UNCSI Article 5 State immunity
A State enjoys immunity, in respect of itself and its property, from the jurisdiction of the courts of another State subject to the provisions of the present Convention.
UNCSI Article 6 Modalities for giving effect to State immunity
1. A State shall give effect to State immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another State and to that end shall ensure that its courts determine on their own initiative that the immunity of that other State under article 5 is respected.
2. A proceeding before a court of a State shall be considered to have been instituted against another State if that other State:
(a) is named as a party to that proceeding; or
(b) is not named as a party to the proceeding but the proceeding in effect seeks to affect the property, rights, interests or activities of that other State.
The UN Convention provides a regime of rules for the regulation of the immunity of a foreign State in proceedings brought against it in the courts of another State. It makes no explicit reference as regards other pleas which the courts of a forum State may deploy when considering whether to exercise jurisdiction in respect of a foreign State or to adjudicate matters concerning such a State and its national laws. But a careful reading of Article 6(2)(b) above shows that the ILC was aware that the ‘property, rights, interests or activities’ of a State might be affected in a proceeding in which the State was not itself a named party. From the commentary and cases referred to in its footnotes, it would seem that the main purpose of this subparagraph was to apply the Convention’s rules to proceedings in rem brought against any property owned or in the possession of or over which the State had some claim, without making the State itself a named party to the proceeding. The scope of Article 6(2)(b) construed in this narrow manner is examined later under the Convention’s provisions relating to the exception to State immunity for immovables and movables. Read in its wider sense, however, the subparagraph touches on the more general questions of the different ways in which a national court’s jurisdiction may be excluded where the proceedings affect the interests of a foreign State. Such proceedings in English and US law attract not only the plea of State immunity but the pleas of act of State and non-justiciability and it is the purpose of this chapter to locate the plea of State immunity alongside the other doctrines in the common law where the interests of another State call either for recognition of that State’s national laws or restraint as regards their adjudication or even disregard of them.
The ‘procedural versus substantive’ criterion features as a relevant distinction in defining the scope of State immunity and informs not only the application of the procedural bar in direct proceedings brought against a foreign State but also other proceedings in national courts which, in the words of UNCSI Article 6(2)(b) ‘affect the property, rights, interests or activities’ of the foreign State.
As already reviewed in Chapter 1, a national court of a State may respond to a claim brought by the institution of proceedings directly against a foreign State or its agents by applying the bar of immunity to hold the foreign State or its agents immune by reason of its status as an independent sovereign State. Alternatively or in addition, immunity may be granted by the national court of another State by reason of the subject-matter of the proceedings relating to the exercise of sovereign governmental power. Here again, the court declares itself to lack jurisdiction but does so by reason of the nature of the subject-matter. This book is directed principally to a study of the history and current state of these two aspects of the plea of immunity.
In other proceedings brought where only private parties and non-State parties are engaged, the immune status of the State as an international person, even though not a party to the proceedings, may still affect the scope of the proceedings. In common law courts the doctrine known as ‘act of state’1 may refer to the legislative or executive acts of a foreign State and if successful the English court will refuse to investigate the propriety of an act of a foreign government and exercise restraint in the adjudication of disputes relating to legislative or other governmental acts which a foreign State has performed within its territorial limits.2 Act of State is generally invoked so that, if it is not contrary to public policy, a governmental act of a foreign State affecting any private property right in movable or immovable property will be recognized as valid and effective in England if the act was valid and effective by the law of the country where the property is situate. Proceedings of the third type have generally related to claims arising in contract or as to title to property by private parties challenging the validity of legislative or administrative acts of a foreign State which have caused them loss. In applying this doctrine the English court will generally uphold the validity of the foreign State’s acts in respect of property located within its territory or contracts governed by its law,3 but subject to overriding considerations of public policy as further discussed under English law of Non-justiciability below.
More generally and as a fourth method of disposing of a case, by reason that the issue concerns relations between foreign States, both a civil or common law court may rule that it lacks jurisdiction despite the parties to the proceedings being private litigants; further, a common law court, whilst postponing a decision as to its jurisdiction to a hearing on the substantive issues, may by reason of the matters concerning a foreign State, declare it to be non-justiciable, as one to which no judicial standards are applicable for its determination. A section below discusses US law as regards these last two methods of disposing of a case in which an interest of a foreign State arises (as with UNCSI the US Foreign Sovereign Immunities Act 1976 (FSIA) which codified the plea of State immunity in accordance with the restrictive doctrine makes no express mention of the other pleas).
The direct impleading in proceedings of the State or its property in proceedings gives rise to the plea of State immunity which is a rule of procedure exempting a foreign State from the national court’s competence.4 As discussed in Chapter 10 on definition of the State, the national court usually takes judicial notice of the sovereign status of the impleaded entity. ‘The definitional question of who enjoys sovereign immunity remains crucial for the operation and doctrinal consistency of sovereign immunity. First, although being granted sovereign status does not guarantee receiving immunity, being denied sovereign status guarantees not receiving immunity. From the point of view of a defendant seeking immunity, a reliable formula for determining sovereign status is thus indispensable.’5
The personal nature of the plea based on the status of the foreign State was determinative of the plea of immunity in its First Model but, as discussed in Chapter 2 in the Second Model, the restrictive doctrine by introducing a distinction between the sovereign and commercial or private law acts of the foreign State confines immunity to the public acts of the foreign State. In consequence the conferment of immunity depends on the criterion of the nature of the act performed by the foreign State rather than the sovereign status of the foreign State.
To define the plea as no longer personal in nature because it is based on the nature of the act performed may be too facile. As is shown in Chapter 12 relating to the discussion of the private law and commercial criteria for the restrictive doctrine, these criteria are not of themselves sufficient to determine whether an act is immune or not. The extent of the participation of the State, in its regulatory superior role, the context in which the act is performed may also be a determinant factor in the overall appraisal of the non-immune character of the act, particularly for the residuary activities that do not come within a list of non-immune acts, that is, for the hard cases. The formulation of the plea as based on subject-matter rather than its performance by a sovereign State, cannot disguise the underlying criterion: that the matters identified as immune all depend on the public persona of the foreign State, the core attributes of a State.
