This chapter recalls the history of the law of State immunity through the decisions of the national courts in both common and civil law jurisdictions and recounts the general recognition in common and civil law jurisdictions of the restrictive doctrine as well as its adoption by national legislation in 1976 in the US (the Foreign Sovereign Immunities Act 1976 (FSIA)) and in 1978 in the UK (the State Immunity Act 1978 (SIA)) followed by similar legislation in some Commonwealth and other countries. The conclusion drawn from State practice in surveys conducted by the International Law Commission (ILC) and the Council of Europe is that there is wide and ever increasing support for a restrictive doctrine of immunity.1 The absence of a universal convention, however, and the diversity of State practice as shown in the development of the law on State immunity in common and civil law jurisdictions has held back any significant harmonization of the law. It is to be hoped that the adoption in 2004 of the ILC’s Draft as the UN Convention on Jurisdictional Immunities of States and their Property and the increasing number of ratifications will now accelerate that harmonization.
A coherent concept of State immunity developed out of the separate immunities recognized in respect of ambassadors, personal heads of State, and warships. The need to protect representatives of foreign States led to the development of diplomatic immunity. The visits of personal sovereigns required the development of a principle of inviolability of their person and immediate possessions and entourage as well as immunity from suit in the local court. The visits of warships of friendly States to national ports required the recognition of the ships’ immunity from local jurisdiction.
The earliest form of immunity was that associated with the representative or legatus of a monarch, prince, or other ruler dispatched into another ruler’s territory for the purpose of negotiation. The early history of the immunity of the diplomatic envoy and his mission is described by Denza:
Wherever among separate States of an international community ambassadors were sent or received, custom or religion invariably accorded a special protection to their person. Among the City States of ancient Greece, the peoples of the Mediterranean before the establishment of the Roman Empire, among the States of India, the person of the herald in time of war and of the diplomatic envoy in time of peace were universally held sacrosanct.2
Satow takes up the account: ‘at the outset of the sixteenth century … in the atmosphere of developing nation States, shifting alliances and the dynastic struggles for power the resident diplomatic agent was invaluable in keeping his master supplied with information and acting as a barometer to register every evidence or portent of impending change’.3
The wars of religion, however, so embittered relations between Catholic and Protestant States that it was only after the Treaty of Westphalia of 1648 had established a new order of relationships, however precarious, that the age of classical European diplomacy could begin. With that age came the privileges and immunities of the ambassador and his mission.
Despite the arguments of the writers,4 the rule of immunity of the ambassador from criminal proceedings in the receiving State was consistently observed in the practice of States by the seventeenth century,5 including his personal inviolability. Expulsion, not arrest or imprisonment, became the remedy resorted to against envoys suspected of conspiring against the sovereign of the receiving State.6 But the extravagant lifestyle of ambassadors unsupported by any salary from their royal masters led them into debt or to engage in trade, and consequent disputes in civil courts led to the enactment of legislation in the Netherlands, Denmark, and England granting immunity in civil proceedings. The Diplomatic Privileges Act 1708 made it a criminal offence to bring a civil suit against an ambassador or his servants, and rendered such civil process null and void. The Act of 1708 was treated by subsequent case-law, notably by Lord Mansfield in Triquet v Bath,7 as declaratory of the law of nations.
By the end of the nineteenth century, the ambassador and all members of the mission, as well as the private servants of the ambassador, were recognized by the English courts to enjoy diplomatic privileges and immunities. The immunity of the ambassador himself from civil jurisdiction was, unlike the present position under Article 31(1) of the Vienna Convention on Diplomatic Relations, not subject to exceptions;8 unlike his servant, he did not forfeit his immunity by engaging in trade.9 Three bases for the immune status of the diplomat were advanced. First, the embassy premises were deemed to be outside the territory of the country where they were located and they and the members of the mission by ‘extraterritoriality’ were treated as outside the court’s jurisdiction. Alternatively, the respect owed to a personal sovereign was required to be extended to the diplomat as his representative. Thirdly, the diplomat required immunity to enable him to carry out his functions. Vattel in Le Droit des Gens justified the grant of immunities on the basis of functional need. As Montesquieu pithily explained, ‘[i]ls sont la parole du prince qui les envoie et cette parole doit être libre’.10 Extraterritoriality was not rejected as a ground until 197211 when the English court refused to treat a talak divorce granted within the Egyptian Consulate in London as obtained ‘in any country outside the British Isles’ for the purposes of section 2 of the Divorce and Legal Separation Act 1971. Reference to the modern law relating to diplomatic immunity is made in Chapter 18 below.
The emergence of the modern State was due to the centralization of power in the hands of a strong ruler, and he himself exercised sovereign powers. Initially then, it was the personal king, prince, emperor, or tsar in whom sovereign powers were seen to vest; he was the personal embodiment of the State and enjoyed equality with other sovereign rulers. Consequently, he was immune from any claim brought against him in the courts of other sovereigns.12 With the advent of constitutional government, the people came to be seen as the repository of sovereign will, and not the president or other leader who headed the State, who became more the chief representative of the State rather than its source of power. Section 14(1)(a) of the SIA refers to ‘a sovereign or other head of State’, and thus appears to recognize this distinction.
The personal attribute of sovereignty of a monarch entitled him to respect and dignity when visiting or in his dealings with other countries. Brownlie suggests that ‘the honorific and ceremonial features of the immunity of the sovereign in person, and their representatives, have reacted often in exaggerated forms upon the topic of State immunity in general’.13 So closely associated were immunities from jurisdiction with a personal sovereign that in 1891 some members of the Institut de Droit International debated whether immunities enjoyed by a monarchical sovereign from arrest and attachment of his property should equally be enjoyed by a head of State such as the president of a republic. It was agreed there that an individual who was head of State, whether of a monarchy or of a republic, represented the State in external affairs, and was equally entitled to immunity.14 The immunity of heads of State is addressed in more detail in Chapter 18.
Prior to the nineteenth century, questions relating to State warships were largely handled in prize courts set up by the Admiralty or another government department to deal with the capture of foreign ships. The US Supreme Court decision in the The Schooner Exchange v McFaddon15 established for the general common law the immunity of a ship of war of a State from arrest and process in the courts of another State. Whilst it was the practice for prior notice to be given before such ships entered a foreign port, in the particular case the ship which had been converted into a public armed ship under a decree from the Emperor Napoleon of France had been driven by stress of weather to seek shelter in US waters ‘on the terms on which ships of war are generally permitted to enter the ports of a friendly power’. Marshall CJ, giving the judgment of the Court, dismissed a creditor’s claim for attachment and ordered the ship’s release since it ‘must be considered as having come into American territory under an implied promise, that while necessarily within it, and demeaning herself in a friendly manner, she should be exempt from the jurisdiction of the country’.16
The reasoning in The Schooner Exchange v McFaddon17 became the basis in the US, English, and other common law jurisdictions for a rule of immunity not merely relating to warships but of a general rule relating to the State. Its rationale has been much debated, providing support for the rule as one of both international law or extra-legal discretion of the territorial state. Further, it contained within it phrases on which to base the later evolution of the restrictive doctrine. As Dellapenna writes:
… it … provided the analytical foundation for both major lines of analysis that have dominated thinking about the question ever since: that the right to immunity is discretionary with the territorial sovereign; and that immunity might be limited to public property or activities of a foreign sovereign.18
In his judgment Marshall CJ described the case as one of first impression:
In exploring an unbeaten path, with few, if any aids, from precedents or written law, the court has found it necessary to rely much on general principles, and on a train of reasoning, founded on cases in some degree analogous to this.
His starting point was jurisdiction of the State ‘within its own territory, … necessarily exclusive and absolute’, subject only to consent, express or implied. Such implied consent arose from the relaxation of territorial jurisdiction by reason of the ‘perfect equality and absolute independence of sovereigns’:
The world being composed of distinct sovereignties, possessing equal rights and equal independence, whose mutual benefit is promoted by intercourse with each other … all sovereigns have consented to a relaxation in practice, in cases under peculiar circumstances, of that absolute and complete jurisdiction.
Such relaxation was to be ‘tested by common usage, and by common opinion, growing out of that usage’. He described the exemption from territorial jurisdiction of personal sovereigns and the ambassadors of a foreign State and distinguished the presence of foreign troops and warships as generally requiring prior notice. On the other hand he declared that ‘when private individuals …’ and ‘merchant vessels enter for the purposes of trade, it would be obviously inconvenient and dangerous to society, and would subject the laws to continual infraction and the government to degradation if such individuals or merchants … were not amenable to the jurisdiction of the country’. In consequence, taking account of these differences, he declared:
a clear distinction is to be drawn between the rights accorded to private individuals or private trading vessels, and those accorded to public armed ships which constitute a part of the military force of the nation [143] … It seems, then, to the court, to be a principle of public law, that national ships of war, entering the port of a friendly power open for their reception, are to be considered as exempted by the consent of that power from its jurisdiction.19
A further strand in Schooner Exchange anticipated the US constitutional position of the judicial branch and the courts in relation to the administration of the day and the executive with regard to foreign relations. Thus Marshall CJ wrote that the withdrawal of the implication as ‘a principle of public law’ of exemption was not to be considered ‘as having imparted to the ordinary tribunals a jurisdiction, which it would be a breach of faith to exercise’. The judgment makes it plain that any withdrawal of immunity, whether in breach of international law, or by way of discretion was a matter for the executive and not the courts, thus opening the way for the US courts’ deference to the executive on foreign relations and the political question doctrine, which have become distinctive features of US law.20
The ruling in the Schooner Exchange was applied in English courts and affirmed in The Parlement Belge.21 In this leading case the established privileges and immunities of the diplomat and his mission, the personal sovereign, and the warship owned by the State were made the basis for the formulation of a general rule of State immunity. The case of The Parlement Belge thus provided the occasion for the first clear formulation of a rule of State immunity in English law, and extended it to all public property of a foreign State intended for public purposes. For some 50 years it was treated as authority in English law for an absolute doctrine of immunity, admitting no exception for commercial activities.
