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Published online by Cambridge University Press: 13 August 2018
This article reviews recent cases from Canada, Australia, the United Kingdom, and the United States involving state immunity from execution and suggests the burden on creditors to disprove this immunity is excessively onerous. While the problem is much belaboured, few solutions have been explored or implemented. This article proposes that in the Canadian context, adjusting the evidentiary burden on parties to an execution immunity dispute would improve the ability of creditors to obtain fair payment from debtor states, without infringing state sovereignty.
Cet article passe en revue des cas récents du Canada, de l’Australie, du Royaume-Uni et des États-Unis impliquant l’immunité d’exécution de l’État, et suggère que le fardeau imposé aux créanciers pour réfuter cette immunité est excessivement onéreux. Alors que le problème est très marqué, peu de solutions ont été explorées ou mises en œuvre. Cet article propose que, dans le contexte canadien, un ajustement au fardeau de preuve imposé aux parties à un différend relatif à l’immunité d’exécution améliorerait la capacité des créanciers à se faire compenser par les États débiteurs sans porter atteinte à la souveraineté des États.
1 Canada-European Union Comprehensive Economic and Trade Agreement between Canada, of the One Part, and the European Union and Its Member States, of the Other Part, 30 October 2016 (provisionally applied 21 September 2017).
2 Comprehensive and Progressive Agreement for Trans-Pacific Partnership, 8 March 2018 (in progress).
3 North American Free Trade Agreement between the Government of Canada, the Government of Mexico, and the Government of the United States, 17 December 1992, Can TS 1994 No 2 (entered into force January 1994).
4 The private actor may sue or arbitrate with a state pursuant to a contract with the state. It may also arbitrate the dispute under the umbrella of a bilateral investment treaty between the state and the creditor’s home state. For a thorough review of the ways in which a litigant may reach the execution immunity stage, see Alexis Blane, “Sovereign Immunity as a Bar to the Execution of International Arbitral Awards” (2009) 41 NYU J Intl L & Pol 453.
5 Sompong Sucharitkul, Special Rapporteur, Seventh Report on Jurisdictional Immunities of States and Their Property, UN Doc A/CN.4/388 (1987), reprinted in Yearbook of the International Law Commission 1985, vol 2, part 1 (New York: International Law Commission (ILC), 1987) at 21, paras 33–82 [Sucharitkul, Seventh Report].
6 For recent litigation over execution immunity, see Firebird Global Master Fund II Ltd v Republic of Nauru, [2015] HCA 43 [Firebird]; Canadian Planning v Libya, Ruling No 4 on Motions, 2015 ONSC 3541, 256 ACWS (3d) 598 [Canadian Planning, Ruling 4]; SerVaas Inc v Rafidian Bank and Others, [2012] UKSC 40 [SerVaas]; Orascom Telecom Holding SAE v Republic of Chad & Ors, [2008] EWHC 1841 (comm.) [Orascom].
7 Blane, supra note 4.
8 The scheme could also work with assets that appear to be for “non-governmental” purposes, but since the Canadian State Immunity Act, RSC 1985, c S-18 [SIA], focuses on an exception for “commercial” assets, I adopt this benchmark. Funds that are apparently commercial could include, for example, a bank account used to pay a private party, possibly the creditor.
9 Yang, Xiaodong, State Immunity in International Law (Cambridge, UK: Cambridge University Press, 2012) at 7.CrossRefGoogle Scholar
10 Ibid at 7, 10.
11 Fox, Hazel & Webb, Philippa, The Law of State Immunity, 3rd ed (Oxford: Oxford University Press, 2013) at 28.Google Scholar
12 Yang, supra note 9 at 6–32.
13 Fox & Webb, supra note 11 at 32–33.
14 In Mavrommatis Palestine Concessions Case (Greece v United Kingdom), Jurisdiction, (1924) PCIJ (Ser A) No 2 at 12, the predecessor to the International Court of Justice (ICJ), the Permanent Court of International Justice, articulated the principle as follows: “[A] state is entitled to protect its subjects, when injured by acts contrary to international law committed by another state, from whom they have been unable to obtain satisfaction through the ordinary channels.” See also ILC, Report of the International Law Commission on the Work of Its Fifty-third Session, UN Doc A/56/10 (2001)Google Scholar at paras 30–77 (Draft Articles on State Responsibility) and paras 158–207 (Draft Articles on Diplomatic Protection).
