Neutral Citation Number: [2013] EWHC 3494 (Comm)
Case No: Folio 328 of 2013
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

The Rolls Building
Fetter Lane
London EC4A 1NL

Date: 18/11/2013

Before:

MR JUSTICE FIELD
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Between :

	Taurus Petroleum Limited	Claimant/
Respondent	
	- and -		
	State Oil Marketing Company of the Ministry of Oil, Republic of Iraq	
Defendant/
Applicant	
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 Guy Blackwood and Paul Henton (instructed by Holman Fenwick Willan LLP) for the Claimant/Respondent
Dan Sarooshi and Siddarth Dhar (instructed by Vinson & Elkins RLLP) for the Defendant/Applicant

Hearing dates: 23rd & 24th September 2013
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Judgment
Mr Justice Field: 
Introduction
1.	By a final UNCITRAL arbitral award dated 13 February 2013 (“the award”) the Claimant (“Taurus”) was awarded against the Defendant (“SOMO”) US$8,716,477.00 in respect of demurrage, war risk premiums, a performance bond, interest and costs. The claims that led to the award arose out of a number of contracts under which Taurus was expressed to be the purchaser and SOMO was expressed to be the seller of crude oil and LPG. 
2.	On 11 March 2013 this Court: (i) granted Taurus permission to enforce the award in the same manner as a judgement; (ii) made interim Third Party Debt Orders (“ITPDOs”) against Shell Trading and Shipping Company Limited and Crédit Agricole CIB London Branch (“Crédit Agricole”) in the sum of £5,808,150 plus costs in respect of purchases of crude oil from SOMO; and (iii) ordered the appointment of a receiver by way of equitable execution to receive moneys receivable in respect of SOMO’s interest as beneficiary in letters of credit issued by Crédit Agricole. At this time, Taurus believed Shell Trading and Shipping Company Limited was the purchaser and SOMO the seller of a cargo of Iraqi crude oil shipped on board the mt “Princimar Strength” and that the price (around US$220 million) was to be paid under a letter of credit issued by Crédit Agricole.  
3.	On 13 March 2013 the court approved the appointment of Mr Andrew Hosking of RSM Tenon as receiver by way of equitable execution and two further ITPDOs were made (for the same sum as in the previous orders) against Shell International Trading and Shipping Company Limited and Shell Trading International Limited respectively, Taurus still not being sure which Shell entity was the purchaser of the aforesaid cargo. On 22 March 2013, Crédit Agricole was ordered to pay US$9,404,764.08 into court and the previous ITPOs made against it were varied to permit this. The payment in was made on 25 March 2013 after Crédit Agricole had deducted £6 million and US$479,265.60 from sums it paid out respectively on 13 March 2013 and on 25 March 2013 pursuant to two letters of credit (no. GBRM 300017 (“17”) and GBRM 300059 (“59”)) issued in respect of a contract for the sale of crude oil between SOMO as seller and Shell International Eastern Trading Company Limited (“SIETCL”) as purchaser.
4.	No ITPDO was sought against SIETCL because it is domiciled in Singapore and under the CPR Part 72 TPDO provisions such an order can only be obtained against “a third party who is within the jurisdiction”.  
5.	SOMO now applies to set aside the ITPDOs and the order appointing a receiver made in March 2013. In its Application Notice the ground relied on by SOMO for the setting-aside order sought is “want of jurisdiction on grounds of State Immunity”. In the light of this, the addressees of the challenged ITPDOs and Crédit Agricole opted not to participate in the application but have reserved their position on all matters other than state immunity. 
6.	The principal contentions advanced by SOMO do indeed raise issues of state immunity arising under the State Immunity Act 1978 (“the SIA”). However, SOMO has also advanced a number of arguments that do not involve issues of state immunity but go to the substantive nature of the debts sought to be attached with a view to demonstrating that the CPR Part 72 TPDO provisions are inapplicable. SOMO also submitted that the court lacked jurisdiction to make the ITPDOs on the ground that the situs of the debts sought to be attached was outside the jurisdiction.
7.	Taurus seeks to rely only on the ITPDOs made against Crédit Agricole and on the receivership order. The question for decision is therefore whether for any of the reasons advanced by SOMO the TPDOs obtained against Crédit Agricole in respect of the two letters of credit should be set aside and/or whether execution on the sum in court can be validly and effectively achieved through the receivership order. 
CPR Part 72
8.	The following provisions within CPR Part 72 are relevant to this application
72.2
(1) Upon the application of a judgment creditor, the court may make an order (a ‘final third party debt order’) requiring a third party to pay to the judgment creditor –
(a) the amount of any debt due or accruing due to the judgment debtor from the third party; or
(b) so much of that debt as is sufficient to satisfy the judgment debt and the judgment creditor's costs of the application.
(2) The court will not make an order under paragraph 1 without first making an order (an ‘interim third party debt order’) as provided by rule 72.4(2).
 
72.9
(1) A final third party debt order shall be enforceable as an order to pay money.
(2) If –(a) the third party pays money to the judgment creditor in compliance with a third party debt order; or (b) the order is enforced against him, the third party shall, to the extent of the amount paid by him or realised by enforcement against him, be discharged from his debt to the judgment debtor.
The letters of credit
9.	The sale contract in respect of which the two letters of credit were issued required that irrevocable letters of credit be opened by Taurus acceptable to the Central Bank of Iraq (“CBI”) and that they be in the form set out in Appendix 1. The two letters of credit are in consequence in common form, save in respect of specific details such as dates of expiry. The parts of the credits relevant to this application are as follows: 
Sender : CRLYGB2LXXX
CREDIT AGRICOLE CIB
LONDON GB
Receiver : CBIRIQBAXXX
CENTRAL BANK OF IRAQ
BAGHDAD IQ
MUR:KSAKD
Message Text
PLEASE ADVISE OUR FOLLOWING IRREVOCABLE, DOCUMENTARY CREDIT TO OIL MARKETING COMPANY (SOMO) AFTER ADDING YOUR CONFIRMATION. OUR REFERENCE: GBRM300017
WE HEREBY ESTABLISH OUR IRREVOCABLE DOCUMENTARY LETTER OF CREDIT NUMBER GBRM300017 (GRBM300059)
BY ORDER OF:  IN FAVOUR OF: OIL MARKETING COMPANY (‘SOMO’) FOR A MAXIMUM AMOUNT OF USD  (UNITED STATES DOLLARS )
EXPIRY: 20 APRIL 2013 [28 APRIL 2013] AT THE COUNTERS OF CENTRAL BANK OF IRAQ, BAGHDAD
THIS LETTER OF CREDIT IS AVAILABLE BY DEFERRED PAYMENT AT THIRTY (30) DAYS FROM BILL OF LADING DATE (B/L DATE TO COUNT AS DAY ONE) AGAINST PRESENTATION NOT LATER THAN 20 APRIL 2013 OF THE FOLLOWING DOCUMENTS AT THE COUNTERS OF THE CENTRAL BANK OF IRAQ, BAGHDAD FOR NEGOTIATION 
……
THIS LETTER OF CREDIT IS NOT ASSIGNABLE AND NOT TRANSFERABLE.
