anwer state immunity

8/2/2019 Anwer State Immunity

http://slidepdf.com/reader/full/anwer-state-immunity 1/9

Factors affecting FDI

This study has analysed the volume and determinants of Foreign Direct Investment (FDI) in developing countries

of the world. The analysis was based on a sample of 15 developing countries with 5 each from upper middle,

lower middle and lower income countries.

Social Impact of Recession

This study examines the impact of global recession on the economy of Pakistan. For a fragile economy like

Pakistan, coping with even a single economic crisis is difficult; let alone the two that followed in quick

succession— the unprecedented surge in commodity prices and then the global recession.

The volatility of Exchange rate:

The Adoption of flexible exchange rate system by many countries during 1973 produced a significant volatility

and uncertainty in exchange rates. This started a debate among policy makers and researchers about the impact

of exchange rate volatility on international trade.

Black Market Ex.Rate

Little attention has been paid to analyze the impact of black market exchange rate on the demand for money in

developing countries that have black market activities for their currencies. The main purpose of this study is to

examine empirically the impact of black market exchange rate on the demand for money in Pakistan where

official and black market exchange rates operate side by side due to exchange controls.

STOCK RETURNS AND INFLATION

The inflation rate in Pakistan has moved from 9.25 to 12.9 percent from 1991 to 1995. The towering rates of

monetary enlargement, low rate of economic growth in three out of the five years and adjustment in administered

prices contributed to the relatively high rates of inflation.

NONLINEARITY IN INFLATION

We usually develop models for forecasting purposes which we use in setting monetary and fiscal policies.

Unfortunately, if we look into the history, the forecasting record of economic variables is poor. To some extent

this could be owing to random human behaviour or availability of virgin data however rigid structural assumptions

of the model may also be responsible for the weak forecasting performance (Moshiri, 1997).

Essay PU:

The role of international trade in promoting economic growth has gained much importance over time. However,

the role of exports and imports instability has not been much highlighted in the literature. This study is focused to

investigate the role of trade instability in economic growth.

The intention of this essay is to clarify whether the commercial activities carried out by states

which do not have difference compared with commercial activities executed on behalf of individuals or companies, have immunity such as the immunity of sovereign action or not

particularly in the context of „State Immunity Act 1978‟.

This paper considers two main aspects:

Immunity from jurisdiction.

Immunity from Execution.



The functions of state immunity.

There are three key functions of state immunity: Firstly: the private parties resort to it when

there is conflict between them and one state in order determine their claims, and claim always

be in other state. Secondly: its other function is to determine whether the subject matter

belongs to the private law claims or public administration of the state. And finally: in the

situations where there is absence of international agreement, it leads to resolve the conflicting

claims in jurisdiction. The parties resort to it as way to determine the relevant state, especially

with regard to activities of the state toward private litigants1.

The difference between adjudicative and enforcement Jurisdiction.

State immunity Act 1978 as well as the European Convention, there is a separate treatment on

the subject of state immunity. Weather the immunity from adjudication or from enforcement,

in United Kingdom Act there is a clear difference between the adjudicative jurisdiction and

the enforcement jurisdiction. It is noticed that the adjudicative procedures starting fromsection 2 to 11, whereas sections 12 to 14 deal with procedure. At the same time dealing also

with the enforcement of jurisdiction, as in section 13 (2) to (6) and section 14(3) and (4). This

division basically leads to two results, firstly: the proceeding which is non-immune cannot be

implemented directly from the moment of judgement. Given the fact that there is a difference

in standards between the implementation phase and sentencing phase. Secondly: this division

may lead to difficulty in the application of the Act‟s provisions.

As this paper discussed above that Immunity from jurisdiction is distinct from immunity from

execution. Immunity from execution comprises measures of constraint directed against

property of the foreign state either for the purpose of enforcing judgments or for the purposeof pre-judgment attachment. Both types of immunities are subject to a commercial exception,

but it is generally more narrowly applied with regard to execution2.

