Summary

One of the successor states to the former Federal Republic of Yugoslavia had, on the facts, a right in relation to a leasehold interest within the meaning of the Land Registration Act 2002 s.42(1) registered in the name of the Republic. The protection of that right gave the state sufficient interest in having restrictions entered to enable the Land Registrar to enter them, or to give the adjudicator jurisdiction to direct him to do so, and in the circumstances, there was no breach of the non-justiciability principle.

Facts

The appellant state (C) appealed against the order of the Adjudicator to the Land Registry directing the Chief Land Registrar to cancel an application by C to enter restrictions on the registered title of a flat. C and the respondent state (S) were successor states to the former Socialist Federal Republic of Yugoslavia. The latter had taken a long lease of the flat, which was duly registered in its name. On dismemberment of the Federal Republic, all the successor states entered into, and ratified, a written agreement on succession issues to resolve matters of the distribution of rights, obligations, assets and liabilities. It stipulated that distribution of diplomatic properties should be in kind, by proportionate percentage share, and it set up two committees to implement those aims, with power to amend an appended list of properties. The flat was not on the list. The agreement provided that issues not specifically dealt with in the agreement should be considered by one of the committees, but neither had made any determination about the flat, nor planned to do so. C applied for restrictions to stop distribution of the flat without both the authorisation of a court and a certificate that due notice had been given to C. The Land Registry told C that the application would be accepted. The occupant of the flat, a member of S's armed forces, objected, and the matter was referred to an adjudicator. He held that he had no jurisdiction on such an issue between sovereign states, that the absence of the property from the list was fatal to C's application, that C's claim was non-justiciable by the English court, and that therefore C could not show a sufficient interest under the Land Registration Act 2002 s.43(1) to give the adjudicator jurisdiction to direct the registrar to enter the restrictions sought. S submitted that the omission of the property from the list appended to the written agreement was fatal to C's case, that the property fell outside the terms of the written agreement, as it was a military property or property of the former army of the Federal Republic, and that the matter was not justiciable by an English court.

Held

The question was whether C had a right or claim in relation to the registered leasehold interest within the meaning of s.42(1) of the Act, the protection of which would give C sufficient interest in the entry of restrictions of the types sought within the meaning of s.43(1)(c) so as to give the adjudicator jurisdiction to decide whether such entries were necessary or desirable. The issue was a matter of statutory construction. In AY Bank Ltd (In Liquidation), Re (2006) EWHC 830 (Ch), (2006) 2 All ER (Comm) 463 the succession agreement had been held to have settled what were the respective interests of the successor states to foreign bank accounts, and that decision formed an essential part of a successor state's proof of title to such property; the same analysis applied to the flat, AY Bank applied. On the facts, C and S had two types of claim to the property: first, pending any distribution under the written agreement, to a beneficial share arising from their common understanding that the only candidates for ownership of the Federal Republic's property were the successor states, and second, a claim to full beneficial ownership capable of pursuit by each of them under the written agreement, and which might or might not succeed. There was no breach of the non-justiciability principle in concluding that both those claims satisfied the threshold test of reasonableness or arguability such that they ought not to be regarded as fanciful. It was wrong, and a breach of the non-justiciability principle, for the adjudicator to have resolved that question of construction in S's favour. C had a claim to a present interest in the property, which was to have it distributed in actual form pursuant to the succession agreement, and also an interest in having the principles and machinery of that agreement carried into effect. The combination of those claims and interest gave rise to a sufficient interest in the making of the entry or entries requested for the purposes of s.43(1)(c) of the Act. C's claims were probably not justiciable by the English court, arising as they did out of transactions between sovereign states and from an unincorporated treaty to which the United Kingdom was not even a party. However, the claims related to an interest in or ownership of land situated in England, title to which was protected by the statutory system of land registration. That suggested that non-fanciful claims relating to the property should, in principle, be capable of protection by restriction, even if they had to be determined in foreign courts. So long as there was a reasonable prospect that the provisions of the succession agreement might lead to distribution of the flat to C, there was nothing to stop C's claim being protected by a restriction, and while C and S continued to agree that the successor states were jointly entitled to such property, there was no reason why C's claim to be a joint beneficial owner should not be protected by a restriction. English law should not refuse to recognise an agreement between successor states just because it was in an international treaty and the parties were sovereign states.

Appeal allowed