Playa Larga (Owners of cargo lately laden on board) v I Congreso del Partido (Owners); Marble Islands (Owners of cargo lately laden on board) v I Congreso del Partido (Owners); I Congreso del Partido

These two appeals raise questions of importance as to the scope of the "restrictive" theory of state immunity as it existed in the law of this country in 1973�75 when the relevant events happened. The law in question is the common law before this was superseded by statute (the State Immunity Act 1978): it will continue to form part of the corpus of international law.

The Proceedings

There are two separate actions, the common feature of which is that both were brought against the owners of the vessel I Congreso del Partido ("I Congreso"), which was constructed, found and arrested in this country. There is no doubt that this vessel was constructed to be used for normal trading purposes. The claims relate not to anything done on or by this ship, but to two sister ships Marble Islands and Playa Larga: they are brought by the owners of cargo formerly laden on them.

As regards Marble Islands

It is interesting to see the basis on which proceedings were first launched. This was that the cargo owners had a claim against a Cuban State Enterprise known as Empresa Navegacion Mambisa ("Mambisa") and that Mambisa was the owner of I Congreso. An action was started on this basis on 9th September 1975 (Fo. No. 544). However, this was met by the contention, supported by affidavit, that I Congreso was owned not by Mambisa but by the Republic of Cuba. The appellants thereupon started another action (Fo. No. 644) on the basis that I Congreso was owned by the Republic of Cuba and that the Republic of Cuba was liable to the appellants in an action in personam as owner or in possession or control of Marble Islands. This immediately gave rise to a claim of state immunity on the part of the Republic of Cuba, which in turn was met by the contention that under the "restrictive" theory, immunity should be denied. This action (Fo. No. 644) is the subject of one of the instant appeals.

As regards Playa Larga

The proceedings concerning Playa Larga were commenced on 12th December 1975 (Fo. No. 752) when I Congreso was again arrested on the application of the owners of cargo formerly laden on Playa Larga, now appellants. Their claim was based on an alleged breach of contract by non-delivery of part of the cargo, the contract in question being a bill of lading signed by the master of Playa Larga. There was also a claim in tort (detinue, conversion, or breach of duty). Ultimately, the same issue emerged, whether the Republic of Cuba as owner of I Congreso and of Playa Larga could raise a claim of state immunity or whether the "restrictive" theory applied. This action (Fo. 752) is the subject of the other of the instant appeals.

Outline of facts

The facts, in outline, are as follows: I shall expand them when the point of decision is reached. In February 1973 a contract for the sale of sugar was made between a Cuban state trading enterprise known as "Cubazucar" as sellers and a Chilean company known as "Iansa" as buyers (the status of Iansa is not material). The contract was for 128,395 tons of sugar to be shipped in eight shipments of 10,000 to 20,000 tons. Cubazucar was to obtain payment by negotiation of documents against a letter of credit to be opened by Iansa. These proceedings are concerned with two of the agreed shipments.

One shipment was of 10,476 tons, carried on Playa Larga: this was a Cuban flag vessel, owned by the Republic of Cuba, and operated by Mambisa.

Mambisa is a state-trading enterprise which manages and operates all Cuban state-owned ships: it is not an "emanation" or department of the Cuban state; it has independent legal existence, and it is not claimed that it would be entitled to state immunity. It is subject however to direction and control by the Cuban Government which provides all the funds necessary for its operation. It may be added here that Cubazucar and another concern to be shortly referred to (Alimport) are also Cuban state-trading enterprises of similar status to Mambisa. It has never been claimed that either of these are agencies of, or that they contracted on behalf of the Cuban state. State-controlled enterprises, with legal personality, ability to trade and to enter into contracts of private law, though wholly subject to the control of their state, are a well-known feature of the modern commercial scene. The distinction between them, and their governing state, may appear artificial: but it is an accepted distinction in the law of England and other states (see Czarnikow Ltd. v. Rolimpex[1979] A.C. 351). Quite different considerations apply to a state-controlled enterprise acting on government direction on the one hand, and a state, exercising sovereign functions, on the other. This distinction is crucial in relation to these appeals.

