This case pertained to an arbitration and jurisdiction dispute involving the International Convention on Salvage 1989 (the Salvage Convention 1989) and the State Immunity Act 1978 (UK). The Altair became grounded in Kuwaiti waters while carrying a cargo of wheat. An employee of the vessel's managers, acting on behalf of the shipowners, entered into a salvage agreement with Tsavliris, a salvage company, based on the Lloyd's Standard Form of Salvage Agreement (the LOF 2000), purportedly on behalf of the ‘property’ to be salved, which appeared to be owned by the Grain Board of Iraq (the GBI). Following the successful refloating of the Altair, Tsavliris Salvage lodged claims to enforce their rights and seek remuneration under the terms of the salvage agreement.

However, since the cargo was perceived to be Government-owned, Tsavliris did not arrest the cargo. Instead, it initiated arbitration to claim salvage remuneration, based on the LOF 2000, from the cargo owners (the GBI), who refused to participate in the claim or provide security.

The arbitrator determined that the cargo belonged to the GBI, recognised the GBI as a separate entity from the Iraqi government, identified the cargo as commercial, and confirmed GBI’s agreement to arbitration as per art 6.2 of the Salvage Convention 1989. This led to the arbitrator's jurisdiction to adjudicate the liability of the GBI to Tsavliris for salvage fees, resulting in an award of USD 496,510.87 plus interest and costs against the GBI.

The Ministry of Trade of the Republic of Iraq (MOT), alongside the GBI, contested this award in the High Court, challenging the arbitrator’s jurisdiction and invoking sovereign immunity for the GBI, and alleging it was an integral part of the MOT. Concurrently, Tsavliris sought enforcement of the arbitration award as a court judgment and requested a freezing injunction against GBI's assets.

Held: Judgment in favour of Tsavliris on all counts.

The shipowners had the authority to bind GBI to the arbitration clause within the LOF 2000, in accordance with art 6.2 of the Salvage Convention 1989, meaning that the cargo owner was legally bound by the salvage agreement. The fact that Iraq had not ratified or acceded to the Salvage Convention 1989 is irrelevant, given that the Convention is recognised and enforced by the laws of the United Kingdom. Since art 6.2 of the Salvage Convention 1989 explicitly grants the ship's master and the shipowner the authority to enter into salvage contracts on behalf of the cargo owners, the cargo owners were conclusively subject to the arbitration proceedings set forth in the LOF 2000, and the arbitrator had the jurisdiction to determine the salvage claim against GBI.

The cargo was owned by the GBI and not the MOT, thus making the GBI liable for the salvage remuneration, based on the following primary reasons: (a) the GBI possesses distinct legal personhood; (b) the GBI’s foundational documentation, specifically its 'Certificate of Incorporation of a Public Company', outlines its objectives and activities, which notably encompass the procurement of grains through imports for the populace; and (c) various documents identify the GBI as the cargo's owner, including the supply contract, the bill of lading, the Letter of Indemnity (LOI), and the arrangements pertaining to a letter of credit. As such, the GBI’s claim to sovereign immunity was dismissed on the grounds that it operated in a commercial capacity and was a separate legal entity from the Iraqi government.

Lastly, Tsavliris was granted a freezing injunction against GBI’s assets to secure the enforcement of the salvage award.