With its consent, a foreign State may be made subject to proceedings in the court of another State. Consent of the State to such proceedings has, therefore, always been a method of removing the bar of immunity. Indeed, the development of State immunity from an absolute to a restrictive doctrine was in part achieved by imputing consent from a State’s participation in commercial enterprises.
Submission by the consent of the State to the national court’s jurisdiction enables the court to take jurisdiction and adjudicate the case. As the ILC Commentary states ‘[t]he obligation to refrain from subjecting another State to its jurisdiction is not an absolute obligation. It is distinctly conditional upon the absence or lack of consent on the part of the State against which the exercise of jurisdiction is being sought’ (Commentary to Article 5, paragraph 1(3)).
The modern law as set out in the UNCSI, Article 7 treats any certain and unequivocal consent to the national court’s jurisdiction, whether contained in an international or arbitration agreement, contract or unilateral undertaking, as both the waiver of the immunity which a State enjoys by reason of its independence and equality to other States, and as the submission of the State to the jurisdiction of the court to which the consent is addressed. Unlike submission ‘in the face of the court’, as described below at common law, such express consent by a State may be given prior to the particular proceeding before the national court where the issue of immunity is raised, or even prior to any dispute arising.1
UN Convention Article 7
Express consent to exercise of jurisdiction
1. A State cannot invoke immunity from jurisdiction in a proceeding before a court of another State with regard to a matter or case if it has expressly consented to the exercise of jurisdiction by the court with regard to the matter or case:
(a) by international agreement;
(b) in a written contract; or
(c) by a declaration before the court or by a written communication in a specific proceeding.
2. Agreement by a State for the application of the law of another State shall not be interpreted as consent to the exercise of jurisdiction by the courts of that other State.
ILC Commentary Article 7
(1) In the present part of the draft articles, article 5 enunciates the rule of State immunity— [A State enjoys immunity in respect of itself and its property from the jurisdiction of the courts of another State subject to the provisions of the present Convention]—while article 6 sets out the modalities for giving effect to State immunity. [A State shall give effect to State immunity under article 5 by refraining from exercising jurisdiction in a proceeding before its courts against another State and to that end shall ensure that its courts determine on their own initiative that the immunity of the other State under article 5 is respected.]
Following these two propositions, a third logical element is the notion of ‘consent’, the various forms of which are dealt with in articles 7, 8 and 9 of this part.
(3) … State immunity under article 5 does not apply if the State in question has consented to the exercise of jurisdiction by the court of another State. There will be no obligation under article 6 on the part of a State to refrain from exercising jurisdiction, in compliance with its rules of competence, over or against another State which has consented to such exercise. The obligation to refrain from subjecting another State to its jurisdiction is not an absolute obligation. It is distinctly conditional upon the absence or lack of consent on the part of the State against which the exercise of jurisdiction is being sought.
ILC Commentary
(4) … There must be proof or evidence of consent to satisfy the exercise of existing jurisdiction or competence against another State.
(5) Express reference to absence of consent as a condition sine qua non of the application of State immunity is borne out in the practice of States.
National laws vary in their requirements for express or implied waivers and in drafting or construing a waiver of immunity clause in an arbitration agreement one is well advised to consult the applicable law. Waiver of immunity is provided for in ECSI2 and all national legislation.
UNCSI, Article 7 contemplates that, apart from an oral declaration, the consent will be expressed in writing. The State Immunity Act 1978 (SIA), section 2(1) expressly requires consent given prior to the proceeding to be in writing, and the Commentary to ECSI, Article 7, paragraph 23, explains: ‘the use of the term in Article 2(b) is meant not only to exclude contracts concluded orally, but also any implication of a tacit submission, for instance, as the result of the acceptance by a State of a clause waiving an immunity, inserted by the other party in an invoice’.
English law requires such prior consent to be by written agreement; other jurisdictions do not require writing, and not necessarily in the form of an agreement, and are prepared to accept a consent which can be implied from the wording provided it clearly amounts to an acceptance of jurisdiction. Given the overall requirement that consent to remove immunity must be express, where a waiver is to be drafted, explicit agreement should be obtained on all aspects of the transaction envisaged.
The US FSIA covers three types of waiver of immunity: waiver from adjudication, from execution after judgment, and from attachment prior to the entry of judgment. It characterizes them as exceptions to State immunity. Waiver from suit and execution may be ‘either explicitly or by implication’ and ‘notwithstanding any withdrawal of the waiver which the foreign State may purport to effect except in accordance with the terms of the waiver’ (sections 1605(a)(1) and 1610(a)(1)). To be ‘explicit’ there must be an express reference to immunity.3 To be effective it is immaterial whether it was given before or after the date of the FSIA.
FSIA §1605: General exceptions to the jurisdictional immunity of a foreign state
(a) A foreign state shall not be immune from the Jurisdiction of courts of the US or of the States in any case
(1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver.
Prior to the enactment of the UK SIA under common law it was widely assumed that consent to waive immunity could only be made by express submission in the face of the court; consequently, election to submit could only be made at the moment when the court was asked to exercise jurisdiction and not at any previous time.4 In a recent Supreme Court’s decision Lord Collins of Mapesbury has shown that view to be based on a mistaken reading of the decision of the House of Lords in Duff Development v Kelantan [1924] AC 797 and to overlook a contractual submission as an alternative valid basis for the English court’s jurisdiction. So far as UK law is concerned, this corrected view of the law is of small significance as the enactment of the UK SIA in 1978 has replaced the common law position with section 2(2) expressly providing that, in addition to a submission given after the suit has arisen, ‘a State may submit … by a prior written agreement’.
