Sovereign Immunity from
Execution
with an emphasis on the enforcement
of arbitral awards
Koji Takahashi (Doshisha University Law School, Japan)
(Authored in the spring of 2007)
Some important instruments
• European Convention on State Immunity 1972
• United Nations Convention on Jurisdictional Immunities
of States and Their Property 2004
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•
•
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United States Foreign Sovereign Immunities Act 1976
United Kingdom State Immunity Act 1978
Canadian State Immunity Act 1985
Australian Foreign States Immunities Act 1985
• General principles of international law
The extent of immunity depends on the law of the
country where the execution is sought.
Conflicting interests behind
sovereign immunity issues
Interests of private litigants in obtaining recovery
Interests of sovereign states in:
•
not being subjected to the sovereign power of another
state
•
avoiding excessive liability.
Kalogeropoulou and others v. Greece and Germany
The European Court of Human Rights rejected the
contention that the refusal to take execution measures
infringed Article 6(1) of the European Convention on
Human Rights.
Article 6(1)
“In the determination of his civil rights and obligations ... everyone is
entitled to a fair ... hearing ... by an ... impartial tribunal...”
Compliance by the defendant
states with judgments against them
Opportunity of voluntary compliance
•
•
U.S. Foreign Sovereign Immunities Act
s. 1610 (c) No … execution … shall be permitted until the court has ordered such
… execution after having determined that a reasonable period of time has
elapsed following the entry of judgment and the giving of any notice ….
UN Convention
A proposal ‘no measures of constraint shall be taken against the property of a
state before that state has been given adequate opportunity to comply with the
judgment’.
Obligation of compliance
•
European Convention
Article 20
A Contracting State shall give effect to a judgment given against it by a court of
another Contracting State: …
Article 23
No measures of execution or preventive measures against the property of a
Contracting State may be taken in the territory of another Contracting State
except where and to the extent that the State has expressly consented thereto in
writing in any particular case.
Two types of immunity
• Immunity from jurisdiction
• immunity from execution
cf. Switzerland, République Arabe d'Egypte v. Cinetel,
Tribunal fédéral suisse (1979) 65 ILR 425
'The Federal Court considers immunity from execution
as simply the consequence of jurisdictional immunity'
Article 20 of the UN Convention
Where consent to the measures of constraint is required
under articles 18 and 19, consent to the exercise of
jurisdiction under article 7 shall not imply consent to the
taking of measures of constraint.
Slower shift from absolute to
restrictive theories
• Under the absolute theory of immunity, the
immunity was inviolable absent the consent of
the foreign state.
• U.S. Congress, House of Representatives,
Report No. 94-1487 “(The bill enacting the
Foreign Sovereign Immunities Act 1976)
…would conform the execution immunity rules
more closely to the jurisdiction immunity rules”
• Greater potential to upset diplomatic relations or
even hamper the functional capacity of the state.
More limited restrictions on immunity from
execution than immunity from jurisdiction
"last bastion of state immunity“
U.S. Foreign Sovereign Immunities Act 1976
• s. 1609 … the property in the United States of a foreign state shall be
immune from … execution except as provided in sections 1610 and 1611 of
this chapter.
• s. 1610. (a) The property in the United States of a foreign state … used for
a commercial activity in the United States, shall not be immune … from
execution … if …
• s. 1611 (b) Notwithstanding the provisions of section 1610 of this chapter,
the property of a foreign state shall be immune … from execution, if-(1) the property is that of a foreign central bank … held for its own account,
unless such bank … or its parent foreign government, has explicitly waived
its immunity … from execution …; or
(2) the property is … used in connection with a military activity and
(A) is of a military character, or
(B) is under the control of a military authority or defense agency.
Exceptions to immunity
UN Convention Article 19
No post-judgment measures of constraint …
against property of a State may be taken …
unless and except to the extent that:
– (a) the State has expressly consented to the
taking of such measures … or
– (b) the State has allocated or earmarked
property for the satisfaction of the claim … or
– (c) … the property is specifically in use … by
the State for other than government noncommercial purposes ….
