The Modern Law of Sovereign Immunity

Author(s): Lakshman Marasinghe

Source: The Modern Law Review , Sep., 1991, Vol. 54, No. 5 (Sep., 1991), pp. 664-684
Published by: Wiley on behalf of the Modern Law Review

Stable URL: https://www.jstor.org/stable/1096903

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
https://about.jstor.org/terms

Modern Law Review and Wiley are collaborating with JSTOR to digitize, preserve and extend
access to The Modern Law Review

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
 The Modern Law of Sovereign Immunity

Lakshman Marasinghe*

The early ideas regarding sovereign imnlunity had their philosophical underpinnings
in the writings of Bodin,l Austin,2 and Hegel.3 In 1577, Bodin wrote:

[I]t is the distinguished mark of the Sovereign that he cannot in anyway be subject to the
commands of another.4

Bodin's notion of sovereignty, or the absolute and perpetual power within the
state,5 coupled with Hobbes'6 justification of absolute power as 'an imaginary
compact between ruler and ruled'7 appears to have provided Austin with the raw
materials for his own view of law as a command of the sovereign.8 Austin's
command theory provided that the sovereign who is not subject to any law
whatsoever, could, if that was the wish, command all whom he may find within
his 'independent political society'9 to be subject to his command. Hegel, who fell
under the influence of these views formulated his theory of dialectics.'° At the
zenith of social advancement chartered by Hegelian dialectics may be found the
state which for Hegel was the 'highest achievement of human endeavour."'
Within this nineteenth century philosophical framework sovereign immunity took
an absolutist form justifying an attitude against impleading a foreign sovereign before
a local court. This attitude became clearly established in the decisions concerning
ships, which were handed down by the courts on both sides of the Atlantic. 12 Yet
another contributing factor for the growth of the absolutist view was the nineteenth
century quest for colonial expansion. Colonial expansion raised the notion of a
sovereign with absolute powers. Austin described his sovereign as one whose powers
were indivisiblel3 and illimitable.l4 Chief Justic Marshall of the United States
Supreme Court'5 and Lord Stowell in the Admiralty Courtl6 took the view that
'Sovereigns have made an implied contract to respect each others' independence

* Professor of Law, University of Windsor, Ontario, Canada. This is the text of a paper delivered at the
National Law Conference held in Colombo, Sri Lanka on 31 August-l September 1990.
1 Bodin, T/le Six Books of tlle CostlstloslswealtSl (Tooley, transl 1955).
2 Austin, T7le Psovislce of Jllrisprllftetlce Detesselisled (ed by Berlin, Hampshire, Wolheim, 1954).
3 Hegel, P/l ilosopSly of Rigll t (Knox, transl) p279 .
4 Note 1 p43.
5 ibid.
6 Hobbes, Levi(ltSlXtl (ed by Oakshott).
7 Dias, Jurisptlsteslve 5th edn p81.
8 Note2,ppl33-134.
9 ibid ppl31 - 134 and 193-195.
10 Note 3 pp375-386.
I 1 ibicl.
12 T}le ScSloosler E;cSlultlge v M'Ftftosl 11 US (7 Cranch) 116 (1812); T/le Pesaro 271 US 562; 771e
Baja Califorlliu 324 US 30; T}le Ucayli 318 US 578; The Naveolur 303 US 68; 771e Glesleden 254
US 522; T7te Hudsosl 336 F(2d) 254 (US decision); 771e Prisls Fredrik 165 ER 1543; T7le P(lrlestleslt
Belge 5 PD 197; The Porto Alexsldre [19201 Probate 30; 771e Cristisla [19381 AC 485.
13 Note 2 Lecture IV. The notion of 'indivisibility' was refuted in the 20th century in such decisions
as, 1Z1 re Alswesly [1954] 3 All ER 525; MadzisslbWstlcxto v Lns(ltler-Blxrke [1969] AC 645; Alatris v
Mislistes of tSle Islterior [ 19521 1 TLR 1245; R v Secsetary of State for Foseigtl Affairs [ 19821 1 QB
892; Malllxel v A-G [19821 3 All ER 822.
14 ibid: The notion of 'illimitability' was refuted in the 20th century in such decisions as: H(lrlis v Mi)lister
of the l)l terior ibid; Ra)l asi)lgSl e v BriDery Commissioll e) [ 1 965 ] AC 1 72 .
15 771e ScSloo)le) FxcSlange v M'Faddoll 11 US (7 Cranch) 116, 2 L Ed 287 (1812).
16 771e Pritls Fred)ik 2 Dods 451, 165 ER 1543.

664 r7' e Mobles sl I> tJ RevieltJ 54: 5 Sept

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
 September 1991] 771e Moulesn Lasv of Soveseign Immunity

and dignity."7 More recently, the Harvard Research Unit stated in its Draft
Convention'8 on the competence of courts in regard to the impleading of foreign
states:

Historically the rule may be traced to a time when most States were ruled by personal
sovereigns who, in a very real sense, personified the State: 'L'Etat, c'est moi.' In such a
period, influenced by the survival of the principle of feudalism, the exercise of authority
on the part of one sovereign over another inevitably indicated either the superiority of
overlordship or the active hostility of an equal. The peaceful intercourse of States could be
predicated only on the basis of respect for other sovereigns.'9

In practice, the absolute view of sovereign immunity caused no great problems

until the turn of the century. In previous periods sovereigns were mainly engaged
in wars and conquests, commercial activity being left to individual merchants of
the realm. The sovereign's interest was in taxing their earnings, in return for which
he supplied them with the armed protection of his naval power. Colonial expansion
was principally a means of extending the sovereign's authority through this indirect
exploitation of new overseas dependencies. The Dutch East India Company, the
British East India Company and the British South Africa Company were a few of
the colonial agencies established by the sovereign for the purpose of exploiting the
riches of the new conquests. The sovereign's role, however, began to change from
about the middle of the nineteenth century.20
The Russian Revolution of 1918 marked the beginning of massive participation
by sovereign states in trading activities. The Bolsheviks' nationalization of industries
meant that the 'means of production' became vested in the state; commercial activities
began to be performed by a myriad of state agencies.2' The question whether these
state agencies could be impleaded in foreign courts began to loom large during the
twenties and thirties. During the years succeeding the Bolshevik revolution, the
monarchies of the Iberian Peninsula were deposed, and, following the pattern set
by the Soviet Union, Spain and Portugal also began trading through state
agencies.22 Other countries have since followed this trend.23 Naturally enough, the
question began to be asked whether the absolute view of sovereign immunity, which
had been developed in such different circumstances, was still a reasonable one,
particularly in view of the new types of disputes bringing sovereign states before
the courts, in which the sovereign appeared directly in the role of a commercial
trader.24

Most states reacted by developing a restrictive theory of sovereign immunity,

limiting the immunity to the sovereign's acta in jure imperEi, and excluding from

l7 O'Connell, Itltertlatiotlal Lav (Stevens, 2nd edn 1970) Vol II p844.

l 8 'The Draft Convention and comment on the competence of courts in regard to Foreig
in vol 26, T7le Americazl Jourtlal of Isltertlatiozlal Lav, (supp) p451.
19 ibid p527.
20 The follow
used for trad
Belge and Tf
21 Johnson, A
11949 2 All ER 277.
22 Baccus SRL v Servicio Naciozlal de Trigo [1957 1 QB 438.
23 Mellegner v New Bruttswick Developmeslt Corporatiosl [1971] 2 All ER 593, [19711 I WLR 6
Swiss Israel Trade Bank v Salta [19721 I Lloyd's L Rep 497.
24 Fawcett, 'Legal Aspects of State Trading' (1948) 25 BritisSl Year Book of I lternatioslal Law 34,
Lauterpacht, 'The Problems of Jurisdictional Immunities of Foreign States' (1951) 28 British Year
Book of ltlternatiotlal Law.