However, in jurisdictions where the common law still applies unamended by statute,5 the correct version of the common law rule relating to submission continues to have relevance. For these jurisdictions the revised assessment of the common law rule as set out in NML Capital Ltd v Republic of Argentina6 has considerable significance. An authoritative account of the evolution of the common law rule is provided by Lord Collins of Mapesbury as follows:
121. The position in English law prior to the enactment of the 1978 Act was that it was thought that a prior contractual submission to the jurisdiction of the court was ineffective to amount to a waiver of immunity and that nothing less than an appearance in the face of the court would suffice: 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, 160.
Having examined these cases relied upon for the mistaken view of the majority in Duff Development—Lord Collins continued:
125. As Dr F A Mann said, ‘the proposition that a waiver or submission had to be declared in the face of the court was a peculiar (and unjustifiable) rule of English law’: (1991) 107 LQR 362, at 364. In a classic article (Cohn, Waiver of Immunity (1958) 34 BYIL 260) Dr E J Cohn showed that from the 19th century civil law countries had accepted that sovereign immunity could be waived by a contractual provision, and that the speeches in Duff Development on the point were obiter (and did not constitute a majority) and that both Duff Development and Kahan v Federation of Pakistan had overlooked the fact that submission in the face of the court was not the only form of valid submission … since the introduction in 1920 in RSC Ord 11, r 2A (reversing the effect of British Wagon Co Ltd v Gray [1896] 1 QB 35) of a rule that the English court would have jurisdiction to entertain an action where there was a contractual submission. In particular, in Duff Development Lord Sumner had overlooked the fact that British Wagon Co v Gray was no longer good law.
Lord Collins concluded his account by stating that
such submission by prior written agreement was in conformity and consistent with international practice: United States Foreign Sovereign Immunities Act 1976, section 1605(a)(1) (State not immune if it has ‘waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver …’); European Convention on State Immunity 1972, Art 2(b) (no immunity if ‘it has undertaken to submit to the jurisdiction of [the] court … by an express term contained in a contract in writing’); UN Convention on Jurisdictional Immunities of States and their Property 2004, Art 7(1)(b) (no immunity if the State has ‘expressly consented to the exercise of jurisdiction by the court with regard to the matter or case … in a written contract’).
UK SIA, section 2(1) provides: ‘A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom’; and subsection (2)that submission may be ‘after the dispute giving rise to the proceedings has arisen or by a prior written agreement; but a provision in any agreement that it is to be governed by the law of the United Kingdom is not to be regarded as a submission.’
The rules relating to submission in the UK legislation have been held to apply to separate entities; the provision which provides that the separate entity is only immune where ‘the circumstances are such that a State … would have been immune’ (SIA, section 14(2) and (3)) makes it plain that a separate entity is to be regarded as having submitted by reference to the test of submission laid down for States in section 2.7
Revocation of any consent to proceedings or of submission is not expressly dealt with in either UNCSI or the Commentary. It would seem that waiver is irrevocable, save in accordance with its own terms, or by consent of all parties to the agreement; where no express right of revocation is granted in an international agreement it will be subject to revocation only if it is established that the parties intended to admit the possibility or to imply revocation from the nature of the treaty.8 If revocation were otherwise allowed it would be remediless, being barred by the immunity for which consent is purported to be withdrawn. Where the consent takes the form of direct submission to the court it would seem to be irrevocable in effect. The Commentary to ECSI provides that a State which of its own will institutes legal proceedings as a claimant or intervening party may not subsequently invoke immunity (paragraph 14). The US FSIA provides that waiver from suit and execution may be ‘either explicitly or by implication’ and ‘notwithstanding any withdrawal of the waiver which the foreign State may purport to effect except in accordance with the terms of the waiver’ (sections 1605(a)(1) and 1610(a)(1)). Waiver made in respect of an applicant in respect of one proceeding does not prevent assertion of the plea in a separate proceeding.9 In Yendall v Commonwealth of Australia10 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.11
For waiver after the dispute has arisen see below.
The consent, whether express or implied, must be that of the State. Consent by waiver is thus one aspect of the law relating to State immunity where the personal basis of the plea ratione personae makes the status of the defendant State and its giving of consent, and not the function of the activity complained of, the essence of the action.12 Consent to jurisdiction or waiver of immunity by a representative of the State must therefore be authorized by the State. UNCSI, unlike ECSI or SIA, contains no provision identifying the representative of the State who may give authority on behalf of the State. Neither the Commentary nor the earlier ILC Draft specifically address the problem except to treat the matter as a question of choice of law and one for the law of the forum State to decide:
Commentary, Article 7, paragraph 11 ‘… The trial court itself … can and must devise its own rules and satisfy its own requirements regarding the manner in which such a consent could be given with desired consequences’.
As Dellapenna explains in respect of the FSIA, which in the House Report equally omits any provision or explanation as to who shall have authority to give consent on a State’s behalf, ‘authority could be determined by the law of the State on behalf of which the representative acts, by the law of the State in which the purported waiver occurs, by the law of the forum, or perhaps by some other body of law’; and he describes, particularly in a federal system, the conflicting US decisions as to the applicable law to decide authority to consent.13
Other jurisdictions have largely avoided the problem by express provision. International law itself goes some way to provide a solution: by Article 7(2)(a) of the 1969 VCLT, heads of State and of government and Ministers of Foreign Affairs are considered by virtue of their function to represent their State for the purpose of performing all acts relating to the conclusion of a treaty and the extension of that provision implies that such office holders also have authority to waive their State’s immunity before the courts of another country.14 The ECSI Commentary to Article 2, paragraph 22 provides that ‘Any person or body empowered to conclude written contracts in the name of the State is also deemed to have the authority to submit that State to the jurisdiction of a foreign court, in the case of a dispute arising from such contract’. English law is even more specific: a head of the State’s mission in the UK 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, and any person who has entered into a contract on behalf of and with the authority of a State shall be deemed to have authority to submit on its behalf in proceedings arising out of the contract (SIA, section 2(7)). Consequently a solicitor in preparing contracts of employment for personnel of an embassy,15 or a director of a medical office attached to a mission,16 were accordingly not persons within the terms of that section deemed to have authority to submit on the State’s behalf.