Waiver of immunity
UN Convention Article 19
No post-judgment measures of constraint … against property of a
State may be taken … unless and except to the extent that:
(a) the State has expressly consented to the taking of such
measures as indicated:
– (i) by international agreement;
– (ii) by an arbitration agreement or in a written contract; or
– (iii) by a declaration before the court or by a written communication after
a dispute between the parties has arisen;
US Foreign Sovereign Immunities Act Section 1610
(a) … the property in the United States of a foreign state ... used for
commercial activity in the United States ... shall not be immune …
from execution ... if
(1) the foreign state has waived its immunity … from execution
either explicitly or by implication …
Property used for non-commercial activity:
unaffected by a waiver of immunity
US Foreign Sovereign Immunities Act section 1610
(a) … the property in the United States of a foreign
state ... used for commercial activity in the United
States ... shall not be immune … from execution ... if
(1) the foreign state has waived its immunity … from
execution either explicitly or by implication …
Af-Cap, Inc. v. Republic of Congo, D.D.C. (2004) 326
F.Supp.2d 128.
The Republic of Congo's embassy was immune from
attachment:
(1) because it was not property used for a "commercial activity."
(2) under the Vienna Convention on Diplomatic Relations.
Properties used for the function of diplomatic
missions: unaffected by a waiver of immunity
Premises of diplomatic missions and the residence
of diplomatic agents
Vienna Convention on Diplomatic Relations 1961
Article 22
…
3. The premises of the mission, their furnishings and other property
thereon and the means of transport of the mission shall be immune
from … execution.
Article 30
1. The private residence of a diplomatic agent shall enjoy the same
inviolability and protection as the premises of the mission.
A Co. Ltd v. Republic of X [1990] 2 Lloyds Rep. 520
(to be continued)
Properties used for the function of diplomatic
missions: unaffected by a waiver of immunity
Bank accounts of diplomatic missions
Ambassade de la fédération de Russie en France v. Société
NOGA, Cour d'Appel, Paris, [2001] 128 JDI 116.
Vienna Convention on Diplomatic Relations 1961 Article 25
The receiving State shall accord full facilities for the performance
of the functions of the mission.
cf. UN Convention Article 21
1. …: (a) property, including any bank account, which is used
… in the performance of the functions of the diplomatic
mission …;
…
2. Paragraph 1 is without prejudice to … article 19,
subparagraphs (a) and (b).
Does an arbitration agreement constitute a
waiver of immunity from execution?: UN
Convention
Article 19 State immunity from post-judgment measures of constraint
No post-judgment measures of constraint … against property of a State
may be taken … unless and except to the extent that:
(a) the State has expressly consented to the taking of such measures as
indicated:
…
(ii) by an arbitration agreement or in a written contract; or
…
Article 17 Effect of an arbitration agreement
If a State enters into an agreement in writing … to submit to arbitration
differences relating to a commercial transaction, that State cannot invoke
immunity from jurisdiction before a court of another State which is otherwise
competent in a proceeding which relates to:
(a) the validity, interpretation or application of the arbitration agreement;
(b) the arbitration procedure; or
(c) the confirmation or the setting aside of the award,
unless the arbitration agreement otherwise provides.
Does an arbitration agreement constitute a
waiver of immunity from execution?: France
Société Eurodif v. République islamique d'Iran, Cour de
Cassation [1984] R.C.D.I.P. 644
An arbitration clause cannot itself imply a waiver of
immunity from execution.
Creighton Ltd. v. Qatar, Cour de cassation [2000] Journal
du Droit Internationale 1054
By submitting the dispute to arbitration under the rules of
the International Chamber of Commerce, the state has
implicitly waived immunity from execution.
Art. 24(2) of the ICC Rules of Conciliation and Arbitration (in
force until 31 Dec 1997): 'the parties shall be deemed to have
undertaken to carry out the resulting award without delay and to
have waived their right to any form of appeal …'.
Does an arbitration agreement constitute a
waiver of immunity from execution?: UK
UK State Immunity Act 1978 s. 9 Arbitrations
(1) Where a State has agreed in writing to submit a
dispute … to arbitration, the State is not immune as
respects proceedings in the courts of the United
Kingdom which relate to the arbitration.
Svenska Petroleum Exploration AB v. Lithuania (No.2)
[2006] EWCA Civ 1529
If a state had agreed to submit disputes to arbitration, it
was amenable to "such processes as might be
necessary to render the arbitration effective and this
included enforcement proceedings".
