INTRODUCTION

In international law, certain persons and institution are immune from jurisdiction of foreign municipal courts, the principal ones are sovereign states and foreign heads of state, diplomatic agents; consuls and international institutions; their officials and agents.

It’s a basic principle of international law that a sovereign state does not adjudicate on the conduct of another foreign state. This immunity extends to both criminal and civil liability. State immunity grew from historical immunity of the person of monarch. In R v BOW STREET METROPOLITAN STIPENDIARY MAGISTRATE AND OTHERS, EXPARTE PINOCHET UGARTE (AMNESTY INTERNATIONAL AND OTHER INTERVENING (NO. 3)[1], Lord Browne Wilkinson Articulated the customary law positions as follows:

“In any event, such personal immunity of the head of state persists to the present day; the Head of State is entitled to the same immunity as the state itself. The diplomatic Representatives of the foreign state in the forum state is also afforded the same immunity, In recognition of the state which he represents. This immunity enjoyed by a Head of State in power and Ambassador in post is a complete immunity vested to the person of the Head of State or Ambassador and rendering him immune from all actions or prosecution whether or not they relate to matters done for the benefit of that state. Immunity is granted ratione personae”

The immunities rationale is predicated on the nation that any activity of a head of state or government, diplomatic agent[2] must be immune from foreign jurisdiction, this is to avoid foreign state from, either infringing sovereign prerogatives of states and with the functions of a foreign state under the guise of dealing with an exclusively private act.

However, the question of immunity is at the same time a question of jurisdiction only when the court already has a jurisdiction will it become meaningful to speak of immunity or exemption from it. For this reason, sovereign immunity is also referred to as “jurisdictional immunity”, “immunity from jurisdiction” in other words “ex-territoriality”[3], Thus, State immunity provides foreign states with protection against legal proceedings brought before the court of other jurisdiction.

Hence, the objective of this paper is to review the gradually importance change in state been immune from legal, arbitral proceedings and execution against its assets

DOCTRINE OF SOVEREIGN IMMUNITY

Sovereignty immunity is a principle of international law[4]. It’s a legal doctrine by which a sovereign entity is immune from any suit before the courts of another sovereign entity[5]. It’s further being sued in any judicial forum without its consent[6] .

Generally, a state is deemed to be immune from legal proceedings[7] (including arbitration) and/or any process of execution of judgment against its property in the court of a foreign state. This principle is basically on broad consideration of public policy, international law & comity as well as on the dignity, equality and independence of states, rather than on any technical rules of law.[8]

Consequently, the doctrine of sovereign immunity under international law is established on the grounds that a sovereign state should not face prosecution in courts of another state. This principle is expressed by the Latin maxims “par in parem no habet imparium- an equal has no power over an equal rank”[9]. The main reason for allowing states to plead sovereign immunity is the inability of national courts to enforce their judgment against a foreign state. The doctrine of sovereign immunity applies not only to a state as a sovereign entity but also to its enterprise, agencies and other appendages of the state representing its sovereign authority. State practice suggests that whether a state is seeking immunity from jurisdiction or from execution against state owned property, the state and its wholly owned or controlled enterprises consider to be carried out by the state in its exercise of sovereign authority[10]. In essence, regardless of the state status of the state agencies or enterprise vis-à-vis the state, so long as the enterprise “is entitled to perform and is performing acts in the exercise of sovereign authority of the state”, it can invoke sovereign immunity as the state as it is viewed as an instrumentality of the sovereign state in the execution of its sovereign power.

It would be however importance to discuss, the theories of sovereign immunity as to shed more light to the foregoing topics

Theories of sovereign immunity

In international law, there are two theories of sovereign immunity, the theory of absolute immunity and the theory of Restrictive immunity.