The ILC Commentary asserts that
the exercise of jurisdiction or the decision to exercise or not to exercise jurisdiction is exclusively within the province and function of the trial court itself. In other words, the rules regarding the expression of consent by the State involved in a litigation are not absolutely binding on the court of another State which is free to continue to refrain from exercising jurisdiction, subject, of course to any rules deriving from the internal law of the State concerned. (Commentary Article 7.11)
This Commentary was drafted without reference to the Draft Articles taking the form of a binding international convention and raises certain problems of construction discussed below. In practice, however, it would seem that to be effective an express waiver must identify the court, proceeding, matter, or case and this requirement will prevent any expression of consent in an international convention constituting a waiver.
Under UNCSI, Article 7 a unilateral act of the defendant State may be made by ‘(c) declaration before the court or communication in a specific proceeding’. Article 7 thus limits the form of consent prior to a dispute and a specific proceeding to that contained in (a) an international agreement, or (b) a written contract. Arguably, then, only parties to the international agreement or written contract may invoke the waiver contained in these instruments and claim the absence of immunity when a proceeding with regard to a matter or case to which the State has consented is instituted. Also, the restriction of the non-contractual forms of the defendant State’s consent—a declaration before the court or a written communication in the specific proceeding—which clearly limits the consent to the jurisdiction of a specified court or to a specified proceeding, supports a construction that the wider forms of expression of consent in (a) and (b), allowed prior to the institution of proceedings, may only be invoked by a party to such international agreement or contract. Yet the wording of Article 7 is broad enough to permit a non-contracting party, whether another State or private individual, to invoke the waiver as removing immunity from a proceeding, provided that such proceeding comes within the description in the international agreement or written contract with regard to a matter or case to which the State has expressly consented to the jurisdiction of the court where the proceeding is instituted.17 In other words, the obligation envisaged by Article 7 arising from an international agreement or the written contract is to the court whose exercise of jurisdiction may be barred by the State’s immunity and not to the party contracting with the State.
To constitute waiver, Article 7 requires the ‘matter or case’ to which the consent relates to be identified as well as the proceeding and court in which the proceeding is instituted and to whose exercise of jurisdiction the waiver relates. This specificity prevents a general waiver of immunity by one State contained in an international agreement which lacks the required specifics from being sufficient to permit the exercise of jurisdiction by the national court of another State. Waiver of immunity and consent to the exercise of jurisdiction in respect of a State cannot be inferred by mere implication from a provision in which the State agrees to exercise jurisdiction over certain activities.18 FSIA, section 4 makes immunity of the State subject to ‘existing international agreements’. The House Report makes it plain that any waiver by reason of such international agreements is limited to situations where they ‘expressly conflict’ with the provisions of the FSIA. Such an agreement must express a willingness to appear before an American court before it can operate as a waiver.19
In its comments on Article 7 the ILC supports a view that an undertaking in a convention or contract without specificity as to the dispute and the court will be insufficient to constitute an effective waiver.
ILC Commentary (11)
The practice of States does not go so far as to support the proposition that the court of a State is bound to exercise its existing jurisdiction over or against another sovereign State which has previously expressed its consent to such jurisdiction in the provision of a treaty or an international agreement, or indeed in the express terms of a contract with the individual or corporation concerned. While the State having given express consent in any of these ways may be bound by such consent under international law or internal law, the exercise of jurisdiction or the decision to exercise or not to exercise jurisdiction is exclusively within the province and function of the trial court itself. In other words, the rules regarding the expression of consent by the State involved in a litigation are not absolutely binding on the court of another State, which is free to continue to refrain from exercising jurisdiction, subject, of course, to any rules deriving from the internal law of the State concerned. The court can and must devise its own rules and satisfy its own requirements regarding the manner in which such a consent could be given with desired consequences. The court may refuse to recognize the validity of consent given in advance and not at the time of the proceeding, not before the competent authority, or not given in facie curiae. The proposition formulated in draft article 7 is therefore discretionary and not mandatory as far as the court is concerned. The court may or may not exercise its jurisdiction. Customary international law or international usage recognizes the exercisability of jurisdiction by the court against another State which has expressed its consent in no uncertain terms, but actual exercise of such jurisdiction is exclusively within the discretion or the power of the court, which could require a more rigid rule for the expression of consent.
On this view whilst an applicant, particularly if a contracting State Party to the international agreement containing the waiver of immunity, may allege breach of treaty, it cannot rely on it as removing immunity in proceedings before a national court; that court being free to specify its own requirements as to the terms in which consent to immunity in the particular proceedings is to be given. The situation may be different for proceedings before a regional tribunal. In Government of the Republic of Zimbabwe v Fick and Ors, the Supreme Court of Appeal of South Africa held that, by becoming party to the Protocol on the Tribunal to the Treaty of the Southern African Development Community (Article 32(3) of which stated that decisions of the Tribunal ‘shall be … enforceable within the territories of the Member States concerned’), Zimbabwe ‘clearly both waived any immunity it might otherwise have been entitled to claim from the jurisdiction of the courts of member states and agreed that orders of the Tribunal would be enforceable in those courts’.20
Further non-contracting parties to the international convention containing the waiver, or private individuals or corporations, will not be in treaty relations and the scope of any waiver will be determined by domestic law of the forum State. As to Article 7, itself constituting a waiver by a State which ratifies the UN Convention without any additional specific identification of the proceeding, court, matter, or case, such a waiver would seem to lack the specificity of express consent to the jurisdiction of the court of another State which that article requires. The generality of such a ratification would not conform with Article 7’s requirement that the consent of the State should be express and relate ‘to the exercise of the jurisdiction by the court with regard to the matter or case’. The defendant State in asserting its immunity might well be in breach of its obligation under UNCSI but its ratification would not be construed as an express waiver in conformity with Article 7’s provision.