665

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Modezn Las} Review IVol. 54

it his acta in jure gestionis, into which category his trading activities, and his trading
vessels fell.
But the common law was slower to respond.25 Until quite recently, it was clear
that in England the absolute theory of sovereign immunity applied to both actions
in rem and in personam. Lord Atkin stated in The Cristina:

T he courts of a country will not implead a foreign sovereign. That is, they will not by their
process make him against his will a party to legal proceedings, whether the proceedings involve
process against his person or seek to recover from him specific property or damages. [Secondly]
they will not by their process, whether the sovereign is a party to the proceedings or not,
seize or detain property which is his, or of which he is in possession or control. There has
been some difference in the practice of nations as to possible limitations of the second principle,
as to whether it extends to the property used only for the commercial purposes of the sovereign
or to personal private property. In this country, it is, in my opinion, well settled that it applies
to both.26

In spite of the codiElcation of the law concerning sovereign immunity in the United
Kingdom27 and in Canada,28 the rest of the Commonwealth has left it to their courts
to determine whether the restrictive theory or the absolute theory of sovereignty
should be followed.
The purpose of this paper is to trace the origins of the two theories, to show that
the restrictivist theory was of greater antiquity and that the origins of the absolutist
theory could be traced to disputes concerning vessels owned by foreign sovereigns
in the early part of the l9th century.
Sovereign immunity, as a principle of Private International Law has been explained
and justified as resting on any one of the following theories:

The Theory of Independence

It is said that, since states are equally sovereign, whether they are large or small,
one state cannot subject itself to the jurisdiction of another 'jurisdiction inhaeret,
cohaeret adhaeret imperio par in parem non habet judicium. ' Among sovereigns,
it was said that there would not be subjection, in the absence of an agreement to
submit to jurisdiction. That would be based on consensus, and therefore such a
submission would leave the sovereignty of the submitting state unaffected. This theory
is underlined by the philosphical disputations of Bodin, Hegel and Austin, and reflects
an absolute view of immunity.

The Theory of Dignity

The theory of dignity rests on the view that the forced submission of one sovereign
to the jurisdiction of another would constitute an affront to the dignity of the submitting
sovereign and an embarrassment to the political relations of the state asserting
jurisdiction. The theory of dignity stems from the same source as the theory of
independence99 and, while it received judicial acceptance by the US Supreme

25 Not until 1978 did the UK Parliament enact The State Imrllunity Act, Ch 33 which was initiated
as a private menlbers bill. Canada followed the UK by enacting The State Imlllunity Act, Ch 95 in 1982.
26 [19381 AC 485, 490.
27 State Immunity Act 1978, (UK Act).
28 State Immunity Act, Statutes of Carlada, 1980-82 (Canadian Act).
29 Austin, T7le Prc)vislce of Jusisprtluleslce Detertrlisled (ed by Berlin, Hampshire, Wolheim), 1954 p214:
iNow in order that an individual or body may be sovereign in a given society, two essentials must
unite. The generality of the given society must render habitual obedience to that certain individual
or body; whilst that individual or body must not be habitually obedient to a determinate human superior.'

666

This content downloaded from

:ffff:ffff:ffff:ffff:ffff:ffff on Thu, 01 Jan 1976 12:34:56 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Modern Law of Sovereign lmmunity

Court in The Schooner Exchange,30 the criticisms of modern writers on the

Austinian concept of sovereignty have reduced the importance of both theories.3'
This too supports an absolutist view of sovereign immunity.

The Theory of Extra-territoriality

The extra-territoriality theory is also an absolutist tlleory. The theory rests on the
proposition that tangible property belonging to a sovereign remains under his
jurisdiction where ever it may be, and is therefore immune from the processes of
a foreign court. The theory of extra-territoriality was finally laid to rest by Lord
Atkin in the Privy Council in Chung Chi Cheung v The King.32 This theory
supports an absolutist approach to sovereign immunity.

The Theory of Comity

It is sometimes alleged that sovereign immunity is not an absolute rule and that
it is based on traditions and of international comity or goodwill among sovereigns.
Thus, it is said that a state which might have jurisdiction will, as a matter of good
international relations, waive it. O'Connell, who regards this as the correct approach
to the question, states that historically one sovereign granted to his fellow sovereigns
the same immunity he himself enjoyed in his own courts, with the expectation of
gaining reciprocity. O'Connell wrote: '[N]othing in this theory requires the view
that immunity of foreign sovereigns from impleading in the courts of another is
an absolute one.'33 The origins of the theory of comity can be traced to Viscount
Simon's speech in the Privy Council in The Sultan of Johore v Abubaker Tanku
Aris Bendahar,34 which was later adopted by Lord Denning in the House of Lords
in Rahimtoola v Nizam of Hyderabad.3s

The Theory of Diplomatic Functions

Both the theory of comity and the theory of diplomatic functions support a restrictivist
approach to sovereign immunity. This theoty appears, particularly, from a collection
of cases dating back to the eighteenth century. It appears that this theory had arisen
out of cases which were concerned with the conflicting rights of princely rulers
on the Indian sub-continent and the East India Company. The dual nature of the
British East India Company being both a corporation engaged in commerce, and
an attribute of UK sovereignty - compounded the issue of sovereignty.
The modern statement of the theory of diplomatic functions appears from the
following passage from Lord Denning's speech in Rahimtoola v The Nizam of
hryderabad.36

Applying the principle is seems to me that at the present time sovereign immunity shoul
not depend on whether a foreign government is impleaded, directly or indirectly, but rather
on the nature of the dispute . . . Is it properly cognisable by our courts or not? If the dispute
brings into question, for instance, the legislative or international transactions of a foreig
government or the policy of its executive, the court shcould grant immunity if asked to do
so, because it does offend the dignity of a foreign sovereign to have the merits of such

30 T7le Schooner Exchange v M'Faddon 11 US (7 Cranch) 116, 3 L Ed 287 (1812).

31 Hart, The Concept of Aw (Oxford: Clarendon Press 1961) Ch 1V; Raz, T/le Concept of a Legal System
(Oxford: Clarendon Press 1970) Chs 1 & 2.
32 [1939] AC 160, 174.
33 O'Connell, International Law (Stevens 2nd edn 1970) Vol II p842.
34 [1952] AC 318.
35 [1958] AC 379, 415-21.
36 ibid.

667

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Modertl Law Review [Vol. 54

dispute canvassed in the domestic courts of another country, but if the dispute concerns for
instance, the commercial transactions of a foreign government (whether carried on by its
own departments or agencies or by setting up separate legal entities), and it arises properly
within the territorial jurisdiction of our courts, there is no ground for granting immunity.37

The Origins of the Absolutist Theory of Sovereign Immunity

The Early Law

The emergence of the absolutist theory may be seen during the early part of the
19th century. Its early formulation could be found in cases involving vessels belonging
to foreign sovereigns. The Schooner Exchange v M'Faddon and Others38 in the
United States Supreme Court in 1812 may well be the earliest source of the theory.
In that case the respondents, John M'Faddon and William Greetham alleged that
they were the lawful owners of a schooner, 'The Exchange.' They alleged that on
27 October 1810 the vessel set sail from Baltimore bound for St Sebastian, in Spain.
While on the voyage, the vessel was forcibly seized on 30 December 1810 by persons
acting under the orders of Emperor Napoleon of France. Thereafter on or about
22 July 181 1, while the schooner now under the name of 'Balaou,' was on a journey
between France and the West Indies, it was compelled to enter the Port of Philadelphia
for 'repairs and refreshment.' These having been obtained, the vessel was about
to leave that port when a writ in rem was issued at the behest of the respondents
on 24 August 1811 to have the vessel seized and detained until the dispute as to
its title could be settled. The Attorney General of the United States representing
Emperor Napoleon of France requested the court to vacate the order to seize and
detain the vessel on the grounds that the subject matter of the dispute was the property
of a friendly sovereign. Marshall CJ formulated the question before the courts in
the following paragraph from his judgment:

This case involves the very delicate and important inquiry, whether an American citizen can
assert in an American court, a title to an armed National vessel found within the waters of
the United States.39

The Court drew a distinction between troops entering the territory of a friendly
sovereign and a public vessel entering a port of a friendly sovereign.40 The former
disturbs the peace of the inhabitants and therefore would be subject to the local
law. The entry of a public vessel into a friendly port does not disturb the inhabitants
and therefore they remain under the protection of the state that controls the port.
Marshall CJ therefore concluded:

But in all respects different is the situation of a public armed ship. She constitutes a part
of the military force of her nation; acts under the immediate and direct command of the
sovereign; employed by him in natioral objects . . . The implied licence therefore under which
such vessel enters a friendly port, miy reasonably be construed, as containing an exemption
from the jurisdiction of the sovereign, within whose territory she claims the rites of
hospitality . 41

The Court found that classical jurists, particularly, Bynkershoek and Vattel had

37 ibid 422.
38 11 US (7 Cranch) 116, 3 L Ev1287 (1812).
39 11 US (7 Cranch) pl35.
40 ibid p141.
41 ibid pl44.

