This chapter reviews the status and general structure of the State Immunity Act 1978 (SIA), and gives an outline of its provisions, and is followed by a section on the procedure for the institution in the English court of proceedings against a foreign State. The provisions of the 2004 UN Convention on the Jurisdictional Immunities of States and their property (UNCSI) in many respects follow the formulation of the restrictive doctrine of State immunity enacted in the English statute with further discussion and comparison to the UNCSI provisions relating to waiver, the exceptions to immunity and enforcement in Chapters 10–17.
The SIA was enacted to codify the restrictive rule of State immunity bringing ‘our law … into line with current international practice’,1 and to enable the UK to ratify the European Convention on State Immunity 1972 (ECSI) and the earlier 1926 Brussels Convention and 1934 Protocol relating to the Immunity of State-owned ships. In addition, it provided for the recognition in the UK of foreign judgments given against the Crown in the courts of States Parties to the ECSI, and it also made provision for the extension to heads of State acting in their private capacity and their families of the privileges and immunities enjoyed by the head of a diplomatic mission and his family.2
The State Immunity Bill was introduced in the House of Lords and had its second reading on 17 January 1978; it was considerably amended in Committee (16 March) and was reported on 23 March, receiving its third reading on 4 April. The Bill was taken in a second reading committee in the House of Commons on 3 May, and it received its second reading on 8 May. Amendments in committee were made and the Bill read a third time on 13 June. The Commons’ amendments were reviewed by the Lords on 28 June 1978, and the Lords’ amendments to the Commons amendments agreed by the Commons on 5 July. The Royal Assent was given on 20 July.
Copies of the draft legislation in its original and amended form with an explanatory circular letter were circulated to all diplomatic missions in London, and no substantive criticism of the draft was received from any State.3 Since the ruling in Pepper v Hart4 clear statements by ministers together with other parliamentary material are admissible in construction of a statute where legislation is ambiguous, obscure, or leads to absurdity.5 The reports in Hansard relating to the progress of the State Immunity Bill through Parliament accordingly have relevance as to the meaning of terms used in the SIA.6
The Act came into force for the UK on 22 November 1978 (SI 1978/1572) and it is not retrospective (see further Chapter 9 on the 2004 UN Convention on the Jurisdictional Immunities of States and their Property).
The Act extends to the whole of the UK and by Order in Council to its dependent territories (State Immunities (Overseas Territories) Order 1979).7 St Helena enacted its own legislation by the State Immunity (Application) Order 1979, made pursuant to powers conferred by sections 3 and 4 of the English Law (Application) Ordinance 1970. It applies, with limited exceptions, to all the world without regard to whether the State concerned is a party to the ECSI. The Act applies to proceedings in the ‘courts of the UK’, defined in section 22(1) as ‘any tribunal or body exercising judicial functions’, and this has been construed to include the industrial tribunal and the Employment Appeals Tribunal.
Section 16 provides that Part I of the Act shall not apply to a number of matters. These include: matters relating to the immunities and privileges of members of the diplomatic mission or a consular post;8 proceedings relating to anything done by or in relation to the armed forces of a State while present in the UK;9 criminal proceedings and proceedings relating to taxation (other than as set out in section 11); and proceedings to which section 17(6) of the Nuclear Installations Act 1965 applies. Section 16 has been construed as excluding these categories from the whole statutory regime of Part I of the SIA.
The Act has not replaced the common law in its entirety,10 but has undoubtedly as regards civil proceedings caused courts to apply a restrictive rule in determining State immunity in accordance with the common law. A common law restrictive rule has been applied to State immunity in civil claims arising prior to the Act11 and also been applied to claims arising subsequent to its commencement which relate to matters excluded from the Act, in particular to civil proceedings relating to visiting armed forces of another State.12
Lord Hope of Craighead explained the relationship of the Act to the common law:
Unlike the US FSIA, the UK Act is, therefore, not the exclusive source of the law relating to State immunity. Immunity which is accorded to foreign States in civil proceedings is the subject of two separate regimes. The first is that laid down by Part I of the State Immunity Act 1978, by which a foreign State is immune from the jurisdiction of the UK courts unless a series of exceptions to immunity in sections 2 to 11 applies…. The second regime is that under the common law. It applies to all cases that fall outside Part I of the Act … One might have supposed that the purpose of section 16(2) was to disapply the exceptions in Part I, so that anything done by or in relation to visiting forces should enjoy the statutory immunity conferred by section 1 and be dealt with exclusively under arrangements to be made by the Secretary of State under the Act of 1952. But the subsection disapplies the whole of section 1, so that it disapplies the statutory immunity and leaves the position of visiting forces in the UK to be governed by the common law.13
This construction as far as visiting armed forces is somewhat surprising as section 16(2)14 derives from a similar exclusion clause in the ECSI and, contrary to Lord Millett’s view, both Convention and the UK statute were based on the same structure, namely the retention of immunity.15 It derives from Article 31 of the ECSI, which provides: ‘Nothing in this Convention shall affect any immunities or privileges enjoyed by a contracting State in respect of anything done or omitted to be done by or in relation to the armed forces when on the territory of another contracting State’.
The relationship of State immunity as dealt with in the SIA to diplomatic and consular immunity and the immunity of international organizations is inadequately worked out, with section 16(1) continually giving rise to problems of construction, and subparagraph (a) subject to challenge as in contravention of the right of access to court provided in Article 6(1) of the European Convention on Human Rights. (See Chapter 19 on diplomats and the diplomatic mission.) No mention is made of immunity of international organizations in the SIA, yet the activities of State members of such organizations and their representatives may give rise to issues involving all three types of immunity.16
As regards criminal proceedings, they continue to be decided under common law given the express exclusion in section 16(4);17 in consequence, in Pinochet the House of Lords derived no assistance from Part I, section 14(1)(a) of the SIA which conferred immunities on a head of State in his public capacity, because Part I of the Act applied solely to civil proceedings.18
The SIA has served as a model, subject to some modification, for much subsequent legislation in Commonwealth countries (Singapore State Immunity Act 1979, Pakistan State Immunity Ordinance 1981, South African Foreign State Immunities Act 1981, Canadian State Immunity Act 1982, Malawi Immunities and Privileges Act 1984, Australian Foreign State Immunities Act 1985) and the ILA Montreal Convention 1982 as revised at Buenos Aires in 1994. Any amendment of the SIA to enable the UK to ratify the 2004 UN Convention on the Jurisdictional Immunities of States and their Property will therefore be likely to require consideration in other Commonwealth jurisdictions.
In its original form the Bill followed closely the structure of the ECSI, and both Lord Wilberforce and Lord Denning initially expressed concern that there was a risk that the proposed legislation represented ‘a more restrictive line on State immunity than is generally expressed in international law’ or in the Court of Appeal’s decision in Trendtex, on appeal at the time to the House of Lords. Amendments, however, were made to enlarge the scope of the statute beyond that of the European Convention in the course of the Bill’s progress through Parliament with the result that the UK Act:
(i) applied to all States, not merely Convention States. Only Part II implementing the obligation in the Convention to give effect to judgments given against a contracting State by the court of another such State is restricted to Convention States;
(ii) the provision dealing with commercial transactions and commercial obligations to be performed in the UK was extended (section 3);
(iii) the provision relating to arbitration agreements was extended to permit enforcement of foreign arbitral awards (section 9);
(iv) the Act provided a general right to execute a judgment against a State on State property in use or intended for use for a commercial purpose (section 13(4); cf optional Article 26).
The ECSI was adopted by the Council of Europe in parallel to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968, now replaced for the UK by Council Regulation 44/2001/EC (the Judgments Regulation). Matters which are immune as in exercise of sovereign authority do not come within the ambit of this legislation since the ‘civil and commercial matters’ to which it relates has been held not to cover the exercise of public powers by a public authority.19
The UK ratified ECSI on the day the SIA came into force, depositing declarations pursuant to Articles 19(2), 21(4), and 24(1). The declaration under Article 19(2) declared that UK courts were not bound to stay proceedings against another contracting State where proceedings had already been initiated in the court of another contracting State. The declaration under Article 21(4) designated the UK courts which were competent to give effect to a judgment against the UK. Article 24(1) was designed to restrict the rule of immunity more narrowly than as provided in Articles 1 to 13 of the European Convention for countries whose courts already applied a more restrictive rule. Contracting States could preserve this additional jurisdiction but ‘without prejudice to the immunity which foreign States enjoy in respect of acts performed in the exercise of sovereign authority (acta jure imperii)’. The UK accordingly made a declaration under Article 24(1) that its courts, in so far as they did not apply a rule of immunity to States not parties to the Convention, were equally entitled so to apply the same rule to other contracting States, in addition to the exceptions to immunity contained in Articles 1 to 13 of the Convention, but without prejudice to immunity in respect of acts performed in the exercise of sovereign authority.20
Orders in Council made under the SIA to give effect to ECSI, Article 28.2 by which constituent units of another State may enjoy immunity on the federal State making the required declaration include:
• the State Immunity (Federal States) Order 1979, SI 1979/457. This Order was required because Austria, as a party to the ECSI, in accordance with Article 28 of the Convention, notified her constitutional territories as being entitled to invoke the immunity provisions of the Convention applicable to contracting States (Burgenland, Carinthia, Lower Austria, Upper Austria, Salzburg, Styria, Tyrol, Vorarlberg, and Vienna are named as the constituent territories in the Order);
• the State Immunity (Federal States) Order 1993, SI 1993/2809, in force 7 December 1993, applies Part I of the State Immunity Act 1978 in similar manner to the constituent units of the Federal Republic of Germany following that country becoming a party to ECSI and making a declaration under Article 28 of that Convention. The constituent territories named in the Order are Baden-Württemberg, Bavaria, Berlin, Brandenburg, Bremen, Hamburg, Hesse, Mecklenburg-West Pomerania, Lower Saxony, North Rhine-Westphalia, Rhineland Palatinate, Saarland, Saxony, Saxony-Anhalt, Schleswig-Holstein, and Thuringia.21
No such Order in Council has been made in respect of Belgium despite her declaration dated 4 September 2003 made under ECSI, Article 28.2; this may indicate a change of policy on the part of Her Majesty’s Government as to the necessity for an Order in Council given the more restricted conferment of immunity on constituent units under the UN Convention.22
In the event of ratification by the UK of UNCSI the UK will, as proposed by CAHDI, along with the other States Parties, denounce the European Convention.
The UK is a State Party to the 1952 European Convention on Human Rights (ECHR) and the immunity afforded to a foreign State from civil proceedings in an English court by the rule of immunity in SIA, section 1 has been challenged as contrary to the procedural right of access to justice in Article 6(1) of the ECHR. In claims brought against foreign States—in Fogarty, a claim against the US relating to discrimination against a job seeker and in Al-Adsani against Saudi Arabia for torture—proceedings were barred in the English court by State immunity. In subsequent proceedings brought against the UK at Strasbourg, the European Court of Human Rights (ECtHR) held that the barred claims related to the determination of ‘civil rights and obligations’ and that State immunity as a procedural bar constituted a limitation on the right of access under ECHR, Article 6(1). The rights of such access, however, are not absolute and may be subject to limitations. In this respect States enjoy a certain margin of appreciation but the limitation applied must not so restrict or reduce the access in such a way or to such an extent that the very essence of the right is impaired. Further, a limitation will not be compatible unless it pursues a legitimate aim and be proportionate. In the case of Fogarty, although the applicant’s claim of sex discrimination was barred by State immunity, the Court held that ‘questions relating to the recruitment of staff to missions and embassies may by their very nature involve sensitive and confidential issues, inter alia, to the diplomatic and organisational policy of a foreign State’ and ‘in the absence of any trend towards the relaxation of the rule of immunity as regards issues of recruitment to foreign missions’ the UK in conferring immunity on the US in the case could not be said to have exceeded the margin of appreciation allowed.23 In the case of Al-Adsani the ECtHR held by a narrow margin, eight to seven, that ‘the grant of sovereign immunity to a State in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between States through the respect of another State’s sovereignty’ and that the growing recognition of the importance of the prohibition of torture did not render disproportionate a limitation which grants immunity to States ratione personae in respect of civil liability for claims of torture committed outside the forum state. Thus the immunity provided in the SIA, including immunity from execution, has been held to be compatible with ECHR, Article 6(1) but always provided the limitation on access imposed is not disproportionate.24 A number of cases have challenged a plea of immunity as disproportionate but none to date has been successful.25
The English Supreme Court and lower courts have cited the 2004 UN Convention in support of their decisions.26 UNCSI followed closely the SIA in its layout of and the formulation of the exceptions to immunity and the UK provided strong support throughout for the work of the ILC and the discussions in the UNGA Sixth Committee and its Working party. Ratification by the UK of the Convention might therefore appear as a logical progession of this longstanding UK support. In a notice with a deadline of April 2005 the Foreign and Commonwealth Office sought views of departments on the compatability of the SIA with the 2004 Convention; and though there was no published statement,27 it seems that a comparison of the existing law under the SIA to the provisions of the UNCSI has led departments to conclude that few and small amendments would be required to enable the UK to ratify. Undoubtedly, over the 35 years since the Act came into force problems of construction of the SIA28 and the need to accommodate changes in the law have made amendment of the SIA and the Jurisdiction and Judgments Act 1982, section 31 increasingly necessary, regardless of whether ratification is decided upon. O’Keefe has expressed an opinion that it is marginally in the interests of the UK to ratify.29
Ratification may expose the UK to complaint; that is, should less immunity after ratification be afforded to a foreign State than the Convention requires, to complaint from another State Party, by reference to the ICJ under the settlement procedure in UNCSI Article 27; and should more immunity be afforded than the Convention permits, to proceedings by an aggrieved private party pursuant to ECHR Article 6(1) for right of access to court. As to such risks: regarding a State party’s complaint of the UK conferring less immunity on ratification, taking account that there are only a small number of protests by States when the grant of immunity bars suit of one of its nationals, and that the ICJ has recently in Jurisdictional Immunities limited immunity to the procedural stage of a claim; and regarding a private party’s complaint to the ECtHR as the UK conferring more immunity by its ratification, taking account of the UK’s current exposure already to a large number of proceedings pursuant to ECHR Article 6 (1), it seems likely that the risk of either is small.
The most significant difference between the UK legislation and the UN Convention is the former’s removal of immunity from execution of a judgment obtained against a foreign State in respect of all State property in use or intended use for commercial purposes (as opposed to State property that ‘has a connection to the State entity against which the proceeding was directed’ UNCSI, Article 18(c)). But as discussed in Chapters 16 and 17, the Understandings annexed to Article 19 of the UNCSI relating to post-judgment coercive measures against State property and the exemptions recognized in English law relating to State diplomatic or cultural property considerably narrow the difference. Any remaining differences could be covered by an interpretative declaration or reservation on ratification.
An alternative course at the present time, given the likely length of time before the required 30 ratifications are obtained, is for the UK to ratify UNCSI either with no reservation (as France and Spain have done) or with a declaration or even a reservation (as Norway and Sweden have done) in respect of the matters which are particularly thought to be at variance with the provisions of the Convention.
The structure of the SIA broadly confirmed the change from an absolute to a restrictive rule of immunity, adopted by a majority of the Court of Appeal in Trendtex and confirmed by the House of Lords in I Congreso del Partido. It gives ‘full weight’, in the words of the UK government’s comments to the ILC in 1988, to the principle: ‘That State practice now attaches to the rule of law, that is to say, the entitlement of those who find themselves engaged in legal disputes with the government of a foreign State acting in a non-sovereign capacity, to have those disputes adjudicated upon and determined by the ordinary processes of law’.30
The Act is divided into three parts: Part I deals with proceedings before UK courts by or against other States; Part II implements the requirement in the European Convention to give effect to judgments; and Part III, in addition to definitions, entry into force, and provisional arrangements, deals with the immunities in a personal capacity of a head of State and family (section 20), and State certificates giving the Secretary of State power to certify a country, or person or persons, as a State, government, or head of State respectively (section 21).31
Part I contains the catalogue of exceptions to the general immunity of jurisdiction set out in section 1, and the exceptions to the prohibition against enforcement of State property where the State consents in writing or the property is in commercial use. It provides definitions of a State and a separate entity, deals with exclusions, and contains a provision relating to immunity of ships in commercial use which enabled the UK to ratify the 1926 Brussels Convention and 1934 Protocol. Special procedural rules are set out for use where a State is the defendant; these in effect serve the same function as UNCSI’s Part IV described as ‘Immunity from enforcement in respect of measures of constraint in connection with proceedings before a court’.
Section 1(1) states the general principle of absolute immunity from jurisdiction, but makes the principle subject to wide-ranging exceptions for which the subsequent sections (sections 2–17) in Part I of the Act provide. The formulation of the law in this way as a rule of immunity subject to exceptions, rather than as a rule of territorial jurisdiction subject to an exception for State immunity, or a rule recognizing two categories of acts, acts jure imperii, immune from the court’s jurisdiction, and acts jure gestionis, subject to the court’s jurisdiction, has been criticized by jurists,32 but follows the European Convention33 and has been adopted in all national legislation, the ILC Draft Articles,34 and the UN Convention.35 The Act makes considerable departures from any application of a distinction between acta imperii and acta gestionis in removing immunity for all contracts performable wholly or in part in the UK, and for specified transactions of sale of goods, provision of services or loans (section 3(1)(b) and 3(3)), and for claims relating to personal injuries caused by an act or omission of the State in the UK (section 5). The Act is ‘a comprehensive code’, with power to restrict or extend by Order in Council subject to annulment by resolution of either House of Parliament, privileges or immunities in excess or less than those required by any international convention (SIA, section 15). Apart from the express exceptions, the Act is not subject to any overriding qualification of conformity with international law. But with the enactment of the Human Rights Act 1998 and the right of access to court under ECHR, Article 6(1) discussed above, the English courts increasingly accept the need to reconcile the provisions of the Act with the UK’s international obligations.36
The SIA treats separately immunity from adjudication and immunity from execution, but unlike UNCSI’s separate treatment in Part IV, the SIA makes no clear distinction placing both in its Part I, under the general title Proceedings in the United Kingdom by or against other States with a general rule of immunity set out in section 1. Sections 2 to 11 deal with adjudicative procedure. Sections 12 to 14 deal with procedure; of these, sections 13(2) to (6) and 14(3) and (4) deal in particular with enforcement jurisdiction.37 This division prevents the automatic enforcement of a judgment in respect of non-immune proceedings and necessitates a further determination of immunity by reference to a separate waiver by the State to the court’s enforcement jurisdiction or where there is no such submission, by more restricted different criteria than those applied at the adjudicative stage, see Chapters 16 and 17 on Immunity from Enforcement. The SIA, section 13(3) expressly provides that a provision merely submitting to the jurisdiction of the courts is not to be regarded as a ‘consent’ to ‘the giving of any relief … or for the enforcement of a judgment or arbitration award’. The division between the adjudicative and enforcement stages is, however, by no means easy to make. Lord Diplock himself noted in Alcom that some proceedings would not fit neatly into this division; he instanced Admiralty jurisdiction in rem as a hybrid.38 Proceedings to recognize a foreign judgment given against a foreign State, to register a foreign judgment under the Administration of Justice Act 1920, or to enforce a foreign judgment or arbitral award,39 relate to the exercise of the court’s adjudicative jurisdiction come within the general rule of immunity in section 1, but the issues in such proceedings relate to the circumstances and regularity of the judgment or award, and not to the transaction underlying the original judgment or award; consequently even if such underlying transaction is commercial, section 3(1)(a) is not applicable.40 A Mareva injunction as relief ancillary to execution falls within enforcement jurisdiction.41
The formulation of a general rule of immunity with exceptions has the consequential effect enacted in section 1(2) that the court is itself required to give effect to immunity. The court may take judicial notice of the defendant’s status as a State, government, or head of State, but if in doubt section 21 of the SIA provides that a certificate of the Secretary of State shall be conclusive evidence as to that status. Section 1(2) re-enacts the duty recognized at common law42 on the judge to determine immunity proprio motu by which the court shall give effect to the immunity of the foreign State ‘even though he does not appear in the proceedings in question’. The duty has even been applied by an appeal court so as to admit new evidence contrary to the usual rules as to its admission in order to correct a refusal of immunity by a lower tribunal made as a result of not having all the relevant evidence.43 Immunity is thus not made dependent on a foreign State’s claim thereto, although it may of course be lost by waiver.44 Foreign States are not always prepared immediately to appear in the English court on receipt of notice of proceedings and this rule and the procedure laid down in section 12, particularly that which requires extended periods of time for service of proceedings or of any judgment in default, and for challenge to the jurisdiction, provide a useful safeguard to ensure adequate notice to the foreign State and opportunity for action through diplomatic channels.45
SIA contains no definition of a foreign State but applies the immunities and privileges conferred in Part I of the Act to ‘any foreign or Commonwealth State other than the United Kingdom’ and includes within the term ‘State’:
(a) the sovereign or other head of State in his public capacity;46
(b) the government of that State; and
(c) any department of that government.
