Case Comment: SerVaas Incorporated v Rafidian Bank & Ors

28 08 2012

SerVaas Incorporated v Rafidian Bank & Ors [2012] UKSC 40. SerVaas (S), the appellant US judgment creditor (incorporated in Indiana) appealed against the Court of Appeal’s decision that monies due to the Republic of Iraq under a scheme of arrangement for distribution of assets relating to Rafidian (R), the Iraqi respondent bank, were immune from execution by reason of section 13 of the State Immunity Act 1978. S had entered into an agreement for supplying equipment and machinery to the Iraqi Ministry of Industry a couple of years prior to Saddam Hussein’s 2 August 1990 invasion of Kuwait. (R’s UK assets were frozen under the sanctions that followed in the wake of the invasion.)

In the two decades since (1) this case has been litigated in the Paris Commercial Court – which found in S’s favour for US$14,152,800; (2) the Netherlands subsequently recognised that judgment and S recovered US$966,515 against Iraq’s assets there; and (3) US$6,736,285 was paid to S by the UN claims commission for loss suffered due to the Gulf War. In a complicated series of developments from 2003 until 2008 involving a debt cancellation agreement and debt restructuring under the Iraqi Debt Reconciliation Office, a scheme of arrangement for the distribution of assets held by the Provisional Liquidators to R’s creditors was ultimately sanctioned. Claims in the sum of US$253.8 million were admitted in the scheme (“the Admitted Claims”).

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