668

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Modern Law of Sovereigsl Isnmunity

expressed contrary views on subjecting armed vessels by foreign sovereigns to the

local jurisdiction.42 Marshall CJ Flnding no authorities to refute these opinions
appears to have avoided discussing them further. He concluded:
Without indicating any opinion on this question, it may safely be afElrmed, that there is a
manifest distinction between the private property of the person who happens to be a prince,
and that military force which supports the sovereign power, and maintains the dignity and
the independence of a nation.43

It must be mentioned, before the later authorities that adopted The Schooner are
considered, that there were no 18th century authorities that Marshall CJ was able
to find in support of his decision exempting all vessels of foreign sovereigns from
local jurisdiction. The Schooner therefore blazed a new trail in the United States
unsupported by, and in fact against, all previous authorities.
It appears from the English Law at the time that the common law still followed
a restrictivist approach to sovereign immunity. In The Prins Fredrik,44 the English
Court of Admiralty in 1820 was faced with a salvage claim, made against the King
of the Netherlands. His warship, carrying a cargo of spices and other goods, had
suffered considerable damage off the Scilly Islands. It was towed iSlrst to Penzance
and then to Plymouth Harbour. The salvors claimed salvage from the captain and
had the ship detained until that was paid. Sir William Scott in the Admiralty Court
made an award in favour of the salvors. While making the award, he remarked:
for it is not reasonable to suppose, that private individuals in this country should go unrewarded,
for services performed to the ships of foreign governments, when they would have been
liberally rewarded for similar services performed for such ships belonging to their own.45

But this award was made with the consent of the Netherlands Ambassador to the
court of St James. This aspect of the case, where the award resulted out of a
consensual order, appears to have troubled Lord Campbell in later years. This will
be mentioned later.
The judgment of Sir William Scott, was however well supported by authority
borrowed from the 18th century. Equally reasoned was Sir Robert Phillimore's
judgment in 1873 in 771e Charkieh.46 In that decision, the English Court of
Admiralty denied a claim of sovereign immunity to the Khedive of Egypt whose
steamship 'The Charkieh' had negligently collided with the plaintiffs vessel 'Batavier'
rendering it an actual total loss. There was evidence that 'The Charkieh' had carried
a cargo while under a charter to a British subject and had entered at the British
customs as an ordinary cargo vessel. The commercial venture in which 'The
Charkieh' was engaged became a key element in the decision to deny the Khedive
of Egypt his claim for exemption from jurisdiction based on sovereign immunity.
Both The Prins Fredrik and The Charkieh were clear examples of a restrictivist
approach to sovereign immunity. Some authors47 have written of a nexus of
authority linking The Exchange with The Prins Fredrik, but upon a closer examination
of the two cases, this assertion appears to be unsupportable. The Prins Fredrik was
however, misinterpreted by Lord Campbell in De Haber v The Queen of

42 ibid pp144-145.
43 ibid p145.
44 (1820) 2 Dods 451.
45 ibid p484.
46 (1873) LR 4 Adm & Ecc 59.
47 O'Connells op cit p844 n 1.

669

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Modern klw Review [Vol. 54

Portugal.48 In that case Lord Campbell took The Prins Fredrik to represent the
proposition that in the absence of consent, a foreign sovereign may not be impleaded
in an English court. In The Prins Fredrik there was voluntary submission by th
King of the Netherlands, in that his vessel was within the English jurisdiction. Further
the King of the Netherlands consented to the award made in favour of the salvor
The matter being an issue for the Admiralty Courts, the presence of the ship within
the jurisdiction was suffilcient for the purposes of jurisdiction. The claim there, was
a claim in rem. Lord Campbell appears to have extended this view to a case in 185
where he held that the Ambassador for Guatemala and New Granada to the cour
of St James was not impleadable in an English Court in a civil action for failing
to pay a call by a company in which the Ambassador was a shareholder.49 There
Campbell CJ ruled that a public minister of a foreign state was not impleadable
even in a commercial transaction without his consent. The thrust of his judgmen
is strongly absolutist.50 It was Lord Campbell's interpretation of The Prins Fredr
that Brett LJ pressed into use in 7Xe Parlement Belge5' to commence the Englis
doctrine of absolute immunity. It must, however, be said that such an interpretation
of The Prins Fredrik was thoroughly misconceived. That interpretation of the ca
misses the central issue of The Prists Fredrik, which was primarily an armed shi
and was sailing principally in the service of the King of the Netherlands while carryin
a cargo. It was not clear as to whom the cargo belonged and in that condition the
is no option but to presume that the cargo did belong to His Majesty, the King of
the Netherlands.
It had long been accepted under international law that an armed ship 'constitutes
a part of the military force of her nation; acts under the immediate and direct command
of the sovereign; is employed by him in national objects.'52 Armed ships are the
sovereign's own ships and are considered in law as being used exclusively for public
purposes. These ships must, however be distinguished from a sovereign's unarmed
ships, which may sometimes be used for trading purposes, and at other times for
public purposes. This may be as ferries for public transport or used in national
emergencies or sailing under a charterparty having been chartered to a private
carrier.53 This distinction between armed ships and unarmed ships of the sovereign
carrying commercial cargo is a crucial distinction that must be drawn before con-
sidering the application of sovereign immunity. If immunity was allowed in both
these types of cases then clearly an absolutist doctrine would have been established.
If immunity was allowed only for armed ships or ships owned by the sovereign
(but not where they are used for commercial purposes) such as his pleasure yachts
then the restrictivist view would have taken root. The unfortunate fact was that
the courts in the late 19th and early 20th centuries failed to draw this vital distinction.
Ownership and control of a vessel rather than its nature and particular use became
the key elements that the judges looked to in the equation for determining a justifi-
cation for immunity.
The move towards an absolutist approach to sovereign immunity took place, in
the English law, as late as 1879 in The Parlement Belge.

48 (1851) 17 QB 171, 196.

49 Mrzgdsllensl Stebltl Nslvigatintl C}Zslpfltly v Muttiz (1859) 2 Ll & El 94.
50 ibiflpplll-113.
51 11874-18801 All ER Rep 104.
52 Per Marshall CJ in 77ze ScS10c;)Z7er ExcSlfltlge 1 1 US (7 Cranch) pl44, 3 L Ed p296. See als
op cit p869 n 1.
53 As in 37le P/liliplvitlc) Ablli/-ol (Onvtlers) v Wslllel Shilitlg (Hog-Kotlg Ltfl) [1977] AC

670

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 19911 The Modern Law of Sovereign Immunity

The Parlement Belge: Its Implications

The commencement of the absolutist view in the English common law may be found
in Sir Robert Phillimore's judgment in The Parlement Belge.s4 Indeed, this is the
starting point of many difficulties and is therefore a case which deserves careful
analysis.
'The Parlement Belge' was a cross-channel steamer belonging to the Belgian
Government. The steamer carried public mail, cargo and passengers, the cargo and
passengers being carried for a fee which was credited to the Belgian Government.
On one of her journeys, 'The Parlement Belge' collided with a tugboat, 'The Darling,'
which was Iying at anchor in the Dover harbour. An action in rem was commenced
by the owners of 'The Darling' in the Admiralty Division. The owners of the steamer,
the Belgian Government, raised the plea of sovereign immunity. Sir Robert
Phillimore, at Elrst instance,55 denied the plea and subjected the owners, as a bar
to jurisdiction, to the Court of the Admiralty:
The Parlement Belge is a packet conveying certain mails and carrying on a considerable
commerce, officered, as I have said by Belgian officers and flying the Belgian pennon. Can
such a vessel so employed be entitled to the privileges of a public ship of war? .. . [a]
distinction might well apply to property like public ships of war held by the sovereign jare
coranae . . . it would not include a vessel engaged in commerce, whose owner is . . . strenue
sic] mercatorem agens. Upon the whole, I am of opinion that neither upon principle,
precedent, nor analogy of general international law, would I be warranted in considering
the Parlement Belge as belonging to that category of public vessels which are exempt from
process of law and all private claims.5fi

Sir Robert distinguished two types of sovereign activities, the public acts of the
sovereign, which undoubtedly fell within the area of sovereign immunity, and trading
or commercial activities, which fell outside the area of sovereign immunity. As
'The Parlement Belge' was primarily a trading vessel (although it did carry mail
between Dover and Ostend), the claim to immunity failed.
The Belgian Government appealed that decision to the Court of Appeal.s7 It must
be emphasised that the critical issue before the Court of Appeal, was not the distinction
between a ship used for trading or commercial purposes and a ship used for public
purposes and the effect such a distinction would have upon the doctrine of sovereign
immunity. The appeal proceeded squarely on the premise that 'The Parlement Belge'
was performing a public and national service for the Belgian sovereign and was,
therefore, not a trading vessel. Brett LJ who delivered judgment for the court stated
the issue as follows:

Has the Admiralty Division jurisdiction in respect of a collision to proceed in rem against,
and, in case of non-appearance or omission to find bail, to seize and sell, a ship present in
this country, which ship is at the time of the proceedings the property of a foreign sovereign,
is in his possession, control, and employ as by means of his commissioned ofElcers, and is
a public vessel of his state, in the sense of its being used for purposes treated by such sovereign
and his advisers as public national services, it being admitted that such ship, though
commissioned, is not an armed ship of war or employed as a part of the military force of
his country?58

54 (1879) 4 PD 129.
55 ibidl.
56 ibid pp l 47-149.
57 [1874-18801 All ER Rep 104.
58 ibid plO8.

