Posts Tagged State immunity
A short update on the Prestige litigation. I reported earlier on the disclosure order in the recognition leg of the case. In that review I also listed the issues to be decided and the preliminary assessment under Title III Brussels Ia. That appeal is to be heard in December 2020 (see also 21 ff of current judgment). In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v Spain (M/T “PRESTIGE”)  EWHC 1582 (Comm) Henshaw J on 18 June held on yet another set of issues, related to arbitration and State Immunity.
He concluded after lengthy analysis to which it is best to refer in full, that Spain does not have immunity in respect of these proceedings; that the permission to serve the arbitration obligation our of jurisdiction, granted earlier to the Club should stand; and that the court should appoint an arbitrator.
I am pondering whether to add a State immunity chapter to the 3rd ed. of the Handbook – if I do, this case will certainly feature.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11, Heading 18.104.22.168, Heading 2.2.16.
Belgian constitutional court’s ruling on vulture funds fails properly to answer arguments on the basis of EU law.
I have reported earlier on the action of MNL Capital against the 2015 Belgian Vulture Fund Act (my EN translation here), on which I have a paper here. I then reported on a related action (where MNL were joined by Yukos).
At the end of May the Belgian Constitutional Court, ruling 61/2018, rejected an MNL challenge to the Act, which was based inter alia on an alleged infringement of the Brussels I Recast Regulation: at A.23.2: MNL argued that Belgium cannot across the board reject vulture funds activities (I agree) based on an absolute ordre public argument against them: MNL suggested this entails a one-sided reading of ordre public in favour of foreign entities refusing to honour their debt.
Due in large part to the peculiarities of constitutional review in Belgium, the Court at B.15.4 looked at the argument purely from a non-discrimination point of view: creditors who have obtained a foreign judgment against a State are no better or worse off than those having obtained such ruling from a Belgian court.
In essence therefore the arguments on the basis of EU law are left entirely unanswered.
(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.16, Heading 22.214.171.124.4.
I applied for funding 2 years back to have someone conduct a thorough review of recent development in State Immunity. Funding was not granted: quelle horeur!. Reviewers suggested there was no need to revisit an area where law and practice is settled: quelle erreur!
Needless to say both statutory and case-law developments have proven reviewers wrong since. I would still be happy by the way to supervise research in the area (happier still for someone to fund it).
Now, coming to the point: in 16-22.494 Congo v Commisimpex the French Supreme Court essentially held that the French Sapin II law applies retroactively. State assets employed iure imperii are only available for seizure following express and property-specific waiver. The Court’s decision does not reflect unisono developments in other States (neither indeed, I agree with Victor Aupetit), does it help France with regulatory competition in civil procedure: quite a few jurisdictions have taken a more relaxed and wide approach to contractual waiver of State immunity.
Update 17 November 2017 For discussions in Dutch case-law (including re contractual waiver) with respect to SHAPE, see here.
‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’
Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.
Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).
Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.
An interesting and well argued judgment.
Vulture funds (and Yukos) fail in Round 1 against Belgian enforcement regime viz sovereign immunity. No reference to Luxemburg on compatibility of Brussels I with international law.
Thank you Quentin Declève for alerting me to the Constitutional Court’s judgment on a related action (where MNL were joined by Yukos) namely against the act of 23 August 2015 which introduced Article 1412quinquies in the Belgian Judicial Code. It is noteworthy that the action against the Act of July has not yet been decided by the Court (that case number, for the aficionados, is 6371), at the least I have not been able to locate any judgment).
As Quentin summarises, as a general rule, Article 1412 quinquies of the Belgian Judicial Code provides that assets located in Belgium that belong to a foreign State are immune from execution and cannot be subject to enforcement proceedings by creditors. Exceptions to that rule are possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge. This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.
The Court has now annulled the word ‘specifically’ but has otherwise left the Act intact. Quentin summarises how the Court found that this proviso is not part of international law on State immunity.
Now, picking up where Quentin left: part of applicants’ arguments relate to Brussels I Recast. The argument is made that Belgium with its Act re-introduces exequatur, now that is has been abolished by the Recast. Belgium’s Government seems to argue that the law relating to seizure has public order character and hence is covered by the ordre public exception of the Brussels I Recast Regulation, and that seizure in Belgium which would go against public international customary law on State immunity, along the same lines would be covered by the ordre public exception of the Recast (para A.5.2, p.6).
The Court (at B.29.1 ff, .34 ff) deals with the Brussels I arguments very very succinctly: it refers to Article 41(1) which other than the substantive requirements of title III, makes recognition and enforcement subject to the law of the State of enforcement. The Court also says enforcement is not entirely obstructed: some of the foreign entities’ assets remain subject to seizure; and there are other ways of enforcement other than seizure. Finally the Court suggests that the Brussels I Recast surely must not be applied in a way which would be incompatible with international customary law. By rejecting the suggestion for a prelimary reference to Luxembourg (suggestion made by the Belgian State, unusually), the Court clearly believes that call is not one that has to be made by Luxembourg. Pitty: that would have been an interesting reference.
Again, NML Capital’s action against the Vulture Fund Act is still ongoing, lest I have missed withdrawal. As I noted in my paper, this Act I believe is wanting on various grounds, including some related to the New York Convention and the Brussels I Recast.