Consent to submit given in a prior contract or consent to arbitration constitutes submission. Whether there is an agreement and how it is to be construed will be matters for the proper law of the contract.
UK SIA, section 2(7) requires a binding agreement made with the authority of the ambassador or a person authorized by the State to make the agreement. An expression of opinion or unilateral offer by a State representative cannot constitute such an agreement made with the authority of the State itself.21
Whereas the common law submission and the civil law prorogatum required a direct statement to the court, UNCSI along with national systems provides that a written communication will suffice.
UN Convention Article 8
Effect of participation in a proceeding before a court
1. A State cannot invoke immunity from jurisdiction in a proceeding before a court of another State if it has:
(a) itself instituted the proceeding; or
(b) intervened in the proceeding or taken any other step relating to the merits. However, if the State satisfies the court that it could not have acquired knowledge of facts on which a claim to immunity can be based until after it took such a step, it can claim immunity based on those facts, provided it does so at the earliest possible moment.
2. A State shall not be considered to have consented to the exercise of jurisdiction by a court of another State if it intervenes in a proceeding or takes any other step for the sole purpose of:
(a) invoking immunity; or
(b) asserting a right or interest in property at issue in the proceeding.
3. The appearance of a representative of a State before a court of another State as a witness shall not be interpreted as consent by the former State to the exercise of jurisdiction by the court.
4. Failure on the part of a State to enter an appearance in a proceeding before a court of another State shall not be interpreted as consent by the former State to the exercise of jurisdiction by the court.
Implicit consent may be deduced from conduct indicating such consent; failure to react is not sufficient, and hence non-appearance to a proceeding brought against it does not constitute waiver by a State. Waiver may be deduced from conduct implying an intent to waive, as by conduct specifically in relation to the court proceedings, for example the filing of a general appearance, intervening, or taking a step in the proceedings.22 Consent to the court’s jurisdiction cannot be implied by an appearance solely for the purpose of pleading immunity (ECSI, Article 3(2)); this principle is somewhat obscured in English law by the State being required, where it wishes to raise immunity, to acknowledge service of the claim and to apply to the court to rule that it has no jurisdiction (see Chapter 7 on SIA procedure). UNCSI, Article 8.1 permits ignorance of the facts as a ground for denial of submission by taking a step in the proceedings, provided that it is raised ‘at the earliest possible moment’, but the scope and intention of that provision is much more clearly expressed in the wording of SIA, Article 2(3): ‘any step taken by the State in ignorance of facts entitling it to immunity if those facts could not reasonably have been ascertained and immunity is claimed as soon as reasonably practicable’.
The Commentary describes as unequivocal evidence of consent to the exercise of jurisdiction the following acts: ‘when a State knowingly enters an appearance in answer to a claim of right or to contest a dispute involving a State or over a matter in which it has an interest, and when such appearance is unconditional, and unaccompanied by a plea of state immunity’ (Article 8, paragraph 1); ‘by choosing to become a party to a litigation before the court of another state …, regardless of whether it is a plaintiff or defendant’ (paragraph 3) or ‘By becoming a plaintiff before the judicial authority of another State, the claimant State, seeking judicial relief or other remedies, manifestly submits to the jurisdiction of the forum’ (paragraph 4).
Participation for the limited purpose of objecting to the continuation of the proceedings on the ground of immunity will not constitute submission (Commentary, paragraph 7). Furthermore, a State may assert a right or interest in property by presenting prima facie evidence of its title at issue in a proceeding to which the State is not a party, without that assertion being treated as a submission to the jurisdiction of another State pursuant to Article 8(2).
UN Convention Article 8(3)
The appearance of a representative of a State before the Court of another State shall not be interpreted as consent by the former State to the exercise of jurisdiction by the court.
Article 8(3) was inserted to cover the situation where a representative of the State might appear as a witness to ‘affirm that a particular person is a national of the State’ (Commentary, paragraph 8); this insertion is misleading. Unless accompanied by limitation of the appearance for a stated specific purpose it would seem that an unqualified appearance or tender of evidence by an authorized State representative, such as the filing of an affidavit by a serving head of state in support of a claim brought in another State’s national court, would constitute waiver of immunity.23
According to the ILC Commentary, ‘[f]ailure to enter an appearance is not to be construed as passive submission’ (Article 8 paragraph 4). Nor can a State be ‘compelled to come before a court of another State to assert an interest in property against which an action in rem is in progress, if that State does not choose to submit to the jurisdiction of the court entertaining the proceedings’ (paragraph 4).
Consent of a foreign State can only confer competence on a national court where the immunity of the foreign State ratione personae constitutes the bar to its exercise of jurisdiction. Lack of jurisdiction of a national court by reason of some requirement of public policy or other ground of non-justiciability cannot be cured alone by the consent of a foreign State Party to the proceedings.
Here, waiver is a matter not solely within the discretion of the foreign State but regulated by forum State law. Some support for this view is to be found in the treatment of waiver as though it were an exception to immunity it being so regulated as to its modalities in the European Convention and the US and UK legislation. Where it is so treated it is generally accepted that proof of waiver dispenses with any need to bring the alleged activity within any other exception to immunity. This would seem to respect the discretion of the foreign State to determine what activity shall be treated as non-immune, the essence of the plea being the discretion of the foreign State to determine the method of settlement. The justiciability of the claim, however, may not be determined by consent of a litigant, even one of sovereign status (see further Chapter 3 on Act of State and Non-Justiciability and Chapter 4 on Jurisdiction). The private litigant cannot complain that a State has failed to exercise a waiver, since in such a situation it is open to him to contradict the State’s assertion by satisfying the national court that the activity comes within the commercial or other exceptions.
