¹ Sucharitkul’s Fourth Report, YBILC (1982) II, pt 1, para 121, Draft Article 12 Trading or Commercial Activity reads:

‘1. In the absence of agreement to the contrary, a State is not immune from the jurisdiction of another State in respect of proceedings relating to any trading or commercial activity conducted by it, partly or wholly in the territory of the other State, being an activity in which private persons or entities may engage.

2. Paragraph 1 does not apply to transactions concluded between States nor to contracts concluded on a government to government basis.’

² For a general account of the ILC’s work on the Jurisdictional Immunities of States and their Property see Ch 9 (legislative history).

³ An element which did not survive was an attempt to accommodate States still supporting an absolute rule by basing the exception on waiver; if the State entered a commercial contract as defined above it was to be considered to have consented to the exercise of jurisdiction in a proceeding arising out of a commercial contract and cannot invoke immunity from jurisdiction in that proceeding.

⁴ YBILC (1988) II, pt 1, 51 et seq.

⁵ Article 2(1)(c) and 2(2) concerning the definition of commercial transaction and the interpretative provision were as in Arts 1(b)(3) and 2(2) of the 1986 Draft: see Ch 9. The definition of ‘commercial transaction’ reads: ‘Article 10 Commercial Transactions1. If a State engages in a commercial transaction with a foreign natural or juridical person and, by virtue of the applicable rules of private international law, differences relating to the commercial transaction fall within the jurisdiction of a court of another State, the State cannot invoke immunity from that jurisdiction in a proceeding arising out of that commercial transaction.2.Paragraph 1 does not apply:(a)in the case of a commercial transaction between States;(b)if the parties to the commercial transaction have agreed otherwise.3.The immunity from jurisdiction enjoyed by a State shall not be affected with regard to a proceeding which relates to a commercial transaction engaged in by a State enterprise or other entity established by the State which has an independent legal personality and is capable of:(a)suing or being sued; and(b)acquiring, owning, or possessing and disposing of property, including property which the State has authorised it to operate or manage.’

⁶ YBILC (1991), vol II, pt 2, Commentary to Article 10(1), para 2.

⁷ A classic example is Societe Levant Express Transport v Chemin de Fer du gouvernement Iranien, Cour de Cassation, civ 1^ère, 25 February 1969 (a French company suing the Iranian government railways for breach of contract after goods were damaged due to the acts of the railways).

⁸ Mol Inc v People’s Republic of Bangladesh 736 F.2d 1326 (9th Cir 1984), cert denied; 105 S Ct 513; Rush-Presbyterian-St Luke’s Medical Center v Hellenic Republic 877 F.2d 574 (7th Cir 1989), cert denied; 493 US 937; 101 ILR 509; the English Court of Appeal left open the question whether a joint venture agreement between a State agency and a private investor to exploit on a profit-sharing basis relating to State natural resources, Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2006] EWCA Civ 1529; [2007] 2 WLR 876, was to be regarded as a commercial transaction. See the discussion in the previous chapter on commerciality.

⁹ EF Vriesde v The State of the Netherlands and the National Investment Bank for Developing Countries, Netherlands Sup Ct, 3 May 1985, NYIL (1986); Philipp Bros v Sierra Leone and the Commission of the European Communities [1995] 1 Lloyd’s Rep 289, CA; 107 ILR 517.

¹⁰ Victoria Aircraft Leasing Ltd v United States (2005) 218 ALR 640 at 645.

¹¹ Kessedjian and Schreuer, ‘Le Projet d’Articles de CDI sur les Immunités des Etats’ (1992) 96 RGDIP 299 at 316, 320.

¹² Kessedjian and Schreuer, ‘Le Projet d’Articles de CDI sur les Immunités des Etats’ at 319–21.

¹³ See also Greylock Global v Province of Mendoza, No 04 Civ 7643 (HB) 2005 US Dist LEXIS 1742, at 18 (SDNY 8 February 2005) where there was no immunity in a case where the province of Mendoza, Argentina, had engaged in commercial activity in the US by issuing bonds denominated in dollars subject to an Indenture governed by New York law and appointing a New York bank as trustee.

¹⁴ Kessedjian and Schreuer, the authors comments were directed at the 1991 ILC draft articles at 312. Dupuy, Droit international public (2002), 120–1.

¹⁵ (1928) 22 AJIL 118 at 124.