Where there is no waiver of immunity, by reason of the procedural nature of the plea of immunity, the underlying liability or State responsibility of the defendant State is excluded, as the ICJ noted in confirming Germany’s entitlement to immunity: ‘The question whether Germany still has a responsibility towards Italy, or individual Italians, in respect of war crimes and crimes against humanity … does not affect Germany’s entitlement to immunity. Similarly, the Court’s ruling on the issue of immunity can have no effect on whatever responsibility Germany may have’.6 Nor does the recognition of the immunity of a foreign State render lawful a situation created by an internationally unlawful act. Consequently the recognition of State immunity does not contravene the principle of nullum crimen sine lege,7 the exclusion of acts by reason of a plea of state immunity occurs at the date of the commencement of the proceedings, being the date at which a plea of immunity takes effect; this leaves unaffected the application of the law relating to the substantive law of responsibility, which, even if the acts complained of occur many years before the claim is brought, as in the case of the acts of the German armed forces in the Second World War, they will be decided by reference to the law in force at that date.8 Nor does the recognition of State immunity, even if it results in the exclusion of any consideration of the act as a breach of a jus cogens rule, or as rendering aid and assistance in maintaining such a breach, affect the requirement in Article 41 of the ILC Articles on State Responsibility.9
As a plea personal to a foreign State, immunity confers a discretion as to the invocation of the plea—immunity may be waived by consent of the foreign State (Chapter 11) and waiver thereby gives consent to the forum on which the local court can found its jurisdiction. Immunity allows a State to choose its method of dispute settlement, and by waiver the State accepts the forum court as that chosen method of settlement. It becomes a nice question as to the extent to which such submission extends the jurisdiction of the forum court where, in the absence of such consent, it would refrain from taking jurisdiction on the ground of incompetence as regards the subject-matter (see below, under non-justiciability and the Msabago case).10
Whilst as a procedural bar the plea of immunity bars any consideration of substantive law issues and State responsibility, waiver of immunity which permits adjudication of substantive matters may result in the widening of the scope of the State’s responsibility depriving it of the defences of force majeure and frustration which private parties may raise, since these relate to matters within the control of the State as a contracting party.11 The wider spread of a State’s entities and activities raises difficult questions of shared responsibilities; private litigants are uncertain with which arm of government they have contracted and whether they may sue the entity on the basis of separate juristic identity as a private party, or whether recourse is solely to the parent State.12 The presence of the State and its emanations in so many other States complicates the determination of appropriate jurisdictional connections with the national court.
State practice, as largely confirmed in the provisions of the UN Convention, provides special rules for service of process on a State including a provision that the date of receipt of service by the State is deemed the date of service of process (see UNCSI, Article 22 and Chapter 1); restrictions are placed on the rendering of a default judgment against a State or the imposition of any fine or penalty for non-compliance with an order of a national court (UNCSI, Article 24). Similarly, English law provides special rules in respect of proceedings relating to a foreign State as regards service of process, time limits for compliance, and notice of default judgments. Further privileges are enjoyed by relief from enforcement in respect of interim orders of the court; no injunction, order for specific performance, or for discovery of documents can be made against a foreign State unless it has consented and waived immunity.13
The study of State immunity requires an understanding of the extent to which it differs from the pleas of act of State and non-justiciability and also an appreciation of their considerable overlap as to subject-matter. To enable a better understanding, this section provides a brief account of the US law of justiciability, act of State and the political question, and of the English law relating to the general principles in English law which govern the pleas of act of State and non-justiciability.
The US Supreme Court first applied the doctrine of act of State to the exercise of authority by a recognized government (or one later recognized) in time of revolution or emergency. Thus in Underhill v Hernandez14 the court refused to examine the legality of the detention of the plaintiff by Hernandez, who was the military and civil governor of an insurrectionist movement which was subsequently recognized as the government of Venezuela; and similarly it refused relief in respect of the seizure of the plaintiff’s property by duly commissioned military commanders of the recognized government of Mexico. The same principle was applied by the US Supreme Court to refuse adjudication of claims of US nationals concerning property seized abroad by insurrectionary forces.15
In the leading case of Banco Nacional de Cuba v Sabbatino,16 a US purchaser of sugar which had been expropriated by Castro’s government in Cuba entered into arrangements with that government for its delivery but paid the purchase price to the company which was the owner prior to its seizure. Cuba sued in the US courts the US purchaser and the previous owner for conversion of ‘its’ sugar; the defendants claimed Cuba’s seizure was in violation of international law and consequently title remained in the original owner. The US Supreme Court held that Cuba was entitled to recover the purchase price of the sugar and that under the act of state doctrine US courts could not question the validity of the seizure by reference to international law. It declared that: ‘The Judicial Branch will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit, in the absence of a treaty or other unambiguous agreement regarding controlling legal principles, even if the complaint alleges that the taking violates customary international law’.17
Whilst international comity and choice of law rules played some part, deference of the courts to the executive appears to have played a major role in the Supreme Court’s decision in Sabbatino. Thus, the court referred to ‘the constitutional underpinnings’ of the act of state doctrine reflecting the separation of powers; the doctrine was described as expressing ‘the strong sense of the judicial branch that its engagement in the task of passing on the validity of foreign acts of State may hinder rather than further this country’s pursuit of goals both for itself and for the community of nations’.18 Four suggested exceptions to the act of state doctrine have been aired by judicial and other authorities but none have gained majority support of the Supreme Court; these exceptions are known as the ‘Bernstein’, the ‘commercial’,19 the ‘treaty’ exceptions and the Second Hickenlooper Treaty Amendment and all illustrate the close identification of the court’s outcome with US foreign policies. An early exception is contained in the ‘Bernstein letter’, which is based on a view of judicial deference to the Executive Branch when it has indicated that a judicial decision will not harm US foreign relations. After the courts had applied the doctrine to uphold Nazi decrees discriminating against the property of Jews, the plea was so named by reason of a letter written by Mr Tate, the Acting Legal Adviser to the State Department, to the effect that it was the policy of the executive ‘to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi officials’.20
Immediately after the Sabbatino case Congress introduced another exception, the Second Hickenlooper Amendment, reversing the Supreme Court’s ruling so far as it concerned takings of property in violation of international law. This exception provides that no court shall ‘decline on the ground of the federal act of state doctrine to make a determination on the merits giving effect to principles of international law in a case in which a claim of title or other right to property is asserted by any party…based upon (or traced through) a confiscation or other taking by an act of that State in violation of the principles of international law’.21
A third exception, the treaty exception, was recognized by the Supreme Court in Sabbatino ‘in the absence of a treaty or other unambiguous agreement regarding controlling legal principles’; this exception has been applied to exclude resort to the act of State doctrine by a confiscating State which is a party to a Treaty with the US prohibiting expropriation without compensation. In the particular case, Ethiopia, the confiscating State, was held, by reason of such ‘controlling legal’ terms in an ‘unambiguous’ Amity Treaty with the US, to be unable to obtain the court’s assistance in seeking to recover payment for shipments of confiscated assets of the defendant company.22
Unlike immunity, the US act of State serves as both a sword and as a shield. The US courts allow the use of act of State as a weapon of attack, as the basis for a substantive remedy. Whilst the political question doctrine ‘is a judicial bar that requires abstention’, act of State, as Born notes, may confer a positive cause of action.23 Indeed, it is a surprising aspect of the Sabbatino case, although the Supreme Court stressed it was ‘not laying down or reaffirming an inflexible or all-encompassing rule’, that, far from dismissing the suit for lack of jurisdiction, the Supreme Court used the doctrine to affirm the judgment in Cuba’s favour and to treat as valid its expropriatory seizure of the sugar. In that Cuba was a direct party to the proceedings, the case is to be distinguished from the usual situation where in a dispute between private parties the court refuses to allow the plaintiff to question the validity of a foreign State’s act under which the defendant claims title. With Cuba as plaintiff, the Sabbatino case treated the matter, as does immunity, as one of status of a foreign State but, unlike immunity, gave positive effect to its legislative acts.