Whilst waiver by consent to immunity as a procedural matter is not open to challenge as contrary to a jus cogens norm of substantive law, it may be open with regard to the procedural right to access to court pursuant to ICCPR Article 14 and the ECHR Article 6(1) which may prevail over State immunity, and in particular, any attempt to enlarge the scope of immunity by agreement between the forum and the foreign State. Can a private individual challenge such an enlargement, whether contained in a treaty provision or legislation of the forum court as defeating his right of access to a court of law to adjudicate his legal rights? The question is difficult to answer in the abstract. A procedural right of access to justice may be a constraint on a provision of national law where, as in such an agreement to enlarge the scope of immunity, it has the effect of depriving a category of litigants of access to the court. Much would depend on the construction of the agreement. It might merely constitute a clarification of the mutual jurisdictions of the States; it has not to date been suggested that the rules for allocation of jurisdiction to be found in the Brussels Convention contravene the right of access to justice under Article 6(1) of the ECHR.24 The right of access may itself be waived by the private party’s consent to submit the dispute with a State to arbitration;25 similarly where an alternative dispute settlement procedure is provided in the constituent agreement of an international organization to which the forum State is a party that procedure will prevail over the right to access to court of the private party.26 Or the agreement might constitute a clarification of the scope of the immunities conferred. Would a grant of personal immunities to lower ranking officials when in office serve so as to bar prosecution be a permissible extension? Not, one would think, so as to bar prosecution for the commission of international crimes, though even here a necessity to keep open international communications in response to urgent humanitarian need might justify a temporary grant of immunity. The EU Common Position adopting restrictive measures against Uzbekistan, adopted by the EU Council on 14 November 2005 in barring admission to the EU of certain individuals accused of indiscriminate use of force in specific incidents in Uzbekistan, provides a precedent here in granting exemption from such prohibition ‘when travel is justified on the grounds of urgent humanitarian need or on grounds of attending intergovernmental meetings, where a political dialogue is conducted that directly promotes democracy, human rights and the rule of law in Uzbekistan’ (Article 3(6)).27
Similarly, clarification may be permissible of which matters may properly be treated as acta jure imperii as opposed to acta jure gestionis. But if the agreement was so drafted as to remove a recognized category of private law claims from adjudication before the national court, its legality could not be justified by reference to the rationale of State immunity. State immunity removes from the national courts of one jurisdiction matters relating to the exercise of governmental power, but not disputes relating to private law rights.
Without express consent a State will not lose its immunity in respect of proceedings in a national court of another State for violations of human rights causing death or personal injuries.28 Such rights arise by reason of international law and not private law; there is no inherent jurisdiction in the forum State to exercise civil jurisdiction in respect of such claims based on obligations in human rights conventions ratified by the foreign State, and hence only express consent of the defendant State can remove the bar of immunity. To date attempts to read an implied waiver of State immunity into obligations undertaken by States relating to the observance of human rights or other international standards in bilateral treaties have generally not succeeded (see the analysis in Chapter 14).
UNCSI, Article 7(2) states that an agreement to the application of the law of another State does not by itself constitute consent to the jurisdiction of the courts of the State the law of which is chosen as the applicable law. The English and US legislation have rules to the same effect; a stipulation that a contract or transaction shall be governed by English or New York law (a choice of law clause) does not constitute a waiver of immunity in respect of the jurisdiction of an English or New York court. In proceedings by a Swedish local authority to recover the costs of training Icelandic pilots pursuant to an inter-State agreement between Sweden and Iceland, the Swedish Supreme Court held the proceedings to be immune as they were of a public law nature and recognized that the choice to apply Swedish law in the agreement did not constitute consent on the part of Iceland to the jurisdiction of the Swedish courts.29
The extent to which a forum selection clause—an agreement that the courts of a named State shall have jurisdiction over any dispute—constitutes a waiver of immunity and vice versa requires more careful consideration. A choice of jurisdiction clause if limited to the courts of a named State, whilst it may be construed as a waiver of immunity before the courts of the named State, cannot readily be construed as a general waiver of immunity in relation to courts of other jurisdictions. Thus in Svenska a general waiver of immunity in a clause attached to an arbitration agreement coupled with a submission to the jurisdiction of the courts of Lithuania was held not to constitute a waiver under SIA, section 2(1) of immunity in respect of proceedings brought to enforce the arbitration award in the English court.30
Similarly, a general consent to the jurisdiction of any court in which the dispute is litigated unrestricted by any limitation as to the court exercising jurisdiction, whilst it may constitute a general submission to jurisdiction and place the foreign State on the same footing as a private litigant, will not necessarily also constitute a general waiver of immunity. The position, however, may be different where State immunity is the sole obstacle to the exercise of the court of a third State assuming jurisdiction. In NML v Argentina in proceedings in the English court to enforce a New York Court’s judgment in respect of a debt owed on commercial bonds the Supreme Court held a provision in the bonds stating that the judgment may be enforced ‘in any specified court or in any other courts to the jurisdiction of which [Argentina] is or may be subject … upon such judgment …’ as well as constituting a waiver of immunity in the New York court, also amounted to a waiver by Argentina of any immunity which it enjoyed before the English court.’31
Where there is doubt as to the ambit of a general waiver of immunity it would therefore seem advisable, in the absence of other indications, to construe it as impliedly restricted to the jurisdiction with which there is a territorial connection.32
The distinction between consent to jurisdiction to determine the dispute and consent to enforce the resultant award is generally observed by national courts and evidenced by a separate Part in UNCSI, Part IV, the provisions of which relate to immunity of State property from measures of constraint.
Effect of consent to jurisdiction to measures of constraint
Where consent to the measures of constraint is required under articles 18 and 19, consent to the exercise of jurisdiction under article 7 shall not imply consent to the taking of measures of constraint.