15 For a succinct summary, see Fox & Webb, supra note 11 at 483.
16 Sucharitkul, Seventh Report, supra note 5 at 35–36, paras 73–77.
17 Ibid at 31–35, paras 45–72.
18 Philippine Embassy Bank Account (1977), 65 ILR 140 at 164 [Philippine Embassy].
19 See Abbott v Republic of South Africa (1992), 113 ILR 411 (Spanish Constitutional Court) [Abbott]; Condor and Filvem v National Shipping Co of Nigeria (1992), 33 ILM 593 (Italian Constitutional Court); Canadian Planning, Ruling 4, supra note 6.
20 Outliers include Russia and China, where immunity is treated as absolute in the absence of a specific waiver. See Democratic Republic of the Congo v FG Hemisphere Associates, [2011] HKCU 1049 (Hong Kong Court of Final Appeal); Civil Procedure Code of the Russian Federation (No 138-FZ of 2002), art 401; ILC, “Draft Articles on Jurisdictional Immunities of States and Their Property” in Report of the International Law Commission on the Work of Its Forty-third Session, UN Doc A/46/10 (1991) at 36 [ILC, “Draft Articles on Jurisdictional Immunities”]; Reinisch, August, “European Court Practice Concerning State Immunity from Enforcement Measures” (2006) 17 EJIL 4.Google Scholar
21 Amaratunga v Northwest Atlantic Fisheries Organization, 2013 SCC 66 at para 28, 365 DLR (4th) 511 [Amaratunga].
22 United Nations Convention on Jurisdictional Immunities and Their Property, 2 December 2004 (not yet in force).
23 Ibid, art 30.
24 Jurisdictional Immunities of the State (Germany v Italy: Greece intervening), [2012] ICJ Rep 99 at 115 [Jurisdictional Immunities].
25 ILC, “Draft Articles on Jurisdictional Immunities,” supra note 20.
26 Jones v Ministry of Interior of the Kingdom of Saudi Arabia, [2006] 2 WLR 1424 (UKHL); Mitchell v Al-Dali, [2006] UKHL 26 at paras 8, 26; Mora, Paul David, “Jurisdictional Immunities of the State for Serious Violations of International Human Rights Law or the Law of Armed Conflict” (2012) 50 Can YB Intl L 243 at 273.Google Scholar
27 Jurisdictional Immunities, supra note 24 at para 118; see also Philippine Embassy, supra note 18; Spain v Company X (1986), 82 ILR 44 (Swiss Federal Tribunal); Alcom Ltd v Republic of Colombia, [1984] 1 AC 580 (UKHL) [Alcom]; Abbott, supra note 19.
28 Jurisdictional Immunities, supra note 24 at para 119.
29 Certain Iranian Assets (Islamic Republic of Iran v United States of America), Order of 1 July 2016, [2016] ICJ Rep 249, suspended by order dated 2 May 2017, online: <http://www.icj-cij.org/files/case-related/164/19430.pdf> [Certain Iranian Assets].
30 Vienna Convention on Diplomatic Relations, 18 April 1961, 500 UNTS 95, art 31(2) (entered into force 24 April 1964) [VCDR].
31 Denza, Eileen, Diplomatic Law: Commentary on the Vienna Convention on Diplomatic Relations, 4th ed (Oxford: Oxford University Press, 2016) at 261.Google Scholar
32 See Alcom, supra note 27 at 604; Banamar-Capizzi v Embassy of Republic of Algeria (1989), 87 ILR 56 at 61 (Italy, SC) [Banamar]; Iraq v Vinci Constructions (2002), 127 ILR 101 at 106 (Brussels, CA) [Vinci Constructions]; Denza, supra note 31 at 130. For an exception to this, see Thai-Lao Lignite (Thailand) Co, Ltd v Gov’t of the Lao People’s Democratic Republic, 2011 WL 4111504 at 6 (SDNY), where the court ordered discovery of the bank accounts. The proceeding was later vacated on appeal, 864 F 3d 172 (2nd Circuit 2017).
33 Fox & Webb, supra note 11 at 585.
34 For a detailed review of the interaction between execution immunity and the arbitration regime, see Blane, supra note 4 at 454–505.
