“The Court considers that the rule of State immunity occupies an important place in international law and international relations. It derives from the principle of sovereign equality of States, which, as Article 2, paragraph 1, of the Charter of the United Nations makes clear, is one of the fundamental principles of the international legal order. This principle has to be viewed together with the principle that each State possesses sovereignty over its own territory and that there flows from that sovereignty the jurisdiction of the State over events and persons within that territory. Exceptions to the immunity of the State represent a departure from the principle of sovereign equality. Immunity may represent a departure from the principle of territorial sovereignty and the jurisdiction which flows from it.”
“The foundation for the application to set aside the writ and arrest of the ship is to be found in two propositions of international law engrafted into our domestic law which seem to me to be well established and to be beyond dispute. The first is that the 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. The second is that 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.”
“This restrictive theory seeks to draw a distinction between acts of a state which are done jure imperii and acts done by it jure gestionis and accords the foreign state no immunity either in actions in personam or in actions in rem in respect of transactions falling under the second head.”
“Sitting in this House I would unhesitatingly affirm 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 in rem. In truth an action in rem as regards a ship, if it proceeds beyond the initial stages, is itself in addition an action in personam – viz the owner of the ship (see The Cristina[1938] AC 485 , 492 per Lord Atkin, p 504 per Lord Wright), the description in rem denoting the procedural advantages available as regards service, arrest and enforcement. It should be borne in mind that no distinction between actions in rem and actions in personam is generally recognised elsewhere so that it would in any event be desirable to liberate English law from an anomaly if that existed. In fact there is no anomaly and no distinction. 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 rem or not, are to be decided according to the ‘restrictive’ theory.”
“The conclusion which emerges is that in considering, under the ‘restrictive’ theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.”
“The Brussels Convention was intended to give effect to the distinction between public and private acts but the complexity of its drafting means that its application depends on the ship coming within the precise conditions listed in the provisions. On this account the UK State Immunity Act, instead of merely giving effect in English law to the Brussels Convention, contains a specific section dealing with Admiralty proceedings in rem and in personam relating to claims against ships, their sister ships, and their cargoes (section 10) … The application of the Brussels Convention to ships conforming with its listed conditions may on occasion afford a wider immunity than does the UK SIA to government ships. But the complexity of the Convention has discouraged its wider ratification by States, particularly as national courts have shown themselves prepared, in reliance on general principles of international law, to accept jurisdiction as a non-immune proceeding relating to a private law activity over claims arising out of the carriage of goods or passengers on merchant ships owned or operated by States.”
“At the very most it may, together with its progressive, though not numerous, ratifications and accessions, be evidence of the gradual seepage into international law of a doctrine of restrictive immunity.”
“Article 1 Sea-going ships owned or operated by States, cargoes owned by them, and cargoes and passengers carried on State-owned ships, as well as the States which own or operate such ships and own such cargoes shall be subject, as regards claims in respect of the operation of such ships or in respect of the carriage of such cargoes, to the same rules of liability and the same obligations as those applicable in the case of privately-owned ships, cargoes and equipment. Article 2 As regards such liabilities and obligations, the rules relating to the jurisdiction of the Courts, rights of action and procedure shall be the same as for merchant ships belonging to private owners and for private cargoes and their owners. Article 3 (1) The provisions of the two preceding Articles shall not apply to ships of war, State-owned yachts, patrol vessels, hospital ships, fleet auxiliaries, supply ships and other vessels owned or operated by a State and employed exclusively at the time when the cause of action arises on Government and non-commercial service, and such ships shall not be subject to seizure, arrest or detention by any legal process, nor to any proceedings in rem. Nevertheless, claimants shall have the right to proceed before the appropriate Courts of the State which owns or operates the ship in the following cases: — (i) Claims in respect of collision or other accidents of navigation; (ii) Claims in respect of salvage or in the nature of salvage and in respect of general average; (iii) Claims in respect of repairs, supplies or other contracts relating to the ship; and the State shall not be entitled to rely upon any immunity as a defence. (2) The same rules shall apply to State-owned cargoes carried on board any of the above-mentioned ships. (3) State-owned cargoes carried on board merchant ships for Government and non-commercial purposes shall not be subject to seizure, arrest or detention by any legal process nor to any proceedings in rem. Nevertheless, claims in respect of collisions and nautical accidents, claims in respect of salvage or in the nature of salvage and in respect of general average, as well as claims in respect of contracts relating to such cargoes, may be brought before the Court which has jurisdiction in virtue of Article 2.”