The word ‘government’ is to be construed in the light of the concept of sovereign authority referred to in section 14(2). In Propend the Court of Appeal held that concept to be relevant to a determination of what bodies are a part of the ‘State’ and the ‘government’ for the purposes of section 14(1).47 Citing the Empire of Iran case,48 the court held the performance of police functions to be essentially a part of governmental activity.49 The House of Lords has now confirmed that the term government in the SIA is to be construed by reference to the UNCSI. ‘[A]s Lord Diplock said in Alcom Ltd v Republic of Columbia [1984] AC 580, 597, the provisions of the SIA fall to be construed against the background of those principles of public international law as are generally recognised by the family of nations’. That means that ‘state’ in section 1(1) of the SIA and ‘government’, which the term ‘state’ is said by section 14(1)(b) to include, must be construed to include any individual representative of the State acting in that capacity, as it is by Article 2(1)(b)(iv) of the UNCSI. The official acting in that capacity is entitled to ‘the same immunity as the State itself’.50 Conferment of legal personality does not under the SIA disqualify the entity from coming within the definition of the State;51 to come within the statute’s category of ‘separate entity’ it must also be shown that it is ‘distinct from’, that is to say not part of ‘the executive organs of government’.52
The SIA, section 14 (1)(a) expressly includes the head of State in its definition of foreign State. Part 1 of the Act applies to such a head of state ‘in his public capacity’ (section 20(5)), and when acting in his private capacity applies in Part III the regime for a diplomatic agent (section 20).53
Section 20 in its original form, as explained by the Lord Chancellor, Lord Elwyn-Jones: ‘… will equate the position of a Head of State and his family while he visits this country as a guest or an invitee of the government with the position of an ambassador’.54 On further examination the clause as drafted was found to be too narrow, in that it did not contain an express power to exclude a foreign sovereign intending to travel to the UK and under UK law exemption from immigration control flowed from diplomatic status; further, it failed to give statutory protection to a head of State not physically present in the UK.
A government amendment was therefore introduced by Lord McLuskey ‘to ensure that Heads of State and members of their families forming part of their households will, irrespective of presence in or absence from the UK, be treated as regards immunities and privileges like heads of diplomatic missions and members of their families’.55 Section 20(1) in its final form provides that, subject to ‘any necessary modifications’, a head of State, members of his family forming part of his household, and his private servants shall enjoy the same privileges and immunities as a head of a diplomatic mission. As the Pinochet case shows it is not altogether a ‘neat exercise’ to make such necessary modifications as the functions of the two offices differ. A diplomat resides and performs his functions in the host State; consequently his acts are subject to the territorial jurisdiction of the host State, even if attributed to the home State. A head of State, on the contrary, apart from official visits, performs his functions within his home State and within its own jurisdiction.
Criminal proceedings are excluded from the SIA, Part I; so while a head of State enjoys immunity from civil proceedings under section 14(1)(a) for acts performed in the course of his official duties, his position as regards immunity from criminal proceedings falls to be determined by customary international law as given effect in the SIA, section 20. In its judgment in Pinochet (No 3) of 24 March 1999, the House of Lords accepted Article 39(2) of the Vienna Convention on Diplomatic Relations (VCDR) to be the controlling provision which was incorporated into English law by the SIA, section 2056 and was to be applied to the acts of a head of State whether committed in the UK or abroad and covers all the functions of a head, not merely international functions such as signing treaties.
The proceedings in the Pinochet case related to the arrest of the former head of State of the Republic of Chile, whilst receiving medical treatment in England, pursuant to a request for his extradition to Spain in respect of the commission of atrocities against Spanish nationals following a right wing coup against the left wing regime of President Allende.57 Whilst the majority of the charges were dismissed as not constituting crimes under English law at the relevant time,58 the plea of immunity of Pinochet as a former head of State from extradition proceedings for the international crime of State torture, as defined in the 1984 UN Torture Convention and given effect by section 134 of the UK Criminal Justice Act, was rejected by the House of Lords in 1999 by a majority of six to one (see further Chapter 18).59 The Lords, however, were unanimous that their decision left unchanged the absolute immunity which a serving head, as well as a State, enjoys from criminal proceedings before national courts, even where the acts alleged related to an international crime committed in the course of his functions.60
Pinochet No 3 remains a landmark case and a beacon of hope to those advocating greater protection of human rights. But it should not be overlooked that it is unsupported by a ruling of the ICJ in the Arrest Warrant case.61 Moreover, the core reasoning of Pinochet No 3 was tied to the Torture Convention, which necessarily limits its impact on the interpretation and development of the customary international law on immunities.
A full discussion of immunity of a head of a foreign State is in Chapter 18 and a briefer reference in Chapter 10 ‘The Definition of the Foreign State’ where the SIA’s treatment is compared to that in UNCSI.
Separate entities are generally to be treated as private parties. Though enjoying an immunity limited to acts in exercise of sovereign authority, separate entities are expressly excluded from the term ‘State’ as defined by SIA, section 14(1); such separate entities, not being departments of that State, and distinct from the executive organs of that State’s government are identified by their capacity of ‘suing and being sued’. As such they, as the ‘legal entities’ defined in ECSI, Article 27 from which they are derived, rank in proceedings as parties subject to private law and in general enjoy no immunity from adjudication or enforcement. SIA, section 14(2), however, confers immunity from adjudication when the separate entity performs acts in exercise of sovereign authority. That subsection provides that ‘a separate entity is immune from the jurisdiction of the courts of the United Kingdom if and only if (a) the proceedings relate to anything done by it in the exercise of sovereign immunity; and (b) if the circumstances are such that a State … would have been immune’.
In the course of enactment of section 14(1) the requirement ‘under the internal law of the State’ was deleted62 and, accordingly, as established under the earlier common law,63 English law, as well as the internal law of the foreign State, may be taken into account in determining the attributes of the separate entity. Unlike US law there is no requirement that the separate entity should be State-owned; Lord Goff in Kuwait Airways v Iraqi Airways (No 2) considered without deciding that the category was confined to an entity or separate entity ‘of the State’, that is one established by public rather than private law.64
A separate entity differs, however, from an ordinary private law corporation by its relationship with a foreign State given effect by SIA’s conferment in section 14(2) of a restricted immunity when the separate entity is acting ‘in exercise of sovereign authority’.65 In KAC v IAC (No 2) the overall effect of section 14(2) was summed up by Lord Mustill as follows:
The immunities of the sovereign and the entity are of an entirely different character. The former is a matter of status, inherent in the nature of the person or body claiming it, and all embracing except when specifically excluded by the Act. By contrast the separate entity has no status entitling it to a general immunity and is endowed by section 14 only with a case by case immunity in the situations there described.66
The relationship of clauses (a) and (b), however, led to differences of construction. The House of Lords by majority in the case construed the condition set out in section 14(2)(b) as tautologous, imposing no additional requirement to the condition in section 14(2)(a) for the entitlement of a separate entity to immunity. Immunity was lost if the act done by the entity came within any of the exceptions to immunity which the State enjoyed under the Act, including acts which were not performed in exercise of sovereign authority; hence on the facts the integration and operation of Kuwaiti aircraft in its commercial airline by Iraqi Airways after their expropriation by Iraqi legislation was a commercial transaction and rendered non-immune by section 3 of the Act.67 However, Lords Mustill and Slynn disagreed, holding that where the entity acted in pursuance not of its own powers but on the orders of and in participation with the State, section 14(2)(a) was satisfied, and with the consequence that the act performed had to be construed as one performed in the exercise of sovereign authority.68
In Trendtex the question whether the Central Bank of Nigeria was a department or organ of the State of Nigeria was treated by the Court of Appeal as a legal question to be determined by an examination of all the evidence ‘to see whether the organization was under government control and exercised government functions’ (per Lord Denning MR at 561); or (per Shaw LJ at 573) ‘to be accorded the status of a department of government or not must depend on its constitution, its powers and duties and its activities’. This Trendtex test of control and functions has been applied in subsequent cases to determine whether a separately constituted legal entity is part of the state or a separate entity within the meaning of SIA, section 14(1). The Trendtex key questions of ‘governmental control’ and ‘governmental functions’ are to be determined as a matter of English law, although the English courts may have regard to the position under the law where the body is incorporated and account can be taken of the view of the government concerned, though it is not decisive.
The Trendtex criteria have been applied in recent proceedings in English courts to determine the circumstances in which, if any, a separate entity may be equated with the State and its assets made available to meet the debts of the State, or its own debts attributed to the State.69 Some criticism of this approach has been made on the ground that it ignores the separate status of corporations conferred by commercial company law.70 Lord Wilberforce’s dictum in I Congreso del Partido which concerned the question whether two Cuban state-owned entities had contracted on behalf of the State of Cuba has been cited:
State-controlled enterprises, with legal personality, ability to trade and to enter into contracts of private law, though wholly subject to the control of their state, are a well-known feature of the modern commercial scene. The distinction between them, and their governing state, may appear artificial: but it is an accepted distinction in the law of England and other states.71
At the present time the application of the Trendtex criteria requires an English court to engage in an extensive review of the past and present operations of an entity to determine which factor—the extent of the foreign State’s control or the functions of the entity in conformity with private law of the forum State—is to prevail. This produces conflicting decisions of courts, influenced in part by the extraneous consideration of questions of sham, fraud or the possibility of ‘lifting the corporate veil’. In an attempt to clarify the position the Privy Council in the recent case of Gecamines has identified a separate entity as ‘enjoying a hybrid status’ and declared that in determining its status there should be applied a ‘strong presumption … that its separate status should be respected’.72 This approach would seem to differ from that provided by ECSI, Article 27 and in UNCSI’s definition of state agencies in Article 1.2(b)(iv) as coming within the Convention’s term ‘State’ ‘to the extent that they are entitled to perform and are actually performing acts in the exercise of sovereign authority of the State’. Rather than establishing a new type of entity as Gecamines suggests, ECSI and UNCSI treat entities, which are not departments of the central government, as subject to private law ‘even (as ECSI Art 27(1) states) if that entity has been entrusted with public functions’, and confine any immunity enjoyed by such a private law entity to the narrow class of ‘acts in exercise of sovereign authority’. In determining whether any act comes within that class equal weight is to be given to the two factors of empowerment and performance.
Under the SIA, political subdivisions and constituent units are treated as separate entities and only enjoy immunity when exercising sovereign power in accordance with the requirements of (a) and (b) under section 14(2). So far as political subdivisions in a unitary State, this would seem to accord with State practice before the enactment of the SIA and is borne out by the treatment of the territorial entities of Scotland, Wales, and Northern Ireland (see below),73 ‘[T]he concepts of “constituent territory” and “state” are mutually exclusive for the purposes of the Act’,74 with the SIA taking a more restrictive line to the conferment of immunity on constituent units than the Court of Appeal in Mellenger v New Brunswick Development Corpn.75 Whilst this decision has not been expressly overruled it has not been followed in respect of immunity of constituent units of other Commonwealth Federations with regard to criminal proceedings claimed in respect of Nigeria and a head of State’s immunity in respect of Malaysia.76 The SIA makes no express distinction between unitary or federal States other than section 14(5) which empowers by Order in Council the application of the immunities set out in Part I to any constituent territory as specified in the Order as they apply to a State.77 Where no Order in Council has been enacted in respect of it, a constituent territory of a federal State is to be treated as a separate entity, enjoying the same immunities when it acts in exercise of sovereign authority; the ‘sovereign authority’ referred to in section 14(2)(a) is the sovereign authority of the recognized State. Neither it nor any head of State enjoys any immunity solely by virtue of acting in the exercise of the authority of the constituent territory,78 although it does enjoy the same special arrangements under section 12 as apply to the State relating to service of process and judgments in default of appearance (section 14(5)).
Under the 1998 devolution the status of the UK as a unitary State is not intended to be affected and the legislation has sought to retain the capacity to enter foreign relations with the central government at Westminster. Whilst any change resulting from the current Scottish Parliament’s proposals for independence79 might move the UK’s constitutional structure towards a federal system,80 it is unlikely to change the identity of the UK Parliament as both a central and sovereign legislature.
Under the 1998 arrangements none of the regional entities qualifies as a constituent unit so as to come within the definition of the State for the purposes of State immunity. However, to secure local consent to and effective local compliance with international obligations entered into by the UK, it has been necessary to confer powers on the regional entities relating to the implementation of treaties; these powers qualify them at least for the status of separate entities, being distinct from the executive organs of (central) government and capable of suing and being sued. It remains to be seen whether this competence will develop constitutionally so as to permit a regional entity to claim immunity as a constituent unit if sued by a private party in another State’s court.81
Under the devolved arrangements made in 1998 by the first Blair Labour administration, wide executive powers and certain legislative powers were devolved by Act of the UK Parliament at Westminster to the territorial entities of Scotland, Northern Ireland, and Wales. The arrangements, which vary from region to region, do not constitute a federal State, with Scotland given full legislative competence except for reserved areas and Wales acquiring no primary legislative powers.82 The UK’s central government retains residuary legislative powers although constitutional conventions are likely to make the circumstances where they can be exercised independently extremely limited.83 In all the devolved regions the treaty-making powers are reserved to the government of the UK, as is the power of the Westminster Parliament to give domestic effect to treaties. In consequence the devolved administrations do not qualify as constituent units of a federal State since they in no way share the treaty-making powers. On the other hand, they are clearly authorized to and will in fact exercise sovereign authority and thus satisfy the requirements of political subdivisions and State agencies. However, the power to implement international obligations lies with the appropriate legislative authority, which means the devolved authority, if the required legislation would ordinarily fall within its competence. Thus there exists dual legal competence.84 In effect there are parallel competences when it comes to the domestic implementation of any treaty’s requirements and hence consultation becomes necessary between central government and the devolved entities on negotiation of the treaties and on implementation prior to ratification.85 Berman explains why implementation of treaty obligations, as opposed to creation of treaties, has been made expressly within the devolved competence: to prevent any argument that the competence devolved to the new legislature or territorial executives is being ousted by action of the central government in the international relations area. Four mechanisms ensure the primacy of central government in foreign relations:
(i) no power is devolved to legislate on international relations, a restriction which is secured by various mechanisms (the Minister must declare positively that a Bill is within the regional entity’s competence, the validity of Scottish legislation being subject to judicial review by the Privy Council);
(ii) the Secretary of State may take steps to see a Bill exceeding the legislative competence is not submitted for Royal Assent; or
(iii) may order the devolved executive to refrain from taking any action incompatible in his view with the United Kingdom’s international obligations; action exclusively within the devolved enforcement power to attach property could thus be prohibited by the Secretary of State if the attachment was sought of non-commercial property of a foreign State or the arrest of a diplomat; and
(iv) the fourth mechanism permits the Secretary of State to order the devolved entity to enact the required legislation to ratify the treaty.86
Central banks may be departments of a government or given independent personality or qualify as a separate entity under SIA, section 14(1). If a separate entity, a central bank will have immunity if, and only if, the proceedings relate to anything done by it in the exercise of sovereign authority and the circumstances are such that a State would be immune. The issue of a letter of credit87 or of a promissory note88 by a central bank, or the transfer in private law form of shares in a company by a former central bank to a newly created central bank,89 have been held by English courts to be commercial activities and hence not immune; whereas the issue of bank notes90 and the regulation and supervision of a nation’s foreign exchange reserves91 have been treated as governmental and immune. The SIA gives special treatment to central banks or other monetary authority as regards enforcement measures. Where a central bank which is a separate entity under SIA, section 14(a) submits to the jurisdiction in proceedings where it is entitled to immunity the SIA confers the same immunity from execution as enjoyed by a State.92 In any event, whether or not it is a government department, separate entity, or independent legal entity, the property of a central bank is not subject to attachment as in use or intended use for commercial purposes (section 14(4)).93 (The position of central banks with regard to immunity from execution is more fully discussed in Chapters 10 and 17).
English law accords immunity to individuals who act as agents for a foreign State. In Twycross v Dreyfus94 the Court of Appeal refused to entertain a claim for failure to pay interest on bonds issued by the defendants acting as agents of the State of Peru; Peru at the time under the absolute doctrine was immune from the English court’s jurisdiction. James LJ stated:
You cannot sue the Peruvian government. It would be a monstrous usurpation of jurisdiction in my opinion to endeavour to sue a foreign government indirectly by making its agents in this country Defendants and saying ‘You have got the money of the government and you ought to apply that’. It really would be indirectly endeavouring to make the foreign government responsible to the jurisdiction of this Court.95
In Propend Finance Pty Ltd v Sing the English Court of Appeal held the Commissioner of the Australian Federal Police (AFP) to be immune from suit in respect of contempt of court although there was no express reference to individuals in the SIA and the AFP was not a separate entity within the meaning of section 14(1) and (2) of that Act.