It is generally well established that a separate waiver is required for immunity from execution than that given in relation to adjudication; consent to the exercise of the national court’s jurisdiction over the proceedings is not sufficient to constitute consent to the execution of any judgment which results from such proceedings.33 The UK and US statutes, and other national legislation (but not the 1972 European Convention which provides an optional procedure in relation to enforcement of judgments) all require separate waiver in respect of execution from that of waiver of immunity from jurisdiction before permitting execution based on a State’s consent.34 Whilst an express waiver of immunity may operate to constitute consent to remove immunity in respect of both the adjudication and execution stages of a proceeding, such an intention must be clearly expressed. In English law, Saville J indicated a robust approach in construing a general submission clause contained in a commercial contract and stated that the English court would not adopt a restrictive interpretation of any submission clause merely by reason of one of the parties being a sovereign State and so ‘would put the State on the same footing as a private individual so that neither in respect of the State nor its property would any question of sovereign immunity arise in connexion to the State’s obligations to the plaintiff under the agreement’.35 Such a ruling applying waiver to both the adjudication and enforcement stages of the proceedings was followed by the English Court of Appeal in the case of Sabah Shipyard (Pakistan) v Pakistan.36 In these two cases the waiver expressly referred to State property. It has 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.37
The French courts broadly followed the same rule, holding ‘waiver of jurisdictional immunity does not in any way involve waiver of immunity from execution’,38 though a modification was allowed in 1984 in Eurodif when the Cour de Cassation permitted enforcement against State property used for a commercial purpose provided there existed a connection between the property to be attached and the subject-matter of the claim.39 Whilst this case would seem capable of being construed as a specific allocation of State property within the terms allowed for post-judgment in UNCSI, Article 19(b), in the light of the subsequent French decision in Creighton v Qatar it would seem to indicate a readiness on the part of French courts to relax the strict requirement of an additional express consent to enforcement where a State has agreed to arbitration in accordance with institutional rules. The Cour de Cassation in Creighton v Qatar construed the undertaking of the State of Qatar in the terms of Article 24 of the ICC Rules of Arbitration (replaced by Article 28(6) of the Rules of 1 January 1998) as a waiver of immunity from execution.40
Whilst the majority of commentators accept that consent to arbitration proceedings includes consent to the declaration of enforceability of the award—that is to exequatur or recognition proceedings in respect of the award—they question an implication that such consent extends to the taking of measures of constraint such as attachment, sale or other types of execution. It has not to date been followed in the English court.41 Gaillard suggests that a reconciliation of the conflicting principles of autonomy of the arbitration and immunity of the State might be found by permitting on the basis of this undertaking the attachment of the commercial assets of a State agency for the purpose of enforcement of an award rendered against a State where the separate identity of the agency is rendered fictitious by the extensive control exercised by the State.42
It may be that this decision of the French court is just one more indication, as discussed in the final section of this chapter, of a willingness of national courts to prioritize the autonomy of the arbitration over jurisdictional immunities before national courts of foreign States.
UN Convention Article 9
Counterclaims
1. A State instituting a proceeding before a court of another State cannot invoke immunity from the jurisdiction of the court in respect of any counterclaim arising out of the same legal relationship or facts as the principal claim.
2. A State intervening to present a claim in a proceeding before a court of another State cannot invoke immunity from the jurisdiction of the court in respect of any counterclaim arising out of the same legal relationship or facts as the claim presented by the State.
3. A State making a counterclaim in a proceeding instituted against it before a court of another State cannot invoke immunity from the jurisdiction of the court in respect of the principal claim.
As with all other types of submission, consent given by way of institution of proceedings extends to ‘all stages of the proceedings, including trial, and judgment at first instance, appellate and final adjudications and the award of costs but excluding execution of the judgement’ (Commentary Article 9, paragraph 4). The SIA expressly provides in section 2(6) that ‘A submission in respect of any proceedings extends to any appeal’. The Commentary to ECSI addresses the same issue in a similar manner, additionally stating that a submission also covers ‘where a court decides, on account of its own lack of competence, to refer the matter to another court in the same State’ (paragraph 15). Consent does not extend to any counterclaim unless it arises out of the same legal relationship or facts of the claim. Where the State brings a claim, the UN Convention and English law do not allow, as does US law,43 recovery in respect of a counterclaim unrelated to the claim up to the amount of the State’s claim.
The rationale for unlimited recovery for related counterclaims is that it would be unfair to allow a State to resort to the court without allowing the court to adjudicate all aspects of the dispute. As regards unrelated counterclaims, the FSIA adopts the compromise made in National City Bank v Republic of China44 whereby recovery is permitted up to the amount awarded (rather than sought, despite the wording of section 1607) to the State on the claim. This treats both claimant and counterclaimant as having interests in the same fund to be distributed by the court. The limitation is explained in the comment to the Restatement (Third) as follows: ‘To permit affirmative recovery by a counter-claimant on an unrelated counterclaim not otherwise adjudicable in the United States would impose an excessive risk on a foreign State that sought access to United States courts as a plaintiff’.45
The extent of waiver to be deduced from entry into an arbitration agreement may be variously interpreted according to its scope. If the arbitration is to be held in the forum State (or to apply forum State law) then waiver of immunity to the jurisdiction at least to the extent of the supervisory powers over arbitration of the forum court may be implied.46 The difficult issue is whether such consent to arbitration constitutes waiver of enforcement of the award. Where the State has in addition committed itself under institutional rules such as the ICC Arbitration Rules or is a party to the New York or UNCITRAL Conventions, all of which instruments impose obligations on the party to honour any arbitral award rendered, an even stronger case of implied waiver of immunity from execution of the award can be argued. There has been considerable diversity of views among both jurists and courts as to how far a State can be assumed to give its consent and to waive immunity from execution in national courts in these situations.47 The attempts of Lliamco48 to enforce arbitral awards obtained in respect of cancellation of oil concessions by Libya illustrates the difference of result achieved. In Sweden the consent to an ICC arbitration, although held in another country (Switzerland) under whose law there was insufficient jurisdictional link to enforce the award, was held sufficient to permit execution in Sweden; the US court was ready to find a similar waiver but applied the act of state doctrine to refuse enforcement.