The Parlement Belge was a packet-boat, owned by the King of the Belgians and in his possession. It was operated by the officers of the Royal Belgian Navy as a mail packet between Dover and Ostend, which ‘besides carrying letters, carried merchandise and passengers and their luggage for hire’. Proceedings were brought in the English courts for damage arising out of a collision caused to the plaintiffs’ steam tug moored within the Port of Dover by the Parlement Belge. By Article VI of the 1876 Postal Convention between Great Britain and Belgium it was provided that mail packets operating within the terms of the Convention were to be ‘considered and treated as vessels of war’.
Sir Robert Phillimore,22 sitting in the Admiralty Court, at his own instance directed the issue of immunity to be argued and, with no appearance being entered by the defendant, the King of the Belgians, the Attorney-General on behalf of the Crown appeared to put the case for Belgium. Sir Robert Phillimore allowed the claim, holding first that the Parlement Belge was not entitled to immunity as a public ship of war. He stated that ‘neither upon principle, precedent, nor analogy of general international law should I be warranted in considering the Parlement Belge as belonging to the category of public vessels which are exempt from the process of law and all private claims’. Secondly, he held that without parliamentary approval the 1876 Convention was ineffective to confer an exempt status on the Parlement Belge so as to prevail over private rights acquired under statute.
The Attorney-General appealed. The Court of Appeal (Brett, James, and Baggally LJJ) expressed no opinion on the second issue, being whether the 1876 Convention ousted a jurisdiction which the court might otherwise have over the ship.23 Nonetheless, the Court of Appeal reversed the lower court’s decision, holding that the Parlement Belge, irrespective of the 1876 Convention, was within the general rule of immunity from the court’s jurisdiction conferred on public ships, and that such immunity was not lost by reason of the vessel’s partial use in the carriage of goods and persons.
The ratio decidendi of the case has been a source of much debate over the years. As McKenna J explained in 1972, when re-examining this ‘great’ case, the difficulty arose by reason of ‘the form of the judgment suggesting one answer and the logic of the reasoning another’.24 Brett LJ, who gave the judgment of the Court of Appeal, stated that there were three main questions. Leaving aside the question of ouster by the Convention, the other two were as follows: first, did the court have jurisdiction to seize the Belgian vessel in rem; and secondly, was any jurisdiction (which the court might so have) lost by reason of her trading in the carriage of goods and persons. It being accepted that the Belgian State was immune from direct proceedings, the first question turned on whether ‘the public property … in use for national purposes’ of the foreign State was ‘not as much exempt from the jurisdiction of the court as is the person of the sovereign’. The English Court of Appeal concluded that the well-recognized immunity enjoyed by warships of a State extended to all public property owned by the State and destined for public use; it agreed with Sir Robert that auxiliary ships carrying troops or military stores, hospital ships, the private yacht of the personal sovereign, and surveying or exploring ships—if manned by the State—came within the immunity;25 further that the immunity equally applied to a State-owned ship carrying mail. Brett LJ declared the correct exposition of the law of nations to be:
That as a consequence of the absolute independence of every sovereign authority and of the international comity which induces every sovereign State to respect the independence of every other sovereign State, each and every one declines to exercise by means of any of its courts, any of its territorial jurisdiction over the person of any sovereign or ambassador of any other State, or over the public property of any ambassador, though such sovereign, ambassador. (212)
and as regards immunity of State property he added:
It puts all the private movable property of a State, which is in its possession for public purposes, in the same category of immunity from jurisdiction as the person of a sovereign, or of an ambassador, or of ships of war, and exempts it from the jurisdiction of all Courts for the same reason—viz. that the exercise of such jurisdiction is inconsistent with the independence of the sovereign authority of the State. (213)
The finding in The Parlement Belge therefore extended immunity to all State-owned ships operated for public purposes and included the carriage of mail as such a public purpose. Although its ruling that the ship as public property was immune made it unnecessary for the Court of Appeal to articulate a view, it expressly declared that an action in rem indirectly impleaded the State. This was because a judgment against the ship was conditional on the owner being liable in respect of the compensation sought; and natural justice required him to have an opportunity to challenge the proceedings. In consequence, proceedings in rem against a ship of a State indirectly impleaded the State as owner of the ship (217–19). ‘To implead an independent Sovereign in such a way is to call upon him to sacrifice either his property or his independence. To place him in that position is a breach of the principle upon which his immunity from jurisdiction rests. We think he cannot be so indirectly impleaded, any more than he could be directly impleaded’ (219).
As to the ship’s use in part for trading,26 on the analogy of the personal sovereign or ambassador who did not lose their immunity by reason of trading, and by reference to the evidence of the foreign State through its ambassador that the vessel was used for the purpose of carrying mail, the court saw no ground to exercise its authority against the State: ‘We are of the opinion that the mere fact of the ship being used subordinately and partially for trading purposes does not take away the general immunity’ (220).
Lord Atkin in a much quoted passage in The Cristina summarized in 1937 the English law relating to State immunity:
The foundation for the application to set aside the writ and arrest of the ship is to be found in two propositions of international law engrafted into our domestic law which seems to me to be well established and to be beyond dispute. The first is that the courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages. The second is that they will not by their process, whether the sovereign is a party to the proceedings or not, seize or detain property which is his or of which he is in possession or control.27
Three of the core elements of the common law rule of State immunity in its absolute form are contained in this formulation: first, the definition of ‘the State’, being the entity described as a ‘foreign sovereign’, which may not be directly impleaded; secondly, the definition of ‘State property’, because under the rule a State may not be indirectly impleaded by proceedings taken against its property; and thirdly, the doctrine of waiver, because immunity serves only as a bar to the court’s jurisdiction where proceedings are brought ‘against the will’ of the State, and consent to the court’s jurisdiction removes immunity. A fourth element, the nature of the activity for which immunity is accorded to a State, is missing from Lord Atkin’s formulation. This of course is the element by which the restrictive doctrine sought to narrow the operation of the rule solely to activity of the State in exercise of its sovereign or governmental authority. This element played no part in the absolute doctrine propounded by Lord Atkin.
From 1879, the date of The Parlement Belge, onwards the absolute nature of the doctrine of immunity so as to include trading or commercial activities within its bar was accepted as regards both direct and indirect impleading of the State. Where the State was directly impleaded, the Court of Appeal in Mighell v Sultan of Johore made it plain that, applying The Parlement Belge, there could be no question whether the private or trading nature of the State’s activities deprived it of immunity. In that case a claim for breach of promise of marriage was brought against the Sultan who when the alleged contract was made, was residing incognito in England under the name of ‘Albert Baker’. The Court of Appeal affirmed the Divisional Court’s ruling that the defendant ruler was immune on the basis of a certificate from the Colonial Office that he was the head of a sovereign State.28 In rejection of the argument that in making a private contract the Sultan was not acting in a public capacity, Wills J in the Divisional Court declared there to be no authority for saying a sovereign was amenable to the jurisdiction for acts performed in a private capacity; he distinguished the case from Duke of Brunswick v King of Hanover29 where the proceedings were allowed in respect of the King in his capacity as a British subject. In contrast, the Sultan was not a British subject; whilst he might well incur liability under English law, it did not follow that he was amenable to the court’s jurisdiction: ‘It is one thing to say that a foreign sovereign is capable of making an effectual contract in this country; it is quite another thing to say that he can be sued in the courts of this country’.30 Lord Esher (formerly Brett LJ) held The Parlement Belge to be binding authority, and the fact that the defendant had come to England and lived under a false name had not deprived him of his immunity. That immunity could only have been lost by express submission to the jurisdiction.
As regards indirect impleading by proceeding in rem against State property, the Court of Appeal extended the principle in The Parlement Belge beyond ownership so as to treat the State as impleaded where it had ‘a lesser interest which may be not merely not proprietary but not even possessory’ (per Lord Wright in The Cristina). Thus in the Porto Alexandre it was applied to a vessel subject to the direction of a foreign State by reason of its requisition, but regardless of whether or not the vessel was in its possession.31 Warrington LJ, citing the principle propounded by Brett LJ in the earlier case that all movable public property of the State was immune, expressly stated that it applied to ships engaged in commerce; ‘whatever may be the actual use to which the ship is put I think the evidence is quite sufficient to show that it is the property of the State and is destined for public use’.32 Scrutton LJ agreed, stating that ‘The Parlement Belge excludes remedies in these Courts’, but commented that default by States in honouring their liabilities would lead to unwillingness to salve ships or to employ them in carriage of goods. But he added: ‘These are matters to be dealt with by negotiations between Governments and not by Governments exercising their power to interfere with the property of other States contrary to the principles of international courtesy which govern the relations between independent and sovereign States’.33
His words did not go unheeded. On the proposal of Sir Maurice Hill, the Admiralty judge who had with regret upheld immunity in the court of first instance in the Porto Alexandre, the Comité Maritime International in 1922 adopted a resolution for the abolition of jurisdictional immunities of public vessels with particular reference to their commercial activities, and this led to negotiations resulting in the signature by States, including the UK (although not its ratification until 1978), of the Brussels Convention for the Unification of Certain Rules concerning the Immunity of State-Owned Vessels on 10 April 1926, discussed in Chapter 5.