Absolute immunity, as the name implies, confers immunity on all actions of a state or state agency regardless of the purpose or nature of the transaction from which he disputes arose while restrictive immunity, confers immunity only on sovereign acts of a state –acta jure imperii, while acts of a state in respect to commercial transactions –acta jure gestionis – are not covered by immunity but governed by private law in the same way as a private person would not enjoy immunity.[11]

In addition, the approach associated with absolute sovereign immunity is called “structuralist” while the approach associated with restrictive immunity is called “functionalist”[12]. The former is concerned with the status of the party claiming sovereign immunity, while latter is concerned with the subject matter (i.e. the nature of the transaction) forming the basis for the claim of sovereign immunity. The absolute immunity theory ahs sway in the early development of the doctrine of sovereign immunity but has gradually been replaced by the restrictive immunity doctrine in most jurisdictions. In the development of restrictive immunity, the most remarkable decision epousing this theory is the well-known decision of the UK court of Appeal in Tendiex Trading Corporation V Central Bank of Nigeria[13] where Lord Denning MR stated Thus

“Many countries have now departed from the rule of absolute immunity. So many have departed from it that it can no longer be considered a rule of international law and it has been replaced by the doctrine of restrictive immunity. The doctrine gives immunity to acts of a government nature, described in Latin as jure imperil but no immunity to acts of a commercial nature jure gestionis”[14]

The distinction between the absolute and restrictive immunity theories is also reflected in the protection extended to state agencies as an extension of a state’s sovereignty. According to the absolute immunity approach (structuralist) a state enterprise is entitled to immunity from jurisdiction as an extension of the sovereign will of the state. Under the restrictive immunity approach (functionalist), when a state enterprise has distinct legal personality (i.e., one detached from the state itself) and it performs acts of a private or commercial nature, it cannot claim sovereign immunity.[15] To functionalists, the status of the state enterprise is irrelevant; only the nature of its acts really matters for purposes of jurisdictional immunity[16]

SOVEREIGNTY IMMUNITY IN ARBITRATION OR ARBITRAL PROCEEDING

International commercial transactions often involve state and state agencies in contractual dealings with individual & multinational corporations and owing to the reluctance of state to subject disputes arising from their transactions to the court of another state. Arbitration is often the forum of choice for resolution of disputes arising from such international commercial involving state parties & their agencies. The ultimate goal of arbitration proceedings is the rendering of enforceable awards against a state or state agencies in international arbitration[17]

Arbitration is used for the resolution of varieties of disputes in relation to Technology, shipping, energy, intellectual property; construction, banking et al.[18]Arbitration maybe domestic or international.

International arbitration has been the most popular form of arbitration because most people involved in international transactions wants confidential and fast mechanism for settling their disputes; state are not left out. The arbitral awards are the instrument recording the decision of the arbitral tribunal provisionally or finally determine the claims of the parties.

Consequently, the concept of ADR (alternative disputes resolution) has proved a very attractive proposition for parties as a neutral disputes resolution mechanism for resolving disputes that may arise in their international commercial transactions with individual & corporate entities. There are different forms of ADR (supra) namely Arbitration, Mediation and conciliation, of these forms of ADR arbitration (and by extension international arbitration) is however the most prominent & widely used method for resolving disputes arising from international agreements and other international relationship. Arbitration could be Ad-hoc, wherein parties assume full control of the arbitration proceedings & decide the rules regulating the proceedings of an established arbitration institution which governs the arbitration proceedings and regulates the enforcement of awards obtain under the established arbitration institution (tribunal).[19]

There are two stages where the doctrine of sovereign immunity can be invoked In relation to international arbitration – sovereign immunity from jurisdiction and sovereign immunity from execution and they are considered to be completely distinct. Nevertheless, there also seems to be a trend toward treating both types of immunity in a similar manner. Sovereign immunity can be raised to challenge the jurisdiction of the arbitral tribunal or it can be invoked as a defense in enforcement proceedings based on an arbitral award although the former is considered rather weak due to the fact that arbitration in the first instant is only possible because parties have agreed to arbitrate.[20] Once a valid agreement to arbitrate has been concluded, t is settled that it constitutes a waiver of jurisdictional immunity. Since the purpose of sovereign immunity is to prevent one state from being subjected to the jurisdiction of another state before another foreign court, it could come as a something of an aberration for a state that is party to an arbitration agreement to invoke an immunity plea.