As discussed above, French courts in general require waiver to be express49 but as the cases of Eurodif50 and Creighton v Qatar demonstrate, they recognize some modification of the requirement as regards consent to arbitration. The Cour de Cassation in Creighton v Qatar supports submission by a foreign State of a dispute to arbitration under institutional rules with an express clause, as in the ICC Rules, relating to ‘the carrying out of the award’, to amount to waiver of the foreign State’s immunity from enforcement as well as its immunity from adjudication.51 English law expressly provides that choice-of-law clauses shall not constitute waiver of immunity.
Although the House Report described implicit waivers under FSIA as extending to cases where a foreign State has agreed to arbitration in another country or where a foreign State has agreed that the law of a particular country governs a contract, US courts held that the ‘implied waiver’ provision of section 1605(a)(i) must be narrowly construed and generally restricted the waiver to confer jurisdiction on the courts where the arbitration was to take place. Several US courts, however, have held that although the agreement to arbitrate signed by the State had not expressly chosen the US as the place to arbitrate the award, suits to enforce the award could be brought in the US if the arbitration had taken place in a State Party to the New York Convention (NYC); the reasoning being that all States Parties to the NYC are required (subject to limited defences) to enforce agreements to arbitrate and arbitral awards rendered in other contracting States.52 Agreement to arbitrate under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) does not constitute waiver of immunity in US courts because the Washington ICSID Convention, whilst declaring the award as binding on the parties, and in Article 54 imposing an obligation on the contracting State to recognize the award as binding, provides in Article 55 that ‘nothing in Article 54 shall be construed as derogating from the law in force in any contracting State relating to immunity of that State or of any foreign State from execution’.
Conflicting decisions in the US courts as to the scope of such waivers led to the enactment in 1998 of the amendment of FSIA and the introduction of the exception to State immunity for arbitration agreements discussed below as set out in FSIA, section 1605(a)(6). Indeed, according to the main sponsor of the Bill the arbitration amendment was added to ‘say that an agreement to arbitrate constitutes a waiver of immunity in an action to enforce that agreement’.
UNCSI, by providing a similar express exception for proceedings relating to consent given by a State to arbitration, offers a method of solving problems arising from implied waiver and uncertainty as to the jurisdiction to which submission is made.
UN Convention Article 17
Effect of an arbitration agreement
If a State enters into an agreement in writing with a foreign natural or juridical person to submit to arbitration differences relating to a commercial transaction, that State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding which relates to:
(a) the validity, interpretation or application of the arbitration agreement;
(b) the arbitration procedure; or
(c) the confirmation or the setting aside of the award,
unless the arbitration agreement otherwise provides.
Annex to the Convention
Understanding with respect to article 17
The expression ‘commercial transaction’ includes investment matters.
ILC Commentary, Article 17, paragraph 6:
Consent to arbitration is as such no waiver of immunity from jurisdiction of a court which would otherwise be competent to decide the dispute or difference on the merits. However, consenting to a commercial arbitration necessarily implies consent to all the natural and logical consequences of the commercial arbitration. In this limited area only, it may therefore be said that consent to arbitration by a State entails consent to the exercise of supervisory jurisdiction by a court of another State, competent to supervise the implementation of the arbitration agreement.53
One of the consequences involved in consent has been facilitated by the inclusion of the Understanding referred to above. In order to facilitate arbitration for disputes jure imperii arising from development projects undertaken for foreign States by foreign private investors, the ILC Working Group introduced an an Understanding relating to the arbitration exception that ‘the expression “commercial transaction” includes investment matters’.
A particular problem may concern the validity of a waiver of immunity under the New York Convention 1958 (NYC), relating to a State’s consent to the arbitration of disputes arising under bilateral investment treaties, where the disputed activities regarding the foreign investment concern matters of taxation, export licences, rebates which, treated as a matter of administrative discretion or regulated by national legislation, and may be claimed as activities performed ‘in the exercise of sovereign authority’. Indeed, it appears that China’s Supreme Court has in the past held that ‘arbitration between a foreign investor and the host country is not included’ in the scope of the NYC.54 For States which apply the NYC subject to the ‘commercial’ reservation it may be argued that such matters being under governmental control are not arbitrable; and hence any waiver given is invalid and of no effect. The Understanding annexed to UNCSI relating to the exception to immunity for arbitration agreements in Article 17 may help to refute such a challenge. Given that the challenged activities though relating to the exercise of sovereign authority are included in matters covered in the foreign investment protected by the BIT, it may be argued, by reference to the UNCSI Article 17 Understanding, that by broadening the definition of commercial transaction to include ‘investment matters’, such activities come within the commercial reservation and hence the State is under the NYC obligation to enforce the arbitration award and respect any consent which it or its state entity has given to the arbitration.55
Returning to the arbitration exception as set out in Article 17 UNCSI, its application is subject to a number of conditions: the arbitrations within the exception are restricted to those made in writing; with foreign persons (arbitrations with a State’s own nationals are excluded); with private persons (not with other States or with international organizations); to differences relating to a commercial transaction; and the court before whom the exception is invoked must be ‘otherwise competent’, that is jurisdictional links required by local law must be satisfied.56 Further, the supervisory powers of the national court from which immunity is removed cover the adjudication stage of arbitration but stop short of enforcement of the arbitral award.
