Whilst the restrictive doctrine has laid open a wide area of procedural and substantive law to enable national courts to exercise jurisdiction over foreign States in respect of commercial transactions, State immunity continues to bar to a very large extent the enforcement of judgments given by such courts against foreign States. In the absence of the consent of the State, UNCSI Part IV sets out in respect of State property a rule of immunity from execution in respect of both pre-judgment and post-judgment enforcement save in respect of narrowly defined categories of property. Again and again thwarted judgment creditors have sought to attach assets of foreign States within the forum State territory, only to be refused orders for execution by national courts.1 Not surprisingly, Professor Sucharitkul, the ILC’s first Special Rapporteur, described immunity from execution as ‘the last fortress, the last bastion of State immunity’.2
Nonetheless, change is taking place, with a number of national courts, as well as applying the now widely recognized exception to enforcement in respect of commercial property in commercial use, seeking additional ways to render enforcement immunity less absolute in respect of the adjudicated liabilities of the foreign State. Relevant to these changes is the need for claimants to seek certain enforcement measures in advance of the determination by the national court of a claim; attachment, arrêt-conservatoires, are thus frequently sought by claimants at the first adjudicative stage of the proceedings prior to any adjudication and judgment by the national court in order to preserve the property at stake or to prevent its removal by the foreign State; for example, as regards a credit of a foreign State in a bank account to stop its transfer out of the forum State territory. At a late stage in its drafting this practice was taken account of in UNCSI with an amendment dividing the general bar against measures of constraint into two stages, pre-judgment and post-judgement. Both stages contained two exceptions to the enforcement immunity bar, namely consent by the foreign State and allocation of identified property, but for post-judgment enforcement, a third exception was added allowing measures to be taken against State property used for government non-commercial purposes.
New ways in State practice by claims and cases applying these rules with regard to the two stages, pre- and post-judgment, taking account of the facts relating to the claim, any waiver and the location and type of property to be attached, are indicating new ways by which modification of the absolute rule of immunity may be introduced. One way may lie in the treatment of the two stages, adjudication and enforcement, combining them into the first adjudicative stage, resulting in enforcement automatically becoming a consequence of the removal of immunity from adjudication. This route is followed by the Swiss courts and possibly also, in respect of enforcement of arbitral awards, by the French courts, where the foreign State has given its express consent to settlement by arbitration under ICC or other institutional rules. Another way may be one applying the specific circumstances of the claim to a combination of factors, the specific transaction, the consent of the State, the terms of the judgment of the forum State court and the property in respect of which enforcement is sought. Variations in Courts’ practice on a variety of matters, as to the state’s specificity of consent required for a category of property, the nature and timing of the measure of constraint or relief sought, the relevant period for the identification and nature of the use of the State property, the terms on which State property is held in the forum State territory, all these issues may alone or in conjunction with each other contribute to a reduction in the absolute nature of the foreign State’s immunity from enforcement.
This chapter provides a general survey of State practice and an analysis of the elements involved in immunity from enforcement as provided by UNCSI in its Part IV on State Immunity from Measures of Constraint. The next chapter sets out the three exceptions which UNCSI permits to immunity from enforcement, followed by an account of the five categories of State property listed in UNCSI as property in use or intended for use for other than governmental non-commercial purposes for which no measure of constraint is allowed without specific waiver relating to the particular category. At the end, some general conclusions are drawn and certain proposals made with respect to both Chapters 16 and 17.
Today, as largely in the past, there is no general law enforceable in national courts governing the attachment, seizure and collection of debts owed by a sovereign State. There is no general international law by which payment of State debts may be enforced; there is no international law of insolvency to resolve a State’s general inability to meet its financial commitments; rescheduling of State debts remains largely a political process. Given that a State’s duration, compared to that of an individual, is measured in centuries rather than decades, and its economic welfare depends over that period on its political standing and share of the world’s resources, the situation today, as in the past, as Waibel, after providing a historical review of sovereign insolvency, acknowledges, largely continues as one in which ‘sovereign defaults are legion and … governments rarely repay their debts in full’.3 Resort to the use of force is ruled out; in 1902 the foreign Minister of Argentina, Dr Drago, in response to the blockade of Venezuelan ports by the UK, US, and other European States on the sovereign default of Argentina and other South American States proclaimed that ‘the public debt [of an American nation] cannot occasion armed intervention … by a European power’;4 and today the UN Charter, Article 2(4) prohibits Member States from ‘the threat or use of force against the territorial integrity or political independence of any State’, thus constituting a prohibition on one State’s resort to forcible measures of constraint against the property of another State. Attempts to resolve debt crises taking account of other interests—of the population of the debtor State or of the international community as a whole—continue to be made, for example in the nineteenth century the Argentine jurist Carlos Calvos’ theory, condemned absolutely ‘diplomatic as well as armed intervention as legitimate methods of enforcing any or all private claims of a purely pecuniary nature, at least such as are based upon contract, or as the result of civil war, insurrection or mob violence’ (the Calvo doctrine),5 or again in the 1970s the New International Economic Order (NIEO) was proclaimed for a revision of the international economic system in favour of Third World countries6 and in this century in 2002–03 proposals were put foward by the International Monetary Fund for a sovereign debt restructuring mechanism (EDRM).7 All these have to date met with little success.
Enforcement against State property constitutes a greater interference with a State’s freedom to manage its own affairs and to pursue its public purposes than does the pronouncement of a judgment or order by a national court of another State. States increasingly maintain some of their national wealth in foreign reserves, and discretion as to their disposal is seen as an element in the exercise of sovereign authority. Indeed, a forum State anxious to attract foreign capital, may be slow to permit execution against a State asset under its laws (although financial considerations may operate in the opposite direction, to require effective execution for trade debts, as shown by the City of London’s support for English legislation to compete with the US FSIA). Even where attachment of State assets located in the forum State is legally possible, the political consequences to the friendly relations of the forum State with the foreign State may discourage the forum State’s support for such enforcement.8 Again, certain unsatisfied judgments, particularly those relating to dealings in foreign investment or development, often relate to disputes which arise from some political difference between States.
In consequence of all the above, short of resort to war, there is therefore little alternative even today but to make settlement of judgment debts with the cooperation of the debtor State and by diplomatic means. The Paris Club serves precisely such an end being ‘the forum charged with restructuring unsustainable intergovernmental debt in which countries in financial difficulties request such a restructuring with creditor governments’.9 Its first meeting in 1956 was with Argentina, which, with other Latin American countries, was experiencing a further financial crisis. ‘Characteristic features of Paris Club restructurings are a case-by-case approach, the operation by consensus, and comparability of treatment. The last principle requires the debtor State to seek a restructuring on comparable terms for all other creditors.’10 Even where the property of the foreign State is located within the forum State and hence where the forum State courts’ judgments may be given effect, certain constraints on enforcement still operate. These obstacles based on political expediency have become the justification for a legal plea of immunity from execution that avoids placing national courts in conflict with the foreign State; and leaves to diplomatic means the satisfaction of judgments obtained in national courts.11 In addition in some countries the execution of judgments is supervised by the executive and not the courts and this has permitted retention, as in the case of the unexecuted judgment of the Greek court in the Voiotia/Distomo case, by the government of control over the manner in which enforcement against a foreign State takes place.12
Under the first Absolute Model, as with the immunity from adjudication, immunity from enforcement was absolute in respect of all State property. With the adoption of the restrictive doctrine in the Second Restrictive Model in respect of immunity from adjudication a modification of the enforcement immunity took place with regard to allowing measures of constraint in respect of
(1) State property in commercial use.
As shown by State practice summarized below, by the 1990s, there was a general consensus among the major jurisdictions that immunity from enforcement in respect of all State property no longer applied. The absolute rule was replaced by a rule relating to immunity in two parts: whilst immunity from enforcement remained absolute for property of the foreign State in use for public purposes, State practice recognized that some State property might be subject to enforcement but varied as to the extent required of its use for a non governmental purpose and connection with a non-immune subject matter or commercial entity. Immunity from enforcement, continues in State practice, as confirmed by UNCSI Part IV of the UN Convention, as a separate and distinct rule from immunity of adjudication and one subject to its own rules which ‘go further than those governing jurisdictional immunity.’ (Jurisdictional Immunities, para 131.)