671

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Modern Law Review [Vol. 54

Guided by this formulation, the court proceeded to examine a number of ca

involving the property of a sovereign used primarily for public or national purpos
Relying on these precedents, Brett LJ correctly concluded:
The principle to be deduced from all these cases is that, as a consequence of the abs
independence of every sovereign authority . . . each and every one declines to exerc
means of its courts any of its territorial jurisdiction over the person of any soverei
ambassador or any other state, or over the public property of any state which is des
to public use.60

The question as to whether immunity should lie for a vessel not engaged in a
public purpose and loaned by a sovereign was never an issue before any Court of
Appeal. Yet, as an afterthought,6' Brett LJ did refer to 'the problem of the trading
vessel':

But it is said that the immunity is lost by reason of the ship having been used for trading
purposes. As to this, it must be maintained either that the ship has been so used as to have
been employed substantially as a mere trading ship and not substantially for national purposes,
or that a use of her in part for trading purposes takes away the immunity, although she is
in possession of the sovereign authorlty by the hands of commissioned ofElcers, and is
substantially in use for national purposes.62

Sir Robert Phillimore at Hlrst intance and Brett LJ on appeal were, therefore,
generally agreed on the question of sovereign immunity regarding a 'trading vessel'
they both appear to hold that sovereign immunity would not attach to such a vessel
To Sir Robert Phillimore, 'The Parlement Belge' was a trading vessel and, therefore,
sovereign immunity did not apply to it. Brett LJ, however, assumedfi3 that 'Th
Parlement Belge' was not a trading vessel but a vessel used for pllblic or rIationa
purposes, and he accordingly reached the opposite conclusion. While the fact that
'The Parlement Belge' was regarded as a trading vessel was central to the decision
at Elrst instance, the presumption that it was a vessel used for public purposes wa
equally central to the decision on appeal. Accordingly, Brett LJ's view on the position
of a trading vessel was obiter.
The Parlement Belge was not, then, an authority for a general rule of sovereign
immunity.64 It does not support the view that a sovereign may claim immunity
generally for both his trading activities and public acts. But, in The Porto
Alexandre,6s the Court of Appeal misunderstood the ratio of The Parlement Belge.
It felt bound to follow its own previous decision which it misconstrued as laying
down a broad order of absolute sovereign immunity for any ship owned or under
the control of a foreign sovereign. The 'Porto Alexandre,' a vessel owned by the
Portuguese Government but used solely for trading purposes ran aground in British
waters. A writ in rem was issued by the tug owners to recover payment for salvage

S9 T7le SCSIOOZI8r FxcSlatlge 11 US (7 Cranch) 1 16, 3 L Ed 287 (1812); T7le Duke of Brllssswick v Ehe
Kislg of Hasloves 6 Beav 1, 49 ER 724, aff'd ER 993 (HL 1848), 2 ML cases 1; 771e Prisl.s Fedrick
2 Dods 451, 165 ER 1543 (High Court of Admiralty, 1820); De Haber v The Queetl of Pottlogal
(1851) 17 QB 171, 1 17 ER 1246; T7le AtSlal I Wm Rob 374 (1842); Briggs The LigSlt*hips 11 Allen
157 (1865); T7le Sasltissi1tla Trisli(luld 20 US (7 wheat 282), 5 L Ed 454 (1822).
60 5 PD 197, 214-215.
61 Brett LJ's considera
that spans over seventeen pages, S Pr) 197, 219.
62 il7ib1.
63 ibid 204.
64 Per I,ord Cross in 171e P/lilipl)isle Adstlisell [19771 AC 394.
65 [19201 Probate 30.

672

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Modern IAXW of Sovereign Immunity

services. At least two members of the Court of Appeal upheld the claim of sovereign
immunity because they considered that The Parlement Belge made no distinction
between acta imperii and acta gestionis.66
II1 1938, in The Cristina, Lord Maugham correctly formulated a ratio decidendi
for The Parlement Belge:

My Lords, I cannot myself doubt that, if The Parlement Belge had been used solely for trading
purposes, the decision would have been the other way. Almost every line of the judgment
would have been otiose if the view of the court had been that all ships belonging to a foreign
government, even if used for commerce, were entitled to immunity . . . for my part, I can
see no sufElcient reason for not following, in the case of a state-owned vessel, being neither
a ship of war nor in any true sense a vessel publicis usibus destinata, the decision of Sir
Robert Phillimore.67

He also stated most cogently the arguments against upholding an absolute doctrine
of sovereign immunity:

Half a century ago foreign governments very seldom embarked in trade with ordinary ships,
though they not infrequently owned vessels destined for public uses, and, in particular, hospital
vessels, supply-ships, and surveying or exploring vessels. There were doubtless very strong
reasons for extending the privilege long possessed by ships of war to public ships of the nature
mentioned. But there has been a very large development of state-owned commercial ships
since the Great War, and the question as to whether the immunity should continue to be given
to ordinary trading ships has become acute. Is it consistent with sovereign dignity to acquire
a tramp-steamer and to compete with ordinary shippers and ship-owners in the markets of
the world? Doing so, is it consistent to set up the immunity of a sovereign, if, owing to the
want of skill of captain and crew, serious damage is caused to the ship of another country?
Is it also consistent to refuse to permit proceedings to enforwe a right of salvage in respect
of services rendered, perhaps at great risk, by the vessel ot another country? Is there justice
or equity, or for that matter, is international comity being followed, in permitting a foreign
government, while insisting on its own right of indemnity, to bring actions in rem or in
personam against our own nationals?

My Lords, I am far from relying merely on my own opinion as to the absurdity of the position
which our courts are in if they must continue to disclaim jurisdiction in relation to commercial
ships owned by foreign governments. The matter has been considered over and over again
of late years by foreign jurists, by English Lawyers, and by business men, and with practical
unanimity they are of opinion that, if governments or corporations formed by them choose
to navigate and trade as ship-owners, they ought to submit to the same legal remedies and
actions as any other ship-owner.68

But, notwithstanding the vigourous support lent by Lord Macmillan69 and

Thankerton70 it was the absolutist theory advanced in the judgment of Lord Atkin7'
(who rested his thesis on The Parlement Belge), and supported by Lord Wright,

66 'It has been held . . . in The Parlemellt Belge that trading on the part of the Sovereign does not subject
him to any liability to the jurisdiction.' Scrutton LJ ibid p37, but Warrington LJ appears to have based
his decision on a finding that the ship was being used for a public purpose, ibid p35. In addition see
the discussion by Huggins J when delivering his judgment in the Supreme Court of Hong Kong in
Nle P/lilippitle Adliral (1974) 2 LL L Rep 568, 581.
67 nle Cristina [1938] AC 485, 519-520. See also the following dicta of Mackenna J in Swiss Israel
Trade Batlk v Salta [1972] I LL L Rep 497, 503: '771e Parlement Belge left the question of "mere
trading ships" open, the form of the judgment suggesting an answer, and the logic of reasoning another.'
68 ibid 521-522.
69 ibid 497-498.
70 ibid 495-496.
71 ibid 490.