(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.16, Heading 126.96.36.199.4.
The UKSC in MOD v Iraqi Civilians: Immunity of coalition forces is procedural. Civilians’ claim in tort is time-barred.
Ministry of Defence [MOD] v Iraqi civilians highlights a classic in private international law (statutes of limitation), with an interesting link to State immunity. Procedural issues are considered to be part of the lex fori. Meaning, a court always applies its own procedural rules. For the discussions in the Rome II context, see an earlier posting. However what is less settled is whether statutes of limitation fall under procedure or substantial law. If the former, then they follow the lex fori. If the latter, then they follow lex causae: the law applicable to the substantive matter at issue.
Limitation, which deprives the litigant of a forensic remedy but does not extinguish his right, was traditionally classified by the English courts as procedural. The result was that until the position was altered by statute in 1984, the English courts disregarded foreign limitation law and applied the English statutes of limitation irrespective of the lex causae. This was widely regarded as unsatisfactory, mainly because of the rather technical character of the distinction on which it was based between barring the remedy and extinguishing the right.
The Foreign Limitation Periods Act 1984 changed the position and provided for the English courts, with limited exceptions, to apply the limitation rules of the lex causae.
Now, in MOD v Iraqi Civilians, on appeal from  EWCA Civ 1241, the civilians claim to have suffered unlawful detention and/or physical maltreatment at the hands of British armed forces in Iraq between 2003 and 2009, for which the MOD is liable in tort. It is agreed between the parties that any liability of the Ministry in tort is governed by Iraqi law. Under article 232 of the Civil Code of Iraq, the standard limitation period applicable to claims of this kind in Iraqi law is three years from the day on which the claimant became aware of the injury and of the person who caused it. The action sub judice was begun more than three years after most of the claimants must have been aware of these matters.
However, Coalition Provisional Authority Order 17, which had and still has the force of law in Iraq, made it impossible for claimants to sue the British government in Iraq. Section 2(1) of the Order provides that coalition forces in Iraq (including British forces) are “immune from Iraqi legal process.” Claimants argue that Order 17 needs to be seen as an ‘impediment’ within the meaning of article 435 of the Iraqi Civil Code, which is one of a number of provisions suspending the running of time in particular cases. It provides:
” Article 435 – (1) The time limit barring the hearing of the case is suspended by a lawful excuse such as where the plaintiff is a minor or interdicted and has no guardian or is absent in a remote foreign country, or where the case is between spouses or ascendants and descendants, or if there is another impediment rendering it impossible for the plaintiff to claim his right.
(2) The period which lapses while the excuse still exists (lasts) shall not be taken into account (for the running of the time limitation).”
Lord Sumption leading, held (at 11) that Order 17 is not a rule of limitation, but a particular form of state immunity, which serves as a limitation on the jurisdiction of the courts. It is therefore necessarily procedural and local in nature. It is not legally relevant, given the claimants have brought proceedings in England, what impediments might have prevented similar proceedings in Iraq [at 13]. Claimants could have always and did eventually sue in the UK. Claimants’ submission, if accepted, would mean that there was no limitation period at all affecting the present proceedings in England, by reason of a consideration (CPA Order 17) which had no relevance to English proceedings because it has no application outside Iraq and has never impeded resort to the English court (at 16).
The Appeal was dismissed. In the wider context of immunity, it is important precedent. Claimants faced with immunity obstacles to litigation in a jurisdiction, must not hesitate to start proceedings elsewhere, where no such obstacles exist. In proceedings before the English courts, any delay in doing so is subject to the ordinary limitation periods of the lex causae.
Paris suing FoxNews. (Birmingham joining optional). A dream essay for conflict of laws, many questions for practitioners..
Exam time for conflict of laws students the world over, I imagine. Here’s a dream essay question. (Pick and mix a definite possibility). Bear in mind each of these questions exercises practitioners, too.
‘It is widely reported that Paris (the town, not the socialite) may sue FoxNews. (For the sake of this essay assumed to be incorporated in Delaware, USA). A FoxNews analyst suggested the existence of ‘no go’ zones for non-muslims in the French capital.
1. How would you qualify Paris’ suit?
2. Where would you advise Paris to file the suit and why? What legal basis supports your litigation advice?
3. Assuming a French court would entertain the suit. What law would it apply to the case at hand?
4. Assuming a US (State) court would entertain the suit. What law would it apply to the case at hand?
5. Assume FoxNews countersues Paris.
5.1. Under the assumption of Q3, can the French Court join the countersuit to the original one?
5.2. Under the assumption of Q4, can the US Court join the countersuit to the original one?
5.3. Assume FoxNews is successful on its countersuit in a French court and wishes to have that judgment recognised and enforced against the bank account of Paris with BancoFrancais in London. Would an English court apply state immunity?
5.4 Assuming the same as under 5.3 however against assets held in Belgium. Would you come to the same conclusion?
5.5 Assume the same as under 5.3 however on a countersuit in a US court. Would FoxNews be succesful in enforcing the judgment in France?
6. Replace ‘Paris’ with ‘Birmingham (United Kingdom)’. Revisit all of the questions above.
7. Add (rather than replace) a claim against FoxNews by Birmingham, UK. Could a French court assumed to have already upheld jurisdiction over Paris’ claim, join a Birmingham claim? On what legal basis? (if at all).’