Nonetheless, the decision in The Porto Alexandre remained binding authority in the English courts. The House of Lords had occasion to consider The Porto Alexandre in The Cristina. Although, on the facts of that case, the use of the ship for public purposes was admitted, all the Law Lords expressed views on the immunity of public vessels engaged in trading activities. Lords Atkin and Wright gave it as their view that the English rule prohibiting the seizure or detention of State property by action in rem applied to all ships, including those solely in use for ordinary trading or commercial purposes; Lords Thankerton and Macmillan wished to reserve the question for future consideration; but Lord Maugham openly opposed the rule. He held The Parlement Belge to be no authority in support of the absolute doctrine in in rem proceedings, and maintained that, had that court been prepared on the facts to find that the ship was used solely for trading purposes, the decision would have been the other way. Referring to the practice of other countries and the signature of the 1926 Brussels Convention, he declared the time had come to put an end to the absurdity whereby England declined to give redress against a foreign trading ship belonging to a government when such an action would be allowed in a foreign court.
English law continued to observe the absolute doctrine of State immunity34 until well after the ending of the Second World War in 1945. However, in the 25 years prior to the enactment of the SIA in 1978 there was a growing dissatisfaction with the application of an absolute rule. The Privy Council even went so far as to assert ‘[t]heir Lordships do not consider that there has been finally established in England any absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances’.35 A direct attempt by government to reform the law was unsuccessful.
A number of initiatives were taken to restrict the absolute doctrine. One method was to broaden the concept of submission and to treat prior agreement or unequivocal conduct of the State indicating an intent to waive immunity as sufficient consent to the jurisdiction of the forum State court; this initiative is covered in Chapter 13 under waiver. A second method was to narrow the inclusion within immunity of the trading activities of the State. As is discussed below, this was achieved first by denying immunity where proceedings were brought in rem against the property of the State and not personally against the State, and secondly by direct attack denying immunity to engagement of the State in commercial activity. Although these initiatives were largely unsuccessful before the courts, they provided the arguments for and the content of the restrictive rule which was eventually enacted in 1978 in the SIA.
A third initiative was to exclude State agencies from the definition of the State. In the absolute immunity phase, courts resorted to the exclusion of trading agencies from the definition of the State so as to keep the conferment of immunities within reasonable bounds. The conduct of business by a State agency located within the forum State became an early formulation in Belgian case-law and in the Harvard Research of both the jurisdictional and the private law elements in an exception based on commercial activity. Similarly ECSI Article 6 removed immunity where a State ‘has on the territory of the forum State an office, agency or other establishment through which it engages, in the same manner as a private person, in an industrial, commercial or financial activity and the proceedings relate to that activity of the office, agency or establishment’.
This method was blocked by the Court of Appeal’s decision in Krajina v Tass Agency. On the Soviet Ambassador’s evidence that Tass was a department of the Soviet State exercising the rights of a legal entity, the court held a State news agency to be immune from a libel suit, ruling: ‘The evidence falls far short of what would be necessary to establish that Tass is a legal entity and that the USSR by procuring its incorporation has deprived a particular department of the immunity which normally attaches to a department of the State in accordance with the principles of comity established by international law and recognised by this country’.36
This case caused an outcry, leading to questions in Parliament and a debate in the Lords initiated by Lord Vansittart on the unfairness of a foreign State agency enjoying immunity when the British publisher or printer would be liable in libel. An interdepartmental committee under the chairmanship of Lord Justice Somervell was appointed in 1950; all the departments of government directly concerned were represented on the committee with a judge minded to effect reform and two academic lawyers who had made a close study of the subject.37 All the areas of difficulty were identified and there was discussion, in outline, of the solution eventually adopted in the 1978 Act, that is, a list of non-immune activities and the limitation of immunity to departments of governments and only to other agencies when acting in the exercise of sovereign powers. The committee found UK law to be wider than certain other countries’ practice but disagreed as to whether it was wider than international law required. There was a firm rejection of any general execution on the property of foreign States, but no attempt was made by the committee to take evidence from the City of London or other business or shipping interests as to either the desirability or the practicability of change. The overall conclusion of the committee was that the desirability of change could not be determined without further consultation. Its interim report delivered on 13 July 1951 was never published, the committee being so divided in its views that it advised consultation with the US and interested Commonwealth countries before any change was undertaken.38
On the specific issue whether a State agency, possessing separate legal personality and engaged in trading activities, should enjoy immunity, Professor Hamson favoured the approach of the French courts. He proposed that ‘in proceedings against the agency the question whether it is a branch or department of State is irrelevant’. For Professor Hamson it was the nature of the activity, whether governmental or not, which was determinative of immunity. Objection was taken that this might lead to illogicality, with immunity turning on the fortuitous making of government contracts through or in the name of agencies.39 Without a criterion by which to distinguish a commercial agency from a foreign State by whom it had been set up, the French solution would be unworkable. The committee resorted to an administrative solution, suggesting by reference to the treatment of the Russian trade delegation that prior to its establishment in the UK, the agency should agree or the foreign State undertake that immunity would not be claimed.40
Legal personality as a basis for excluding immunity was rejected by majority in Baccus SRL v Servicio Nacional del Trigo41 in relation to an agency held to be a department of the State incorporated as a separate legal entity under the laws of Spain for the purposes of importing and exporting grain for the Spanish government under the directions of the Spanish Ministry of Agriculture. The Court of Appeal (Jenkins and Parker LJJ, Singleton LJ (the Chairman of the unsuccessful 1950 departmental Committee) dissenting) held that separate legal personality did not disqualify an agency from being a department of State for whom the State was entitled to invoke immunity. Jenkins LJ stated that the conferment of separate legal personality was ‘purely a matter of governmental machinery’; he distinguished the case of an ordinary trading company or an ordinary bank in which the State acquired shares, holding that the purchasing and selling of staple commodities in the interests of the public were not ordinary trading activities, but operations for which responsibility had been assumed by the State and carried on under the supervision of the State.42 In the later case of Mellenger v New Brunswick Development Corpn43 Lord Denning MR voiced support for the dissenting judgment of Singleton LJ in Baccus,44 and indicated his own view that a separate legal entity of the State should only be treated as part of the State where control over its acts as an agent of the State was established. Finally, in Trendtex Trading Corpn v Central Bank of Nigeria,45 the Court of Appeal held the Central Bank of Nigeria, which had been created as a separate legal entity with no clear expression of intent that it should have governmental status, was not an emanation, alter ego, or department of the State of Nigeria and was not therefore entitled to immunity from suit.
In the years prior to the enactment of SIA, there was a gradual shifting of the courts away from their previous attachment to the doctrine of absolute immunity and a greater readiness to deny immunity to separate trading entities. Singleton LJ queried whether absolute immunity should be accorded to all transactions of the State: ‘A State may create many such trading entities and if they act in the ordinary course it ought not to be open to the State to say they were not authorised so to do. Otherwise trading and business relationships would become impossible.’46
But it was left to Lord Denning to give the first judicial blessing to an exception for commercial transactions. Lord Denning’s technique of incrementally dismantling a rule he believed to be wrong is well illustrated in his decisions shifting immunity from an absolute to a restrictive form, see Rahimtoola,47 and Thai-Europe Tapioca Service Ltd.48 Finally, in Trendtex,49 with the support of one but not both of the other members of the Court of Appeal, and by way of a second ground for the court’s decision, Lord Denning applied the commercial transaction exception to defeat immunity. The majority of the House of Lords, however, did not at the time endorse this initiative for reform.
Meanwhile, support for change came from a new quarter, the Judicial Committee of the Privy Council, and in relation to proceedings brought against the property of the State rather than against the State. The Privy Council in The Philippine Admiral50 declared, adopting the analysis of McKenna J in Swiss-Israel Trade Bank v Government of Salta,51 that The Parlement Belge had not laid down the wide proposition that ‘a sovereign can claim immunity for vessels owned by him even if they are admittedly being used wholly or substantially for trading purposes’. A vessel, The Philippine Admiral was operated as an ordinary trading ship by a company under a conditional sale agreement with the Philippines Reparation Commission, a government agency; on the company’s failure to pay for repairs, the Hong Kong court ordered it to be sold. The Reparations Commission intervened as owner to request the court to set aside the writ as it related to a State-owned ship. After extensive review of the changing practice in other countries’ courts, reference to the US State Department’s Tate letter to US courts, and the enactment of a restrictive rule in the 1926 Brussels Convention and the 1972 European Convention on State Immunity, the Privy Council confirmed the decision of the lower court. Construing The Parlement Belge narrowly as establishing that immunity applied where a foreign State was sued in personam or there was an action in rem brought against its ship if ‘being used substantially for public purposes—as … was the case of The Parlement Belge’, the Privy Council decided not to follow The Porto Alexandre, and held that proceedings in rem for goods supplied against a ship owned by an agency of the Republic of the Philippines but in the possession and operated by a commercial company for trading purposes were not immune.
This decision of the Privy Council successfully challenged the precedential authority of The Parlement Belge. The momentum for change in the common law was gaining in strength, and reached its culmination in Trendtex v The Central Bank of Nigeria.52 In that case, as a second ground of their decision,53 the Court of Appeal by majority (Lord Denning MR and Shaw LJ) decided that international law now recognized no immunity from suit for a government department in respect of ordinary commercial transactions as distinct from acts of a governmental nature, and in consequence the Central Bank of Nigeria was not immune from suit on the plaintiff’s claim in respect of a letter of credit issued in payment of a consignment of cement. Lord Denning MR in developing the commercial exception stressed that the nature, not the purpose, was determinative of immunity of the transaction, and the scope of immunity was to be narrowly construed:
It was suggested that the original contracts for cement were made by the Ministry of Defence of Nigeria and that the cement was for the building of barracks for the army. On this account, it was said that the contracts of purchase were acts of a governmental nature, jure imperii, and not of a commercial nature, jure gestionis. They were like a contract of purchase of boots for the army. But I do not think that should affect the question of immunity. If a government department goes into the market places of the world and buys boots or cement—as a commercial transaction—that government should be subject to all the rules of the market place. The seller is not concerned with the purpose to which the purchaser intends to put the goods.