¹⁶ Article 9 and Commentary in the Harvard Project (1932) 26 AJIL (Suppl) 455 at 572–4.

¹⁷ Dellapenna, Suing Foreign Governments and their Corporations (2nd edn, 2002) (hereafter Dellapenna), 410. A third reason given is, so far as US law is concerned, to cover the rare case of escheat and expropriation. It is also to be noted that immunity for tangible property is removed to the exception in UNCSI 12 the territorial exception for ‘damage to or loss of tangible property’.

¹⁸ ‘Article 9 and Commentary’ (1932) 26 AJIL (Suppl) 455 at 572–4.

¹⁹ The Commentary to ECSI, Art 10.

²⁰ ILC Commentary Art 13, para 3.

²¹ Intpro Properties (UK) Ltd v Sauvel and Ors [1983] 1 All ER 658, Bristow J; [1983] 2 All ER 495, CA. The Court of Appeal construed s 16(1)(b) as only applying to proceedings relating to title or possession since the word ‘use’, which appears in s 6(1)(b), was omitted from this later section.

²² Jurisdiction over the Yugoslav Mission (Germany) 38 ILR 162. See also Deputy Registrar case, Netherlands District Ct (1980) 94 ILR 308; confirmed by the ECtHR in Hirschhorn v Romania 29294/02 ECtHR (Third Section) 26 July 2007 citing Manoilescu and Dobrescu v Romania and Russia (dec) no 60861/00, ECHR 2005-VI, stating, in respect of Art 6(1) right of access to court regarding diplomatic mission premises, that ‘as the transfer of ownership rights over the disputed property did not in itself entail the eviction of the tenant, it was open to the latter, in the event of a dispute over the occupancy of the building, to submit defence arguments, including arguments relating to its alleged immunity from jurisdiction.’

²³ Permanent Mission of India to the United Nations v New York 551 US 207 (2007). See Ch 8.

²⁴ Denza, Diplomatic Law (3rd edn, 2008), 156. Denza notes: ‘The premises of the mission are protected from pre-judgment and post-judgment measures of constraint under Part IV of the Convention, but the relevant provisions would permit enforcement against mission premises if there had been express consent to the taking of such measures or earmarking the premises for the satisfaction of the claim which is the object of the proceedings’ (156).

²⁵ Juan Ysmael & Co Inc v Government of the Republic of Indonesia [1955] AC 72; [1954] 3 All ER 236; 21 ILR 95; Rahimtoola v Nizam of Hyderabad [1958] AC 379; [1957] 3 All ER 441; 24 ILR 175. It is uncertain how this provision affects the inviolability or confidentiality of documents constituting the archives of a diplomatic mission as protected by the Vienna Convention on Diplomatic Relations.

²⁶ See for a general account, Foreign Relations Law of the US (Third) (1987) vol 2, s 712. Siderman de Blake v Republic of Argentina 965 F.2d 688 (9th Cir 1992); 103 ILR 454.

²⁷ As to Art 20 in the ILC’s 1986 draft Articles excluding the extraterritorial effects of measures of nationalisation with regard to State property and its later rejection, see Yang State Immunity in International Law (2012), Ch 7, 298–303.

²⁸ SA Biocare v Gécamines (Zaire) and Republic of Zaire, Belgium Civil Ct of Brussels, 16 March 1989; 115 ILR 415.

²⁹ Republic of Austria v Altmann 327 F.3d 1246 (2004).

³⁰ See further, Ch 8 (FSIA, s 1605(a)(3)).

³¹ Dralle v Republic of Czechoslovakia (1950) 17 ILR 156, Case No 41; UN Legal Materials, 183, 10 May 1950, Austrian Supreme Court; cf Potter (1906) 3 CLR 479, proceedings to adjudicate rights under a patent granted by a foreign court were refused by the Australian High Court on the basis that intellectual property rights were analogous to land and so non-justiciable outside the countries where such rights were granted.

³² Spanish State Tourist Office case, Germany, Oberlandesgericht Frankfurt, 30 June 1977; 65 ILR 141 (see Ch 15) (breach of copyright in film music by foreign tourist office held non-immune as activity similar to that performed by private party); Chateau Gai Wines Ltd v Le Gouvernement et La République Française, Canada, Exch Ct; 612 2d DLR 709; 53 ILR 284 (entry of trade mark in forum State registry confined to right of private party).

