Evidence and Burden of Proof in Foreign Sovereign Immunity Litigation: A Guide for International Lawyers and Government Counsel (4)


Published in 2014 with Createspace / Amazon by Peter Fritz Walter.


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Publication Table of Contents


Contents

Introduction
Construction of the Act
Immunity from Jurisdiction
Immunity from Execution
Conclusion


Introduction

Jean-Flavien Lalive, from Lalive Lawyers in Geneva, wrote back in 1953 that much like the United States, the United Kingdom long applied an ‘absolute’ immunity doctrine to foreign sovereigns.

— Jean-Flavien Lalive, L’immunité de Juridiction des États et des Organisations Internationales, 84 RCADI (1953-III), 209, 222 ff.

The particular reason for this doctrine, he argued, was that the Crown, under English common law, has a supreme status (‘The King can do no wrong’). In addition, after some leading cases, the doctrine of stare decisis that is part of English common law, has built an almost insurmountable wall for drawing a foreign sovereign in front of an British tribunal.

The most famous of those precedents, The Parlement Belge, [1880] 5 P.D. 197, [1874–80] All. E.R. Rep. 104, is interesting in so far as Judge Phillimore was trying to break through this wall, refusing to grant immunity to a postal package belonging to the King of Belgium, which was transported by officers of the Belgian marine, with the argument that the ship had been chartered for commercial purposes. However, the judgment was reversed by the Court of Appeals, stating that international comity required that courts had to deny competence ‘over the person of any sovereign or ambassador of any other State or over public property of any State which is destined to public use.’

Sir Ian Sinclair observed that, at first sight, this judgment was not incompatible with the restrictive immunity doctrine, for it was first of all the public usage of the ship that let the court conclude pro immunitatem.

Sinclair’s view is not merely speculative in the sense that, if the ship really had been used exclusively for private purposes, immunity would have had to be denied.

— Ian Sinclair, The Law of Sovereign Immunity. Recent Developments. 167 RCADI (1980-II), 117, 126.

This is interesting also from another point of view.

Some legal scholars in the United States have quoted precedents in support of an absolute immunity rule, while such a rule was never proven to have existed.

To give an example, it is astonishing to see that the very first precedent, The Schooner Exchange v. M’Faddon and Others, 11 U.S. [7 Cranch] 116 (1812), often is quoted in support of an ‘absolute’ doctrine of immunity, while when you really read this brilliant judgment, you see that the very contrary is true.

The vessel in question, the ‘Exchange’ first belonged to the defendants John McFaddon and William Greetham, two American citizens. While on high sea, the vessel was captured by officers ‘acting under the decrees and orders of Napoleon, Emperor of the French.’ Upon which the vessel was armed by Napoleon and damaged. When the vessel was in the port of Philadelphia for repair, the two owners tried to attach it, and the action went up to the Supreme Court of the United States. Let me quote here the opinions of Dallas, the district attorney, and Chief Justice Marshall, to show how the evidence situation was in this case:

The Schooner Exchange (District Attorney Dallas)

As to the proof of the public character of the vessel. The flag, the public commission, and the possession of the officer, have always been sufficient evidence. (…) It is proved that she arrived in distress; that she had been sent to a distant mission with a military cargo. (11 U.S. 116, 121).

The Schooner Exchange (Chief Justice Marshall)

In the present state of the evidence and proceedings, ‘The Exchange’ must be considered as a vessel, which was the property of the libellants, whose claim is repelled by the fact, that she is now a national armed vessel, commissioned by, and in the service of the Emperor of France. The evidence of this fact is not controverted. (Id., p. 146).

There was thus no question about whatsoever ‘absolute’ immunity doctrine. Under the FSIA, the decision would have been exactly the same. The Privy Council stated in The Philippine Admiral, referring to The Schooner Exchange:

It was submitted in argument that if a sovereign engaged in trade he would enjoy no immunity in respect of his trading operations; but the judgment left that question open. (Id., p. 391).

It was only about a hundred years later that American federal jurisprudence changed because back in 1812, ships were generally owned by private persons, as at that time it was not yet common that nation states behaved like private traders on the public market place. In Berizzi Brothers v. Steamship Pesaro, 271 U.S. 562, 46 S.Ct. 611 (1926), the United States Supreme Court distinguished the case from the Schooner Exchange, and Judge Van Devanter wrote:

It will be perceived that the opinion, although dealing comprehensively with the general subject, contains no reference to merchant ships owned and operated by a government. But the omission is not of special significance, for in 1812, when the decision was given, merchant ships were operated only by private owners and there was little thought of governments engaging in such operations. That came much later. The decision in The Exchange therefore cannot be taken as excluding merchant ships held and used by a government from the principles there announced. On the contrary, if such ships come within those principles, they must be held to have the same immunity as war ships. (271 U.S. 562, 573–574).

However, in The Porto Alexandre, [1920] P. 30, [1918–19] All E.R.Rep. 615, [1920] A.C. 30, a more absolute doctrine of sovereign immunity was finally adopted, for about the next five decades.

The Court of Appeals granted the private German vessel Porto Alexandre immunity, despite the fact that the ship had been chartered exclusively for commercial purposes. The court said it could not distinguish the case from The Parlement Belge.

While a certain revision of precedents was proposed by Lords Thankerton and Maugham in The Christina, a real change only came with The Philippine Admiral, where the Privy Council refused for the first time to follow the precedent The Porto Alexandre.

The Christina, [1938] A.C. 484. While Lords Atkin and Wright were in favor of an absolute immunity doctrine, Lord Maugham stated in an obiter dictum that ‘[i]f The Parlement Belge had been used solely for trading purposes, the decision would have been the other way … ‘ (Id., 519). Lord Macmillan held that there was ‘no proved consensus of international opinion or practice in favor of an absolute immunity doctrine for ships that are used entirely or principally for commercial purposes. (Id., 498).

The Philippine Admiral, [1976] 1 All E.R. 78. We have to mention, however, Lord Denning’s brilliant minority opinions that were always in favor of adopting the restrictive immunity doctrine. See, for example, Rahimtoola v. Nizam of Hyderabad, [1957] 3. W.L.R. 884, 903–914, [1938] A.C. 379 and Thai-Europe Tapioca Service Ltd. v. Government of Pakistan et al., [1975] 3 All. E.R. 961.

Thus, if ever we admit something like an absolute immunity doctrine, it was of a temporary nature and was abandoned later on, at least for actions in rem when vessels belonging to foreign states were exclusively used for private, commercial purposes.

— See also A.D. Adede, The United Kingdom Abandons the Doctrine of Absolute Sovereign Immunity, 6 BROOKLYN J.INT’L L. 197–215 (1980).

After this precedent, we can thus observe a different handling of actions in rem and action in personam, in English case law.

— See, for example, Ian Sinclair, The Law of Sovereign Immunity. Recent Developments. 167 RCADI (1980-II), 117, 157 and Georg Ress, Entwicklungstendenzen der Immunität ausländischer Staaten, 40 ZaöRV 217, 240 (1980).

One year later, this last anomaly was removed by the important case Trendtex Trading Corp. v. Central Bank of Nigeria, [1977] 1 All E.R. 881, [1977] 2 W.L.R. 356, [1977] 1 Lloyd’s Rep. 581 (C.A.), [1977] 1 Q.B. 529, 16 ILM 471 (1977), 64 ILR 111 (1983). It was through this leading case that the restrictive immunity doctrine was also recognized for actions in personam against foreign states. Exactly eleven months later, on the 13th December 1977, the State Immunity Bill was introduced in the House of Lords by the Lord Chancellor. (Hansard, H.L. Debates, Vol. 388, cols 51–78).

— It’s an interesting coincidence that the decision of the German Constitutional Court (Beschluss des Bundesverfassungsgerichts zu Fragen der Staatenimmunität), dates the same day, 38 ZaöRV 242 (1978), 65 ILR 146 (1984).

During the Second Reading, the Lord Chancellor stated:

The Bill represents a major change in our law, and one which I believe to be highly desirable, long overdue and to the benefit of United Kingdom nationals and companies. (Id., col. 52).

There were in fact two reasons why the United Kingdom, a bit hurriedly, passed this bill. There was first of all a commercial interest, as from the moment the United States had the Foreign Sovereign Immunities Act 1976 in force, the British government had attributed ‘an element of urgency’ to passing a statute on their own.

— ‘Second Reading Committee’ of the House of Commons, Solicitor-General (Peter Archer), on the 3rd of Mai, 1978, see Hansard, H.C. Debates, Vol. 949, col. 412 and Sir Michael Havers, Hansard, id., cols. 414, 415.

The FSIA had been considered a legislation favorable to the international commerce and trading between private merchants and foreign states. The main concern of the British government was namely that through this enactment, international financial transactions might shift from London to New York.

— See also Clark C. Siewert, Reciprocal Influence of British and United States Law: Foreign Sovereign Immunity Law from the Schooner Exchange to the State Immunity Act 1978, 13 VAND.J.TRANSNAT’L L. 761–794, at 791 (1980).

In addition, the British enactment was considered to enable the United Kingdom to ratify the Brussels Convention of 19 April 1926, as well as the European Convention on State Immunity, of 16 May 1972. This is why the State Immunity Act 1978 entered into force already on the 22nd of November 1978.

— See the Lord Chancellor, on 17th of January 1978, Hansard, H.L. Debates, Vol. 388 col. 409. The Convention was ratified by the United Kingdom on the 3rd of July 1979, UKTS 15 (1980). See also Bowman & Harris, Multinational Treaties, Index and Current Status (1984), 66 (Treaty 96).

— See the Solicitor-General, on the 3rd of Mai, 1978, Hansard, H.C. Debates, Vol. 949, col. 409. The Convention was ratified by the United Kingdom equally on the 3rd of July 1979, UKTS 74 (1979), Bowman & Harris, id., 362 (Treaty 599).