There is another answer. Trendtex here are not suing on the contract of purchase. They are claiming on the letter of credit which is an entirely separate contract. It was an entirely straightforward commercial transaction. The letter of credit was issued in London through a London bank in the ordinary course of commercial dealings. It is completely within the territorial jurisdiction of our courts. I do not think it is open to the Government of Nigeria to claim sovereign immunity in respect of it.54
Shaw LJ agreed, saying that he was convinced that ‘the preponderant contemporary rule of international law supports the principle of qualified or restrictive immunity which takes account not only of the sovereign status of the party but also of the nature of the action in respect of which the issue of immunity arises’ (576). He made it clear that he regarded ‘the intrinsic nature of a transaction rather than its object as the material consideration in determining whether entering into the transaction is a commercial activity or in exercise of sovereign authority’ (579). Stephenson LJ dissented. Although he accepted that a restrictive rule of immunity was consonant with justice, he had doubts whether on taking judicial notice of the practice of other States including the ECSI, unratified by the UK, that such a rule had been ‘proved’. Further, he was certain that the doctrine of precedent, stare decisis, forbade the Court from giving effect to such a rule. Accordingly, Stephenson LJ held that the Court of Appeal was bound by previous decisions ruling in favour of an absolute rule until altered by the House of Lords or statute. Trendtex marks a decisive point in the evolution of the common law relating to State immunity. The case was settled before it reached the House of Lords but that Court after the enactment of the SIA implicitly adopted the new approach in I Congreso del Partido.55
The initiatives described above taken by English courts to adapt the common law to meet the needs of business and justice in regard to States acting as traders show how urgent the need was for legislation to put their reforms on a proper footing. But it was more the fear of loss of business to US banks and New York as a centre of finance by the enactment of the FSIA which enabled US courts to render judgments against foreign States for their commercial debts, than regard to case-law, that led the City of London at last to convince the Labour administration of the day of the need for legislation. Chapter 8 discusses the enactment, structure, and procedure in the SIA 1978.
The reasoning in The Schooner Exchange v McFaddon56 provided the basis for a common law doctrine of immunity, and in the following century and a half Marshall CJ’s judgment was developed in the US into a rule of immunity covering the modern State and its property. Two arguments applicable to the forum State appear to have influenced the US courts in extending immunity to the modern State, that neither the forum State itself nor its fellow States in the US union were subject to the ordinary law: as to the first, the immunity of the local sovereign was upheld ‘on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends’;57 and as to the second, the States of the Union under the Constitution continued to enjoy immunity save where ‘there has been a surrender of this immunity in the plan of the Convention’.58
The immunity granted to public warships in The Schooner Exchange was extended by the US Supreme Court to a State ship engaged in trading. The court held immune a merchant ship owned, possessed, and operated by a foreign government in the carriage of merchandise, the court declaring that the principles enumerated in The Schooner Exchange ‘are applicable to all ships held and used by a government for a public purpose, and that when, for the purpose of advancing the trade of its people or providing revenue for its treasury, a government acquires, mans and operates ships in the carrying trade, they are public ships in the same sense that warships are’. Van Devanter J added that the court knew of ‘no international usage which regards the maintenance and advancement of the economic welfare of a people in time of peace as any less a public purpose than the maintenance of a naval force’.59
Contrary to English law, US courts were not prepared to grant immunity to a foreign State solely by reason of its ownership of a ship.60 It was necessary that the ship also be in the possession of the foreign State, alternatively possessed and controlled or managed by a foreign government.61 Ownership by a State was not seen of itself to impress the property with a public character; it was its employment in carrying on operations of the government, even if in trading activity, which entitled the ship to immunity.62 Even privately owned ships if employed by a government for a public purpose could be treated as immune.
The outstanding feature of US law distinguishing it from English law is the US courts’ deference to the executive on foreign relations and the great weight which they gave and still continue to give to State Department suggestions that immunity should or should not be granted. As early as the case of The Schooner Exchange, a US Attorney-General made ‘a suggestion’ of immunity to the court, and from the beginning of the nineteenth century this deference of the courts to the views of the executive became the regular practice. Exceptionally, in The Pesaro the Supreme Court did not follow a State Department suggestion relating to immunity.63 But in the 1940s under Chief Justice Stone, a firm ruling that the US courts must follow any executive direction was laid down. Accordingly, in Ex parte Peru64 the Supreme Court followed an executive direction to grant immunity to a ship in the possession of the Peruvian government. And in Mexico v Hoffman it denied immunity to a government-owned merchant vessel not in its possession when the State Department had merely forwarded without endorsing a request from the Mexican government for immunity. Stone CJ declared:
It is therefore not for the courts to deny an immunity which our government has seen fit to allow, or to allow an immunity on new grounds which the government has not seen fit to recognise. The judicial seizure of the property of a friendly State may be regarded as such an affront to its dignity and may so affect our relations with it, that it is an accepted rule of substantive law governing the exercise of the jurisdiction of the courts that they accept and follow the executive determination that the vessel shall be treated as immune: Ex parte Peru (318 US 588, 87 L Ed 1020, 63 S Ct 793). But recognition by the courts of an immunity upon principles which the political department of government has not sanctioned may be equally embarrassing to it in securing the protection of our national interests and their recognition by other nations.65
This deference of the courts to the executive’s directions was encouraged by the formal manner in which a plea of immunity was required to be made. Only the foreign government or its accredited and recognized representative could raise the issue directly before the court; more usually the State Department suggested or presented the claim to the courts either on its own initiative or at the request of the foreign government following diplomatic exchanges. A claim asserted through the wrong channel, as by the master of a public ship, a consul, or counsel, would not be entertained.66
Building on this acceptance by the courts of its guidance in the field of foreign relations, the State Department issued the Tate letter. In a letter of 19 May 1952 from the Acting Legal Adviser of the Department of State, Jack Tate, to the Acting Attorney-General, it announced: ‘The Department of State has for some time had under consideration the question whether the practice of the government in granting immunity from suit to foreign governments made parties defendant in the courts of the US without their consent should not be changed’.67
The letter continued by noting that ‘a study of the law of State immunity revealed the existence of two conflicting concepts of sovereign immunity, each widely held and firmly established’.68 It then reviewed the advantages of the restrictive theory; and noted that the action of the US in granting immunity in its courts was ‘most inconsistent with the action of the government of the US in subjecting itself to suit in these same courts in both contract and tort and with its long-established policy of not claiming immunity in foreign jurisdictions for its merchant vessels’. It concluded:
Finally the Department feels that the widespread and increasing practice on the part of governments of engaging in commercial activities makes necessary a practice which will enable persons doing business with them to have their rights determined in the courts. For these reasons it will hereafter be the Department’s policy to follow the restrictive theory of sovereign immunity in the consideration of requests of foreign governments for a grant of sovereign immunity.69
The State Department had in fact, in contrast to the Department of Justice,70 supported a restrictive doctrine of immunity in relation to State-owned ships, and the Tate letter enabled it to apply the restrictive theory to all commercial transactions. The letter was very general in its terms; it did not state whether any change to immunity from enforcement was to result from adoption of the restrictive doctrine,71 nor whether the removal of immunity required in addition a territorial connection with the jurisdiction of the US courts. Nor did it provide any criterion to distinguish commercial from public transactions, and as the State Department’s subsequent decisions were to show, the application of the distinction appeared to turn more on political considerations than legal principle. As a move to the restrictive approach, the Tate letter was welcomed by the legal profession and academics but its basis in government policy rather than principle of international law was criticized, with academics urging that the question be treated as one of law, not ‘respect for policy of the department’.72 The State Department’s method of implementing its new policy also came in for criticism. Determinations within the State Department under the Tate letter placed it in the difficult position of seeking to apply a legal standard to a dispute already the subject of litigation, and to decide it in quasi-judicial proceedings, without having the machinery to receive evidence, hear witnesses, and provide for appeals. The initiative rested with the foreign State whether to plead immunity and whether to pursue it through the courts or to refer it to the State Department, and if so whether to apply diplomatic influence. The private litigant was in consequence left in great uncertainty as to whether his legal dispute would be decided by ‘non-legal considerations through the foreign government’s intercession with the Department of State’.73
It is therefore not surprising that in the years following the Tate letter, opinion increasingly strengthened in favour of US immunity practice conforming to that in virtually every other country, sovereign immunity decisions being made by the courts, and not by a foreign affairs agency such as the State Department. The outcome was the enactment of the Foreign Sovereign Immunities Act 1976 which provided a statutory code based on the restrictive approach. One exception to State immunity in relation to certain arbitration agreements was added in 1988. In 1996 a further exception was added, restricted in its application to a foreign State designated by the State Department as a ‘sponsor of terrorism’ for acts of terrorism and similar activities. For the legislation relating to these exceptions, and to enforcement measures against a foreign State’s property as well as the Alien Tort Statute 1789 and the Torture Victim Protection Act 1991, see further Chapter 8.
As noted above, Australia, Canada, Malaysia, Pakistan, South Africa, and Singapore have all enacted legislation on State immunity adopting a restrictive approach.74 Recent amendments to the Canadian SIA follow the US model of designating ‘State sponsors of terrorism’, and introduce an even broader jurisdictional basis, allowing Canadian nationals and permanent residents who are victims of terrorism, as well as others if the action has a ‘real and substantial connection to Canada’, to seek redress by way of a civil action for terrorist acts committed anywhere in the world on or after 1 January 1985.75 The Canadian State Immunity Act 1982, section 6 (which provides a tort exception for death or personal injury that occurs in Canada) is extended to permit proceedings against a foreign State ‘for its support of terrorism on or after January 1, 1985’, but only in respect of a foreign State whose name is set out on a list by order of the Governor in Council and only where, ‘on the recommendation of the Minister of Foreign Affairs made after consulting with the Minister of Public Safety and Emergency Preparedness, the Governor in Council is satisfied that there are reasonable grounds to believe that the foreign state supported or supports terrorism’, section 6.1(2).76 Section 6.1(11) provides that where a Canadian court has determined that such a listed foreign State has supported terrorism, that State is not immune from the jurisdiction of a court in proceedings against it that relate to terrorist activity by the State.77 Two States, Iran, and Syria, were listed as of May 2013.
