Litigation & enforcement

Suing a state in London: immunity, enforcement and the UK blocking statute

Sovereign Creditor Review Staff

— 5 min read
Share

Status: Explainer · Updated: 22 October 2026 · Topic: Litigation & enforcement

General information on the law as at 22 October 2026, not legal advice. Reading it does not create a lawyer-client relationship. See our disclaimer.

English courts are a common forum for sovereign debt claims, because many older loan agreements are governed by English law. A creditor bringing such a claim faces two separate questions. The first is whether the court will hear the claim at all. The second is whether a judgment can be enforced against the state's assets. The State Immunity Act 1978 answers each of them differently.

Hearing the claim

Section 1 gives a foreign state immunity from the jurisdiction of UK courts unless an exception in the Act applies, and the court must give effect to that immunity even if the state does not appear. Under section 2, a state that has submitted to the jurisdiction, including by a prior written agreement, is not immune. The most important exception for creditors is in section 3. It covers proceedings relating to a "commercial transaction", which expressly includes any loan or other transaction for the provision of finance and any guarantee of it. Section 9 removes immunity for court proceedings relating to an arbitration the state has agreed in writing to submit to, subject to any contrary provision in the arbitration agreement. In practice, a sovereign that borrowed on commercial terms under English law can usually be sued in London.

Enforcing the judgment

Winning the claim does not by itself make enforcement possible. Section 13(2) provides that no injunction or order for specific performance or for the recovery of land or other property may be granted against a state, and that state property is not subject to any process to enforce a judgment or arbitral award. There are two ways around this. Under section 13(3), the state can give written consent, which may be contained in a prior agreement, but a clause that only submits to the court's jurisdiction does not count. Under section 13(4), which applies only to enforcement process, the creditor can enforce against property that is for the time being in use, or intended for use, for commercial purposes. A certificate from the head of the state's diplomatic mission in the UK that property is not in use or intended for use for commercial purposes is accepted as sufficient evidence of that fact unless the contrary is proved.

Section 14 sets out who counts as the state. A "separate entity", distinct from the executive organs of the government and capable of suing or being sued, is immune only where the proceedings relate to something it did in the exercise of sovereign authority and a state would have been immune in the same circumstances. Central banks get special protection: under section 14(4), the property of a state's central bank or other monetary authority is treated as not in use for commercial purposes. Such property can still be reached if the central bank has given written consent under section 13(3). For creditors, whether a state bank counts as an ordinary separate entity or as a central bank can decide whether any of its assets can be reached.

Judgments from foreign courts face a parallel test. Under section 31 of the Civil Jurisdiction and Judgments Act 1982, an overseas judgment against a state is recognised and enforced in the UK only if it would be recognised were it not against a state, and the foreign court would have had jurisdiction under rules corresponding to the 1978 Act's exceptions in sections 2 to 11. Under section 31(4), the 1978 Act's procedural protections, including the restrictions on execution in section 13, then apply in the same way.

The UK blocking statute

The UK does not maintain an autonomous Cuba sanctions regime. Cuba is absent from the FCDO's list of current UK sanctions regimes. Instead, the UK protects its businesses against certain US measures. Government guidance on the Protection of Trading Interests names the Cuban Liberty and Democratic Solidarity Act of 1996 (the Helms-Burton Act) and the US Cuban Assets Control Regulations as legislation imposing proscribed sanctions. Protected UK persons must not comply with them, directly or indirectly. They must notify the Secretary of State for Business and Trade within 30 days of obtaining information that leads them to consider that their economic or financial interests have been affected. Applying for a US licence without prior UK authorisation itself counts as compliance. Breach is a criminal offence under the 1996 Order.

This can leave a business caught between two systems. A UK company that stops a Cuba-related transaction to satisfy US rules may breach UK law. A US person, or an entity owned or controlled by US persons, risks liability in the United States if the transaction goes ahead, as OFAC’s 2025 settlement with Key Holding over its Colombian subsidiary’s Cuba shipments shows. Neither regime resolves the conflict, though in exceptional circumstances the UK can authorise compliance with the US rules case by case, where not doing so would seriously damage the interests of the person concerned or of the UK.

In practice

The Supreme Court’s decision in The Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11, given on 15 March 2023, shows how this plays out. It concerned US$3 billion of 5% notes issued by Ukraine and constituted by a trust deed dated 24 December 2013, governed by English law and giving the courts of England and Wales exclusive jurisdiction. According to the judgment, the Russian Federation was the sole subscriber and has retained the notes since issue. The notes fell due on 21 December 2015 and were not paid; the trustee issued proceedings in the High Court on 17 February 2016, and Blair J entered summary judgment against Ukraine on 29 March 2017. The defences Ukraine pleaded, as summarised by the court, went to capacity, authority, duress, implied terms and countermeasures rather than state immunity. The Supreme Court held that Ukraine had no arguable case on capacity, authority or countermeasures, but that its duress defence, to the extent based on alleged threats of the use of force, could not be determined without a trial, so the trustee was not entitled to summary judgment. Questions about enforcement come later, and they are often the harder ones.

Sources

Read more

Disclosure: The proprietor of Sovereign Creditor Review and its affiliates may hold, or may take, long or short positions in the debt, claims, securities or litigation interests of any sovereign, issuer or matter discussed on this site. The founders have advised sovereigns and creditors in the past and may do so in the future. Content is for information only and is not legal, investment or other advice.