More recently further modifications are to be observed:
(2) by the application of different rules of enforcement to the pre- and post judgment stages of the proceedings;
(3) merger of enforcement with adjudication where there is a jurisdictional link of State property to the forum territory;
(4) express State consent to adjudication by arbitration under institutional rules of an arbitration centre.
State practice regarding the general rule from enforcement and as it supports these four modifications is now set out.
The recognition and observance of a general rule of immunity for State property from execution by means of arrest, sale and other measures of constraint is well established in State practice. Early draft proposals for the immunity of the State itself, such as those of the Institut de Droit International and the Harvard Project, set out first a general rule of immunity from enforcement of State property followed, if at all, by restricted exceptions.
The USSR, while adhering to an absolute doctrine of immunity, solved the issue of execution by entering into bilateral agreements under which it expressly consented to valid final judgments being executed against the property of its trade delegation, or more rarely against such property of the Soviet State itself as was not required for the exercise of its ‘political or diplomatic rights’ in conformity with international law.
A first modification of the absolute rule of enforcement was provided by the 1926 Brussels Convention on the Immunity of State owned Ships with Article 1 applying to State-owned or operated ships engaged in maritime commercial operation the same rules of liability and the same obligations as those applicable to privately owned ships; by Article 2 Warships and State ships owned or operated exclusively for governmental and non-commercial purposes were excluded. Proposals for limited enforcement against property connected with a commercial activity of the State were put forward by the Institut de Droit International in its 1891 Hamburg Resolution and by the Harvard Research in 1932. The Institut proposed to allow execution, subject to adequate notice, in respect of property expressly given as security for payment of a debt; the Harvard Research provided limited enforcement against the property of a State, not used for diplomatic or consular purposes, when the property to be enforced was immovable, or used in connection with the conduct of a business enterprise for which an exception to immunity was proposed.
Early decisions allowing attachment of property in use for commercial purposes to satisfy judgments in respect of commercial or private law activities were given by courts in Italy and Greece; but their governments retained political control and enacted legislation requiring the approval of a minister of the government to such forcible measures, and its application solely to those States certified as according reciprocity. In effect, although the foreign State’s immunity from execution was accepted as not absolute, the occasion for its exercise and the property to be attached were to be for the political determination of the executive.13
An early case in Belgium made headlines by ordering forcible measures against a foreign State’s property. In Socobelge Greece had long-standing debts, incurred in the construction of a railway, which had been confirmed by arbitral award and reference to the Permanent Court of International Justice; the Belgian civil court declared valid the attachment of funds deposited in a bank in Belgium territory in the name of Greece to satisfy those judgment debts; but the case was eventually settled, given that some of the funds to be attached related to US Marshall postwar aid.14 The Hague Court of Appeal drew a similar distinction in a 1968 case when granting attachment of assets of a trading State entity located in the forum provided they were not dedicated to the public service of the State, in respect of obligations relating to an agreement for exploitation of petroleum resources of a country made in private form by the State entity which enjoyed separate legal personality. The court declared that where sums due to the State entity were garnisheed, the fact that by direction of the State entity they might be paid direct to the State did not render such sums as designated to public service.15
So long as common law countries still observed absolute immunity from jurisdiction, immunity from execution followed as a matter of course; it was not until the legislation of the 1970s introduced a restrictive doctrine that change took place. The 1972 ECSI prohibited measures of execution against the property of a Contracting State without its express consent in writing, Article 23, but allowed an optional regime pursuant to the procedure in Articles 24 to 26, where a declaration had been lodged by both foreign and forum State parties, in respect of attachment of property in use or intended use for commercial purposes. National legislation enacted by individual States on State immunity in the 1970s formulated immunity from enforcement as a separate regime with its own different requirements from those of the regime of immunity from adjudication. Thus the 1976 US FSIA, section 1609 stated a separate rule of immunity from enforcement relating to State property: ‘Subject to existing international agreements to which the US is party … the property of a foreign State in the United States shall be immune except as provided in ss 1610 and 1611’. And in 1978 the UK SIA set out under ‘other procedural privileges’ in section 13, a general bar on ‘relief’ or ‘any process of enforcement’ in subsection (2) in respect of ‘the property of a State’ followed by exceptions for written consent (3) and for property ‘in uses or intended use for commercial purposes’ (4).
The international rule was reformulated by the German Constitutional Court in The Philippine Embassy case, where a judgment for the unpaid rent of an office leased by the Philippine Embassy was outstanding and attachment was sought on the account of the diplomatic mission in Bonn. After an extensive review of court decisions, treaty practice, the legislation of common law countries, resolutions of learned institutions, and legal writing, the court declared that:
the general rules of international law imposed no outright prohibition on execution by the State of the forum against a foreign State but they do impose certain limits … There is an established general custom among States, backed by legal consensus, whereby the State of the forum is prohibited from levying execution, under judicial writs against a foreign State, on property of the foreign State which is situated or present in the State of the forum and is used for sovereign purposes except with the latter’s consent.16
This reformulation that a State enjoyed immunity from execution for property in use for sovereign public purposes but no general immunity from execution for property in use for commercial purposes has been accepted by both the Spanish17 and the Italian Constitutional Courts.18
State practice, however, continued very varied: the Spanish Constitutional Court, reviewing the position in 1992, stated ‘the degree to which property held by a foreign State in the State of the forum … is treated as not immune from execution varies from refusal to recognize even the slightest exception to immunity, on the one hand, to notably advanced positions which require that such property be unequivocally allocated to activities jure imperii on the other hand’.19
The practice of French courts until 1984 was hesitant and inconsistent. In Clerget v Banque Commerciale Pour l’Europe du Nord the Court of Appeal in Paris held, in refusing to allow attachment of a bank account of the Vietnam State for unpaid salary of the manager of a State enterprise, that ‘Immunity from execution is in no way connected with immunity from jurisdiction, the absolute principle stated above [of immunity from execution] must be applied, even in the case of an act of a private law character’. The Cour de Cassation confirmed this ruling, stating that evidence of the origin and destination of the property was required to permit any different treatment.20 Yet in Englander, where a State bank used funds indifferently for the settlement of commercial debts and the expenses of its diplomatic services, the Cour de Cassation concluded that the lower court was wrong to refuse execution on the mere chance of ‘a risk originating in the impossibility of discriminating between the funds, a part of which only, as the court found, belongs to the State’.21 Reduction of the absolute rule was achieved by an incremental process; the absolute rule continued to be applied to diplomatic property or property clearly in public use, but where such use was not immediately apparent the court was prepared to order an inquiry as to the extent of property of the foreign State located in France and as to its origin and destination. In 1984 the Cour de Cassation introduced a new and more liberal exception in favour of the private party to the general rule of immunity; it declared that the immunity from execution of the State might be set aside where the property seized ‘was connected to a private law economic or commercial activity which was the subject-matter of the proceedings before the court’.22 This second requirement of a connection with a non-immune commercial transaction bore a considerable similarity to the requirement in the US FSIA that execution on the property of the State (but not applying to the property of State agencies and instrumentalities) in commercial use was only permitted where such property was in use for the commercial activity on which the claim was based. As discussed below a further modification to the general rule of immunity from enforcement now seems recognized in French courts in respect of express consent given by the State to arbitration proceedings. Whereas in Eurodif, apart from an exception as regards conservatory measures for State property in use for commercial purposes which was connected to a non-immune commercial transaction for which immunity had been waived, French courts necessitated a renunciation of the benefit of immunity to be manifest, expressed in an unequivocal manner and not to be implied from a mere submission to arbitration, in Creighton v Qatar the Cour de Cassation outlined a second exception, as discussed below, that an undertaking to arbitrate under institutional rules (requiring voluntary compliance with the resulting award) is sufficient to constitute a waiver for the purposes of immunity from execution.
By the 1990s, there seems to have been a general consensus among the major jurisdictions that immunity from enforcement in respect of all State property no longer applied. It was replaced by a rule relating to immunity in two parts: whilst immunity from enforcement remained absolute for property of the foreign State in use for public purposes, State practice recognized that some State property might be subject to enforcement but varied as to the extent required of its use for a non-governmental purpose and connection with a non-immune subject matter or commercial entity. The 2004 UN Convention, however, continues to state the general rule relating to State property as one of immunity subject to consent and two defined exceptions in respect of post judgment.