Botswana, Kenya, Ireland, New Zealand, Nigeria, and Zimbabwe have no legislation, but their courts have accepted that the restrictive doctrine is now applicable.78 Although Trinidad and Tobago declared itself in support of the absolute doctrine in 1982,79 with the adoption of the 2004 UNCSI other common law jurisdictions are also likely to adopt a restrictive approach.
In India the political nature of State immunity is emphasized by the grant of immunity being made dependent on the central executive; section 86 of the Indian Code of Civil Procedure 1908 provides, subject to certain exceptions, that no foreign State may be sued in any court otherwise competent to try the case except with the consent of the central government, verified in writing by the Secretary of State. In 1986 the Indian Supreme Court held this rule to vest authority in the central government to determine claims relating to State immunity and thus prevented the Indian courts applying international law principles in determining their jurisdiction, although it was nonetheless possible for them judicially to review the reasonableness of the central government’s decision.80 India indicated support for the restrictive doctrine by signing on 12 January 2007 the UNCSI; this support is further indicated in a report on the negotiations leading up to this signature, prepared in 2004 for the AALCO Secretariat based in India, which concluded: ‘When there has been a large-scale movement of investments, disputes arising out of such ventures need a legal mechanism. Therefore, early adoption of the Convention would facilitate the smooth flow of investments, as it would bring in legal clarity in such transactions.’ It therefore seems possible that the Indian courts will now be more favourable to the application of the restrictive approach to State immunity.
In 1997 Chief Justice Barak sitting in the Israeli Supreme Court provided an authoritative review of ‘the customary norms of international law [which] constituted a part of the Israeli law in the absence of a domestic statutory provision prescribing the contrary’, but strongly urged the need for enactment of legislation. Applying a restrictive doctrine of State immunity and the nature of the act as the generally accepted basis of decision, he ruled that the purchase, building and lease of property, despite the official nature of its intended use for diplomatic or consular premises, were simple commercial transactions. Accordingly, he held Canada to enjoy no immunity in respect of failure to vacate as agreed premises for use by the Ambassador and his family. He nonetheless readily acknowledged that ‘[t]he outcome of the case could have been different had it concerned a motion to evict a diplomatic representative from his residence’.81 His advice was promptly followed by the enactment of the Israel Foreign States Immunity Law 2008, which is notable for its express exclusion of criminal proceedings (section 2) and for empowering the Minister for Foreign Affairs in consultation with the Attorney-General to prescribe by order that a political entity shall have immunity though its international legal status does not amount to that of a State (section 20).82
The position as to States which have enacted no legislation and have had no or few proceedings before their courts is more difficult to ascertain. A survey in response to a UN questionnaire in the 1982 UN Legal Materials showed that the majority of the 31 States which responded, regardless of their position as to doctrine, stated that the subject was governed by international law; in most cases they had no domestic law relating to State immunity. At that time only Brazil, Sudan, Syria, Trinidad and Tobago, the USSR, and Venezuela clearly supported absolute immunity, but even these based the grant of immunity on reciprocity of treatment. Czechoslovakia and Hungary, although stating that they observed the absolute doctrine, admitted limited exceptions, and Hungary stated that judicial practice was likely ‘to develop towards the distinction between public and non-public acts in accordance with the demands of life’.83 In reply to the Questionnaire of the ILC Special Rapporteur Mr Ogiso in 1988, Brazil, Bulgaria, Byelorussia, China, the German Democratic Republic, and Venezuela expressed continued support for the rule of absolute immunity. At the same date, Cameroon, Chile, the Nordic States (Denmark, Finland, Iceland, Norway, Sweden), Belgium, Spain, the eight European countries ratifying the ECSI, and the common law countries with State immunity legislation supported a general rule of immunity subject to exceptions, variously expressed, for commercial transactions.
In 2002 the Council of Europe commissioned a project, conducted under the supervision of its Committee of Legal Advisers on public international law (CAHDI), to ascertain national laws and regulations and judicial decisions relating to State immunity. Over a period of two years, materials covering this State practice were collected from some 27 Member States of the Council of Europe and one observer State, Israel; analytical reports under various subject headings were compiled by three academic institutes84 to reveal shared practices and common positions, and to be compared to the provisions of the ECSI and UNCSI, with summaries of the materials submitted by each contributing State annexed.85 In addition, in Part II a summary was provided of all the court decisions submitted, sorted in accordance with the structure of the UN Convention under headings relating to exceptions to State immunity and to measures of constraint.
The survey demonstrates a fairly consistent preference throughout by national courts for the application of a restrictive rule.86 Here it is sufficient to state the more general conclusions set out in this survey.87 In the materials collected, many countries are noted as applying without clear distinction both diplomatic and State immunity to claims made against foreign States88 and some—in their official communications and court decisions—continue to show adherence to an absolute doctrine. As regards the extent to which separate entities are treated as part of a State entitled to immunity, the collected material shows that, even for constituent units of federation, although there is no common position, there is a move to a restrictive rule. The nature of the act performed whether in exercise of sovereign authority on behalf of a particular foreign State or of a private law nature has become the principal issue.89 Once determined as a public act, the status of the entity performing the act and its attribution to the State on whose behalf it is exercised becomes a relatively simple matter. Only in borderline questions do the previously much contested issues of conferment of separate legal identity, control, and funding by the foreign State and the comparison of the laws of the foreign and forum States become necessary.90 Nonetheless, continued application of the absolute rule with regard to commercial decisions relating to commercial acts is demonstrated in decisions provided by courts in Bulgaria, the Czech Republic, Poland, Romania, and Russia.91 The reporter Wittich comments: ‘While this review discloses more decisions on absolute immunity than expected, practice with regard to absolute immunity is scarce, the more so as most of the cases are not free from ambiguity and are rather isolated or at least peculiar to their factual background, or have been rendered obsolete by later jurisprudence. Nevertheless, they show that still today the theory of absolute immunity plays a role—albeit a marginal one—in the practice of European States’ (Hafner, 29–30). The bulk of the court decisions submitted by States to the Council of Europe concerned employment cases, with the majority of these relating to employment of personnel in embassies and consulates. The interests of the employer State frequently resulted in the confirmation of the asserted immunity over the labour rights of the employee. In employment in other institutions connected with the State such as libraries, schools, cultural or commercial agencies, greater weight was given to the employee, with much greater attention to the circumstances of the employment.92 As regards immunity from enforcement, the materials support ‘that absolute immunity is no longer the rule’ with increasing support for execution of judgments relating to commercial acts against State property held for non-governmental purposes.93
Having regard to the above surveys by the UN in 1982, the ILC in 1988, and the Council of Europe in 2002, the following abstract of the practice of national courts makes no attempt to trace the treatment of State immunity in individual countries but merely draws attention to significant developments, leading cases, and the elucidation in specific cases of points of general interest relating to the evolution of the restrictive doctrine in both common law and civil law jurisdictions.94
As with early developments in common law countries, the law in civil law countries relating to State immunity was developed through the courts without the aid of legislation or treaty.95 State immunity slowly detached itself from the immunities afforded to its personal head, its diplomatic representatives, and its fighting ships to give protection to the apparatus of modern government in all its functions. In 1849 in Lambège et Pujol v Etat d’Espagne, the French Cour de Cassation declared that ‘l’indépendance réciproque des Etats est l’un des principes les plus universellement reconnus du droit des gens. De ce principe, il résulte qu’un gouvernement ne peut être soumis, pour les engagements qu’il contracte, à la juridiction d’un état étranger’.96 It was accordingly accepted throughout the nineteenth century that the foreign State for reasons of independence, equality, and comity was not subject to the jurisdiction of the national court and that immunity extended to all its activities. There was, however, debate as to how far such immunity extended to lower units of government in departments, provinces, and cities and a shift of emphasis to the nature of the act and its purpose rather than the entity by which it was performed. Internally, Napoleon’s introduction of a separate system of the Conseil d’Etat ‘to resolve difficulties which might occur in the course of the administration’ led to the separation of the administrative activities of the State from civil suits between private parties.97 In proceedings relating to foreign States, civil courts in defining the nature or purpose of the act began to employ the concepts of public service and exercise of ‘puissance publique’ developed in administrative law to determine the exercise of jurisdiction over foreign States.98
By the end of the nineteenth century, as with the US and English law, French and other civil law systems accorded immunity to the State, but there was diversity of decision and fluctuation between absolute and restrictive doctrines. Trooboff identifies five factors which worked in favour of a change from an absolute to a restrictive doctrine of immunity. They were: increased accountability of the forum State before its own courts; increased trading activity of States; declining support for a rationale based on sovereignty and dignity of States; increased use of waivers, particularly in public debt transactions; and a fundamental unfairness towards the private party in the operation of the doctrine.99
The position up to 1963 was well summarized by the West German Federal Constitutional Court in the Empire of Iran case:
Until the time of the First World War the clearly predominant practice of States was to grant foreign State absolute immunity or, in other words, to exempt them from domestic jurisdiction in respect of both their sovereign and their non-sovereign activities. Since then, however State immunity has been ‘undergoing a process of contraction’ (Dahm, Festschrift für Arthur Nikisch (1968) 153 et seq.); its history has ‘become the history of the struggle over the number, nature and scope of exceptions’ (Ernst J. Cohn in Strupp-Schlochauer, Wörterbuch des Völkerrechts, vol. I, 662). The increasing activity of States in the economic field, and particularly the expansion of State trading, seemed to make it necessary to except acts jure gestionis from State immunity. It was felt that private parties must be given greater legal protection through the courts than in the past, not only against their own States but also against foreign States. Mainly for these reasons, the trend in recent decades has led to a situation in which one can now no longer point to a long-standing custom observed by the overwhelming majority of States, in conscious fulfilment of a legal obligation, whereby foreign States are immune from domestic jurisdiction even in respect of actions relating to their non-sovereign activities.100
In Part III of this book the application of the restrictive doctrine by civil law courts is examined in some detail in respect of the established exceptions to State immunity. Here, only a brief summary of the changing position in each country is given.