35 Crawford, James, “Execution of Judgments and Foreign Sovereign Immunity” (1981) 75 AJIL 820;Google Scholar Brandon, Michael, “Immunity from Attachment and Execution” (1982) 1 Intl Fin L Rev 32;Google Scholar Bouchez, Leo J, “The Nature and Scope of State Immunity from Jurisdiction and Execution” (1979) 10 Nethl YB Intl L 3;Google Scholar Higgins, Rosalyn, “Execution of State Property: United Kingdom Practice” (1979) 10 Nethl YB Intl L 35;Google Scholar Seidl-Hohenveldern, I, “State Immunity: Federal Republic of Germany” (1979) 10 Nethl YB Intl L 55;Google Scholar Seidl-Hohenveldern, I, “State Immunity: Austria” (1979) 10 Nethl YB Intl L 97;Google Scholar Verhoeven, Joe, “Immunity from Execution of Foreign States in Belgian Law” (1979) 10 Nethl YB Intl L 73;Google Scholar Varady, T, “Immunity of State Property from Execution in the Yugoslav Legal System” (1979) 10 Nethl YB Intl L 85;Google Scholar Enderlein, Fritz, “The Immunity of State Property from Foreign Jurisdiction and Execution: Doctrine and Practice of the German Democratic Republic” (1979) 10 Nethl YB Intl L 111;Google Scholar Agrawala, SK, “A Note on Indian State Practice with Respect to the Immunity of Indian Property Located within the Jurisdiction of Foreign States” (1979) 10 Nethl YB Intl L 125;Google Scholar Metzger, Stanley D, “Immunity of Foreign State Property from Attachment or Execution in the USA” (1979) 10 Nethl YB Intl L 131;Google Scholar Sucharitkul, Sompong, “Immunity from Attachment and Execution of the Property of Foreign States: Thai Practice” (1979) 10 Nethl YB Intl L 143;Google Scholar Lalive, Jean-Flavien, “Swiss Law and Practice in Relation to Measures of Execution against the Property of a Foreign State” (1979) 10 Nethl YB Intl L 153;Google Scholar Boguslavsky, MM, “Foreign State Immunity: Soviet Doctrine and Practice” (1979) 10 Nethl YB Intl L 167;Google Scholar Condorelli, Luigi & Sbolci, Luigi, “Measures of Execution against the Property of Foreign States: the Law and Practice in Italy” (1979) 10 Nethl YB Intl L 197;Google Scholar Hirobe, Kazuya, “Immunity of State Property: Japanese Practice”(1979) 10 Nethl YB Intl L 233;Google Scholar Voskuil, CCA, “The International Law of State Immunity, As Reflected in the Dutch Civil Law of Execution” (1979) 10 Nethl YB Intl L 245;Google Scholar see also ILC, “Draft Articles on Jurisdictional Immunities,” supra note 20 at 56 (Commentary to art 18, para 1); Reinisch, supra note 20; Wiesinger, Eva, State Immunity from Enforcement Measures (2006) [unpublished, archived at the University of Vienna].Google Scholar
36 Fox & Webb, supra note 11 at 479, n 1: “Again and again thwarted judgment creditors have sought to attach assets of foreign States within the forum State territory, only to be refused orders for execution by national courts.” See also Crawford, supra note 35; Brandon, supra note 35.
37 Teitel, Ruti, “Humanity’s Law: Rule of Law for the New Global Politics” (2002) 35:2 Cornell Intl LJ 355 at 385–86.Google Scholar
38 Rahimtoola v Nizam of Hyderabad, [1958] AC 379 at 609.
39 In the HBO series Game of Thrones, the Lannister family motto is “[a] Lannister always pays his debts.”
40 See Canadian Planning, Ruling 4, supra note 6; SerVaas, supra note 6; Firebird, supra note 6; Mr Frank Sedelmayer v Russian Federation, SCC, Decision of the Swedish Supreme Court, 1 July 2011, reprinted in (2012) 106 AJIL 347; Creighton Ltd v Qatar, 181 F(3d) 118 at 120 (DC Cir 1999).
41 See the summary of findings in Gaukrodger, David & Gordon, Kathryn, Investor-State Dispute Settlement: A Scoping Paper for the Investment Policy Community, OECD Working Papers on International Investment no 2012/03 (2012) at 30.Google Scholar
42 Fox & Webb, supra note 11 at 31.
43 Ibid at 481; see also Sinclair, Sir Ian, “Law of Sovereign Immunity: Recent Developments” (1980) 167 Rec des Cours 113 at 219.Google Scholar
44 Fox & Webb, supra note 11 at 481, re: “political consequences”; see also Sinclair, supra note 43.
45 See Liberian Eastern Timber v Gov of Rep of Liberia, 659 F Supp 606 (DDC 1987); Foxworth v Permanent Mission of Uganda, 796 F Supp 761 (SDNY 1992) [Foxworth].