From this account it will be apparent that the Convention’s formulation of the arbitration exception is made subject to a number of limitations which do not appear in similar exceptions in US, UK and other common law jurisdictions.57
The first of these limitations is the exception to arbitrations relating to ‘differences relating to a commercial transaction’. No such restriction appears in the UK SIA arbitration agreement exception in section 9 and the US statutory requirement is broader, referring to difference arising from ‘a defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration under the laws of the United States’ (FSIA, section 1605(a)(6)).58 Any problem, however, arising from this limitation of UNCSI, Article 17 to differences relating to a commercial transaction is lessened by the Understanding to Article 17 annexed to the UN Convention which provides that ‘the term “commercial transaction” includes investment matters’, as mentioned above.59
The second limitation to the arbitration exception—the list of the supervisory powers of the court from which immunity is removed—means that immunity is retained in respect of proceedings in national courts for the recognition or enforcement of the award. Whilst Article 17 provides a procedure for supervision of the validity of the arbitration agreement and support for the arbitral process, it does not extend, as do similar exceptions in US, UK, and other common law legislation, to the second stage of the recognition and enforcement of the award. The US FSIA exception confers power under this exception to enforce an arbitration agreement or to confirm an award pursuant to such an agreement to arbitrate. In the case of the UK legislation, the relevant section, section 9, was amended during its passage through Parliament ‘to remove the immunity currently enjoyed by States from proceedings to enforce arbitration awards against them’; and, subject to section 13 which governs the measures of enforcement which may be ordered against state property, enables the English court to order the recognition and enforcement of a foreign arbitral award.60
The third limitation relates to the need for some jurisdictional connection of the arbitration agreement with the national court on which the exception confers jurisdiction. The UNCSI exception imposes no specific jurisdictional connection but requires the national court to be ‘otherwise competent’. In effect that leaves the question of whether a connection is required, and if so what connection, to the private international law rules of the national court. The ILC Commentary to this article explains that:
… a court may be competent to exercise such supervisory jurisdiction in regard to a commercial arbitration for one or more reasons. It may be competent in normal circumstances because the seat of the arbitration is located in the territory of the State of the forum, or because the parties to the arbitration have chosen the internal law of the forum as the applicable law of the arbitration. It may also be competent because the property seized or attached is situated in the territory of the forum (paragraph 3).
The question of the extent of the jurisdiction conferred on national courts by a State’s consent to arbitration has been under discussion for many years. Is a State’s consent to arbitration, without express words, to be construed as automatically conferring jurisdiction on each and every national court under whose laws there is power to make an order for enforcement of a foreign arbitral award?
This question, as already discussed, arises not only in relation to the specific arbitration agreement exception from immunity but also more generally as regards the scope of implied waiver. In US law the courts, in applying the implied waiver provision in section 1605(A)(1), queried the sufficiency of the jurisdictional links for foreign arbitrations and the exception for arbitration agreements, and in 1988 the FSIA was amended with the express purpose of overcoming these difficulties.61 The jurisdictional connections required by that section before a US court may exercise enforcement jurisdiction over a foreign arbitral award effectively demands an agreement that the arbitration take place in the US or that the agreement or award is ‘governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards’. The exception has been specifically identified as applying to the NYC.62 In Cargill the Court stated that the NYC ‘is exactly the sort of treaty Congress intended to include in the arbitration exception’.63
In its original form the UK exception to immunity from jurisdiction for arbitration agreements followed the form of the exception in the European Convention including its requirement of a jurisdictional connection and qualified the arbitration as one ‘in, or according to the law of the United Kingdom’. But the intent to exclude this requirement was made clear in the section’s final form. Section 9(1) reads: ‘Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration’.64 The English court has now held that there is ‘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’.65 It is therefore clear that section 9 was intended to apply to ‘any foreign arbitral award’ and there is no justification to be found in the language used in section 9 (in particular when contrasted with that used in section 3) for limiting the exception to awards relating to purely commercial disputes.66
It can now be stated with reasonable certainty, with the authority of Article 17 of the UN Convention in support, that international law limits the scope of jurisdictional immunities of a State Party to an international commercial arbitration in the first stage of adjudication and permits national courts to exercise a supervisory jurisdiction in support of the arbitration agreement and the arbitral proceedings. As to the removal of State immunity when the arbitral award is sought to be enforced in a national court, the differing requirements which have to be met in national legislation (with the Australian Foreign States Immunities Act 1985 providing for yet another version of the arbitration exception)67 indicate that there is no generally accepted rule sufficient to constitute a customary international rule permitting measures of constraint without express consent where only an exception to immunity for an arbitration exception applies.
As shown in this chapter, State practice supports a general requirement of express and separate consent to both adjudication and enforcement of State immunity which is set out in a detailed scheme in UNCSI in Articles 7, 8, 9, and 17 on express consent, participation in proceedings, counterclaims, and the effect of an arbitration agreement as an exception to immunity and in Part IV, particularly in Article 20, on the effect of consent to jurisdiction to measures of constraint. One persistent undercurrent weakening this general rule, however, is to be found in the procedural requirements relating to settlement by arbitration both in treaty, legislation, and institutional rules, and in the national court decisions applying them, which treat a State’s initial consent to arbitration as a sufficient waiver of both immunity from adjudication and from enforcement. It might be said that US, Swiss, and French practice in different ways indicate some support for such a difference in the treatment of State immunity with regard to arbitration proceedings. Thus the US shows greater willingness to become a party to international arbitration conventions, eg the NYC of 1958, than to international conventions regulating the jurisdiction of national courts, eg the unsuccessful negotiations over the draft Hague Convention 1999 between European countries and the US; Swiss courts make orders for attachment and other measures of constraint when satisfied that both the subject-matter and the State property in issue have a sufficient jurisdictional connection with Swiss territory; and a distinction is drawn by the French Cour de Cassation between funds in commercial use in respect of a particular commercial transaction (Creighton v Qatar) and property in use for the purposes of a State’s diplomatic mission (NML Capital Ltd v République Argentine).68 Although this discrepant State practice may show a willingness of national courts to prioritize the autonomy of the arbitration over jurisdictional immunities before national courts of foreign States, the differing requirements which have to be met in national legislation and rules of procedure for enforcement indicate that the general requirement of express and separate consent to both adjudication and enforcement of State immunity in national courts remains the general rule.