Subsequently the US act of State doctrine has come to be regarded more as a choice of law question than as a jurisdictional abstention doctrine. It has been treated as barring a claim if first there is an ‘official act of a foreign sovereign performed in its own territory’, and secondly, ‘the relief sought or the defence interposed [in the action would require] a court in the United States to declare invalid [the foreign sovereign’s] official act’.24 But three policy considerations are to be taken into account in the application of the doctrine—the degree of codification or consensus as to the international law relating to the issue, the government of the foreign State which perpetrated the official act no longer being in existence, and perhaps most relevant the importance of the implications of the issue for US foreign relations.25 Thus, US law recognizes some limitations to the doctrine of act of State. In Sabbatino the Supreme Court was careful to confine the act of State doctrine to acts of a foreign State ‘within its own territory’; and subsequent decisions of lower courts have emphasized the importance of the situs requirement.26 Immunity is concerned with jurisdictional restrictions as it were from the other end of the telescope. As originally enacted, the nexus requirements under the FSIA, although liberal in having some extraterritorial effect, in no way authorized the exercise of US jurisdiction over acts whose effects were confined to the foreign State’s territory. Acts performed within the territory of the foreign State automatically attracted the plea of immunity; only those acts which took place or produced effects beyond the foreign State’s territory raised any possibility of the exercise of jurisdiction in the US court. For States generally this position still obtains but for States designated as State sponsors of terrorism the ‘terrorist’ amendment (FSIA, section 1605(A)(7)) introduced by the Anti-Terrorism and Effective Death Penalty Act of 1996 (AEDPA) breaches this restriction by extending US jurisdiction over specified types of act performed solely within the foreign State’s territory.27
Not all acts, particularly those of State entities, will be construed as acts of State.28 On the analogy of the restrictive rule introduced into State immunity by the FSIA, four members of the Supreme Court in support of a fourth ‘commercial’ exception, stated their view that the act of State doctrine has no application to commercial conduct of a foreign State;29 but lower courts have been cautious in applying such a distinction, particularly to expropriatory decrees of a foreign State. Mere findings as to the occurrence of acts of State without any determination of their validity will not make the act of State doctrine applicable.30 Nor will the doctrine be applicable if the challenge goes, not to the validity (effect) of the foreign State’s act, but to the circumstances and motivation which led to its conclusion. Thus, in what has been seen by some commentators as a move to narrow the scope of the doctrine, the Supreme Court held that allegations of bribery or fraud contrary to foreign or US law leading up to the act can be adjudicated even though such enquiry may embarrass the foreign State. An unsuccessful bidder for a contract with the Nigerian government sued for damages, under the Racketeering Influenced and Corrupt Organization Act, the successful winner of the contract who paid 20 per cent of the price by way of commission to officials. The Supreme Court, in rejecting the defence of act of State as barring the court from enquiring into the legality of the bribe, stated that although such enquiry might prove the contract with Nigeria to be illegal, that was not the question to be decided in the case; act of State was only applicable where the court was asked to declare invalid the official act of a foreign government within its own territory. ‘The act of state doctrine does not establish an exception for cases and controversies that may embarrass foreign governments, but merely requires that, in the process of deciding, the acts of the foreign sovereigns taken within their own jurisdictions shall be deemed valid.’31 The distinction is nicely illustrated in Riggs National Corpn v IRS32 where, as a term of a commercial bank’s loan to the central bank of Brazil, it was agreed that interest and any Brazilian tax owed by the Riggs Bank on that interest income would be paid by the central bank. When Riggs Bank sought to take advantage of this as a foreign tax credit, the US internal revenue service (IRS) and the Tax Court denied such credit asserting the Bank not to be legally liable for the tax under Brazilian law. Riggs successfully pleaded act of State; the US Appellate Court held the doctrine required the Tax Court to abstain from challenging the Brazilian minister’s statement that the tax was due and his order to the central bank to pay such taxes, since it implicitly declared invalid his interpretation of Brazilian law. This case demonstrates how the act of State rule as articulated by the Kirkpatrick case and its subsequent application in the courts operates as a choice of law rule rather than as a jurisdictional abstention doctrine.33 Thus the better course would have been to concede the legitimacy of the minister’s order but to contend that under US tax principles the payments should not be considered a creditable tax under the US legislation.34
As the niceties of the application of the FSIA came to be appreciated, the practice developed of entering a plea of act of State along with a plea of immunity on behalf of a defendant State, and this provided US courts with an opportunity to side-step the issue of immunity and decide the case on act of state grounds.35 More recently the focus has shifted to the relevance in the application of the Alien Tort Statute (ATS) to the doctrine of act of State and the related pleas of the political question, comity, and exhaustion of remedies.
In the deference paid to State Department Statements of interest the act of State defence approximates to the US political question doctrine which imposes a constitutional limitation on the judicial power exercised by the federal courts from resolving matters that raise issues more appropriately committed to the discretion of the legislative or executive powers of government. In Baker v Carr the Supreme Court described the political question doctrine as a function of the separation of powers and set out six factors that require dismissal of the suit if any one of them is ‘inextricable from the case at the bar’.
A non-justiciable political question would ordinarily involve one or more of the following factors:
(1) a textually demonstrable constitutional commitment of the issue to a coordinate political department; or
(2) a lack of judicially discoverable and manageable standards for resolving it; or
(3) the impossibility of deciding without an initial policy determination of a kind clearly for non-judicial discretion; or
(4) the impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or
(5) an unusual need for unquestioning adherence to a political decision already made; or
(6) the potentiality of embarrassment from multifarious pronouncements by various departments on one question.36
The deference of the courts to the executive which, although reduced by the enactment of the FSIA, still manifests itself in US courts’ acceptance of the executive’s suggestion that immunity be accorded. Whilst immunity’s unpopular ground of refusing jurisdiction at the request of a foreign State is avoided, the application of the political question may permit the more direct political influence of the home government to determine the outcome of the proceedings. Instead of the presence of a foreign State imposing a moratorium or State of neutrality upon the court, the court itself may become the advance detector for the executive of the vital interests of the country.