PROVIDED ALL TERMS AND CONDITIONS OF THIS LETTER OF CREDIT ARE COMPLIED WITH, PROCEEDS OF THIS LETTER OF CREDIT WILL BE IRREVOCABLY PAID IN TO YOUR ACCOUNT WITH FEDERAL RESERVE BANK NEW YORK, WITH REFERENCE TO ‘IRAQ OIL PROCEEDS ACCOUNT’. THESE INSTRUCTIONS WILL BE FOLLOWED IRRESPECTIVE OF ANY CONFLICTING INSTRUCTIONS CONTAINED IN THE SELLER’S COMMERCIAL INVOICE OR ANY TRANSMITTED LETTER.
WE HEREBY ENGAGE WITH THE BENEFICIARY AND CENTRAL BANK OF IRAQ THAT DOCUMENTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE DULY HONORED UPON PRESENTATION AS SPECIFIED TO CREDIT C. B. I. A/C WITH FEDERAL RESERVE BANK NEW YORK.
THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (2007 REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 600.
SPECIAL INSTRUCTIONS TO CENTRAL BANK OF IRAQ:
UPON RECEIPT OF YOUR AUTHENTICATED TELEX/SWIFT CONFIRMING THAT YOU HAVE TAKEN UP DOCUMENTS IN STRICT CONFORMITY WITH CREDIT TERMS AND CONDITIONS AND COURIERED THEM TO US, WE UNDERTAKE TO EFFECT PAYMENT AT MATURITY AS PER YOUR INSTRUCTIONS, PROVIDED THAT SUCH TELEX/SWIFT IS RECEIVED AT LEAST 1 NEW YORK/LONDON BANKING DAY PRIOR TO DUE DATE. OTHERWISE, PAYMENT WILL BE MADE 1 NEW YORK/LONDON BANKING DAY LATER.
IF OUR COVER DOES NOT REACH YOU IN TIME TO REIMBURSE YOU FOR YOUR PAYMENT UNDER THE CREDIT ON DUE DATE, WE HEREBY UNDERTAKE TO COMPENSATE YOU FOR ANY LOSS OF INTEREST INCURRED BY YOU DUE TO THIS DELAY.
DOCUMENTS TO BE COURIERED TO:
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, DOCUMENTARY CREDIT OPERATIONS, BROADWALK HOUSE, 5 APPOLD STERET, LONDON EC2A 2DA
REGARDS, DOCUMENTARY CREDIT OPERATIONS
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, LONDON.

10.	The provision that the stipulated sum would be paid into the account of the Central Bank of Iraq at the Federal Reserve Bank New York accords with the payment mechanism established by Iraq under which all proceeds of the sale of Iraqi oil must be paid into CBI’s Oil Proceeds Account at FRBNY, from which 5% must be transferred to the UN Compensation Fund Account and the remaining 95% transferred to another account in part controlled by the Iraq Ministry of Finance. This mechanism replaced that set up in response to UN Security Council Resolution 1483 of 22 May 2003 which required all proceeds from the sale of Iraq oil to be deposited into the Development Fund for Iraq, from which 5% was to be transferred to the Compensation Fund established after the invasion of Kuwait by UN Security Council Resolution 687 of 1991.
11.	Payment pursuant to the credits (less the sum paid into court) was made by Crédit Agricole sending an instruction from London to JP Morgan Chase Bank NA in New York to pay the sum due into CBI’s Oil Proceeds Account at FRBNY, which instruction was implemented according to its terms.
12.	Neither of the credits was confirmed by CBI and I understand it to be common ground that it was not expected that CBI would act as confirming bank, even though it was contemplated by the terms of the credits that CBI would do so. Mr Blackwood for Taurus suggested that since CBI did not confirm the credit it was probable that Crédit Agricole did not rely on any inspection of the documents in Baghdad but made their own inspection once the documents had been couriered to London. This seems entirely possible, but in the absence of any evidence from Crédit Agricole stating that this was the case, I shall assume that CBI inspected the documents in Baghdad and Crédit Agricole sent its payment instruction to JP Morgan Chase Bank NA relying on a representation from CBI that conforming documents had been presented.
13.	There is no doubt that the beneficiary under the credits is SOMO but the question arises whether Crédit Agricole was also promising CBI that it would pay the stipulated sum into CBI’s account with FRBNY upon presentation of conforming documents at its counters in Baghdad. This question is important because if Crédit Agricole’s obligation to pay under the credits was owed to SOMO and CBI jointly, the debt due under that promise could not in my judgement be attached by a ITPDO pursuant to CPR Part 72.2 (1) because the words “any debt due or accruing due to the judgment debtor from the third party” connote in my opinion a debt owed solely to the judgement debtor. Otherwise, since payment to the judgement creditor in compliance with a TPDO discharges the debt owed to the judgement creditor (CPR 72.9 (2)), the joint promisee would be cut out of his interest in the debt. Nor in my view could execution be made in respect of the debt under the letters of credit by virtue of the receivership order because either CBI would be deprived of its interest as a joint promisee or Crédit Agricole would have to pay twice, once to Taurus and again to CBI. 
14.	Whether CBI was a joint promisee raises a question of construction which in turn raises the question of what law governs the credits. There is no dispute that the sale contract underlying the letters of credit is governed by the law of Iraq: each so provides. The letters of credit, however, contain no governing law clause. Counsel for SOMO (Mr Sarooshi and Mr Dhar) contended that the governing law was that of Iraq and Counsel for Taurus (Mr Blackwood) submitted that the governing law was that of England.  
15.	In my view, for the present purpose of construing the credits, it matters not what law governed them – the law of Iraq or the law of England – because the credits expressly incorporated the UCP 600 (2007 Revision) and it was not suggested on the part of SOMO that the credits would be construed to different effect under the law of Iraq than under English law. 
16.	However, since SOMO also advances a set of additional non-construction submissions which predicate the applicability of Iraqi law to the credits, I propose to determine what law applies to the credits in accordance with Article 4 of the Rome I Regulation.
17.	Whether or not SOMO and CBI were joint promisees, there was only one promisor under the credits – Crédit Agricole. For the purposes of Article 4 we are therefore concerned only with the contractual obligations of Crédit Agricole.
18.	In my opinion the letters of credit are contracts falling within the residual rule in Article 4(2) of Rome I in which the characteristic performance is Crédit Agricole making payment by taking steps in London to credit CBI’s account at FRBNY through the use of an intermediary bank in New York and accordingly the credits are governed by English law. It is true that I have made the assumption that payment was made against conforming documents presented at CBI’s counters in Baghdad, but the crucial element in Crédit Agricole’s performance was the making of the stipulated payment and the performance of this obligation involved Crédit Agricole taking steps in London as we have seen. 