The difficulty of distinguishing proceedings relating to enforcement from those relating to adjudication provides support for the immunities of adjudication and enforcement forming one single regime as discussed below under modifications (3) and (4). Immunity from execution of the property of a foreign State concerns immunity from the imposition without its consent of forcible measures against the person of the State (see below text at fn 58) or against the property of a foreign State by the judicial or administrative authorities of another State. Such measures directed against the property of the State or its agencies may be by way of orders such as arrest, attachment, Mareva order, saisie-conservatoire, or saisie-arrêt. The variety of coercive measures under different systems of municipal law and substantive differences as to the incidents of ownership, particularly of intangibles such as bank accounts, complicates the whole subject of immunity of State property from execution. Thus, the conditions required to be satisfied prior to the ordering of coercive measures and the nature of the enforcement which they impose vary according to the particular measure and the legal system under which it is imposed. Much State practice draws a distinction between execution in satisfaction of a judgment and interim orders for seizure or attachment made prior to adjudication of the substantive claim. As for Member States of the ECSI, such attachment of property in commercial use is limited to an optional regime relating to post-judgment or arbitral award; both the US and the UK Acts permit pre-judgment attachment where the State has expressly waived immunity from execution but, in allowing a limited exception for attachment in respect of State property in commercial use, restrict the court’s jurisdiction to orders made in satisfaction of a judgment given against the State. (As to US law see Carter and Fellas, International Commercial Arbitration in New York (2010), Ch 13.)
The ground of the objection to coercive measures against State property at the pre-judgment stage lies in the timing of interim measures; at the time when pre-judgment attachment is sought, no decision on immunity has been reached so the jurisdiction remains in issue. However, when the subject-matter of the claim and the property sought to be attached appear to be connected to a commercial activity, pre-judgment attachment is justified as a form of conservatory order preserving the subject-matter of the proceeding until judgment is given; French and Italian courts allow pre-judgment attachment23 (Germany solely with regard to the property of a State-owned trading enterprise with a separate legal personality)24 but the remedies available in their courts are generally confined in the extent to which they immobilize a foreign State’s assets located in the forum State, being in the nature of conservatory measures: saisie conservatoire rather than saisie arrêt.25 Pre-judgment attachment has been allowed in Germany, but in respect of the property of a State-owned trading enterprise with a separate legal personality, not of the State itself.26
Applications made at the interlocutory stage consequently have been adopted as a line of attack by courts to whittle away the immunity from execution. Although not generally adopted in the UK, SIA, section 10 allows such a link between jurisdiction and execution where the pre-judgment attachment in rem of a ship is allowed, provided ship(s) and cargo are in use or intended use for a commercial purpose.27
The Swiss courts early took an independent line on the basis that once exceptions from adjudication to the jurisdiction of a national court based on the absolute rule were permitted by the restrictive doctrine it followed that any such judgment rendered would take effect in national law. The Swiss Federal Tribunal explained this reasoning as follows:
As soon as one admits that in certain cases a foreign State may be a party before Swiss courts to an action designed to determine the rights and obligations under a legal relationship in which it had become concerned, one must admit also that a foreign State may in Switzerland be subjected to measures intended to ensure the forced execution of a judgment against it. If that were not so, the judgment would lack its most essential attribute, namely that it will be executed even against the will of the party against which it is rendered … there is thus no reason to modify the case-law of the Federal Tribunal insofar as it treats immunity from jurisdiction and immunity from execution on a similar footing.28
As Reinisch, citing Julius Bar and République Arabe d’Egypte v Cinetel,29 writes:
The Federal Tribunal has consistently held that immunity from execution should be seen as a consequence of jurisdictional immunity. Accordingly, it also tended to deny immunity from enforcement measures with regard to foreign State property. The major policy argument in favour of such a further restriction of enforcement immunity seems to have been the fact that a denial of jurisdiction on the enforcement level would render the adjudicatory jurisdiction, granted under a restrictive immunity concept, meaningless.30
Consequently provided that both the activity and the State property to be attached had close connections with the Swiss forum and that the property was not in public use the Swiss court would permit enforcement against State property. Such a jurisdictional link was provided as stated in Julius Bar where the State property ‘either has its origin in Switzerland or falls to be performed in Switzerland, or the debtor must have at least taken certain steps which make Switzerland a place of performance with State property’. Thus in United Arab Republic v Mrs X attachment of State property was awarded as a provisional measure to secure rent due on a villa in Vienna under a lease which contained a choice-of-forum clause in favour of Swiss courts and for payment into a Swiss bank account.31 By these decisions the Swiss courts effectively denied that execution enjoyed a separate regime of immunity from that which applied to jurisdiction. They asserted ‘the overall unity of substantive law’, and that ‘a judgment imports enforceability’.
Yet throughout, the Swiss courts acknowledged a general rule that property of the State in use for State purposes enjoyed immunity from enforcement, for instance being careful to preserve immunity from enforcement of property of diplomatic or consular missions; ‘ce qui vaut pour l’immunité de juridiction vaut en principe aussi pour l’immunité d’exécution, la seconde n’étant qu’une simple conséquence de la première, sous la seule réserve que les mesures d’exécution ne concernent pas des biens destinés à l’accomplissement d’actes de souveraineté.’32 Whilst then a jurisdictional connection to the forum State territory of the State property to be attached as well as the proceedings for which adjudication is claimed may remove immunity from enforcement as well as from adjudication, this treatment of the two immunities as a single regime represents only an exception to the general rule in Swiss law of treating the two regimes as distinct.
Some support for an exception to immunity from enforcement as a distinct regime may be found, as Reinisch notes, in the practice of other European national courts which have allowed enforcement where the foreign State has by its acts established a closer link with the forum territory.33
The recent change of practice in the French courts might also be classified as an argument against the separate nature of the two regimes relating to adjudication of proceedings and enforcement against State property. The decision in Creighton v Qatar of the French Cour de Cassation has provided support for a more liberal removal of immunity from enforcement in respect of certain awards resulting from a State’s consent to settlement of a dispute by arbitration proceedings. In that decision after termination by the Ministry of Municipal Affairs and Agriculture of the State of Qatar of a contract to build a women’s hospital in Doha, Creighton Ltd (incorporated in the Cayman Islands with offices in the US), pursuant to an arbitration clause, obtained final arbitration awards against the Qatari Ministry. In February 1996, Creighton ‘par deux saisies-attributions’ seized monies, and ‘…par deux conservatoires d’associés’ attached stockholder rights and securities held in France by Qatar National Bank and Banque de France in the name of the Qatar Ministry of Municipal Affairs and Agriculture.
On the application of Qatar to the Paris Tribunal de Grande Instance the seizure of assets was ordered to be lifted by that Tribunal and confirmed by the Paris Court of Appeal; however, on further appeal the Cour de Cassation overruled the lower courts’ orders. Contrary to the Court of Appeal’s acceptance that an arbitration clause cannot assume waiver of immunity from execution which is separate from immunity from jurisdiction ‘ne peut faire présumer la renonciation à cette immunité, qui est distincte de l’immunité de jurisdiction …’, the Cour de Cassation construed the undertaking of the State of Qatar consenting to arbitration 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. Article 24 of the (then in force) ICC Rules of Arbitration provides in its second paragraph that ‘by submitting the dispute to arbitration by the International Chamber of Commerce, the parties shall be deemed to have undertaken to carry out the resulting award without delay and to have waived their right to any form of appeal in so far as such waiver can validly be made’.34
The Court held:
Qu’en statuant ainsi, alors que l’engagement pris par l’État signataire de la clause d’arbitrage d’exécuter la sentence dans les termes du règlement d’arbitrage de La Chambre de commerce international impliquait renonciation de cet Etat à l’immunité d’éxecution, la cour d’appel a violé les principes…. Casse et annulle …l’arret rendu…par la cour d’appel …35
This ruling has been questioned as constituting a valid waiver of the immunity from enforcement and the taking of coercive measures against State property. Some qualification of its scope has been suggested that, whilst arguably, the incorporation of the ICC rules may bar further recourse within the arbitration process, the extent to which such a ‘deemed waiver’ is recognized and given effect in different jurisdictions is, however, a matter to be determined in accordance with the applicable law.36 Though welcomed as honouring the principle of good faith and strengthening resort to arbitration, it has been criticized as contrary to the earlier ruling of the Court of Cassation in Eurodif, and as undermining the requirement that waiver of immunity be express and certain. It is also compared adversely to US law which requires a waiver in express terms and to arbitration under ICSID rules which by Article 55 expressly distinguishes the State’s immunity from execution from a State’s commitment to recognize the binding nature of the award and to carry it out.37
In 2012 the ICJ declared itself in support of the rules of immunity from enforcement and of adjudication as constituting two regimes stating that ‘the rules of customary international law governing immunity from enforcement are distinct from and go further than those governing jurisdictional immunity, and must be separately applied’ (para.131). In discussing Germany’s immunity from measures of constraint imposed by Italian courts as a consequence of a Greek judgment ordering Germany to pay compensation, the International Court observed that the immunity from enforcement in regard to their property situated on foreign territory goes further than the jurisdictional immunity enjoyed by States, ‘that it was distinct and must be applied separately regardless of whether at the adjudication stage the foreign State enjoyed immunity’ (paras 113, 114).