— See The State Immunity Act 1978 (Commencement) Order 1978, of 26th of October 1978, reprinted in UN-MAT., 52 and 17 ILM 1581 (1978). The Royal Assent was notified to the House of Lords on the 20th of July 1978, see Hansard, H.C. Debates, Vol. 954, col. 830. See also The State Immunity (Federal States) Order, UN.MAT., 52–53. The British Act was not applied retroactively, see Hispano Americana Mercantil S.A. v. Central Bank of Nigeria, [1979] 2 Lloyd’s Rep. 277 (C.A.) by Lord Denning M.R. p. 279 col. 2, by Lord Justice Waller, p. 280 col. 1, as well as The Uganda Holding Co. (Holdings) Ltd. v. The Government of Uganda, [1979] 1 Lloyd’s Rep. 481, by Justice Donaldson, p. 483, col. 2 and Planmount Ltd. v. The Republic of Zaire, [1980] 2 Lloyd’s Rep. 393, Justice Lloyd, p. 395, col. 1. The first precedents in which the STIA 1978 was applied were Intro Properties (U.K.) Ltd. v. Sauvel, [1983], 1 Q.B. 1019, [1983] 2 W.L.R. 1 and Alcom Ltd. v. The Republic of Colombia et al., [1984] 2 Lloyd’s Rep. 24 (H.L.), 23 ILM 719 (1984), The Times, 13th of March 1984, Business Law Brief, May 1984 and 22 ILM 1307 (1983).


Construction of the Act

The State Immunity Act 1978 states the general rule of immunity in section 1.(1):

1. General Immunity from Jurisdiction (1) A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act.

The numerous exceptions to immunity from jurisdiction are to be found in sections 2 to 11 of the Act. The rule of immunity from execution is to be found, a bit hidden, under ‘other procedural privileges’, in §13(2) STIA 1978:

(2) Subject to subsections (3) and (4) below – (a) relief shall not be given against a State by way of injunction or other for specific performance or for the recovery of land or other property; and (b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.

While an executory measure under §13(2)(a) is only possible with the written consent of the foreign state, §13(3) STIA, section 13(4) provides, with regard to subsection (2)(b), an exception ‘in respect of property which is for the time being in use or intended for use for commercial purposes.’

(3) Subsection (2) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned; and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.

Contrary to the American Act, the STIA 1978 contains, in section 13(5), a burden of proof rule regarding the usage of the state property in question. As we shall see further down, this section reveals the allocation of the burden of proof.

(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; but, in a case not falling within section 10 above, this subsection applies to property of a State party to the European Convention on State Immunity only if – (a) the process is for enforcing a judgment which is final within the meaning of section 18(1)(b) below and the State has made a declaration under Article 24 of the Convention; or (b) the process is for enforcing an arbitration award. (5) The head of the State’s diplomatic mission in the United Kingdom, or the person for the time being performing this function, shall be deemed to have authority to give on behalf of the State any such consent as is mentioned in subsection (3) above and, for the purposes of subsection (4) above, his certificate to the effect that the property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.


Immunity from Jurisdiction

General Considerations

Contrary to the American Act, there is nothing to be found how the STIA 1978 allocates the burden of proof for jurisdictional immunity; the legislative history is silent and there are no precedents at this point.

— See Hansard, H.L. Debates, Vol. 387, cols. 1976–7 of 13th of December 1977; Vol. 388, cols. 51–78 of 17th of January 1978, as well as H.C. Debates, Vol. 949, cols. 405–420 of 3rd of March, 1978, col. 937 of 8th of March 1978, Vol. 951, cols. 841–845 of 13th of June 1978, Vol. 953, cols. 616–620 of 5th of July 1978, Vol. 954, col. 830 of 20th of July 1978.

It is even doubtful if a British judge can consider the legal materials for interpreting a statute. In principle, all interpretation is based upon the terms of the statute itself; however it seems from what Maxwell on the Interpretation of Statutes (1969) write, the legislative history might be considered as an additional element for the interpretation of a statute:

‘The Court’, said Sir George Jessel, M.R., ‘is not to be oblivious … of the history of law and legislation. Although the Court is not at liberty to construe and Act of Parliament by the motives which influenced the Legislature, yet when the history of law and legislation tells the Court, and prior judgments tell this present Court, what the object of the legislation was, the Court is to see whether the terms of the section are such as fairy to carry out that object and no other, and to read the section with a view to finding out what it means, and not with a view to extending it to something that was not intended. (Quoting Holme v. Guy, [1877], 5 Ch.D. 901, 905).

In the interpretation of statues, the interpreter may call to his aid all those external or historical facts which are necessary for comprehension of the subject-matter, and may also consider whether a statute was intended to alter the law or to leave it exactly where it stood before. (Maxwell on the Interpretation of Statutes (1969), pp. 47, 48).

The Rule and Exception Principle

I have already pointed out for the American enactment that the rule and exception principle, generally considered in common law as a valid argument for finding the burden of proof, is misleading in matters of foreign sovereign immunity litigation because the drafting technique of the immunity acts follows merely historical developments, which is why it is a fallacy to draw any conclusions from it for the allocation of the burden of proof. In so far, the literature speaks about a ‘common drafting technique.’

— See, for example, Georges R. Delaume, The State Immunity Act of the United Kingdom, 73 AJIL 185, 186 (1979), Clark C. Siewert, Reciprocal Influence of British and United States Law: Foreign Sovereign Immunity Law from the Schooner Exchange to the State Immunity Act 1978, 13 VAND.J.TRANSNAT’L L. 761–794, at 791 (1980).

At first sight, it’s of course immunity from jurisdiction that is the rule under §§1(1) STIA 1978 and 1604 FSIA. The exceptions, §§2–11 STIA 1978, 1605–1607 FSIA, are so numerous that there is not much left from the rule.

Lord Denning found the opening clause ‘quite out of date;’ he meant the rule of immunity, and qualified it as a ‘residual concept’ which is really a smart formulation for what could be called an anomaly. (See Hansard, H.L. Debates, Vol., 388, col 71 of 17th January 1978). Normally, the plaintiff bears the burden of proof for an exception to a general rule.

Sherman v. United States, 199 F.2d 504, 507 (8th Cir. 1952), Wood v. Schwartz, 88 F.Supp. 385 (W.D.Pa. 1950).

But under the FSIA we have seen that this is valid only for personal jurisdiction, not for subject matter jurisdiction, i.e, the absence of sovereign immunity, as it’s the foreign state who bears the burden of proof for its immunity claim, in matters of immunity from jurisdiction.

Hence, it’s not the rule-and-exception schema that provides us any valid answers as to the allocation of the burden of proof in matters of immunity from jurisdiction. In other words, if we applied the rule-and-exception principle for finding the burden of proof, we would have to put the burden of proof squarely upon the plaintiff in all matters of foreign sovereign immunity litigation. It is interesting, in this context, what the Committee on International Law of the Association of the Bar of the City of New York stated:

It is evident that the bill intends that the claim of sovereign immunity be raised as an affirmative defense by the foreign state. Nevertheless, in form, sovereign immunity is codified as the general rule (§1604), with nonimmunity the exception. In the ordinary course, the burden of proving an exception in a statute is on its proponent. It would therefore be appropriate for the reports of the respective House and Senate committees to include clear language stating the intent of the Congress to place the burden of proving entitlement to immunity on the foreign state, notwithstanding the general rule to the contrary. In substance, the initial burden of going forward, as well as the ultimate burden of proof, would rest with the sovereign. Notwithstanding, where the sovereign sustains its initial burden, the burden of going forward would shift to the plaintiff. The shifting burden is the general standard in litigation and should be reflected in the legislative history as having been embraced by the legislation. (Hearings on H.R. 11315, Jurisdiction of U.S. Courts).

This statement was actually giving the incentive to insert a passage in the House Report to the FSIA, that we extensively discussed previously in this study, while it was also said, which sounded almost like an apology, that ‘[t]he chapter is thus cast in a manner consistent with the way in which the law of sovereign immunity has developed.’ (H.R. Report 11315, p. 17, 15 ILM 1398, 1407 (1976). This was also acknowledged by the American federal jurisprudence.

— See, for example, the decision of the Court of Appeals of the 2nd Circuit in Verlinden v. Central Bank of Nigeria, 647 F.2d 320, 326–327, note 20 (2d Cir. 1981) where the court stated: ‘Some confusion on this point arises from §1604, which is drafted to create a general principle of immunity, not a presumption of amenability which defendant most overcome. The reasons for this aspect of the Act’s structure are historical.’

Now, the United Kingdom enactment doesn’t construe sovereign immunity as an affirmative defense, as the House Report stated it for the FSIA, while even so, it was clarified by later jurisprudence that this formulation was, once again, an overly joyful attempt by the American Congress to attract as many immunity actions as possible to the American forum. If that had been admitted, a violation of international law would have been probably the result.

— The Supreme Court pulled the handbrake in Verlinden and that is, in turn, why the difference between the FSIA and the other immunity statutes is not as striking as it appears on first sight.

That is why we are concluding here that these arguments cannot provide a valid basis for drawing any conclusions as to the burden of proof under the British Act. The most probable reason why the STIA 1978 was drafted in the same way as the FSIA is that historical and psychological considerations primed over a strictly logical drafting that would more clearly show the allocation of the burden of proof.

Who is to blame? When we see that also all international conventions on sovereign immunity apply the same scheme of rule and exception, we can more easily understand why all national law givers, those who have drafted immunity statutes, applied this same schema.

— See Art. 15 of the European Convention on State Immunity (1972) which states: ‘Un État contractant bénéficie de l’immunité de juridiction devant les tribunaux d’un autre État contractant si la procédure ne relève pas des articles 1 à 14; le tribunal ne peut connaître d’une telle procédure même lorsque l’État ne comparaît pas.’ See also Charles Vallée, A propos de la convention européenne sur l’immunité des États, 9 REV.TRIM.DR.EUR. 205 (1973).

They simply wanted to comply with the international standard, which is something not uncommon to realize for the international law expert.

States and governments do not behave in a purely logical manner, just as human beings don’t. They are also bound by conventions, habits and customs, and by traditions, and that influences their law making. While to the purely forum-based lawyer, this may sound strangely exotic, it’s the reality of international law. It is interesting, in this context, what Gamal Moursi Badr wrote in State Immunity (1984), 133–134:

States of all ideological persuasions have linked immunity to sovereignty for so long that the issue has become for them one charged with emotion. They cannot easily bring themselves to face the fact of the withering away of state immunity. It appears that the very process of negating immunity is helped by continuing to pay lip service to the principle of immunity, as the seven most recent instruments on the subject do in the face of compelling evidence to the contrary.

In addition, there are systemic arguments that speak against an application of the rule-and-exception principle for elucidating the burden of proof in matters of immunity from jurisdiction.