Firstly: Immunity from Jurisdiction.

First of all, it should be considered that the State immunity Act 1978 regulates the immunities

of the United Kingdom, in order to be a system applied in the courts. This Act actually is

derived from the European Convention on state immunity of 1972. However, the major

difference between these Acts is the fact that United Kingdom‟s State Immunity Act of 1978is more restrictive in nature for immunities compared with European Convention. At the

same time it is also applied not only to the United Kingdom, but it can be applied according

to section 14(1) to the foreign state and commonwealth countries as well. On the other hand it

also applies whether the party is government of state, head of state, department of the

government or others3.

The most frequent basis for the exclusion of immunity for a transaction is its private law

character or its commercial nature. The first is used in many civil law countries while the

1

2d

3



second is used in most of the national legislation adopted in common law countries. But both

tend to approach the same result. For convenience, this note refers generally to the

commercial exception to encompass both the commercial and private law exception4.

The beginning of this Act contains a general provision that all states are immune from the

jurisdiction of the courts in United Kingdom. However, this general principle is not absolute,but received a set of exceptions that are explained in the legal nature of the state in case of

entry into the business relationship as a commercial party as follows:

Commercial transactions and Contracts.

The most important exception of State immunity Act 1978 is section 35. The structure of this

section is partially complex. And this referred to the legislative history. The Bill contains a

collection of sections that reduced of immunity in respect of activities and transactions that

were similarly performable by the private party/individual. Whereas adopting a different

approach to state immunity would be a fair balance in the rights of creditors by reference tothe difference between the law of sovereign authority and the private law nature. This section

also responded to the European Convention in same structure in article 4 and 7.

Subsection 1 of section 3 explained the procedures that the state cannot invoke the immunity,

which include commercial transactions such as which state be as party of business. As well as

the obligations of the contracts by the state, whether such contracts are commercial or non-

commercial, and whether to be performed wholly or partly in United Kingdom.

Subsection 3 of section 3 of this Act defined the term „commercial transaction‟. So this term

include all contracts for the supply of goods and services as well as all transactions andfinancial obligations in addition to loans and other financial transactions for the purpose of

providing finance and guarantee or any other compensation. Furthermore, all the activities

that is commercial in its nature such as industrial, financial, professional and other similar

character are excluded when the state are not regarded as the sovereign authority.

For example the contract to supply boots to the Army considered as a commercial transaction

regardless of the governmental nature of the activity, and thus is not immune according to

section 3 (3)(a).

In the case of Kuwait Airway Corp against Iraq Airway Corp, after Iraq invaded Kuwait in1990, Iraq brought 10 aircraft belonging to Kuwait airlines KAC by order of the Minster of

transport and communications of Iraq. This then became part of the IAC. Court of Appeal

decided that the transfer Kuwait Aircraft to Iraq is commercial process, because the IAC has

a separate state entity as it mentioned in section 14(1) and it is also fall within the definition

of „commercial transaction‟ in section 3(3). Thus, the case and the subject parties of the case

are considered as non-immune.

4

5



„The house of lords also has held that immunity conferred by reason of the government

nature of the initial seizure of another state's property can lose that character where

transferred into the ownership of a trading state agency by legislative decree‟.

These provisions have further eliminated that the court of United Kingdom has jurisdiction in

this matter, based on section 3 and 14(1). But on the other hand, and according to section

14(2) the court of United Kingdom is supposed to eliminate that it does not have jurisdiction.

Therefore, Even if the IAC is separate entity but that does not mean that the state has no

power to exercise its authority upon it. Hence, it is immune from any jurisdiction.

