Swiss Israel Trade Bank v Government of Salta
| Jurisdiction | England & Wales |
| Judgment Date | 03 March 1972 |
| Date | 03 March 1972 |
| Court | Queen's Bench Division |
(MacKenna J.)
International law in general — Relation to Municipal law — Customary International law relating to sovereign immunity-Effect on earlier decisions of municipal courts — Doctrine of binding precedent — Whether judge of first instance empowered to apply customary International law rather than precedents — The law of England
Jurisdiction — Territorial — Exemptions from — Foreign States — Province of federal State — Provincial government of Argentine Republic — Bank created by legislation — Relevance of lack of Governmental control of bank — Whether Government or bank entitled to immunity — The law of England
Summary: The facts:—The plaintiffs were the holders in due course of a number of bills of exchange which had been accepted by the two defendants and subsequently dishonoured. The first defendant was the Government of the Province of Salta, one of the provinces of the Argentine Republic. Salta had been one of several Spanish provinces in South America which in 1816 had declared themselves independent of Spain and in 1853 had combined to form the Argentine Republic. Since 1929 the executive authority in Salta had been vested in the Governor, an agent of the central Government of the Argentine Republic. In 1966 the Argentine Republic had been converted from a federal to a unitary State. The second defendant was a bank created by a law of the Provincial Legislature of Salta and was independent of Governmental control. In response to an action brought by the plaintiffs on the bills of exchange, the two defendants raised, inter alia, the plea of sovereign immunity.
Held:—(1) The writ against the first defendant would be set aside. The first defendant was, in substance, either the Government of the Argentine Republic or a department of that Government and was therefore entitled to the full immunity of a foreign sovereign State.
(2) A review of the earlier decisions of the English Courts showed that a foreign sovereign State could not be sued in an action in personam in any circumstances whatsoever. These decisions were binding on the Court in the present case and it was not open to it to adopt the restrictive view of immunity favoured in other States.
(3) The action against the bank would be allowed to proceed. The bank was independent of Government control and was not to be regarded as a Department of State.
The following is the text of the relevant part of the judgment of the Court:
This is the defendants' summons in an action brought by the Swiss Israel Trade Bank against two defendants, the so-called Government of Salta and Banco Provincial de Salta (which I shall refer to as ‘the Bank’). The defendants ask that the writ should be set aside on the ground that each of them has the immunity from suit of a sovereign State. The first defendants ask as well for other relief on grounds which I shall explain later.
The plaintiffs sue as the holders in due course of 10 bills of exchange of a total face value of £279,345 14s., drawn on Dec. 13, 1962, and payable at different dates between Apr. 15, 1964, and Apr. 15, 1965. The drawer of each bill was the Industrial Export and Finance Corporation of Vaduz in Liechtenstein and each bill had two acceptors, one described as the Ministry of Economy, Finance and Public Works, Salta, for which the Minister signed, and the other the Bank. Each bill was expressed to be for
and was payable at the Westminster Bank in London. All the bills are alleged to have been dishonoured on presentation. Mr. Yorke, for the plaintiffs, explained how the bills were issued and how they came into his clients' possession, so far as these facts are known to them. There was a contract between the Ministry and the Liechtenstein Corporation for the supply by the corporation to the Ministry of a brewery. The corporation contracted with an English company, Nalder and Nalder Ltd., to provide the equipment required for the performance of the corporation's contract with the Government. On Nov. 17, 1963, the plaintiffs issued a confirmed irrevocable letter of credit for £245,881 in favour of the English company, which deposited the 10 bills of exchange as security for the issue of the letter. Documents were negotiated under the credit to its full value. The brewery has not been erected.
Affidavits have been filed by both defendants and these, with their exhibits, have been read to me by Mr. Evans, for the defendants. Having read them he, his junior, and his instructing solicitors Messrs. Coward, Chance & Co., left the Court and took no part in the argument which followed upon the reading of the counter-affidavits filed by the plaintiffs. The reasons for their taking this course are explained in a letter of Feb. 24, 1972, from His Excellency General Zuviara, the Argentine Ambassador in London, to Messrs. Coward, Chance & Co., and in a letter to the same effect of Feb. 25, 1972, from the Ambassador to the Secretary of State for Foreign and Commonwealth Affairs, I shall quote from the second of these letters:
Neither letter explains how Argentine law deals with a case like this, in which the disputed question is whether either defendant is in truth a sovereign State or ‘an integral part’ of such a State. Our law requires the Judge to consider and decide this question, when it is raised, and I proceed to do so, regretting that I have not had the usual assistance of hearing argument on both sides.
There are matters of Argentine constitutional law to be considered, including questions as to the effect of two laws passed in 1966, the Act of the Argentine Revolution and the Statute of the Revolution. The position before these laws were passed is not in dispute and I shall summarize it.
Salta was one of several Spanish Provinces of South America which in 1816 jointly proclaimed their independence of the mother country. At the end of the fighting each became a sovereign State and so remained until 1853, when the Provinces combined to form the Argentine Republic, to which a federal constitution was given in that year. Under this constitution each Province delegated certain powers to the Federal Government, retained such powers as it had not delegated, had its own local institutions, elected its governor, legislators and officials without any Intervention of the Federal Government, and enacted its own provincial constitution. Article 110 of the 1853 Constitution declared the governors of the Provinces to be
Salta gave itself a constitution which has been revised from time to time by conventions held under the laws of the Province, It was revised for the last time in 1929 and I shall state the more important provisions of this version. Article 2 declares that sovereignty shall be vested in the people, who shall not deliberate or govern except through their representatives and constitutional authorities. Legislative power is vested in a Chamber of Senators and one of Deputies. Executive power is to be discharged by an elected Governor declared to be the immediate agent and director of the National Government for the purpose of enforcing within the Province the Constitution and Laws of the Nation. Administrative business is to be despatched by two or three Minister Secretaries appointed by the Governor and removable by him. Judicial power is vested in a Supreme Court appointed by the Executive Power with the agreement of the Senate and in such local Courts as it may be necessary to establish.
I come now to the changes made in Argentine Constitutional Law by the Act and the Statute of the Revolution.
The Act was promulgated in 1966 by the heads of the three armed forces of the Republic. By its provisions they formed themselves into a Revolutionary Council, removed from office the President of the Republic and the Governors of the Provinces, dissolved the National Congress and the Provincial Legislatures, removed from office the Judges of the Supreme Court, and offered the Presidency of the Re-public to Lieutenant-General Juan Carlos Ongania. On the same day, acting as the new Revolutionary Council, they enacted the Statute of the Revolution. Article 1 of this law gives the Executive Power of the Nation to the citizen whom the Revolutionary Council may appoint as President. Articles 3, 5 and 9 are in these terms:
One of the exhibits In the case is Instruction no. 1 of 1966, being ‘Private Directives for Governors issued by the Minister of the Interior’, to which I must briefly refer. The document states that the Governor is the agent of the National Government and must therefore act in accordance with such directives as that Government shall give him. He is to have such powers as the Provincial Constitution grants to the Executive Power and to the Legislative Power, but is not to exercise the Legislative Power without the previous authorization of the National Government. Another exhibit of later date gives the current version of the instructions to Governors. The document is headed ‘Relations between the Provincial Governments and the National Government and Establishment of Functions’. Article 1 (1) of this document...
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