First of all, a general rule of immunity, as a rule of international law, has never been proven. Badr writes:

Moreover, the existence in customary international law of an autonomous rule requiring the grant of immunity to foreign states is not generally recognized. The rules in this area of international law are but the reflection of the rules of the internal laws of the various states, the most restrictive and the least admitting of immunity among them tending to acquire universality through the ripple effect of reciprocal treatment. (Id., 135).

But there is no general agreement on the opposite rule either, that is, that states have total jurisdiction, and that foreign states only enjoy a residual immunity for certain well-defined cases.

Such a ‘positive list’ was in fact favored in the international law literature by Weiss, Lauterpacht, Lalive and other experts on foreign sovereign immunity. The problem was also quite extensively discussed by Sompong Sucharitkul, General Rapporteur for the International Law Commission’s Draft Convention on Immunities of Foreign States and their Property, in his course at the Asser Institute of International Law, Developments and prospects of the Doctrine of State Immunity (1982).

In the first place, a rule of international law on State immunity could start from the very beginning as a rule of State immunity, or it could go back beyond and before the beginning of State immunity. It could trace the origin of State immunity beyond sovereignty and equality of States and even beyond consent to a more basic or more fundamental norm like ‘pacta sunt servanda’ or the ‘undivided and indivisible concept of sovereignty’ and to regard immunity not as a rule, nor less a general rule of law, but more appropriately from the ultimate viewpoint of originality as an exception to a more basic rule of territorial sovereignty.

— Sompong Sucharitkul, Developments and Prospects of the Doctrine of State Immunity. Some Aspects of Codification and Progressive Development, XXIX NETH.INT’L L.REV. 252, 261 (1982).

Hence, with regard to the burden of proof, there is certainly an impact of the drafting technique on its allocation. Dr. Sucharitkul admits that the drafting technique does have an impact upon the burden of proof situation under a convention or statute on sovereign immunity:

Two or three approaches are open. Either starting with exploring cases of nonimmunity or beginning with the attempt to identify sovereign acts covered by immunity, or indeed working simultaneously on both categories until reaching the border-line cases. The priority of undertaking the study of the cases of non-immunity first entails the effect of maintaining the burden of proof which is in favour of the general rule and rather against the exception, whereas to shift the emphasis would mean having to furnish evidence to establish the existence of State immunity all over again in every case, a process which has been undergone once over when formulating the general rule. (Id.) To start from the proposition of a general rule of State immunity, is more in line with the established practice, whereas to require proof of international law for every type of State activity said to be immune might run counter to the very concept of sovereignty of States. (Id., note 36).

The problem was even more clearly identified by Rosalynn Higgins in her course at the same institution. She asked the question empathically:

What is the rule and what is the exception? Is sovereign immunity still the basic rule, with the exercise of jurisdiction an (expanding) exception? Or is it really the other way around?

The European Convention of 1972, the United States Act of 1976 and the United Kingdom Act of 1978 all speak of immunity as the basic rule, and indicate certain exceptions. But as the exceptions increase in scope, the truth is that we begin to think in other terms. We begin to think of immunity as not normally being allowed unless — exceptionally — the acts are acta iure imperii.

— Rosalynn Higgins, Certain Unresolved Aspects of the Law of State Immunity, XXIX NETH.INT’L. L.REV. 265, 270 (1982).

There was no doubt, for either Sucharitkul, nor Higgins that, in reality, the rule is the total and unrestrained territorial jurisdiction of the forum state, and immunity is the exception from this rule.

— See Sompong Sucharitkul, Developments and Prospects of the Doctrine of State Immunity. Some Aspects of Codification and Progressive Development, XXIX NETH.INT’L L.REV. 252, 261 (1982): ‘It cannot be gainsaid that the doctrine of State immunity is an exception or a qualification of a more basic norm of jurisdiction or imperium or sovereign power of the State.’

— See Rosalynn Higgins, Certain Unresolved Aspects of the Law of State Immunity, XXIX NETH.INT’L. L.REV. 265, 270, 271, note 51 (1982): ‘It is very easy to elevate sovereign immunity into a superior principle of international law and to lose sight of the essential reality that it is an exception to the normal doctrine of jurisdiction. It is a derogation from the normal rule of territorial sovereignty.’

As we have seen, this was actually the point of departure in the classic precedent The Schooner Exchange, 11 U.S. [7 Cranch] 116, 135 (1812), where Chief Justice Marshall explained:

The jurisdiction of the courts is a branch of that which is possessed by the nation as an independent sovereign power. The jurisdiction of the nation, within its own territory, is necessarily exclusive and absolute; it is susceptible of no limitation, not imposed by itself. Any restriction upon it, deriving validity from an external source, would imply a diminution of its sovereignty, to the same extent, in that power which could impose such restriction. All exceptions, therefore, to the full and complete power of a nation, within its own territories, must be traced up to the consent of the nation itself. They can flow from no other legitimate source.

Contrary to many misleading comments in the international law literature that try to justify the early roots of an assumed absolute rule of sovereign immunity, there is no doubt that, for Chief Justice Marshall, not immunity from jurisdiction was the rule, but the principally unlimited jurisdiction (competence) of the state within its territory, for such jurisdiction is a direct consequence of a state’s sovereignty.

Also Wilfried Schaumann and Walter J. Habscheid have shown in their report for the German Society of International law that territorial competence is the rule and immunity from jurisdiction the exception. This result was confirmed by subsequent research.

— Wilfried Schaumann & Walter J. Habscheid, Die Immunität ausländischer Staaten nach Völkerrecht und deutschem Zivilprozessrecht, Berichte der deutschen Gesellschaft für Völkerrecht (BDGVR), Bd. 8, 24–25. See also Schmitthoff and Wooldridge, The Nineteenth Century Doctrine of Sovereign Immunity and the Importance of the Growth of State Trading, 2 DENV.J.INT’L L. & POL. 199, 211 (1972) and Gamal Moursi Badr, State Immunity (1984), 134: ‘The negation of the principle of state immunity is disguised as a mere recount of the exceptions to an ostensibly reaffirmed general rule of immunity.’

It is equally of interest what M. Sucharitkul states in a footnote to the text:

To start from the proposition of a general rule of State immunity is more in line with the established practice, whereas to require proof of international law for every type of State activity said to be immune might run counter to the very concept of sovereignty of States. (XXIX NETH.INT’L L.REV. 252, 261, note 36 (1982).

Whatever we may think about this rather theoretical discussion about rule and exception, it doesn’t help much for assessing the burden of proof.

The British Act poses immunity as the general rule. This was also the approach of the International Law Commission (ILC) in their United Nations Convention on Jurisdictional Immunities of States and Their Property (2004) and of the other statutes on sovereign immunity to be discussed further down in this study.

It is for this reason perhaps more helpful to take a meticulous and pragmatic stance on the matter, as it was suggested by Francis A. Mann in The State Immunity Act 1978, 50 BRIT.Y.B.INT’L L. 43–62, at 50 (1979):

What the legislator described as exceptions represents a very broad sector of State activity. Its limits should be so drawn as to fit the legislative purpose behind each provision rather than the drafting technique that the legislator followed. The so-called exceptions are a far-reaching group of provisions which are not subordinate, but equal, to and on the same level as the so-called principle. Hence the rule usually applicable to the construction of exceptions does not fit.

This argument is so much the more convincing when considering the fact that there were no definite reasons why the British Act was drafted in that way, and not the other way around. The principle, it is true, was formulated as a general rule of immunity from jurisdiction, §1(1) STIA 1978, and the admittedly numerous conditions under which courts enjoy competence over foreign states were drafted as exceptions from that rule.

But that does not per se indicate an intention of the law maker to rule on the burden of proof, if such intention cannot be shown to be reflected in the legislative history.

While from a point of view of traditional statute construction, the drafting technique in the STIA 1978, as under the other statutes, would indicate that the ultimate burden lies with the plaintiff to demonstrate that an exception to the general rule applies, F.A. Mann shows that this rule is not applicable for the British Act.

In fact, the question is more subtle than that, it is what is to be applied in the case of a non liquet situation, is it in dubio pro immunitatem, recurring to the general rule, or is it in dubio contra immunitatem, because the burden is ultimately upon the state to prove that its immunity claim is founded?

In England it has frequently been a technique of statutory interpretation to say that an exception does not derogate from the principle to a greater extent than the words used strictly require, that, in other words, in case of doubt the principle rather than the exception should be held to apply. But this is not invariably so and should certainly not be so in the present case. (Id.)

We have seen previously, in our discussion of the American Act, that Congress well had foreseen this problem, which is why an explanative passage regarding the burden of proof was inserted in the legislative materials. We also have seen that this rule was later modified by federal jurisprudence.

In a more recent American precedent, McDonnell Douglas Corp. v. Islamic Republic of Iran, 758 F.2d 341 (8th Cir. 1985), the Court of Appeals of the 8th Circuit stated that the FSIA ‘recognizes that sovereign immunity is the exception, rather than the rule, and should be confined to a foreign sovereign’s truly governmental acts … . (758 F.2d 341, 348).

Under the British Act, the situation can’t be different. While the British parliament has not provided any guidelines as to the burden of proof in the marginal notes, nor is there anything to be found in the parliamentary debates, this lack of evidence of a legislative intention must not lead us to conclude to the opposite, that is, that the allocation of the burden of proof follows the drafting technique.

— The annotated version of the STIA 1978 is to be found in Halsbury’s Statutes if England, 3d ed. Vol. 48 (1979), pp. 85 ff. As to the parliamentary debates, I have gone through all of them, and have reported earlier on in this text, with precise references, that nothing is to be found in the whole of the legislative history of the STIA 1978.

As Francis A. Mann put it:

Although the marginal note to section 1 speaks of the ‘general immunity from jurisdiction’ and this paper, therefore, speaks of a ‘principle’ and ‘exceptions’, the preceding review proves that it is only a residual immunity which a foreign State can claim in relatively few cases. The denial of immunity is so far-reaching that it is more appropriate to treat the ‘exceptions’ as distinct categories. Accordingly it is submitted that what may be described as the usual rules about proving exceptions should not be applicable. (The State Immunity Act, op.cit., p. 62 (1979).

The Restrictive Immunity Doctrine

For the United States’ Foreign Sovereign Immunities Act, 1976, the House Report put up something like an evidence rule that contains some guidelines for the burden of proof. Such an interpretative guideline is not to be found for the other statutes examined in this study.

