3. The Alternative Condition of Enforcement Measures against State Property
3.2 Allocated or Earmarked Property
Definitely, international community is divided on the issue of the effect of implied waiver of immunity from execution. UN Convention does not directly provide the implied consent in the provisions of measures of constraint. But, in reality, there is a fact that, a State does not express consent to execution in writing, or by written or oral
299 The formula of Article 1610 (d) is that, ‗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 in any action brought in a court of the United States or of a state, if the foreign State has explicitly waived its immunity ……‘ The
synonymous substitution of the sentence is that the property of a foreign State used for a commercial activity in the US shall be immune from attachment prior to the entry of judgment in any action brought in a court of the US except the foreign State has explicitly waived its immunity.
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notice to the court, but the State is prepared to enforce a judgment or an arbitration award and allocates the property for satisfying the claims established by the judgment or the award. In order to response the situation, the Convention gives the waiver of immunity by way of conducts.
According to the Article 19 (b) of UN Convention, a foreign State has allocated or earmarked property for the satisfaction of the claim which is the object of an action brought in a court of forum State, that foreign State cannot invoke immunity for the property.
With regard to the functions of the Article 19 (b), a representative view held that it prescribes the implied consent in disguise. But the International Law Commission made another interpretation. In the Commentary on Draft Articles on Jurisdictional Immunities of States and Their Property, it argued that,
―The property can be subject to measures of constraint if it has been allocated or earmarked for the satisfaction of the claim or debt which is the object of the proceeding. This should have the effect of preventing extraneous or unprotected claimants from frustrating the intention of the State to satisfy specific claims or to make payment for an admitted liability.‖ 300
From the commentary, it is obvious that the Article 19 (b) of UN Convention is designed to ensure the implementation of the intention of the State to satisfy specific claims or to make payment for an admitted liability.
The judicial practice of States fashioned the rule that ‗specific allocation of State property‘ is not immune from execution measures. As a matter of fact, few countries are willing to designate their property for the use of execution. The establishment of such exception relies largely on the discretionary of the court and its expansionary interpretation to the law of State immunity. Understandably, ‗the question whether particular property has or has not been allocated for the satisfaction of a claim may in some situations be ambiguous and should be resolved by the court.‘301
For example, in the Alcom Case,302 the House of Lords UK, by interpreting the Article 13 (4) of State Immunity Act, regarded ‗the specific allocation of State
300 See: International Law Commission, Commentary on Draft Articles on Jurisdictional Immunities of States and Their Property (1991), draft Article.18, para.10.
301 See: International Law Commission, Commentary on Draft Articles on Jurisdictional Immunities of States and Their Property (1991), draft Article.18, para.10.
302 See: Alcom Ltd v. Republic of Colombia, England, House of Lords, (1984) AC 580; 74 ILR 170.
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property‘ as a method to remove immunity from execution of State property. The UK House of Lords held that the property ‗documentary credits‘ was designated by the diplomatic mission for commercial transaction, because that ‗documentary credits‘
were issued by Colombia in the payment of the price of goods. It satisfied the requirements of the provision in Article 13 (4): ‗the property which is for the time being in use or intended use for commercial purposes‘, UK judicial authority hereby was entitled to taking measures of constraint on the current account of the diplomatic mission of Colombia.
A set of subsequent cases was affected by Alcom Case. Take the Orascom Case as an example. The claimant Orascom obtained the ICC arbitration award against the Republic of Chad and sought a third party debt order against a bank account: the Borrower‘s Account held by Chad in London. The account was set up under requirements imposed by the World Bank. Chad‘s oil revenues were to be paid into a Transit Account of Citibank branch in London, and sums were taken from that account every month to repay Chad‘s borrowings from the World Bank. The balance went into the Borrower‘s Account. Chad asserted State immunity for the Borrower‘s Account, and invoked Article 13 (4) of the UK State Immunity Act 1978 under which State property is immune from execution unless it is ‗for the time being in use or intended for commercial purposes‘. However, the Commercial Court, Queen‘s Bench Division of High Court rejected the Chad‘s claims, and held that the Borrower‘s Account was in use for the commercial purposes. Because the Borrower‘s Account was designated to receive the proceeds of oil revenues and as a guarantee of repaying loans, it was the earmarked property for commercial transactions. As a result, the Borrower‘s Account was not immune from execution measures. 303
The rule that allocated or earmarked State property is not protected by immunity arises from the expansionary interpretation of courts on the use of that property in judicial practice. This exception to the immunity from execution of State property may be seen as ‗a move towards recognizing that identified purpose for which the State property is destined may determine its status as immune or not.‘304
303 See: Orascom Telecom Holding SAE v. Republic of Chad, Citibank NA (Third Party) International Bank for Reconstruction and Development and Another (Intervening), England, High Court, Queen‘s Bench Division, Commercial Court, [2008] EWHC 1841 (Comm); 2 Lloyd‘s Law Reporter (September, 2008), 396.
304 See: Hazel Fox CMG QC, The Law of State Immunity, 2nd edition, Oxford University Press (2008), p.631.
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