The protection afforded by the Act of 1978 to States would be undermined if employees, officers, (or as one authority puts it, ‘functionaries’) could be sued as individuals for matters of State conduct in respect of which the State they were serving had immunity. Section 14(1) must be read as affording to individual employees or officers of the foreign State protection under the same cloak as protects the State itself.96
The principle that individual officials when acting on behalf of the State enjoy State immunity has been applied in conformity with the SIA, section 14(2) to an official of a separate entity, a central bank of a State, when in an official function he performs acts in exercise of sovereign authority. In Grovit v De Nederlandsche Bank NV the claim was for libel in a letter written on the Bank’s behalf by the officials notifying of a refusal to register the defendant for the execution of money transfer transactions; Tugendhat J held the letter was written in exercise of the public supervisory powers of the Bank and was immune, even if written recklessly and with malice.97
Subsequently in Jones v Saudi Arabia the question arose whether in addition to the Ministry of the Interior which as an organ of the State enjoyed immunity, the Minister in person and other individuals alleged to have committed torture in a State prison came within SIA, section 14(1) so as to be protected by immunity. The Court of Appeal distinguished Propend and held the section could not be applied to conduct of the nature alleged: Phillips MR construed SIA, section 14(1) as relating to functional immunity and not to personal immunity or ‘where the subject matter does not rank as “matters of state conduct”’ (para 130); Mance LJ on the other hand seems to have thought the subsection was restricted to personal immunity (para 31) but if extended to functional immunity it was to be read as excluding ‘conduct which should be regarded as outside the scope of any proper exercise of sovereign authority or with international crime’ (para 39).98 The Lords, however, emphatically reaffirmed Propend, holding immunity to cover the Ministry, Minister, and any individual who acting ‘under colour of authority, tortures a national of another State, even though the acts were unlawful and unauthorised’ per Lord Hoffmann (para 78). Lord Bingham declared: ‘A State can only act through its servants and agents; and their official acts are the acts of the state; and the state’s immunity in respect of them is fundamental to the principle of state immunity’ (para 30).99
This case seems to support the distinction made in Rahimtoola that immunity may be accorded to an individual as an organ of the State or as an individual acting as an officer or employee. In Rahimtoola v Nizam of Hyderabad100 immunity was claimed in a suit for recovery of money belonging to one sovereign State which had been wrongly or mistakenly transferred to an official of another State. Three possibilities were argued as to the capacity in which Rahimtoola, then the High Commissioner for Pakistan, received the money: as a private individual—disproved on the evidence that he accepted on the instructions of Pakistan; as an organ or alter ego of the State of Pakistan—the money was paid into the account of the High Commission and the individual High Commissioner acted as an organ of Pakistan; or as agent on behalf of the State of Pakistan. In granting Rahimtoola immunity the House of Lords held that it was immaterial whether Rahimtoola acted as an agent or an organ, although the Court of Appeal and Lord Denning thought it more appropriate to treat him as an agent. Different legal consequences would seem to result from this distinction101 with the procedural rules differing where an individual is treated as an organ. Official capacity based on status as an organ may be established by judicial notice; service of proceedings may be governed by rules relating to service on the State, and property handled by the individual may become immediately the property of the State.102
Once identified as agent or organ of the State, the plea of immunity bars any investigation by the court as to the manner in which that agency was established.
State immunity may be waived by the consent of the State; such consent serves both as waiver of a foreign State’s entitlement to immunity and as consent to the court’s exercise of jurisdiction. In the civil law, submission whether express or implied is required to be certain and clear, there being no requirement so far as waiver of the adjudicative jurisdiction of the court that it must be ‘in the face of the court’. Nor does any such rule apply as regards waiver of diplomatic immunity by a State; VCDR, Article 32(1) provides that a State may waive the immunity from jurisdiction of persons enjoying diplomatic immunity.
At the common law it had until recently been assumed that waiver of immunity was only to be made by a submission at the time of the proceedings ‘in the face of the court’. It was accordingly assumed that SIA, section 2(2) amended the law when it provided that ‘a State may submit after the dispute giving rise to the proceedings has arisen or by a prior written agreement’. But as Lord Collins has shown in a revised assessment of the three cases Duff Development Co v Government of Kelantan [1924] AC 797 and Kahan v Federation of Pakistan [1951] 2 KB 200, relying on Mighell v Sultan of Johore [1894] 1 QB 149, 159, based on an article by Dr DJ Cohn,103 the principle that a State could submit to the jurisdiction ‘by prior written agreement’, did in fact apply in the common law.104 So far as UK law is concerned, any change in the position at common law is largely academic as the SIA now governs.105
The SIA follows the common law rule that waiver of immunity from jurisdiction in civil or administrative proceedings does not imply waiver in respect of the execution of the judgment, for which a separate waiver is required.106 Section 2 treats consent to adjudication in the same way as did the common law, namely as submission to the local court’s jurisdiction. But the Act, implementing the ECSI, expressly spells out that the submission, both by prior written agreement and after the dispute (section 2(2)), is of great importance in commercial dealings as it enables the private litigant to provide in advance that any disputed claim can be adjudicated by the English court. By prior written agreement a State binds itself in advance to accept the jurisdiction of the court.
The rules relating to submission in section 2 have been held to apply to separate entities; the words ‘by virtue of subsection (2) above’ in section 14(3) (which provides that section 13(1)–(4) is to apply ‘if a separate entity submits to the jurisdiction’) make plain that the separate entity is only immune where ‘the circumstances are such that a State … would have been immune’ and consequently a separate entity is to be regarded as having submitted by reference to the test of submission laid down for States in section 2.107
Although, given the introduction of a restrictive rule by the Act, the State strictly only retains a choice regarding submission in respect of cases where it is otherwise entitled to immunity, and on this account section 2 is included in the list of exceptions to the general rule of immunity, that section is generally regarded as applicable to all proceedings brought against a State. Hence if a State chooses to waive immunity and submit in accordance with section 2, all entitlement to immunity is removed and there is no need to rely on any of the exceptions to immunity set out in sections 3 to 10. It is doubtful whether the waiver provisions in the Act relating to adjudication and enforcement apply to proceedings relating to the property of a diplomatic mission.
Although on frequent occasions the individual functionary or his immediate superior may respond to the initiation of proceedings or act in such a way as to indicate consent to the court’s jurisdiction, the Act, applying previous case-law narrowly defines who is competent to submit on behalf of the foreign State. Section 2(3) speaks of ‘the State’ being deemed to have submitted by institution of or intervention or taking any step in the proceedings. By section 2(7) the head of the State’s diplomatic mission or the person for the time being performing his functions is deemed to have authority to submit on behalf of the State in respect of any proceedings of whatsoever nature but this does not necessarily provide an exclusive way in which a state can submit to the jurisdiction. Any person who has entered a contract on behalf and with the authority of a State is deemed to have authority to submit in respect of proceedings arising out of the contract (SIA, section 2(7)). Conferment of authority is essential. It follows that action taken by a member of the diplomatic mission (or solicitors instructed by the mission) is required to be taken with the authority which includes authority to delegate of the head of mission or the person for the time being performing his (or her) functions.108 The doctrine of ostensible authority does not apply nor can jurisdiction be created by estoppel.109 A solicitor preparing contracts of employment for personnel,110 or a director of a medical office attached to a mission,111 are not of themselves persons with authority to submit on the State’s behalf.
Section 2 recognizes four ways in which a State may give or be deemed to give its consent to the proceedings:
(i) by submission after the dispute;
(ii) by prior written agreement (section 2(2));
(iii) by institution of proceedings (section 2(3));
(iv) by intervening or taking any step in the proceedings other than to claim immunity or assert an interest in property in certain cases (section 2(4)).
The nature of the submission required of a State by the Act ‘after the dispute’ giving rise to the proceedings has arisen is not specified; conduct, other than written consent, outside the court by a party or his legal representative might satisfy the section although it would presumably have to be conduct authorized as above.112 Mann was of the view that an oral statement accepting jurisdiction but not amounting to a submission in proceedings actually pending would satisfy the section.113
The Act expressly permits submission by a prior written agreement. Consequently, a consent to submit given in a prior contract or to an arbitration114 may now constitute submission.115 Whether there is an agreement and how it is to be construed will be matters for the proper law of the contract.116 The Act states that submission of an agreement to English law is not to be regarded as submission to English jurisdiction. Saville J indicated a robust approach in construing a general submission clause contained in a commercial contract made by a State as applying waiver to both the adjudication and enforcement stages of the proceedings117 and this case was followed by the English Court of Appeal in the case of Sabah Shipyard (Pakistan) v Pakistan.118 Such a liberal construction of a clause as constituting submission to both adjudication and enforcement tends to blur the statute’s requirement that waiver should be separately given in respect of each.119 These two cases have been distinguished in a later case where the waiver was more general, ‘irrevocably waiv[ing] all rights to sovereign immunity’; here the court, though prepared to put the State on the same footing as a private individual as regards an arbitration held in Denmark, refused to construe consent to arbitration in Denmark and a waiver of immunity by a State as an implied submission to the jurisdiction of the English court.120
Section 2(3) re-enacts the common law rule. A State’s institution of proceedings is deemed consent to the jurisdiction of the court in which they are brought. As with all other types of submission, consent given by way of institution of proceedings extends to any appeal but not to any counter-claim unless it arises out of the same legal relationship or facts of the claim. English law does not allow, as does US law, recovery in respect of a counter-claim unrelated to the claim up to the amount of the State’s claim.
Subsection 2(3)(b) provides that intervention or taking a step in the proceedings constitutes submission but section 2(4)(a) provides that this section does not apply to intervention or a step taken ‘for the purpose only of (a) claiming immunity or (b) asserting an interest in property in circumstances such that a State would have been entitled to immunity if proceedings had been brought against it’. The courts have adopted a liberal construction of these two subsections, not construing any step other than one taken for the purpose of claiming immunity as submission. Determination that the State’s conduct amounts to submission proceeds in two stages. The conduct complained of must first be held to amount to intervention or a step in the proceedings, and secondly be taken for a purpose other than claiming immunity.
There can be no submission unless the conduct of the State or separate entity amounts to intervention or a step in the proceedings (section 2(3)(b)). What constitutes ‘a step in the proceedings’ is to be judged on ordinary principles of English law. These principles have for the most part evolved in the context of the Arbitration Acts.121 The reported cases are difficult to reconcile but the test propounded by Lord Denning MR has been adopted in the construction of section 2. A step in the proceedings is:
a step by which the defendant evinces an election to abide by the Court proceedings and waives his right to arbitration. Like any election it must be an unequivocal act done with knowledge of the material circumstances…. to deprive a defendant of his recourse to arbitration a ‘step in the proceedings’ must be one which impliedly affirms the correctness of the proceedings and the willingness of the defendant to go along with a determination by the courts of law instead of arbitration.122
Applying this test, the joinder of the State as a party would constitute intervention and the filing of a defence on the merits123 or a request for a plea of forum conveniens to be considered at a prior and separate hearing to one of State immunity124 will constitute a step in the proceedings.125 Intent to take the step in the proceedings other than for the purpose of claiming immunity must also be established. Section 2(4), a relieving provision, has been liberally construed so as not to constitute submission where a plea of State immunity is coupled with some other application to the court. It has accordingly been held that where the defendant State makes plain its challenge to the court’s jurisdiction, its obtaining of a stay of a default judgment against it and performance of the conditions required for that stay do not constitute a step in the proceedings; the stay constituted no more than ‘a resistance to enforcement’ and involved no assumption as to jurisdiction to deal with the merits. Nor will the joinder of pleas of non-justiciability and forum non conveniens to a plea of State immunity amount to a stay of the proceedings where it is clear that they also constitute a challenge to the court’s jurisdiction; and in the case of forum non conveniens, assert that an international forum rather than a municipal court is the correct method of settlement. In all these situations the defendant State has ‘acted only so as to disaffirm the correctness of the proceedings and its willingness to go along with their determination by the English courts’.126
Revocation of any consent to proceedings or of submission is not expressly dealt with in the Act. In Yendall v Commonwealth of Australia127 the Employment Appeal Tribunal assumed that a State could not withdraw its waiver once given and that such waiver extended to any new claim which by amendment was included in the proceedings. Consequently it refused the application to amend on the ground that the defendant State would be prejudiced. As has already been stressed, submission to enforcement jurisdiction of the English court must be express and made separately from consent of the State to the adjudicative jurisdiction of the court (section 13(3)).128
In addition to section 2 by which consent of the State to the exercise of jurisdiction by the court removes immunity, the SIA sets out a further eight sections containing exceptions to the general rule of immunity set out in section 1.
The contest between the parties as regards any one of these exceptions is likely to focus on the presence or absence of stipulated elements in the non-immune transaction with the result that the substance of the alleged transaction will be enquired into at the preliminary stage, regardless of whether in the final event the plea of immunity is successful. For example, in the International Tin case the legal relationship between the defaulting International Tin Council, an international organization, and its Member States was closely examined; whether the Council had independent legal personality, acted as an agent, or had its dealings in tin and loans guaranteed by the Member States was the subject of extended proceedings, although in the direct action brought by the tin brokers and the banks the defendant States (other than the UK) only advanced a plea of immunity.129
No decision to date has determined whether the exceptions are cumulative or exclusive in effect. An express provision deals with the relationship between the general exception for commercial transactions in section 3(3)(c) and contracts of employment in section 4 but no similar provision covers the many specialized types of contract in sections 5 to 10, or to those tort proceedings listed under section 5, which may also fall within section 3. The decision in the Lords treating as torts of detention and conversion acts committed abroad relating to the incorporation of the KAC’s planes removed from Kuwait into IAC’s fleet disregarded the jurisdictional limitation to acts or omissions in the UK in the tort exception in section 5.130
As the White Book notes, the SIA ‘restricts immunity, it does not directly confer jurisdiction’.132 The English courts’ jurisdiction in proceedings relating to foreign States is governed by English private international law and in particular the Civil Procedure Rules. The treatment of a connection to the territorial jurisdiction of the English court in the statute is unsystematic. Unlike the ECSI or the US FSIA, the SIA does not impose, for all the enacted exceptions which it introduces in order to give effect to the restrictive doctrine of immunity, additional jurisdictional links; it stipulates such a requirement for some exceptions but most importantly omits it with regard to the general exception for commercial transactions. Where a jurisdictional requirement is specified, failure to satisfy it will render the proceedings immune even where in all other respects it falls within one of the statutory exceptions.133
Some time before the SIA’s enactment, Lord Denning, in advancing radical ideas to reform the English law of immunity in Thai-Europe Tapioca Service v Government of Pakistan declared, in addition to the well-recognized exceptions for land or trust funds situate in England, that ‘immunity should be removed in respect of debts incurred here for services rendered to its property here’ and for ‘a commercial transaction entered into with a trader here’; he qualified this last exception by adding ‘and a dispute arises which is properly within the territorial jurisdiction of our courts’, saying:
By this I do not mean merely that it can be brought within the rule for service out of the jurisdiction under RSC Ord. 11, r. 1. I mean that the dispute should be concerned with property actually situated within the jurisdiction of our courts or with commercial transactions having a most close connection with England such that, by the presence of the parties or the nature of the dispute, it is more properly cognisable here than elsewhere.134
This proposal for stricter jurisdictional links than those required for commercial litigation between private parties was promptly challenged. Basil Markesinis wrote in 1976 of the doctrine of sovereign immunity: ‘it serves no purpose to connect or confuse this doctrine with the rules of jurisdiction in Order 11. If a case cannot be tried by an English court the claim for sovereign immunity is irrelevant. But a plaintiff who takes advantage of the admittedly wide rules of jurisdiction of the English courts may still see his claim defeated by the doctrine of sovereign immunity’.135
To similar effect Professor Higgins, as she then was, suggested Lord Denning was mistakenly using the language of forum non conveniens: ‘One may wonder why, if application to serve out of the jurisdiction has properly been granted under Order 11, rule 1 [now the Civil Proceedings Rules 6.20] and if in those circumstances a private corporate defendant would be required to contest the action in England, a sovereign engaging in trade should be given the extra protection of a “real connection” being needed before immunity will be disallowed’.136
The SIA in part adopts the view of Lord Denning requiring stricter jurisdictional connections for the exceptions to State immunity, and in part reflects the view of his critics that immunity and jurisdiction are to be treated as separate issues. The jurisdictional connections provided in the ECSI are generally implemented in all the exceptions, save the commercial transactions in section 3 and proceedings relating to State-owned ships. Thus jurisdictional requirements of a more stringent nature are to be found in the employment contract exception in section 4 where a plaintiff may bring proceedings in respect of an employment contract made with a foreign State or performed within the UK if he complies with nationality or habitual residence requirements; and proceedings for personal injuries are only immune in respect where they were caused by an act or omission of the State in the UK (section 5). Proceedings relating to membership of a company may only be brought where the company is incorporated or constituted in the UK (section 8), or in respect of patents and trade marks where their registration or infringement occurs within the UK (section 7). Even the exception relating to arbitration, which has been criticized for not being limited to arbitration agreements where the place of the arbitration or the law is English, is unavailable except with regard to proceedings in the UK which relate to the arbitration (section 9). Even for the second limb of the general commercial exception relating to contractual obligations of the State, the jurisdictional link of performance in whole or in part in the UK is retained (section 3(1)(b)).
In addition to these specified jurisdictional requirements, the Act also applies, in respect of all proceedings falling within all the statutory exceptions, the general requirements relating to exercise of extraterritorial jurisdiction which apply to proceedings between private parties (section 12(7)).137 In the main, then, a plaintiff seeking to bring proceedings against a State must first obtain leave to serve out of the jurisdiction under CPR 6.20 (which now replaces Order 11 rule 1) and then satisfy the English court that his claim complies with the additional jurisdictional connection specified.
For commercial transactions entered into by the State under section 3(1)(a), and arrest of State-owned or operated ships under section 10, however, no additional jurisdictional link is specified. As noted above with regard to the legislative history, the initial draft of the Bill provided that immunity for commercial activity was to be restricted solely to such activity conducted through a State agency or office in the UK; on representations by Lord Wilberforce and Lord Denning (despite his previous judicial pronouncements) this additional jurisdictional requirement was deleted and no other link stipulated. In consequence, so far as commercial transactions are concerned, provided the claimant satisfies the requirements relating to service out of the jurisdiction under CPR 6.20 the jurisdiction of the English court is governed by the same rules as those relating to litigation between private parties. The Supreme Court in NML v Argentina recently endorsed the omission in section 3(1)(a) of a jurisdictional link between the foreign State’s commercial transaction and the UK jurisdiction. In the leading judgment, Lord Phillips with whom Lords Walker, Mance, and Collins agreed, stated:
I can see no justification for giving section 3(1)(a) a narrow interpretation on the basis that it is desirable to restrict the circumstances in which it operates to those where the commercial transaction has a link with the United Kingdom. The restrictive doctrine of sovereign immunity does not restrict the exemption from immunity to commercial transactions that are in some way linked to the jurisdiction of the forum.
He explained that although the original Bill followed closely the structure of the ECSI, its scope was, however, significantly enlarged by amendment.
The ECSI only applies as between contracting states. The 1978 Act was expanded so as to apply to all states. The ECSI does not give effect to the restrictive doctrine of State immunity … But the UK, however, had done so, in its declaration under ECSI Article 24(1) which extended to States not party to the Convention proceedings in English courts by making clear (as observed by Lord Goff in KAC v IAC [1995] 1WLR 1147 at 1158) ‘the inapplicability in English law of the principle of sovereign immunity in cases in which the sovereign was not acting jure imperii.’138
A similar situation prevails in relation to Admiralty proceedings under section 10, though the reference to ‘Admiralty’ may import the procedures for service applicable in Admiralty proceedings. The ECSI contains no exception relating to the operation of sea-going vessels owned or operated by States and their cargoes in commercial use which is covered by the 1926 Brussels Convention (Article 30 and commentary). Article 16 of the UNCSI, however, in proceedings relating to ships owned or operated by States restricts the immunity to the ‘court of another State which is otherwise competent’. The absence of any additional jurisdictional requirement to the forum State jurisdiction was explained by Goff J, who over the period of the enactment of the SIA was confronted with the issue in the course of the first instance proceedings relating to I Congreso del Partido. He rejected the contention that under English common law the court had no jurisdiction over a claim relating to the conversion of goods on board foreign ships on the high seas or in foreign countries, declaring:
On the evidence before me there appears to be no international consensus on the requirement of a territorial connection … I find it difficult to accept that the English court should not be able to assert jurisdiction in an action in rem against a foreign State-owned trading ship in such a case, even though the contract of carriage has no connection with the territorial jurisdiction of England. Jurisdiction asserted by means of an arrest of a ship is not an exorbitant jurisdiction. By allowing ships to trade, a foreign State must be taken to have exposed his ships to the possibility of arrest, a procedure which is widely accepted among maritime nations and which is regulated to some extent by international convention; in the case of State-owned ships by the Brussels convention of 1926, and in the case of other seagoing ships by the Brussels Convention of 1952.139
One of the stated purposes of the SIA was to enable the UK to ratify the 1926 Brussels Convention and the 1934 Protocol and accordingly, in conformity with that Convention and the 1952 Brussels Convention relating to the Arrest of Sea-Going Vessels, no additional jurisdictional requirement was inserted in section 10 of the Act which enacted an exception for State-owned or operated ships in use or intended for use for commercial purposes.