673

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Moulern Law Review IVol. 54

which prevailed.72 The views of Atkin and Wright have been the subject o
considerable judicial73 and academic74 criticism.
In subsequent decisions, particularly in the Privy Council,75 English judges d
express grave doubts as to the historical accuracy of the absolutist view of soverei
immunity. They were also concerned about its apparent injustice. However, it wa
not until Lord Denning's speech in Rahimtoola v Nizam of Hyderabad76 that th
doctrine of sovereign immunity was correctly traced back to its eighteenth centu
origins in Nabob of the Carnatic v East India Company.77 Sovereign immunity h
been associated with acta in jure imperii simply because sovereign functions of
state are best regulated through diplomacy and not through judicial determinatio
made by municipal courts. A distinction has naturally been drawn betwen acta
jure imperii and acta in jure gestionis. The distinction could accurately be restate
as one between the sovereign and the non-sovereign functions of a state or its agents.
Lord Denning drew his distinction at the end of his speech in the Rahimtoola cas

[W]hat would be the position if the transaction had taken place, not between the Finan
Minister of Hyderabad and the Foreign Secretary of Pakistan, but between the Finance Ministe
of Hyderabad and the Foreign Secretary of Great Britain? . . . Would an action lie in o
courts for the return of the money? Clearly not, the transaction was more in the nature
a treaty than a contract or a trust. Reference would be made to such well-known cases
Nabob of the Ca)ttatic v East India Company78

The dignity of the sovereign is secured by rendering its sovereign attributes

immune; but that dignity is not involved in those commercial transactions of th
sovereign which bring it under the municipal law of another state. What is necessary
is to obtain a determination from the courts as to whether a particular dispute concern
an attribute of sovereignty. If that is the case, the dispute must be resolved by
diplomacy, and not by litigation. The English courts appear to have taken this
view79 at least as early as the middle of the eighteenth century. Even Lord Atkin
in I7we Cristina, did not assert that a trading activity of a sovereign state was an
attribute of its sovereignty his view was that a claim of sovereign immunity a
a bar to jurisdiction would lie both for trading and non-trading activities of a stat
But, returning to Lord Denning's view in the Rahimtoola case, it is clear that th
courts had, from ancient times, always maintained a distinction between acts whic
are jure imperii and acts which are jure gestionis, restricting a claim for immunit
from jurisdiction to the former and excluding it from the latter.
Historically then, the absolute view is devoid of authority. The immunity of th
sovereign was in fact a limited one. This emerges clearly from the writings of Vattel
and Bynkershoek, to which Marshall CJ made reference, without comment, in 77z
Exchange. The immunity was restricted to the sovereign's public acts and did n

72 See eg Chcshire's Psivte lsztesszatioslal LBI}V (Butterworths 9th edn ed by P North 1974) plO5. Th
10th and 11th editions discuss the State Immunities Act of the UK and allow no room for a discussio
of the Common Law.
73 See eg Ra}ittltookl v T7le Nizas of fiIydesubad [1958] AC 379, 415-421, and Ssviss Ismel T ade
Batzk v Salt [19721 I LL L Rep 497.
74 See eg Goodhart (1950) 66 LQR 459 and Lauterpacht, 'The Problem of Jurisdictional Immunitics
of Foreign States ' in (1951) 28 Bs itis} Yeas Book of lsztet slatioszal Lus} 220.
75 Jlxasl Ysstlael & Co v Govesszmeslt of ltldoesia [19551 AC 72; Sulrasl of Jo)ore v Abubakas Beszd)tar
[1952] AC 318.
76 [1958] AC 379.
77 2 Ves Jun 56, 30 ER 521.
78 [19581 AC 379, 423.
79 See Note 77.

674

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
 T/te Moderst Law of Sovereign Immunity
September 1991]

extend to acts jure gestionis, into which category his trading activities, together
with his trading vessels, fell. Such activities are not within his sovereign attributes
and these are what in Roman jurisprudence were properly terms as the Imperium.
The Parlement Belge clearly supported that restrictivist view, which indeed was
traceable to the Private International Law of the eighteenth century, to classical
jurists of that period in particular, to the two classical jurists, Vattel and
Bynkershoek.
It was however, in The Porto Alexandre,80 that all three judges of the court of
appeal thought that they were bound by their previous decision in The Parlement
Belge. They further thought that case supported the restrictivist view. They were
clearly correct in their Elrst proposition but they did commit a grave error in their
second. An error that was later to be perpetuated for the next 46 years-until The
Philippine Admiral81 came before the Judicial committee of the Privy Council. The
narrow construct of judicial reasoning that characterised the judgment of the Court
of Appeal in The Porto Alexandre may be seen in the following passage from Bankes
LJ's judgment:

The function of this court in this particular case is to decide whether it is covered by Ne
Parlemeslt Belge. I think it is, and it is therefore not necessary or desirable that the court
should enter upon a discussion of the wider question at this stage, or consider, the importance
of other views that may be taken.82

Both the judgments of Warrington83 and

ceeded upon the supposition that The Parl
that the common law doctrine of sovereign
an absolutist theory.
On the western shores of the Atlantic t
The Schooner was being acutely felt.
In Ex parte Muir,85 'The Gleneden' w
been requisitioned by the British Govern
Muir' and its owners had 'The Gleneden' s
Court while conceding that the British
sovereign immunity refused that claim m
curiae on behalf of the British Embassy, on
had not supported that claim with proof
to a requisition order.
Again in The Pesaro,86 a consignment o
to a US port. The vessel was a mercha
Government. The consignment was lost
the vessel upon a writ in rem. The US Su
of The Exchange expanded the application
owned and operated by sovereigns. Merch
for which they are put into use is for c
While expanding the application of T
Devanter J wrote:

80 [19201 Probate 30.

81 [1977]AC373.
82 [1920] Probate 30, 34.
83 ibifl p35 .
84 ibid p36.
85 (1921) 254 US 522.
86 (1926) 271 US 562.

675

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Modern Law Reziess}
IVol. 54

The decision in 771e Exchange therefore cannot be taken as excluding merchant ships held
and used by a government from the principles there announced. On the contrary, if such
ships come within the principles, they must be held to have the same immunity as warships,
in the absence of a treaty or statute of the United States evincing a different purpose.87

The US Supreme Court equated the significance of state owned trading vessels
to armed naval vessels. Van Devanter J justified this equation in the following words:

We think the principles are applicable alike to ships held and used by a government for a
public purpose, and that when, for the purpose of advancing the trade of its people or providing
revenue for its treasury, a government acquires Lmen] and operates ships in the carrying trade,
they are public ships in the same sense that warships are. We know of no international usage
which regards the maintenance and advancement of the economic welfare of a people in time
of peace as any less a public purpose than the maintenance and training of a naval force.88

In 77ze Navemar89 it was alleged that the Spanish Government had unlawfully
seized the ship while it was in the ownership and possession of the applicants through
its crew. The applicants therefore claimed to be entitled to its possessions. A writ
isl rem was issued for the ship's seizure. The facts are more in line with The Exchange
and the United States Supreme Court invited the Spanish Government to establish
that the vessel was in their possession. Stone J wrote:

Admittedly a vessel of a friendly government in its possession and service is a public vessel
even though engaged in the carriage of merchandise for hire, and as such is inlmune from
suit in the collrts of the United States.90

Again in Ex parte The Republic of Peru,9' the Ucayali, which was owned by the
Peruvian Governlnent was on charter to the applicants to transport a consignment
of sugar from a Peruvian pol-t to New York. There was a breach of that charterparty
and the charterers had the vessel seized upon a writ in rem. By a majority the US
Supreme Court, following The Exchange ordered the vessel to be released, while
recognising the right of the Peruvian Government to claim sovereign immunity as
a basis for denying the jurisdiction of American Courts. For the majority, Chief
Justice Stone wrote:

The principle is that courts may not so exercise their jurisdiction, by seizure and detention
of the property of a friendly sovereign, as to embarrass the executive arm of the government
in conducting toreign relations 92

The Republic of Mexico v HoUlan,'93 in 1945, raised some important issues in

the United States Supreme Court. The 'Baja California' which was owned by the
government of Mexico was under a demise charter to a private shipper. While in
Mexican waters the vessel negligently collided with 'Lottie Carson' inflicting that
vessel with considerable damage. While the 'Baja California' was visiting southern
California, the owners of 'Lottie Carson' had the offending vessel seized under a
writ in Z esn . The US government advised the District Court of Southern California,
from which court the writ was issued, that the 'Baja California' was owned by the
Mexican Government, but it did not claim sovereign immunity as a bar to the Court's

87 ifvi(l pS74.
88 ibil.
89 ( 1 938) 303 US 68.
90 ibibl p74.
91 ( 1943) 3 1 8 Us 578.
92 ibibl p588.
93 (1945) 324 US 30.

