3. The Restrictive Doctrine of State Immunity
3.3 The Crucial Elements for the application of Restrictive Immunity
3.3 THE CRUCIAL ELEMENTS FOR THE APPLICATION OF RESTRICTIVE IMMUNITY
The current practice of international community proves that the restrictive doctrine of State immunity is increasingly getting to be an international consensus. In context of restrictive State immunity, a State can invoke immunity before the courts of another State only with regard to sovereign activities, because the law of State immunity is used to facilitate the performance of governmental functions of State.
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Therefore, it is very important for application of restrictive State immunity to clarify the question how to classify and evaluate State acts.
Empirically, the application of restrictive State immunity is supposed to meet a couple of rules established by international practice: the private act of States and the private act performed in the territory of the forum State46. They constitute the pillars of restrictive doctrine of State immunity.47
(1) The Classification of the Activity of State
State immunity has been recognized as a procedural plea that blocks the exercise of jurisdiction by virtue of the status of the defendant. In the dominant period of absolute State immunity, the courts paid close attention to the status of State, as long as the defendant has State identity, then it would be entitled to immunity. However, circumstances have been changed with the development of State immunity. Currently, it is widely recognized that a State can invoke immunity merely for its acta jure imperii rather than acta jure gestionis. Under the circumstance of restrictive immunity, the courts of a State generally deduce the status of State from State activities. Only a State‘s acts can be attributed to the governmental or sovereign classification, can the defendant State enjoy immunity in the courts of another State. The classification of State acts becomes a significant issue in the application of restrictive doctrine of State immunity in practice.
―The consequence of the application of the restrictive doctrine, which changed the nature of immunity, shifts the emphasis to the attribute of the act not the personality of the sovereign, and makes immunity depend on function not status.‖ 48
In these countries who adopt restrictive approach, their courts usually employ a distinguishing technique to classify a State‘s acts in question, and then determine whether or not grant immunity to that State. The distinguishing technique derives from a tradition of the dichotomy between civil society and political nation.
According to the dichotomy, the performance and operation of public power is restricted in the realm of political nation in order to defend the private autonomy.
Traditionally, no matter what acts a sovereign State performs could be recognized as
46 The phrase ‗in the territory of the forum State‘ is intended to be only a simplified form for various situations where an act has a jurisdictional connection with the territory of the forum State.
47 See: Xiaodong Yang, State Immunity in International Law, Cambridge University Press (2012), p. 58.
48 See: Hazel Fox CMG QC, The Law of State Immunity, 2nd edition, Oxford University Press (2008), p. 103.
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acta jure imperii which falls into the realm of political nation. However, with the expansion of State activities in economic field, it is improper to categorize all of acts of State into the domain of political nation. Assuming that a State is involved in a commercial contract, in this case the ac of the State is inclined to be regarded as the
‗private act‘ rather than the sovereign act, since the State does not perform its public or sovereign authority. Actually, it is hard to say that a State still implements its public or governmental functions on condition that the State involves in transactions or contracts in the manner of a private individual, and thus it cannot invoke State immunity.
To distinguish the identity of a sovereign State is not an intractable task, while to classify the attribute of the State‘s activities is really arduous. In practice, the courts of forum State usually employ private person test, the essence of which is the analogy of the foreign State to a private individual.49
Based on the dichotomy between private law and public law, the theory of dual personality of State appeared. This theory argued that States existed both as ‗political entity‘ and as ‗civil entity‘ (juridical person of private law) according to the capacity of State. A State is obligated to provide for the administration of public organs and the interests of private individuals, so it may involve in the matters of private law. If a State acts in the same manner as a private person, it will lose the opportunity to invoke immunity in a suit. In essence, the private person test believes that the grant or denial of immunity to a foreign State depends on whether or not the State acts in the capacity of a private person.
As early as 1880s, the private person test was applied by some countries of Civil Law system, such as Italy and Belgium.50 The landmark Empire of Iran Case signified that the international community began to accept this method. As the German Constitutional Court declared in the decision:
―As a means for determining the distinction between acts jure imperii and jure gestionis one should rather refer to the nature of the State transaction or the resulting legal relationships, and not to the motive or purpose of the State activity. It thus depends on whether the foreign
49 The ―private person test‖ has been variously been expressed as ―on an equal footing with private person‖, ―in the same manner as a private individual‖, ―in a private capacity‖, ―in the realm of private law‖ and so on.
