State immunity

An arbitration award against a state is not easily enforced. Section 13 of the State Immunity Act 1978 gives immunity to the assets of a state unless the assets are in use or are intended for use for commercial purposes, as defined in s3 of the 1978 Act. Orascom Telecom Holding SAE v Republic of Chad [2008] EWHC 1841 (Comm) considers the meaning of the s3 definition.

Orascom: the facts

In 2000 Orascom established, at the request of the Republic of Chad, a joint venture telecommunications company with ST, the Chad national telecommunications company. The agreement between Orascom and ST contained an arbitration clause specifying ICC arbitration in Geneva. Orascom, in reliance on the agreement, invested substantial sums in the joint venture. Thereafter, Chad intervened and adopted a series of measures designed to force Orascom out: those measures included freezing bank accounts, closing business premises, shutting down the network and cancelling the operating licence.