19.	The following parts of the credits suggest that CBI was a joint promisee: 
[A] PROVIDED ALL TERMS AND CONDITIONS OF THIS LETTER OF CREDIT ARE COMPLIED WITH, PROCEEDS OF THIS LETTER OF CREDIT WILL BE IRREVOCABLY PAID IN TO YOUR ACCOUNT WITH FEDERAL RESERVE BANK NEW YORK, WITH REFERENCE TO ‘IRAQ OIL PROCEEDS ACCOUNT’.

[B] WE HEREBY ENGAGE WITH THE BENEFICIARY AND CENTRAL BANK OF IRAQ THAT DOCUMENTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE DULY HONORED UPON PRESENTATION AS SPECIFIED TO CREDIT C. B. I. A/C WITH FEDERAL RESERVE BANK NEW YORK.
[C] SPECIAL INSTRUCTIONS TO CENTRAL BANK OF IRAQ: UPON RECEIPT OF YOUR AUTHENTICATED TELEX/SWIFT CONFIRMING THAT YOU HAVE TAKEN UP DOCUMENTS IN STRICT CONFORMITY WITH CREDIT TERMS AND CONDITIONS AND COURIERED THEM TO US, WE UNDERTAKE TO EFFECT PAYMENT AT MATURITY AS PER YOUR INSTRUCTIONS, PROVIDED THAT SUCH TELEX/SWIFT IS RECEIVED AT LEAST 1 NEW YORK/LONDON BANKING DAY PRIOR TO DUE DATE. OTHERWISE, PAYMENT WILL BE MADE 1 NEW YORK/LONDON BANKING DAY LATER.
[D] IF OUR COVER DOES NOT REACH YOU IN TIME TO REIMBURSE YOU FOR YOUR PAYMENT UNDER THE CREDIT ON DUE DATE, WE HEREBY UNDERTAKE TO COMPENSATE YOU FOR ANY LOSS OF INTEREST INCURRED BY YOU DUE TO THIS DELAY.
20.	I decline to accept Mr Blackwood’s submission that all of these passages would only operate as distinct enforceable promises made to CBI if CBI confirmed the credit. In my view the word “YOUR” in passage [A] means “CBI’s” and not “ SOMO’s” and this passage and the remaining passages constitute a promise to CBI that the stipulated payment will be made into CBI’s account at FRBNY if conforming documents are presented whether or not CBI confirmed the credit. I should add that even if [C] and [D] are predicated on CBI having confirmed the credit (which I think is not the case) [A] and [B] by themselves constitute a promise to CBI regardless of whether it confirms the credit. For these reasons, quite apart from the other reasons I give below, I conclude that the ITPDOs against Crédit Agricole should be set aside and equitable execution is not available through the receivership order. 
21.	Mr Sarooshi argued that in entering into the sale contract to SIETCL and in procuring the letters of credit, SOMO was acting as the duly authorised agent for the Republic of Iraq which could enforce Crédit Agricole’s promise to pay as an undisclosed principal. I conclude in paragraph 61 below that SOMO was not acting as the agent of the Republic of Iraq in concluding the sales contract and procuring the letters of credit. But even if SOMO had acted as aforesaid as the duly authorised agent for the Republic of Iraq, I would hold that the terms of the credits precluded enforcement by an undisclosed principal since: (i) the UCP 600 plainly contemplates the beneficiary being the sole party who can enforce an issuing bank’s payment obligation made to the beneficiary; and (ii) the credits were expressed to be non-transferable.  
22.	SOMO contended that the ITPDO against Crédit Agricole must be set aside for each of the following additional reasons:
(1) The situs of the debts constituted by the letters of credit is the state of New York and pursuant to the decision of the House of Lords in Société Eram Shipping Co Ltd v HSBC [2004] 1AC 260 only debts situated within the jurisdiction can be the subject of an order in the nature of a TPDO (“the situs/jurisdiction issue”).
(2) Crédit Agricole owed no debt to SOMO under the letters of credit since the contract related to the sale of Iraqi oil and under Iraqi law debts due for the purchase of Iraqi oil are owed to the Republic of Iraq and not to SOMO (“the true promisee issue”).
 (3) The debts due under the letters of credit constituted “property of the state” within the meaning of s. 13 (2) (b) of the State Immunity Act 1978 (“the SIA”) and accordingly they are immune from execution (“the s. 13(2) (b) issue”).
(4)  The debts under the letters of credit had to be paid into the account of the Central Bank of Iraq (“CBI”) held at FRBNY by reason of which CBI had the legal interest in the debt and thus a qualifying interest in the money owed by Crédit Agricole so as to trigger the protection afforded by s. 14(4) of the SIA (“the s. 14(4) issue”).
(5) Under the law of Iraq, SOMO had no right to benefit from Crédit Agricole’s promise to pay under the letters of credit but instead was bound to ensure the money was paid into the account of the CBI at FRBNY and accordingly no TPDO should be made under CPR Part 72 since SOMO could not honestly deal with the debt sought to be attached other than by allowing it to be discharged by payment into CBI’s account at FRBNY (“the honest dealing issue”).
(6) If SOMO is a separate entity from the Iraqi State, its sale of Iraq’s petroleum reserves could only be performed in the exercise of sovereign authority where the State itself would be immune and thus SOMO’s property is immune from execution pursuant to s.14(2) of the SIA (“the s.14 (2) issue”). 
23.	All of these issues, save for (1) (and possibly (4)), go equally to the validity and effectiveness of the receivership order as a means of execution against the funds in court as they do to the validity of the ITPDOs. Given the importance of this case to the parties, I propose to deal with them all, notwithstanding the conclusion already expressed that the ITPDOs and the receivership order ought to be set aside because the payment promise made in the letters of credit was made not only to SOMO but also to CBI.  
The situs/jurisdiction issue
24.	Mr Dhar submitted on the authority of Power Curber International Limited v National Bank of Kuwait [1981] 1 WLR 1233 that the situs of the debts under the letters of credit was New York since that was where payment was to be made by crediting CBI’s account with FRBNY. It followed, argued Mr Dhar, that the debts were not attachable under CPR Part 72 since the House of Lords has held in Société Eram Ltd v Cie Internationale [2004] 1 AC 260 that debts situate outside the jurisdiction are not attachable under CPR Part 72 because such a form of execution is an exercise of sovereign authority and it is a general principle of international law that one sovereign state should not trespass on the authority of another by attempting to seize assets situated in the foreign state. 
25.	In Power Curber, Lord Denning MR and Griffiths LJ held that the situs of the debt constituted by an irrevocable unconfirmed credit advised through Bank of America, Miami, to North Carolina National Bank, Charlotte, under which the issuing bank (“NBK”) contracted to honour drafts drawn on the Bank of America, Miami, was the place of payment -- North Carolina. NBK had refused to pay the outstanding sum due under the credit when the party who had procured it obtained in Kuwait a provisional attachment of the sums payable under the credit which by Kuwaiti law prevented NBK from making further payment. After starting but then discontinuing proceedings to enforce payment in North Carolina, the beneficiary (“PCIL”) sought and obtained summary judgement against NBK in London. On appeal to the Court of Appeal, it was argued that NBK had an arguable defence on the basis that Kuwaiti law was the proper law of the credit or the situs of the debt and under that law payment of the sum sued for was unlawful. Lord Denning MR held that the proper law of contract was the law of North Carolina where payment was to be made on behalf of the issuing bank – this being the law with which the contract had the closest connection. Lord Denning went on:
Nor can I agree that the lex situs of the debt was Kuwait. It was in North Carolina. A debt under a letter of credit is different from ordinary debts. They may be situate where the debtor is resident. But a debt under a letter of credit is situate in the place where it is in fact payable against documents.