³³ Virtual Countries v South Africa 148 F.Supp.2d 256 (SDNY 2001), affirmed 300 F.3d 230 (2nd Cir 2002) Internet trade name: Claim against South Africa by reason of its press release challenging use of ‘southafrica.com’ by claimant as a domain name; immunity of South Africa confirmed by Circuit court as not taken in connection with a commercial activity of the foreign state. Further, there was no direct effect in the US by hampering the plaintiff’s ability to raise capital from investors on which to base subject-matter jurisdiction under the FSIA. The reaction of third-party investors to the press release was simply too extenuated a harm to constitute a direct effect sufficient to establish jurisdiction.

³⁴ See generally Morris, ‘The Exception for Intellectual and Industrial Property’ (1986) 19 V and J Transnat Law 83, who argues that the exception should cover the use of intellectual property within the forum State and not be confined merely to infringement.

³⁵ See Ch 8.

³⁶ See Ch 5.

³⁷ The 1926 Brussels Convention introduced a similar exception to the immunity from jurisdiction as part of a wider reform by which the operation of State-owned or operated ships and their cargoes engaged in trade were made subject to the same jurisdiction of national courts and the same liabilities as apply to private vessels and cargoes. See Ch 5.

³⁸ The further definition of the term ‘operation’ was discussed by the ILC and the UNGA Sixth Committee; the UK suggested the definition of maritime claim in Art 1 of the Brussels Arrest of Seagoing Ships Convention 1926 might assist.

³⁹ The House Report in explaining the 1976 Acts’ prohibition stated: ‘Attachments for jurisdictional purpose have been criticized as involving US courts in litigation not involving any significant US interest or jurisdictional contacts, apart from the fortuitous presence of property in the jurisdiction. Such cases frequently require the application of foreign law to events which occur entirely abroad. Such attachments can also give rise to serious friction in US foreign relations, PL 94-583 (26–7). See Dellapenna, Suing Foreign Governments and their Corporations (2nd edn, 2003), 210–16 for the drastic reduction in Admiralty claims in US courts consequent on the statutory prohibition and subsequent 1988 amendments to the FSIA.

⁴⁰ See KJ International v MV Jupiter (Compania de Navigatie Maritime ‘Romline’ SA intervening) South Africa Supreme Ct, 8 July 1997, 131 ILR 529; The Akademie Fyodorov S Africa Sup Ct, 19 April 1996, 131 ILR 460 Immunity bar on the enforcement of Arbitration award applies to pre-award attachment. Use of ship for environmental research not commercial and hence ship immune.

⁴¹ Since the 1926 Convention does not extend to sister ships it would seem that s 10 subs 6 as providing that removal of immunity for sister ships as stated in s 10, para 3, shall not apply where the foreign State owner or operator of the ship is a party to the Brussels Convention.

⁴² Cf Ministry of Trade of Republic of Iran v Tsavliris Salvage (International) Ltd (The ‘ALTAIR’) [2008] EWHC 612 Comm [2008] 2 IL Rep 90, Gross J construed the status of the cargo in the exception to immunity for cargo in SIA, s 10 Admiralty proceedings to be determined at the time of salvage; the judge also stated that he was inclined to construe s 10(4)(b) as not requiring the cargo to be ‘in use or intended use for commercial purposes’. Cf Thor Shipping A/S v The Ship ‘Al Duhail’ (2009) 58 ICLQ 702 where a single judge (Justice Dowsett) of the Federal Court of Australia held the Amir of Qatar entitled to immunity as a head of State when sued as owner of a cargo ship in respect of damage to the cargo in transit, a private yacht, Alderton (2009) 58 ICLQ 792.

⁴³ SIA, s 3(3)(a) and (c) also removes immunity from a contract for the operation of a State-owned ship or carriage of cargoes provided they are ‘engaged otherwise than in the exercise of sovereign authority’ but omits anything about sister ships.

⁴⁴ Allianz Via Insurance v USA French Ct of Appeal, Aix en Provence, 3 September 1999; 127 ILR 148, US held was immune in respect of a claim arising from an order of the commander of a US warship which was dragging its anchor in a storm to cast off a barge used to secure the vessel with the consequence that the barge drifted and foundered. Cf Thor Shipping A/S v The Ship ‘Al Duhail’ [2008] FCA 1842.