There is a general structure of this section that can be clarified in the following manner:

firstly, the term „contractual obligations‟ that is included in section 3 is not limited to

activities and contracts that the state is part of. But this also includes tort claims due to these

obligations. Secondly, the term „commercial transactions‟ has a negative and positive

meaning by contrast with activities of sovereign authority. This section is intended to separate

commercial activities on the activities of sovereign authority. So, the descriptive words in this

section such as industrial, commercial, financial, professional and other similar character, the

purpose of it is to discriminate the activities whether they belongs to jure imperii or jure

gestionis. Thirdly, the burden of proof in the case is subject to change. The defendant has

entered in the relationship as a state. Therefore, the claimant must prove and explains that the

transaction between him and the state is „commercial‟ and it is listed under section 3. If the

claimant demonstrates that the transaction or activity is industrial, commercial, financial,

professional or any activities belongs to the business, defendant „state‟ will deny the capacity

of the commercial activity and clarify that the activity is one of sovereign authority in order

to shelter immunity. Finally, it should be noted in this section that the definition of „commercial transaction‟ does not include contracts of employment between the state and

individuals6.

The intention of transaction.

Sometimes there is difficulty in determining whether the transactions are immune or non-

immune in the activities in which state is the party. Depending on the purpose or nature of the

transactions, especially as most of the activities that the state is a party, are for sovereign

purpose. However, courts in some countries make the nature of the activity as the main

principle to determine the type of immunity to be exercised in the subject case. However, at

the same time few countries list the activities that cannot be covered/protected under the

immunity. In United Kingdom it seems to combine both, the nature or the purpose of the

activity on one hand, and listed some of transactions on the other hand, such as (Patents and

trade markets, Employment contracts, Admiralty proceedings and others).

Therefore, the dependence on the nature of activity may lead to difficulties in such cases of

immunity, especially in some in some transactions that have two natures. The courts may see

that the transaction is not immune because it is of commercial nature. But at the same time

the act is practiced as a sovereign purpose. For example, the transaction between Argentina

and MNL Ltd Capital which is related to purchase of bonds by the government of Argentina,

6



the transaction on the face is commercial but on the other hand has a sovereign purpose. The

purpose is to try to address the crisis of debt, as experienced by the involved countries.

Contractual obligations carried out in UK by the state.

Under section 3(1)(b) immunity does not have any interest when the state be as party of

contract. Which means that the state cannot invoke immunity when it enters in a contractual

relationship, regardless of whether the relationship is of commercial in nature or not. This

section is also mentioned in the European convention in article 4. However, it is conditional

that the implementation of the contract in wholly or in parts, executed in the UK. This leads

to reduce the chance of its application and execution. This item does not include contracts

that are executed outside the UK. In addition to that there is other limitation contained in the

section 3(2) which reported that „subsection (1)(b) above does not apply if the contract (not

being a commercial transaction) was made in the territory of the State concerned and the

obligation in question is governed by its administrative law‟.

Exclusion where the state are parties to the dispute.

Under section 3(2) there is another exception of the section 3(1) where „ the parties to dispute

are states‟. If the dispute is between two states, section 3(1) does not apply. But sometimes

the relationship between the parties are containing a number of states, in this case, would

seem questionable. But the exception does not apply if claim is filed as separate contract

relating to the other parties. Accordingly, if there is a credit agreement between two states

related to promissory note issued to meet liability. In this case, no immunity where the parties

where to the note were not the states.

Such as the case between the Central Bank of Yemen (CBY) and Cardinal Financial

Investment (CFI) country name. The CBY argued that the court has no jurisdiction based on

the sections 3(2) and 14 of State Immunity Act. The original contract with regard to

promissory notes between two states, even if issued by separate entity (CBY), which is used

for sovereign purposes. Moreover, the assignment to CFI was not a commercial transaction

and therefore CBY is immune in such case. But the court held that the CBY cannot be

regarded as “state” within the meaning and application of section 3(2). Adding to that

issuance of promissory notes has no relationship with the exercise of sovereign authority.

Separate entities from jurisdiction.

According to section 14(2) the court in the UK in general does not have jurisdiction in

respect of separate entities, and therefore have immunity and that only: „if the proceedings

relating to anything done by it in the exercise of sovereign authority and the circumstances

are such that a state ... would have been so immune‟.