State practice in respect of all these three Modifications of the separate rule of immunity from enforcment may herald a growing erosion of the strict rule of no enforcement against State property and in consequence some lessening of the distinction between the two immunities of adjudication and enforcement. However, as both the countries concerned in weakening the distinction, Switzerland and France, have now ratified the 2004 UN Convention without any reservation or statement relating to Part IV’s separate immunity from enforcement as set out in Articles 18 and 19, and the ICJ’s recent support for two separate regimes, it must be concluded at the present time that a distinct and separate regime of the rules relating to immunity from enforcement continue to be recognised from the rules relating to immunity from adjudication.
ILC Commentary (3) Part IV is of special significance in that it relates to a second phase of the proceedings in cases of measures of execution, as well as covering interlocutory measures or pre-trial or prejudgement measures of attachment, or seizure of property ad fundandam jurisdictionem. Part IV provides in general, but subject to certain limitations, for the immunity of a State from all such measures of constraint in respect of the use of its property in connection with proceedings before a court of another State (paragraph 2 to article 18). If it is admitted that no sovereign State can exercise its sovereign power over another equally sovereign State (par in parem imperium non habet), it follows a fortiori that no measures of constraint by way of execution or coercion can be exercised by the authorities of one State against another State and its property. Such a possibility does not exist even in international litigation, whether by judicial settlement or arbitration.
UNCSI Part IV contains four articles: Articles 18 and 19 both contain a prohibition against measures of constraint followed in both by two exceptions where (a) the State has expressly consented to the taking of measures of constraint, or (b) has ‘allocated or earmarked the property for the satisfaction of the claim which is the object of the proceeding’; in addition in Article 19 alone, a further third exception (c) to the taking of such measures is set out.
Article 20 follows declaring that the consent given in Article 18 to pre-judgment measures and in Article 19 to post-judgment measures is distinct from the consent required for the adjudication of a claim in Part I Article 7, and that such consent to adjudication required in Article 7 shall not imply consent to the taking of measures of constraint under Article 18 or Article 19. The final article of Part IV details five specific categories of the property of a State—broadly summarized as State property in diplomatic use; in use for military functions; property of the State’s central bank; forming part of its cultural heritage or archives; forming part of an exhibition of objects of a scientific, cultural or historical interest. Paragraph 2 of Article 21 states that its paragraph 1 is without prejudice to Article 18 and Article 19, subparagraphs (a) and (b).
The ILC showed no great enthusiasm to tackle the core problem of execution of judgments given by national courts against States, it being some six years after his appointment that the first Special Rapporteur addressed the topic in his Seventh 1985 Report. Although recognizing from previous discussions that execution would be a divisive issue, Sucharitkul knew that to postpone the whole matter of enforcement of judgments to a later date would have been unacceptable to those countries where some degree of enforcement against State property was already recognized. Throughout the discussions, both in the ILC and the Working Group of the UNGA Sixth Committee, there was unresolved conflict between supporters of no execution and those favouring restricted immunity, in particular as regards the categories of property, diplomatic, military, central bank, and cultural, identified initially by the Rapporteur as ‘untouchable’ State property and declared to be immune ‘regardless of consent or waiver’(see further under Article 21). In effect those opposing execution intended the categories of immune property to cover all available State property and thus to prevent all execution. The case was argued that States could neither commit themselves by consent as to what property should satisfy a judgment, nor be prevented from revoking such consent because constitutionally it was necessary to obtain legislative approval to financial appropriations. This contradiction in the Draft was highlighted in the ensuing debate; the drafting Committee provided a solution by allowing execution against the listed categories but only where the particular immune property had been specifically allocated or the State had specifically consented to measures of constraint against that particular category of property.38
Although in the 1985 Seventh Report the arguments were set out whether immunity of execution was to be treated as ancillary and automatic to immunity from adjudication or whether it constituted a separate regime, the First Special Rapporteur proceeded in his draft on the assumption that immunity from execution was the general rule proposing four exceptions to this rule: express consent to execution, specific allocation to satisfy a judgment, use or intended use for commercial purposes, and execution against property relating to a claim by way of succession, gift, or bona vacantia.39 After debate and revision by the drafting committee these exceptions were reduced to two: specific allocation to satisfy a judgment being retained and the exception for property in commercial use which was narrowed by a requirement of ‘a connection with the object of the claim, or with the agency or instrumentality against which the proceeding was directed’ (see further under ‘purpose of the use or intended use of the property’, also the definition of property whether to include the control or interest of the State, and the appropriate law to determine issues of property).
The debates in the Commission raised issues that in the subsequent search to reach agreement were not covered by any express provision in the text, such as jurisdictional links of the property with the forum State, issues where enforcement is sought in a third State not being the State in which judgment or an award had been given against the State, and the varied scope of measures of execution available in different countries.
The 1986 Draft adopted on the first reading contained three articles: Article 21 (State immunity from measures of constraint with two exceptions); Article 22 (consent to measures of constraint); and Article 23 (specific categories of property declared immune).40 On taking over in 1988 the new Special Rapporteur, Motoo Ogiso, delivered First and Second Reports and after comments made by governments, in his Third Report, recognizing the continuing opposition of those against any exception to the immunity from execution of State property, proposed two alternatives as to immunity from enforcement.41 The first was as in the 1986 text. The second endeavoured to achieve ‘a carefully limited execution rather than its total prohibition’. Accordingly, this second alternative was more clearly defined and simplified to apply solely to property of the State located within the forum State and omitting any reference to control or interest. The main addition in this second alternative was a new article, Article 23, denying immunity to a State in respect of segregated property entrusted to a State enterprise. This was necessitated by the Commission’s acceptance in the new Article 11 bis in respect of the exception for commercial contracts that a State enterprise was not to be included within the definition of a State as an agency or instrumentality. Members of the Commission were not convinced that the new article was needed; a State enterprise established for commercial purposes, not being a State as defined in Article 2, was not entitled to perform acts pursuant to the governmental authority of the State and hence fell outside the topic of jurisdictional immunities.42
The ILC Draft as submitted to UN in 1991 contained two articles: the first one, save that it made no distinction as to pre- or post-judgment measures, was identical to the final Article 19 relating to post-judgment measures now to be found in the 2004 UN Convention; in addition its wording up to the end of the exception (b) was identical to that set out in the final Article 18 in the 2004 Convention which is now restricted to pre-judgment measures. Its third paragraph 1(c) provided an earlier version of paragraph (c) which now appears in UNCSI’s Article 19 relating solely to post-judgment measures. The second article in the 1991 Draft, identical to the final text of UNCSI Article 21, listed the categories of property to be considered as immune. The two additional articles now present in UNCSI—Article 20 providing consent to jurisdiction should not constitute consent to execution, and Article 18 relating to pre-judgment measures of constraint—were absent from the 1991 Draft. The 1991 version of the wording in the third exception (c) read:
Article 18.1. No measure of constraint, such as attachment, arrest or execution, against property of a State may be taken in connection with a proceeding before a court of another State unless and except to the extent that:
… (c) the property is specifically in use or intended for the use by the other State for other than government non-commercial purposes and is in the territory of the State of the forum and has a connection with the claim which is the object of the proceeding or with the agency or instrumentality against which the proceeding was directed.