“Salvage operations which have had a useful result give right to a reward.”
“The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will. There is an exception to this proposition in the maritime law. I mention it because the word ‘salvage’ has been used from time to time throughout the argument, and some analogy is sought to be established between salvage and the right claimed by the Respondents. With regard to salvage, general average, and contribution, the maritime law differs from the common law. That has been so from the time of the Roman law downwards. The maritime law, for the purposes of public policy and for the advantage of trade, imposes in these cases a liability upon the thing saved, a liability which is a special consequence arising out of the character of mercantile enterprises, the nature of sea perils, and the fact that the thing saved was saved under great stress and exceptional circumstances. No similar doctrine applies to things lost upon land, nor to anything except ships or goods in peril at sea.”
“….a security or privilege attaching to the ship itself, travelling with the ship (irrespective of any change in ownership, or in encumbrance, of the ship) and arising from circumstances concerned with the ship…a charge on the ship…attaching automatically by operation of law, upon the occurrence of the relevant events…adhering to the ship, notwithstanding a change of ownership; enforced only by maritime proceedings against the ship, and in that sense inchoate, until perfection by the bringing of maritime proceedings; its importance being both as to access to the property for payment irrespective of ownership, and as to priority over other claimants to the ship represented by the fund to which it attaches, even secured claims such as mortgages.”
“There is a category of in rem claim which could be described as truly in rem because it is brought against a ship irrespective of her present ownership and irrespective of any link with liabilityin personam on the part of the owner of the ship at the time the claim is brought.This category comprises claims to enforce maritime liens and mortgages, claims for forfeiture, droits of Admiralty, and claims relating to possession or ownership. These are claims where in substance there is a claim to the ship in whole or in part. That is to say claims which are truein remclaims are, as the name suggests, directed against the ship as res and not against any person who has an interest in the ship such as an owner.”
“…the action in rem is an action against the ship itself. It is an action in which the owners may take part, if they think proper, in defence of their property, but whether or not they will do so is a matter for them to decide, and if they do not decide to make themselves parties to the suit in order to defend their property, no personal liability can be established against them in that action.”
“…an Admiralty action in rem nevertheless has a characteristic which distinguishes it from an Admiralty action in personam. That characteristic is that the in rem claim form may be served within the jurisdiction on the vessel named in the claim form as the vessel against which the action is brought (by fixing a copy of the claim form on the outside of the vessel in a position which may be reasonably expected to be seen). The action may then proceed to trial even though the owners of the vessel are out of the jurisdiction and have not been served personally with the proceedings or acknowledged service of proceedings. The vessel may also be arrested by the Admiralty Marshal and when judgment is given (or pendente lite) the vessel can be sold by the Admiralty Court and the judgment satisfied from the proceeds of sale. In practice, in the great majority of cases, the owners’ P&I Club will provide security for the claim and instruct solicitors to accept service so that the action will proceed in a manner indistinguishable from an action in personam. But that practice should not obscure the distinguishing characteristics of an action in rem.”
“was the cargo in use for the purposes of any transaction or activity mentioned in section 3(3)?”
“It was being carried, and that is all.”
“To speak of a debt as ‘being used or intended for use’ for any purposes by the creditor to whom the debt is owed involves employing ordinary English words in what is not their natural sense, even if the phrase ‘commercial purposes’ is given the ordinary meaning of jure gestionis in contrast to jure imperii that is generally attributed to it in the context of rights to sovereign immunity in public international law; though it might be permissible to apply the phrase intelligibly to the credit balance in a bank account that was earmarked by the state for exclusive use for transactions into which it entered jure gestionis. What is clear beyond all question is that if the expression ‘commercial purposes’ in section 13(4) bore what would be its ordinary and natural meaning in the context in which it there appears, a debt representing the balance standing to the credit of a diplomatic mission in a current bank account used for meeting the day-to-day expenses of running the mission would fall outside the subsection.”