At the time I wrote my thesis on the subject, the literature was completely confused, besides a few marked statements by F. A. Mann, Rosalyn Higgins and Gamal Moursi Badr, but that was not enough to prove an evidence rule that the allocation of the burden of proof in matters of sovereign immunity litigation had became a standard under international law.

Most authors discussed matters along the lines of any real or invented rule-and-exception principle, without seeing that their conclusions were hopelessly circular.

This means in plain English that the rule-and-exception principle does not help at all for finding the answer to the delicate problem of the burden of proof. One could in fact legitimize quite arbitrarily the two extreme positions, with a slightly better argumentation basis perhaps for the statement of jurisdiction as the rule and sovereign immunity as the exception.

As a result I reasoned that to arrive at a clear and unambiguous repartition of the burden of proof in cases involving sovereign immunity, only a scrupulous examination of the restrictive immunity concept or doctrine could serve.

If it can be said that this concept only secures, in today’s international law practice, a residual immunity rule which grants immunity only in some exceptional cases, the burden of proof would principally be on the foreign state to show that such an exceptional case of immunity exists.

Contrary to the solution under the FSIA 1976 which comes to exactly this result, the situation is more difficult to decide under the STIA 1978 and the other statutes, which are all more or less closely drafted with the British example in mind, since the legislator was not clarifying this point in the parliamentary debates. But this lacuna is largely compensated by a long list of precedents in English case law where Lord Denning’s carefully drafted minority opinions had powerfully prepared the eventual shift of the English international law doctrine on sovereign immunity to the modern standard of a restrictive concept. The question to decide is —

(i) Does the restrictive immunity rule grant immunity as a general rule, admitting competence of courts against foreign states only in some exceptional cases?

or —

(ii) Does the restrictive immunity rule rather deny immunity from jurisdiction for foreign states, conceding the protection of immunity only in a quite limited range of activities and for governmental acts in the strict sense?

This is not to confuse with the question of what is the rule and what the exception, formulated in a somewhat different way. I do not proceed examining of what is or what should be the rule and the exception (immunity or competence) in today’s international law practice.

What I try to find out is whether there was in English case law, in matters of foreign sovereign immunity, a fundamental shift which could be said to have abandoned a former absolute immunity concept (although this doctrine has never been proved as being a rule of international law), and adopted a new restrictive immunity concept granting only a residual immunity from jurisdiction, so that immunity is granted only if the foreign state has acted in the form of a public, sovereign act (de iure imperii).

The burden of proof would then principally be on the foreign state to show that prima facie an act of a public, sovereign nature forms the basis of the action. In the original thesis work for the University of Geneva, we demonstrated that this fundamental shift indeed occurred in British case law and that it prepared another fundamental shift, the one namely in international law practice. To this end, we examined the following precedents:

— Rahimtoola v. Nizam of Hyderabad, [1958] A.C. 379, [1957] W.L.R.884, 913;

— Thai-Europe Tapioca Service Ltd. v. Government of Pakistan, Ministry of Food and Agriculture Directorate of Agricultural Supplies, [1975] 1 W.L.R. 1485 (C.A.), 64 ILR 81 (1983);

— The Owners of the Ship Philippine Admiral v. Wallem Shipping (Hong Kong) Ltd., [1976] 1 All E.R. 78, [1976] 2 W.L.R. 214, 15 ILM 133 (1976), [1977] A.C. 373, Privy Council Appeal No. 13 (1974), 64 ILR 90 (1983);

— Trendtex Trading Corp. Ltd. v. Central Bank of Nigeria, [1977] 1 All E.R. 881, [1977] 2 W.L.R. 356, [1977] 1 Lloyd’s Rep. 581 (C.A.), [1977] 1 Q.B. 529, 16 ILM 471 (1977), 64 ILR 111 (1983) and

— I Congreso del Partido, [1981] 2 All E.R. 1064 (H.L.), [1981] 2 Lloyd’s Rep. 367, [1983] 1 A.C. 244, 64 ILR 307 (1983).

Examination of the Precedents

As we have seen that the rule-and-exception principle doesn’t fit to determine the burden of proof, we are suggesting here that the restrictive immunity doctrine might provide the solution in that we may be able to draw direct conclusions from it, for the allocation of the burden of proof.

— As Rosalynn Higgins observes in her course at the Asser institute: ‘The question of burden of proof is of course closely linked to the problem of identifying the underlying basis of sovereign immunity.’ Certain Unresolved Aspects of the Law of State Immunity, XXIX NETH.INT’L. L.REV. 265, 270, 271 (1982).

In this pursuit, we need to retrace the formation of the restrictive immunity doctrine in British case law. Lord Denning unveiled as early as in 1958 the problems resulting from the former absolute immunity doctrine in Britain and the unsatisfactory situation of dealing with litigations arising from state trading activities of foreign states, under British law.

— Lord Denning (1899–1999), Master of the Rolls (M.R.) was the President of the Civil Division of the Court of Appeals in England. He was not only a most highly considered jurist and judge in England, but also a renowned writer. The bibliography of his publications extends over a period of more than thirty years. Some examples are Freedom of the Law (1949/1977) and Landmarks of the Law (1984).

Rahimtoola v. Nizam of Hyderabad, [1957] 3 All E.R. 441, [1957] 3 W.L.R. 884, [1958] A.C. 379, was an appeal case where the appellant, at the time High Commissioner of Pakistan in London, was sued by the Nizam and the government of Hyderabad because of a financial transaction he received that was not authorized by the Nizam. Rahimtoola claimed immunity in front of the High Court and the House of Lords was evaluating that immunity claim. The transaction was based upon a contract between Rahimtoola and one of the ministers of the Pakistani government.

The House of Lords granted immunity, but for different motives than the High Court. The majority of the lords followed the absolute immunity doctrine. However, Lord Denning submitted a minority opinion:

If the dispute brings into question, for instance, the legislative or international transactions of a foreign government, or the policy of its executive, the court should grant immunity if asked to do so, because it does offend the dignity of a foreign sovereign to have the merits of such a dispute canvassed in the domestic courts of another country; but, if the dispute concerns, for instance, the commercial transactions of a foreign government (whether carried on by its own department or agencies or by setting up separate legal entities), and it arises properly within the territorial jurisdiction of our courts, there is no ground for granting immunity. ([1958] A.C. 379, 422, [1957] 3 W.L.R. 884, 913.

While Lord Denning’s opinion was isolated at the time in England, it has animated a juridical discussion and prepared for the change that was to come later with the immunity act.

Still in 1975, the opinion of Lord Denning in Thai-Europe Tapioca Service Ltd v. Government of Pakistan, Ministry of Food and Agricultural Directorate of Agricultural Supplies, [1975] 3 All E R 961, [1975] 1 W.L.R. 1485 (C.A.), 64 ILR 81 (1983), was a minority ruling.

The German plaintiffs had chartered a ship to a Polish company for transporting fertilizer from Poland to Karachi, Pakistan. When the ship was discharged in the port of Karachi, it was gravely damaged by a raid of the Indian air force.

The plaintiffs asked for an indemnity with the West Pakistan Agricultural Development Corporation, for which account the cargo had been effected. Before service of process, the Pakistani government had dissolved the organism; it was replaced by defendant, the department of the ministry of agriculture. Pakistan claimed sovereign immunity. As in Rahimtoola, the Court of Appeals granted immunity unanimously, however Lord Denning, once again, contradicted:

[A] foreign sovereign has no immunity when it enters into a commercial transaction with a trader here and a dispute arises which is properly within the territorial jurisdiction of our courts. If a foreign government incorporates a legal entity which buys commodities on the London market; or if it has a state department which charters ships on the Baltic Exchange: it thereby enters into the market places of the world, and international comity requires that it should abide by the rules of the market. [1975] 1 W.L.R. 1585, 1491.

It is interesting to note the number of exceptions that Lord Denning cited in his judgment, and when you look at that, you really get the impression that rule and exception have been reversed over time, and that the putting up of rules of immunity in all statutes and conventions on sovereign immunity has more to do with international diplomacy, tact and courtesy than with responsible and rational law making. In fact, a reversal of the British jurisprudence is clearly to be seen from about The Philippine Admiral and Trendtex.

The Privy Council ruling in The Owners of the Ship Philippine Admiral v. Wallem Shipping (Hong Kong) Ltd. can be said to represent a historical landmark, to paraphrase Ian Sinclair, an eminent expert on the development of the restrictive immunity doctrine in Britain.

— Ian Sinclair, The Law of Sovereign Immunity. Recent Developments. 167 RCADI (1980-II), 117, 154.

It was an action in rem against the ship Philippine Admiral which belonged to the government of the Philippines. The plaintiff asked for payment of services rendered to the ship. The Privy Council refused to grant the ship immunity for the reason that it had been chartered for commercial purposes. Lord Cross of Chelsea, delivering the judgement of the Lords, stated:

This restrictive theory seeks to draw a distinction between acts of a state which are done jure imperii and acts done by it jure gestionis and accords the foreign state no immunity either in actions in personam or in actions in rem in respect of transactions falling under the second head. [1976] 2 W.L.R. 214, 228.

This formulation of the restrictive immunity doctrine doesn’t let us see the burden of proof yet, it is true, but there is a much more interesting passage to be found in the pleadings of the appellee that was not contradicted by the court:

Sovereign immunity from suit will not be granted in proceedings in rem against a ship, even where a foreign Sovereign State is the registered owner of the ship, unless the ship is operated or required to be operated for public or national purposes — publicis usibus destinata. [1977] A.C. 373, 380.

The Restrictive Immunity Doctrine

Let me briefly recall the most important precedents. As we already mentioned, Trendtex Trading Corp. Ltd. v. Central Bank of Nigeria, [1977] 1 All E.R. 881, [1977] 2 W.L.R. 356, [1977] 1 Lloyd’s Rep. 581 (C.A.), [1977] 1 Q.B. 529, 16 ILM 471 (1977), 64 ILR 111 (1983), was one of the court actions that came up as a result of what Lord Denning used to call ‘the Nigerian cement catastrophe.’

