of a central bank" within the meaning of section 14(4) of the SIA and, accordingly, the UK assets in which NBK had an interest were immune from the enforcement jurisdiction of UK courts.

Peter Griffin and Devashish Krishan