Discussions in the Working Group under the Chairmanship of Mr Calero-Rodrigues, set up by UNGA Sixth Committee, took place in 1992 and 1993 and were followed by informal consultations in 1994. As had been the case with the members of the Commission, the representatives of governments divided into two groups: those who remained of the view that immunity from measures of constraint was a principle of international law observed in the practice of State, and those who cited recent legislation and case-law to the contrary permitting limited execution where State property located in the forum State was shown not to be in public use. Some in this second group argued for the deletion of the requirement of a connection between the property and the claim or agency against which the claim was brought as both meaningless and difficult to prove43 whilst the former group supported it as a necessary protection where the definition of ownership was dependent on local courts and there was confusion between assets of the State and those of a state agency. The absence of any provision to deal with an under-capitalized State agency or instrumentality was a cause for concern. The second group also queried the usefulness of Article 19 with its non-exhaustive list of categories of immune property, even seeing it as dangerous in creating a negative presumption of immunity with regard to State property not there included. One constructive proposal of the Chairman was to provide a period of grace for compliance coupled with a recognition that there was an international as well as a municipal obligation to comply with a valid judgment. There was a general agreement that pre-judgment measures should be reserved for use against State agencies with independent legal personality.
In 1998 the matter was referred back to the ILC for its consideration and in its 1999 Report the Working Group of the ILC, after outlining how the issue had evolved and referring to recent case-law, made some specific recommendations. Chief among these was a conclusion that a distinction between pre-judgment and post-judgment measures might help sort out the difficulties inherent in the issue.
The Commission made the following recommendations that pre-judgment measures of constraint should only be possible in the following cases:
(a) measures on which the State has expressly consented either in advance or ad hoc;
(b) measures on property designated to satisfy the claim;
(c) measures available under internationally accepted provisions (leges specialis) such as ship arrest under the International Convention relating to the arrest of sea-going ships, Brussels, 24 February 1926;
(d) measures involved in the property of an agency enjoying separate legal personality if it is the respondent of the claim.
As regards post-judgment measures of constraint the ILC was of the view that they should only be possible in the following cases;
(a) measures on which the State has expressly consented either in advance or ad hoc;
(b) measures on designated property to satisfy the claim.
Beyond this the Working Group explored three possible alternatives which the Assembly might follow: first a period of grace to comply with a valid judgment followed by execution on property other than that listed as immune in Article 19; secondly, a similar scheme but failing compliance the claim to be brought ‘into the field of inter-State dispute settlement procedures in connection with the specific issue of execution of the claim’; and thirdly a decision not to deal with the subject because of the delicate and complex issues involved: ‘The matter would then be left to State practice on which there are different views’.44
The 2002 and 2003 texts of the 2002 Ad Hoc Committee adopted the ILC’s recommendations by dealing separately with pre-judgment and post-judgment execution, but merely omitted in respect of pre-judgment execution any attachment in respect of property in use or intended use for commercial purposes. Thus a new article was adopted dealing with pre-judgment measures of constraint with the same wording as now appears in UNCSI, Article 18. In Article 18 in the 2002 Draft relating to post-judgment measures of constraint ‘to reflect the remaining divergencies of view’,45 square brackets were placed round the additional requirement in subparagraph (c) that the property have ‘a connection with the claim that is the object of the proceeding or with the agency or instrumentality against which the proceeding was directed’. These were removed in the 2003 version which is the present form of Article 19, but supplemented by the three Understandings which now appear annexed to Article 19 in the 2004 Convention, with some delegates being in favour and others against this nexus requirement in post-judgment measures.
ILC Commentary
(2) The expression ‘measures of constraint’ has been chosen as a generic term, not a technical one in use in any particular internal law. Since measures of constraint vary considerably in the practice of States, it would be difficult, if not impossible, to find a term which covers each and every possible method or measure of constraint in all legal systems.
Article 18
State immunity from pre-judgment measures of constraint
No pre-judgment measures of constraint, such as attachment or arrest, against property of a State may be taken in connection with a proceeding before a court of another State unless and except to the extent that: …
Article 19
State immunity from post-judgment measures of constraint begins with precisely the same words.
At a late stage in 2002, on the recommendation of the ILC working party, separate articles to provide for pre-judgment and post-judgment coercive measures were introduced into the draft UN convention.46 In consequence there is no ILC Commentary relating to this distinction. Apart from the third exception introduced into post-judgment Article 19 UNCSI’s provisions for pre- and post-judgment are identical. As discussed above, both the US and the UK Acts permit pre-judgment attachment where the State has expressly waived immunity from execution47 but, in allowing a limited exception for attachment in respect of State property in commercial use, restrict the court’s jurisdiction to orders made in satisfaction of a judgment given against the State48
Clearly the situations differ. First, the mere attachment of assets located within the forum State may in some jurisdictions supply a basis for the exercise of jurisdiction. This jurisdictio ad fundandum is permitted in the conflict of law rules of some States, although others consider it exorbitant.49 The prohibition in the FSIA, section 16011(d) on pre-judgment attachment, except by waiver, was attributed in part to the US legislator’s intent to abolish exorbitant jurisdiction based on the mere presence of assets within the jurisdiction and also on political considerations to avoid disturbance of relations with other States. This second reason was also given for Lord McLuskey’s rejection of the proposals of Lords Denning and Wilberforce to allow pre-judgment attachment in the SIA’s provisions governing immunity from execution (see Chapter 7 (UK law)).
French and Italian courts have allowed pre-judgment attachment,50 but the remedies available in their courts are generally confined in the extent to which they immobilize a foreign State’s assets located in the forum State, being in the nature of conservatory measures: saisie conservatoire rather than saisie arrêt. In the case of French execution, although not in Italian, the requirement that the property be connected with the subject-matter of the proceedings narrows the scope of the property subject to execution; the conservatory order allowed in Creighton v Qatar on the basis of the consent of the State to arbitration under ICC Rules was of this type (other orders of a more permanent enforcement nature may not be so allowed).
As stated above, difficulties have arisen in ascertaining as to which stage, whether pre- or post-judgment the particular proceedings relate. It has been suggested that the request to extradite General Pinochet related to the immunity of a State representative from the coercive measure of arrest and rendition and not the question of his immunity from adjudication in respect of the commission of an international crime.51 Where a claim relates to State property in use as diplomatic premises, an order determining the issue of title to property is treated as adjudication whereas an order to vacate or relating to possession of the premises is treated as enforcement.52 In proceedings to wind up the International Tin case (ITC), the English court refused to classify winding up as a process to enforce a debt but regarded it as one rather designed by a collective process to prevent it. The better view, the court considered, would be to treat it as a new process of adjudication. This case relating to the ITC illustrates that proceedings, particularly where the court undertakes administrative tasks, as with trusts and bankruptcy, and possibly in judicial review of subordinate legislation, may contain elements of both adjudicative and enforcement jurisdiction.53
An illustration of the niceties of this distinction between adjudication and enforcement arises where the enforcement sought is not in respect of a judgment given by the court which is sought to make an order for enforcement but relates to the recognition (exequatur) of a foreign judgment given in a court of another third State. Proceedings for recognition or exequatur of a judgment given against a foreign State by a national court of a third State to enforce a judgment or an arbitration award against a foreign State have been held by both the ICJ and the English Supreme Court to relate to the adjudicative stage and not as in an order for measures of constraint to relate to the enforcement stage. The ICJ approach formulated in its Jurisdictional Immunities judgment differs from the approach of the common law as adopted by the UK Supreme Court in NML. The ICJ stated that the law applicable by the court allowing the exequatur to be taken against the foreign State’s property will be the same as that applied by the original court ruling against immunity as a bar to the acts complained of.54
In other situations, State practice would seem to vary as to the extent to which the grant of a pre-judgment injunction relates to adjudication or enforcement, as the different US, English, and French practice for conservation or freezing of assets indicates. One recent ruling, which clearly resulted in enforcement consequences arose in NML Capital Ltd v Argentina (2nd Cir) following the issue of an injunction by the New York Court, confirmed by the 2nd Circuit. After a restructuring of Argentina’s sovereign debt, to discourage ‘hold-out’ speculators from purchasing the original bonds at a much discounted value and seeking to enforce them in the court at full value, the New York district court granted the plaintiff bondholder summary judgment and enjoined Argentina from making payments on debt issued pursuant to its 2005 and 2010 restructurings without making comparable payments on the defaulted debt. The 2nd Circuit upheld that ruling construed the judgment as relating solely to the adjudicative stage:
Next, we conclude that because compliance with the Injunctions would not deprive Argentina of control over any of its property, they do not operate as attachments of foreign property prohibited by the FSIA s 1609….
