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Waiver of sovereign immunity upheld

The DIFC Court rejected a sovereign immunity defence argument in Pearl Petroleum Company Ltd & ors v The Kurdistan Regional Government of Iraq (KRG). This decision is a reminder of the importance of express waiver of immunity provisions in agreements with states and state entities, and how such provisions can avoid significant uncertainty and complex legal arguments on the existence and scope of sovereign immunity.

The claimant companies obtained orders from the DIFC Courts for the recognition and enforcement of two LCIA London seated arbitral awards totalling over USD2bn. KRG applied to set aside those orders on sovereign immunity grounds.

The DIFC Court dismissed KRG's argument and ruled that KRG had waived any sovereign immunity in an express contractual waiver of sovereign immunity. However, the DIFC Court left open the difficult question of whether foreign sovereign immunity is recognised in the UAE. Mr Justice Jeremy Cooke stated:1

Footnotes

1. See paragraph 25 of the Judgment.

Further information

This case summary is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication.  For more information please contact Karen Birch – karen.birch@allenovery.com, or tel +44 20 3088 3710.

I do not need to decide whether or not there is a recognition in the law of the UAE, of Dubai and of the DIFC that a sovereign state or an arm or constituent part of it is capable of asserting sovereign or state immunity because I have come to the clear conclusion that the KRG has waived any right to such immunity

Legal and Regulatory Risk Note
Middle East