676

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Modersl Law of Sovereigzl Isnznunity

jurisdiction. That claim was, however, claimed by the Mexican Ambassador to the
United States. It might be recalled that, both in The Pesaro and in 771e Navemar,
the vessels there in question were owned and possessed by governments. The US
Supreme Court in each of those cases allowed the claim of sovereign immunity
notwithstanding the fact that in each case the vessel was being used for trading
purposes. In the present case, the fact that the sBaja California' was not in the
possession of a sovereign albeit owned by one The Mexican Government and
the further point that the government of the US had not recommended the recognition
of sovereign immunity to the court, were together considered as sufficient justification
to refuse the Mexican ambassador's claim for immunity from jurisdiction. Chief
Justice Stone therefore concluded:

Whether this distinction between possession and title may be thought to depend upon the
aggravation of the indignity where the interference with the vessel ousts the possession of
a foreign state . . . it is plain that the distinction is supported by the overwhelming weight
of authority. More important, and we think controlling in the present circumstance, is the
fact that, despite numerous opportunities like the present to recognise immunity from suit
of a vessel owned and not possessed by foreign government, this government has failed to
do so. We can only conclude that it is the national policy not to extend the immunity in the
manner now suggested, and that it is the duty of the courts, in a matter so intimately associated
with our foreign policy and which may profoundly affect it, not to enlarge an immunity to
an extent which the govelnment, although often asked, has not seen Elt to recognise.94

What the present dispute concerning the 'Baja California' decides may appear
to be a little strange to English lawyers. It appears from Stone CJ's judgment that
the Executive arm of government in the US has the power to advise the judiciary
as to what it should do with regard to a claim for sovereign immunity. The judiciary
it appears are bound to follow such advice to avoid embarrassing the government
of the day. This stands on its head the position in the English Law. The role of
the Executive arm of government in the English Law is to inform the courts as to
whether the government of the day in the United Kingdom recognises a particular
regime as being sovereign.95 Thereafter, it is left for the judges to decide whether
the claim for immunity should be granted. This would naturally depend on the facts
of the situation in each case. This difference of approach in the US is important,
for it diminishes the role of the courts in matters raising sovereign immunity.
As a concluding line regarding the absolutist approach, it might be mentioned,
that on both sides of the Atlantic, the absolutist view of sovereign immunity arose
out of cases concerning ships raising admiralty jurisdiction. This might be due to
the fact that the principle lines of communication in the l9th century were through
the mediation of ships and these were mostly owned and possessed by sovereign
states. The conveyance of postal packets and cargo such as silks, spices and slaves,
were matters that were intimately connected with the interests of sovereign states.
These interests were there in the previous centuries too, but Europe and the New
World having suddenly come ablaze with commerce in the 19th century, ships,
whether used for trading purposes or as armed vessels, became a part of the vital
interests of states, and therefore, it was seen as objects that bore the imprimatur
of sovereign authority. It is in this sense that the US Supreme Court in 7he

94 ibid p38.
95 In C(lrl Zeiss Stifill)lg v R(l>llel (1)le1 Keele) Ltd (No 2) [1967] 1 AC ss3, it was held by the House
of Lords that the German Democratic Republic (GDR) was not a sovereign state but an 'Organization
sub-c)rdinate to the USSR.' Therefore, the acts done by the GDR were recognised as 'acts done by
a subordinate body which the USSR set up to act on its behalf.' This conclusion was reached while
relying on a letter which the Foreign Secretary of Great Britain had written to the courts.

677

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
The Moules n Lus} Review [Vol. 54

Pesaro96 thought that the 'advancement of the economic welfare of a people in

time of peace as any less a public purpose than the maintenance and training o
a naval force.'

The History of the Restrictivist Theory of Sovereign Immunity

The Antecedents
One of the early decisions on sovereign immunity to which Lord Denning made
reference in his trend setting speech in The Nizam of tSyderabad v Rahimtoola97
was Re Nabob of the Carnatic v East India Company.98 The Nabob of the
Carnatic was the ruler of a principality within the sub-continent of India. He had
entered into a treaty with The British East India Company. Under that treaty certain
moneys were due to the Nabob. By this action The Nabob sought an order from
the Chancery Division to have the company account for the money as a right ill
equity. The court refused that request on the grounds that the dispute brought into
question a treaty between two sovereigns and as such was not subject to municipal
law. Both The Nabob and the company were British subjects but the treaty was
one they had entered into in their capacity as sovereigns. Lord Eyre observed:

We are all satisfied, that the bill Inust be dismissed. It is a case of Inutual treaty between
persons acting in that instance as states independent of each other and the circumstance, that
the East India Company are mere subjects with relation to this country, has nothing to do
with that. That treaty was entered into with them, not as- subjects, but as a neighbouring
independent state, and is the same, as if it was a treaty between two sovereigns; and conse-
quently is not a subject of private, municipal, jurisdiction.99

Lord Eyre, indicated in the next passage that the Law would be different if the
undertaking was not a treaty obligation but a mercantile obligation. Lord Eyre, said,
'it was not mercantile in its nature, but political"°° The judgment, therefore, laid
down the foundations for a restrictivist approach to sovereign immunity. The basis
for allowing immunity was carefully spelt out as being limited to matters political,
which Lord Denning 160 years later was to formulate as questions which raised
'the legislative or international transactions of a foreign government, or the policy
of its executive. a 101 Thus immunity to such functions of the state as those that may
be characterised as acta in jure imperii as distinct from those that fall under the
category of acta in jure gestionis. The latter embodies such functions as the trading
functions of a state for which the plea of sovereign immunity as a bar to jurisdiction
was not available. Acta in jure imperii includes such functions of a state as those
that concern the executive, legislative and international functions of a state. Such
acts of a state which propagates development as distinct from trading, too fall within
the ambit of an acta in jure imperii.'02 The claim of sovereign immunity was
therefore restricted to acta in jure imperii.
The decision in The Nabob of the Carnatic was followed in The Secretasy of State

96 See Note 86.

97 11958] AC 379, 423.
98 2 Ves Jun 56, 30 ER 521.
99 ibid pS9, 30 ER pS23.
I oo ibid .
101 11958] AC 379, 422.
102 Melsolger v Nerv B)lOtS}tXiCk CO)p(Ofiti(l)t 119711 I WLR 604.

678

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Morlessl Lalv of Soveseigzl ls?lznunity

for India v Sahaba 103 where the Privy Council held that the respondent, the widow
of the late Rajah of Tanjore (the ruler of the principality of Tanjore) could not sue
the British East India Company for confiscating the property of the Rajah after his
death. The Rt Hon Lord Kingsdown declared that:

The general principle of law was not, and indeed it could not, with any colour of reason
be disputed. The transactions of independent States between each other are governed by other
laws than those which municipal courts administer. Such courts have neither the means of
deciding what is right, nor the power of enforcing any decision which they may make. 104

Again in 771e E-Rajah of Cootg v East India Company 105 the respondents tres-
passed into the principality of Coorg, ousted its ruler and annexed his principality.
Further it was alleged that the invading army had destroyed a Promissory Note for
a very large sum of money (653,140 rupees). That sum of money had been lent
by the Ruler of Coorg, the appellant, to the East India Company for which the latter
had issued the Promissory Note. The action was brought not for waging war against
the principality of Coorg but for the recovery of money. The Master of The Rolls,
Sir John Romilly, declined to entertain the action. He explained his decision in this
way:

Now these circumstances, in my opinion, amount to a taking possession of the No

part of the defendant in the exercise of their sovereign and political power. It is
this act of taking possession of the Notes was not of mercantile character. It
merchants that they could have taken or retained them, and if this be so, as in m
it is . . . if falls within the rule laid down and the cases cited in the case of T
Tanjore, 106 107

The judgment drew a distinction between a sovereign act and

seizing of the Promissory Notes was characterised as a sovereig
it was, and although it was a Tort it was nonetheless an act of
could only have been answered by the use of force. Where the
force the municipal courts have no role to play in adjudicating
act is a sovereign act for which there is no legal redress from
Rights declared by a sovereign, not as a part of the law of the
it'08 are not cognisable in a court of law. All these matters rai
In Cook v Sprigg,"° the plaintiffs claimed to be grantees of c
them by the paramount chief of Pondoland. This concession w
territory was annexed by the British Government. The plaintiff b
a right to the concession. While refusing that right, Lord Halsb

It is a well-established principle of Law that the transactions of indep

each other are governed by other laws than those which municipal

103 13 Moo PC 22, 15 ER 9.