Does an arbitration agreement constitute a
waiver of immunity from execution?: US
• Ipitrade International SA v Federal Republic of Nigeria, 1978, 465 F
Supp 824
• Birch Shipping Corp. v. Embassy of United Republic of Tanzania,
United States District Court for the District of Columbia, 1980, 507 F.
Supp. 311
Foreign Sovereign Immunities Act 1976
s. 1610. Exceptions to the immunity from attachment or execution
(a) The property in the United States of a foreign state … shall not
be immune … from execution, upon a judgment entered by a court
of the United States or of a State … if-(1) the foreign state has waived its immunity … from execution either
explicitly or by implication … or
…
(6) the judgment is based on an order confirming an arbitral award
rendered against the foreign state, provided that … execution, would not
be inconsistent with any provision in the arbitral agreement, or …
Does an arbitration agreement constitute a
waiver of immunity from execution?:
Australia
Foreign States Immunities Act 1985 Section 17 Arbitrations
(2) Where:
(a) … a foreign State would not be immune in a proceeding
concerning a transaction or event; and
(b) the foreign State is a party to an agreement to submit to
arbitration a dispute about the transaction or event;
then, subject to any inconsistent provision in the agreement, the
foreign State is not immune in a proceeding concerning the
recognition as binding for any purpose, or for the enforcement, of an
award made pursuant to the arbitration, wherever the award was
made.
Australian Law Reform Commission, Foreign State Immunity, Report
No. 24 (1984) para. 107
This will allow the enforcement of awards arising out of commercial
transactions, or of other transactions of the foreign state over which
the courts would have had jurisdiction.
Property in use for commercial purposes:
another category of exception to immunity
Test = Purpose of the property cf. nature of the act
UK State Immunity Act 1978 s. 13
(2) Subject to subsections (3) and (4) below-(b) the property of a State shall not be subject to any process for the
enforcement of a judgment or arbitration award ….
(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;
UN Convention
Article 19
No post-judgment measures of constraint … against property of a State may be
taken … unless and except to the extent that:
(c) it has been established that the property is specifically in use or intended for
use by the State for other than government non-commercial purposes and is in
the territory of the State of the forum, provided that post-judgment measures of
constraint may only be taken against property that has a connection with the
entity against which the proceeding was directed.
Requirement of nexus between the
property and the claim
France Société Eurodif v. République islamique d'Iran
Court of Cassation tacitly endorsed the requirement for a connection between the
property to be attached and the subject matter of the claim.
US Foreign Sovereign Immunities Act
s. 1610 (a) The property … of a foreign state … used for a commercial activity in the
United States, shall not be immune … from execution … if-- …
(2) the property is or was used for the commercial activity upon which the claim is
based,…
American Bar Association Working Group, “Reforming the Foreign Sovereign Immunities
Act” (2002) "Only in rare instances would a foreign state have property in the United
States, perhaps an office, warehouse, or goods awaiting export, "used" for the activity
giving rise to the claim."
UN Convention
"connection with the claim which is the object of the proceeding" :Draft Articles on the
Jurisdictional Immunities of States and Their Property, U.N. Doc. A/46/10 (1991)
Australian Law Reform Commission Report 24, Foreign State Immunity (1984) Summary
of Recommendations, para. 34
“There should be no requirement of a nexus between the transaction and the
property executed against.”
Categorical exclusion of certain
types of property
UN Convention
Article 21 Specific categories of property
1. The following categories, in particular, of property of a State shall not be
considered as property specifically in use or intended for use by the State
for other than government non-commercial purposes under article 19,
subparagraph (c):
(a) property, including any bank account, which is used or intended for use
in the performance of the functions of the diplomatic mission of the State or
its consular posts, special missions, missions to international organizations
or delegations to organs of international organizations or to international
conferences;
(b) property of a military character or used or intended for use in the
performance of military functions;
(c) property of the central bank or other monetary authority of the State;
(d) property forming part of the cultural heritage of the State or part of its
archives and not placed or intended to be placed on sale;
(e) property forming part of an exhibition of objects of scientific, cultural or
historical interest and not placed or intended to be placed on sale.
