The dispute involved Zhongshan Fucheng Industrial Investment Co Ltd (“Zhongshan”), a Chinese company, and the Federal Republic of Nigeria (“Nigeria”). Zhongshan sought to enforce an arbitration award amounting to approximately US$55.6 million against Nigeria. To satisfy this award, Zhongshan applied for final charging orders over two residential properties in Liverpool owned by Nigeria.

Background:

Zhongshan argued that the properties in question were not protected by state immunity under Section 13(4) of the State Immunity Act 1978 (“SIA”) as they were used for commercial purposes, being rented out to private tenants for income generation. The claimant emphasised that these properties had not served consular or diplomatic functions for over three decades and thus did not qualify for immunity as sovereign assets. Zhongshan also maintained that the interim charging orders were properly served, as they formed part of the enforcement process and did not require the special service provisions outlined in Section 12(1) of the SIA. In response, Nigeria contended that the properties were immune from enforcement under the SIA, asserting that they had been used for consular purposes in the past, preserving their non-commercial status. Secondly, Nigeria argued that the burden of proof was on Zhongshan to demonstrate commercial use, which it claimed had not been satisfactorily established. Additionally, Nigeria challenged the validity of service, asserting that the procedural requirements under the SIA had not been met, and claimed that enforcing against state-owned properties infringed upon its sovereign dignity and rights under international law.

Court’s Decision:

The court dismissed Nigeria’s objections and granted the final charging orders, allowing Zhongshan to enforce the arbitration award against the properties. In doing so, the court examined the applicability of state immunity under the SIA, particularly focusing on whether the properties were used for commercial purposes, which would negate immunity under Section 13(4) of the SIA. Evidence presented showed that both properties were rented out to private tenants unrelated to Nigeria’s diplomatic mission, indicating commercial use. The court found Nigeria’s claims that the properties were used for consular activities unsubstantiated, noting that they had been unused for such purposes for over three decades.

In terms of the service issue, the court clarified that interim charging orders are considered further steps in enforcement and do not require fresh service under Section 12(1) of the SIA. Therefore, the service was deemed proper.