In sum the position of the SIA, as with the UNCSI which in this respect follows the piecemeal approach of the English Act,140 is anomalous with regard to a jurisdictional connection for proceedings brought against foreign States additional to that required in proceedings between private parties. It does not observe the strict logic of the ECSI’s position, by which every exception is linked narrowly to the forum where proceedings are to be brought, nor does it contain, as does the FSIA, nexus requirements for the exception for commercial transactions. In consequence, as the discussion in the ILC shows, it is difficult to find any international concurrence on what if any additional jurisdictional connections are required by international law before a national court may exercise jurisdiction over a foreign State.
The core provision of the SIA which gives effect to the restrictive doctrine is in section 3. The structure of that section is complex, partly due to its legislative history. The Bill contained no one section removing immunity in respect of those transactions or activities which were equally performable by a private individual, nor a clear division of immune and non-immune activities by reference to the distinction between acts of a private law nature jure gestionis and in exercise of sovereign authority jure imperii. Instead the clause, as originally drafted, formulated the exceptions exactly as contained in Articles 4 and 7 of the ECSI; thus clause 3 provided that a State is not immune as respects proceedings relating to any commercial, industrial, or financial activity in which it has engaged in the same manner as a private person through an office, agency, or establishment maintained by it for that purpose in the UK; and clause 4 provided that a State is not immune as respects proceedings relating to a contractual obligation of the State which falls to be performed by the State wholly or partly in the UK. In debate in the Lords this formulation was severely criticized; Lord Wilberforce noted that the form adopted for these clauses was employed in the ECSI to enable the enforcement of judgments against States participating in the Convention.141 He questioned whether such a restrictive form was appropriate for the current legislation which was intended as substantive rules to govern relations with all States; and along with Lord Denning, he maintained that these clauses gave less exemption from immunity than that which the Court of Appeal had currently determined in the Trendtex case.142 In response an amendment was introduced at the report stage in the Lords greatly enlarging the scope of non-immune commercial transactions.
In its final form section 3(1) reads:
A State is not immune as respects proceedings relating to—
(a) a commercial transaction entered into by a State;
(b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom;
and subsection (3) defines ‘commercial transaction’:
In this section ‘commercial transaction’ means—
(a) any contract for the supply of goods or services;
(b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or any other financial obligation;
(c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority;
but neither paragraph of subsection (1) above applies to a contract of employment between a State and an individual.
Before examining the construction of particular phrases in section 3 it is important to comprehend its general structure. Subsection (1) identifies two categories in respect of which proceedings are not to be immune: (a) ‘a commercial transaction entered into by a State’ and (b) ‘an obligation of the foreign State which by virtue of a contract falls to be performed wholly or in part in the UK’. Both require the direct involvement of the State.143 Subsection (2) deals with exclusions. Two are general: immunity is not removed ‘if the parties to the dispute are States’ or ‘have otherwise agreed in writing’; the third exclusion relates to the second category only, which is to remain immune if the non-commercial contract was made in and governed by the administrative law of the State. The third subsection provides a threefold definition of the term ‘commercial transaction’. As Lord Diplock noted, the 1978 Act in its approach does not adopt ‘the straightforward dichotomy between acts jure imperii and acts jure gestionis that had become familiar doctrine in public international law’.144 Instead it adopts a list approach identifying two types of non-immune transaction, irrespective of the purpose for which they were undertaken; these are subsection (3)(a) ‘any contract for the supply of goods or services’, and subsection (3)(b) ‘any loan or other transaction for the provision of finance’ (which is stated, more particularly, to include ‘any guarantee, or indemnity in respect of any such transaction or any other financial obligation’);145 the provision of finance may be either by or to the State.146 A third residuary category, subsection (3)(c), is made subject to the restrictive criterion with no immunity solely in respect of a transaction into which a State enters or engages otherwise than in the exercise of sovereign authority.147
Six general points may be made about the final limb of the statutory definition of commercial transaction contained in subsection 3. Although not expressly stated, the nature and not the purpose of the transaction or activity determines whether or not it is immune. The test first judicially set out in the Empire of Iran case has been applied to the construction of this subsection, as cited by Lord Wilberforce in I Congreso del Partido:
As a means for determining the distinction between acts jure imperii and jure gestionis one should rather refer to the nature of the State transaction or the resulting legal relationships; and not the motive or purpose of the State activity. It thus depends on whether the State has acted in exercise of its sovereign authority, that is in public law, or like a private person, that is in private law.148
Secondly, the residuary category is not confined to contractual obligations; the express inclusion of ‘activity … into which a State … engages’ enlarges its scope to include claims in tort in respect of which the State is a party,149 although it would seem that such claims must comply with a commerciality test.150
Thirdly, the terms ‘commercial transaction’ and ‘activity otherwise than in the exercise of sovereign authority’ are positive and negative definitions of the same concept; a comprehensive dichotomy is thus set up by the statute by which all acts not amounting to commercial transactions constitute acts in exercise of sovereign authority.151 This dichotomy between acts jure imperii and jure gestionis is elaborated by the addition of the descriptive words ‘commercial, industrial, financial, professional, or other similar character’ so as to embrace the widest conception of private law or commercial acts.152 The inclusion of ‘professional’ was welcomed as reversing decisions which had treated as immune claims relating to fees of architects and other professional advisers to an embassy.153
Fourthly, the language of section 3(3)(a) is very broad, and in particular, in relation to section 3(3)(b), it has been held that the provision of finance may be either by or to the State; and applies where a bank receives funds pursuant to a mechanism to secure their direct transfer into the account of a third party.154
Fifthly, the burden of proof appears to shift; the defendant having established itself as a State, the burden is upon the plaintiff to show that the transaction falls within one of the three limbs of the definition of commercial transaction; but if the plaintiff establishes an activity of a commercial, industrial, financial, professional, or other similar character, it is arguably for the defendant State to show that it entered or engaged in it in the exercise of sovereign authority so as to retain immunity.
Finally, contracts of employment between a State and an individual are excluded from the definition and indeed the entire scope of section 3.
Parallel to the operation of the SIA the courts have developed the common law in accordance with a restrictive doctrine; in so doing they have had regard to both the commerciality and the private law nature of the act. They have adopted the rule elaborated in the Empire of Iran case that regard should be had to the nature and not the purpose of the act, and in the cases under the SIA where it has been necessary to address the issue, the same approach has been adopted. The test of the nature of the act has been broadened into a consideration of the whole context of the alleged transaction or activity. Lord Wilberforce formulated this test in a much cited passage:
in considering, under the restrictive theory, whether State immunity should be granted or not, the court must consider the whole context in which the claim against the State is made, with a view to deciding whether the relevant act(s) on which the claim is based should, in that context, be considered as fairly within an area of activity, trading or commercial or otherwise of a private law character, in which the State has chosen to engage or whether the relevant activity should be considered as having been done outside the area and within the sphere of governmental or sovereign activity.155
That test has been further elaborated by identifying in all the circumstances the relevant factors which characterize the activity. Courts have relied on the passages from the Empire of Iran case and Lord Wilberforce’s words in Congreso in deciding cases under the statute156 and under the common law. In Littrell, a case decided under the common law, the Court of Appeal focused more narrowly on the alleged facts—the place where, the person by whom, and the type of act alleged to have been committed—than the general context of the maintenance by the foreign State of a unit of its armed services in the UK. Lord Justice Hoffmann in useful advice, in a passage subsequently approved by the Lords,157 said: ‘I do not think that there is a single test or a bright line by which cases on either side can be distinguished. Rather, there are a number of factors which may characterise the act as nearer to or further from the central military activity’.158
Section 3 provides no guidance as to the moment in time, whether at the conclusion of the transaction, its subsequent performance or breach, or date of the proceedings, the nature of the transaction and which of the three categories in (a), (b), or (c) of subsection 3 it falls within is to be determined, issues which can be particularly problematic in a continuing transaction where the acts at commencement may be of one nature and in performance of another.159 Lord Wilberforce highlighted the problem in I Congreso del Partido, a case decided under the common law: he noted that the restrictive theory did not and could not deny the capability of a State to resort to sovereign, or governmental, action and therefore it ought legally to be open for a State as a State to bring an end to its trading activity by the exercise of a governmental act. The facts in I Congreso del Partido related to claims brought by a Chilean company for breach of contract and conversion against the Republic of Cuba, the owner of I Congreso, the attached vessel, in respect of failure to deliver a cargo of sugar carried in two sister ships, the Playa Larga and the Marble Islands. Following the overthrow of the Allende government in Chile, the Cuban government ordered the Playa Larga to leave Valparaiso without completing the unloading of her cargo and the Marble Islands not to go to Chile. The Playa Larga returned to Chile with the remainder of the cargo and the Marble Islands was diverted to Vietnam where the cargo was disposed of. The intervention of the Cuban government resulting in failure to deliver the cargo clearly raised a question as to the continuity of the initial commercial transaction. The majority held that the commercial transactions of carriage of a cargo of sugar for delivery to Chile remained commercial in character although terminated for political reasons (Cuba’s breaking off relations with Chile after its right-wing coup) because the acts complained of, the discharge and sale of the cargo, were effected under private law. Lord Wilberforce, with Lord Edmund Davies, was in the minority in holding in respect of the ship Marble Islands that the Republic of Cuba was never in trading relations with the cargo owners; and its actions, being confined to directing the transfer of the sugar to North Vietnam and to the enactment of legislation freezing and blocking Chilean assets, must be characterized as done in the exercise of sovereign authority.160 In another case arising under the Act, the House of Lords by majority has held that immunity conferred by reason of the governmental nature of the initial seizure of another State’s property can lose that character where transferred into the ownership of a trading State agency by legislative decree.161
Section 3(1)(b) survives as initially drafted in the Bill and enacts Article 4 of the ECSI. As in the Convention, immunity is removed from all contracts regardless of the nature of the transaction, that is whether or not it is in exercise of sovereign authority, provided the obligation arises under a contract to be performed wholly or in part in the UK. This is a potentially wide removal of immunity (similar to that in section 5 for proceedings in tort in respect of death or personal injuries or damage or loss to tangible property) unrestricted by the governmental nature or purpose of the activity, but the jurisdictional requirement that performance of the contract takes place in the UK considerably narrows its application.162 The removal of immunity in respect of an obligation of the State arising by virtue of a contract163 is further narrowed by the exclusions contained in subsection (2) of section 3. One of these is particularly directed to subsection (1)(b), providing that it shall not apply if the contract (not being a commercial transaction) was made in the territory of the State concerned and the obligation in question is governed by administrative law.164 These exclusions and the restrictive jurisdictional link would seem to have discouraged resort to this second limb of section 3(1) when bringing proceedings for breach of contract against a State, thus bearing out the criticisms directed against it by Lords Wilberforce and Denning during its passage through the Lords. On the other hand, the State to lose immunity need not be a party to the contract, as is required where a commercial transaction is relied on. A concurrent or secondary liability, as in the case of undisclosed principal, has been held to constitute ‘an obligation of the State by virtue of contract’.
Here again, unlike UNCSI, Article 10 which restricts the exception for commercial transactions to where ‘a State engages in a commercial transaction … ’, SIA, section 3(3)(c) provides that the activity to be non-immune need not be contractual and hence there is no immunity for proceedings relating to the torts of misrepresentation or deceit in respect of commercial dealings.
The exclusion in section 3(2) where ‘the parties to the dispute are States’ refers to the parties named in the proceedings, even though States may be parties to the underlying transaction. Whether the immune nature of an agreement between States passes on assignment to a private party would seem questionable.165 The exclusion has no application if the claim is brought in respect of an independent contract relating to other parties; thus no immunity could be claimed in respect of a promissory note issued to discharge liability under an underlying credit agreement between two States where the parties to the note were not the States.166
The phrase ‘entered into by the State’ in section 3(1)(a) carries through into the non-immune proceedings listed in SIA, section 3(1)(a), but not in (b) so as to make it necessary for the State to be a party to the contract for the supply of goods, services, or a loan or to any other financial transaction. On this account the Member States enjoyed no immunity in respect of the contracts of the loans entered into by the buffer stock manager of the International Tin Council; for even though they might not have entered into such contracts themselves, so as to be caught by the terms of section 3(1)(a), the giving of a secondary guarantee or their status as undisclosed principal alleged in Submissions B and C constituted ‘an obligation of the State which by virtue of a contract [although not with the member States] falls to be performed in the UK’.167
Section 4 provides that a State is not immune in respect of proceedings relating to a contract of employment168 between the State and an individual but hedges this provision around with so many restrictions that only a limited class of State employees at the present time enjoys the benefit of this exception. First there is a jurisdictional requirement that the contract must either be made in the UK or relate to work to be performed in the UK either wholly or in part (section 4(1)). Secondly, the individual is required to satisfy specified nationality or residence qualifications, save where the work which is the subject of the proceedings is for an office, agency, or establishment maintained by the State in the UK for commercial purposes;169 in these circumstances any national may bring a claim, except one who at the time when the contract was made was habitually resident in the foreign employer State (section 4(3)). In respect of claims relating to other contracts or work, nationals of the foreign State and third State nationals,170 unless habitually resident in the UK at the time when the contract was made, do not qualify to bring proceedings (section 4(2)(a) and (b)).
The parties to a non-immune contract of employment within the scope of section 4 may contract out and retain the State’s immunity but section 4(4) prevents such a contract defeating a mandatory requirement of English law vesting jurisdiction in the English court.171
SIA, section 16(1)(a) operates to introduce another restriction in the scope of section 4, excluding from its operation claims relating to employment of ‘members of the staff at a diplomatic mission’ of a foreign State, which by reference to the definition in the VCDR 1961, Article 1, includes not only diplomatic officers, but lower grade administrative and technical and domestic staff, irrespective of their nationality.172 Whilst under SIA, section 16 (1) (a) a foreign State enjoys absolute immunity in respect of ‘proceedings relating to a contract of employment’ in the case of employees who are members of a mission, a claim for personal injury by an employee pursuant to SIA, section 5 is distinct; ‘Sections 4 and 5 are separate and freestanding exceptions to the general rule of state immunity provided by section 1 … Section 16 (1) (a) expressly qualifies that exception as regards section 4 but it has no impact on section 5’.173
The impact of obligations imposed on the UK by international conventions increasingly makes section 4 in need of amendment.174 The effect of subsection (2), particularly in relation to third State nationals, is discriminatory (the UN Convention on Jurisdictional Immunities of States and their Property, Article 11 now omits a similar provision) and open to challenge as regards other European Community nationals as contrary to Articles 12 (formerly 6) and 39 (formerly 48) of the EC Treaty and regulations made thereunder. In addition, in respect of all persons other than UK nationals it may now be contrary to the 1950 Convention on Human Rights, particularly the procedural right of access to justice in Article 6(a) (see further Chapter 6 under ‘Access to court’). As regards the compatibility of SIA, section 16 (1)(a) with the UK’s obligations under the ECHR, the Strasbourg Court has supported the ‘emerging trend’ indicated in the 1991 ILC Draft Articles and the UNCSI, Article 11 and annexed understanding, to recognize the right of access of staff of diplomatic missions abroad in respect of employment claims and to narrow the test of its proportionality to any immunity claimed by reference to the ‘security interests’ of the foreign State, as referred to in Article 11.2(d) of the UNCSI, rather than the more inclusive public nature of the employee’s duties. The Court continues to preserve immunity in respect of employment claims relating to recruitment, renewal of employment, or reinstatement of an individual. Thus, in Fogarty the Court upheld the immunity of the US before the UK court stating that ‘questions relating to the recruitment of staff to missions and embassies may by their very nature involve sensitive and confidential issues, inter alia, to the diplomatic and organisational policy of a foreign State’.175 But the Court rejects immunity and shows a willingness to recognize an employee’s right of access to court in respect of claims for wrongful dismissal.176
Proceedings in respect of claims by employees of foreign States has been a frequent source of litigation; in many cases due to a failure on the part of the immediate supervisor or even of the industrial tribunal to appreciate the employer’s entitlement to immunity, but also as to a correct assessment whether the particular employee is to be treated as a member of the staff of the mission. An element of forum seeking also cannot be excluded.177
The Act provides no general exception to State immunity in respect of non-contractual tortious acts; consequently the general immunity provided in section 1(a) will apply to proceedings for defamation against a foreign State.178 SIA, section 5 renders non-immune proceedings in respect of (a) death or personal injuries; or (b) damage or loss of tangible property caused by act or omission in the UK. This is a potentially wide exception in that it covers the commission of torts in the course of sovereign as well as private activities, but the State as defendant enjoys a stricter jurisdictional requirement than an ordinary defendant from whom compensation for personal injuries or tangible loss is sought.179 Modelled on a similar exception in the ECSI, the English exception requires the act or omission complained of to occur in the UK but omits the additional requirement that the author of the act or omission should be present in the UK. The activity of the State is not, however, required to be of a commercial nature; provided it occurs within the UK jurisdiction proceedings may be brought. This is to be contrasted with proceedings in respect of tort claims brought under section 3(3)(c), where it would seem the words ‘activity … in which the State engages’ permit proceedings in tort for economic loss, provided they comply with a test of ‘commerciality’ and concern relations in contract, tort, or otherwise which are governed by private law.180 The last point has not been judicially considered. Section 3(2) gives some support for this proposition, although whether, with the growth of judicial review, an obligation relating to ‘reasonable expectations’ is governed by administrative law and hence is immune is debatable.181 This may be relevant to claims sought to be brought in relation to grants for students and other beneficiaries of State assistance brought under section 3(3)(c). The limitation to torts causing physical damage reflects the general reluctance of States to adjudicate on statements made by other States, where and however published and whether malicious or negligent.
The jurisdictional requirement that the act or omission causing damage be committed in the UK bars a remedy being brought for personal injuries inflicted abroad whether intentionally or negligently by an official of a foreign State. The decisions in Al-Adsani and Jones v Saudi Arabia establish that, where the alleged wrongful act of a foreign State fails to come within the tort exception in section 5 by reason of its commission abroad, the general principle in section 1 of the Act applies so as to confer immunity upon the foreign State even though the act alleged amounted to a violation of human rights and of the prohibition against torture.182
The proceedings in Al-Adsani have acquired particular interest because the English Court of Appeal initially was prepared to exercise jurisdiction and secondly because, on a subsequent Court of Appeal holding the claim barred by State immunity, in a claim brought against the UK, the ECtHR accepted jurisdiction on the basis of ECHR, Article 6(1) but dismissed the claim on the ground that the immunity satisfied the requirements of a legitimate aim and proportionality.
The plaintiff, a dual national of the UK and Kuwait, alleged that by reason of a private dispute arising out of the circulation of video containing pornographic material he had suffered mistreatment by acts of the Kuwaiti authorities involving wrongful detention in a State prison, repeated beatings, and the sustaining of severe burns. He claimed that by reason of the ill-treatment he had suffered physical and psychological injuries and argued that the psychological injuries were exacerbated by the threats which he had received while in London from the Kuwaiti Ambassador and anonymously over the telephone.