104 ibid p75, 15 ER pp32-33.
105 29 Beav 300, 54 ER 642.
106 771e Secretasy of State for India v KB Sahabzl see note 103.
107 29 Beav 300, 310, 54 ER 642, 646-647.
108 Such as by Treaties or by concessions.
109 Civilian War ClaitJIants Association Ltd v T7le King [1932] AC 14, RstotJzjee v 771e Queen [1876]
2 QBD 69; Cook v Sprigg [ 1899] AC 572 (pc); T7le Secretasy of State for India v Bari Rajbai (1915)
LR 42 IA 227 (PC); Vayjesingi JoravarsislgXi v Secretasy of State for India (1924) LR 51 IA 357
(PC); Dattatraya Krinhna Rao Kane v Secretasy of State for India (1930) LR 57 IA (PC) 318, and
Secretasy State for India v Sardar RllstatJI Khan [ 1941] AC 356 (HL).
110 [1898] AC 572.
1 1 1 ibil pS78.

679

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
Nle MorSein Lw Rc9view IVol. 54

It appears from a consistent line of authorities, which do not arise out of disp
concerning ships which therefore al-e outside the courts of Admiralty, that the app
cation of sovereign in1munity as a plea for exclusion from jurisdiction was limi
as froln the eighteenth century, to sovereign acts and was not available to the sover
when the dispute was concerned with trading, comtnercial or mercantile acts.
ppears to be the correct determination for the status of that claim in the com
law. Such a determination places the plea of sovereign immunity within a restrictivi
frame, making the absolutist approach to sovereign imtnunity somewhat errant
absolutist approach, as it was earlier shown, arose out of a misapplication of T
Parlesnent Belgcvll2 in the later decisions, such as in The Cristina. "3 Any refut
of the absolutist view therefore Inust arise frona authorities that involve ship
that appears to have been done by the Privy Council"4 in 1977 and by the Ho
of LordsI'5 in 1981. By doing se, the Privy Council and the House of Lord
brought the notion of sovereign immunity in the common law into line with
eighteenth century view of limiting immunity to acta in jure imperii and exclu
it from actfl in jure ge.stionis. In the modern law the restrictivist approach ap
to all disputes, whether they arise in the Admiralty concerning ships or to any othe
transactions of a sovereign. This coincides with a view expressed by Lord Den
in 1958 in Tl1e Nizclm of Hyblerabad v Rahimtoola,l'') in which he proposed t
sovercign iml11unity should be limited to the 'legislative or international transuctio
of a foreign governn1ent, or the policy of its executive."'7 That Ineans that
immunity should be restricted to (lcta isl jure isslperii. These decisionsIl8 have
the foundatioll for a restatelnent of the law concerning sovereign immunity

The Modern Law

A re-statement of sovereign immunity must take into consideration the two diverge
views c)f immunity, the absolutist view and the restrictivist view. As for the applic
of a claim for immunity in disputes not involving ships, Lord Denning laid d
the law in Rahimtoola v The Nizanl of Hyderabad."9 There, The Nizam's finan
secretary transferred over a million pounds Iying in a British bank to the appel
The appellant who was Pakistan's High Commissioner to Britain received that
of naoney under the authority of the Foreign Secretary of that country, for an
behalf of Pakistan. Alleging that his H1nancial secretary had no authority to transfe
the money to the appellant, The NizaIn sued the British bank for the return of
money. The bank impleaded Rahimtoola, the appellant, as a second defendant.
appellant claimed the absence of jurisdiction based on sovereign immunity. Th
House of Lords held that the appellant as the representative of the Republic o
Pakistan! was entitled to clainl immunity. The basis for allowing that claim, w
Lord Denning prc)posed, has now been followed in a number of later decision

112 S PD 197.
113 11938] AC48.S.
1 14 771e PStiSi/pirl} Ablmirnl (Owslers) Y Wwllessl Shippirlg (H(ng Kearlg) Ll(/ 119771 AC 37
115 I Corlgreso blel Purti(lo 119831 1 AC 244.
l 16 [ 19581 AC 379.
I 17 ihil p42/2.
118 Notes 114, IIS, and 116.
I 1 9 [ I 958 1 AC 379.
120 Aleore1 Ltel v GosUernrerlt of Coll(ralDi(l 119841 AC 580, fren(tle- Tssw(ting Cozp v BcQszk (f Nigeric}
[ 19771 l QB 529.

680

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] 771e Mo(les t7 Lcv of Soves eigsz 1ss2Es2uslity

He restricted the application of the claim 'to legislative or international trailsactions

of a foreign government, or the policy of its executive.'2'-'22 This means that
immunity became restricted to acta in juze imperii thus leaving acta in jure gestionis
outside its ambit. Thus, he established in the common law the restrictivist approach
to sovereign immunity in cases which did not involve the sovereignss ships.
The position of sovereign immunity pertaining to ships remained unresolved in
the common law until The Philippine Admiral '23 came before the Privy Council.
There, the ship, The Philippine Admiral, was owned by the War Reparations
Commission of The Philippine Government. This was a government agency which
received and distributed war reparations paid by the Japanese Government. The
ship was delivered to the Liberation Shipping Company which was under a conditional
sales agreement to buy the vessel. The vessel thereafter was chartered by the
Liberation Shipping Company to charterers who were a Hong Kong based company.
While in the port of Hong Kong the vessel underwent repairs for which the Liberation
Shipping Company became liable. In addition the company fell into arrears in its
payment to The Commission. The Commission, thereafter, repossessed it. For most
of the period of the charter agreement, The Philippine Admiral remained in dry
dock, in Hong Kong, undergoing repairs. The Company realising its impecuniosity
and the seriousness of the defects of the ship, cancelled the charter agreement. The
repairers and the charterers brought reparation actions in rem for the cost of goods
supplied and disbursements made for the ship and for the breach of the charterparty.
The ship was subsequently arrested and the Supreme Court of Hong Kong ordered
it to be appraised and sold. The Republic of the Philippines, as the principal of
the Commission, applied for a stay of execution from that order.'24 The matter
finally reached the Privy Council.'25 The Republic of the Philippines claimed
sovereign immunity in support of a stay of execution. The Privy Council refused
that claim. While dismissing the appeal brought by the Republic of the Philippines,
Lord Cross who delivered the unanimous opinion of the Board, pointed out that
the so called doctrine of absolute immunity was based upon a misinterpretation of
Tlfle Parlement Belge and, after examining post war developments in other jurisdic-
tions, Lord Cross said that the absolutist doctrine should have no place in English
Jurisprudence. Lord Cross observed:

In 7he Parlement Belge the Court of Appeal said that the court could not exercise jurisdiction
over the public property of any state which is 'destined for its public use,' but it did not
say that state-owned vessels engaged wholly or substantially in ordinary commerce must be
regarded as property 'destined to its public use. ' It was careful to leave that point open. 126

After reviewing the authorities, Lord Cross declared:

Their Lordships turn now to consider what answer they should give to the main question
raised by this appeal-whether or not they should follow the decision of the Court of Appeal
in The Porto Alexanclre. There are clearly weighty reasons for not following it. In the first
place the Court decided that case as it did, because its members thought that they were bound
to decide by The Parlesnellt Belge whereas-as their Lordships think-the decision in The
Parlement Belge did not cover the case at all. Secondly, although Lord Atkin and Lord Wright
approved the decision in Ehe Porto Alexandre the other three Law J ords who took part in
The Cristilla thought that it was at least doubtfu} whether sovereign immunity should extend

1 21-1 22 [ 1 959] AC 379 , 422 .

123 P/lilippitle Alttliral (O6vzless) v Willlettl SSlippitlg (Hotlg Kotlg) Ltel [1977] AC 373.
124 [1973] HKLR 615 and on appeal to the Hong Kong Court of Appeal, [1974] 2 Lloyd's Rep 568.
125 [19771 AC 373.
126 [19761 2 WLR pp224-225.