The Injunctions at issue here are not barred by s 1609. They do not attach, arrest, or execute upon any property. They direct Argentina to comply with its contractual obligations not to alter the rank of its payment obligations. They affect Argentina’s property only incidentally to the extent that the order prohibits Argentina from transferring money to some bondholders and not others. The Injunctions can be complied with without the court’s ever exercising dominion over sovereign property….55
However acceptable as confined to the adjudicative stage of the proceedings this US ruling may be, it is indisputable that the subsequent order made by the Ghana Supreme Court enforcing the New York judgment for the arrest of the Argentinian warship, the Fragata Libertad, in Accra port when on a goodwill visit to Ghana, amounts to a measure of constraint contrary to a foreign State’s immunity regarding a warship (see below arrest of ships).56
Given this difficulty, particularly as regards arbitration proceedings, of distinguishing whether the proceedings relate to the adjudication or enforcement stage the issue of State immunity should be raised at the earliest opportunity whenever it is likely that an injunction of State property may be sought.57
ILC Commentary Article 18(4)
The measures of constraint mentioned in this article are not confined to execution but cover also attachment and arrest, as well as other forms of saisie, saisie-arrêt and saisie-exécution, including enforcement of arbitral award, sequestration and interim, interlocutory and all other prejudgement conservatory measures, intended sometimes merely to freeze assets in the hands of the defendant.
Immunity from execution concerns immunity from the imposition without its consent of forcible measures against the property of a foreign State by the judicial or administrative authorities of another State. The variety of coercive measures under different systems of municipal law and substantive differences as to the incidents of ownership, particularly of intangibles such as bank accounts, complicates the whole subject of immunity of State property from execution and is a major obstacle to a general codification of the law. As noted above, the conditions required to be satisfied prior to the ordering of coercive measures and the nature of the enforcement which they impose vary according to the particular measure and the legal system under which it is imposed.
UN Convention Article 24
Privileges and immunities during court proceedings
1. Any failure or refusal by a State to comply with an order of a court of another State enjoining it to perform or refrain from performing a specific act or to produce any document or disclose any other information for the purposes of a proceeding shall entail no consequences other than those which may result from such conduct in relation to the merits of the case. In particular, no fine or penalty shall be imposed on the State by reason of such failure or refusal.
2. A State shall not be required to provide any security, bond or deposit, however described, to guarantee the payment of judicial costs or expenses in any proceeding to which it is a respondent party before a court of another State.
The ILC in its 1986 Draft boldly stated that a State is not required to comply with an order by a court of another State compelling it to perform a specific act or to refrain from a specific action, but following criticism of such an invitation to openly flout a national court’s order the final text considerably modifies the approach. The Convention consequently deals with the use of forcible measures to enforce proceedings in its national courts only by stating a general rule that a State is immune from all coercive measures save as expressly provided in its provisions. Article 24(1) merely states that any failure or refusal of a State to comply with an order of a court of another State, including failure to comply with a request for discovery of documents, shall ‘entail no consequences other than those which may result from such conduct in relation to the merits of the case’. The imposition of penalties for failure to comply is prohibited; the Commentary explains, however, that procedural sanctions such as preclusion or the drawing by the court of adverse inference in consequence of failure to produce documents are not to be treated as penalties. UNCSI also provides that a State as a party to any proceeding shall not be required to provide security of costs by way of deposit. Articles 22 and 23 relating to service of process and default judgment set out at the end of this chapter also ensure that there is no rendering of a judgment against a State without notice and full opportunity for the State to appear and oppose it. While correct with regard to the State when made a defendant without its consent, the initiation of proceedings by a State as party constitutes a waiver of immunity from jurisdiction. Procedural orders for the adjudication of the claim ought surely to come within such waiver, although subsequent failure to pay costs may well come within the separate immunity from execution. Thus, as for as measures of constraint against the person of the State, an absolute rule of immunity from execution continues to prevail.58
The UK SIA, section 13(1) is to the same effect in providing an express prohibition of the imposition of any penalty by way of committal or fine in respect of any failure or refusal by the State to disclose information or produce any document.59 Section 13(2) prohibits the giving of any relief against a State by way of injunction or order for specific performance or recovery of land or other property.60
Similarly the Netherlands Supreme Court has ruled that it has no jurisdiction to declare a foreign State bankrupt:
Bankruptcy is a general seizure of the assets of a debtor and comprises his entire assets at the time of the bankruptcy petition … The nature of the bankruptcy and the consequences attached to a declaration of bankruptcy prevent the Dutch courts from having jurisdiction to take a measure of this kind in relation to a foreign power. Acceptance of this jurisdiction would imply that a trustee in bankruptcy with far-reaching powers could take over the administration and the winding up of the assets of a foreign power under the supervision of a Dutch public official. This would constitute an unacceptable infringement under international law of the sovereignty of the foreign State concerned.61
The Australian Law Reform Commission has taken an independent line: although accepting that no penalty by way of fine or committal may be ordered against any person by reason of a State’s failure to comply with an order of the court (Australian FSIA 1985, section 34), it asserts a basic principle, given effect in section 30, that if a court has jurisdiction over a case it should be able to make such orders (including interim or final orders and orders of a procedural or substantive character) as are appropriate and otherwise within its power.62
Injunctions given in the course of the proceedings relating to the adjudication of a claim may relate to the adjudicative stage, as where an arbitration tribunal makes an order relating to the conduct of the oral hearing or to conserve property pending the determination of an award. Whilst in respect of a commercial transaction there may be an exception to immunity from adjudication, at the stage of enforcement the more restricted nature of any exception may bar attachment.
Unlike the US FSIA and the ILA Draft Articles, UNCSI contains no provision as to the extent of damages recoverable. The general rule in international law is that reparation when assessed in money terms is for economic losses actually incurred63 but the award of punitive damages has been considered recently in respect of international criminal responsibility.64 The UN Convention appears to leave the matter to be determined by the applicable law once immunity is removed, with the applicable law being the municipal law of the forum State or such other municipal law as determined by the private international law rules of the forum State. FSIA, section 1606 provides that the foreign State shall be liable in the same manner and to the same extent as a private individual under like circumstances, and restricts the recovery to actual or compensatory damages; this provision, however, is stated to apply solely to the State itself or its political subdivisions (not to an agency or instrumentality of the State, against whom it would seem punitive damages may be awarded).65 The ILA Buenos Aires Revised Draft Articles on State Immunity 1994 closely followed the FSIA wording by including an article on the extent of liability of the foreign State where immunity was removed from any proceedings, but omitted the exclusion of a state agency or instrumentality. It declared that the foreign State should not be liable for punitive damages and recovery should be limited to ‘actual or compensatory damages measured by the primary loss incurred by the persons for whose benefit the suit was brought.’66
In addition to arrest and detention of physical property of the State, coercive measures of execution directed against the State as a legal person, for example a committal of a high-ranking official, or an injunction not to do an act, or an order for specific performance to do a specified act on pain of penalty if not obeyed, imply the use of actual physical force and are hence clearly impossible of execution without disrupting relations between States, even to the extent of war, and/or interference in the internal structure of the foreign State.67 The decision of the ICJ in Arrest Warrant confirms the general prohibition of coercive orders against personal representatives of the State. The ICJ held that the issue of an arrest warrant for the current Minister of Foreign Affairs of another State and its international circulation were coercive measures in violation of an international obligation of the forum State towards the foreign State, ‘in that it failed to respect the immunity of that Minister and more particularly infringed the immunity from criminal jurisdiction and the inviolability then enjoyed by him under international law’.68
The absence of any actual arrest and the qualification in the writ that ‘immunity be accorded to all State representatives welcomed as such onto the territory of Belgium (on “official visits”)’ were held by the Court not to alter its legal effect as a coercive measure. Although no action was taken by any other State and no Red Notice was issued by Interpol at the relevant time consequent on such circulation, the Court also held the international circulation of the warrant to be a further coercive measure despite the lack of any significant interference with Mr Yerodia’s diplomatic activity. The court stated:
As in the case of the warrant’s issue, its international circulation from June 2000 by the Belgian authorities, given its nature and purpose, effectively infringed Mr Yerodia’s immunity as the Congo’s incumbent Minister of Foreign Affairs and furthermore was liable to affect the Congo’s conduct of international relations. Since Mr Yerodia was called upon in that capacity to undertake travel in the performance of his duties, the mere international circulation of the warrant, even in the absence of ‘further steps’ taken by Belgium could have resulted, in particular, in his arrest while abroad.69
The coercive nature of the warrant was well explained in the Joint Separate Opinion of Judges Higgins, Kooijmans, and Buergenthal:
68. We have not found persuasive the answers offered by Belgium to a question put by Judge Koroma, as to what the purpose of the warrant was, if it was indeed so carefully formulated as to render it unenforceable.