— In 1975, the Nigerian government ordered about twenty million metric tons of cement from merchants all over the world in order to restore the infrastructure of the country. The cement had to be delivered within a delay of twelve months. However, the average cement importation of Nigeria was about two million metric tons per year. The arrival of ten times this quantity caused a real disaster. All Nigerian ports were full with waiting ships; only in the port of Lagos/Apapa between 300 and 400 ships waited for delivery. This cement crisis provoked a coup d’état with a change of government in Nigeria. The new military government raised an embargo on the importation of cement and refused to pay indemnities to vessels discharging their load without a particular government certificate. Lord Denning’s minority vote in the Trendtex case gives the best statement of facts. Other cases related to the Nigerian cement catastrophe are: National American Corporation v. Federal Republic of Nigeria, 448 F.Supp. 622, 641–42 (S.D.N.Y. 1978), 17 ILM 1407 (1978), 63 ILR 63 (1982), conf’d, 597 F.2d 314 (2d Cir. 1979), 63 ILR 137; Texas Trading & Milling Corporation v. Federal Republic of Nigeria and Central Bank of Nigeria, 647 F.2d 300, 310 (2d Cir. 1981), 20 ILM 620 (1981) with a note of Georges R. Delaume, 20 ILM 618, UN-Materials, p. 527, 63 ILR 459 (1982), cert. den., 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982) and the German case Youssef M. Nada Establishment v. Central Bank of Nigeria, Landgericht Frankfurt, Judgment of August 25, 1976, 16 ILM 501 (1977). The American courts among the referenced cases have rejected the argument submitted by Nigeria that the break of the cement contracts served a public goal: prevention of a national economic catastrophe. The courts have equally denied that a military or governmental goal behind the cement contracts could influence their purely commercial character.

High Court judge Donaldson stated that ‘[t]he onus of establishing this immunity is upon the Central Bank.’ [1977] 1 Lloyd’s Rep. 581, 583, col. 2. Lord Denning’s appeal opinion then reveals the reasons for this particular evidence rule:

(ii) The doctrine of restrictive immunity. In the last 50 years there has been a complete transformation in the functions of a sovereign state. Nearly every country now engages in commercial activities. It has its departments of state — or creates its own legal entities — which go into the market places of the world. They charter ships. They buy commodities. They issue letters of credit. This transformation has changed the rules of international law relating to sovereign immunity. Many countries have now departed from the rule of absolute immunity. So many have departed from it that it can no longer be considered a rule of international law. It has been replaced by a doctrine of restrictive immunity. This doctrine gives immunity to acts of a governmental nature, described in Latin as jure imperii, but no immunity to acts of a commercial nature, jure gestionis.

It is important to note two essential remarks which are contained in this statement:

A New Restrictive Immunity Rule

The new restrictive immunity doctrine has replaced the former absolute doctrine. This new doctrine is thus not only a kind of attenuation of the old rule, admitting a further exception to this rule (no immunity for commercial activities), but a new independent rule of international law with a specific content.

It is a New Independent Rule

The content of this restrictive immunity rule is that it grants immunity only in the case that the act in question was of a public, governmental nature. It thus reaffirms the old original rule that a forum state waives the jurisdiction it enjoys over its property only in favor of foreign sovereigns or sovereign states acting in their sovereign capacities.

— This rule has already been pointed out in the old precedent The Schooner Exchange v. M’Faddon (1812), 11 U.S. [7 Cranch] 116, 135 (1812). It has nothing to do with what later has been called the absolute immunity doctrine, for there is no doubt — even under the new restrictive immunity rule — that a forum state is impeded by international law from touching the acts of a foreign sovereign (state) when these acts are of a public, governmental nature.

As a result, it can be argued that the new restrictive immunity rule contains in itself an allocation of the burden of proof: in order to enjoy the privilege of immunity the foreign state must make a case that prima facie there is some basis for its claim of immunity. This rule of the burden of proof is not an outflow of the rule-and-exception-system, but inherent in the restrictive immunity concept itself. It is not surprising that Lord Denning, in the Parliamentary Debates on the STIA 1978, stated:

The opening clause is quite out of date. (…) This Bill, it seems to me, has not taken into account the developments in the law since 1972. (Hansard, H.L. Debates, Vol. 388, cols. 71–73, of January 17, 1978).

This seems in fact a strange situation considering that the Lord Chancellor during the second reading of the bill speaks of the statute as providing a major change in our law. (Id., col. 52).

The STIA 1978 forwards in its Section 1(1) an outdated concept of General Immunity from Jurisdiction whereas in reality this so-called general immunity is but an affirmation of a residual concept. Francis A. Mann’s statement on this point speaks for itself:

What the legislator described as exceptions represents a very broad sector of State activity. Its limits should be so drawn as to fit the legislative purpose behind each provision rather than the drafting technique that the legislator followed. The so called exceptions are a far-reaching group of provisions which are not subordinate, but equal, to and on the same level as the so-called principle. Hence the rule usually applicable to the construction of exceptions does not fit. (The State Immunity Act 1978, 50 BRIT.Y.B.INT’L L.43–62 (1979), at 50).

Although the marginal note to section 1 speaks of the general immunity from jurisdiction and this paper, therefore, speaks of a principle and exceptions, the preceding review proves that it is only a residual immunity which a foreign State can claim in relatively few cases. The denial of immunity is so far-reaching that it is more appropriate to treat the exceptions as distinct categories. Accordingly it is submitted that what my be described as the usual rules about proving exceptions should not be applicable. (Id., 62).

The logical conclusion is that the foreign state would principally bear the burden to establish a primary basis of immunity. As Francis A. Mann concludes in the above cited article:

It is submitted that, throughout, the State claiming immunity has to prove the facts on which it relies. (…) The burden of proof, it would seem, is throughout on the State claiming immunity, though in many cases this may mean proving a negative, viz. the non-existence of one of the exceptions introduced by the Act. (Id.)

I Congreso Del Partido

As we have seen that principally the foreign state bears the burden of proof for its immunity claim, let us now examine how the foreign state is going to produce this evidence. We saw already that under the American Act, the foreign state cannot be reasonably forced to refute all the exceptions from sovereign immunity, but only those that the plaintiff invoked in his claim.

Let us consider the commercial activity exception, as an example. Under the FSIA, §1605(a)(2), the foreign state must make a prima facie case that the activity in question was one of public, governmental character. Under the British Act, the foreign state must establish prima facie evidence that none of the exceptions in §§3(3)(a),(b),(c) STIA 1978 applies.

State Immunity Act 1978 (UK)

3. (1) A State is not immune as respects proceedings relating to — (a) a commercial transaction entered into by the State; (…) (3) In this section ‘commercial transaction means – (a) any contract for the supply of goods or services; (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority.

Now, the question is if the foreign state can benefit from the clause ‘otherwise than in the exercise of sovereign authority’, §3(3)(c), when the activity that gave rise to the suit is the breach of a commercial contract, however this breach of contract being effected in the exercise of sovereign authority? There are namely two possible solutions here —

(i) We see contract and breach of contract as so closely related to each other that the commercial nature of the contract automatically affects the breach thereof;

(ii) We see the breach of contract as an independent activity, which would allow us to qualify it as ‘any other transaction’ in the sense of §3(3)(c) STIA 1978; as a result, we could admit a commercial activity only in cases where the foreign state did not act in the exercise of its sovereign authority.

In that case the foreign state could escape responsibility under the commercial contract despite of the restrictive immunity doctrine.

This was exactly the intriguing question to solve for the Lord judges in I Congreso del Partido, a highly complex and interesting case.

— [1981] 2 All E.R. 1064 (H.L.), [1981] 2 Lloyd’s Rep. 367, [1983] 1 A.C. 244, 64 ILR 307 (1983). I owe gratitude to Professor Dr. Georg Ress from Saarland University to have directed my attention toward this leading case. See also my exam of the case in Peter Fritz Walter, Gibt es eine Beweislastverteilung bei der Immunität von Staaten, 30 RIW/AWD, 9–14 (1984).

The State Immunity Act 1978 was not yet applicable for this precedent, as it is not applied retroactively.

— Lord Wilberforce explained: ‘If these matters had arisen as at the present date, they would be governed by the State Immunity Act 1978. This Act, which came into force on 22nd November 1978, introduced, by statute, a restrictive theory of state immunity into English law by means of a number of detailed exceptions to a general rule of State immunity. It was not retrospective. [1981] 2 All E.R. 1064, 1069 (a).

Nonetheless, the case is to be considered of such high importance that it certainly also impacts upon the interpretation of the Act. The factual background is quite complex.

— See the report of Lord Wilberforce, ‘Outline of Facts’, [1981] 2 All E.R. 1064, 1067–1068.

The litigation was about a cargo of Cuban sugar to Chile, effected in 1973, in exercise of a contract concluded between Cubazucar, an organism of the Cuban government, and Chilean merchants. The sugar was transported on two ships, the Playa Larga and the Marble Islands. While the Playa Larga was discharging the cargo in the port of Valparaiso and the Marble Islands was still on high sea, the Chilean government changed because of the coup d’état by general Pinochet, on September 11, 1973.

The Cuban government decided to severe all diplomatic relations with the new Chilean government, and with Chilean merchants, and ordered the captains of the two ships to return back to Cuba. The diplomatic relations between the two countries were effectively severed later on.

The Playa Larga arrived in Cuba, while the Marble Islands was seized in the Panama Canal, but could escape the seizure and headed toward North Vietnam.

This ship, that belonged to a Liechtenstein company, was then acquired by Cuba. The cargo, discharged at Haiphong, was offered to the people of North Vietnam within the framework of an aid programme that Cuba entertained with that country.

As to this particular fact, Lord Wilberforce noted that Cuba had testified, by a high employee of the ministry of foreign affairs that the donation of ten thousand and eight hundred tons of sugar to the people of North Vietnam was expressly commanded by the Cuban government, in accordance with a law that governs the aid programme concluded between the two countries. (Id., 1076, (e).

In pursuit of damages suffered and as indemnity, the Chilean merchants seized another Cuban ship, the I Congreso, and its sugar cargo, in the port of London. Cuba claimed sovereign immunity in the English court. The merchants argued that a foreign state who has entered the world market place and contracted with private merchants could not later on breach their contracts by invoking governmental purposes. Cuba admitted it could not invoke absolute immunity in this case, but that even under the restrictive immunity doctrine, it could invoke such immunity in the present case because the activity in question was not the commercial contract, but its breach, which had been a government act that was to be seen in the framework of Cuban foreign policy.

The High Court judgment gave right to Cuba’s argument and granted sovereign immunity. [1977] 1 Lloyd’s Rep. 536, [1978] 1 Q.B. 500 (Justice Robert Goff).