Another plea, the foreign Sovereign Compulsion doctrine which provides that one State may not require an individual or company to do an act on the territory of another State which violates the law of that State, raises many of the same issues discussed in respect of the Act of State doctrine and the political question and its current scope and limitations are uncertain.37
Though comprehensive, the exclusionary effect of these pleas should not be overrated. The Supreme Court’s jurisdiction has been assessed as limited in this area and the view expressed that ‘the Court has decided many sensitive and controversial cases that had enormous national and security or foreign policy ramifications’.38
Recently both the act of State and the political question doctrines have been applied to claims under the Torture Victim Protection Act 1991 (TVPA).39 Only where the doctrines’ application would call for decisions on broad policy issues in direct conflict with the US government’s position would such policy issues bar the claim. Regard for the implications of the claim on US foreign relations defeated claims made against the Vatican Bank in respect of its alleged profiting from the expropriation of property by the Nazi-sympathizing Ustasha puppet regime of Croatia during the Second World War on the ground that consideration of the claims would risk creating a conflict with the steps the US actually took in prosecuting that war. As the Ninth Circuit commented: ‘we do not know and cannot know why the Allies made the policy choice not to prosecute the Ustasha and the Vatican Bank’.40 But claims focusing on the acts of a single individual during a localized conflict in Kadic were treated as not barred, as has a suit for damages arising from the military assistance rendered by the government to a US corporation encountering opposition to its mining activities in Papua New Guinea from local residents. In Sarei v Rio Tinto plc the Ninth Court construed the ‘serious weight’ it was required to give to the State Department’s suggestion of interest (SOI) as not ‘controlling’ the court’s determination whether a political question was present and declared their decision that the issues were justiciable was in conformity with the Supreme Court’s admonition in Sosa that federal courts should not ‘avert their gaze entirely from any international norm intended to protect individuals’. Even ‘post-Sosa’, the Rio Tinto Corporation could, in principle, be held ‘liable under theories of vicarious liability for alleged war crimes and crimes against humanity committed by the PNG army’. As to the district court’s dismissal of the claims of racial discrimination and violations of the UN Convention on the Law of the Sea (UNCLOS) under the act of State doctrine, the Ninth Circuit held that the allegations of racial discrimination constituted jus cogens violations, and that they could therefore not be characterized as an act of State that would insulate them from scrutiny. The alleged violations under UNCLOS were upheld as acts of State, because the court was unable to conclude that the UNCLOS codified jus cogens norms.41
The Act of State doctrine, the political question and US Courts’ acceptance of the executive suggestion that immunity be accorded to a foreign State are all ways in which account may be taken of the vital interests of the country and perhaps more questionably the current administration’s policy towards and willingness to respect rules of international law. The several US doctrines of justiciability are closely identified with the separation of powers and the reluctance of the judiciary to ‘interfere’ in foreign and diplomatic affairs. ‘[All] in effect provide in different ways of asking one central question: “are United States courts the appropriate forum for resolving the plaintiffs’ claim?”’.42 The US law on act of State is informative as to its relative characteristics compared to immunity ratione materiae. It establishes that its operation is dependent on the judiciary’s respect for the constitutional balance of powers between the legislative, the executive, and the judiciary and on the courts’ respect and compliance with the advice of the State Department as to the course it should adopt. It reacts to an issue not in accordance with the wishes of the foreign State but of its home government. Its concern is with the possible recognition of acts performed within the foreign State’s territory, whereas immunity defers certain disputes even though they relate to extraterritorial activities of the foreign State to the latter for settlement.
The pleas of act of State and non-justiciability in US law are also recognized in English law where proceedings relate to transactions between foreign States governed by international law and may apply irrespective of whether or not the relevant State or its organs are joined as parties to the action.43 Thus, in Buttes Gas the proceedings turned on a dispute relating to the right in international law to exploit as an oil concession an area of the sea and, as the House of Lords held, there were ‘no judicial or manageable standards by which to judge these issues, or to adopt another phrase, the court would be in judicial no man’s land; the court would be asked to review transactions in which four foreign States were involved, which they had brought to a precarious settlement, after diplomacy, and the use of force’. Lord Wilberforce, who gave the single judgment of the House, after a review of particular rules, and reference to proceedings in US federal courts on the same international incident, declared a general principle, ‘not one of discretion but inherent in the very nature of process … There exists in English law a more general principle that the courts will not adjudicate on the transactions of foreign sovereign States’.44
However, subsequently, where manageable standards have been found in international law the English court has shown itself ready to interpret this principle of non-justiciability more flexibly. Thus in Kuwait Airways (No 2), after the invasion of Kuwait, an action condemned by the UN Security Council as an illegal use of force contrary to Chapter VII of the UN Charter, Iraq ordered ten aircraft owned by Kuwait to be flown to Iraq, and sought to transfer their ownership to Iraq Airways. The House of Lords refused to recognize the Iraqi decree expropriating the planes and stated that ‘in appropriate circumstances it is legitimate for an English court to have regard to the content of international law in deciding whether to recognise a foreign law’. The Lords held that English public policy would not permit enforcement or recognition of foreign law which constituted ‘a gross violation of established rules of international law of fundamental importance’,45 supported by ‘the universal consensus on the illegality of Iraq’s aggression’.46 Lord Wilberforce’s principle was reinterpreted: ‘Judicial restraint must be exercised. But restraint is what is needed, not abstention. And there is no need for restraint on grounds of public policy where it is plain beyond dispute that a clearly established norm has been violated’.47
There are now two developments which may further narrow the distinction between issues subject to international law and those subject to municipal law: one, where ‘a foothold in domestic law’ is established so as to permit an English court to make a ruling on international law; and secondly, where State immunity barring the exercise of jurisdiction of a national court conflicts with the procedural right of access to court which is now enacted in international and regional human rights conventions to which the UK is a party. Where the facts support one or other of these two developments—that is where there exists ‘a foothold in domestic law’, or where the denial of jurisdiction amounts to a disproportionate disregard of right of access to court of the private claimant—there will be no dismissal of a claim on the basis of either act of State or non-justiciability….
An outline of the scope of act of State and non-justiciability as they compare to the plea of State immunity follows with some further discussion of these two developments which may work towards a more receptive recognition in English law of international law obligations whether arising in treaty or customary law.
The principle enunciated in Underhill v Hernandez, that the courts of one State shall not sit in judgment on the acts of the government of another done within its territory, has been adopted into English law as a defence of act of State.48 It is a rule of English law49 (civil countries do not have such a rule though the jurisdictional requirement of international competence covers some of the same ground) and though giving effect to a policy of judicial restraint,50 is regarded as narrower than the doctrine of non-justiciability. In the latest, 2012, edition of Dicey, Morris, and Collins the ambit of the defence of act of State is described in the following way:
The courts will not investigate the propriety of an act of a foreign government performed in the course of its relations with another State nor enforce any right alleged to have been created by such an act unless that right has been incorporated into English domestic law.51
As with the plea of non-justiciability, the application of the defence is recognized as a necessary one, but to be kept within proper limits and it should only be invoked in clear cases, and is not to depend on the idiosyncratic inferences of a few judicial minds.52 Whilst a foreign law will rarely be held to be contrary to public policy, in the past and by reference to US decisions, the defence has been mainly applied to the executive confiscation of property by the foreign State within its own territory.