46 Ostrander, Jeremy, “The Last Bastion of Sovereign Immunity: A Comparative Look at Immunity from Execution of Judgments” (2004) 22 BJIL 541 at 574.Google Scholar
47 See further Banamar, supra note 32 at paras 59–60; Birch Shipping v Embassy of United Republic Tanzania, 507 F Supp 311 (DDC 1980); Alcom, supra note 27.
48 Fox & Webb, supra note 11 at 612.
49 Blane, supra note 4 at 504.
50 Reinisch, supra note 20; Blane, supra note 4; Ostrander, supra note 46.
51 SIA, supra note 8, s 12(1)(b); see Debates of the Senate, 32nd Parl, 1st Sess, vol 2 (22 January 1981) at 1561 [Debates] for a discussion of the purpose of the Act — that is, to bring Canada into line with the United Kingdom, the United States, and other major trading jurisdictions.
52 SIA, supra note 8 at s 12(b).
53 Debates, supra note 51 at 1563. In addition to the exception for commercial purposes, s 12(b) also makes an exception where the property in question was used to support terrorist activity or where the state is listed as one that supports terrorism and the judgment to be executed was rendered in an action brought against the state for its support of terrorism. This provision has been litigated, which has allowed Canadian courts to bypass dealing with the commercial purpose exception to immunity. This provision is analogous to that in the US Foreign Sovereign Immunities Act, 28 USC § 1062–1611 [FSIA]. Iran has initiated a proceeding at the ICJ to challenge the validity of this provision of the FSIA. See Certain Iranian Assets, supra note 29.
54 Kuwait Airways Corp v Iraq, 2010 SCC 40, 325 DLR (4th) 236.
55 Ibid at para 35.
56 Canadian Planning, Ruling 4, supra note 6.
57 It is worth noting here the distinction between state immunity and diplomatic immunity; the latter attracts greater deference at international law and is governed in Canada by the Foreign Missions and International Organizations Act, SC 1991, c 41, rather than the SIA, supra note 8.
58 Canadian Planning, Ruling 4, supra note 6 at para 27.
59 Ibid at para 51.
60 Canadian Planning v Libya, Ruling No 3 on Motions, 2015 ONSC 3386 at paras 79–80, 255 ACWS (3d) 468 [Canadian Planning, Ruling 3]; Ontario, Rules of Civil Procedure, r 60.18 [Ontario Rules].
61 Canadian Planning, Ruling 3, supra note 60 at para 20.
62 Ibid at paras 43, 60.
63 FSIA, supra note 53, § 1330.
64 Andrew, N Vollmer et al, Working Group of the International Litigation Committee of the Section of International Law and Practice of the American Bar Association, Recommendations and Report on the US Foreign Sovereign Immunities Act (2001), online: <https://www.americanbar.org/content/dam/aba/migrated/intlaw/policy/civillitigation/foreignsovereignimmunities.authcheckdam.pdf>.Google Scholar
65 Ibid.
66 FSIA, supra note 53, § 1610(7)(a).
67 Em Ltd v Banco Central de la Republica Argentina, 800 F(3d) 78 (2d Cir 2015), petition for writ of certiorari dismissed, 136 S Ct 1731 (2016) [Em].
68 First National City Bank v Banco Para El Comercio Exterior de Cuba, 462 US 611 (SC 1983) at 626; EM, supra note 67 at 89.
