Alcom Ltd v Republic of Colombia; Alcom Ltd v Santos
| Jurisdiction | UK Non-devolved |
| Judge | Lord Diplock,Lord Fraser of Tullybelton,Lord Keith of Kinkel,Lord Roskill,Lord Templeman |
| Judgment Date | 12 April 1984 |
| Judgment citation (vLex) | [1984] UKHL J0412-1 |
| Date | 12 April 1984 |
| Court | House of Lords |
[1984] UKHL J0412-1
Lord Diplock
Lord Fraser of Tullybelton
Lord Keith of Kinkel
Lord Roskill
Lord Templeman
House of Lords
My Lords,
The diplomatic mission of the Republic of Colombia in the United Kingdom, like the diplomatic missions of most other foreign sovereign States, maintains at a London branch of a commercial bank a current account upon which it draws for the purpose of meeting the expenditure incurred in the day-to-day running of the mission. The question of law in this appeal is whether the English High Court has jurisdiction in garnishee proceedings to order the attachment of the whole or part of the balance standing to the credit of the foreign State in such an account, in order to satisfy a judgment for a sum of money that has been validly obtained against that State by a judgment creditor.
Since, under Order 49 of the Rules of the Supreme Court a garnishee order is in the first instance made ex parte and operates forthwith to freeze the bank account to the extent of the amount specified in the order, the grant by the court of such an order for a substantial sum can gravely hamper and may soon temporarily prevent the day-to-day running of the diplomatic mission. So the question that falls to be determined by your Lordships is one of outstanding legal importance not only nationally but also internationally.
The answer to this question depends upon the true construction of subsections (2( b)) and (4) of section 13 of the State Immunity Act 1978. The Act, as its short title indicates, deals primarily with relations between sovereign States, though its provisions are capable of extension by Order in Council to relations between the United Kingdom and the constituent territories of federal States. Accordingly its provisions fall to be construed against the background of those principles of public international law as are generally recognised by the family of nations. The principle of international law that is most relevant to the subject-matter of the Act is the distinction that has come to be drawn between claims arising out of those activities which a State undertakes jure imperii, i.e. in the exercise of sovereign authority, and those arising out of activities which it undertakes jure gestionis, i.e. transactions of the kind which might appropriately be undertaken by private individuals instead of sovereign States.
The particular aspect of public international law dealt with by Part I of the Act, comprising sections 12 to 17, is the immunity of foreign States from the jurisdiction of courts of law in any part of the United Kingdom. The distinction between the jurisdiction of national courts to decide, and to authorise the execution of remedies for the enforcement of, claims made against foreign States arising out of the exercise of jus imperii and those arising out of transactions entered into in the exercise of jus gestionis, obtained growing recognition in European countries as sovereign States began increasingly to engage, either directly or through separate entities that were emanations of the executive government of the State, in commercial and trading transactions with private citizens of other States. Under what came to be termed the "restrictive" theory of sovereign immunity the jurisdiction of national courts was exercised over foreign States in claims against them that arose out of commercial or trading transactions into which they had entered with private individuals. The United States of America had clung longer than several European States to the "absolute" theory of sovereign immunity, under which its courts declined to entertain any claims against foreign States even where these arose out of commercial or trading transactions. Following a change of policy by the executive branch of government this practice was abandoned in 1952 by the U.S. courts which then adopted the "restrictive" theory; and the matter has since 1976 been regulated in the United States by an Act of Congress, the Foreign Sovereign Immunities Act.