As discuss earlier, Arbitral tribunals being independent are not creatures of any state but entities deriving legitimacy and jurisdiction from the parties. In addition, a submission by a state or state enterprise to arbitration under the guidance of the International Centre of the Settlement of Investment Disputes (I.C.S.I.D) constitutes on its partor that of the state involved, an irrevocable waiver of immunity from the ensuing arbitration proceedings[21]. It’s further accepted that sovereign immunity can be waived either expressly or by implication; this principles is also enshrined in several legislations governing sovereign immunity, the European Convention of 1972 provides that

“A contracting state cannot claim immunity from jurisdiction of a court of another contracting state if it has undertaken to submit to the jurisdiction of both courts either;

By International agreement
By an express term contained in writing or
By an express consent given after a disputes between the parties have arisen ”[22]
A similar provision is contained in section 9 of UK State Immunity Act 1978 which provides that

“Where a state has agreed to in writing to submit a dispute which has arisen, or may arise, to arbitration, the state is not immune as respects proceedings in the courts of the United Kingdom which relates to arbitration”[23]. In Libyan American oil company (LIAMCO) V. Socialist people’s Libyan Arab Jamahiriya[24] where the court by relying on Sec. 1605(a)(6) of the Federal State Immunity Act (FSIA), rejected Libyan’s jurisdictional argument and held that Libya had waived its defense of sovereign immunity by expressly agreeing to the specific amendments to the arbitration & choice of law in deeds of concession. The above laid decision followed the precedent in the case of Ipitrade S.AV. Federal Republic of Nigeria[25] where the court upheld the view that the arbitration clause in a contract for sale of cement providing for dispute settlement by the international chamber of commerce (ICC) in Paris constitutes a waiver from immunity. The swiss arbitral award was made unilaterally against the government of Nigeria even though Nigeria refused to participate in the arbitration on the grounds of sovereign immunity.[26]

Sovereign immunity from Execution

Where a state party loses in an arbitration proceeding, one of the options available to the party is to raise the issue of sovereign immunity to enforce the award against its assets abroad. This position is given statutory recognition by sec. 13(2) (b) of the UK State Immunity Act which provides that

“The property of a state shall not be subject to any process for the enforcement of a judgment or arbitration award or in an action in rem for its arrest, detention or sale”

The US Supreme Court in the case of Argentine Republic V. Amerada Shipping Corp[27] has also held that signing an arbitration agreement cannot amount to an implied waiver of immunity over execution of awards and judgments.

Furthermore, the provision of the I.C.S.I.D convention & New York convention also recognize the fact that submission to arbitration by a sovereign is not a waiver of immunity to enforcement and execution of awards against the sovereign. Article 54(3) of I.C.S.I.D convention provides “Execution of the award shall be governed by the laws concerning the execution of judgments in force in the state in whose territories such execution is sought” while Article 55 went further to state that“Nothing in Article 54 shall be construed as derogatory from the law in force in any contracting state relating to immunity of that state or of any foreign state from execution”

It should be remembered that national laws and practice on sovereign immunity of a state or state enterprise from measures of execution may differ, some jurisdiction do not grant sovereign immunity from execution against the proper ties of sovereign entities in all circumstances. In this regard, a distinction is created between properties used for commercial purposes, properties owned by state-owned enterprise that is destined specifically for the fulfillment of sovereign functions or used for sovereign purposes[28] is immune from execution while those used for commercial purpose are not immune from execution [29]

Where the law of sovereign immunity is not the same for jurisdiction and enforcement purposes and the restrictive approach to sovereign immunity applies to actions to enforce an award, the “purpose” test will be applied to determine whether the immunity can be invoked for state or state-enterprise- owned property.

State practice also endorses the concept of distinguishing between sovereign property and commercial property for the purpose of determining the community of a state to execution of awards & judgment

The UK state immunity Act allows execution right for the property of a member state used for commercial purposes[30], in accordance to Sec. 13(5); the use or intended use of the property subject to execution maybe proved by a certificate issued by the foreign state’s representative.