50 See: Morellet v. Governo Danese, Italy (1882), 26 AJIL Supplement [1932] 481. Guttieres v. Elmilik, Italy (1886), 26 AJIL Supplement [1932] 622. La Société Anonyme Compagnie du Chemin de Fer
Liégeois-Limbourgeois v. État Néerlandais, Belgium (1903), 31 JDIP [1904] 417.
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State has acted in exercise of its sovereign authority, that is in public law, or like a private person, that is in private law.‖ 51
The Austrian Supreme Court in the case Steinmetz v. Hungarian made a very similar statement as follows:
―As soon as a foreign State acts in the capacity of a contractual partner in commercial transactions, for example as the owner of a nationalized undertaking, it thereby descends to the level of subjects of private law and is as much amenable to domestic jurisdiction as any other foreigner.‖52
More importantly, the private person test was confirmed by the European Convention on State Immunity 1972. The Article 7 (1) provides that,
―A Contracting State cannot claim immunity from the jurisdiction of a court of another Contracting State if it has on the territory of the State of the forum an office, agency or other establishment through which it engages, in the same manner as a private person, in an industrial, commercial or financial activity, and the proceedings relate to that activity of the office, agency or establishment.‖
The Article 26 and Article 27 (2) of the European Convention employ the same phrase, namely ‗in the same manner as a private person‘.
The private person test as well as the theory of dual personality of State was well recognized by States of Civil law system.
Traditionally, Civil law States pay attention to abstract thinking and theory, and formulate general principles from abstractions, so they created the private person test to classify the non-sovereign acts of States in complicated cases. However, influenced by empiricism, Common law States usually do well in the case-to-case thinking, and usually use specific matters which based on experiences and cases to define the scope of State immunity. For instance, States of Anglo-American law system generally associate non-sovereign acts of State with commercial activities. If a State engaged in commercial transaction, then its acts can be readily recognized as non-sovereign activities, and the State cannot claim immunity. But this practice cannot accurately
51 See: Empire of Iran Case, Germany (1963), 45 ILR 57.
52 See: Steinmetz v. Hungarian, Austria (1970), 65 ILR 15.
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identify the sovereign acts as well as non-sovereign acts of State. The Common law States gradually drew on the private person test from the Civil law system.
In the US, the drafters of the Foreign Sovereign Immunities Acts 1976 mentioned the method in a report,
―The sovereign immunity of foreign States should be restricted to cases involving acts of a foreign State which are sovereign or governmental in nature, as opposed to acts which are either commercial in nature or those which private persons normally perform.‖53
The British judicial practice accepted the private person test after the case of I Congreso del Partido.54
And also, the US Supreme Court declared in the case of Republic of Argentina v.
Weltover Inc.,
―When a foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign‟s actions are „commercial‟ within the meaning of the Foreign Sovereigns Immunities Act …… Thus, a foreign government‟s issuance of regulations limiting foreign currency exchange is a sovereign activity, because such authoritative control of commerce cannot be exercised by a private party; whereas a contract to buy army boots or even bullets is a
„commercial‟ activity, because private companies can similarly use sales contracts to acquire goods.‖55
The UK and US Court‘s change from a commercial activity for profit to conduct in the manner of a private party brings the restrictive approach closer to the Civil law criterion.56
Under the restrictive view of State immunity, States have dual personality: one assumes sovereign function, and the other belongs to the realm of private autonomy.
Accordingly, it is necessary to classify the activity of State so as to limit the extent of State immunity, and the private person test provides for a basic method to this classification.
(2) The Presumption of Jurisdiction Based on Territorial Connections
53 See: US House of Representatives, Report No. 94-1487, (1976), p. 14.
54 See: I Congreso del Partido, England (1977), [1978] 1 QB 500, 528; 64 ILR 154.
55 See: Republic of Argentina v. Weltover Inc., US, 504 US 607, 614~615, (1992); 100 ILR 509.
56 See: Hazel Fox CMG QC, The Law of State Immunity, 2nd edition, Oxford University Press (2008), p. 345.
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It is well known that the term ‗immunity‘ refers to be exempt from jurisdiction.