The first Court of Appeal, at an ex parte hearing at which the foreign State was not represented, granted leave to serve the proceedings out of the jurisdiction. The Court held that the SIA was intended to give effect to principles of public international law; it therefore had to be construed in accordance with those principles and since torture was expressly prohibited by international law, and in particular by the 1984 UN Convention against Torture which had been given effect in English law by section 134 of the Criminal Justice Act 1988, the plaintiff had made out a good arguable case that his claim was not barred by the Act. Further, the alleged threats being made in the UK brought into operation the tort exception.183
After service of proceedings the Government of Kuwait contested the ruling on immunity and on a preliminary trial a second Court of Appeal held Kuwait to be entitled to immunity and that the English court had no jurisdiction to hear the case. The Court of Appeal accepted that international law prohibited torture but held, citing the US cases of Amerada Hess and Siderman, that the English statute was a comprehensive code and that a foreign State was immune unless the proceedings came within one of the exceptions therein enacted. None of the exceptions in the Act was applicable to the plaintiff’s allegations; the exception in section 5 applied only where the acts occasioning personal injuries were committed in the UK. As regards the threats alleged to be made in the UK the burden of proof was upon the plaintiff to show that on the balance of probabilities they were made by Kuwait. Although there was no doubt that threats were made, the plaintiff had failed to produce any evidence that they were made by the ambassador or anyone else on behalf of Kuwait.184
Criticism that the SIA barred a hearing to a human rights victim and shielded a State from such an allegation led to an application to the ECtHR. That court held that the applicant’s alleged treatment by Kuwait gave rise to a civil right but that the grant of immunity by the English court was a proportionate limitation of the right of access to court. The court, by a narrow majority, declared:
The Court, while noting the growing recognition of the overriding importance of the prohibition of torture, does not accordingly find it established that there is yet acceptance in international law of the proposition that States are not entitled to immunity in respect of civil claims for damages for alleged torture committed outside the forum State.185
Section 6(1) and (2) of the SIA gives statutory form to the exceptions recognized at common law for proceedings relating to immovable property situate in the UK, and to an interest in property, whether movable or immovable, arising by way of succession, gift, or bona vacantia. It is further provided in subsection (3) that a claim by a State to an interest in property is not a bar to proceedings relating to the estates of deceased persons, persons of unsound mind, or to insolvency, the winding up of companies, or the administration of trusts; all these matters depend for their recognition on, and are governed by, English or Scottish law. The section also provides a general rule on the effect of a State’s possession or control of property which is the subject-matter of a dispute to which the State is not a party. Immunity is no bar if the State would not be immune as defendant; if it would be entitled to immunity either personally or by reason of its interest in the property, it will still not enjoy immunity unless the interest of the State is admitted or supported by prima facie evidence, thus giving statutory effect to the rule developed at common law that a State is required to produce evidence that its claim was not wholly illusory nor founded on a defective title.186 In stating the circumstances by which immunity will not constitute a bar by reason of the indirect impleading of a State, section 6(4) is considerably more restrictive of State immunity than the wide provision in the UNCSI, Article 6(2)(a) which provides that a proceeding is to be considered as instituted against another State if it ‘in effect seeks to affect the property, rights, interests or activities of that other State’, with nothing being stated as to the burden and nature of proof required to establish such an ‘affecting’ of the State’s property etc.
The removal of immunity for immovables would seem to cover disputes relating to tenancies, possession of land, mortgages, nuisance, and trespass, but an important exclusion in section 16(1)(b) renders section 6(1) inapplicable to proceedings concerning title or possession of property used for the purposes of a State’s diplomatic premises. The private residence of a diplomat (not of the ambassador) is not within this exclusion, nor are proceedings for breach of a covenant of a lease to be construed as ‘proceedings concerning title or possession’.187
Subsection (3) has been construed as removing any bar in proceedings in a winding up of a company, concerning not merely any interest of the State in the property of the company but also any State property in the possession or control of the insolvent company. It has been applied by the court to enable it to restrain a liquidator from paying out assets in an insolvent bank belonging to the diplomatic mission of a State on the basis that the title of the State was not called into question, only its right to enforce immediate payment being suspended.188 This decision seems somewhat at odds with the ruling in Alcom, in that it permits collective enforcement by means of a bankruptcy against a bank account held in the name of a diplomatic mission. It can possibly be justified on the basis that if the mission chooses to place its money in a local bank it thereby acquires only a contractual right against the bank and one which is subject to English company law; accordingly it is deemed to accept the advantages and disadvantages such as insolvency or liquidation of the local bank that such a course entails. Nonetheless, to allow the central bank of the forum State to place in liquidation, at a time when no diplomatic relations have been disrupted, a bank which holds funds of the mission and with the effect that the business of the mission will be halted (including the provision of maintenance of students and their families) would seem to run counter to the duty imposed in the VCDR, Article 3 not to obstruct the mission in carrying out its functions. The exclusion in section 16(1)(b) was not applicable since it relates expressly to section 6(1) only, but the court’s prevention of the mission recovering possession of its assets might with regard to a friendly State in time of peace be said to conflict with the obligation in Article 3 of the VCDR not to act in a manner so as to obstruct the mission in carrying out its function.189
These rights all concern rights in private property in commercial use. Rights in property created by national private law are subject to national law.190 There has been no judicial decision on this exception, although Staughton J commented on the words ‘alleged infringement’ in section 7(b).191
The proper law of a corporation is the law of the country where it is incorporated, controlled from, or has its principal place of business. Unincorporate bodies are similarly governed by the law of the country which recognizes their existence, confers powers, and controls them. A State which is a member of an incorporated or unincorporated body governed by English law enjoys no rights other than those conferred on it by English law and for their determination the English court has jurisdiction. Section 8 gives effect to this position by declaring a State not to be immune in proceedings relating to its membership of a body corporate, an unincorporate body, or partnership which is governed by UK law and has members other than States. The type of proceedings for which there is no immunity are those arising between the State and the body or its other members, or, as the case may be, between the State and the other partners. The section allows a provision to the contrary, retaining immunity either by agreement in writing between the parties to the dispute or by the constitution or other instrument regulating the body or partnership in question.192
By this section where a State has agreed in writing193 to submit a dispute which has arisen or may arise to arbitration there is no immunity before the UK court in respect of proceedings in the courts of the UK which relate to the arbitration. Section 9 provides an express exception to immunity not only for proceedings to enforce an award, but for all proceedings relating to an arbitration to which a State is party, and establishes the jurisdiction of the English court in relation to all such proceedings.194 The arbitration agreement may provide otherwise and arbitration agreements between States are excluded from the operation of the section. Section 9(1) bases loss of immunity, not on a State’s consent to court proceedings, but in respect of the consent given to an arbitration in respect of which a court may subsequently entertain proceedings. As originally drafted the exception was based on the arbitration exception in ECSI, Article 12 which contained three limitations, two of which are also present in the arbitration exception in the UNCSI, Article 17:195 the exception only applied to arbitrations relating to disputes arising out of civil or commercial matters; further it did not apply to proceedings for enforcement of an award resulting from the arbitration; and it contained a jurisdictional connection removing immunity solely in respect of proceedings in the court of another State on the territory or according to the law of which the arbitration has taken or will take place.196 As to the first limitation, SIA, section 9 referred to a dispute without any qualifying words, ‘civil and commercial matters’, with the consequence that immunity was removed from proceedings relating to any type of dispute for which arbitration had been agreed. In a dispute referred to arbitration with a State in respect of exploitation of its oil reserves, the Court of Appeal held, by analogy to enforcement proceedings for a foreign judgment against a State, that in proceedings relating to the enforcement of an arbitral award the underlying nature of the transaction whether sovereign or commercial is irrelevant. In confirming this to be the law the Court of Appeal explained:
Arbitration is a consensual procedure and the principle underlying section 9 is that, if a state has agreed to submit to arbitration, it has rendered itself amenable to such process as may be necessary to render the arbitration effective.197
As regards the second limitation, the sub-clause (Clause 10(2)) expressly stating that the section did not apply to proceedings for enforcement of an award was deleted during the passage of the Bill through Parliament. The Lord Chancellor in moving the amendment stated:
This Amendment is intended to remove the immunity currently enjoyed by States from proceedings to enforce arbitration awards against them. Clause 10(1) [as section 9 then was] removes immunity from proceedings relating to arbitration where the State had submitted to the arbitration in the United Kingdom, or according to United Kingdom law, but by subsection (2) enforcement proceedings are excepted; that exception is now to be removed. If the Government Amendments to Clause 14 are accepted, the property of a State which is for the time being in use or intended for commercial purposes will become amenable to execution to satisfy an award. However, it would not be possible to proceed to such execution without first bringing enforcement proceedings to turn the award into an order of the court on which the execution could be levied, and unless the State had waived its immunity to enforcement, Clause 10(2) would prevent the necessary steps being taken. This Amendment will delete the subsection.
The Court of Appeal in the case cited above held after reference to the above Parliamentary history that there was ‘no basis for construing section 9 of the State Immunity Act (particularly when viewed in the context of the provisions of section 13 dealing with execution) as excluding proceedings relating to the enforcement of a foreign arbitral award’ (para 117).
Finally as regards the requirement of a jurisdictional connection with the forum State, the words ‘arbitrations in or according to the law of the United Kingdom’ in the clause were also deleted so that, as amended, section 9 removes immunity in respect of proceedings relating to foreign, as well as English, arbitral awards. As stated in Svenska v Lithuania, ‘the Parliamentary proceedings as reported in Hansard for 28 June 1978, Col 316 make it clear that the omission was deliberate’. The Lord Chancellor stated:
Clause 9 of the Bill provides that where a State has agreed in writing to submit a dispute to arbitration in, or according to, the law of the United Kingdom, the State is not immune as respects proceedings which relate to the arbitration. The Amendment removes the links with the United Kingdom, and by deleting the reference to the United Kingdom or its law, it will ensure that a State has no immunity in respect of enforcement proceedings for any foreign arbitral award.
A further reference to the UK still remains in the enacted section 9 in that immunity is only removed ‘in respect of proceedings in the courts of the United Kingdom’; in holding that a registration of a judgment is an exercise of jurisdiction within the meaning of the general bar to immunity in SIA, section 1(a), this phrase in section 9 was construed by Stanley Burnton J to mean that the proceedings ‘in the courts of the United Kingdom’ referred to the award itself and not to the transaction underlying the award. UK courts were thus not barred by SIA, section 1 from exercising jurisdiction as by recognition (exequatur) of an award wherever originally made, but that jurisdiction was to be determined by the law applicable to recognition of awards not that which determined the non-immune nature of the underlying transaction.198
Whilst the SIA has now been construed as impliedly overruled by the Civil Jurisdiction and Judgments Act 1982, section 31(1), it should not be overlooked that section 13, relating to measures of enforcement governs how any such court order may be executed.199 Having regard to section 9(2), which makes it plain that subsection (1) ‘has effect subject to any contrary provision in the arbitration agreement’, the potential width of section 9(1) is likely to be curtailed where the arbitration agreement incorporates enforcement provisions in accordance with the New York Convention of 1958 or the ICSID Convention.
Applying the restrictive approach200 this exception to immunity permits proceedings to be brought against a State in respect of a ship or its cargo in commercial use. It is broadly drafted in that it removes immunity not only from proceedings in respect of ships owned by the State in commercial use but also ships or cargoes possessed or in control of the State and it is sufficient that they are intended rather than in actual use for commercial purposes.201 The jurisdictional requirement for such proceedings is satisfied where proceedings are brought either in rem against the ship itself or a sister ship belonging to the State provided, at the time when the cause of action arose, both were in use or intended for use for commercial purposes; consequently the section goes further than any other exception in removing immunity from enforcement in respect of an action in rem against such a ship.202 A State is not immune in respect of a claim in rem in respect of cargo belonging to such a State where both the cargo and the ship were at the time the cause of action that arose in use or intended for use for commercial purposes. Subsection (4)(b) is differently worded, and accordingly where an action in personam is brought in respect of a cargo belonging to a State, it would seem that immunity is lost if the ship, regardless of the nature of the cargo, was at the time of the cause of action in use or intended for use for commercial purposes.203 The width of the exception in SIA in its application to a sister ship is to be contrasted with the narrower scope of Article 16 in the UNCSI.
No additional jurisdictional link to the UK as regards the location of the ship or cargo, or the performance or law relating to the terms of carriage is required.
The Act broadly gives effect in English law to the Brussels Convention, but the latter by its intricate drafting only applies to ships conforming to its specified conditions. It was therefore necessary to provide that the section did not apply if the State was a party to the Brussels Convention and the claim related to the operation of a ship owned and operated by that State.
References to a ship or cargo belonging to a State are to be interpreted to cover a ship or cargo in the possession or control of the State or in which it claims an interest (section 10(5)). This seems to give to government ships a more favourable rule than section 6(4)(b) which, for other property in which a State claims an interest, removes immunity unless the claim is admitted or supported by prima facie evidence; in the case of ships under section 10 it is sufficient to retain immunity for a State to claim an interest.
The provisions of this exception were varied by a Protocol to the 1974 UK/USSR Treaty on Merchant Shipping,204 now revoked, which provided that, if civil proceedings were brought concerning the operation of any vessel engaged in commercial service, the case should be dealt with in the same way as cases having a private owner (Article 1), but execution should be limited to arrest, with sale or other measure prohibited (Article 2). In return, the State as the owner of the vessel undertook to take ‘administrative measures’ to give effect to the judgment.205
By section 16(5) the SIA does not apply to proceedings relating to taxation other than those mentioned in section 11. Section 11 provides that there shall be no immunity for value added tax, customs duties, excise duty, or agricultural levy (section 11(1)(a)) or rates on premises occupied for commercial purposes (section 11(1)(b)).206
In a case relating to a foreign State’s entitlement for withholding tax, Dillon LJ summed up the position as follows: ‘Any proceedings relating to income tax, or advance corporation tax or any tax other than those mentioned in section 11 [of the SIA] are wholly outside the scope of even section 1(1) of the Act and the position rests on what the common law was before and still is’.207 The collection of tax may involve proceedings as to substantive liability, requests for information concerning tax, and enforcement proceedings for the collection of tax. Sending States by reason of their obligation to respect the laws and regulations of the receiving State are required to make tax returns in respect of such members of their staff who are liable to pay local taxes.208 Proceedings before the Special Commissioners may relate both to adjudication and enforcement of a tax liability. The request of a tax inspector for information seems to relate to enforcement.
The SIA deals only with immunity from suit and says nothing as to exemption from liability for tax. In this respect its provisions relating to taxation are to be contrasted with those in the Diplomatic Privileges Act 1964, section 2 of which provides that certain Articles of the VCDR set out in Schedule 1 to that Act shall have the force of law in the UK: ‘The sending State and the head of the mission shall be exempt from all national or regional or municipal dues and taxes in respect of the premises of the mission, whether owned or leased, other than such as represent payment for specific services rendered’.209 Apart from this clear substantive exemption of a sending State from taxation relating to diplomatic premises, there is some uncertainty as to the position at common law as to a State’s immunity from taxation. On 21 June 1988 the Paymaster General stated in the House of Commons, in answer to a question relating to the tax position of the Kuwait Investment Office: ‘The income, profits and gains of sovereigns, foreign States and integral parts of foreign governments arising in the UK are immune from United Kingdom tax’.210
Yet, in Ex parte Camacq, counsel on behalf of the Crown submitted that sovereign immunity means no more than immunity from suit; that foreign States are liable to income tax on any income that accrues to them and that liability can be enforced against them by any process that may be available to the Crown; the only immunity is that it cannot be enforced by action in the courts and recovery of judgment. On the facts of the case, the Inland Revenue were held to be within the law when, on reversing a first ruling, they refused to authorize the payment of a tax credit which was to constitute a greatly increased price in a sale of shares without any additional cost to the seller. Dillon LJ described the Revenue’s action to be ‘a revolutionary reversal of previous practice’, affecting very many other foreign sovereigns, which was misconceived (at 188–9). A commentator writes:
The position revealed by the case is unsatisfactory in the extreme. Perhaps the most extraordinary aspect of the whole affair was that it was apparently common practice for the Inland Revenue to allow repayment claims by foreign sovereigns in all cases. In the financial year 1987/88 apparently a sum of £190,000,000 was refunded to sovereign immune bodies and the five largest recipients accounted for 80 per cent of the total repayment! Sovereign immunity from suit is one thing; exemption from taxation and entitlement to refund is quite another. Here by administrative action, huge benefits were being conferred on foreign States … There may be very good reasons of policy for exempting, say, the government of Kuwait from UK taxation on its UK income. One might reasonably take the view that what is good enough for Kuwait is too good for Libya or Bosnia. Yet this is a decision which ought to be taken by Parliament and not by Ministers behind closed doors or, worse still, by Revenue officials acting on a wholly misconceived view of the law … Even if the only legislation which is forthcoming is to the effect that Ministers have a general discretion to dispense foreign sovereigns from liability to UK taxation where, for reasons of policy, they think fit, that would be an improvement on the present position.211
As generally accepted in doctrine and State practice, the SIA treats immunity from enforcement as a distinct regime from that of immunity from adjudication, although unlike UNCSI it makes no clear distinction between adjudication and enforcement jurisdiction placing its provisions relating to measures of constraint under the headings in the SIA of Procedure, section 13 and Supplementary Procedure, sections 14(3) and (4) and 17(1). Consequently SIA, section 1 has been construed to provide a general rule of immunity in relation to UK courts’ enforcement jurisdiction as well as to their adjudicative jurisdiction. In the case of immunity from enforcement the rule remains strict except for property in respect of which the State has expressly waived immunity from enforcement measures, made an allocation of State property or which is proved to be in use or intended for use for commercial purposes. The criterion of ‘use or intended use for commercial purposes’ which the SIA adopts to determine whether State property may be attached without its consent differs from ‘the transaction of a commercial nature’ required in respect of immunity from adjudication in section 3 and, as the leading case of Alcom shows, is a difficult one for creditors to satisfy when seeking to enforce judgments or arbitral awards against foreign States, given the practice of many States, particularly developing States, when depositing State assets out of their countries to place them in accounts held in the name of their diplomatic missions or of their central banks.212
A preliminary question as to whether the English court is considering a question of jurisdiction or one of execution has been discussed above (see text under ‘The distinction between adjudicative and enforcement jurisdiction’). Not all types of proceedings can be readily divided into adjudicative and enforcement jurisdiction since they may contain elements of both.213
The provisions in the SIA relating to enforcement against States and State entities are to be found in sections 13 and 14, definition of terms in section 17, and exclusions in section 16. Section 13 lists comprehensively all measures of constraint likely to be invoked against a State and prohibits their use subject to two exceptions: prior written consent of the State, or in respect of property in use or intended for use for commercial purposes. Section 14(3) extends to separate entities the immunity from enforcement contained in section 13(1) to (4) where such entities, being entitled to immunity, have submitted to the jurisdiction of the court. Execution against central banks is separately covered in section 14(3) and (4).
The form of section 13 is complex, for although it applies to all States it also accommodates, as regards States parties to the European Convention, the provisions relating to execution contained in that Convention.214 Indeed, in its original form the Bill did no more than enact those provisions allowing an exception to the absolute bar to enforcement solely in respect of ships or cargo in commercial use for which judgment had been obtained in Admiralty proceedings which were rendered non-immune by section 10. This aspect of the Bill was severely criticized, as giving ‘no legally binding right of redress’, it being ‘surely desirable to permit judgements in all cases to be enforced against commercial property’.215 An amended version of clause 13 (then clause 14) was accordingly introduced in Committee in the Lords much as in its final form, although the provisions relating to the property of central banks were subsequently dealt with separately in section 14(3) and (4).