69 Ladjevardian v Republic of Argentina, 2016 US Dist Lexis 69348 (SDNY), affirmed 2016 US App Lexis 18731 (2d Cir NY).
70 Export-Import Bank of China v Grenada et al, 768 F(3d) 75 (2d Cir 2014).
71 Ibid at 92–93.
72 Republic of Argentina v NML Capital, Ltd, 134 S Ct 2250 (2014) [NML].
73 NML Capital, Ltd v Republic of Argentina, 2011 WL 3897828 (SDNY).
74 EM Ltd v Republic of Argentina, 695 F(3d) 201 (2nd Cir 2012).
75 NML, supra note 72 at para 3.
76 Ibid at para 8.
77 Ibid.
78 Ibid at para 9.
79 Ibid.
80 Ibid.
81 Ibid.
82 Ibid at para 10.
83 State Immunity Act 1978 (UK), c 33 [UK SIA].
84 Orascom, supra note 6; SerVaas, supra note 6.
85 Alcom, supra note 27 at 604.
86 Ibid at 604.
87 Ibid at 597.
88 Ibid at 604.
89 Ibid.
90 Orascom, supra note 6; see also EM Ltd v Republic of Argentina, 473 F(3d) 463 (2d Cir 2007).
91 Orascom, supra note 6 at para 23.
92 Ibid. It should be noted that Orascom involved an order made to Citibank to produce information relating to the account, including its balance and certain recent transfers (at para 9). The broad discovery of the bank account likely also assisted the court in concluding the account was subject to attachment.
93 SerVaas, supra note 6.
94 Ibid at para 32.
95 Ibid at paras 32–33.
96 Fox & Webb, supra note 11 at 213.
97 SIA, supra note 8, s 14.
98 Foreign States Immunities Act 1985 (Cth), s 32.
99 Firebird, supra note 6.
100 Firebird Global Master Fund II Ltd v Republic of Nauru, [2014] NSWSC 1358.
101 Firebird, supra note 6 at para 106.
102 Ibid at para 117.
103 Ibid at paras 105–07.
104 Ibid at para 109.
105 Ibid at para 113.
106 Ibid at para 114.
107 Ibid at para 116.
108 Ibid.
109 Ibid at para 119.
110 Ibid at para 123.
111 Ibid at para 125.
112 Ibid at para 255.
113 Fox & Webb, supra note 11 at 612.
114 Vinci Constructions, supra note 32 at 106.
115 Eurodif Corporation et al v Islamic Republic of Iran et al (1984), 23 ILM 1062 at 1067 (French Court of Cassation).
116 Armstrong, SW, “The Doctrine of the Equality of Nations in International Law and the Relation of the Doctrine to the Treaty of Versailles” (1920) 14:4 AJIL 540.Google Scholar
117 Teitel, supra note 37.
118 Yang, supra note 9 at 421.
119 Reinisch, supra note 20 at 831–33.
120 SIA, supra note 8, s 13(5); see also Fox & Webb, supra note 11 at 506.
121 Philippine Embassy, supra note 18; Alcom, supra note 27; Banamar, supra note 32; Foxworth, supra note 45; Z v Geneva Supervisory Authority for the Enforcement of Debts and Bankruptcy (1990), 102 ILR 205 (Tribunal fédéral Suisse) [Geneva Supervisory Authority]; Netherlands v Azeta BV (1998), 128 ILR 688 (Dist Ct Rotterdam) [Azeta BV].
122 Geneva Supervisory Authority, supra note 121 at 207; see also Vinci Constructions, supra note 32 at 105.
123 VCDR, supra note 30.
124 See British Columbia, Supreme Court Civil Rules, r 13-4; Manitoba, Court of Queen’s Bench Rules, r 60.17; New Brunswick, Rules of Court, r 61.14; Nova Scotia, Civil Procedure Rules, r 79.23; Ontario Rules, supra note 60, r 60.18; Prince Edward Island, Rules of Civil Procedure, r 60.19 [PEI Rules]; Saskatchewan, Queen’s Bench Rules, part XXXI; Northwest Territories, Rules of the Supreme Court of the Northwest Territories, r 512; Yukon, Rules of Court, r 45.
125 R v Cinous, 2002 SCC 29, 210 DLR (4th) 64 [Cinous].
126 Ibid at para 52; R v Schwartz, [1988] 2 SCR 443 at 466.
127 Cinous, supra note 125 at para 60.
128 Vinci Constructions, supra note 32.
129 Alcom, supra note 27 at para 604.
130 See NML, supra note 72.
131 Ontario Rules, supra note 60, r 60.08(1.1); PEI Rules, supra note 124, r 60.09(1.1).
132 Azeta BV, supra note 121; Geneva Supervisory Authority, supra note 121; SerVaas, supra note 6.
133 Ostrander, supra note 46 at 578: “[W]hen a state enters the commercial arena, it takes on the persona of a private actor and must face all of the ensuing limitations and responsibilities.”