Embassy or consular accounts
a mixed account
an account used concurrently to satisfy commercial obligations and to fund
sovereign diplomatic activities, such as purchasing goods or services like
office supplies.
UN Convention Article 21(1)(a)
'used or intended for use for the purposes of the diplomatic mission'
Presumption in favour of non-commercial purpose
The Philippine Embassy Bank Account Case, Bundesverfassungsgericht,
13 Dec. 1977, 46 BVerfG 342; 65 ILR 146
... for the executing authorities of the receiving State to require the sending
State, without its consent, to provide details concerning the existence or the
past, present or future purposes of funds in such an account would
constitute interference, contrary to international law, in matters within the
exclusive competence of the sending State.
Burden of proof on the purpose of
property
Presumption in favour of non-commercial purposes of state-owned property
Société Eurodif v. République islamique d'Iran, Cour de cassation, Cour de cassation, 14
Mar. 1984 [1984] R.C.D.I.P. 644
'Assets belonging to a foreign State are presumed to be destined for a public activity. It is
for the State's creditors to prove by any means that attached assets are destined for an
economic or commercial activity under private law'.
Certificates of the head of a State’s diplomatic mission
UK State Immunity Act s. 13(5)
… for the purposes of subsection (4) above, [a] certificate [of the head of a foreign state's
diplomatic mission in the United Kingdom] to the effect that any property is not in use … for
commercial purposes shall be accepted as sufficient evidence of that fact unless the
contrary is proved.
Property apparently not in use
Australian Foreign States Immunities Act 1985
s. 32(3) For the purposes of this section:
…
(b) property that is apparently vacant or apparently not in use shall be taken to be being
used for commercial purposes unless the court is satisfied that it has been set aside
otherwise than for commercial purposes.
Other requirements for
enforcement
Connection between the claim and the State of enforcement
LIAMCO v. Libya, Swiss Federal Court, 19 June 1980
An expropriation dispute in Libya. The seat of arbitration in
Switzerland.
Executive authorisation for enforcement measures
• Criticism
– The authorisation requirement may be seen as an
infringement of the right of access to justice.
– The decision to grant or deny immunity may become
politicised.
• Condor and Filvem v. Ministry of Justice, 15 July 1992
The requirement of an authorisation by the Ministry of Justice
was held by the Italian Constitutional Court to infringe the right
to judicial protection enshrined in the Italian Constitution.
Pre-judgment Measures of
Constraint
to secure assets for the enforcement of a subsequent
judgment
e.g. pre-judgment attachment, Mareva injunction
The same test as for post-judgment measures
• Société Eurodif v. République islamique d'Iran, French
Cour de cassation, 14 Mar. 1984 [1984] R.C.D.I.P. 644
• Australian Foreign States Immunities Act 1985 s. 30
Except as provided by this Part, the property of a foreign State is
not subject to any process or order (whether interim or final) of
the courts of Australia for the satisfaction or enforcement of a
judgment ….
A broader immunity than for postjudgment measures
US Foreign Sovereign Immunities Act s. 1610
(d) The property of a foreign state … used for a commercial activity in the United
States, shall not be immune from attachment prior to the entry of judgment … if-(1) the foreign state has explicitly waived its immunity from attachment prior to
judgment … and
(2) the purpose of the attachment is to secure satisfaction of a judgment that has
been or may ultimately be entered against the foreign state, and not to obtain
jurisdiction.
UN Convention Art. 18
No pre-judgement measures of constraint, such as attachment or arrest, against
property of a State may be taken in connection with a proceeding before a court of
another State unless and except to the extent that:
(a) the State has expressly consented to the taking of such measures as indicated:
(i) by international agreement;
(ii) by an arbitration agreement or in a written contract; or
(iii) by a declaration before the court or by a written communication after a dispute between
the parties has arisen; or
(b) the State has allocated or earmarked property for the satisfaction of the claim
which is the object of that proceeding.
Further reading
• August Reinisch, “European Court
Practice Concerning State Immunity from
Enforcement Measures” (2006) 17 Eur. J.
Int'l L. 803
• Jeremy Ostrander, “The Last Bastion of
Sovereign Immunity: A Comparative Look
at Immunity from Execution of Judgments”
(2004) 22 Berkeley J. Int'l L. 541