Grauforg J (year) stated that „the definition of separate entities would cover a Central Bank

or other monetary authority which is distinct from executive organs of suing and being sued,

if so then Central Bank or other monetary authority is covered by section 14(2)‟. And upon



that the Central Bank or other monetary authority are not immune from jurisdiction of the UK

unless to be part of section 14(2).

Secondly: immunity from execution.

Execution against the foreign states is considered as the most difficult stage compared with

determining jurisdiction, and no difference whether the enforcement is judgments or arbitral

awards. Given the fact that the state-owned assets existing in abroad are usually under the

name of the diplomatic mission or under the Central Bank, which are immune and are not

subject to execution.

Section 13 and 14 of this Act related to enforcement against State and State entities, section

13 include two cases the state cannot invoke by immunity. First: where there is a prior written

consent of the state, and the second: if the property is used or intended for use in commercial purpose. Whereas the section 14 deals with the separate entities and whether it is immune or

not.

The commercial property exception.

As a general principle in respect of property of the state according to section 13(2) shall not

be subject to the implementation process. Whether there was a court judgment or arbitral

award, in an action n rem or others. But there is an exception under section 13(4) „the

property is use or intend for use for commercial purpose‟ these property are not immune, and

therefore it can be subject to attachment. The meaning of „commercial purpose‟ defined insection 17 is as „purposes of such transaction or activities as are mentioned in section 3(3)

7.

section 13(4) give a great validity to the private parties to meet their claims with all the

property that is used for „commercial purpose‟. However, it does not allow issuing injunction

against its property, and thus it can be contrary to the rule of comment law.

Evidence of the use of the property.

The burden of proof is mentioned in section 13(5), and according to this section The

certificate is acceptable and considered as sufficient evidence that the property is not use or

intended to use by the state for commercial purpose. If approved that a person has the

authority to give information on behalf of the state in the UK, such as the representative of

the diplomatic mission or the person for the time being performing his function, this

declaration is an admission, which is valid unless the contrary is proved. But if the private

party presents evidence contrary to other evidence that are mentioned by the representative of

the state, the court must accept such evidences, and therefore the burden of proof moves to

the applicant. They must submit a proof that the property is use or intended to use for

commercial purpose in order to be attached.

7



An Egyptian company (Orascom Telecom Holding) acquired on the arbitration award by the

International Chamber of Commerce against Chad (country), which has failed to pay sums of

money. Chad has a set of accounts in London, some of these accounts are used for paying

their debts to the World Bank and others are used for commercial purpose. The company has

frozen one of these accounts, and reported that the account is used for commercial purpose.And therefore, non immune under section 14(4). But Chad has argued that, and stated that the

account is only used for sovereign purpose, hence, it is fall within section 14(2) by certificate

provided by ambassador.

But after verification of the certificate, which eventually turns out to be an incorrect

document. And it lacked evidence, and it was found that the account is used to save the

money of oil imports. Thus, it is falls under the definition of „commercial transactions‟

section 3(3) as well as section 14(4) where the property is used or intended to use for

commercial purpose, and therefore it was not regarded as immune.

Separate entities from enforcement.

Section 14(4) explained that the property of state include Central Bank or other monetary

authority does not apply to the provision of section 13(4) which is related to enforcement on

the property. Whether the use or intended for use for commercial purpose, and therefore, it

cannot be subject to enforcement whether there is a judgement or arbitral award. But other

separate entities can be subject of enforcement according to section 14(3) when these

separate entities submitted to the adjudicative jurisdiction of the UK courts.

AIG Capital Partner filed arbitration proceedings against the Republic of Kazakhstan for

breach of the contract between them; the arbitration award was issued to the AIG Company.