69…. If a State issues an arrest warrant against the national of another State, that other State is entitled to treat it as such—certainly unless the issuing State draws to the attention of the national State the clauses and provisions said to vacate the warrant of all efficacy. Belgium has conceded that the purpose of the international circulation of the warrant was ‘to establish a legal basis for the arrest of Mr Yerodia … abroad and his subsequent extradition to Belgium’. An international arrest warrant, even though a Red Notice has not yet been linked, is analogous to the locking on of radar to an aircraft: it is already a statement of willingness and ability to act and as such may be perceived as a threat so to do at a moment of Belgium’s choosing. Even if the action of a third State is required, the ground has been prepared.
In Certain Questions of Mutual Assistance (Djibouti v France) (2008) the International Court ruled that a request to a visiting head of State to give evidence in criminal proceedings without, in the event of non-compliance, any threat of further legal action, although requiring an apology, does not constitute a ‘subjection … to a constraining act of authority’ and in consequence is no violation of the Head of State’s immunity (para. 16).70 In his separate opinion, para. 13, Judge Koroma considered that ‘the actions complained of involved not merely matters of courtesy, they concerned the obligation implied in the inviolability of and need to respect the honour and dignity of the Head of State and his immunity from legal process, in whatever from, which was breached when the witness summons was sent to him and this was compounded by the leaks to the press’. In his view ‘when the Court came to the conclusion that there was a violation and an apology due in the form of a remedy, this should have been reflected in the operative paragraph as a finding of the Court’.71
A further issue arose in the Arrest Warrant case by reason of the holder of immunity vacating his official post during the challenged criminal process. The continuing illegality of the warrant after the individual had ceased to hold the office of Foreign Minister divided the court; by a majority of ten to six, it ordered Belgium to cancel the warrant by means of its own choosing and to inform the authorities to whom it was circulated. Judges Higgins, Kooijmans, and Buergenthal, along with Judges Oda, Al-Khasawneh, and Judge ad hoc van den Wyngaert, dissented on the basis that immunity from criminal jurisdiction of a national court relating to crimes against humanity ceased to bar the individual from prosecution by a national court once he had vacated the office of Foreign Minister.
The decision in the Arrest Warrant case left uncertain the precise demarcation line between the steps a country may lawfully take in investigation of atrocities committed in another country. One view, not fully accepted by the ILC was advanced by Mr Kolodkin, Special Rapporteur on Immunity of State officials from foreign criminal proceedings, in his Preliminary Report:
51. Criminal prosecution includes a substantial pre-trial phase…The actions of the police and other law enforcement agencies in the preliminary investigation, such as drafting reports on the inspection of the crime scene, collection of material evidence, interrogation of witnesses, institution of criminal proceedings and so on, do not require, or at least in some countries, may not require judicial proceedings. Such actions may affect a foreign official. Accordingly, the exercise of jurisdiction may already raise the question of immunity in this pre-trial phase.
He maintained that ‘…in these situations, although legally this concerns criminal prosecution of physical persons, it essentially concerns the exercise of sovereign prerogatives of one State in relation to another (paragraph 53).
In the Arrest Warrant Joint Separate Opinion Judges Higgins, Koijmanns, and Buergenthal expressed a different view: ‘No exercise of criminal jurisdiction may occur which fails to respect the inviolability or infringes the immunities of the person concerned…. but [we] will say at this juncture that commencing an investigation on the basis of which an arrest warrant may later be issued does not violate those principles. The function served by the international law of immunities does not require that States fail to keep themselves informed’ (paragraph 59).
Property of a State
Article 19 (b) ‘property for the satisfaction of the claim’
Article 19(c) ‘property that has a connection with the entity against which the proceeding was directed’
In construing the phrases relating to ‘property of the State’ in Articles 18 and 19 a number of issues arise in respect of the qualifications in Article 19(b) and (c):
(1) the proprietary interest of the State covered by the measures of constraint in Part IV particularly with regard to ‘property that has a connection with…’;
(2) the extent to which the second and third exceptions allowing enforcement apply the same definition of State property; and
(3) the inclusion within the purpose other than ‘governmental non-commercial’ of State property for common public non-profit making purposes, eg cultural or educational purposes as with regard to the Villa Vigoni. Any application of Part IV must also be compatible with the law set out in other parts of the UN Convention;
(4) the position of State entities with regard to these matters.
As to the first issue the Understanding to Article 19, the words ‘property that has a connection with the entity’ in sub-paragraph (c) suggests that the word ‘property’ on its own as used in UNCSI is to be restricted to the State having a title, proprietary or possessory, in the property and not to other ‘right or interests’ (as additionally referred to in UNCSI Articles 6 and 13 relating to immunity from adjudication).72.
As regards the first issue, the UK SIA employs the same term ‘property of the State’ in its provisions relating to immunity from execution (sections 13 and 14). In a case relating to the immunity of State property held by a private corporation in the name of the State’s central bank, an English court had to address the application of these sections where both the State and its central bank had interests in the assets. Applying previous case-law Aikens J stated: ‘in my view, “property” will include all real and personal property and will embrace any right or interest, legal, equitable, or contractual in assets that might be held by a State or any “emanation of the State” or central bank or other monetary authority that comes within sections 13 and 14 of the Act’.73 A lien, though privately imposed, was classified as property of the State so as to come within the FSIA provision relating to immunity from execution.74
The second issue concerns the nature of and the extent of the qualifying phrases in the second exception and third exception removing the bar on measures of constraint. Articles 18 and 19 both restrict enforcement to ‘property in connection with a proceeding before the court of another State’; and, in respect of the second exception in (b), allowing allocation, the State property is to be ‘for the satisfaction of the claim which is the object of that proceeding’. The third Article 19 Exception, adds the words ‘the entity against which the property was directed’ in allowing enforcement ‘against property that has a connection with the entity’. Both may be read as enlarging the allocation or enforcement in respect of some less specific right or interest held by such an entity which is ‘the object of the [particular] proceeding’ property or has a ‘connection with the entity against which the [particular] proceeding was directed’. If this reading is correct it may be intended as a tentative and somewhat elusive enlargement of the relevant exceptions to permit the enforcing court to have regard to ‘the object of the proceeding’ or to ‘a connection with an entity a party against which the proceedings is directed’.75
The third issue concerns the inclusion as acta jure imperii of property used for non-governmental educational or cultural acts rather than including them within the non-immune commercial activities. The recent decision of the ICJ in the Jurisdictional Immunities case that a building, the Villa Vigoni, was being used as ‘the seat of a cultural centre to promote cultural exchanges between Germany and Italy’, and ‘hence for governmental purposes that are entirely non commercial’ (para 119) hence non- attachable illustrates this issue.76 This issue also takes account of the differences in wording in the two exceptions with no express restriction solely to property in ‘commercial’ use in the allocation exception; whereas the third exception is restricted to property ‘specifically in use or intended for use for other than government non-commercial purposes’ (these words of themselves are capable of varied interpretation including the meaning of the phrase ‘government non-commercial purposes’ (discussed in Chapter 12 ‘The Concept of Commerciality’). The introductory words of Article 18 limiting the property available for allocation to that ‘taken in connection with a proceeding’, may however confine the removal of immunity in both exceptions to property solely in commercial use. In the same way the limitation of the FSIA’s requirement to a connection with the commercial activity upon which the claim was based will usually mean that only State property specifically allocated or earmarked for commercial use will satisfy it.77
A final fourth issue concerns the reference to ‘an entity’ which broadens the third exception to permit attachment of assets owned by (or possibly having a more tenuous link with) a State entity, but only where such an entity is a party to a proceeding with which the property is connected. The final Understanding with respect to Article 19 is relevant here and whilst seeking to exclude any overall application of the UN Convention to State entities seeks at the same time to allow the exception to accommodate the Russian support’s for ‘segregated State property’. The reader is referred to the discussion in Chapter 10 on definition regarding ‘piercing the corporate veil’.
Some support for the intention to strictly confine the applicability of the third exception to an entity is to be found in the ILC and Sixth Committee Working Party discussions and also in current State practice.