“Unless it can be shown by the judgment creditor who is seeking to attach the credit balance by garnishee proceedings that the bank account was earmarked by the foreign state solely (save for de minimis exceptions) for being drawn upon to settle liabilities incurred in commercial transactions, as for example by issuing documentary credits in payment of the price of goods sold to the state, it cannot, in my view, be sensibly brought within the crucial words of the exception for which section 13(4) provides.”
“As to the language of section 13(4), I would accept Mr Howard QC’s submission on behalf of Iraq that the expression “in use for commercial purposes” should be given its ordinary and natural meaning having regard to its context. I would further accept his submission that it would not be an ordinary use of language to say that a debt arising from a transaction is “in use” for that transaction. Parliament did not intend a retrospective analysis of all the circumstances which gave rise to property, but an assessment of the use to which the state had chosen to put the property.”
“In enacting section 13(4), Parliament could have referred to property that “related to” a commercial transaction, or arose “in connection with” a commercial transaction as being susceptible to enforcement. It chose not to do so, which suggests that it intended a difference in meaning. Property will only be subject to enforcement where it can be established that it is currently “in use or intended for use” for a commercial transaction. It is not sufficient that the property “relates to” or is “connected with” a commercial transaction. I would accept Mr Howard’s submission that this is consistent with the different treatment of the two categories of immunity in the Act.”
“…[T]he critical point for present purposes is the proposition that the judgment creditor must show that the bank account was earmarked by the state solely for being drawn down upon to settle liabilities incurred in commercial transactions. The essential distinction is between the origin of the funds on the one hand and the use of them on the other. As Stanley Burnton LJ said in the instant case at para 33, it was not suggested by Lord Diplock in the Alcom case … that if the moneys in the bank account resulted from commercial transactions, that might be relevant to the question whether the account was used or intended for use for commercial purposes.”
“What matters under the statute is not how the Congo made its money, but how it spends it. The amenability of these royalties and taxes to garnishment depends on what they are ‘used for’, not on how they were raised.”
“Following on the issue of the writ, the plaintiffs had an immediate right, without having served the writ, to have the ship arrested by the Admiralty Marshal. Nothing would have been required of the plaintiffs, as no caveat against arrest had been entered, except an affidavit verifying the basic facts essential to the existence of their statutory right of action in rem. The justification for this procedure is that ships are owned and trade internationally, and unless a claimant can gain immediate security for a claim he may never have the opportunity effectively to pursue it.”
“If it is correct to say, as was not challenged in the court below and is not challenged in this court, that after the issue of the writ in rem the plaintiffs could serve the writ on the Aro, and arrest the Aro, in the hands of a transferee from the liquidator and all subsequent transferees, it seems to us difficult to argue that the Aro was not effectively encumbered with the plaintiffs' claim. In our judgment the plaintiffs ought to be considered as secured creditors…”
“A judgment in rem is a judgment against all the world, and if given in favour of the plaintiffs would conclusively oust the defendants from the possession which on the facts I have stated they beyond question de facto enjoy. The writ by its express terms commands the defendants to appear or let judgment go by default. They are given the clear alternative of either submitting to the jurisdiction or losing possession. In the words of Brett LJ the independent sovereign is thus called upon to sacrifice either its property or its independence. It is, I think, clear that no such writ can be upheld against the sovereign State unless it consents. It is therefore given the right, if it desires neither to appear nor to submit to judgment, to appear under protest and apply to set aside the writ or take other appropriate procedure with the same object. It may be said that it is indirectly impleaded, but I incline to think that it is more correct to say that it is directly impleaded.”
“Under customary international law, to which section 10(4) is intended to give effect, the sovereign/commercial test applies to the nature of the activity being undertaken, not its purpose, as the citations from the speech of Lord Wilberforce in I Congreso … make clear. This is mirrored in the language of the 1978 Act which identifies what is sovereign and what commercial in section 3 by reference to “transactions” and “activities”
“Moreover, the specific context of section 10(4)(a) is salvage, including salvage of wreck. The intended use of the cargo on completion of the voyage is legally and logically irrelevant to such a claim, which arises before completion of the voyage. The maritime cause of action in salvage depends upon the property being cargo when on board the vessel, which demands an inquiry as to use at that time, not intended use thereafter.”
“Based on the old principle par in parem non habet imperium, the rule of international law is not that a state should not exercise over another state a jurisdiction which it has but that (save in cases recognised by international law) a state has no jurisdiction over another state.”