This then sought to enforce the award of arbitration in the United Kingdom against the assets

that held by AAMGS. However, the Central Bank of Kazakhstan acknowledged that these

assets were property of Central Bank, and therefore, by then it is not possible to enforce upon

it on the basis of section 14(4) of state immunity. High court stated that the assets by

AAMGS have full immunity under section 14(4), also high court in this case confirmed what

was stated in section 14(4) the functions of Central Bank and other Monetary authority is

likely to be for sovereign authority purposes and not for commercial purposes.

Foreign judgment to be enforced by UK courts.

State immunity Act 1978 had not been subject to foreign states judgment and whether it can

be enforced in the United Kingdom or not. But the Civil Jurisdiction and Judgment Act 1982

explain that in section 31 any judgment of foreign state against other state except the UK and

the state to which the court belongs, will be recognised and enforcement in the UK. But

however this enforcement has two conditions to oblige. Firstly: the enforcement cannot be

against the state. And secondly: the rules of the foreign state shall have a same rules

applicable to such matters as in UK in accordance to sections 2 to 11 of the State Immunity

Act 1978.



Further, the enforcement of a judgment given by the court of foreign states does not apply

except to limited group of countries, those who are party to the Brussels or Lugano

Convention.

NML Capital Ltd .v. Argentina, the matter is related to the purchase of bonds. The case

initially presented in front the court of New York, and the judgement issued for NML

Company. NML sought to enforce that judgement in United Kingdom, but it cannot be

because there is no treaty between United Kingdom and United State to enforce the

judgments between the two states.

NML submitted a request that the transaction between the subject parties is „commercial‟.

Furthermore, Argentina has waived the immunity in the court of New York. The Court of

Appeal decided that Argentina had not submitted to the jurisdiction of the English courts in

the transaction documents, which left NML relying on section 31 of the Civil Jurisdiction and

Judgments Act 1982, to enforce the judgement. But the Court of Appeal stated that even if

the judgement is in conformity with the requirements of section 31, but that is not enough. It

must prove that Argentina is not immune in accordance with sections 2 to 118.

So, the New York court had jurisdiction because the case was „commercial‟ and Argentina

has waived the immunity. Whereas the situation is different in the United Kingdom because

the enforcement of judgement is not „commercial‟ and section 3 of state immunity cannot be

applied even if the judgment is „commercial‟.

Conclusion

According to the idea that was prevailed for the immunity of foreign states, the state is not

subject to the rules and laws that are applicable to other states. This doctrine prevent national

courts to consider any procedure when one of parties in a case is a foreign state. States have

absolute immunity against the claims of people and other states, but as a result of

participation of states in commercial activities as commercial party no different on the

activities of individuals and companies, the immunity disables. The doctrine of immunity of

foreign states have changed to which known as „restrictive immunity‟ under this idea the

court have no jurisdiction over the sovereign acts of foreign states whereas it has jurisdiction

in commercial activities.

This is exactly what is stated in the State Immunity Act 1978 of Country, the first section of

this Act include a general idea that all states are immune from jurisdiction of the court in

United Kingdom. But this principle is not absolute, there are many exceptions of it, but the

exception of being „commercial‟ include two types of immunities (immunity from

jurisdiction and immunity from execution). The first type falls below „commercial

transactions‟ and thus the state cannot invoke immunity in any commercial transaction. It is

important to state here that the term „commercial transaction‟ include all contracts for the

supply of goods and services as well as all transactions and financial obligations, in addition

8



to loans and other transactions for the purpose of providing finance and guarantee or any

other compensations. Furthermore, all the activities that is commercial in its nature such as

industrial, financial, professional and other similar character.

Also, immunity from jurisdiction includes „separate entities‟ when the proceedings relating to

any work done in the exercise of sovereign authority. The second type is immunity from

execution, which falls below „commercial property‟. In such case the state cannot invoke

immunity when the property is used or intended for use for commercial purpose. In addition,

the separate entities which include the Central Bank or other monetary authority is immune

from execution if they are also used commercially or when these separate entities submitted

to the adjudicative jurisdiction of the UK courts.

anwer state immunity

Documents