Courts in Italy and Belgium and the mixed courts of Egypt were the first to recognize a restrictive doctrine of State immunity in the late nineteenth century. The adoption of a restrictive doctrine was more hesitant in other European countries.
In Italy, a number of cases in the 1880s applied a restrictive approach, distinguishing between the State as bearer of sovereign authority (ente publico) and the State as subject of private law (ente civile) and activities of a sovereign or private law nature (atti d’impero, atti di gestione).101 Later cases also employed a wide construction of implied waiver.102 By the 1970s the rule was clearly established in the Cour de Cassation that among the generally recognized customary rules of international law, the Italian legal order recognized a rule of international law exempting foreign States from jurisdiction only as ‘to those relations which remain completely outside the Italian legal order or because those States act, albeit within the territory of some other States, as subjects of international law, or because they act as the holders of a power of command within their own legal order and within the limits of their own territory’. However, where ‘a foreign State acts independently of its sovereign power, placing itself on the same level as a private citizen, it cannot be exempted from the jurisdiction of other States, inasmuch as it carries out its activities as a subject of the legal order of the State of the forum’;103 as shown by court rulings on wrongful dismissal and enforcement of judgments this distinction was not always an easy one to apply.104 The Italian Constitutional Court increasingly showed a progressive approach favourable to the interests of the private individual in its decisions with regard to State immunity as a bar to proceedings brought in Italian courts: in 1992 it declared unconstitutional a 1926 law providing for execution against State property ruling that it was not a matter of discretion having regard to reciprocity for the consent of the Minister of Justice, but a judicial function to determine whether assets were in public or commercial use.105 Further debate arose as to the extent to which the constitutional norm of Article 10(1) of the Constitution requiring the Italian legal system to conform with the generally recognized rules of international law permitted the disregard of State immunity by reference to rules of higher rank.106 In a confrontation only finally resolved by the International Court of Justice (ICJ)’s judgment on 3 February 2012, the advanced views of the Italian Cour de Cassation came to a head in the refusal of immunity to the State of Germany in a series of cases arising from war damage inflicted by German military forces in 1943–45; for an outline of the ICJ’s judgment upholding Germany’s immunity, see Chapter 5. One category of cases is represented by Ferrini, which related to an Italian national entitled to prisoner-of-war status, suffering deportation in 1944 and enforced labour; this situation was claimed to come within the tort exception to immunity. Another category is represented by the Milde case where following a sentence in absentia to life imprisonment, Milde and Germany were ordered to pay reparation to the successors in title to victims of a massacre in which he as a member of the German armed forces had taken part; here it was argued that the nature of the alleged acts as crimes under international law were of a jus cogens nature and without effective alternative means of redress affected ‘universal values which transcend the interests of individual state communities’. Further discussion of these grounds and the tort exception is found in Chapter 15. Consequent on its disregard of Germany’s immunity from adjudication, the Italian Cour de Cassation also made additional rulings setting aside immunity from enforcement by recognizing a Greek judgment given against Germany in similar disregard of immunity and by imposing a legal charge to meet the cost of reparation awarded on the Villa Vigoni, a German owned property used as a cultural institute located on Lake Como; the ICJ declared these rulings of the Italian Court also to be in breach of international law, see further Chapter 16 ‘State Immunity from Enforcement’. Italy acceded to UNCSI on 6 May 2013.
Belgium
Belgian courts showed an unusual consistency of practice in favour of a restrictive rule, and in 1903, the Cour de Cassation confirmed this practice, holding that the Netherlands might be sued in respect of a sum alleged to be due under a contract relating to the enlargement of the railway station at Eindhoven.107 In that case the court ruled that a foreign State, just like a private individual, could be sued before the Belgian courts without putting its sovereign authority in question when the proceedings only required the exercise or defence of a private law right. Many decisions of the Belgian courts relied strongly on implied waiver derived from the foreign State’s voluntary conduct of business within Belgian territory, and even applied this approach to treat the foreign State as submitting to the Belgian court in respect of execution in respect of commercial activities. In the well-known case of Socobelge v The Hellenic State108 this line of argument led the Brussels court to approve the attachment of assets paid to Greece by way of Marshall Aid out of US funds and deposited by Greece in Belgium. The ECA, the agency responsible for distribution of such aid, threatened to cut off Marshall Aid to Belgium and the Belgian government was obliged to arrange an out-of-court settlement between the private creditor and the Greek government. In subsequent cases up to the present day, Belgian courts have adopted an increasingly critical stance when a State pleads immunity from execution.109 Belgian courts have also stressed the need with regard to the enforceability of the immunities of an international organization, for the organization’s own procedures of redress to provide ‘equivalent protection’ to that required by the procedural right of access to court, pursuant to ECHR Article 6(1).110
Mixed courts of Egypt
The mixed courts, established in 1875 by the Khedive Ismail, were the foremost judicial authority in Egypt from 1875 to 1949,111 and were one of the earliest jurisdictions to draw distinction between the public and private acts of government. In an 1894 case where an Englishman sued the Egyptian government for the cancellation of a concession to build tramways in Cairo, the Mixed Court of Appeal held that the granting of a commercial concession was ‘not a matter of public sovereignty’ and could be tried in the Courts.112 The restrictive rule was reinforced in the 1896 Dongola Expedition case. The question was whether the Egyptian government was entitled to use the surplus money of the Caisse de la Dette for its own purposes; the Caisse had been established in 1976 to regulate the payment of foreign loans.113 The question arose in the context of the government funding a military expedition to capture Dongola, the most strategically important town in the Sudan. The Mixed Court of Appeal held that even though the decision to engage in military action was a sovereign act, the advance of the money by the Caisse was a private act that did not benefit from immunity.114 Subsequent cases followed the restrictive rule, denying immunity to a government-owned ship which was found to be on a commercial voyage, to the Caisse Nationale d’Epargne of France in relation to the provision of savings accounts,115 and to the Greek Treasury, finding that its acts were akin to the management of a private business.116
In France, an early decision of the Cour de Cassation relating to the supply of boots to the army pronounced in favour of absolute immunity in Gouvernement Espagnol v Casaux.117 Later decisions of lower courts relating to former heads of State and the State acting as a personne privée sought to limit the rule to the public persona or actes de puissance publique. The exclusive management of all economic and commercial activity by the Communist government on its takeover of power in the Russian State placed the traditional view of the State as a public persona under strain. Accordingly, there was a first clear shift to a restrictive rule in 1929 when suit was allowed against the commercial representative of the newly recognized USSR.118 It was not, however, until 1969 that French law clearly adopted the restrictive rule in Administration des Chemins de Fer du Gouvernement Iranien v Société Levant Express Transport.119 The Cour de Cassation declared that the nature of the activity and not the quality of the person exercising it was determinative of immunity and, applying the criteria used in administrative law, indicated that both the nature and purpose of the activity were to be considered. Immunity was to be granted if the alleged activity constituted ‘un acte de puissance publique ou a été accompli dans l’intérêt d’un service public’.120 The French government’s proposals to ratify the UNCSI, presented in 2010 to 2011 to the French Senate and the Assembly, provide a useful survey of the law relating to State immunity as applied in the French courts: the extension of immunity to entities exercising other than governmental or administrative powers, even though possessed of a separate legal personality, provided they acted on behalf of the foreign State, Neger v Land de Hesse;121 the application of immunity to employment contracts dependent on the nature of the work undertaken and a scrutiny of whether the functions and responsibilities of the employee were directed to private tasks or in exercise of a sovereign function; and with regard to enforcement, the placing of the burden of proof upon the public organization to prove that the assets sought to be attached were in use for a public purpose.122 This last aspect was illustrated by a French court’s decision holding the Swiss company, NOGA, was unable to enforce a commercial liability owed by Russia against a Russian registered ship, SS Sedov, by reason of it being on assignment to a university as a training ship, and hence, being in public use, immune.123 The French government in its proposals also explained that France had not signed the ECSI, preferring to wait for a worldwide convention which could be applied directly by French courts and provide greater legal certainty to French enterprises contracting with foreign States once they too had ratified the UNCSI. French courts, as those of Belgium, have scrutinized the alternative settlement procedures of international organizations to be satisfied that they offer equivalent protection to claimant employees.124 France ratified the UNCSI on 12 August 2011.
Until the late 1980s both Spain and Portugal observed the absolute doctrine of immunity.125 In the subsequent years their courts increasingly came to recognize the restrictive doctrine.126 As regards enforcement, in 1992 the Spanish Supreme Court declared that in view of the fundamental right to a fair hearing by a judicial organ the courts should not simply deny the right to enforce a judgment; nonetheless, although advising on the exhaustion of all alternative possible ways of execution, such as credits, aids, or subsidies granted to the foreign State, it held no measures of constraint could be taken against bank accounts of a foreign embassy.127
Both countries have now ratified the UNCSI, Portugal on 14 September 2006 and Spain on 21 September 2011.