The nature of the acts coming within a governmental act has not been fully clarified; but as the above description makes clear, it applies solely to property located within the territory of that State;53 where property had been stolen and brought within the territory by the confiscating State itself, as was the case of the Kuwaiti aircraft removed by Iraq from Kuwait, the principle does not apply.54 In the Rose Mary it was sought to confine the scope of the English court’s recognition of confiscatory legislation to the property of nationals of the confiscating State so as not to deprive aliens of title but this was rejected by Upjohn J in Helbert Wagg who declared nationality irrelevant and affirmed that: ‘In general, every civilised State must be recognised as having power to legislate in respect of movables situate within a State and in respect of contracts governed by the law of that State’.55
When applying the principle to give effect to a governmental act, the English court will not enquire into the motivation of the State in enacting legislation;56 and would enforce the consequences of any expropriation made within its territory by a State without considering the merits; thus in Williams and Humbert v W & H Trade Marks (Jersey) Ltd,57 since the English court recognized the expropriation of the shares of a company registered in Spain by the Spanish State, it followed that it should also permit the expropriating State as plaintiff to enforce rights consequent on such expropriation—in the instant case the right of the expropriated company to sue for the breach of trademarks. Provided the source of the governmental act is the State, English law is not prepared to exclude from the doctrine, as has been suggested in certain US decisions, acts which, rather than in the exercise of sovereign authority, relate to commercial transactions.58
Until KAC (Nos 4 and 5) no House of Lords’ decision had directly addressed the issue of the validity of confiscatory decrees of a foreign State. It had been assumed that the English court would give effect to the confiscatory legislation of a foreign State in relation to property, movable or immovable within that State even though providing no or insufficient compensation. The grounds in favour of affording such recognition and effect were varied. First, it was in conformity with the general rule of private international law by which the lex situs, the law of the State within whose territory the property was located, determined its validity. Secondly, as the Supreme Court’s decision in Sabbatino which gave effect to the expropriatory legislation of Cuba demonstrated, at least at that time (1964), there was an absence of generally accepted rules of international law relating to compensation for expropriation59 to justify English courts disregarding legislation of foreign States. Thirdly, comity favoured such recognition. Thus in Luther v Sagor,60 whilst the court applied the lex situs rule of conflicts of law to uphold the validity of the title acquired under the Soviet expropriatory decree, and refused to set that rule aside on the ground that it was contrary to public morality, the court’s determination of both issues was influenced by the confiscatory decree being an act of State in the exercise of governmental authority by a recognized government. Scrutton LJ considered that it would be ‘a serious breach of international comity’ to postulate that its legislation is ‘contrary to essential principles of justice and morality’.61 The fact of involvement of another independent State appears to have had a restraining effect on the English court in characterizing foreign legislation as contrary to public policy.62
In 2002 the act of State doctrine as it applied to expropriatory legislation came under review in the Lords. In KAC (Nos 4 and 5) the extent to which the English court would recognize and give effect to expropriatory legislation of a foreign State—the Iraqi expropriatory decree transferring the property of Kuwaiti aircraft present in Iraqi territory into the ownership of the Iraqi State airline—came before the House of Lords for decision. Act of State was relied upon to secure the English court’s recognition of the validity of the Iraqi decree and the doctrine was expressly reaffirmed by Lord Hope in that case:
There is no doubt as to the general effect of the rule which is known as the act of State rule. It applies to the legislative or other governmental acts of a recognised foreign State or government within the limits of its own territory. The English courts will not adjudicate upon, or call into question, any such acts.63
Nonetheless, the majority of the House (with Lord Scott dissenting so far as the withdrawal of recognition as lawful rendered the conduct in Iraq tortious so as to permit the English court to award compensation) did not apply the act of State doctrine and declined to recognize the Iraqi expropriatory decree as effectual to divest the claimant of title in the aircraft present in Iraq at the time of the making of the decree. Respect for the State and its laws over property within its territory as reflected in the lex situs rule was displaced by enquiry as to whether the laws were contrary to established rules of international law of fundamental importance. The Lords held that English public policy would not permit enforcement or recognition of foreign law which constituted ‘a gross violation of established rules of international law of fundamental importance’,64 a ‘flagrant international wrong’,65 a breach, in Lord Steyn’s words, ‘of principles of the UN Charter prohibiting the use of force as having the character of jus cogens’ supported by ‘the universal consensus on the illegality of Iraq’s aggression’.66
To sum up the scope of the plea of act of State, while in many cases the same result would be achieved by the application of the ordinary rules of private international law and the lex situs to determine the title to property located within the foreign State’s territory, it is admitted in Dicey, 16th edn that recent decisions indicate that not all situations can be so explained. Here the extent to which public policy grounds may apply when act of State is involved become the same as those applicable when a plea of non justiciability is raised.
The issues in respect of which a challenge of non-justiciability arise in English courts are very diverse and much wider than those likely to arise in direct proceedings in which State immunity of the defendant State is raised. General issues as to validity of foreign marriages, testamentary directions, ‘incapacities imposed on account of slavery, religion or religious vocation, alien nationality, race, divorce’ to borrow from Dicey’s list, which adds ‘(perhaps unjustifiably) physical incompetence and prodigality’, do not directly raise issues as to the status of another State or of sovereign State practices. McGoldrick in a review of ‘The Boundaries of Justiciability’67 in English law directed to UK relations with foreign States and international affairs, summarizes the heads of judicial review as including foreign affairs and international relations, defence, national security, interpretation of international law, political questions and transactions between foreign States; in respect of which last head he adds an exception, by reference to the Oppenheimer and the KAC v IAC principle, of ‘flagrant violations of rules of international law of fundamental importance’. A list containing largely similar categories to the above will be found in Chapter 13 in an examination of the concept of commerciality of acts in exercise of sovereign authority identified by State practice as contrasted with acts of a commercial or private law nature, and hence immune from the jurisdiction of a national court of another State.
Regardless of whether raised by direct suit against a foreign State or in proceedings between private parties, the reasons for the rejection of many of the claims coming within the above categories, as already noted in respect of act of State, are explicable on a separate ground—lack of conformity with the general rules of private international law and in particular of a jurisdictional requirement such as lex situs, the law of the State within whose territory the property was located, or the absence of some other required jurisdictional connection with the forum territory.68
The doctrine has always been subject to exceptions comprehensively covered by the general statement that the English court will not enforce a foreign government act if it is contrary to public policy.69 Three heads may be identified. A court will not enforce: the penal or fiscal laws of another country; discriminatory legislation directed against particular individuals or a particular class of individuals; gross violations of established rules of international law of fundamental importance. Under the first head, an English court refused a claim of the Indian government for taxes related to the voluntary liquidation of an English company in England that had been doing business in India: ‘It is perfectly elementary that a foreign government cannot come here—nor will the Courts of other countries allow our Government to go there—and sue a person found in that jurisdiction for taxes levied and which he is declared to be liable to by the country to which he belongs’.70
It is possibly under this head, but in relation to a plea of State immunity which alleged that a foreign State through the agency of its audit office was directly engaged, that the awkward decision of the New Zealand Court of Appeal in the Wine Box case may be explained. The court, faced with a request for production of documents by a statutory commission empowered to investigate a New Zealand tax fraud in which it was alleged the Cook Islands government was implicated, refused on grounds of public policy to accord immunity to an agency of that government.71 A slightly different aspect of public policy arises when a foreign State seeks the assistance of the English court to promote its own sovereign interests. The proceedings brought by the President and the Republic of Equatorial Guinea in tort in England to recover damages for the costs incurred for increased security and defence resulting from a failed coup d’état provide an example of this situation; the President’s claims were held to be non-justiciable since they related to losses from enforcement of public laws which were only to ensure the continued functioning of the current governing body of the State: the mere fact that the claimants were a head of State in office and a sovereign State were not sufficient to make the claims non-justiciable. Had they related to loss to property as owners, to a ‘patrimonial loss’ this might have been recoverable; but the Court of Appeal held that in the main the losses related to costs incurred in the detention and prosecution of suspects and security measures; delay caused in road and other engineering projects was attributable more to the state of emergency declared by the President, than any direct loss to property and hence were irrecoverable.72 This case is to be compared with Iran v The Barakat Galleries Ltd where a claim related to antiquities some 5,000 years old, which it was sought to recover, as part of its cultural heritage, from an art gallery; although the State had never reduced them into its possession, the claim was held to be justiciable as relating to a patrimonial claim.73 Decisions of the English court to hold the claim justiciable would seem to turn less on the nature of the rights in property which constitute a patrimonial claim than on the coincidence of the sovereign public interests which the foreign State seeks to enforce with the international commitments of the UK.74
Under the second head, the court will not enforce discriminatory legislation directed against particular individuals or a particular class of individuals. In Oppenheimer v Cattermole the House of Lords had to consider the applicability of a double nationality tax convention with Germany under which the applicant taxpayer was claiming certain exemptions. The Lords unanimously held that by Article 116 of the Basic Law of the Federal Republic of Germany the applicant had lost his German nationality and did not qualify for exemption as a dual national. All five Law Lords also obiter dicta addressed what the position would have been if they had had to decide the case before the Basic Law came into effect, at which time the appellant, who was a Jew, would have been subject to a Nazi decree of 1941 which deprived all Jews outside Germany of their German nationality. Lord Cross, with whom Lords Salmon and Hodson agreed, stated that although a judge ‘must be very slow to refuse to give effect to the legislation of a foreign State in any sphere in which, according to accepted principles of international law, the foreign State has jurisdiction’, there were certain exceptions. The first of these was that the courts would not recognize a change in the status of an enemy alien effected during war under the law of the enemy. The second was that ‘an English court will not recognize foreign legislation that constitutes a grave infringement of human rights’.