The scheme in the SIA on enforcement is threefold: immunity from enforcement measures is expressed:
(1) as a total prohibition of committal orders or fines against the person of the foreign State (section 13(1));
(2) as a prohibition on all other enforcement measures (section 13(2)) unless written consent of the State is given (section 13(3));216
(3) a narrower exception confined to ‘the issue of any process’ is made in respect of any property which is for the time being in use or intended for use for commercial purposes (section 13(4)).
Section 13(1)(a) and (b) provide a fairly comprehensive list of enforcement measures which are not generally available against a State.217 Subsection 1 prohibits any penalty by way of committal or fine by reason of failure to produce evidence or non-compliance with an order for discovery. This would not, however, prevent the court from drawing an adverse inference from the State’s failure to comply with a request for discovery in proceedings where the court, either by reason of the State’s consent or application of an exception, has jurisdiction.
Section 13, subsection 2(a) preserves the immunity of the person of the State by prohibiting relief by way of injunction (interdicts in Scotland), or order for specific performance, or recovery of land against a State. Subsection 2(b) extends the immunity to the property of the State, prohibiting ‘any process for the enforcement of a judgment or arbitration award’ against the property of the State and in actions in rem ‘for its arrest, detention or sale’. In Sabah v Pakistan where the foreign State had instituted proceedings in Pakistan in beach of contract, the Court of Appeal issued an anti-suit injunction but itself accepted that ‘the Court’s order is not intended in any way to be an interference with the jurisdiction of the courts of Pakistan and cannot bind the Pakistan Court into staying proceedings within its jurisdiction’.218 As with a Mareva order, such an injunction acts in personam against the respondent; in normal circumstances where the respondent is a private person, failure to observe it by continuing with the foreign proceedings, would be a contempt and subject to committal proceedings. Even as in the case where the State had waived immunity in respect of both adjudication and enforcement, there is little the English court can do to give direct effect to the order against the State. But it has been suggested that it will not be without some effect: by rendering persons subject to the English court in contempt should they assist the State in its institution of proceedings elsewhere; as a factor to be taken into account by any foreign court when considering whether to stay proceedings; and by prejudicing the English court in any subsequent proceedings in which the State may be engaged on the same issue.219
The first exception to this general bar on enforcement is contained in section 13(3) where written consent of the State to the enforcement measures has been obtained; such consent may be contained in a prior written agreement (including a treaty) but is not constituted merely by the State’s consenting to submit to the jurisdiction of the court.220 Written consent usually refers expressly to consent to both pre- and post-judgment measures of enforcement.221 The provision enabling consent to be given to a limited extent or generally may indicate that express reference to that type of relief should be stated in the written consent. A State’s written waiver of ‘whatever defence it may have of sovereign immunity for itself or its property (present or subsequently acquired)’ has been construed to constitute consent to pre-judgment attachment of property of a State in respect of a claim, unsupported by a judgment, against a State.222
Prior written consent, which constitutes submission in accordance with section 2(2), is classified in the heading preceding that section as an ‘exception from immunity’ and, accordingly, where the State has given written consent to both adjudicative and enforcement jurisdiction, as in the above case, no question can arise as to whether the substantive proceedings are immune. However, where this is not the case it would seem that the plaintiff who seeks to rely solely on a waiver as to execution must establish that the proceedings are themselves non-immune in respect of which enforcement against the property of a State is sought. By section 13(5) the head of a State’s diplomatic mission, or the person for the time being performing his functions, is deemed to have authority to give consent to adjudication on behalf of the State, but not to consent to execution in respect of the contract (section 13(4)).
The second exception introduces ‘an important and major change’ in UK law. Property in use or intended use for commercial purposes is made subject to attachment; section 17 defines ‘commercial purposes’ to mean ‘purposes of such transactions or activities as are mentioned in section 3(3)’. There is no statutory requirement that the property attached be shown to be connected with the subject-matter of any judgment or claim.
The wording of the two exceptions differs in that subsection (4) omits ‘the giving of relief’. The effect of this difference is to permit pre-judgment attachment where the State has given prior written consent but not where attachment is sought on the basis of the use or intended use of the property for commercial purposes under subsection (4).223 A Mareva injunction, which is an interlocutory remedy which restrains a defendant from removing its assets out of the jurisdiction, may thus be permitted where written consent has been given, but not in respect of property in use or intended use for commercial purposes under the second exception. In the consideration of the State Immunity Bill in the House of Lords, Lord Wilberforce sought to introduce two amendments to section 13 to enable an interlocutory injunction to be made against a State or third parties. His proposals as to ‘where there is property in this country’ were ‘… to grant interim interlocutory relief of a kind which would prevent that property being removed. What very often happens is that property is held by some bank or third party and one wishes to secure that the money in that bank shall be held there and not removed pending determination of the dispute’.224 The Lord Chancellor firmly rejected Lord Wilberforce’s proposals stating ‘the government sees very serious difficulties if court orders which are subject to personal sanctions are made against foreign States … even orders for the detention or preservation of the subjectmatter of the litigation present, I think, some difficulty. These orders although they relate to particular property, nevertheless normally can be enforced only by a contempt process, which noble Lords may think is the kind of sanction which is inappropriate against States’.225
In one respect this second exception in SIA, section 13(4) enlarges the remedies available to the private party in that all property in commercial use is made available to meet his claim, but in another it reverses the common law rule and prohibits an injunction against the State in respect of its property.226
The burden of proof is addressed in section 13(5), which is to be compared with section 6(4).227 Where the State is indirectly impleaded by proceedings in rem brought against State property, section 6(4) of the Act provides that prima facie evidence, in accordance with the ruling in Juan Ismael,228 in support of the State’s interest in the property is sufficient to retain immunity and prevent the court from entertaining the proceedings. The degree of proof required in section 13(5) is higher; by that section the certificate of the head of a State’s diplomatic mission in the UK, or of the person for the time being so acting, that any property of the State is not in use or intended for use for commercial purposes, is to be accepted as sufficient evidence of that fact unless the contrary is proved. If the private party introduces contrary evidence, the court must proceed to consider it. Even so, whilst this provision may prevent harassment of foreign States, it places the burden of proof on the applicant to establish the commercial use of the property sought to be attached. This burden is a difficult one to discharge when cross-examination of the ambassador is barred by his diplomatic immunity.
Section 13(4) also confines enforcement in relation to commercial property against a State Party to the European Convention to post-enforcement of a final judgment and where the State concerned has made a declaration under Article 24 or for enforcing an arbitral award.
Section 13(4) reintroduces the ‘purpose’ test for attachment which the exceptions to adjudicative jurisdiction abandoned in favour of a ‘nature of the act or proceedings’ test. The criterion ‘use or intended use for commercial purposes’ is more suited for application to ships or tangible objects than to book debts and intangibles such as funds in bank accounts which may be used for both commercial and public purposes. The general prohibition in section 13(2) against enforcement seems to establish a presumption that State property is in use or intended use for a public purpose without the need to provide special categories of property exempt from attachment. It is therefore somewhat confusing when such exempt categories are introduced, as is done for property of the mission (section 16(1)(b)) and property of a State’s central bank or other monetary authority. By section 14(5), property of a State’s central bank or other monetary authority shall not be regarded for purposes of section 13(4) (ie attachment) as in use or intended use for commercial purposes (section 14(4)). Only express consent of the State itself, and possibly even then only in the form of submission rather than written consent prior to proceedings, will be sufficient to permit attachment of any property of the diplomatic mission;229 similar immunity from attachment is likely to apply to military or cultural property of the State even if not designated as property of the diplomatic mission, cf UNCSI, Article 21(1)(b), (d), and (e). Thus the exclusion of proceedings relating to armed forces while present in the UK (section 16(2)) suggests that a similar rule would probably apply in respect of military property of the State; similarly attachment of cultural property of the State would be exempt although not specifically identified as an exempt category.
The difficulties in law which arise from mixed accounts, particularly when they are opened by the foreign State’s diplomatic mission, are addressed below in Chapter 18, but in the context of English law it seems useful to examine here in some detail the leading case of Alcom Ltd v Republic of Colombia.230 That case determines the meaning of ‘property which is for the time being in use or intended for use for commercial purposes’ and the application of section 13(4) of the SIA to ‘mixed funds’ containing property for use for both sovereign and commercial purposes. The judgments at all three levels illustrate the logical incoherence of the commerciality test. In that case a private party, having obtained a default judgment for the unpaid price of security equipment, sought to obtain a garnishee order against the bank account held to the credit of the defendant State’s diplomatic mission in London. At first instance Hobhouse J held the bank account immune from attachment; accepting the ambassador’s certificate pursuant to section 13(5) with regard to its non-commercial use, he held that a bank account used for an embassy was prima facie non-commercial; alternatively, even if buying goods and services for the embassy was commercial, other uses of the account, such as paying the ambassador, and helping stranded citizens, were for non-commercial purposes. The account not being wholly or predominantly commercial, to allow a garnishee order to attach the whole account which did not distinguish between the two purposes would offend the immunity provided in the Act. He accordingly discharged the garnishee order.
On appeal the Court of Appeal reversed his decision, holding that section 13(4) read in conjunction with section 17(1) and section 3(3) rendered the credit balances in the embassy account attachable if they were for the purposes of the transactions mentioned in section 3(3). As the purchase of goods or services or the meeting of financial obligations were included within these transactions, unqualified by any requirement as to the public or commercial character of these obligations or purchase, it followed that money in an embassy account was for the purpose of these ‘commercial transactions’ and hence subject to attachment. Donaldson MR applied the principles of international law as requiring the court to have regard to the nature of the transaction rather than its purpose. He disposed of the ambassador’s certificate in that, whilst accepting his good faith, he held the words ‘commercial transaction’ to be used purely as a term of art in the Act. The Court of Appeal even indicated that it was prepared to hold that the garnishee order could attach the whole account by holding that funds in the mission’s bank account were not for mixed purposes; in Lord Donaldson’s view, no funds in the account could be held for non-commercial purposes; the purpose of money in a bank account could never be to run an embassy; it could only be to pay for goods and services or to enter into other transactions which enable the embassy to run.
In a single judgment delivered by Lord Diplock, the House of Lords reversed the Court of Appeal and restored the order discharging the garnishee order. The distinction which international law and the SIA made between adjudicative and enforcement jurisdiction was stressed; whilst a current bank account was ‘property’ within the meaning of section 13(2)(b) and section 13(4), the debt owed by the bank and represented by the credit balance in the current account of the diplomatic mission was a single and indivisible chose-in-action and not susceptible of anticipatory dissection into the various uses to which monies drawn on it might be put in the future. Consequently, when the account was used for a purpose defraying the expenses of running the mission, which was immune by international law, as declared by the German Federal Constitutional Court in the Philippine Embassy case, and given effect in the exemption in SIA, section 16(1)(b) for diplomatic immunities, the fact that it might also include monies due under non-immune contracts for the supply of goods or services to the mission did not bring it within the exception ‘of property in use or intended use for commercial purposes’ in section 13(4), nor remove it from the foreign State’s general immunity from attachment of its property under section 13(2)(b). Furthermore, the VCDR, Article 3, placed an obligation on the executive and the legal branches of the government to act in a manner so as not to obstruct the mission in carrying out its function. The ambassador’s certificate as to the account’s use for the day-to-day running expenses of the mission was in the circumstances conclusive, and attachment of such a current account might only be permissible when it was earmarked by the mission for the exclusive use for commercial transactions, for example, for issuing documentary credits for the price of goods purchased by the State. Recently, however, a modification of this requirement set out in Alcom was permitted in Orascom; a London bank account (not of the diplomatic mission) for general use was treated as an account for commercial purposes and non-immune because the oil revenues of a foreign State were paid into separate accounts, to be held first for the purpose of discharging loans owed to the World Bank and second for general use in the management of the economy and government revenues of Kazakhstan.231
In general, separate entities are not entitled to immunity from adjudicative jurisdiction and consequently enjoy no immunity from execution. But by section 14(2) such an entity enjoys immunity ‘if the proceedings relate to anything done by it in the exercise of sovereign authority and the circumstances are such that a State would have been so immune’. If a separate entity, not a State’s central bank or other monetary authority, submits to the jurisdiction of the English court in proceedings where it is entitled to such immunity under section 14(2), subsections (1) to (4) of section 13 apply; in effect a separate entity in these circumstances enjoys the same immunity as the State.232
By reason of the involvement of the jurisdiction of national courts of other States the recognition and enforcement of foreign judgments in English law, has always, even with regard to judgments given against private individuals, been complex. Prior to the 1968 Brussels Convention, one system of ‘indirect’ rules of jurisdiction generally prevailed in English law under the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933 on the basis of reciprocity with members of the British Commonwealth and such foreign States as were recognized by order in Council to have made reciprocal provisions for the enforcement in their courts of UK judgments. This system did not apply to judgments given against foreign States: instead a scheme in 1978 was provided in SIA, Part II for the recognition and enforcement of judgments given against States party to the ECSI and was enlarged by the Civil Jurisdiction and Judgments Act 1982 (CJJA), section 31 to apply to foreign judgments given against all States, other than the UK, and the State to which the court making the judgment belonged.
Hence the present jurisdiction of the English court is governed by the SIA and the CJJA in respect of the recognition and enforcement of foreign judgments given against States and is exercised in two stages: recognition by which the foreign court’s determination is accepted in rem as regards the jurisdiction, and the procedural and substantive issues of the original judgment so as to preclude any re-litigation of the claim on the same facts; hence, whilst it may estop a party from proceeding with a claim in an English court, recognition by itself involves no order for enforcement or other measure of constraint in the UK; and enforcement which relates to the order of the court executing the judgment or the taking of other coercive measures in respect of the person against whom the judgment is given.233
The recognition by the English court of a judgment constitutes an exercise of its adjudicative jurisdiction and consequently so far as a judgment given against a foreign State is barred by the general immunity of a foreign State from the jurisdiction of the English court as provided by section 1 of the SIA. As regards the second stage of enforcement, the CJJA, section 31 preserves the immunity of the State from execution in respect of any foreign judgment (whether within subsection (1) of that Act or not) unless there is express consent of the State or the State property against which execution is sought is ‘in use or intended use for commercial purposes’.234
English law relating to the recognition and enforcement of a foreign judgment given against a State distinguishes three situations:
a judgment given by the foreign court against the UK itself,
against a State other than the UK by a court which belongs to that State, and
a judgment given by the court of one foreign State against another foreignState.
Only the last category falls within CJJA, section 31.
Such recognition and enforcement is only possible in respect of judgments made against the UK in the courts of a State Party to ECSI. This is a small group as, apart from the UK, only seven western European States are parties to ECSI—Austria, Belgium, Cyprus, Germany, Luxembourg, the Netherlands, and Switzerland. Sections 18 and 19 of Part II of the SIA provide for recognition of a judgment given against the UK by a court of another State Party to ECSI if it was given in proceedings in which the UK was not entitled to immunity by virtue of provisions corresponding to those of sections 2 to 11 of the SIA, and if it is final in the sense that it is not subject to appeal or liable to be set aside. SIA, sections 2 to11 contain exceptions to the adjudicative immunity to State immunity set out in Articles 1 to 13 of ECSI and give effect in English law to the UK’s ratification of that convention. Recognition by the English court is also subject to consideration of public policy, procedural fairness, lis pendens, and res judicata.235
As regards judgments given against the UK by courts in States other than the parties to ECSI there appears to be an absence of legislation. CJJA, section 31(i) expressly excludes from its provisions relating to recognition of judgments in foreign courts ‘a judgment given by a court of an overseas country … against the United Kingdom’.
This was the situation in AIC Ltd v Nigeria where an application was made to the English Court to register a foreign judgment, being a judgment given by its own national court against a State (in the case in question, Nigeria, a member of the Commonwealth). There being no express provision either in the SIA or CJJA relating to this type of foreign judgment given against a State by one of its own courts, the judge reviewed two earlier statutes for reciprocal enforcement of judgments, the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933, but concluded that neither applied to a judgment of a foreign court given against a State. Registration of a foreign judgment by the English court under the 1920 Act is discretionary, the Act providing that the court may order the judgment to be registered if it thinks it ‘just and convenient’ that it should be enforced in the UK, and, as in 1920, since neither enforcement against the Crown nor a foreign State was possible, the rule of absolute immunity then prevailing, the judge ruled in AIC that the 1920 Act was inapplicable to the judgment of the Nigerian court for which enforcement was sought. Similarly, as with the 1920 Act, nothing in the 1933 Act expressly refers to registration of foreign judgments rendered against foreign States, but a number of provisions operate to exclude such registration.236
As regards the application of SIA, the judge held that an application to register a foreign judgment is an adjudicative act and hence falls within section 1 of Part I of the SIA.237 The proceedings were proceedings relating to the foreign judgment and were hence immune under SIA, section 1 and not to the underlying commercial transaction in section 3(1) relating to unpaid commission on sales.238 The cumulative effect of these provisions was to exclude the application of the 1933 Act to a judgment given against a foreign State in its own court. Generally, the judge held it ‘unsurprising’ that the Nigerian judgment given by one of its own courts against the Nigerian government was immune from enforcement in the UK.
The majority in the Supreme Court in the case of NML adopted and applied to the third category of judgments given against foreign States this ruling in AIC that proceedings to register a foreign judgment were proceedings relating to the judgment (and came within SIA, section 1) and not to the underlying commercial transaction giving rise to the judgment (to which the exception in SIA, section 3(1) applied).239
The CJJA, section 31 governs this category of foreign judgments against foreign States. The leading case on recognition of this category of foreign judgments is NML v Argentina and in his judgment Lord Phillips explains how prior to 1982
1. there had been no attempts to enforce in the United Kingdom foreign judgments against states … the 1920 and the 1933 Acts240 gave little scope for registering foreign judgments against states and there is no recorded instance of an attempt to do this before 1978. In 1978 the Rules of Court made no provision for impleading a foreign sovereign, no doubt reflecting the previous absolute doctrine of state immunity. Section 12(1) of the 1978 Act made provision for service on a state and section 12(7) made it plain that such service required permission, which could only be granted in accordance with the rules of court governing service out of the jurisdiction. There was no provision in 1978 for service out of the jurisdiction of a claim to enforce a judgment. In these circumstances it is perhaps not surprising that the Act made no express provision in relation to proceedings to enforce foreign judgments, other than judgments against the United Kingdom covered by the ECSI.241
As a consequence of the enactment of the 1982 Act, which by subsection (4) made SIA, section 12 applicable to the recognition and enforcement of a foreign judgment, the Civil Procedure Rules governing service out were amended in 1983 to permit such service by leave of the court where a claim was brought to enforce any judgment or arbitral award.242
CJJA, section 31 applies to all foreign States against whom judgments in foreign courts have been given other than, as expressly stated in subsection (a), the UK or the State to which the court giving the judgment belongs (already discussed above). As stated in NML: ‘The primary object of the 1982 Act was to give effect to the Brussels Convention of 1968. This Convention made provision for the reciprocal recognition and enforcement of judgments. The application of section 31 was not, however, restricted to the states who were parties to that Convention’, para. 44.
CJJA, section 31 (1) provides:
A judgment given by a court of an overseas country against a state other than the United Kingdom or the state to which that court belongs shall be recognised and enforced in the United Kingdom if, and only if—
(a) it would be so recognised and enforced if it had not been given against a state; and
(b) that court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the State Immunity Act 1978.