26.	Griffiths LJ said:
Secondly, it was submitted that payment was unlawful according to the lex situs of the debt which it is said is Kuwait. But this is a debt which is owed in American dollars in North Carolina; I do not regard the fact that the bank that owes the debt has a residence in Kuwait as any reason for regarding Kuwait as the lex situs of the debt. The lex situs of the debt is North Carolina, and this ground for giving leave to defend cannot be supported. 
27.	Waterhouse J agreed that the judge was right to refuse leave to defend on the basis that the provisional order of attachment did not affect the existence of the debt. However, he disagreed with Lord Denning and Griffiths LJ as to the lex situs of the debt:
A debt is generally to be looked upon as situate in the country where it is properly recoverable or can be enforced and it is noteworthy that the sellers here submitted voluntarily to the dismissal of their earlier proceedings against the bank in North Carolina. We have been told that they did so because of doubts about the jurisdiction of the North Carolina court which was alleged in the pleadings to be based on the transaction of business by the bank there, acting by itself or through another named bank as its agent … In the absence of any previous binding authority, I have not been persuaded that this debt due under an unconfirmed letter of credit can be regarded as situate in North Carolina merely because there was provision for payment at a branch of a bank used by the sellers in Charlotte: and I do not regard the analogy of a bill of exchange or a security transferable by delivery as helpful. 
28.	The decision by the majority of the Court of Appeal that the debt was situate in North Carolina represented a departure from the general rule that a debt is situate where it is recoverable. It is suggested in Dicey, Morris and Collins, The Conflict of Laws (15th ed pp 1291-1292) that the decision is explained on policy grounds aimed at increasing the seller’s security since the courts of this country are less likely to interfere with payment (by seizing or attaching the debt) than those of the buyer’s country. 
29.	In Power Curber, NBK contracted to honour drafts drawn upon itself, the value of which was to be drawn on NBK’s account with Bank of America (International), New York, by the negotiating bank to whom the documents were to be presented in North Carolina. Also, the law governing the credit was the same as the law held to be the lex situs. In the instant case the position is different: Crédit Agricole promised to make a deferred payment into CBI’s account at FRBNY (requiring steps to be taken in London) if conforming documents were presented at CBI’s counters in Baghad. In these circumstances, I conclude that the debt is situate not in New York but in London with the result that the lex situs of the debt is also the law governing the letters of credit, namely English law. It follows that the attachment of the debts under the letters of credit pursuant to CPR Part 72 would not involve any trespass on the authority of a foreign state. 
30.	Mr Blackwood argued that even if the debt were situate in New York with the consequence that a TPDO could not be validly made in respect of it in light of Société Eram, Taurus could nonetheless levy execution on the sum in court by by virtue of the receivership order, this being an order that operates in personam and not in rem. This argument raises the question of what was the basis on which the money was paid into court. Was it paid in in respect only of any liability Crédit Agricole had in respect of the ITPDOs made against it so that if those ITPDOs were set aside, Crédit Agricole would prima facie be entitled to have the money paid out to its order subject to any restraining order sought and obtained by the receiver? Or was the money also paid in respect of any obligation arising by virtue of the receivership order in which case the money would have to stay in court pending determination of the receiver’s claimed right to be paid the sum in execution?
31.	 The relevant provisions of the payment in order are: 
UPON the Claimant being given permission to enforce an arbitral award dated 13 February, 2013 in an amount of USD 8,716,477.00 (“the Award”);
AND UPON the Claimant obtaining the interim third party debt orders identified in Schedule A to this order requiring the First Third Party not to make payment out to any Party of the sums identified in those order, save with the permission of the Court;
AND UPON hearing counsel for the Claimant and counsel for the First Third Party.
IT IS HEREBY ORDERED AND DIRECTED THAT;
1.	The First Third Party shall by close of business on Monday 25 March 2013 pay into the Court Funds Office a total sum of USD 9,404.764.08 (“the Total Sum”) comprising
(i) USD 8,925,498.48, being the funds currently held for the First Third Parry in Ashurst LLP’s client account, and
(ii) the further sum of USD 479,265,60 which the First Third Party shall deduct and retain from  the payment made under a letter of credit due for payment on 25 March 2013, under which the Defendant is the beneficiary.
2. The Orders listed in Schedule A to this Order are varied so as to permit the First Third Party to make payment into the Court Funds Office in accordance with paragraph 1 above.
3. Upon the First Third Party making payment of the Total Sum into the Court Funds Office in accordance with paragraph 1 of this Order, the First Third Parry shall be automatically discharged without further order from all obligations under the Orders listed in Schedule A to this Order, including (for the avoidance of doubt) all obligations to comply with instructions given by the Receiver appointed by the Orders dated 11 and 12 March 2013.
4. The Total Sum shall be held by the Court Funds Office until further order of the Court and, in particular, subject to determination of the Claimant’s proceedings against the Defendant and subject to and without prejudice to the rights and claims of all parties.
5. …
6.  The First Third Party has permission to pay the full amounts due on 22 March 2013 under two further letters of credit in respect of which the Defendant is the beneficiary.
 7. …
32.	The orders listed in Schedule A were the ITPDOs previously made against Crédit Agricole and the three Shell companies referred to in paragraphs 2 and 3 above, and the receivership orders made on 11 and 13 March 2013.
33.	An order of the court for payment in was necessary because the ITPDOs made against Crédit Agricole prohibited it from paying to SOMO any sum save for the (sterling) amount due under the award plus costs and also the receiver had demanded on 15 March 2013 that the sum equivalent to that stipulated in the ITPOs which was currently being held in Ashurst’s client account be transferred to him for onward payment into court.
