Recognition and Sovereign Immunities
| Published date | 01 March 1939 |
| Date | 01 March 1939 |
| Author | R. Y. Jennings |
| DOI | http://doi.org/10.1111/j.1468-2230.1938.tb00415.x |
RECOGNITION AND SOVEREIGN IMMUNITIES
287
RECOGNITION
AND
SOVEREIGN
IMMUNITIES
A
civil
war
may present the dilemma
of
two
governments chhing
control over the same
temtory,
the one being recognised
de
fact0
and
the other
de
jure.
In such circumstances the courts may be forced to
regard the administrative and legislative
acts
of the one
as
operative
to
the
exclusion of the acts of the other, in relation
to
a particular
area
or matter. Clauson, J.
was
confronted
with
this
problem in
Bank
of
Ethiopia
v.
Ndiolral Bank
of
Egyp
and
Liguori,
[I9371
Ch.
513,
where
it
was
decided
that
the
de
fact0
government “must for
all
purposes, while
continuing to occupy
its
de
fact0
position, be treated
as
a
duly recognised
foreign sovereign state,” whilst the
de
jure
monarch has merely “soma
right (not in fact at the moment enforceable)
to
reclaim the governmental
control of which he has in fact
been
deprived.”
Substantially
this
same question came before the Court of Appeal in
Bunco
de
Bilbao
v.
Rey,
[1938]
2
K.B.
176,
and resulted in a parallel
decision delivered
by
the same judge. The somewhat complicated facts
leading
to
the dispute are
as
follows. The plaintirr
bank
was
domiciled at
Bilbao, and controlled by
a
board of directors elected in the usual way.
The defendants had for many years acted
as
managers of the London
branch.
On
6th October,
1936,
the Basque country became an autonomous
r@e within the Spanish State, and in December a decree of the new
Basque Government placed the bank under the control of a new and
partly nominated board. The new board
was
desirous of obtaining control
of the London branch, and, in due
course,
one Albisu presented
himself
at
the London office with documents purporting
to
transfer
to
him
all power
to
act
on
behalf of the bank. The defendants refused
to
hand over the
branch
to
Albisu, and continued
to
act for the bank. Accordingly, an
action
was
begun to restrain them from
so
acting.
At
the trial before
Lewis, J.
it
was
held that according to the Spanish Constitution the
decrees of the Basque government were ineffective to pass control of the
bank
to
the newly constituted board. The plaintiff
bank
gave notice of
appeal. Meanwhile, events in Spain moved rapidly.
On
the approach of
General Franco’s forces the new board left, with their documents, for
Barcelona, and in June, Bilbao
was
occupied by the insurgent forces.
Two decrees were then issued by the Republican government, in August
and September respectively, according to which the domicile of the
plaintif3 bank
was
deemed to have been transferred to Barcelona, and the
decrees of the Basque Government, which had
been
found invalid by
Lewis,
J.,
were validated retrospectively. The Insurgent Government
countered in December with decrees, the effect of which
was
to nullify
the decrees of the Republican Government, and any acts purporting to
change the status of the bank after July,
1936.
In these altered circum-
stances the appeal from
Lewis,
J. came before the
Court
of Appeal, the
plaintiffs now relying
on
the alleged validation of the acts of the Basque
Government by the subsequent decrees of the Republican Government.
The appeal failed.
It
was
held that the question of what body of directors
had the legal right of representing the bank must depend
on
the articles
under which it was constituted. Those articles must
be
interpreted accord-
ing
to
the
lex
loci
contractus,
i.e. “the law from time to time prevailing
at
the place where the corporate home
was
set up.” What
that
law
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