The natural meaning of section 31(1) requires the recognition and enforcement of a foreign judgment against a foreign State (other than the UK or the State in which the foreign proceedings were brought) if (a) the normal conditions for recognition and enforcement of judgments are fulfilled, and (b) mutatis mutandis the foreign State would not have been immune if the foreign proceedings had been brought in the UK. That meaning was one adopted by textbook writers and approved by the Supreme Court in NML which did so by construing the foreign State’s written agreement in respect of the transaction in the foreign proceedings in accordance with SIA, section 2’s provision of waiver from immunity as constituting, not only a submission to the jurisdiction of the foreign court, but also as amounting to a submission to the jurisdiction of the English court. The application of CJJA, section 31(1) is accordingly reasonably straightforward; the English court will make an order for recognition, provided a written waiver agreeing to submission to the English court can be established in respect of the transaction, the subject-matter of the judgment given in the foreign court.
In NML Capital v Argentina, the majority of the Supreme Court held that the general immunity of SIA, section 1 applies to a foreign judgment for which recognition of the English court is sought against the foreign State, and not to the transaction or transactions underlying the judgment; thus although the original New York court had held the transaction underlying the foreign judgment related to a commercial transaction, the application to the English court for registration concerned proceedings relating to recognition of a judgment and in consequence did not come within the exception to immunity in section 3(1)(a) of the SIA for proceedings relating to commercial transactions.243
The facts in the NML case were complicated, leading to lengthy proceedings with the Court of Appeal construing section 31(1) in a contrary manner so as to provide no grounds to grant recognition of the foreign judgment.244 The facts of the case concerned an application to the English court for recognition of a judgment obtained by a company, NML, in a US District Court, such recognition by the English court being a necessary step to enforcement of the bonds in respect of assets located in the UK. Blair J at first instance, in addition to waiver by the foreign State, found that the rules applied by the New York court with regard to a proceeding relating to an activity of a commercial nature ‘corresponded’ to the similar exception section 3(3)(b) as authorized by the SIA and granted recognition of the US judgment on the basis that the requirements of CJJA, section 31 were satisfied.245
The Court of Appeal, however, refused recognition: it construed CJJA, section 31(1) as setting out two mandatory requirements in subsections (a) and (b) as to the merits of claims for the recognition of and enforcement of judgments against States but saying nothing as to the jurisdiction of the English court; it contained no jurisdictional rule, it did not expressly state that it amended or repealed the SIA and, accordingly, the adjudicative jurisdiction of the court in respect of recognition and enforcement of a foreign judgment remained as in the ECSI and SIA, with CJJA, section 31(1) not ‘adding a new specific exception to the general rule by which foreign States have immunity from the jurisdiction of the UK courts’ (per Aiken LJ at [79]).
In the Supreme Court the applicability of the exception in SIA, section 2 as corresponding with US rules relating to State immunity centred on whether the proceedings in England in respect of the New York judgment were ‘proceedings relating to … a commercial transaction entered into by the State’, where ‘commercial transaction’ includes ‘any loan or other transaction for the provision of finance … ’: section 3(1)(a); section 3(3)(b). All the justices agreed that the issue was whether the context required a broader or narrower meaning to be given to proceedings ‘relating to … a commercial transaction’ in section 3 of the 1978 Act. Whether the New York proceedings were themselves ‘proceedings relating to a commercial transaction’ was not the relevant question.’246 The narrow meaning would result in a conclusion that the proceedings ‘relate’ to the enforceability of the New York judgment, where such a ‘suit based on a foreign judgment normally precludes re-investigation of the facts and law thereby decided … not infrequently directs[ing]attention to quite different matters, such as the foreign court’s competence in English eyes to give the judgment, public policy, fraud or the observance of natural justice in the obtaining of the judgment’.247 ‘The wider meaning would give effect to the practical reality that the proceedings relate to liability under the bonds, the issue of which was plainly a commercial transaction for the purposes of section 3’.248
The minority, Lords Phillips and Clarke, were of the view that the question ought to be answered in the light of the restrictive doctrine of State immunity under international law and whether the foreign State’s liability arises out of acta jure imperii or acta jure gestionis. This involved consideration of the nature of the underlying transaction that gave rise to the New York judgment.
The majority of the Supreme Court thought otherwise, confirming Stanley Burnton J in AIC. Lord Walker, Lord Mance and Lord Collins, considered that a suit based on a foreign judgment differed from one based on a cause of action; it concerned ‘a special area of private international law’ normally precluding any reinvestigation of the facts and law relating to the cause of action (see Lord Mance at [85]). In consequence a judgment came within the general immunity provided in SIA, section 1(1).
The Supreme Court’s ruling relating to the criterion for immunity regarding proceedings in a national court for recognition of a foreign judgment and the three arguments deployed in support has a wider relevance than the outcome of the case itself. The minority, not the majority, ruling in favour of the underlying transaction as the appropriate criterion has found acceptance by the ICJ as the correct position in international law in its judgment in Jurisdictional Immunities of the State. In ruling on Germany’s claim that in respect of proceedings to enforce in the Italian court a judgment given against Germany in Greece by a Greek court, the ICJ cited the UK decision in NML as well as the Supreme Court of Canada in Kuwait Airways Corpn v Republic of Iraq249 and stated:
A State invited to grant recognition of a judgment given against a foreign State in a third State national court is to ask itself whether, in the event that it had itself been seised of the merits of the dispute identical to that which was the subject of the foreign judgment, it would have been obliged under international law to accord immunity to the respondent State’ (para 130).
In NML Capital v Argentina, as discussed above, the majority of the Supreme Court held that the general immunity of SIA, section 1 applies to a foreign judgment for which recognition of the English court is sought against the foreign State, and not to the transaction or transactions underlying the judgment.250
As regards the Supreme Court’s acceptance that no territorial connection with the UK is required regarding the exception for commercial transactions in SIA, section 3(2), the position of the SIA, as with the UNCSI, is anomalous with regard to a jurisdictional connection for proceedings brought against foreign States additional to that required in proceedings between private parties and supports the lack of any international concurrence on what if any additional jurisdictional connections are required by international law before a national court may exercise jurisdiction over a foreign State.
As regards the Supreme Court’s construction of the relationship of the express provision in SIA, section 9 relating to arbitrations with the general provision for immunity in SIA, section 1, this may not have entirely beneficial consequences in common law jurisdictions, such as Hong Kong, which now, following the Court of Final Appeal’s decision in FG Hemispheres, is obliged to look to the common law for the rules relating to State immunity.
Finally, the effect of the change after the enactment of the SIA in 1978 in the rules relating to service on a foreign State emphasizes the closeness of the relationship between procedure and substantive law and the necessity to be alert to the extent to which the Civil Procedure Rules affect the substance of the remedy available in the English court against a foreign State in respect of its dealings with private persons.
The decision in NML by which an English court applied to a State such as the US the ‘direct’ rules of jurisdiction of the Brussels/Lugano system, is an example of the ‘singularly generous position’ adopted by English law as regards foreign judgments referred to in Dicey,251 given that such a State has not agreed, as States Parties to the Brussels/Lugano Conventions have, to apply such common treaty rules of jurisdiction in its own courts. Whilst the UK derives its immunity rules from international law and more particularly the enactment into English law by the SIA of the State immunity rules set out in the ECSI (to which the US is not a party), no similar treaty binds the US with regard to the bases of its courts’ exercise of jurisdiction over a foreign State.
As explained, section 31(1) is restricted to foreign judgments given against the legal person of the State, but expressly excludes judgments against the UK (in respect of which the limited provision in SIA, section 18 applies), and judgments given by a court against the State to which that court belongs (to which the decision in AIC applies).
Section 31 relates solely to judgments given against foreign States; other persons entitled to immunity under public international law such as international organizations are not covered and there can be no enforcement of a foreign judgment given against an international organization under the direct scheme on the lines of the Brussels/Lugano Conventions. This position is stated in Rule 38 in the 14th edition of Dicey, Morris and Collins which repeats in the same terms section 4(3)(c) of the Foreign Judgments (Reciprocal Enforcement) Act 1933 which provides that ‘the courts of the country of the original court shall not be deemed to have had jurisdiction—(c) if the judgment debtor, being a defendant in the original proceedings, was a person who under the rules of public international law was entitled to immunity from the jurisdiction of the courts of the country of the original court and did not submit to the jurisdiction of that court’.252
In the commentary, this general Rule 38, however, is stated to apply to diplomats, as well as international organizations. This seems to overlook the width of the definition of the term ‘State’ in section 31(2). Subsection (2) of the 1982 Act253 applies the definition of the ‘State’ in SIA, section 14(1) to provide that a judgment given against a State includes judgments given against the government, a department of the government, the head of State acting in his public capacity, and a separate entity acting in a public capacity and subsection (5) includes within the definition, in respect of a federal State, judgments given against any of its constituent territories. Although individuals, such as employees or officers are not specifically included in this list, the term ‘State’ in section 31 is to be read, as SIA, section 14(1) has been judicially construed,254 as including such persons for matters of State conduct in respect of which the State they were serving had immunity. If this is correct, then a foreign judgment given against a diplomat in respect of State matters which come within the commercial or other exceptions to immunity in the SIA, would seem equally capable of enforcement within section 31(1) in the same way as a foreign judgment against a head of State acting in his public capacity would be enforceable if it related to matters for which SIA, sections 2 to 11 removes immunity. With regard to the head of State, the diplomat and all other agents, the immunity belongs to the State which alone may consent to its waiver. It is, however, true, as with the serving head of State, that a diplomatic agent enjoys a wider personal immunity in respect of private acts while in post than other agents of the State. Thus to be strictly accurate, a qualification of the Dicey commentary would seem necessary; namely that Rule 38 applies to both the head of State and diplomat in respect of any personal immunity which is enjoyed under the rules of public international law, but when acting in public capacity any foreign judgment given against them comes with the enforcement provision of section 31(1).
Under the SIA such special procedural treatment as the foreign State enjoyed under common law is continued, and in addition a special procedure for service of process and default judgments is introduced. Therefore, despite the expectation of adherents of restrictive immunity that disputes with States would be adjudicated in accordance with the ordinary processes of law, the SIA confers special privileges on the sovereign State as litigant as to method of service and time limits (a two-month extension beyond the usual time). In addition, section 13 preserves the State’s immunity from enforcement in respect of orders of the court. By virtue of section 14(1) of the SIA, these privileges apply to the sovereign or head of State in his public capacity, the government, or a foreign or Commonwealth State, and also, by section 14(5) and Orders in Council made thereunder, to constituent territories of a federal State, which otherwise are not entitled to immunity. However, these privileges do not apply to a State agency if it falls within the definition of a ‘separate entity’ under section 14(1). Such a separate entity, if distinct from the executive organs of government and capable of suing or being sued, is subject to the ordinary procedures of the court, including service of process. As will be seen, unless the parties agree to some alternative method of service, the section 12 procedure for service on a foreign State is mandatory and exclusive.
Proceedings relating to foreign States and the plea of immunity are governed by the Civil Procedure Rules.255
Pleas as to the immunity of a foreign State or its head would seem to require a public hearing. In proceedings for maintenance brought by a woman who alleged she was the wife of a serving head of State, the court at first instance ordered the issue of immunity to be heard in camera and the names of the party to be anonymized on the ground that, pursuant to Article 29 of the 1961 Vienna Convention on Diplomatic Relations,256 ‘the receiving State shall treat due respect and shall take all appropriate steps to prevent to attack on his person, freedom or dignity’.257 The Court of Appeal decided that the case should be heard in public. Giving the leading judgment, Thorpe LJ stated that ‘a claim to State immunity is essentially a public claim that demands open litigation. I would say the same of a claim to sovereign immunity particularly in relation to private rather than governmental acts. In relation to private acts the boundaries of immunity are not forever fixed as absolute and the issue is in my judgment one of legitimate public interest and debate’.258 In Aziz v Aziz and Sultan of Brunei, a claim by a ruling head of State to redact and anonymize all reference to himself and to intimacies of his married life, in proceedings between a former wife and a fortune-teller, was dismissed by the Court of Appeal. The Court considered the case to give rise, not to a question of sovereign immunity, but to a question of open justice and the power of the court to order proceedings to be heard in camera. Collins LJ doubted the existence of a rule of customary international law requiring States to take steps to prevent individuals from insulting foreign heads of State abroad. He accepted that the court, in exercising its discretion to make part of a judgment private, may take into account the fact that the applicant is a foreign head of State, and may also take into account the international obligations of the UK to the foreign State of which he is head, and further that an application for redaction or anonymization of a court judgment might be made by a head of State, without waiving his immunity for any other purpose.259
Recognition of States and governments involves sensitive political considerations. Where a question of State immunity is in issue, the common law employed executive certificates to determine the status of a State or a government; to avoid the courts engaging in such political enquiry; and to ensure that the judiciary and the executive ‘speak with one voice’.260 English courts treated these certificates as conclusive. The SIA put on a statutory basis executive certificates for the purpose of State immunity.261 The court may take judicial notice of the defendant’s status as a State, government, or head of State, but if in doubt section 21 of the SIA provides that a certificate of the Secretary of State shall be conclusive evidence for the purposes of Part I on any question ‘whether any country is a State’ or ‘as to whether any person or persons be regarded as the head or government of a State’. A contention that section 21, which is in Part III of the SIA, is a power to certify only for the purposes of Part I, which does not include section 20 (relating to the personal immunity of a head of State), was rejected by the Court of Appeal:
Section 21 contains no such limitation and section 20(5) incorporates, for the purposes of section 20, the concept of a state on which immunities and privileges are conferred by Part I. I do not see how a territory which is not a state on which immunities and privileges are conferred by Part I may nevertheless be a state, the head of which can avail himself of the provisions of section 20.262
Section 21(1) of the SIA has been held to apply to criminal proceedings; in case of uncertainty as to whether an entity is a sovereign State, a certificate should be sought from the Secretary of State, containing the necessary information.263 The authenticity of such a certificate is reviewable by the courts, but the content of the certificate itself, and the lawfulness of the decision to issue it, have been held to be non-reviewable aspects of the prerogative.264 For a period between 1980 and 2011, following a parliamentary statement,265 the UK government sought to remove the decision as to the criteria required for recognition of such a government from political decision to the objective assessment by the English courts; the factors to be taken into account in such objective assessment, as indicated by judicial decision, would include, in addition to the UK’s own dealings with the regime, the constitutionality of the regime, the degree, nature and stability of its administrative control over the territory of the State, and also the extent of international recognition as a government.266 However, the recent recognition by the UK government of the National Transitional Council (NTC) as ‘the sole government authority in Libya’, supported by a certificate to the English court, at a time when the Gaddhafi forces were still fighting and in control of Tripoli and parts of the East of Libya,267 would seem to indicate a reversion on the part of the UK to the traditional determination of the existence of a government on solely political grounds.268
Prior to 1980, when there was a constitutional change of practice, the recognition of a sovereign State depended on the question of effective control and the UK government’s political decision. Where a new regime emerged unconstitutionally, with the old regime continuing to retain control of some part of the territory of the State, de facto recognition of the new regime might be accorded, with the previous regime retaining de jure recognition until the new regime was sufficiently established to justify its recognition de jure.269 The matter was effectively decided by the executive.
In 1980, however, a distinction was introduced in UK practice between recognition of States and of governments. The UK government announced in Parliament that while it was British policy still to recognize States,270 in future it would not accord recognition to governments. Where in future a new regime came to power unconstitutionally the question whether it qualified to be treated as a government would be left ‘to be inferred from the nature of the dealings, if any, which we may have with it, and in particular whether we are dealing with it on a government to government basis’.271 The change was in part attributable to the emergence of claims concerning international illegality—usually as to the means by which the new regime had attained control—and other States’ consequent wish to avoid any endorsement of the conduct of the new regime.272
Where the immunity of a State or a constitutional government was concerned, the impact of the 1980 statement was small: a certificate under section 21 of the SIA would be available, or evidence provided as to the UK government’s dealings with the regime in question. However, where uncertainty arose concerning the status of a new regime the criteria became a matter for objective assessment by the English courts rather than political decision by the UK government. In respect of proceedings relating to the validity of payment to an interim government of a sum owed to the Republic of Somalia, Hobhouse J set out the criteria by which the court should be guided:
Accordingly, the factors to be taken into account in deciding whether a government exists as the Government of the State are: (a) whether it is the constitutional Government of the State; (b) the degree, nature and stability of administrative control, if any, that it of itself exercises over the territory of the state; (c) whether Her Majesty’s Government has any dealings with it and if so what is the nature of those dealings; and (d) in marginal cases, the extent of international recognition that it has as the Government of the State.273
Consequently, instead of issuing a certificate, ‘under the [1980] arrangement, the Government would present evidence of its dealings with the foreign authority, evidence which carried powerful weight but which, nonetheless, might be challenged or contradicted by other evidence [ … ] the court itself undertaking to see if a claimant really was the government of a foreign State’.274
On occasion, however, the objective facts as regards the situation have not necessarily coincided with British policy, particularly where supported by international opinion. Thus following the occupation of Kuwait by Iraq in 1990, the Court of Appeal considered that the four factors identified by Hobhouse J in the Somalia case indicated that Iraq had not become the de facto government of Kuwait, and construed a letter from Sir Franklin Berman, the Legal Adviser to the Foreign and Commonwealth Office (FCO), as constituting continued British recognition of the government of Kuwait and evidence that the British government had never given recognition to any regime set up by Iraq in the territory of Kuwait. The Court added that:
an unequivocal position adopted by Her Majesty’s Government, even if not formally conclusive, may be compelling, at any rate in the absence of some countervailing and paramount factor. On the present case, no such factor is present.275
Recently the UK government’s recognition of the National Transitional Council (NTC) as ‘the sole government authority in Libya’, supported by a certificate to the English court to similar effect, has raised further doubts as to the UK’s continued observance of the 1980 declared practice. Until 2011 the UK had the usual inter-State diplomatic relations with the Gaddhafi government, but after the setting up of the NTC in Benghazi in the western part of Libya, it implemented the UN sanctions and took part in the NATO armed operations authorized by UN resolution 1973. On 28 July 2011 the British Foreign Secretary, William Hague, announced that ‘the UK recognizes and will deal with the National Transitional Council as the sole government authority in Libya’. He later confirmed this recognition in a certificate to the English court. This statement was made at a time when the Gaddhafi forces were still fighting and in control of Tripoli and parts of the East of Libya. The Foreign Secretary explained the reason for the UK’s decision as reflecting:
the NTC’s increasing legitimacy, competence, and success in reaching out to Libyans across the country. Through its actions the NTC has shown its commitments to a more open and democratic Libya […] in stark contrast to Qhadafi, whose brutality against the Libyan people has stripped him of all legitimacy.
The general uncertainty led to delay in payments to Libyan national students attending UK universities out of funds of the Libyan State administered by the Libyan embassy, and in August 2011 proceedings were brought in the English court by the British Arab Commercial Bank, seeking a declaration that it was entitled to act on the instructions of the embassy established by the NTC on behalf of the State of Libya in respect of the accounts it held for the embassy. Blair J noted that the Somalia and Sierra Leone cases were different, because the issue did not concern the position of a government recognized by HM Government, as in the case before him, and that in any event to apply the approach of Hobhouse J might be a difficult exercise given the conditions that appeared to prevail in Libya at the time of his judgment (26 August 2011). Accordingly, he held the Foreign Secretary’s certificate of 24 August 2011 to be conclusive
because in the field of foreign relations, the Crown in its executive and judicial functions speak with one voice (see e.g. Gur Corporation v Trust Bank of Africa Ltd [1987] 1 QB 599 at 604H, Steyn J, on appeal at 625G, Nourse LJ).276
Further, holding that the accreditation to a permanent diplomatic mission was a matter ‘exclusively for decision by the Government and not for the courts’,277 he declared that the person appointed as charge d’affaires by the NTC was authorized to give instructions to the bank in relation to the embassy accounts.