34.	The application for the order was preceded by correspondence between the solicitors for Taurus, Holman Fenwick Willan LLP (“HFW”), and those acting for Crédit Agricole, Ashurst LLP (“Ashurst”). By letter dated 13 March 2013, HFW told Ashurst that their understanding was in the event the court determined that Taurus was entitled to funds held in the client account, whether by a final TPDO or collection by the receiver, Crédit Agricole would transfer the funds to the order of Taurus. In their reply of the same date, Ashurst stated that the money had been transferred to the client account for the reasons stated in a letter to the court (which referred only to the ITPDO of 13 March 2013), adding that Crédit Agricole would of course comply with the terms of any TPDO. On 15 March 2013, Ashurst informed the receiver that they refused to transfer the funds to him for onward transfer into court since the funds were secure and segregated by virtue of being held in the client account. On 19 March 2013, HFW told Ashurst that they took the view that either the money must be paid in court (by whatever route) or held in the client account to abide the court’s decision as to whether Taurus was entitled to levy execution under a final TPDO or under the receivership order. In their reply of 21 March 2013, Ashurst stated that their client’s concerns about the receivership orders related primarily to the extent to which their terms were inconsistent with the TPDO, and continued:
Our client will continue to act in accordance with the terms of the TPDO until such time as the Court makes a final order as to the TPDO, or an alternative order in this regard. This means that the money will remain in the Ashurst account pending further order. We see no reason why, in these circumstances, your client has any valid reason for concern or any need to rely on the Receiver Orders at present. If your client ultimately fails to obtain a final TPDO in respect of this money but considers that it is, nonetheless, able to enforce its award over this sum then it will be open to it to ask the Court at the very same hearing to order that the money be paid over to the Receiver. In other words, the Receiver Orders might become relevant if the TPDO fails, but are otherwise irrelevant. Our client confirms that it will abide by whatever orders the Court makes at the final TPDO hearing …
35.	The hearing at which the payment in order was made was attended by counsel for Crédit Agricole (Mr Wales QC) who explained to the court (myself) that Crédit Agricole was looking for a solution which would leave it free to conduct its business and pay out under the letters of credit to the extent possible.
36.	Counsel for SOMO invite the court to conclude on the basis of the terms of the payment in order and the background correspondence that the order was made pursuant to and in discharge only of the ITPDOs. In support of this submission they: (i) draw attention to the second recital and paragraph 3 in the order; (ii) note that under a receivership order the receiver is entitled to require payment of the whole sum due under the letters of credit and then seek directions from the court, whereas under the ITPDOs only the amount of the judgement debt can be attached; and (iii) further note that Taurus sought the receivership order, inter alia, because such an order did not depend on there being a debt due or accruing due to the judgement creditor. 
37.	In my judgement, in light of the terms of the payment in order and the aforesaid background, the order was a conscious response by Crédit Agricole to both the ITPDOs and the receivership orders and was made on the basis that the money would remain in court pending determination of Taurus’s claims to execute under a final TPDO and, if necessary, the receivership order. As was made clear at the hearing on 22 March 2013, Crédit Agricole wanted to get on with its business free from the obligations imposed by the orders annexed to the order and referred to in paragraph 3. In my view, the words “subject to determination of the Claimant’s proceedings against the Defendant” in paragraph 4 of the order mean “subject to the determination of the validity of the steps taken to execute on the judgement against SOMO by way of the ITPDOs and/or the receivership orders”. 
The true promisee issue
38.	 Mr Sarooshi submitted that under the law of Iraq no debt was owed by SIETCL to SOMO whether under the contract of sale or under the letters of credit and accordingly no ITPDO could be made in respect of the debt due under the letters of credit. Mr Sarooshi relied on the following provisions of Iraqi law: 
The Constitution of Iraq
Article 27. “Public assets are sacrosanct, and their protection is the duty of each citizen.”
 Article 111. “Oil and gas are owned by all the people of Iraq in all the regions and governorates.”
Article 112 “The federal government, with the producing governorates and regional governments, shall undertake the management of oil and gas extracted from present fields, provided that it distributes its revenues in a fair manner…and this shall be regulated by a law.” 
 The Iraqi Financial Management Law promulgated pursuant to Coalition Provisional Authority Order No.95 dated 4 June 2004. 
 
           Section 5
                Management of Petroleum Revenues

1) All proceeds from the sale of petroleum or otherwise derived from current and prospective petroleum extraction, including from the federal government’s production shares and royalties, and from the amount paid in respect of a right to explore for petroleum resources, and any amount derived from the investment of amounts in the petroleum revenue account, shall accrue to the budget. Except as provided in paragraph 2 of this section, below, or as may otherwise be required by applicable United Nations Security Council Resolutions (UNSCRs) the receipts from the export of petroleum shall be deposited into the Development Fund for Iraq (DFI) account to be held in the name of the Central Bank of Iraq, or a successor account to the DFI, hereafter generically referred to as the petroleum revenue account, and reflected accordingly as receipts and transfers to and from the budget.

2) Pursuant to United Nations Security Council Resolution 1483 (2003), and subsequent related UNSCRs, five percent (or such other percentage as may be determined by the United Nations Security Council or jointly by the internationally recognized, representative government of Iraq and the Governing Council of the United Nations Compensation Commission in accordance with UNSCR 1483) of the receipts from the export of petroleum shall be transferred to the Compensation Fund established in accordance with UNSCR 687 (1991) and subsequent relevant UNSCRs and the balance of receipts from the export of petroleum shall be deposited into the petroleum revenue account. These transfers to the Compensation Fund will be shown in the budget.
39.	Founding on these provisions, Mr Sarooshi submitted that SOMO did not at any time have title to the oil appropriated to the contracts of sale and did not have any entitlement to receive the sale proceeds. Instead, title to the oil and the entitlement to receive the sale proceeds was at all times vested in the Republic of Iraq, hence the provisions in the sale contract and letters of contract that payment was to be made directly into CBI’s Oil Proceeds Account at FRBNY.
40.	Mr Sarooshi also relied on the evidence given by Mr Al-Shahir, Director General of the Legal Directorate at the Iraqi Ministry of Oil and Dr Alamri, the Director General of SOMO. It was the former’s opinion that by virtue of s.5 (1) of the Financial Management Law all Iraqi crude oil is the property of the Government of Iraq and the proceeds of the sale of such oil are also the property of Iraq and its people. Dr Alamri deposed that SOMO has no control or authority over the proceeds from the sale of Iraqi oil, 95% of which has to be paid into CBI’s account at FRBNY and accrues to the Iraqi Federal Budget.
41.	It followed, argued Mr Sarooshi, that the debt due under the letters of credit was not a debt due or accruing due to the judgment debtor (SOMO) from a third party (Crédit Agricole) for the purposes of CPR r. 72.2 (1).
42.	I do not accept Mr Sarooshi’s submissions. The debt in issue in this case is the debt due under the letters of credit, not the debt due under the contracts of sale, and the sole question arising under this second issue is whether SOMO has title to enforce the chose in action constituted by Crédit Agricole’s promise to pay the stipulated sums in accordance with the terms of the credits.
43.	Letters of credit are autonomous transactions and banks with obligations under letters of credit are in no way concerned with or bound by any underlying sale contract. Such is the rule as a matter of general English law, the law governing the credits, and under Article 4 of UCP 600. As I have already observed, SOMO is the beneficiary under the letters of credit, and as such it plainly is a promisee of Crédit Agricole’s promise to pay. Indeed, Mr Sarooshi accepted in argument that the chose in action was SOMO’s not that of the Republic of Iraq, but sought to argue that since the money payable under the credit could not be dealt with by SOMO for its own account, the debt was not owed to it but to the Iraqi state. In my judgement, whilst SOMO’s lack of a right to dispose of the sum payable under the credits may be relevant to some of the other issues to be determined, it does not mean that SOMO is not a promisee of Crédit Agricole’s promise to pay. On the contrary, Crédit Agricole’s promise to pay is owed to and is enforceable by SOMO, the judgement debtor.