Lord Cross’s treatment of this exception as belonging to a more general principle (‘it is part of the public policy of this country that our courts give effect to clearly established rules of international law’) provided the way forward to the acceptance of the third and much broader head of English public policy relating to gross violation of general international rules of fundamental importance which, as discussed below, led the Lords to decline to enforce the Iraqi confiscatory decree relating to the Kuwaiti aircraft in Iraqi territory.
Whilst Lord Hope acknowledged that ‘a judge should be slow to refuse to give effect to the legislation of a foreign State in any sphere in which in accordance with the principles of international law, the foreign State has jurisdiction’ (paragraph 138) and Lord Steyn stated that: ‘the conception of public policy is and should be narrower and more limited in private international law than international law; … local values ought not lightly to be elevated into public policy on a transnational level’ (paragraph 114), the whole court accepted that the lex situs was displaced in favour of international law.
Recent cases challenging non-justiciability, however, support an exception to the rejection of a claim on grounds of public policy where ‘a foothold in domestic law’ can be demonstrated on the facts. It has been suggested that the rule should be re-formulated to the effect that the court will have no ‘jurisdiction to rule on matters of international law unless in some way they are properly related to the court’s determination of some domestic law right or interest’.75 Under such a development the English court’s recognition of the validity of acts performed in the exercise of sovereign authority of a foreign State continues to apply;76 however, acts requiring the application of municipal law—issues where ‘a foothold in domestic law’ exists for a ruling to be given on international law—come within the English court’s jurisdiction to investigate fully as to their legality and effect.77
This development is illustrated by the case of AY Bank where the court held the principle of non-justiciability had no application where the dispute involved the enforcement of private law rights even though the occasion for that enforcement resulted from an international agreement. By a 2001 Agreement on Succession Issues (ASI) the five successor States to the former Socialist Republic of Yugoslavia (SFRY) agreed the proportions into which the assets of SFRY were to be shared between them. Morritt Chancellor held that the determination of the amount of one asset, a debt located in the AY Bank in England and governed by English law, was a question of English law; it did not involve the interpretation and enforcement of the ASI as between the successor States of the former Republic of Yugoslavia but went purely to the correct valuation according to principles of the governing English law of the amount of the debt in the bank, the sharing of which had already been determined by the ASI. The court’s determination would be ‘by force of the rules of English law when applied to the operations on the accounts of [the National Bank of Serbia] with the [AY] Bank, not by way of interpretation, enforcement or variation of the ASI or by intruding on the responsibilities of the two committees established thereunder’.78 A further illustration of the modification of the rule relating to the application of unincorporated treaties is to be found in Occidental Exploration and Production Co v Republic of Ecuador.79 The Court of Appeal confirmed the judges’ decision rejecting the objection based on non-justiciability. Mance LJ said: ‘The case is not concerned with an attempt to invoke at a national legal level a Treaty which operates only at the international level. It concerns a Treaty intended by its signatories to give rise to rights in favour of private investors capable of enforcement, to an extent specified by the Treaty wording, in consensual arbitration against one or other of its signatory States. For the English Court to treat the extent of such rights as non-justiciable would appear to us to involve an extension, rather than an application, of existing doctrines developed in different contexts.’80
In some ways this modification may be seen as a particular application of the suggestion of the Court of Appeal in KAC v IAC (Nos 4 and 5) that non-justiciability should be confined solely to acts in exercise of sovereign authority, jure imperii, and has no application to private rights in property or contract where manageable and judicial standards exist. Thus, the Court of Appeal in that case declared: ‘In essence, the principle of non-justiciability seeks to distinguish disputes involving sovereign authority which can only be resolved on a State to State basis from disputes which can be resolved by judicial means’ (paragraph 319). But the location of the rule on the applicability of municipal law rather than international law as the proper law for the determination of the issues raised would seem a preferable basis for the modification, avoiding the uncertainties in the public/private act distinction.
A ‘foothold in domestic law’ may not always be possible and the Court has been unwilling to find one where the principle relied on by the claimant lacks recognition or general approval as one of international law. Thus in ex parte Campaign for Nuclear Disarmament where it was claimed that to take military action against Iraq would be in breach of international law unless expressly sanctioned by a resolution of the Security Council of the UN Simon Brown LJ in rejecting the declaration sought to that effect said ‘there is…no point of reference in domestic law to which the international law issue can be said to go; there is nothing here susceptible of challenge in the way of the determination of rights, interests or duties under domestic law to draw the court into the field of international law’ (87). He later expressed the point thus: ‘Here there is simply no foothold in domestic law for any ruling to be given on international law’.81 In R (Noor Khan) v Secretary of State for Foreign & Commonwealth Affairs, the court pointed out that the UK Intelligence and Security Committee was better placed to assess the lawfulness of a policy of passing intelligence to the US for potential use in drone strikes; ‘[t]here is no basis on which this court could or should conclude that a declaration would fill a void and impose the rule of law on a lawless territory’.82
Note here should be taken of a recent remarkable case regarding the right to liberty and security of the person in which a ‘foothold’ as a challenge to the prerogative powers relating to the conduct of foreign affairs was achieved by an application for the issue of the writ of habeas corpus.83 Exceptionally, as in Rahmatullah where detention of the claimant was shown to be within the control of the UK authorities by reason of a memorandum of understanding between the US and the UK relating to his custody, its issue by the court resulted in the UK executive being placed under a legal obligation to make a return.84
Whilst the development of this exception may prove of some value to permit wider review of UK foreign policy relating to much debated decisions of the administration currently in government, it is doubtful as to its assistance to soften the exclusionary effect of the plea of immunity in direct proceedings brought against a foreign State. In its Jurisdictional Immunities judgment the ICJ has stressed the procedural nature of the plea of immunity in proceedings brought against a foreign State in a national court and has spelt out that the rules of immunity are procedural in character and ‘do not bear upon the question whether or not the conduct in respect of which the proceedings are brought was lawful or unlawful’ (paragraph 93). Consequently, all issues relating to substantive law and State responsibility are excluded, even where as on the facts in the 2012 case Germany admitted responsibility as regards the absence of any compensation paid to Italian nationals who were the subject of the claims barred by Germany’s plea of immunity. The extent of the exclusions which the ICJ ruling applies are examined in the following chapters but briefly, so far as the claims in the case brought by Italy against Germany, it resulted in the exclusion of all review of acts of German military and other officials during the Second World War in respect of serious violations of international humanitarian law amounting to war crimes and crimes against humanity; for violations of norms of jus cogens character; and any consideration of the absence of success in all other attempts to obtain reparations for the victims. The discussion of the nature and durability of the procedural exclusion of the plea of State immunity which the ICJ has so firmly propounded is discussed in the previous chapter. As discussed there, the door, however, is left open by the ICJ’s decision, allowing a possible challenge based on the procedural effectiveness of the bar of State immunity.