In England the jurisdiction of its courts of justice over claims against foreign sovereign States was governed by the common law. Although the courts' refusal to exercise jurisdiction over foreign sovereigns was originally attributed in the eighteenth century to the acceptance of the law of nations as part of the common law of England, the English courts during the twentieth century were slow to recognise and give effect to the change that had been taking place in public international law over the last fifty years, whereby, among the great majority of trading nations, the restrictive theory of sovereign immunity had replaced the absolute theory. That recognition first occurred in a judgment of the Privy Council in The Philippine Admiral [1977] A.C. 373 delivered in November 1975; though this in its terms was limited to actions in rem. It was the seminal judgment of Lord Denning M.R. in Trendtex Trading Corporation v. Central Bank of Nigeria [1977] 1 Q.B. 529 that marked the definitive absorption by the common law of the restrictive theory of sovereign immunity.
Lord Denning's statement in Trendtex as to what had become the revised common law rule as to the immunity of foreign sovereign States from the jurisdiction of the English courts before the passing of the State Immunity Act 1978, received the seal of approval of this House in I Congreso [1983] 1 A.C. 244. Although the speeches in I Congreso were delivered after the Act had come into force they dealt with matters that had occurred before the Act was passed and to which section 23(3) prevented it from being applicable. So as respects the immunity of foreign States from the jurisdiction of national courts the critical distinction drawn by the existing law, English common law and public international law alike, was between what a State did in the exercise of its sovereign authority and what it did in the course of commercial or trading activities. The former enjoyed immunity; the latter did not.
The functions of a diplomatic mission that are recognised in public international law are set out in Article 3 of the Vienna Convention on Diplomatic Relations of 1961 as follows:
"1. The functions of a diplomatic mission consist inter alia in:
( a) representing the sending State in the receiving State.
( b) protecting in the receiving State the interests of the sending State and of its nationals, within the limits permitted by international law;
( c) negotiating with the Government of the receiving State;
( d) ascertaining by all lawful means conditions and developments in the receiving State, and reporting thereon to the Government of the sending State;
( e) promoting friendly relations between the sending State and the receiving State, and developing their economic, cultural and scientific relations."
If one were seeking for prototypes of things done in the exercise of its sovereign authority by one State within the territory of another it would be difficult to find examples more striking than those included in this list; and the Convention by Article 25 goes on to provide:
"25. The receiving State shall accord full facilities for the performance of the functions of the mission.".
Transposed into its negative form: neither the executive nor the legal branch of government in the receiving State - and enforcement of judgments of courts of law is a combined operation of both these branches - must act in such manner as to obstruct the mission in carrying out its functions.
Upon the specific question whether international law prohibits the attachment by legal process of monies standing to the credit of a current bank account of a diplomatic mission that is used to defray the expenses incurred in performance of the functions of the mission, your Lordships have been referred to a comprehensive and closely reasoned judgment of the Constitutional Court of the German Federal Republic of 13 December 1977, which decisively rejected the claim of a judgment creditor of the Philippine Republic to distrain upon a current bank account maintained by the diplomatic mission of that sovereign State for the purpose of defraying the expenses incurring in the day-to-day running of the mission. It was thus a case which was closely parallel to that with which this House is now concerned; and the judgment is particularly helpful inasmuch as the question was decided by that distinguished court by reference to public international law which, by the Federal Constitution Act, is incorporated ipso jure as part of German Federal Law.
My Lords, I find the reasoning of the German Constitutional Court in the Philippine Republic case wholly convincing that immunity from legal processes of execution was required by public international law to be accorded to the current bank account of a diplomatic mission used for defraying the expenses of running the mission, at the date when the State Immunity Act 1978 was passed by the parliament of the United Kingdom.
Of itself, however, the fact that under public international law, including the Vienna Convention to which the United Kingdom is a party, the bank account of the Colombian diplomatic mission that the respondent sought to make the subject of garnishee proceedings would have been entitled to immunity from attachment, at the date of the passing of the State Immunity Act 1978, is not sufficient to answer the question with which your Lordships are confronted in the instant appeal. It makes it highly unlikely that parliament intended to require United Kingdom courts to act contrary to international law unless the clear language of the statute compels such a conclusion; but it does not do more than this.
The State Immunity Act 1978, whose long title states as its first purpose to make new provision with...
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