The s. 13(2) (b) and s. 14(4) issues
44.	Section 13 (2), (3) & (4) of the SIA provide:
(2) Subject to subsections (3) and (4) below— 
(a) relief shall not be given against a State by way of injunction or order for specific performance or for the recovery of land or other property; and 
(b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale. 
(3) Subsection (2) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned; and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection. 
(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; but, in a case not falling within section 10 above, this subsection applies to property of a State party to the European Convention on State Immunity only if— 
(a) the process is for enforcing a judgment which is final within the meaning of section 18(1)(b) below and the State has made a declaration under Article 24 of the Convention; or 
(b) the process is for enforcing an arbitration award. 
(5) The head of a State’s diplomatic mission in the United Kingdom, or the person for the time being performing his functions, shall be deemed to have authority to give on behalf of the State any such consent as is mentioned in subsection (3) above and, for the purposes of subsection (4) above, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.
45.	S. 14 (4) of the SIA reads:
Property of a State’s central bank or other monetary authority shall not be regarded for the purposes of subsection (4) of section 13 above as in use or intended for use for commercial purposes; and where any such bank or authority is a separate entity subsections (1) to (3) of that section shall apply to it as if references to a State were references to the bank or authority.
46.	It is submitted on behalf of SOMO that: (1) the Republic of Iraq has a property interest in the debt due under the letters of credit for the purposes of s. 13 (2) (b) of the SIA because SOMO is an emanation of the Republic of Iraq and by reason of the above stated legal requirements under Iraqi law that the sale proceeds of Iraqi oil must be paid into CBI’s Oil Proceeds Account at FRBNY, as to which 95% thereof must accrue to the national budget and 5% must be transferred to the United Nations Compensation Fund; and (2) the commercial purposes exception provided for in s.13 (4) does not apply, as to which reliance is placed on a certificate addressed to the court by Dr Muhieddin Hussien Abdullah, the Chargé d’Affaires at the Iraqi Embassy in London, which reads in part:
“I certify on behalf of the Republic of Iraq that …[A]ll payments received pursuant to oil sales contracts between a third party and SOMO are for the government purposes of the Republic of Iraq and not for commercial purposes.” 
Alternatively, SOMO submits that CBI has an interest in the debt due under the credits and thus by reason of s.14 (4) there can be no execution in respect thereof whether under the ITPDOs against Crédit Agricole or by virtue of the receivership order.
47.	Mr Blackwood submitted that: (1) SOMO is a separate entity from the Republicof Iraq; and/or (2) the provisions of Iraqi law as to oil and the proceeds of sale of oil relied on by SOMO are irrelevant because of the autonomous nature of the credits; alternatively (3) the English conflict rules should be applied under which a government act affecting any private property right in any movable or immovable thing will be recognised as valid and effective in England if valid and effective by the lex situs, but not otherwise: see Dicey, Morris and Collins, The Conflict of Laws, 15th ed rule 137 and here the lex situs of the debt is England, not Iraq.  
48.	The focus of Mr Sarooshi’s submissions and the evidence he relied on was the proceeds of the sale of Iraqi oil not the debt due under the letters of credit. Once the proceeds have been received into CBI’s Oil Proceeds Account at FRBNY there can be no doubt that they belong to the Republic of Iraq. But in my judgement, the only parties with rights under the letters of credit are SOMO as named beneficiary and CBI. I turn therefore to consider whether SOMO is an entity separate from the Republic of Iraq or whether it and the Republic of Iraq are one and the same.
49.	Section 14 (1) of the SIA defines a “separate entity” as “any entity ... distinct from the executive organs of the government of the state and capable of suing or being sued”. Under the scheme of the SIA a separate entity is entitled to sovereign immunity only if the proceedings relate to anything done by it in the exercise of sovereign authority and the circumstances are such that a State would have been so immune (s. 14 (2)).
50.	 In La Générale Des Carrières et Des Mines Sarl v Hemisphere Associates LLC (Jersey) [2012] UKPC 27; [2012] 2 Lloyd’s Rep 443 the Privy Council held that the approach to distinguishing between an organ of the state and a separate legal entity was the same whether the underlying question was one of immunity or substantive liability and enforcement. Henceforth, the approach should have regard to the formulation of more nuanced principles governing immunity in current international and national law which express the need for recognition of the existence of separate juridical entities established by states, particularly for trading purposes even where such entities exercise certain sovereign authority, providing them in return with a special functional immunity to the extent they exercise such sovereign immunity. 
51.	Paragraphs 28-30 and 33 of the judgement of the Board (delivered by Lord Mance) read as follows:
Separate legal entity - the correct approach
28. What then is the correct approach to distinguishing between an organ of the State and a separate legal entity? And is this distinction relevant not only to questions of immunity, but also to questions of substantive liability and enforcement? … In the Board’s opinion, it is now appropriate in both contexts to have regard to the formulation of the more nuanced principles governing immunity in current international and national law. These, as explained in paragraphs 10 to 18 above, express the need for full and appropriate recognition of the existence of separate juridical entities established by states, particularly for trading purposes. They do this, even where such entities exercise certain sovereign authority jure imperii, providing them in return (as already noted) with a special functional immunity if and so far as they do exercise such sovereign authority. A similar recognition of their existence and separateness would be expected for purposes of liability and enforcement.
29. Separate juridical status is not however conclusive. An entity’s constitution, control and functions remain relevant: paragraph 25 above. But constitutional and factual control and the exercise of sovereign functions do not without more convert a separate entity into an organ of the State. Especially where a separate juridical entity is formed by the State for what are on the face of it commercial or industrial purposes, with its own management and budget, the strong presumption is that its separate corporate status should be respected, and that it and the State forming it should not have to bear each other’s liabilities. It will in the Board’s view take quite extreme circumstances to displace this presumption. The presumption will be displaced if in fact the entity has, despite its juridical personality, no effective separate existence. But for the two to be assimilated generally, an examination of the relevant constitutional arrangements, as applied in practice, as well as of the State’s control exercised over the entity and of the entity’s activities and functions would have to justify the conclusion that the affairs of the entity and the State were so closely intertwined and confused that the entity could not properly be regarded for any significant purpose as distinct from the State and vice versa. The assets which are (subject to waiver and to the commercial use exception in s.13(4) of the 1978 Act) protected by State immunity should be the same as those which against the States' liabilities can be enforced… 
30. There may also be particular circumstances in which the State has so interfered with or behaved towards a state-owned entity that it would be appropriate to look through or past the entity to the State, lifting the veil of incorporation. But any remedy should in that event be tailored to meet the particular circumstances and need. That is the position under domestic law …. It must equally be so in the Board’s view under international law. Merely because a State’s conduct makes it appropriate to lift the corporate veil to enable a third party or creditor of a state-owned corporation to look to the State does not automatically entitle a creditor of the State to look to the state-owned corporation. Lifting the veil may mean that a corporation is treated as part of the State for some purposes, but not others. ..