The development of a restrictive approach in Austria, Germany, and Switzerland was similarly hesitant until after the Second World War.128
Austria
The question whether a foreign State could be sued in Austrian courts was not answered in a uniform manner until, after the Second World War, two decisions of the Austrian Supreme Court indicated a clear commitment to a restrictive doctrine. In one of the few cases of a State pleading State immunity in respect of intellectual property rights, a German company, the owner of trademarks registered in Austria, applied for an injunction. The injunction sought to restrain Czechoslovakia, which had nationalized a branch of the company located in that country, from using the trade marks in Austria. After an extensive review of the practice of its own and of other countries’ courts, the Supreme Court concluded that there was no communis opinio doctorum regarding the exemption of foreign States from the jurisdiction of municipal courts in respect of legal relations in private law. Consequently, the Court held Czechoslovakia not to be immune in relation to acta gestionis, which included registration for use in commerce of trade marks. Whilst upholding the validity under Czech law of the nationalization of the trade marks, the Supreme Court held that the confiscation of trade marks had no extraterritorial effect, and accordingly granted the injunction against their infringement in Austria by the Czech government.129 In the second case, the same court rejected a plea of immunity by the US in respect of a claim arising out of a motor vehicle accident caused by the negligence of a US embassy driver. It was contended on behalf of the US government that all means used by a State in the exercise of sovereign rights constituted sovereign acts, and that this applied to the vehicle pool and the present case where the vehicle had been used for the collection of mail for the air attaché. The court gave guidance as to how a sovereign act was to be distinguished from a private one. In particular, the court asked whether the relationship between the parties was one of equality rather than subordination, and the court looked to the nature of the act of driving as opposed to its purpose, being the collection of mail:
We conclude that the act from which the plaintiff derives his claim for damages against the defendant is not the collection of mail but the operation of a motor car by the defendant and the latter’s action as a road user. By operating a motor car and using public roads, the defendant moves in spheres in which private individuals also move. In these spheres, the parties face one another on a basis of equality, and there can be no question here of any supremacy and subordination. It follows that insofar as liability for the damage is concerned, the foreign State must be treated like a private individual.130
This case is remarkable, for unlike the majority of non-immune private law claims, it did not arise out of a contract or voluntary relationship between the parties from which consent of the State to local jurisdiction could be implied. The Supreme Court’s ruling undoubtedly provided authority for the inclusion of an exception to State immunity for torts in the ECSI (interestingly, as it was first formulated, this exception related solely to motor accidents occurring within the forum State).131
Germany
As in other jurisdictions, German case-law manifested hesitancy, but in 1921 the Reichsgericht in The Ice King132 declared, despite a tendency particularly in the literature to do away with immunity of State property engaged in private business, that a foreign State was in principle immune even in purely private law actions. Thus it held immune a claim arising out of a collision involving a merchant ship operated for commercial purposes by the US Shipping Board. But Germany then changed her position, ratifying the Brussels Convention of 1926 before the Second World War, and its courts increasingly applied a restrictive doctrine for maritime and private law activities. This trend was authoritatively confirmed by the Federal Constitutional Court in the Empire of Iran case,133 when it held there to be no immunity for a claim for repairs carried out at the Iranian Embassy in Bonn on instructions of the ambassador. The magisterial review conducted by that court of State practice, bilateral and multilateral treaties, and legal writing, and the clarity of its reasoning, led to its acceptance as authority that international law permits a restrictive doctrine of State immunity and that the proper criterion for the distinction between sovereign and private acts is the nature of the act, not its purpose. Lord Denning relied on its authority in his pioneering attempts to introduce the restrictive doctrine into English law, as did Lord Wilberforce in Il Congreso del Partido when propounding the criterion of the nature of the transaction.
In later cases the German Federal Constitutional Court gave rulings on the scope of a foreign State’s immunity from execution in respect of State property. In the Philippine Embassy case,134 the court concluded that international law as established by State practice permitted forcible measures to be taken in respect of property in commercial use to satisfy liabilities incurred in respect of non-immune commercial activities (acta jure gestionis). However, the Constitutional Court ruled that the principle ne impediatur legatio, which requires that the proper functioning of the embassy should not be impeded, precluded forcible measures against the bank account of a diplomatic mission of a foreign State. Such measures were precluded even though they were sought in satisfaction of a non-immune private law or commercial transaction. In Re Prejudgment Garnishment against National Iranian Oil Co, the Constitutional Court addressed the more difficult issue of the extent to which the ultimate designation of funds as payable to the State deprived them of their present commercial use when at the disposal of a State trading enterprise. It ruled that the fact that any credit balances derived from oil revenues in the account were required to be transferred to the State budget was no bar to proceedings for the attachment of accounts in a German bank in Frankfurt held in the name of the National Iranian Oil Company, a State-owned trading enterprise with a separate legal personality. This decision, which was based on a careful examination of relevant legislation and the case-law of other countries, confirmed the modern tendency to treat the property of a State-owned entity engaged in trade with property held in its own name as entitled to neither immunity in personam nor immunity in rem for its property, regardless of an ultimate obligation to account for any profits to the State which established it. Recently one attempt of many to enforce against the Russian Federation an award of the Stockholm Chamber of Commerce arbitration tribunal in Sedelmayer’s favour, for compensation for expropriation of his premises in Russia was successful. Although the Russian Federation’s waiver of immunity applied only to immunity from adjudication, on the facts the German Federal Supreme Court held that the revenue gained through its letting activities to finance the activities of the Russian House of Sciences and Culture was not immune: ‘[The] two types of assets had to be distinguished: on the one hand, assets which directly furthered administrative activities of a state by their mere usage; and on the other hand, assets which furthered administrative activities only indirectly, through the utilization of their fruits. The assets that were subject to enforcement in the present case stemmed from the private letting of business premises. Hence, they contributed only indirectly to the administration of a state, if at all’ (paragraph 34).135 In consequence they were not immune.
As mentioned above, following repeated decisions by Greek and Italian courts in disregard of Germany’s immunity in cases concerning reparation for war damage by German military forces in 1943–45, culminating in an attachment order made by the Italian court against a cultural institute owned by Germany in Italy, Germany applied to the ICJ. The International Court declared these rulings of the Italian courts to be in breach of international law; see further the Index.
Switzerland
A restrictive doctrine has been applied by the Swiss Federal Tribunal since 1918, with regard both to immunity from adjudication and enforcement;136 with immunity being granted in respect of the account of a diplomatic mission in respect of unpaid rent of a villa.137 In Republique Arabe d’Egypte v Cinetel,138 the Federal Tribunal explained that in order to determine whether the act in question was commercial, its nature had to be examined; it held that a contract for the supply of television programmes between Cinetel and the State Television Organization of Egypt (TVRAU) was clearly a contract that could have been concluded between two private persons and did not attract immunity. In the case of Republique X v Office federal de la justice,139 the State challenged the freezing of its bank accounts, explaining that the Swiss bank was assisting the State with privatizations and negotiations relating to oil concessions. The Federal Tribunal observed that while the exploitation of natural resources was ‘une activite de service public’, it did not necessarily mean that immunity from jurisdiction had to be accorded to any litigation resulting from that activity. The receiving, keeping, and transferring of funds did not attract such immunity. As regards immunity from execution, two conditions broaden the scope of this immunity in Swiss law: (i) measures of execution cannot be ordered if the property serves the exercise of diplomatic relations or other tasks related to ‘la puissance publique’; (ii) there must be a link with Swiss territory.140 The Swiss Federal Tribunal held a judge who exercises criminal jurisdiction by the issue of an arrest warrant to exercise a public power of a sovereign State, Spain, and accordingly to enjoy immunity in proceedings brought in the Swiss court by the person arrested.141 The Swiss government ratified the UNCSI on 16 April 2010.
After the Second World War the Soviet Union and East European States under its rule observed an absolute rule of immunity and even after the dissolution of the Soviet Union the courts of some of these countries continued to apply an absolute rule
Under Article 251 of the Arbitrazh Procedure Code of the Russian Federation ‘a foreign State, which acts jure imperii, enjoys jurisdictional immunity’. Though the wording of this article is not entirely clear, commentaries on the Arbitrazh Procedure Code in the main suggest that Article 251 introduces the principle of ‘functional immunity’. Article 401 of the Civil Procedure Code provides for absolute immunity of a foreign State unless otherwise provided for by treaty or federal law.143 However, to date no relevant federal law has been passed. The Presidium of the Supreme Arbitrazh Court on occasion directs that a case should be sent back for a new hearing.
Proceedings in Russia for a ruling on liability or enforcement of a commercial transaction are subject to many technicalities, procedural requirements, and arbitrary rulings; frequently the decision of a higher court or the Presidium of the Supreme Arbitrazh Court will reverse the decision of a lower court. In 2001 the Russian High Arbitration Court rejected a claim relating to a construction contract brought against a foreign embassy144 but in Kalashnikova v United States the Constitutional Court of the Russian Federation stated that Article 435 of the Civil Procedural Code providing for the immunity of an Embassy of a foreign State was subsidiary to provisions of the Labour Code in disputes arising from employment contracts and returned the case for reconsideration to the High Arbitration Court.145
In pursuing a claim the identification of the correct defendant party and its mandate is essential;146 entities connected with the State of Russia may be regions, cities, or municipalities with their own legal personality and capacity to enter into contracts but require express specific State authorization if their acts are to bind the State; university and cultural entities are liable solely in respect of their own limited assets. The terms of any waiver are strictly construed and the authority of the Russian State not readily accepted; a ruling by the Presidium of the Supreme Arbitrazh Court stated that ‘An arbitration agreement concluded by parties that do not have the authority to waive jurisdictional immunity and which has been signed in breach of the established procedure cannot be considered legal grounds for a State to waive jurisdictional immunity’ (Decree No 9982/05 of the Presidium of the Russian Federation Supreme Arbitrazh Court of 12 December 2005).
State agencies are hesitant to submit for jurisdiction of foreign courts, but are ready to negotiate an arbitration clause preferably for local submission to the jurisdiction of a domestic arbitral tribunal, such as ICAC in Moscow. Russian domestic courts generally have jurisdiction with regard to investment disputes. The Russian Federation has signed, but not ratified, the 1965 Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (ICSID) and has also signed the UNCSI on 1 December 2006.
