Who Governs in War-Torn Libya? – Commercial Judge Is Asked to Decide

Published 24 March 2016 by Moore Barlow LLP

The division between judiciary and executive is a central tenet of modern democracy – but that line can sometimes be far from distinct. In one case, a judge found himself in the difficult position of being called upon to identify the legitimate government of war-torn Libya in the context of a commercial dispute.

The Libyan Investment Authority (LIA), which is Libya’s sovereign wealth fund and holds about $67 billion in assets, was suing two international banks for about £2 billion. Due to the political crisis in Libya, the country had two rival administrations, based in Tripoli and Tobruk, both of which claimed to be the sole legitimate government. They had each purported to appoint chairmen of the LIA.

Difficulties arose in the underlying litigation – not least because the LIA’s lawyers were uncertain from whom they should accept instructions – and the judge was asked to decide which of the appointees was in fact the body’s chairman. That necessarily involved consideration of the status of the rival Libyan governments.

In those circumstances, the High Court took the unusual step of eliciting the views of the Foreign and Commonwealth Office (FCO). In its written response, the FCO stated that, whilst recognising Libya as a state, it did not recognise either of the two administrations. Its priority was to support the efforts of the United Nations to negotiate a peace between the country’s various warring factions.

The judge found that the formal communication from the FCO represented ‘the voice’ of the British government from a legal point of view. In those circumstances, it would be premature to rule on the issue concerning the chairmanship of the LIA and it was necessary to adjourn the underlying proceedings.