English High Court finds lender's claim not barred due to sovereign immunity

The English High Court has found in favour of a lender in its claim against a sovereign state and a central bank for unpaid sums due under multiple facility agreements and guarantees, finding that it was not barred on sovereign immunity grounds: African Export-Import Bank v National Government of the Republic of South Sudan & Anor [2025] EWHC 1079 (Comm).

Under the State Immunity Act 1978 (SIA 1978), foreign states generally enjoy immunity from the jurisdiction of the English courts (as can a state’s central bank or monetary authority, even if a separate entity). However, exceptions exist, particularly for commercial transactions or when the state or central bank has expressly submitted to the jurisdiction of the English courts. The court determined that two exceptions were applicable in the present case:

1. The borrower and guarantor each had submitted to the jurisdiction of the English courts by a "prior written agreement" under s.2 SIA 1978. The agreements and guarantees each contained express exclusive jurisdiction clauses in favour of the English courts, and also included express waiver of immunity clauses. These were each sufficient to satisfy the requirement for a "prior written agreement" pursuant to s.2 SIA 1978.
2. The proceedings related to a "commercial transaction" entered into by a state under s.3(1)(a) SIA 1978, which provides that there is no immunity for such proceedings. Under s.3(3)(b) SIA 1978, a commercial transaction includes "any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation". The agreements at issue in the present case were each "loans" or "transaction[s] for the provision of finance", whilst the guarantees were "guarantee[s]" or [indemnities] in respect of any such transaction".

Accordingly, the court found in favour of the lender, finding it was entitled to apply for and to enter summary judgment against the borrower and guarantor.

The decision will be of interest to financial institutions as it illustrates the enforceability of loan agreements and guarantees against sovereign states and central banks, particularly when they fail to engage in proceedings. The decision also highlights the importance of including express jurisdiction and waiver of immunity clauses in financial contracts with sovereign states and their central banks. While the nature of a transaction may inherently be commercial and fall under the "commercial transaction" exception in the SIA 1978, these clauses provide extra protection. They ensure transactions also meet the "submission to jurisdiction" exception in the SIA 1978, minimising the risk of claims being barred on sovereign immunity grounds and reducing the likelihood of a successful sovereign immunity defence.

For more information, please see Banking Litigation Notes.