Judge Goff held that the breach of the contract was derived ‘from an actus jure imperii of the Republic of Cuba.’ [1978] 1 Q.B. 500, 533. The opposite position was taken by Lord Denning, M.R. in the judgment of the Court of Appeals. [1980] 1 Lloyd’s Rep. 23 (C.A.).

He considered as ‘reasonably clear’ the fact that the only criterion to consider in the question immunity vel non was the nature of the activity in question, not its purpose. (Id., p. 30).

According to Lord Denning, the origin of all the complex developments of the case was the original commercial contract, and only that was to be considered. For Lord Denning, it was not correct to divide the contract and the breach of contract into two different activities, or, in other words, he held that a breach of contract automatically shares the nature of the contract itself.

Such an act — a plain repudiation of a contract — cannot be regarded as an act of such a nature as to give rise to sovereign immunity. It matters not what was the purpose of the repudiation. If it had been done for economic reasons — as for instance, because the market price of sugar had risen sharply — it could not possibly have given rise to sovereign immunity. If it had been done for humanitarian reasons — as, for instance, because the Cuban government were short of sugar for their own people — or wanted to give it to the people of North Vietnam — equally it could not possibly have given rise to sovereign immunity. It was in fact done out of anger at the coup d’état in Chile and out of hostility to the new regime. That motive cannot alter the nature of the act, nor can it give sovereign immunity where otherwise there would be none. It is the nature of the act that matters, not the motive behind it. (Id., p. 31 (§17).

Lord Wilberforce’s judgment assumes a more flexible position and he asks the pertinent question in a subtler manner:

The question is whether the acts which gave rise to an alleged cause of action were done in the context of a trading relationship or were done by the government of the Republic of Cuba acting wholly outside the trading relationship and in exercise of the power of the state. [1981] 2 All. E.R. 1064, 1074 (h).

For rendering this distinction, the judge developed some kind of evidence rule that is based upon the restrictive immunity doctrine:

Under the restrictive theory the court has first to characterize the activity into which the defendant state has entered. Having done this and (assumedly) found it to be of a commercial, or private law, character, it may take the view that contractual breaches, or torts, prima facie fall within the same sphere of activity. It should then be for the defendant state to make a case that the act complained of is outside that sphere, and within that of sovereign action.

— [1981] 2 All E.R. 1064, 1072 (g), quoting Juan Ismael & Co., Inc. v. Government of the Republic of Indonesia, [1954] 3 All E.R. 236, [1955] A.C. 72, [1954] 3 W.L.R. 531, [1954] 2 Lloyd’s Rep. 175.

There is hardly any doubt that the purpose behind the repudiation of the contract was of a public, governmental character in the present case. And the context of this action taken to severe the contract was situated within the foreign policy of the Republic of Cuba. It was actually a series of concomitant actions:

— the repudiation of commercial relations with Chile;

— the repudiation of diplomatic relations with Chile;

— the donation of a part of the cargo to the people of North Vietnam within an aid programme, that was governed by a national law of Cuba. Lord Wilberforce argued:

I do not think that there is any doubt that the decision not to complete uploading at Valparaiso, or to discharge at Callao, was a political decision taken by the government of the Republic of Cuba for political and non-commercial reasons. [1981] 2 All. E.R. 1064, 1074 (j).

The decisive question was thus if the action at the basis of the litigation had been undertaken in the context of a commercial relation, or if it was part of a political measure, thereby being situated completely outside of the commercial relation and within the domain of political, governmental power.

The conclusion which emerges is that in considering, under the restrictive theory, whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state was made, with a view to deciding whether the relevant act(s) on which the claim is based should, in that context, be considered as fairly within an area of activity, trading or commercial or otherwise of a private law character, in which the state has chosen to engage or whether the relevant act(s) should be considered as having been done outside that area and within the sphere of governmental or sovereign activity. [1981] 2 All. E.R. 1064, 1074 (c).

With regard to the factual background of the other ship, the Playa Larga, Lord Wilberforce pursued:

If immunity were to be granted if any decision taken by the trading state were shown to be not commercially, but politically, inspired, the restrictive theory would almost cease to have any content and trading relations as to state-owned ships would become impossible. It is precisely to protect private traders against politically inspired breaches, or wrongs, that the restrictive theory allows states to be brought before a municipal court. It may be too stark to say of a state ‘once a trader always a trader’; but, in order to withdraw its action from the sphere of acts done iure gestionis, a state must be able to point to some act clearly done jure imperii. [1981] 2 All. E.R. 1064, 1075 (f).

In accordance with the Court of Appeals judgment and the other judges of the House of Lords, Lord Wilberforce admitted the appeal of the Chilean merchants and denied Cuba immunity from jurisdiction.

— The other judges were Lord Diplock, id., 1078–1080; Lord Edmund-Davies, id., 1080–1082; Lord Keith of Kinkel, id., 1082 and Lord Bridge of Harwich, id., 1082–1083.

However, regarding the ship Marble Islands, the judges were divided into two camps. Lord Wilberforce and Lord Edmund-Davies did not follow Lord Denning’s opinion, and they were put in minority by the other judges of the House of Lords.

Nonetheless, the weight of their opinions on the level of the formation of international law is considerable, and should not be underestimated. Lord Wilberforce, while generally in agreement that it is the nature of the activity in question that is to be considered, conceded ‘that the purpose … may throw some light on the nature of what was done.’ [1981] 2 All E.R. 1064, 1077 (h).

Lord Edmund-Davies shared this opinion and added that ‘if in these circumstances it be held that the Republic of Cuba cannot rely on state immunity, I find it impossible to imagine circumstances where the doctrine can operate.’ (Id., p. 1082 (c).

In fact, the factual background regarding the Marble Islands does not give any indications that what had been done was done in the context of the original commercial activity, but rather outside of it. This is particularly striking in view of the fact that the cargo was donated to the people of North Vietnam in accordance with Cuban law.

It is difficult to construe a nexus between this governmental action and the original commercial relationship. To say it with Wilberforce’s terminology that puts the divider in terms of ‘spheres’ of action, it can be said that the act of donation was outside the sphere of the commercial transaction.

Now, when we apply this theory, the question of the burden of proof comes up. Dr. Georg Ress formulated it in these terms:

Lord Wilberforce’s opinion leads straight to the question who bears the burden of proof for the nature of the act in question. When there are commercial relations between a state and a particular, the latter can invoke that all breach of contract or illicit action prima face is within the commercial sphere of the contract. Then the burden is upon the foreign state to produce evidence that its action was exceptionally outside the economic sphere, and as a result, within the sphere of public, governmental action (acta iure imperii).

— Georg Ress, Les tendances de l’évolution de l’immunité de l’État étranger, in: Droit international et droit interne (1982), 90 (Translation mine).

Simply to invoke public purposes here is not enough for the foreign state to discharge its burden of proof for the fact that the repudiation of the contract was exceptionally outside the commercial sphere, and within the sphere of public, governmental activity.

— Id. See also my own conclusion in Peter-Fritz Walter ‘Gibt es eine Beweislastverteilung bei der Immunität von Staaten? 30 RIW/AWD 9–14, 9 ff., 11 (1984).

Ress writes that for discharging this burden, the foreign state must prove really peculiar circumstances that were at the basis of the breach of the commercial contract and that clearly point to the foreign state having acting within its realm of sacrosanct governmental authority. In I Congreso del Partido, it seems, Lord Wilberforce and Lord Edmund-Davies were indeed coming to that conclusion with regard to what was happening with the cargo of the Marble Islands. However, the majority of the Lords applied the evidence rule ‘in dubio contra immunitatem.’

This leading case thus is relevant for the interpretation of the STIA 1978. When we follow the minority opinions of Lords Wilberforce and Edmund-Davies, the breach of a contractual relation by a foreign state would be an act independent of the contract itself, to be qualified by its own nature. If the breach of contract was prima facie within the commercial sphere of the contract, which is notably the case when a private person could have effected it, the burden is upon the foreign state to demonstrate that its action was within the public, governmental sphere of activity. This means that the act in question must be an actus iure imperii.

In addition, we should reflect if splitting off the private, commercial relationship and contract and its subsequent breach is not in basic contradiction with the restrictive immunity doctrine?

This argument was brought forward by Francis A. Mann, in his case note on the I Congreso decision.

— Francis A. Mann, A New Aspect of the Restrictive Theory of Sovereign Immunity, 31 ICLQ 573–575 (1982).

Mann’s answer in his article is that such a split is not permitted under the restrictive doctrine. Referring to Lord Wilberforce’s opinion, Mann pursued:

When in the past one spoke of acts done jure gestionis, then, in the context of contracts, one had in mind the fact that the contract rather than its breach could be so characterized. The ‘act complained of’ was believed to be irrelevant: if a trading contract was frustrated by a sovereign act such as an export prohibition, it was thought to be the contract, the course of action, that had to be looked at for the purpose of the grant or denial or immunity and the circumstances of its breach related to a possible defense, but had nothing to do with immunity. In other words, immunity was believed to depend, not on the act complained of, but to the act to be enforced. (…) It can only be hoped that similar ideas will not find their way into the interpretations of the State Immunity Act 1978, where, indeed, they ought to find no place. (Id., 574).

According to the majority of the Lords in this case, all state action leading to a breach of contract, even though the purposes of the illicit action were governmental, is forcibly related to the contract itself, and thus participates in the commercial nature of it.

This solution can be described with the formula ‘in dubio contra immunitatem,’ and it really embodies the restrictive immunity doctrine that is at the basis of the STIA 1978. As to the allocation of the burden of proof, the I Congreso precedent confirms the principle that we already found, that is, that the burden is upon the foreign state to show that the action in question was one of a public, governmental nature.

Analogous to the Alberti case, we can reasonably admit also under the British Act that the foreign state is not obliged to refute all the exceptions to immunity, but only those the plaintiff has invoked in its claim. Hence, the prima facie case the foreign state has to establish in order to meet its burden is limited to addressing only those exceptions the plaintiff relies upon. And of course, the foreign state also has to prove that it is a foreign state in the sense of §14(1) STIA 1978. The proof of this element is facilitated, as we have seen, through §21(a), where it is stated that the certificate of the Secretary of State represents conclusive evidence to this effect.

Consequently, the burden of proof for its immunity claim is upon the foreign state, but for all other elements in respect to the competence of the court, the burden of proof principally lies with the plaintiff.

The British Act is less ambiguous and convoluted here than the FSIA 1976 as it doesn’t confuse competence and jurisdiction. An example can be found in how the British Act deals with default judgments against foreign states, §12(4) STIA 1978.