Returning to the facts, Playa Larga was chartered for the voyage to Chile by Cubazucar under a normal form of commercial voyage charter: in the charter-party Mambisa was described as owners of the vessel. Bills of lading were issued for the shipment in Mambisa's standard form, signed by the master. They were negotiated to Iansa against payment of the price under commercial letter of credit: Iansa sold the sugar to another Chilean company.

The other shipment was of 10,890 tons carried on Marble Islands. She was owned by Blue Seas Corporations Co. Ltd. a Lichtenstein corporation, and flew the Somali flag. She was chartered to Mambisa on a demise charter and sub-chartered by Mambisa to Cubazucar for the voyage to Chile. Bills of lading were issued for the shipment and negotiated as for Playa Larga.

The events which occurred in September 1973 are described in lucid detail by Goff J. in his judgment. Briefly, on 11th September 1973 Playa Larga was at Valparaiso, Chile, having commenced discharge of the cargo.Marble Islands was at sea nearing her destination. On that day a coup d'�tat took place in Chile; the government of President Allende (friendly to Cuba) was replaced by a government under President Pinochet of which the Government of Cuba strongly disapproved. There was some military action in Santiago: diplomatic relations between Chile and Cuba were terminated. There seems to have been no violence at Valparaiso, and nothing occurred to prevent Playa Larga from continuing to discharge: however she was ordered by Mambisa, which had itself been so instructed by the Cuban government, to leave Valparaiso and join Marble Islands. Consequently, she left Valparaiso without port clearance, taking with her 7,907 tons of her sugar cargo: there was some attempt to stop her leaving but she was able to proceed.

Playa Larga met Marble Islands at sea, and, on instructions, both vessels proceeded to Callao in Peru. It appears that the Chilean authorities, through their embassy, requested discharge at that port, which would have been practicable, but both masters refused to discharge. On 20th September 1973, Playa Larga left Callao and returned to Cuba, where she discharged the balance cargo on 5th October, and where it was later sold by Mambisa. These events seem to establish a prima facie case of tortious action and (see below for further discussion) possibly of breach of contract by the owner of Playa Larga, to which there may or may not be available defences. We are, of course, not concerned with these: the only question is whether, since the owner of Playa Larga is the Republic of Cuba, a plea of state immunity can be raised so as to deny jurisdiction. Whether an action could be maintained against Mambisa, is irrelevant, since Mambisa is not the owner of the sister ship I Congreso.

Marble Islands left Callao on 27th September 1973 intending also to return to Cuba, but she was arrested at the Panama Canal on the application of Iansa. She broke arrest and sailed west for North Vietnam. In the course of her voyage her ownership and flag were transferred to the Republic of Cuba. After arrival at Haiphong, her cargo, having been discharged, was sold by the master to another Cuban state enterprise ("Alimport") and by it donated to the people of North Vietnam in part fulfilment of Cuba's programme of donations to that people. In this case too, it would appear that, subject to defences, a prima facie cause of action by the cargo owners could be raised against Mambisa. The involvement (if any) of the Republic of Cuba is another matter which will have to be examined. It can be observed at this stage, however, that, by contrast with the case of Playa Larga, no claim in contract is made or appears to lie against the Republic of Cuba.

The Law

I must now attempt to ascertain the state of English law as to state immunity as existing in 1973�75. Certain points can be cleared away.

1. If these matters had arisen as at the present date, they would be governed by the State Immunity Act 1978. This Act, which came into force on 22nd November 1978 introduced, by statute, a "restrictive" theory of state immunity into English law by means of a number of detailed exceptions to a general rule of state immunity. It was not retrospective. However, the appellants made use of it in the following way. There is a presumption, they said, that English legislation is intended to be in conformity with international law; therefore the Act may be used as evidence of what international law at its date was. I cannot accept this contention: to argue from the terms of a statute to...