33. In State Immunity, Selected Materials and Commentary, by Dickinson, Lindsay and Loonam (OUP), para 4.101, the authors note that the 1978 Act provides no guidance as to the test to be applied to determine whether a party to proceedings is a department of the government of a foreign state for the purposes of s.14(1)(c). The authors add, with a caution which is in the Board’s view justified, that “Some assistance, however, can be derived from case law pre-dating the 1978 Act”. They then refer not to Lord Denning’s but to Shaw LJ’s statement in Trendtex… They continue:
“It is suggested that the following principles can be derived from these cases:
(a) The characterization of a party to proceedings as a department of the government of a foreign sovereign State depends not on any single factor, but on a consideration of all relevant circumstances.
(b) The status of the party under the law of its home state is one relevant factor, but is not decisive. Nor is the presence of separate legal personality itself decisive against characterizing a party as a department of government.
(c) A detailed analysis of the constitution, function, powers and activities of the party and of its relationship with the state is likely to be essential. The existence of State control is not, however, a sufficient criterion.
(d) The courts are likely to exercise caution before treating a party having separate legal personality as a department of government.
(e) The range of functions performed by and degree of independence usually granted to (and, indeed, required of) a foreign central bank make it unlikely that a separate legal entity performing such a role will be characterized as a department of government.
The principles to be applied in determining whether an entity is a ‘department of government’ for this purpose are closely related to and mirror those for determining whether an entity is a ‘separate entity’. Indeed, it is submitted that there should be no scope for a finding that a governmental entity falls between the two categories, into a judicial no-man’s land.
‘Separate entity’
An entity is a ‘separate entity’ if it is ‘distinct from the executive organs of the government’ and ‘capable of suing or being sued’. Although the 1978 Act does not specify the system of law to be applied in determining whether these conditions are satisfied (except insofar as the legislative history supports the view that the law of the foreign State should not be applied exclusively), ordinary rules of English private international law suggest that the ability to sue and be sued should be tested primarily by reference to the law of the place of incorporation of the entity. As for the requirement that the entity be distinct from the executive organs of government, this would appear to require a careful examination of the entity’s constitution, functions, powers and activities and its relationship with the State in order to determine whether the required degree of separation exists.”
34. This is a helpful enumeration of factors relevant when determining whether an entity is a department or organ of State. The Board sees particular value in the propositions that the existence of State control will not be a sufficient criterion, that the possession of a range of functions coupled with independence in their exercise will militate against a conclusion that an entity is an organ, and, generally, that caution is required before treating a separate legal personality as an organ. The last proposition finds express support both in Trendtex … and in the decision of the United States Supreme Court which the Board addresses in the next paragraph (First National City Bank v Banco para el Comercio Exterior de Cuba 462 US 611 (1983). Ultimately, an overall judgment is required as to whether “the required degree of separation” is present, and the Board has in paragraphs 28 to 30 above indicated its own view as to what this involves.
52.	SOMO was originally established under Iraqi Law no. 101 of 1976 regarding the organisation of the Ministry of Oil and Iraqi Law no. 272 of 1987 regarding the incorporation of a marketing entity connected to the Ministry of Oil which rendered SOMO the sole legal authorised entity with the exclusive right to export and import crude oil, gas and oil products from and to Iraq. In June 1998, following the enactment of the Public Companies Law in 1997, SOMO was granted a certificate of incorporation of a State Company and was registered with the Ministry of Trade, Republic of Iraq. SOMO’s objectives and activities are described in its ‘Declaration of Incorporating’ which states, inter alia, that SOMO’s objectives are:
“…to participate in supporting the national economy in the field of oil sector through the marketing of crude oil, natural gas inside and outside the country and marketing the oil products outside the country and which its realizes the objectives of the development plans and planning decisions.”  
SOMO’s activities include:
(1)	“Finding the international markets for the national production from crude oil and its by-products and natural gas”;
(2)	“To conclude the contracts of selling of crude oil and its by-products and gas with the international consumers”; and
(3)	“Marketing of oil and its by-products and gas outside the country and marketing the crude oil inside the country”. 
53.	SOMO also has the right, for the purpose of carrying out its activities to:
 “To open current accounts, fixed deposits, saving accounts with the Iraqi and foreign banks in the national and foreign currencies according to the disciplines, regulations, laws, which permit this…”  
54.	SOMO has its own Board of Directors, the members of which are appointed by the Ministry of Oil. The Board’s decisions regarding annual plans and budget, final accounts and annual reports, legislation and production incentive systems have to be approved by the Minister for Oil. SOMO does not pay tax in Iraq and receives its funding from the Ministry of Oil which remits 1% of its annual budget to SOMO amounting to hundreds of millions of dollars.
55.	SOMO signs contracts and correspondence etc. in its own name under a letterhead that has in the top left corner the words “Republic of Iraq, Ministry of Oil, Oil Marketing Company (SOMO)”. Under the signatory’s signature is stated his position followed by “Oil Marketing Company (SOMO)”. It is clear from the evidence that SOMO enters into very many substantial contracts for the sale of oil. The court was told that oil revenues account for approximately 92.66% of Iraq’s entire national budget. The criteria governing how SOMO allocates crude oil volumes for export, including the contracting mechanism and implementation procedure are set out on SOMO’s website under the heading “Ministry of Oil” and the sub-heading “Oil Marketing Company (SOMO), Public Company”  and conclude with the words “ With best regards, Dr. Falah J Alami, Director General and Chairman of Board of Directors”. Decisions as to allocations of crude oil and the official sale prices are reviewed and discussed by SOMO’s Board of Directors which submit their final recommendations to a Ministerial Commission headed by the Minister of Oil. Mr Mohammed Al-Jibouri, who joined SOMO in 1983, was elected to SOMO’s Board in 1997 and was its Director General from May to October 2003, deposes in his witness statement that whilst he was Director General, the supervisory function of the Oil Ministry operated as a formality. Mr Al-Jibouri also states that SOMO had its own accounting department and that its funds are segregated from the funds of the Iraqi state.
56.	SOMO participated in the arbitration proceedings brought by Taurus using its own name, although its legal representatives were instructed by an official of the Ministry of Oil. 
57.	The certificate addressed to the court by the Iraqi Chargé d’Affaires certifies: 
The Oil Marketing Company (known as the State Oil Marketing Company of the Ministry of Oil of the Republic of Iraq), (“SOMO”) is wholly owned, funded by, and an integral part of the Ministry of Oil of the Republic of Iraq (“the Ministry of Oil”), the Ministry of Oil is a department of the Republic of Iraq, and, as such, that SOMO is part of the Republic of Iraq.
58.	It is beyond argument that SOMO is a separate juridical entity formed by the State for commercial or industrial purposes, with its own management and budget and accordingly, pursuant to the approach ordained by the Privy Council in La Générale Des Carrières et Des Mines there is a strong presumption that its separate corporate status should be respected.