— Analogous provisions are to be found in Singapore’s STIA 1979, §14(4), Pakistan’s STIO 1981, §13(4), and South Africa’s FSIA 87, 1981, §13(4). The analogous provision in the Canadian Act, §9(6) doesn’t mention any proof requirement. But as it is with the British Act, the requirement of a valid service of process follows from general procedural principles. It’s upon the plaintiff to prove satisfactorily to the court that all the conditions for the court’s jurisdiction and the additional conditions for a default judgment have been met.

This section namely doesn’t mention that a valid service of process must have been made, as it is stated in §1608(e) FSIA, precisely because of that entanglement between subject matter jurisdiction and personal jurisdiction. §27 of the Australian FSIA 1985 contains an interesting and original provision in that it requires both a valid service of process, §27 (1)(a) and that ‘the court is satisfied that, in the proceeding, the foreign State is not immune.’

— The analogous provision for separate entities of foreign states is §27(2) FSIA 1985 (Australia).

This formulation betrays that immunity vel non is a decisive criterion for deciding upon a default judgment. The solution cannot be different than it is for the other acts, that is, the burden of proof here is entirely with the plaintiff to show that the action at the basis of the claim was one of a private, commercial character.

Separate Entities of a Foreign State

As the privilege of sovereign immunity is in principle reserved to foreign states, an immunity of legally separate entities of foreign states requires a particular justification.

All immunity acts here examined provide distinct provisions for the immunity of separate entities, or agencies or instrumentalities of foreign states. Another distinction regularly made between foreign states and their separate entities is to be found for service of process, and in matters of immunity from execution.

— For Service of Process, see §1608(a),(b) FSIA and §9(1) STIA 1982 (Canada), for foreign states, and §9(3) STIA 1982, for agencies.

— Regarding Immunity from Execution, further see §§1610(a),(b), 1611(b)(1) FSIA, §§11(1),(2),(3),(4) STIA 1982, as well as §35 FSIA 1985.

However, the STIA 1978 and the acts of Singapore, Pakistan and South Africa grant immunity only to foreign states, denying to apply this rule to separate entities of foreign states.

Section 14(1)(a),(b),(c) STIA was almost literally overtaken by the other statutes.

§14(1) STIA 1978

(1) The immunities and privileges conferred by this Part of this Act apply to any foreign or commonwealth State other than the United Kingdom; and references to a State include references to — (a) the sovereign or other head of that State in his public capacity; (b) the government of that State; and (c) any department of that government, but not to any entity (hereafter referred to as ‘separate entity’) which is distinct from the executive organs of the government of the State and capable of suing and being sued.

— The literally identical provisions are §3(1) STIA 1979 (Singapore) and §3(1) STIO 1981 (Pakistan), the almost literally identical provision is §1 FSIA 87, 1981 (South Africa), while the Australian Act treats separate entities like foreign states, §22 FSIA 1985.

The general rule of immunity, §1(1) STIA 1978 is thus not applicable to separate entities of foreign states. This difference to the American and Canadian Acts is explained in the legislative history to the British Act. In Trendtex, [1977] 1 Lloyd’s Rep. 581, the High Court decision, Judge Donaldson explained:

The remaining part of this issue involves more complex considerations. What has to be decided is whether the Central Bank is an arm, an organ, an alter ego, a part or an agency of the Nigerian government. (…) It is, therefore, necessary to examine the juridical status and practical working of the Central Bank. This is a matter of evidence. (Id., 584).

The restrictive immunity doctrine does not contain an immunity rule for entities which are legally separate from foreign states. In the contrary is immunity to be granted to those entities if, and only if, there is a nexus between their activity and the governmental activity of the state.

Even under the absolute immunity doctrine, the immunity to be granted to foreign states did not extent to separate legal entities.

As under this doctrine the burden of proof was anyway with the plaintiff for any exception to immunity, there was no question that this applies also for the fact that the state organism is a ‘separate legal entity.’ In Krajina v. Tass Agency et al., [1949] 2 All E.R. 274 (C.A.), Lord Cohen stated:

It is obvious that the first question we have to decide is whether or not the evidence makes out a prima facie case that Tass was a separate legal entity, for, if it was not, it seems quite plain that the evidence does establish that Tass was a department of the Soviet State, and unless counsel for the plaintiff can establish it to be a separate legal entity, it is not disputed that this appeal, in this court at any rate, must fail. The argument on this point can, I think, be summarized as follows. The burden of proof that Tass is a legal entity rests, it is true, on the plaintiff. (Id., 277–278).

The burden of proof that such a nexus exists now is however upon the separate entity, as Judge Donaldson ruled: ‘The onus of establishing this immunity is upon the Central Bank.’

In the STIA 1978, the criterion of such a link or proximity between the entity and the administration of the foreign state, was abandoned. Instead, section 14(2) states:

§14(2) STIA 1978

A separate entity is immune from the jurisdiction of the courts of the United Kingdom if, and only if – (a) the proceedings relate to anything done by it in the exercise of sovereign authority, and (b) the circumstances are such that such a State … would have been so immune.

— See literally identical statements in §16(2) of Singapore’s STIA 1979 and §15(2) of Pakistan’s STIO 1981.

The formulation ‘if, and only if’ clearly indicates that the burden of proof is upon the separate entity for their immunity claim. This is in accordance with the legislative history of the British Act which stated competence of the British forum over such entities, with immunity as the exception. When we consider the construction of §14(2) STIA 1978, we can thus talk about a presumption against immunity relating to separate entities of foreign states.

— See Brower, Bistline and Loomis, The Foreign Sovereign Immunities Act of 1976 in Practice, 73 AJIL 200, 210 (1979).

The various immunity statutes differ in this respect. While the American, Canadian and Australian acts let separate entities participate in general immunity as a rule, the other statutes don’t and even reverse the rule-and-exception schema, which leads to a presumption against immunity.

With regard to the British Act, Georges R. Delaume speaks of a ‘general rule of nonimmunity,’ regarding separate entities.

— George R. Delaume, The State immunity Act of the United Kingdom, 73 AJIL 1985, 188 (1979).

Conclusion

Under the STIA 1978, the burden of proof for jurisdictional immunity is upon the foreign state, and a fortiori, upon a separate entity of the foreign state. This result is in accordance with the allocation of the burden of proof under the American Act. The construction of the British act is hardly apt to provide a guideline for finding the burden of proof, as little as the American Act could fulfill this task.

The reason is simply that all statutes on foreign sovereign immunity are drafted with the historical perspective, not the burden of proof, as the primary focus.

That is why they posit immunity as the rule, and not the original rule, that assumes the competence of the courts as the rule.

As the number of exceptions is so high, the rule of immunity from jurisdiction can rightly be called a ‘residual concept,’ which means that in dubio, it is to be decided contra immunitatem. In addition, and equally in accordance with the American Act, the British Act did not change ordinary procedural principles under which the plaintiff must prove all elements for the court’s competence.

From a procedural point of view, as under the American Act, the foreign state has the right to begin and is thus charged with the evidential burden to establish a prima facie case about two elements: that it is a foreign state and that the activity in question was of a public, governmental character.

In case the claim is directed against a separate entity of a foreign state, the STIA 1978 goes farther than the FSIA 1976 in that it erects a presumption of nonimmunity that the separate entity must overcome by conclusive proof, not just prima face evidence.

This is thus a higher standard of proof, that makes sense because an entity that is legally setup, and thereby different from the foreign state, must justify why it should be treated like a foreign state and enjoy sovereign immunity.


Immunity from Execution

The provisions regarding immunity from execution are to be found, in the British Act, a bit hidden, in section 13, under ‘Other Procedural Privileges.’ The general rule of immunity from execution is stated in §13(2)(b) STIA 1978.

§13(2)(b) STIA 1978

(b) the property of a State shall not be subject to any process for the enforcement of a judgment or arbitration award or, in an action in rem, for its arrest, detention or sale.

— Analogous provisions are to be found in §15(2)(b) STIA 1979, §14(2)(b) STIO 1981, §14(1)(b) FSIA 87, 1981, §11(1) STIA 1982 and §30 FSIA 1985.

Apart from immunity waivers which are governed by §13(3) STIA 1978, the Act provides the following exception to immunity from execution:

§13(4),(5) STIA 1978

(4) Subsection (2)(b) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; (…) (5) The head of a State’s diplomatic mission in the United Kingdom, or the person for the time being performing his functions, shall be deemed to have authority to give on behalf of the State … for purposes of subsection (4) above, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial purposes shall be accepted as sufficient evidence of that fact unless the contrary is proved.

— Analogous provisions can be found in §1610(a)(2) FSIA, §15(4) STIA 1979, §14(2)(b) STIO 1981, §14(3) FSIA 87, 1981, §11(1)(b) STIA 1982 and §32 FSIA 1985. With regard to §13(5) STIA 1978, analogous provisions are to be found with §14(4) STIO 1981 and §15(5) STIA 1979.

Two questions are to be asked:

(i) How do we have to understand the criterion ‘for commercial purposes’, §13(4), when the state property is used both for commercial and governmental purposes?

(ii) Who bears the burden of proof for the fact that the property was used for commercial purposes under the terms of this section?

The questions were tackled by the House of Lords in Alcom Ltd. v. Republic of Colombia, [1984] 2 Lloyd’s Rep. 24 (H.L.), 23 ILM 719 (1984), 22 ILM 1307 (1983)(C.A.). Alcom Ltd., a company that provided security equipment to the Colombian embassy acquired a garnishee order over the embassy’s bank account, which was held with a commercial bank in London. The Colombian Ambassador, in accordance with §13(5) STIA 1978, submitted to the court a certificate that stated as follows:

The undersigned Ambassador Extraordinary and Plenipotentiary of the Republic of Colombia to the Court of St. James’s hereby certifies that: The funds deposited by the Colombian Embassy in its bank accounts at the First National Bank of Boston in London are not in use nor intended for use for commercial purposes but only to meet the expenditure necessarily incurred in the day to day running of the Diplomatic Mission. [Signed] (23 ILM 719, 725).

In the High Court, the plaintiff argued that this proof was not conclusive as the terms of the certificate were contradictory. Expenses incurring ‘in the day to day running’ of an embassy were always commercial, as the definition of the British Act in this respect was rather large.

