Merchant Shipping Act 1993 Defeats State Immunity

The well-established principle of state immunity was re-examined in the context of the Marine Shipping Act 1993 when the question arose of whether a governmental organisation should pay its proportion of a salvage operation from which it had benefited.

Salvage company, Tsavliris, carried out a successful salvage pursuant to a Lloyd's Open Form (LOF) agreement signed by both owners and cargo interests, the Grain Board of Iraq (GBI). The agreement contained a London arbitration clause. A dispute arose when GBI challenged the request for payment of their proportion of cargo salvage on, among others, sovereign immunity grounds.

The dispute was brought to the English court where the claimant salvors argued: (1) that cargo owners were bound by the London arbitration clause; (2) GBI were the owners of the cargo; (3) GBI were liable for cargo's proportion of salvage; and (4) GBI were a separate entity from