Baccus SARL v Servicio Nacional del Trigo [England, Court of Appeal.]
| Jurisdiction | England & Wales |
| Judgment Date | 31 October 1956 |
| Date | 31 October 1956 |
| Court | Court of Appeal |
(Singleton, Jenkins and Parker L. JJ.)
Jurisdiction — Exemptions from — Foreign States — State Corporation Formed for Trading — Whether a Corporation Having Separate Legal Personality Can Be a Department of State — Whether Entitled to Sovereign Immunity — Waiver of Immunity — Entry of Appearance and Request for Security for Costs — Ignorance of Legal Rights.
The Facts.—The plaintiffs were a limited company formed under the laws of Italy and carrying on business there; and the defendants carried on business in Spain. On September 16, 1952, the parties entered into two c.i.f. contracts for the sale by the defendants to the plaintiffs of 26,000 tons of rye, each contract containing a term which, as translated, provided “for any divergence which may arise … both parties submit to the jurisdiction of the technical courts at London”.
Disputes arose and on September 9, 1954, the plaintiffs issued a writ out of the jurisdiction claiming damages for breach of contract. On October 20, 1954, an appearance was entered for the defendants by their solicitors in London. On November 19, 1955, the statement of claim was delivered, and on January 30, 1956, an order was made by consent for security for the defendant's costs in the sum of £150. On April 18, 1956, however, a summons was issued on behalf of the defendants praying that all further proceedings in the action be stayed and that the writ and statement of claim be set aside on the ground that the defendants were a department of the State of Spain and that the State through its ambassador claimed sovereign immunity. It was admitted by the defendants that they possessed a legal personality, had powers to make contracts on their own behalf for the buying and selling of wheat and could sue and be sued in their own name. It was not disputed that, apart from the possible effect of their incorporation, the defendants were a department of the Sovereign State of Spain.
Among affidavits entered for the defendants was one sworn by the Spanish Ambassador at the Court of St. James's, who deposed that the defendant “is a department of the State of Spain, being a department of the Spanish Ministry of Agriculture”. It further appeared from this affidavit that the person who was head of the defendant Company had given the instructions to their solicitors to enter an appearance and to ask for security for costs without the knowledge or authority of the Spanish Minister of Agriculture, to whom the head of the defendants was directly subordinate, and who, apart from the Cabinet or Head of the State of Spain, was the only person with authority to decide whether the defendants should submit to the jurisdiction of a foreign court. “The State of Spain”, continued the affidavit, “does not consent to these proceedings or to the continuation thereof and has never consented thereto. Such continuation would constitute a violation of the sovereign immunity of the State of Spain which I have no doubt this honourable court will not countenance.”
It was argued for the plaintiffs that the defendant, being a separate juristic person, could not be entitled to State immunity; that the immunity did not in any case extend to a juristic person engaged in trade; and that even if the defendant were entitled to immunity as being part of the Spanish State, it had submitted to the jurisdiction by entering an appearance and asking for security for costs.
Held (Singleton L.J. dissenting): that the appeal must be dismissed and the decision of the Court below (per Pearce J.) affirmed. (i) The defendants were a department of the State of Spain notwithstanding that they were a corporate body and a separate legal entity, and they were, therefore, entitled to claim sovereign immunity. (2) There could be no submission to the jurisdiction unless it were made by a person with knowledge of the right to be waived and with the authority of the foreign sovereign, and, therefore, because the acts of the defendants in instructing solicitors to enter an appearance and ask for security for costs had been done in ignorance of his rights and without the knowledge or authority of his superiors, they did not constitute a submission to the jurisdiction.
Jenkins L.J. said: “The questions in the case are, first, whether the defendants, Servicio Nacional del Trigo, were entitled to the sovereign right of immunity from suit as a department of the Sovereign State of Spain?; and, secondly, if the defendants could otherwise claim such a right, whether they have, on the facts of this case, waived it by submitting to the jurisdiction of the court? The first question can be sub-divided into two further questions: first, are the defendants a department of the Sovereign State of Spain, or would they be such apart from the effect of their status as a corporate body?; secondly, are they disqualified from ranking as a department of the Sovereign State of Spain by reason of the fact that they are a corporate body possessing what is called in the evidence, a juristic personality, or, in other words, because they are a separate legal entity?
“As to the first part of the first question, it is not disputed that, apart from the effect of their incorporation, the defendants would be a department of the Sovereign State of Spain. The evidence which my Lord [Justice Singleton] has read in full shows, to my mind, quite clearly that the defendants were formed as a department of State. But it is said that the defendants were invested by the laws of Spain with a juristic personality or corporate status of their own, and that it is impossible for any separate legal entity such as the defendants to be a department of a Sovereign State. It is said once one reaches the conclusion that the defendants are a separate legal entity, corporation or juristic personality, then they cannot be a department of the State, but must by definition be an independent entity. That is the plaintiffs' argument on this part of the case, and they contend as a general proposition that immunity cannot be claimed on behalf of a separate legal entity engaged in trading activities, even though the government of the Sovereign State concerned is interested in those activities. The question is a difficult one, and there has as yet been no authority providing an answer to it. It arose in the Tass case[1] ([1949] 2 All E.R. 274) to which my Lord has referred, but for the reasons which have appeared from his judgment it was not necessary to decide the point which was reserved for future consideration. In so reserving it, Cohen L.J. said that he would not without further argument be prepared to accept the view that it necessarily followed that because a department of State was granted incorporation it was deprived thereby of the right to assert its sovereign immunity in foreign courts.
“In my view of the evidence, it is reasonably plain that while the defendants undoubtedly were constituted a juristic personality with powers resembling those of a natural person, they were only accorded that status for the purposes for which they were formed; and the purposes for which they were formed were, briefly, the importing and exporting of grain for the Spanish Government in accordance with the...
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