59.	In my judgement, this presumption has not been rebutted. On the evidence before me, whilst the Ministry of Oil exercises a close overall supervisory function over the operations and affairs of SOMO, SOMO is not part of the Republic of Iraq but is an entity separate from the Iraqi state. It goes without saying that I take respectful notice of the passage in the certificate of the Iraqi Chargé d’Affaires quoted in paragraph 57 above, but it is only to the extent that such a certificate states that property is not in use or intended for use by or on behalf of the state for commercial purposes, that the evidential presumption provided for in s. 13 (5) of the SIA operates. 
60.	I conclude therefore that there is no sovereign immunity that prevents the operation of the TPDOs and the receivership orders in respect of the promise to pay made to SOMO under the letters of credit.
61.	I would add that I am also satisfied that SOMO was not acting as the agent for the Government of Iraq in entering into the sale contract and procuring the letters of credit. Albeit that it was a public company carrying on these activities for the over-all benefit of the people of Iraq, it was acting as aforesaid as a principal in its own right.
62.	Turning to the s. 14 (4) issue, Mr Blackwood accepted for the purposes of this application that s. 14 (4) did not depend on the nature of the relationship between CBI and the Republic of Iraq or that s. 14 (4) applies only where CBI holds property beneficially for sovereign monetary functions.
63.	In my view, it is not necessary to decide whether Iraqi law can be relied on when deciding whether the debt due under the credits is the property of CBI since I have found that under the provisions of the letters of credit of themselves a contractual promise to pay the stipulated sum into CBI’s account at FRBNY was made to (and is enforceable by) CBI, as well as to SOMO. 
64.	In Alcom Ltd v Republic of Columbia [1984] AC 580 Lord Diplock stated (at 602) that the expression “property” in s. 13 (2) (b) and (3) of the SIA:
“is broad enough to include, as being the property of a banker’s customer, the debt owed to him by the banker which is represented by the total balance standing to the customer’s credit on current account …”
and in AIG Capital Partners Inc v Kazakhstan [2006] 1 WLR 1420 at para 47, Aikens J said, having referred to Lord Diplock’s observation cited above:
In my view the word "property" must have the same meaning and scope in both sections 13 and 14 of the Act. Moreover, I think it clear from Lord Diplock's statement in Alcom …. that the word should be given a broad scope. So, in my view, "property" will include all real and personal property and will embrace any right or interest, legal, equitable, or contractual in assets that might be held by a State or any "emanation of the State" or central bank or other monetary authority that comes within sections 13 and 14 of the Act.
65.	I respectfully agree with these observations of Aikens J and find that the joint contractual promise made to CBI to make payment under the letters of credit constitutes property of CBI within s. 14 (4). As held by Aikens J in AIG Capital Partners, the commercial purposes exception provided for in s. 13 (4) does not apply to the property of a state’s central bank for the purposes of s.14 (4).  It follows that SOMO has established the immunity provided for by s. 14 (4) and for this reason also the ITPDOs against Crédit Agricole and the receivership orders must be set aside.
The honest dealing issue
66.	In the case of In re General Horticultural Company, Ex parte Whitehouse (1886) 32 ChD 512, a judgement creditor (Whitehouse) obtained a garnishee order attaching a debt of £245 odd due to the judgement debtor (Wills) by the liquidator of General Horticultural Company. Unknown to Whitehouse, before the garnishee nisi order was obtained, Wills had charged the debt by assignment to Messrs Hillier and Segar. Chitty J held the garnishee order was unenforceable because otherwise the judgement creditor would obtain not the property of the judgement debtor but that of someone else (Hillier and Segar). The judgement creditor could “only obtain what the judgment debtor could honestly deal with”.
67.	In Rogers v Whitely (1889) 23 QBD 236 the question was whether the defendant banker’s refusal to honour two cheques drawn by a customer (the plaintiff) on his two accounts with the defendant was wrongful in circumstances where the defendant had been served with a garnishee order in the sum of £6000 obtained by a judgement creditor against the plaintiff. In the course of deciding that the refusal to honour the cheques was not wrongful, Lindley LJ said:
A portion of the money in a banker’s hands might be, without the knowledge of the banker, money of which the judgment debtor was trustee. That portion could not be ordered to be paid to the judgment creditor who obtained the charging order, he can only obtain payment out of the debtor’s own money. But if the banker honoured the cheques drawn by the judgment debtor the sum properly payable to the judgment creditor would be reduced and the banker would run the risk of being held liable for the sum the judgment creditor might lose.
68.	Mr Dhar submitted that the effect of these authorities was that a judgement creditor (Taurus) cannot by reason of a TPDO be put in a better position vis à vis the third party debtor (Crédit Agricole) than is the judgement debtor (SOMO). Here, by reason of the provisions of Iraqi law set out in paragraph 38 above, SOMO could not make free use of the debt owed by Crédit Agricole under the credits but instead that debt had to be paid into CBI’s account at FRBNY, an account in which SOMO had no interest.  Thus, if the ITPDOs were valid and effective, Taurus would be in a better position vis à vis Crédit Agricole than SOMO and for this reason the debts owed by Crédit Agricole to SOMO could not be attached under CRR Part 72.
69.	In my judgement, Mr Dhar misstates the principle to be deduced from the cited authorities. The effect of those cases is that there can be no attachment of a debt which is not in the free disposition of the judgement creditor. A governmental act affecting a private proprietary right in any movable is recognised in England only if the act was valid and effective by the lex situs at the moment the act takes effect, and not otherwise; see Dicey, Morris and Collins, Conflict of Laws (15th ed) Rule 137. As I have already held, the lex situs of the debts under the letters of credit is English law, not Iraqi law, and thus the Iraqi law provisions relied on by Mr Dhar are not determinative of the whether the debts were within the free disposition of SOMO.  What is the position under English law? The promise constituting the debt under each credit is a promise to pay the stipulated sum into CBI’s account at FRBNY; and it is common ground that SOMO has no interest in or rights over CBI’s account with FRBNY. It follows, in my view, that the debts sought to be attached by Taurus were never within the free disposition of SOMO and accordingly the ITPDOs made against Crédit Agricole cannot stand.   
The s. 14 (2) issue
70.	I accept Mr Blackwood’s submissions founded principally on the speech of Lord Goff in Kuwait Airways Corporation v Iraqi Airways Co [1995] 1 WLR 1147 (especially at 1159D-F and 1160A-F) that: (i) when determining whether the acts of a separate entity are or are not acts done in the exercise of sovereign immunity it is appropriate to have regard to the English authorities relating to the distinction between acta jure imperii and acta jure gestionis; and (ii) the question is not whether the acts of SOMO in selling oil to SIETCL and procuring the opening of the credits were authorised by the state, but whether these acts were of a sovereign character. In my view, these acts were manifestly of a commercial character of the sort that any private citizen can perform and were not done in the exercise of sovereign authority. They were unquestionably acta jure gestionis, not acta jure imperii. It follows that SOMO’s argument for state immunity based on s. 14 (2) of the SIA fails.
Conclusion
71.	For the reasons given above in paragraphs 20, 65 and 69, the ITPDOs made against Crédit Agricole and the receiverships orders made on 11 and 12 March 2013 are discharged.