Both in civil and common law courts, State agencies, other than central banks whose structure, separate legal personality, and capacity to sue and be sued establish their operation independently of the State which established them, are increasingly subjected to the same treatment as private parties with regard to their conduct of commercial business, as regards immunity from both jurisdiction and execution.78 Generally, provided the commitment in respect of property owned or controlled by a State agency is given in a common commercial form in the course of the usual non-immune commercial business of the agency, State practice supports execution in the same way as they would in respect of the property of a private party. Thus in Sonatrach v Midgeon, in a claim for unpaid salary by a French engineer against the Algerian State oil company, the French Cour de Cassation distinguished the conditions for execution in respect of property of a State agency from those applying to State property.79 It stated:
The assets of a foreign State are, in principle, not subject to seizure, subject to exceptions in particular where they have been allocated for an economic or commercial activity under private law which is the origin of the title of the attaching debtor. On the other hand, the assets of public entities, distinct from the foreign State, whether or not enjoying legal personality, which are part of a group of assets (patrimoine) which have been dedicated to activities in the private law sector, may be seized by all creditors of the public entity.80
The English law supports this ruling by making a firm distinction between the State and its organs and separate entities of the State which are not departments of the State and have the capacity to sue and be sued. See Chapter 7.
The US FSIA in its unamended form prior to the enactment of the terrorist exception is stricter, limiting all recourse against a State agency or instrumentality to attachment of property used for commercial activity. Unlike execution against a State, a State agency may be subject to execution after judgment has been obtained in respect of property in use for its commercial activity where there has been waiver or where the claim relates to a non-immune activity ‘irrespective of whether the property is or was used for the activity upon which the claim was based’ (section 1610(b)).81 The restriction to property in commercial use may not be particularly significant if its business and property are normally confined to commercial purposes.
As to the ‘purpose’ of the use of State property as the criterion in determining the exceptions to a State’s immunity from enforcement’, see below under ‘the use or intended use of State property for the purposes of…’.
The general prohibition of coercive measures against the property of the State in UNCSI, Articles 18 and 19 makes no reference to its location;82 a limitation to State property ‘in the territory of the State of the forum’ in earlier drafts only survives in the exception in Article 19(c) where such measures are permitted against property in use for other than government non-commercial use. The UN Convention’s omission of a specification of the location of the State property to be attached may allow enforcement where the State consents or earmarks State property even though it is located outside the forum State.
By reason of the general immunity of property of a foreign State from measures of constraint, the burden of proof that the property is in use or intended use for a commercial purpose rests with the claimant. It has been held that no reliance on the duty in the Vienna Convention on Diplomatic Relations (VCDR), Article 41 to respect the laws of the receiving State can be construed as imposing any duty of collaboration on the foreign State or the mission to produce accounts or any explanation as to the intended uses of any property sought to be attached. Because of the difficulties of determination of use and potential for abuse if enquiry is allowed international law makes the area of protection enjoyed by the foreign State in respect of its property very wide.
In English law a certificate of the ambassador of the foreign State that any State property is not in use or intended use for commercial purposes is not conclusive, but only constitutes ‘sufficient evidence of that fact, unless the contrary is proved’ (SIA, section 13(5)). Cross-examination might elucidate facts about the expenses of the diplomatic mission and the portion of the account used for that purpose; but it is generally not available because a diplomatic agent is not obliged to give evidence (VCDR, Article 31(20)). Consequently, there is a presumption that the property of the State is in use or intended use for sovereign purposes, unless as Alcom establishes, there is proof of a specific allocation for a commercial purpose.
To avoid a presumption that all funds were in sovereign use or alternatively implied waiver on the part of the foreign State, the Australian FSIA adopts a compromise regime: commercial property subject to execution was defined as ‘property, other than diplomatic or military property, that is in use by the foreign State concerned substantially for commercial purposes’; property ‘apparently vacant or not in use’ was to be taken as ‘being used for commercial purposes unless the court was satisfied that it had been set aside otherwise than for commercial purposes’ (section 32(3)(a) and (b)); and diplomatic property was defined as ‘property that, at the relevant time, is in use predominantly for the purpose of establishing or maintaining a diplomatic or consular mission, or a visiting mission of a foreign State to Australia’ (section 3(2)).
As stated at the beginning of this chapter, contrary to the ‘nature of the activity’ test employed to determine immunity from adjudication, the extent of the immunity from enforcement in respect of State property is one of purpose ‘in use or intended use for the purposes of…’. Account has to be taken by a forum State court when applying this ‘purpose’ criterion to order measures of constraint against the property of a foreign State of the differing nature of State property—immovable/movable, tangible/intangible or artificial assets, such as bank entries, patents, trademarks, copyrights, goodwill, and brand recognition.
The forum State court exercises jurisdiction over Immovables owned or in the possession of a foreign State, such a land or buildings, located in the forum State territory on the basis of lex situs, subject to the ‘special consideration necessitated by diplomatic intercourse’. As this issue mainly arises in respect of use, particularly where part is used for non sovereign purposes, of premises owned and used by the foreign State for the diplomatic mission, it is dealt with under ‘diplomatic property’ in UNCSI, Article 21 (a) below.
The purpose, public or commercial, for which tangible property, physical assets in which category ships and chattels may be included, owned or possessed by the State is in use or intended use is reasonably capable of proof, although a change of user can present problems. Thus a warship by both its nature and the function for which it is constructed, as well as its operation and control by naval personnel of the foreign State, establishes its use for a recognized sovereign purpose. Issues as to the commercial use of a State-owned ship83 or its intended use are also generally capable of proof; where a ship lies idle in harbour the presumption in favour of immunity will establish its purpose for sovereign activity unless evidence to the contrary is produced.84 A sister ship the property of Russia, arrested as security for unpaid damages of another ship, also owned by Russia, was held to be immune from execution pursuant to the South African Foreign State Immunities Act 1981, section 14(1) by reason that at the time of the arrest she was being used for meteorological environmental research in the Antarctic, and consequently did not come within the exception in section 14(3) of State property ‘for the time being in use or intended use for commercial purposes’.85
The specific purpose for which intangible assets, funds, or securities are deposited in banks in the forum State in accounts in the name of the State is much less easy to ascertain. Future use of the property without evidence on behalf of the State which, as the cases show, is not generally available, and in consequence virtually impossible to establish. French courts originally required proof of the origin of the funds and their future destination. In 1984 the Cour de Cassation stipulated in Eurodif a new requirement for execution in relation to State property, but it was still formulated by reference to past use, to an existing commercial activity, the subject-matter of the claim. US Second Circuit applying the FSIA section 1610(A) requirement declared that ‘property may be executed against only if it is “used for” a commercial activity…. The plain language of the statute suggests that the standard is actual, not hypothetical use’.86 English law permits execution without the State’s consent solely against property ‘in use or intended use for commercial purposes’.
As the Advocate General noted in Eurodif, proof of the intended or future use of assets is difficult, if not impossible, without specific allocation by the State:
The necessarily voluntarist nature of the notion of the intended use of funds thus becomes a matter of pure discretion wherever, as here, the foreign government has not made its intentions known explicitly … in practical terms the result will be tantamount to a return to the absolute nature of immunity from execution. The absolute nature of immunity in such circumstances would constitute a retreat to the time when governmental activity was confined to acts of public authority … It would seriously endanger the security of international economic relations if States could, merely by remaining silent, protect themselves from any measure of execution aimed at securing compliance with their obligations.87
Employing like reasoning, German and Dutch courts have rejected ultimate use as determinative of the immune character of property.88 Swiss courts, in keeping with their treatment of immunity from jurisdiction and execution as one regime, are prepared to permit attachment of a general fund where at the time of the attachment having a jurisdictional connection with Switzerland the funds in question were not allocated for any specific purpose, even if they had originally been intended but not subsequently used for a sovereign purpose.89
This phrase appears in Articles 18 and 19 to identify the national court where no immunity from execution will in general be allowed, whereas in Articles 19(c) and 22 the more precise term of the State of the forum is used.
Kessedjian and Schreuer query whether the reference in Articles 18 and 19 to ‘court of another State’ permits removal of immunity from execution only where a judgment on which execution is sought has been given in a court of that other State; alternatively, does it permit such measures to enforce foreign judgments?90 The forum State may be construed as the State of the place of judgment or the State of the place where execution is sought.
This concludes the general survey of State practice relating to immunity from enforcement and the general treatment in the provisions in UNCSI’s Part IV of Measures of Constraint. General conclusions will be found at the end of Chapter 17.