681

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
771e Mobleral Lzllt} Reviesr} {Vol. 54

to state-owned vessels engaged in ordinary commerce. More over this Board in the Sult
of Johote case made it clear that it considered that the question was an open one. Third
the trend of opinion in the world outside the Commonwealth since the last war, has be
increasing against the applicsltion of the doctrine of sovereign imlnunity to ordinary tradi
transactions. Lastly, their Lordships themselves think that it is wrong that it should be
applied. In this country-and no doubt in most countries in the Western world-the sta
can be sued in its own courts on commercial contracts into which it has entered and th
is no apparent reason why foreign states should not be equally liable to be sued there in resp
of such tI anSactiollS. 127

Lord Cross was careful to confine the restrictivist doctrine applicable to a

sovereign's ships to actions in rem. He left the applicability of that doctrine to
ships where the action is one of in personam open. While refuting the absolutist
view in actions in sXem, Lord Cross expressly retained its application to actions in
versonam. In that respect, he said:

The rule that ne action in peZ.sosBam can be brought against a foreign Sovereign state on a
comlnercial contract has been regularly accepted by the Court of Appeal in England and was
assumed to be the law even by Lord Maugham in The Cristina. It is no doubt open to the
House of Lorcls to decide otherwise but it may fairly be said to be at the least unlikely that
it would do so'28

It mustS however, be poirlted out that a year later, in the Court of Appeal, Lord
Denning castigated Lord Cross for his 'dismal forecast."29 In addition to that
characterisation, Lord Denning found Lord Cross to be 'out of line with the good
sense shown in the rest of the judgment of the Privy Council.'30 The application
of sovereign immunity to isl personam actions against a sovereign came before the
House of Lords in 1981 in I Congreso.'3'
rrhe Cuban state enterprise in charge of selling sugar Cubazucar contracted
to sell a quantity of sugar cif to IANSA. a Chilean state enterprise. The sugar was
to be shipped upon Cuban ships owned by a Cuban state enterprise Mambisa.
During the currency of the contract, the Chilean coup d 'etat took place which replaced
the adlninistration of Allende with the administration of Pinochet. Disapproving
this change which resulted in the death of Allende, the Cuban Government breached
the contract by ordering the Cuban Government vessel, 'The Marble Islands,' which
was discharging a consignment of sugar during the progress of the Revolution, at
the port of Valparaiso, to stop discharing the cargo, and return to Cuba. The Captain
of 'The Marble Islands' obeyed these instructions. In the present action the Chilean
Government alleged that the owners of 'The Marble Islands' were liable in personam
for causing the breach of contract. The 'I Congreso,' the Chilean Government alleged,
was owned by Mambisa, the same Cuban Government agency that owned 'The
Marble Islands' and in pursuant to section 3(4) of the Administration of Justice Act,
1956, the Chilean Government sought the arrest of the sister ship 'I Congreso.'
The action was izl personam and the Cuban Government claimed as a sovereign,
immunity from jurisdiction, and therefore sought to have the order to seize the 'I
Congreso' set aside. Adopting the restrictive view of immunity, the House of Lords
held that the Cuban Government might be impleaded in all matters which arose out

127 i/wifl pp232-233.

128 11977] AC 373, 402.
129 Tzezldtevr Tzadislg Corpotatiozl v Ces1ttul Bc*Zzk of Nigeria 119771 Qs 529.
130 [19771 QB 529, 550.
131 [1981] 3 WLR328.

682

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
September 1991] The Modertl Law of Sovereign Immuslity

of the trading transaction and therefore the order to seize was recognised as a valid
order issued by a court with jurisdiction over the ship. Lord Wilberforce wrote:

Until 1975 it would have been true to say that England, almost alone of influential trading
nations (United States of America having changed its position under the Tate letter in 1952)
continued to adhere to a pure, absolute, doctrine of state immunity in all cases. The classic
formulation was of Lord Atkin in . . . 771e Cristina . . . In 1977 there were reported two
landmark cases The Philippine Admiral . . . and Trelldtex Trading Cotporation Ltd v Centlal
Bank of Nigeria [ 1977] QB 529. In The Philippille Admilal the . . . Privy Council . . . decided
to apply the 'restrictive' doctrine to an action in rem against a state-owned trading vessel.
It was further commented that it was open to the House of Lords to move away from the
absolute rule of immunity in actions ill personam. Sitting in this House I would unhesitatingly
affilrm as part of English law the advance made by The Philippine Admiral . . . with the
reservation that the decision was perhaps unnecessarily restrictive in, apparently, confining
the departure made to actions itl rem. In truth an action in rem as regards a ship, . . . is itself,
in addition an action in personam . . . The effect of The Philippine Admiral if accepted, as
I would accept it, is that as regards state-owned trading vessels, actions, whether commenced
in tem or not, are to be decided according to the 'restrictive' theory.'32

Thus, the House of Lords proclaimed the restrictive approach to sovereign

immunity as applicable to all actions, both in rem and in personam pertaining to
state owned trading vessels. That was the ratio decidendi of I Congreso. However,
the House by adopting Lord Denning's judgment in the Court of Appeal in the
Trendtex Trading Corporation Ltd v Central Bank of Nigeria'33 found that the
restrictive approach was a generally accepted view of sovereign immunity in modern
international law. Therefore, Lord Wilberforce wrote:
The other landmark authority (Trendtex . . . ) a decision of the Court of Appeal, established
that, as a matter of contemporary international Law, the 'restrictive' theory should be generally
applied . . . Its value in the present case lies in the reasoning that if the act in question is
of a commercial nature, the fact that it was done for government or political reasons does
not attract sovereign immunity.'34

The House of Lords in I Congreso, in 1981, refited the absolute view of sovereign
immunity for state-owned trading vessels, dating back to The Parlement Belge'3s
and Re Porto Alexandre. '36 In its place the House introduced the restrictivist view,
both for in rem and in personam actions against the sovereign with reference to
his trading vessels.
In the United States of America, the absolutist view which dated back to The
Schooner v M'Faddon remained firmly entrenched until The Tate Letter,'37 of May
1952, was written, relating to a change of policy of the government of the United
States of America in the granting of sovereign immunity to foreign governments.
That letter was written by Jack Tate who then was the Acting Legal Adviser to
the United States Department of State, and was addressed to the Acting Attorney-
General of the US Philip Pearlman. 138 In that letter, Tate informed Pearlman that
the United States Government would thereafter restrict the grant of immunity to

132 ibid pp334-335.

133 [19771 QB 529.
134 [19811 3 WLR 328, 335.
135 (1880) 5 PD 97.
136 [19201 Probate 30.
137 The Tate letter was reproduced in Alfred Dusthill of Losldotz v Republic of Cuba 96 S Ct 1854 pl869
Appendix (1976).
138 Alfred D"slhill of Losldon v Republic of Cllba, ibid Victoty Ttntlsport Islc v Co)tzisaricl Gesleral de
Abastecisnie)ltos Y Tzn)lsportes (771e Hlfdsosl) 336 F 2d 354 (2nd Cir 1964).

683

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms
 The Mortern Lflw Review [Vol. 54

acta isl jure impelii and would not grant immunity to acta in jure gestionis. This
letter provided the justification in subsequent decisions for adopting a restrictivist
approach to sovereign immunity, not only in cases involving state-owned vessels,
but in all acts that a foreign government does which are of a commercial nature,
although they may have been done for governmental OI political reasons. The Tate
letter in 1952 changed the law of the US as a series of decisions commencing
from 771e Nizam of Hydetabas1 in 1957 and ending in the 1 Cong1eso'39 in 1981,
did for English Law.
Despite the introduction of the State Immunity Act 1978 in the UK, the common
law through its powers of expansion and elucidation reached the desired goal of
restrictivism in a logical and consistent manner. The path taken by the judges of
the colnmon law courts was generative in nature, which helped in the evolution
of the restrictivist view within the framework of judicial precedent. Such judicial
activism is always preferable to legislative activism. For the courts must always
be called upon to illterpret the statutes and in interpreting them, the courts would
invariably examine the common law and its precedents. This, the courts do, so as
to ensure that a correct interpretation is given to the dextrous product of the legislature.
To that extentl despite the statutes the common law precedents will continue to
play all important part in fasllioning the modern law of sovereign immunity.

139 119831 1 AC 244.

684

This content downloaded from

14.139.185.174 on Tue, 21 Feb 2023 11:36:31 UTC
All use subject to https://about.jstor.org/terms