The rules of natural justice in common law and the concept of denial of justice in civil law have long been recognized as securing a litigant’s fair hearing of a complaint.85 But the modern development of the right to a fair hearing has been by means of human rights conventions. The right to a remedy when human rights are violated is expressly guaranteed by universal and regional human rights conventions. By reference to this right of a remedy, State immunity is attacked on the ground that the grant of immunity to a class of defendants, foreign States, constitutes a removal from judicial adjudication of claims against such defendants. In Chapter 2 it was noted that ECtHR practice draws a distinction in respect of a procedural right from a substantive one, the procedural right of access is not to be confused with a requirement which though expressed as a procedural restraint relates to substantive law. ‘The right to a court extends only to disputes (“contestations”) over civil rights and obligations which can be said, at least on arguable grounds, to be recognized under domestic law.’86 Article 6(1) does not in itself guarantee any particular content, nor are the civil rights and obligations as extensive as the human rights and freedoms set out in the Convention. Nonetheless, the initial distinction between civil rights arising in private law as opposed to those in public law87 has not been followed in recent cases, and acts of a governmental nature such as entitlement to a State pension,88 expropriation of land,89 and licensing of the sale of alcohol or of public transport have been held to give rise to the right of access.
Secondly, limitations are permitted by implication, since the right of access ‘by its very nature calls for regulation of the State, regulation which may vary in time and in place according to the needs and resources of the community and individuals’. The ECtHR in its case-law has developed principles which allow a margin of appreciation to the contracting State in respect of such limitations, but not where it does not pursue a legitimate aim and does not have a relationship of proportionality between the means employed and the aim to be achieved.
The ECtHR has applied this procedural right so as to consider the plea of immunity derived from international law as a bar to the right of access to court in respect of the international personality of an international organization and of a foreign State: in three cases, Al Adsani, Fogarty, and McElhinney where national courts had refused to exercise jurisdiction on the ground that immunity barred them from suing a foreign sovereign State in a national court, it was claimed access to court had been denied. Similarly, with regard to an international organization, in Waite v Kennedy it was claimed that the immunities of an organization barred dissatisfied employees from seeking a remedy in the national court in the territory of the State where they were employed by the organization (see Chapter 19 on International Organizations). The bar in these cases arose by reason of the application of a rule of international law and was not derived from the substantive law, as occurred by reason of national law limitations to sue local authorities or the police in cases such as Z v UK and Osman v UK.90 In the words of Lord Millett: ‘It is not a self-imposed restriction on the jurisdiction of its courts which the UK has chosen to adopt. It is a limitation imposed from without on the sovereignty of the UK itself’.91
Nonetheless, the Court, contrary to the approach of Lord Millett cited above, did not refrain from all enquiry into the complaints; in the case of an allegation of torture abroad (Al-Adsani), and of assault by a member of a foreign armed force within the forum State territory (McElhinney), the Court found there to be serious and genuine disputes over civil rights relating to compensation for personal injuries and declaring that ‘the prohibition of torture has achieved the status of a peremptory norm in international law’, held
the present case concerns not, as in Furundzija and Pinochet, the criminal liability of an individual for alleged acts of torture, but the immunity of a State in a civil suit for damages in respect of acts of torture within the territory of that State. Notwithstanding the special character of the prohibition of torture in international law, the Court is unable to discern in the international instruments, judicial authorities or other materials before it any firm basis for concluding that, as a matter of international law, a State no longer enjoys immunity from civil suit in the courts of another State where acts of torture are alleged.92
In consequence, the ECtHR found that, as in the case of Jones v Saudi Arabia cited above, because the jus cogens violation was caused outside the jurisdiction of the UK court, there was an absence of jurisdiction conferred upon the UK court to proceed with the hearing.
However, whilst declaring that ‘the prohibition of torture has achieved the status of a peremptory norm in international law’, the ECtHR Court did not wholly reject the relevance of the alleged act as constituting a violation of the jus cogens prohibition against torture but, contrary to the argument of the dissenting judges set out above, declared that although State immunity cannot be struck down as contrary to the right of access to a court, it will always be necessary to establish that its barring of a civil right is not disproportionate to the legitimate aim which State immunity pursues.93 Where international law requires immunity or, in the words of the Strasbourg Court, the immunity claimed is ‘not inconsistent with those limitations generally accepted by the community of nations as part of the doctrine of state immunity’ it will be proportionate. But an immunity expressed too widely, if unsupported by the practice of other States, even making due allowance for a margin of appreciation of the forum State, may on the basis of these three cases, fail the test of proportionality.94
Following the Strasbourg Court’s application of ECHR Article 6(1) to the immunities of States and international organizations, claims relying on Article 6(1) have been brought in national courts arising out of employment, arbitration, and commercial transactions. See further, Chapters 4 and 5 and in regard to international organizations, and that second Chapter on the discussion of the employment exception to immunity in respect of international organizations. As regards claims arising out of arbitration, submission to arbitration is treated as waiver of the right of access to court.95 Article 6(1) has been held to apply where a plea of immunity is raised in enforcement proceedings of an arbitral award, even though the claimant had access to the adjudicative process of an ICSID arbitration. But the same court held that the restriction on the right of a party to enforce a judgment on the property of a central bank or other monetary authority that is imposed by SIA, section 14(4) was both legitimate and proportionate: the four grounds for this decision were that the UNCSI contains a provision conferring immunity of the property of a central bank, that SIA, section 14(4) is a sensible rule, easy to apply, and that there is no consensus in State practice on the matter; and finally that the award was not ineffective or a nullity by reason of inability to enforce it in England as it might be enforced elsewhere.96 This last ground, which is of course not applicable to an international organization which can only offer the alternative dispute settlement procedure provided in its Headquarter agreement, was also the basis of a decision that immunity barring a claim of libel against officials of a central bank was proportionate. An English court held that the immunity extended to the officials of the central bank of the Netherlands by SIA, section 14(2) in respect of proceedings for libel, despite the availability of a defence of qualified privilege in English law, was proportionate having regard to the availability of remedies in the Netherlands where proceedings in the administrative chamber of the Rotterdam court were in progress with a right of appeal to an appeal tribunal.97
While the doctrines of act of State and non-justiciability will normally work in the same direction as the plea of State immunity to prevent examination of the validity of a foreign State’s acts, practice shows that in proceedings between private parties the court may set aside its usual respect for other States’ jurisdiction where the acts of the foreign State constitute a fundamental breach of international human rights or other clearly established international law, whereas it will show hesitation in a direct suit to rule against the foreign State defendant. Whilst the act of State doctrine, by invoking the aid of the national court results in that court going some way to endorse the validity of the act of the foreign State, in immunity the court remains neutral, merely deciding that it is not the appropriate forum.