Where there is no presumed jurisdiction, there is no the issue of immunity. If the plaintiff to litigation considers the relevant matters beyond the competence of a State, he/she will not file a suit before the courts of that State. In this case, of course, State immunity has no opportunity to be applied.
Indeed, only a national court feels that it may be competent to hear and decide a case in which a foreign State is sued, and then it may have the opportunity to check whether or not it should grant immunity to that foreign State in the formal stage of establishment of jurisdiction. How does a national court get the general impression that a case comes within its jurisdiction? The most important connecting factor for a national court to determine the jurisdiction is territoriality. At the very beginning of State immunity, the Chief Justice Marshall explicated the relationship between the sovereign immunity and territorial jurisdiction in the The Schooner Exchange case,
―The jurisdiction of the nation within its own territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself. …… 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.
……
“This full and absolute territorial jurisdiction being alike the attribute of every sovereign, and being incapable of conferring extra-territorial power, would not seem to contemplate foreign sovereigns nor their sovereign rights as its objects. One sovereign being in no respect amenable to another; and being bound by obligations of the highest character not to degrade the dignity of his nation, by placing himself or its sovereign rights within the jurisdiction of another, can be supposed to enter a foreign territory only under an express license, or in the confidence that the immunities belonging to his independent sovereign station, though not expressly stipulated, are reserved by implication, and will be extended to him.
“This perfect equality and absolute independence of sovereigns, and this common interest impelling them to mutual intercourse, and an interchange of good offices with each other, has given rise to a class of cases in which every sovereign is understood to waive the exercise of a
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part of that complete exclusive territorial jurisdiction, which has been stated to be the attribute of every nation.”57
As to the opinion of US Supreme Court delivered in the decision, the territory is the boundary of sovereignty of a State, and every sovereign State is entitled the complete, exclusive and absolute jurisdiction based on territory. For the reason of common interest of States, each State compresses their territorial jurisdiction by themselves respectively. Therefore, based on the self-imposed diminution of jurisdiction, the State immunity appears in international practice. From the argumentation of US Supreme Court, it is readily to infer that territorial jurisdiction constitutes the foundation of State immunity.
It is worth noting that, on the one hand, the forum State may have right to exercise of jurisdiction by some other grounds (jurisdictional connections) permitted by national or international law, all of which should be more or less connected with territory. On the other hand, the territory just provides a prejudgment for jurisdictional issues from the appearance. Base on the territorial connections, national courts is approximately convinced that they may exercise the jurisdiction in the suits against a foreign State.
As a conclusion, the evolution of legal doctrine relating to State immunity experiences the transition from absolute doctrine to restrictive doctrine. It was in 1812 that the US Court first recognized a foreign State‘s claim to immunity from legal process, though not as a matter of right but of ‗grace‘ and ‗comity‘.58 Later, States became increasingly recognized that State immunity was mainly an international right entitled to sovereign States on the basis of principle of sovereign equality. Until 1970s, most of States in the world followed the doctrine of absolute immunity, under which the courts of the forum State would dismiss all claims against foreign States. The adoption of European Convention on State Immunity 1972 was a landmark in the history of the law of State immunity. After the Convention, more and more States were beginning to accept the theory of restrictive immunity via national legislation or judicial practice. In the context of restrictive State immunity, foreign States would continue to request immunity before the forum State in claims based on their public acts, but would not request immunity in claims based on their private acts. In fact, the
57 The Schooner Exchange v. McFaddon, US (1812), 11 US (7 Cranch) 116, 136~137.
58 See: Charles H. Brower II, International Decision: Republic of Austria v. Altmann, 124 S. Ct. 2240, 99 AJIL 236, 237 (2005).
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commercial transaction is the most important symbol and measure to distinguish State public acts from private acts. Consequently, identifying the commercial transaction is essential to the establishment of restrictive doctrine of State immunity.