In fact, §17(1) STIA states that ‘commercial purposes means purposes of such transactions or activities as are mentioned in section 3(3) above.’ However, the plaintiff did not submit any evidence in support of their view, as they thought it was a legal argument only, not a question of fact.

Justice Hobhouse however rejected this argument, stating that in his opinion a bank account used for an embassy ‘is prima facie non-commercial.’ (22 ILM 1307, 1313 (1983).

The judge distinguished between governmental expenses as, for example, the salary of the ambassador and the salaries of the Colombian officials, and commercial expenses. Unfortunately, the account statements did not reveal in which way the particular expenses were used. Consequently, the judge ruled that the seizure of the account was not allowed under international law.

The judges of the Court of Appeals, Sir John Donaldson, M.R., Lord Justice May and Lord Justice Dillon, rendered a more subtle and sophisticated argument, by saying that ‘the purpose of the money in a bank account can never be ‘to run an embassy,’ and that it rather serves ‘only to … pay for goods and services or to enter into other transactions which enable the embassy to be run.’ (22 ILM 1307, 1314–1315).

As a result, the judges did not consider the objective for which the account was used, as §13(5) STIA requires it (‘use … for commercial purposes’), but the nature of the potential transactions that the money can be used for. (Id., 1315–1316). And as the nature of those transactions is commercial, the judges admitted the appeal.

However, the House of Lords reversed the appeal and reinstated the High Court decision in a leading case that was going to serve interpreting this crucial criterion in §13(5) STIA 1978. At the start, Lord Diplock explained that British law contained two different rules, followed by a number of exceptions, relative to adjudicative jurisdiction, on the one hand, and to enforcement jurisdiction, on the other.

In creating these exceptions, for which it has recourse to a somewhat convoluted style of draftsmanship providing for exceptions to exceptions which have the effect of restoring in part an immunity which some other subsection would appear to have removed, the Act nevertheless draws a clear distinction between the adjudicative jurisdiction and the enforcement jurisdiction of courts of law in the United Kingdom. Section 2 to 11 deal with the adjudicative jurisdiction. Sections 12 to 14 deal with procedure and of these, sections 13(2) to (6) and 14(3) and (4) deal in particular with enforcement jurisdiction. (23 ILM 719, 721–722 (1984).

After having clarified that the credit on a bank account is ‘property’ under §13(b)(2) STIA 1978, Lord Diplock tackled the decisive question:

My Lords, the decisive question for your Lordships is whether in the context of the other provisions of the Act to which I have referred, and against the background of its subject-matter, public international law, the words ‘property which is for the time being in use or intended for use for commercial purposes’, appearing as an exception to a general immunity to the enforcement jurisdiction of United Kingdom courts accorded by section 13(2) to the property of a foreign State, are apt to describe the debt represented by the balance standing to the credit of a current account kept with a commercial banker for the purpose of meeting the expenditure incurred in the day-to-day running of the diplomatic mission of a foreign state. (Id., 724).

As Judge Hobhouse, so did Lord Diplock address the problem of a mixed use of a bank account held for a foreign embassy, and concluded.

The debt owed by the bank to the foreign sovereign State and represented by the credit balance in the current account kept by the diplomatic mission of that State as a possible subject-matter of the enforcement jurisdiction of the court is however one and indivisible; it is not susceptible of anticipatory dissection into the various uses to which monies drawn upon it might have been put in the future if it had not been subjected to attachment by garnishee proceedings. (Id.)

This argument thus led to the conclusion that the seizure of an account always affects the entire account, thereby unduly comprising the part of the credit balance that serves governmental purposes. This argument is on a same line of reasoning with the decision of the German Constitutional Court of 13th of December 1977, the Beschluss des Bundesverfassungsgerichts zu Fragen der Staatenimmunität.

— BVerfGE 46, pp. 342 ff. ZaöRV 1978, 245 ff., RIW/AWD 1978, 122 ff., UN-MAT., 297 ff. 65 ILR 146 (1984). See also Ress, Entwicklungstendenzen der Immunität ausländischer Staaten, 40 ZaöRV 217, 218–222 (1980) and Peter-Fritz Walter, Gibt es eine Beweislastverteilung bei der Immunität von Staaten? 30 RIW/AWD, 9, 11–14.

After a thorough exam of international jurisprudence on sovereign immunity, the Court stated that in principle there was no more absolute immunity from execution.

When a bank account served diplomatic purposes, the special regulations regarding diplomatic immunity would have to be respected. This would mean in practice that there is a rule of non-intervention of the forum state in the function of the foreign embassy. Even if the credit balance in the embassy’s account serves commercial purposes, the principle of non-intervention prohibited any preemptory measure of execution against such an account.

The opposite opinion, the court ruled, would allow it the judiciary to scrutinize foreign bank accounts and to which purposes those accounts would be used; such a procedure was to be considered as an interference into the internal affairs of other states.

However the German court concluded that international law did not prohibit the foreign state needing to certify that the credit on such an account served the running of the embassy. As to the form and content of such a certificate, international law required only that it be rendered by an organ acting in due responsibility for the foreign state.

The requirements of international law, formulated so meticulously, were in fact observed by section 13(5) STIA 1978 and the respective provisions in the Singapore and Pakistani statutes on foreign sovereign immunity, as these provisions require a certificate, which serves, in its simplicity, as an effective wand for warding off the seizure of bank account credits that serve, at least in part, governmental purposes.

Lord Diplock held that the certificate being sufficient evidence unless the contrary is proved means that the burden of proof is upon the plaintiff or judgment creditor to demonstrate that the credit on the account served exclusively commercial purposes in the sense of §13(4) STIA 1978:

The onus of proving that the balance standing to the credit of the diplomatic mission’s current bank account falls within the exception created by the crucial words in section 13(4) lies upon the judgment creditor. (23 ILM 719, 725 (1984).

The allocation of the burden of proof is thus as follows:

— The schema of rule and exception applies in such a way that the general rule of immunity from execution applies, except that one of the exception to this rule applies. The burden of proof that an exception applies is upon the plaintiff.

— If the foreign state wants to invoke the presumption of immunity, it must provide, by the competent ambassador, the certificate required by §13(5) STIA 1978. This certificate represents conclusive proof that the account in question serves at least in part governmental purposes, except if the plaintiff can prove the contrary.

In Alcom, the House of Lords has provided a guideline for the burden of proof under the STIA 1978, in matters of immunity from execution. In accordance with American federal jurisprudence under the FSIA 1976, the House of Lords distinguished between the two immunity rules; as to immunity from execution, the court concluded that the burden of proof lies with the plaintiff or judgment creditor.

One can also come to this conclusion by looking at the drafting technique of sections §13(2)(b) — general rule — and §13(4) — exceptions — and the particular provision of §13(5), which has the function of a presumption of immunity that the judgment creditor must overcome (‘unless the contrary is proved’).

It follows ordinary rules of statutory construction that in such a case the burden of proof lies with the one who struggles against the presumption, which is the judgment creditor.

— See also Browser/Bistline/Loomis, The Foreign Sovereign Immunities Act in Practice, 73 AJIL 200, 211 (1979): ‘Furthermore, the UK Act gives effect to an ambassadorial certificate the specified property is not in use or intended for use for commercial purposes ‘unless the contrary is proved’, section 13(5), whereas U.S. Act makes no presumption.’

Under the STIA 1978, the burden of proof in matters of immunity from execution lies thus with the plaintiff or judgment creditor.


Conclusion

Immunity from Jurisdiction

Just as the American Act, the State Immunity Act 1978 treats jurisdictional immunities and immunity from execution in a different manner, in accordance with their different historical development. As a result, the burden of proof had to be found for both rules separately and distinctively.

While for immunity from jurisdiction, the general rule of immunity pronounced by §1(1) STIA 1978 only grants a residual immunity because, in reality, the vast number of exceptions are rather the regular case in practice, the burden of proof is upon the foreign state, and a fortiori, upon a separate entity of the foreign state, for supporting its immunity claim by prima facie evidence to the court. Here, we can talk about an immunity rule ‘in dubio contra immunitatem.’

However, we should ask if there is not a protected core area of sovereign immunity where immunity still prevails? We have seen in our examination of the FSIA 1976 that indeed such a core area or core areas are to be admitted, and have been preserved by meticulous federal case law, in each and every case, when sensitive political areas of foreign states were to be adjudicated by American courts. The question namely comes up if those core areas are not, as Dr. Georg Ress suggested, part of an international standard of typical governmental activity?

— Professor Dr. Georg Ress, Entwicklungstendenzen der Immunität ausländischer Staaten, 40 ZaöRV 217, 257 ff. (1980).

As we have seen, in American case law, such a standard can be found to be existent and this jurisprudence will most probably have an impact upon the development of international law in that the British, Singaporean, Pakistani, South African, Canadian or Australian judge are likely to follow this guideline.

— It should be noted that three entire volumes of the International Law Reports, Nos. 63, 64, 65, are destined only to the subject of foreign sovereign immunity; volume 63 (1982) contains only post-FSIA American federal case law.

Immunity from Execution

As to immunity from execution, the rule stated in §13(2) STIA 1978 represents a veritable general rule from which some exceptions §13(3),(4), giving competence to the courts in a limited number of cases.

The rule works as a presumption in the sense that it’s upon the judgment creditor or seeker of relief to invoke any of the exceptions, but he bears the burden of proof, both the evidential and the persuasive burden for an exception to immunity from execution to apply.

The foreign state only needs to submit the certificate required by §13(5) to activate the presumption in its favor. This certificate is conclusive proof that the active credit on an embassy account serves at least in part governmental purposes.

The plaintiff, in order to overcome the presumption of immunity, must provide full contradictory evidence. It is not sufficient, to this purpose, that the plaintiff just contests the certificate because it might not be clear and transparent under its terms.

That is to say, it is not sufficient for the plaintiff to just make a prima face case to overcome the presumption, but he must prove satisfactorily to the court, by a preponderance of evidence, that the account has been serving exclusively commercial purposes. The wording, ‘unless the contrary is proved,’ is clear and unequivocal.

The American, South African and Canadian Acts do not contain a provision such as §13(5) STIA 1978; however, it’s probable that the British solution will be more in alignment with international law than a more liberal rule regarding execution into bank accounts serving in part governmental purposes.

We do believe that this is going to become the standard of international law in this respect and that judges of those other jurisdictions are likely to interpret these other immunity statutes in accordance with the British solution.


©2015 Peter Fritz Walter. Some rights reserved.
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