However, property of a state’s central bank and other monetary authority do not come within the scope of properties used for commercial purposes[31]. Thus, the general approach is that states are immune from execution of judgments against its properties only if such properties serve “sovereign purposes”[32]

CONCLUSION

This paper has examined the concept of sovereign immunity of a state enterprise from legal and arbitral proceedings in international law, the position of law regarding sovereign immunity from execution as a means to protect sovereign interest in international commercial arbitration

Presently, the state immunity Act in the United Kingdom prohibits the assets of a state from the enforcement of jurisdiction of the United Kingdom courts. In the United state, the court has upheld a plea of sovereign Immunity to the execution of an international commercial arbitration. It can be said that the plea of sovereign immunity from foreign jurisdiction and execution has helped to maintain the integrity, dignity of state from been trashed upon by foreign municipal court et al.

[1] 2 ALL E.R. 97, House of Lords, 1999.

[2] International law provides for exceptions to immunities of diplomatic relations 1961

[3] Paschal oguno, “the concept of state immunity under international law: An overview, vol. 2: issues 5 sept. 2016; pg 10-24”

[4] ibid

[5] Leir, J, masteillis, L and Knolls, comparative international commercial Arbitration (Kluwer Law International, 2003) p. 744.

[6] Jame R. Crawford “international law and foreign sovereigns; Distinguishing immune Transactions [1993] British Y.B Int’l (54)

[7] Ibid

[8] Kemi Pinheiro SAN; https://thenigerianlawyer.com/400-million-chinese-railway-loan-has-Nigeria-truly -mortgaged-its-sovereignty/.”, Sir Lan sinclair, “the law of sovereignty immunity, Recent Development? 167 Hague Recue, Ldes cours 113 (Hague Acrd int’l law 1980-11); Delaume D.R

[9] Georges R.D; Foreign sovereign immunity; impact on Arbitration [1983] Arbitration journal [38] p.34.; Yaya Shamsu, L.L.B; L.L.M , B.L MLD Legislative support service department “Sovereign Immunity & Enforcement of international commercial arbitration awards – P & ID case in focus”

[10] Maniruzzaman, A.F “State Enterprise Arbitration and Sovereign Immunity Issues: A Look at Recent trends”, August, 2005; Dispute Resolution Journal. Pp.1-8, 2005;

[11] Verges, G.S, “Defining A Sovereign For Immunity Purposes: Proposals To Amend The International Law Association Draft Convention,” (1985), Harvard Journal of Int’l Law (26) p. 103.

[12] Brownile, I. “principle of public internatonal Law”. 331 n. 31 (5th ed. OUP 1998)

[13] (1997) QB 529

[14] (1997) QB at page 555

[15] ibid

[17] Faizat Badmus-Busan “Sovereign Immunity & Enforcement Of Awards In International Commercial Arbitration ”

[18] Michael pryles, “Limits of party autonomy in Arbitration”

[19] Bello, Adesina Temitayo (Phd) “sovereign immunity & enforcement of arbitral awards; Breaking the Barrier ”

[20] Domenico Di Pietro & Martin Platte “Enforecement of international Arbitration Awards”, the New York Convention of 1958, London SW18 1SQ, Cameron May Ltd, 2001 at 191

[21] Article 54(3) of I.C.S.I.D Convention

[22] Article 27(1) & Article 14 (1) & (2)

[23] ; Artlcle 17 of the UN Convention on sovereign immunity; US Foreign immunities Act (FSIA)

[24] 923 f. 2d 380, 385 (5th Cir. 1991)

[25] F.Supp. 1175, 1178 CDDC 1980

[26] ibid

[27] (1989) 488 U.S at 442-448

[28] E.g the operation of state railways; the purchase of military equipment; the promotional activities of state tourist offices et al.

[29] L Maracogue; “the modern law of sovereign immunity” 54(5) modern L. Rev. 664 (Sept 1991) 18, waiver of immunity, 34 BRIT. YB. INT’L 260 (1958)

[30] Section 13(4) of the State Immunity Act

[31] Section 14(4) of SIA

[32] ibid