In holding Russia to be in breach of the right of access to court in Article 6(1) in the Oleykinov case, the ECtHR First Section noted that the Russian Federation had accepted restrictive immunity as a principle of customary international law. Setting out the position as to Russian law in 2013, it held:
In particular, the President of Russia on two occasions, in the Opinion of 13 May 1998 and the Letter of 23 June 1999, clearly stated that restrictive immunity constituted a customary norm of international law, whereas the principle of absolute immunity was obsolete. In addition, the two highest judicial authorities, the Constitutional Court and the Supreme Commercial Court, also pronounced on the issue of State immunity. Whereas in the ruling of 2 November 2000 the Constitutional Court stated that a formalistic application of Article 435(1) of the Code of Civil Procedure 1964 would lead to an inadmissible limitation of the right to judicial defence and instructed the courts to investigate the possibility of there having been an implied waiver of immunity by the foreign State, in the Information Letter of 18 January 2001 the Supreme Commercial Court unequivocally instructed the lower courts to apply restrictive immunity, despite absolute immunity being the rule under the 1995 Code of Commercial Procedure then in force. Furthermore, Article 251 of the new Code of Commercial Procedure adopted in 2002 provided for restrictive immunity to be applied in proceedings before the commercial courts.147
Hungary in 2000 brought its domestic law in line with the Lugano Convention of 16 September 1988 on Jurisdiction and Enforcement of Foreign Judgements and ECSI 1972 to apply a restrictive doctrine to claims brought in its courts against foreign States.148 Courts in the Czech Republic, Bulgaria, Poland, and Romania continued to treat commercial claims brought against foreign States as immune,149 though in doing so there has been some confusion as to whether a claim relates to diplomatic or State immunity; claims relating to property and leasing of premises have more readily been treated as brought against ‘a civil moral person and therefore deemed not to have immunity of jurisdiction’150 and a greater readiness to entertain claims arising out of employment contracts has been shown.151
On rejection of a claim by the Lithuanian Supreme Court for wrongful dismissal following proceedings arising from allegations of sexual harassment by another member of the Polish diplomatic mission, the ECtHR held there to be a breach of Article 6(1) relating to access to court; it noted that the practice of the Lithuanian Supreme Court confirmed that it had ‘abandoned the concept of absolute State immunity’; further ‘it should not be overlooked that the applicant’s dismissal and the ensuing proceedings arose originally from acts of sexual harassment that had been established by the Lithuanian Equal Opportunities Ombudsman, with whom the applicant had filed her complaint. Such acts can hardly be regarded as undermining Poland’s security interests’.152
In 2010 in a decision relied upon by the ICJ in its 2012 judgment, the Polish Supreme Court ruled that immunity of the German State barred a claim for reparation for war crimes though constituting international crimes and contrary to jus cogens.153
Estonia, Finland, and Slovakia have signed the UNCSI.
In 1960 the Asian-African Legal Consultative Organization (AALCO) adopted a report entitled The Immunity of States in Respect of Commercial Transactions. The Final Report stated that all the delegations, except that of Indonesia, ‘were of the view that a distinction should be made between different types of State activity and immunity to foreign States should not be granted in respect of their activities which may be called commercial or of a private nature’. At subsequent meetings of the AALCO, Member States, including the People’s Republic of China (PRC/China), Indonesia and South Korea but not Myanmar have indicated support for the ILC’s draft Articles on the Jurisdictional Immunities of States and their Property.154 Singapore and the Philippines have adopted a restrictive rule.155
The positions of China and Japan deserve closer examination. While Japan has moved decisively to adopt the restrictive rule, China’s long-term adherence to the absolute rule of State immunity156 has recently become more entrenched.
The PRC until the last seven years or so appeared to be modifying her adherence to a rule of absolute immunity and accepting that State corporations or entities with independent legal personality enjoy no immunity. She has shown herself ready to waive immunity by bilateral treaty157 and it seemed possible that, as a member of the WTO, she would increasingly modify her position by consent.158 She signed the UNCSI on 14 September 2005.159 However, in FG Hemispheres v Congo in proceedings by the assignee for the enforcement of two arbitration awards made in Switzerland as to Entry Fees payable to the Congo by Chinese State trading agencies in return for exploitation of Congo’s mineral resources, a plea of absolute sovereign immunity was upheld with the full support of the PRC.160 A letter produced from the Commissioner of the Ministry of Foreign Affairs of the PRC in the Hong Kong Special Administrative Region (HKSAR), stated ‘The consistent and principled position of China is that a state and its property shall, in foreign courts, enjoy absolute immunity, including absolute immunity from jurisdiction and from execution, and has never applied the so-called principle or theory of “restrictive immunity”’. At first instance Reyes J stated ‘… having signed the Convention, the PRC Government must be taken to have at least indicated its acceptance of the wisdom of the provisions therein’ (para 65). He held that after the transfer of the HKSAR by the UK to the PRC in 1997 the restrictive doctrine of immunity recognized by the common law continued to apply, but dismissed the claim to enforce the awards against the entry fees payable by reason that the proceedings did not relate to a commercial transaction but ‘the working out of a cooperative venture between two sovereign states’. On appeal the Hong Kong Court of Final Appeal, by majority of 3 to 2,161 ruled that:
The HKSAR cannot, as a matter of legal and constitutional principle, adhere to a doctrine of state immunity which differs from that adopted by the PRC. The doctrine of state immunity practised in the HKSAR, as in the rest of China, is accordingly a doctrine of absolute immunity.
The Court of Final Appeal’s (CFA) ruling was made subject to reference to the Standing Committee of the National People’s Congress, being questions relating to the interpretation of Articles 13 and 19 of the Basic Law. On 26 August 2011 the Standing Committee confirmed the CFA’s ruling. The decision of the Hong Kong Court in FG Hemisphere v Congo and the adamant rejection by the PRC of any modification of absolute immunity in respect of the law applicable in Hong Kong is undoubtedly a setback for the universal adoption of the restrictive doctrine of immunity. This case is further examined in Chapter 9, under waiver in Chapter 11 and enforcement in Chapter 16.
Until 2000, Japanese courts continued to apply the rule of absolute immunity laid down by the Supreme Court; as in 1928 when immunity was granted to China in respect of failure to honour promissory notes drawn by the Chinese chargé d’affaires.162 However, in the past decade there has been a move away from the absolute rule: in a case decided in 2000 where immunity was granted relating to a complaint concerning compensation for noise from over-flying by night of aircraft from a US military base, a possible change of position in favour of a restrictive rule for civil suits relating to acts jure gestionis was indicated.163 In 2006 the Japanese Supreme Court finally gave effect to that change reversing a ruling of the Tokyo High Court holding the non-payment of amounts owing under a contract for the purchase of computer equipment by a company connected with the Pakistani defence ministry was not immune. The Supreme Court cited the UNCSI in support of a ruling that whilst under customary international law nations continue to enjoy absolute immunity for ‘sovereign acts’, that is no longer the case with respect to their private law and business activities (‘literally activities of a private law or business managerial nature’).164 This qualification troubled the committee when drafting the legislation to give effect to the 2004 UN Convention in Japan in considering whether the definition of commercial transaction should apply to other non-commercial acts of a private law nature: after a lengthy exchange of views, a majority view adopted an understanding recorded in the minutes that the definition of commercial transaction as set out in ACJFS, Article 8, was to be interpreted by the domestic courts of Japan, that whether the words in Article 8 ‘commercial and civil’ applied to the activity were to be determined by the nature of the transaction subject to the limited exception provided by the special circumstances test as laid down by the Supreme Court in the Pakistan Loans Contract case.165 Following signature on 11 January 2007 and the Japanese Diet enacting an Act on the Civil jurisdiction of Japanese Courts over Foreign States in May 2009, Japan ratified the UNCSI on 11 May 2010. See Chapter 9 for further details about the Japanese legislation on State immunity.
From the foregoing it can be accepted that, by 1989, as stated by the ILC’s second Special Rapporteur Motoo Ogiso, there was ‘a clear and unmistakable trend towards recognition of the principle that the jurisdictional immunity of States is not unlimited’.166 That trend was strongly and widely endorsed in 2004. The Sixth (Legal) Committee of the UN General Assembly met in October and November 2004 to consider the draft convention on State Immunity which its Ad Hoc Committee chaired by Professor G Hafner was recommending for adoption. A very wide range of States spoke in support of its adoption—the Netherlands (on behalf of the European Union), Bulgaria, Brazil (on behalf of the Rio Group), China, Croatia (and other successor members to the former Yugoslavia), Guatemala, India, Iran, Libya, Malaysia, Morocco, Romania, the Russian Federation, Sierra Leone, South Korea, Switzerland, Tanzania, Turkey, Ukraine, US, Venezuela, and Vietnam. The FG Hemisphere case has now, however, demonstrated China’s adamant adherence to the absolute doctrine. The Russian Federation and parts of the former Soviet Union are hesitant to move to a more liberal position.
Fourteen States from all parts of the world (excluding the continents of Australasia and Africa) have ratified the UNCSI. It can be concluded that all these countries in some measure support the restrictive rule of State immunity; the report of the meeting of the Sixth Committee states that:
Delegates noted that the adoption of the Convention would constitute a significant achievement and lead to harmonisation of the practice of States in this area of law, particularly for those States that relied on customary international law to shape their practice. It was emphasized that the Draft Convention constituted a compromise text which reflected a delicate balance designed to achieve consensus. In this regard, it was noted that the Draft Convention effectively balanced the interests of developing and developed States.167
The absence of a universal convention on State immunity until recently has led to diversity in State practice, but it can be seen from the above review that the development of the law of immunity now represents a shift away from an absolute doctrine to a restrictive doctrine.