As discussed, non-justiciability is not determined by the application of the distinction into public and private acts but by public policy, although the modification noted of treating justiciable issues where common law has a ‘foothold’ is reminiscent of the early rationale for the restrictive rule that the issue concerns a private law matter. The consent of a State would seem irrelevant to the plea of act of State or non-justiciability. It would be odd if mere consent could provide the manageable standards to determine a case which is properly allocated to international settlement procedures; and equally odd if, treating the doctrine as a constitutional requirement for the separation of powers, the consent of a foreign State can render the judicial branch competent to decide an issue, otherwise said to be exclusively a matter for the executive branch.
Secondly, the act of State defence projects itself within the usually uncontested area of another State’s jurisdiction along with its territorial limits, whereas immunity questions whether acts of a foreign State performed or causing effects beyond its own frontiers permit the exercise of the forum court’s adjudication and enforcement powers.
Finally, despite its intrusion within what is generally regarded as the domestic jurisdiction of another State, the act of State doctrine subjects the lex situs to the political and moral values of the forum State, to its public policy; the courts’ decisions are shaped from the point of view of the forum State as to their political, constitutional and legal effect. In contrast, immunity aims at a value-free assessment, an objective ascertainment as to which of the two States is the appropriate one to exercise jurisdiction.
To sum up, in comparing immunity to act of state and non-justiciability attention has been drawn to differences of jurisdiction to adjudicate and of determination of the legality of conduct, personal status, application of the public/private divide, and the effect of consent, as well as the relevance of reference to international law standards.
The above analysis of the law has taken no account of the recent major review both in the English courts and in the ECtHR of the application of the Act of State doctrine and the plea of non-justiciability in the light of facts showing ‘the expropriation of assets … by illegitimate and illegal means, arranged and directed by the Russian State or government’.98 In particular, changes are under consideration in respect of the pleas with regard to two cases relating to a wider campaign waged by the Russian State for political reasons against the Yukos Group and its former CEO, Mikhail Khordorkovsky: in Yukos the Court of Appeal has confirmed the lower court’s decision that the Act of State plea provides no bar to adjudication of the facts relating to Russian arbitral awards and judgments for which Rosneft sought recognition in the English court;99 and very similar allegations are under consideration in the ECtHR under the aegis of the European Convention of Human Rights.100 Whilst Russia, as a State party to the ECHR, was a direct party in the ECtHR case, it has not to date been made a direct party to English cases raising issues of misappropriation by order of the State; for the significance of the Yukos decision in respect of a proceeding brought against the State of Russia see the final concluding paragraph of this Chapter.
In Yukos, after a review of the doctrine of Anglo-American jurisprudence relating to Act of State with particular reference to Buttes Gas, and KAC v IAC (Nos 4 and 5) in the House of Lords and Kirkpatrick in the US Supreme Court, and noting that objection to the Court’s application forum non conveniens might constitute a procedural illustration of the same underlying principle,101 the Court of Appeal found that
Lord Wilberforce’s principle of ‘non-justiciability’ had, on the whole, not come through as a doctrine separate from the act of state principle itself, but rather has to a large extent subsumed it as the paradigm restatement of that principle. It would seem that, generally speaking, the doctrine is confined to acts of state within the territory of the sovereign, but in special and perhaps exceptional circumstances, such as in Buttes Gas itself, may even go beyond territorial boundaries and for that very reason give rise to issues which have to be recognised as non-justiciable. The various formulations of the paradigm principle are apparently wide, and prevent adjudication on the validity, legality, lawfulness, acceptability or motives of state actors. It is a form of immunity ratione materiae, closely connected with analogous doctrines of sovereign immunity and, although a domestic doctrine of English (and American) law, is founded on analogous concepts of international law, both public and private, and of the comity of nations (para 66).
However, the Court held that its reformulated plea of Act of State/non-justiciability was subject to qualifications: (i) the act under review must generally take place in the territory of the foreign State itself; (ii) the doctrine will not apply to ‘a breach of international law which is a matter of deep concern to the worldwide community’;102 (iii) unlike forum conveniens, whilst the doctrine applies to legislative and administrative acts of the foreign States it does not apply to judicial acts:
The act of state doctrine does not prevent an investigation of or adjudication upon the conduct of the judiciary of a foreign state, whether that conduct lies in the past, or in the future, and whether or not its conduct in the past is relied upon as the foundation for an assessment of the risk as to its conduct in the future. The judicial acts of a foreign state are judged by judicial standards, including international standards regarding jurisdiction, in accordance with doctrines separate from the act of state doctrine, even if the dictates of comity still have an important role to play.103
As to qualification (iv), caution needs to be maintained (though not in issue in the present case) that in the modern world ‘it is now accepted, as a matter of general international law, that there is no immunity for the state’s commercial activities’ (para 92). As to a fifth qualification proposed, the English Court of Appeal referred to Kirkpatrick and Justice Scalia’s distinction between occurrence of the facts and their legality but refused to apply it to a situation where ‘Russian law was deliberately misapplied as a matter of State policy’ (para 115).
In an extensive and careful judgment the Court concluded:
the act of state doctrines do not extend to prevent examination of the substantial justice available in the courts of foreign jurisdictions, …. An English court, subject to the requirements of any treaty or convention must, we think, always be entitled to ask and adjudicate on the issue whether a foreign court decision should or should not be recognised or enforced. Subject to treaty or convention, that is the proper business of the courts and they are armed and completely familiar with judicial standards by which to judge what are ultimately issues about judicial standards (para 125).
This Yukos decision of the Court of Appeal is in a preliminary stage subject to appeal and trial on the facts alleged. But if approved and applied subsequently to deny Act of State when challenge is made to the laws of other States, it may mark a considerable shift from a position of careful neutrality to one of commitment to the maintenance of ‘the rule of law’ even with regard to direct rulings of a national court as to the propriety of acts of a State within its own territorial jurisidiction. As regards the plea of State immunity, as noted above, though Russia is a party to the ECtHR proceedings, it is not a defendant in Yukos nor has to date it been made a defendant in other cases making similar allegations of misappropriation and abuse of law pursuant to the deliberate policy and execution of the State itself. Nonetheless the plea of State immunity is taken account of in the ruling in Yukos, which was made at the procedural stage of the proceedings, and its consequent effect also on the removal of State immunity as a bar to examination of the substantive allegations should not be discounted.