These events relating to the recognition by the UK government of the NTC as the government of Libya, and the acceptance of the English court that FCO certificate entitled the NTC and its appointed representative to dispose of the property of the State of Libya,278 suggest that British practice has now returned to the pre-1980 position. But there would seem to be a sharp difference in that, unlike formerly where recognition was used to delay a new regime assuming full powers of a State, in the present case it served to ‘try to help the process come about by conferring on the rebels the advantages which recognition brings’. Whether the treatment of the NTC by the British government proves an isolated occasion or will be seen as indicative of a return, though on a somewhat different basis, to the pre-1980 situation, future events will tell.279
To commence proceedings against the foreign State itself involves several procedural steps for which the claimant must obtain permission.280 Permission is required, first, in order to serve the claim out of the jurisdiction in conformity with CPR 30,281 and secondly, unless an alternative method of service has been agreed with the State, to serve the claim against the foreign State by the special procedure required in section 12 of the SIA and CPR 6.44.282 At common law, a foreign sovereign or State is sued by the name by which it has been recognized by HM Government.283 Service on a State entity, or a person in the service of the State, is not required to be by the special procedure.284
On receipt of the claim the defendant State has two courses open to it. It may decide not to appear or to instruct solicitors to represent it in the English proceedings. In such a case, the claimant may be able to obtain default judgment against the State.285 But provided the State has no assets which are attachable within the English jurisdiction, the former course will deprive the claimant of the possibility of obtaining execution of any judgment in his favour. However, such a course is both open to risk (in that so long as the judgment is unsatisfied any future property brought into the jurisdiction may become attachable) and discourteous to the English court. The better course, where the State wishes to dispute the claim, is to dispute the court’s jurisdiction, in accordance with the procedures summarized in the following section.
The High Court has unrestricted jurisdiction to determine the existence and limits of its own jurisdiction.286 Part 11 of the Civil Procedure Rules sets out the procedure to be adopted in any case where the defendant—State or otherwise—wishes to dispute the jurisdiction of the court.287 CPR 11.1(2) requires the defendant State to acknowledge service of the claim in accordance with CPR 10. The acknowledgment of service will indicate that the State intends to defend the claim. Having acknowledged service, the State must then, within 14 days thereafter, apply to the court for an order declaring that it has no jurisdiction over the claim, or should not exercise any jurisdiction which it may have (CPR 11.1(1)).288 The application must be supported by evidence (CPR 11.1(4)(b)).289 CPR 11.3 ensures that a defendant who files an acknowledgment of service does not, by doing so, lose any right that it may have to dispute the court’s jurisdiction.290 No defence need be filed until after the hearing of an application disputing the jurisdiction (CPR 11.9), and a defendant who wishes to challenge jurisdiction should be careful not to take any step in the proceedings other than acknowledging service and making an application under CPR 11. If a defendant takes another step, such as filing a defence on the merits, it may be taken to have submitted to the court’s jurisdiction and waived the right to dispute it under CPR 11.
On the hearing of the application, the issue of immunity will be determined finally, not merely on the basis of a reasonable prospect of success (or whether the defendant has ‘a good arguable case’).291 If the facts underlying the claim to immunity are contested, there will have to be an enquiry supported by evidence and the court will make a final ruling, which is appealable, on the issue of immunity. The previous distinction between written evidence by affidavit and the oral evidence of witnesses is much reduced by the current requirement that witness statements (as well as all statements of case and responses to requests for further information, formerly a request for further and better particulars) be verified by a statement of truth (CPR 22.1) and the fact that proceedings for contempt may be brought for a false statement (CPR 32.14). Although the court will usually decide the matter on the basis of the written evidence and legal submissions of the parties, it also has power to allow cross-examination of witnesses, disclosure, and the provision of further information by the parties.292 Where the court decides it has no jurisdiction, or not to exercise its jurisdiction, it may set aside the claim form and its service and any other order made before the claim was commenced or the claim form served (CPR 11.6).
If the court does not make a declaration of no jurisdiction, the acknowledgment of service ceases to have effect and the defendant, if he wishes to contest the claim on the merits, is required to file a further acknowledgment of service within 14 days or such period as the court may direct (CPR 11.7). A defence as to the merits or the judgment cannot be made on an application to set aside the jurisdiction; such matters can only arise after the defendant has accepted the jurisdiction of the court.293
The above requirement that a defendant State must acknowledge service of the proceedings even though it challenges the Court’s jurisdiction seems to be contrary to the full enjoyment of jurisdictional immunity under international law.294
The procedure for disputing the court’s jurisdiction is subject to the overriding requirement set out in SIA, section 1(1), which re-enacts the common law duty on the judge to determine immunity of his own motion (proprio motu) so that the court shall give effect to the immunity of the foreign State ‘even though the State does not appear in the proceedings in question’. The court therefore has to play an active role in the proceedings and must of its own motion enquire into the question whether the State is or is not entitled to the immunity conferred by the statute, even though the question is not raised by the State or any other party to the proceedings.295 If a lower court has failed to give effect to immunity, the appellate court may, contrary to the usual rules relating to admission of evidence, admit and consider new evidence so as to correct the error and give proper effect to the state’s immunity. This is necessary because, if the claim to immunity is substantiated, the court below has no jurisdiction to hear the case.296
Where a party to proceedings challenges the plea of State immunity as a violation of the rights conferred by the Human Rights Act 1998 (HRA), the court must also determine the issue. The procedure to be followed depends on whether the immunity complained of stems from UK primary legislation. In such a case the party raising the issue may ask the court to make a declaration of incompatibility under section 4 of the HRA. A party making such an application must serve notice on the Treasury Solicitor, pursuant to CPR 19.4A(1) and section 5 of the HRA. Such a notice was served by the claimant in Entico v UNESCO,297 who was challenging the immunities of a UN agency, granted by an international treaty and implemented in the UK by domestic legislation. The FCO was granted permission to be joined as a party to the proceedings.298 Where the HRA violation complained of does not arise from primary legislation, no declaration of incompatibility is required, and the notice requirement in CPR 19.4A does not arise. In other situations where an issue of immunity is raised, a court may appoint the Attorney-General as an amicus curiae or grant the FCO permission to intervene.
Section 12(1) of the SIA provides that any writ or other document to be served for instituting proceedings against a State shall be served by being transmitted through the FCO to the Ministry of Foreign Affairs of the State. Service will be deemed to have been effected when the writ or document is received at the Ministry. Subsection (6) permits service of the document instituting proceedings in some other manner where so agreed by the State.300
Time for entering an appearance begins to run two months after the date on which the document instituting proceedings is received at the Ministry (section 12(2)), but this time limit does not apply where the State has agreed to some other form of service. A similar period of two months after service on the Ministry as above is required to elapse before any judgment in default of appearance may be given (section 12(4)), with a period of a further two months from receipt of a copy of the judgment at the Ministry within which any application to set it aside must be made (section 12(5)).
The principle underlying the time limits in section 12 is clearly to ensure that the foreign State has adequate time and opportunity to respond to the conduct of proceedings in the English court of whatever nature which affect its interests. This general principle is well illustrated by Westminster City Council v Government of the Islamic Republic of Iran301 where Peter Gibson J held that the reference in section 12(1) to ‘any other document’ included the notice to all interested parties required to be given where registration of a land charge pursuant to the Land Registration Act 1925 was disputed.
That case concerned premises used as the Iranian Embassy and gutted by fire after they were stormed by the Special Air Services to free hostages. The Council sought to register a land charge for costs incurred in shoring up the premises registered in the name of Iran and argued that the registration was an administrative matter or ex parte application not falling within the section 12 procedure. The judge held that the application could not be proceeded with until notice had been served pursuant to the SIA, section 12 procedure.
But some uncertainty as to the statutory time limits for notice to be observed arises by reason of SIA, section 22(2) which provides that ‘in this Act references to entry of appearance and judgments in default of appearance include references to any corresponding procedures’. The wording ‘in default’ leaves uncertainty whether other proceedings to enforce arbitral awards and foreign judgments constitute ‘corresponding procedures’ so as to make applicable the time limits in SIA, section 12(4) and (5). In Norsk Hydro, in reliance on section 22(2), section 12 was said to deal with procedure generally and to apply to both the adjudicative and enforcement stages of the proceedings, with the consequence that, although CPR 16.18(2) dispenses with an arbitration claim form,302 a notice to enforce an arbitral award was required to comply with the time limits set out in section 12(2) and (5). Accordingly, a third-party debt order was held to be premature and of no effect because it was issued before the expiry of a period of two months in addition to the time for compliance set out in the order of the English court enforcing the award.303 On the other hand, where a judgment given against a State in its own home court was sought to be registered in the English court with a view to its enforcement, the court held that the procedure for entry of appearance and judgment by default in section 12(4) and (5) of the SIA did not apply to an application for registration of a judgment against a State under the Administration of Justice Act 1920 or the Foreign Judgments (Reciprocal Enforcement) Act 1933, for which the issue and service of a claim form is required:
An application to set aside a judgment is not a ‘corresponding procedure to an entry of appearance’ within the meaning of section 22(2) of the SIA. An entry of appearance is an act that precedes a judgment, whereas an application to set aside a registration is made after judgment has been entered into. The registration of a foreign judgment is not the equivalent of a judgment in default; it precedes the service of any UK proceedings on the defendant.304
In this case, relating to the enforcement of a registered judgement, third-party debt orders were made on a date prior to the expiry of the statutory two month limits following service of the notice but, as the attached accounts were held immune, the question of non-compliance with the statutory time limits did not arise for determination.
The practice implementing the statutory requirement as to service is laid down by CPR 6.44 and 6.45,305 which provide that the person wishing to have the claim served on the foreign State must file in the Central Office of the Royal Courts of Justice a request for service to be arranged by the FCO, together with a copy of the claim and where necessary a translation thereof in the official language of that State.306 Documents duly filed in accordance with this procedure will be sent by the Senior Master to the FCO with a request for arrangements to be made for the claim form to be served on that State (CPR 6.44(4)). This is a change from the former Rules, so it is now irregular for the claimant’s solicitors to send the relevant documents direct to the FCO.
It is clearly the intention of section 12(1) that the method of service shall be out of the jurisdiction. This is clearly in line with international law. The presence of the foreign State’s diplomatic mission within the forum territory cannot qualify as legal presence within the jurisdiction for purposes of service of process or submission to proceedings. Service of process is an exercise of sovereignty, and to perform such an act in relation to diplomatic premises is an infringement of the inviolability of the premises of the diplomatic mission contrary to Article 22 of the Vienna Convention on Diplomatic Relations.307
Section 12(6)308 permits service of ‘a writ or any other document’ by any other method to which the State has agreed. Such agreement is not required to be in writing, but in practice is likely to be. In this event, the time limits for service of the claim in section 12(2) and (4) do not apply. When a State agrees to accept service by an alternative arrangement it takes upon itself the responsibility of maintaining sufficient links with the designated agent to ensure that process served upon the agent is brought to its attention.309 Service of the claim form may be by the method agreed310 or in accordance with the statutory procedure (CPR 6.44(7)). Service of the judgment, however, must be through the FCO; SIA, section 12(6) does not permit any derogation by agreement for another method of service, ‘a necessary safeguard ensuring that the judgment has been brought to the notice of the State and the Foreign Office before any steps are taken to enforce the order’.311
Failing such agreement in relation to the claim form, the special diplomatic procedure provided in the statute is the exclusive and mandatory method for service on the foreign State. Peter Gibson J so held when he dismissed the Westminster Council’s application to register charges in the Land Register against the Republic of Iran on the ground that due to the absence of diplomatic relations between UK and Iran and the unwillingness of Sweden as the protecting power to serve the documents, no service in accordance with section 12 of the SIA was practicable.312
In Kuwait Airways (No 2), Evans J, rejecting evidence that an embassy is regarded as the emanation of a State, ruled at first instance (affirmed by the House of Lords) that section 12(1) required service of the writ in Baghdad on the Iraqi Ministry of Foreign Affairs. ‘The requirement of service at, not merely “on” the foreign Ministry of the defendant State is no more and no less than the plain words of section 12(1) demand.’ Service is effected by transmission to the Ministry and takes effect when the document is received at the Ministry. ‘In no sense is a diplomatic mission in a foreign State the same as the Ministry of Foreign Affairs of the sending State.’313
Section 12(7) of the SIA expressly provides that the special procedure for service of the claim under section 12(1) shall not be construed as affecting any rules of court whereby leave is required for the service of process outside the jurisdiction. As service under section 12(1) is required to take place out of the jurisdiction, it is consequently necessary to obtain the permission of the court for such service pursuant to CPR 6.36 and 6.37, and para. 3.1 of Practice Direction 6B.314 The practice is to apply for permission ‘without notice’ (ex parte in the old terminology), under the general applications procedure set out in CPR 23. Where the claim is issued in the Queen’s Bench or Chancery Division of the High Court, the application is made to a Master; in the Commercial Court applications are made to a judge of that court. The application must be supported by written evidence which is sufficiently detailed to show why all the factual and legal requirements are met. The application is ‘without notice’ in the sense that notice of it is not given to the defendant State, who will become apprised of the proceedings only if permission is actually given by the court and the State is then served: although at that stage of course the defendant State will be entitled to apply to the court to contest the jurisdiction or apply for a stay of the proceedings or both.315
To obtain permission the claimant must show that:
(a) the claim comes within one of the exceptions to immunity in the State Immunity Act 1978;
(b) on the merits, there is at least a serious issue to be tried; and
(c) that England is the appropriate forum for the trial of the action: the forum conveniens.316
In respect of a claim to sue a foreign State in the English court, this last consideration applies with peculiar force, and leave should not be given in dubious or borderline cases. On the other hand care must be taken on the part of the State in responding to the application, as a plea of forum non conveniens may constitute a form of submission to the jurisdiction.317 In practice, issues of substance in relation to these requirements are usually addressed at the stage when the defendant State has been served and contests the jurisdiction; but even on the claimant’s initial ‘without notice’ application the court will be mindful of them and will wish to see evidence that they have been satisfied.318
The burden of proof under the SIA is upon the claimant, not the defendant State.319
Kerr LJ relying on a similar conclusion reached by Robert Goff J under the common law in Il Congreso del Partido,320 held that the preliminary issue concerned the establishment of the exception to immunity, not the character of the proceedings brought by the plaintiff, and stated: ‘Whenever the question arises under the Act whether a State is immune by virtue of section 1 or not immune by virtue of one of the exceptions, then this question must be decided as a preliminary issue in favour of the plaintiff, in whatever form or by whatever procedure the court may consider appropriate before the substantive action can proceed’.321 This ruling may be of particular importance where there are joint defendants, enabling the State, if successful on the plea of immunity, to be dismissed from the suit on the basis of a good arguable case before the allegations and defences are considered against the other defendants.
In Al-Adsani v Government of Kuwait, following the refusal of leave to serve out by the Judge in Chambers, on the ground that the defendant State was immune, Evans LJ applied this dictum and ruled that only a good arguable case was required when granting leave to serve proceedings on a foreign State out of the jurisdiction. He distinguished the case from Rayner, saying that the preliminary stage of challenge to the jurisdiction had not yet been reached: the proposed defendant State had not appeared, nor had it yet been called upon to make such claim for immunity as it might think appropriate.322
This ruling appears to be contrary to the express wording of SIA, section 1(2), which provides that ‘the court shall give effect to the immunity … even though the State does not appear in the proceedings in question’; and construes the words ‘even though’ as restricting the court’s ex officio duty to the period after the State has been served with the proceedings. Such an approach may be in order where, at the time of the application for leave to serve out, no issue as to immunity has arisen, but it is suggested it cannot be correct when an issue of the court’s jurisdiction relating to immunity is raised: if, by reason of the personal status of the defendant, the court has no jurisdiction over the State, it must so find at once and not purport to order service of process. Only if it is satisfied on the facts as alleged that the proceedings fall within one of the exceptions provided in the SIA 1978 may leave be granted. To allow the Master, judge in chambers, or other court to grant leave on the basis of a good arguable case is to assume a prima facie jurisdiction in contradiction of the statutory requirement that the court shall give effect to immunity even though the State does not appear.
As regards the requirement that the claimant must show that the claim comes within one of the exceptions to immunity in the SIA,323 where the SIA is silent as to any jurisdictional requirement, as in respect of commercial transactions under section 3(3), CPR 6.37 requires the claimant to bring his case within one of the headings of paragraph 3.1 of Practice Direction 6B, for example where the claim relates to a contract made within the jurisdiction, or governed by English law, or concerns a breach of contract committed within the jurisdiction (6PD 3(6)),324 or any claim for relief (not confined to ownership or possession of property) relating to property located within the jurisdiction (6PD 3(11)).325
However, in respect of certain types of proceedings rendered non-immune, the SIA enacts different, stricter jurisdictional requirements.326 This may be a source of uncertainty. In Al-Adsani v Government of Kuwait, Evans LJ noted that the jurisdictional requirements of Order 11 and the SIA relating to proceedings in tort did not exactly correspond. Order 11, rule 1(f), repeated in paragraph 3(9) of Practice Direction 6B, allows service out of the jurisdiction where ‘A claim is made in tort where (a) damage was sustained within the jurisdiction; or (b) the damage sustained resulted from an act committed within the jurisdiction’.327 By contrast, section 5 of the SIA removes immunity for proceedings in respect of death or personal injuries or damage or loss of tangible property ‘caused by an act or omission in the UK’.
By section 12(1), service is deemed to have been effected when the claim form or other document is received at the Ministry, and section 21(d) provides that a certificate of the Secretary of State shall be conclusive evidence on any question as to ‘whether, and if so when, a document has been served or received’. CPR 6.27(4) gives effect to section 21 but omits the word ‘conclusive’ providing that ‘an official certificate by the FCO stating that a claim form or other document has been duly served on a specified date in accordance with a request made under this rule is evidence of that fact’. Rule 6.44(6) provides that a document purporting to be such a certificate shall be treated as such, unless it is proved not to be.
The provisions of section 12 do not apply to an action in rem, nor to proceedings against a State by way of counter-claim.
In Kuwait Airlines Co v Iraqi Airways and the Republic of Iraq the Foreign Office provided a Certificate of Service dated 22 January 1991 that copies of the writ and other documents were ‘served upon the Embassy of the Republic of Iraq by the delivery thereof to the Embassy on the 15 January’. An Iraqi diplomat in an affidavit in the proceedings confirmed that he had received the documents in the embassy. This certificate was remarkable in that it was given in respect of service not made on the Ministry of Foreign Affairs of Iraq as required by section 12(1) and further in that it evidenced service on the premises of a diplomatic mission, a service which, as already stated, seems to offend the inviolability of the mission under Article 22 of the Vienna Convention on Diplomatic Relations.
The current edition of the Queen’s Bench Guide requires that the Master or District Judge be informed in writing of any intended execution of a judgment against a foreign or Commonwealth State by writ of fieri facias, charging order, or Third Party Debt Order. The Master or District Judge is to inform, as soon as reasonably practicable, the FCO and shall not issue any order until that Office is so informed and may postpone the decision for up to three days whether to grant an order if he considers it reasonable for the purpose of enabling the FCO to furnish further information relevant to his decision.328
This concludes the account of the SIA and how its provisions have been applied by the courts. On balance the restrictive rule which the Act introduced has considerably strengthened the position of the private company or individual in their business dealings with foreign States, but the restrictions on execution against State property to give effect to judgments obtained in respect of proceedings coming within the exceptions to immunity from jurisdiction continue to be a source of complaint.