LEGAL COMMITTEE CONSIDERS BEARING OF GLOBAL COMMERCIAL TRENDS ON QUESTION OF JURISDICTIONAL IMMUNITY OF STATES

Press Release
GA/L/3122

LEGAL COMMITTEE CONSIDERS BEARING OF GLOBAL COMMERCIAL TRENDS ON QUESTION OF JURISDICTIONAL IMMUNITY OF STATES

The Sixth Committee (Legal) this morning continued its consideration of the International Law Commission's proposals for resolving outstanding questions related to the draft articles on jurisdictional immunities of States and their property, which are annexed to the Commission's annual report.

Speakers generally agreed that the draft articles, on which the Committee had completed work in 1991, needed updating in the light of current global trends in commerce and legal practice. The representatives of Italy and Viet Nam both pointed to recent large increases in the involvement of States in economic activities.

The debate reflected a longstanding difference of opinion on how explicitly the draft articles should define criteria for determining whether a State was engaged in a "commercial transaction" and thus barred from invoking jurisdictional immunity from foreign legal proceedings related to that transaction. The Vietnamese speaker felt that both the nature and purpose of the transaction must be clarified; the Italian representative was concerned that the inclusion of both criteria introduced unduly subjective elements into the equation, and could lead to conferring of immunity beyond that which was recognized in international law.

On the question of application of measures of constraint against State property, the representative of Algeria said that sacred principles of sovereign immunity were at stake, and urged that the issue not be pursued at present. The representative of France explained that French courts were reluctant to order measures of constraint against State property that was necessary for the exercise of sovereign functions, but would do so if the property were utilized in commercial activity. Algeria and Viet Nam both urged greater utilization of national jurisprudence in resolving jurisdictional immunity issues.

On another issue covered by the Commission’s report, the United States' representative also urged that his national practice be taken into greater account. Referring to the draft articles on nationality in relation to succession of States, which the Committee had discussed in previous meetings, he said that they articulated useful rules. However, he noted, the United

Sixth Committee - 1a - Press Release GA/L/3122 19th Meeting (AM) 28 October 1999

States recognized a right of expatriation, even when it resulted in statelessness. His country's laws also permitted the revocation of fraudulently obtained naturalization, even if the revocation rendered the individual stateless.

The Commission will continue its consideration of the Commission's report, focusing on jurisdictional immunity of States, when it meets next, at 3 p.m. today.

Programme of Work

The Sixth Committee (Legal) this morning continued consideration of the International Law Commission's efforts to articulate the circumstances under which States should be prevented from invoking jurisdictional immunity for themselves or their property in connection with proceedings against them in the court of another State.

The Commission's 1999 report (document A/54/10 and Corr.1 and Corr.2) states that the Commission set up a working group to prepare comments on outstanding substantive issues in the Commission's 1991 version of draft articles on jurisdictional immunities of States and their property. These were to be forwarded to the attention of a working group the Sixth Committee would set up at this session to update the draft articles.

The Commission's working group looked at recent developments of State practice and legislation, as well as comments submitted by States. Its report, annexed to the report of the Commission, addresses five subject areas: (1) defining the concept of “State” for purposes of immunity; (2) criteria for determining the commercial character of a contract or transaction; (3) defining what is a State enterprise or other State entity in relation to commercial transactions; (4) employment contract; and (5) the application of measures of constraint against State property.

With respect to each of the five issues, the Commission recalls the provisions of the 1991 text, examines how the issue has evolved since that time, reviews relevant case law and offers possible solutions. It also offers background on another issue that the working group deemed relevant, stemming from recent practice: the question of whether there is jurisdictional immunity for actions arising out of violations of jus cogens norms.

The report notes that the meaning of State has evolved to include “constituent units of federal States”. It says that court decisions at the national level have emphasized the following indicators of “State” status: defined territory, permanent population, being under the control of its own government and having the capacity to engage in formal relations with other States and to implement the obligations of formal participation in the international community. Thus, it proposes that “State” be defined in the text in terms of the State and its organs of government; constituent units and political subdivisions that are entitled to exercise governmental authority (although the immunity would only arise when they were in fact acting in that capacity); and other agencies, instrumentalities and representatives of the State.

Under the “commercial character” question, the working group notes that the draft articles had accepted the premise that State immunity should be unavailable when the State was undertaking a commercial activity. The question was whether it was the implicit “nature” of a contract or transaction, or an analysis of its "purpose" that should determine whether the State's activity was commercial. At length, the working group agrees that the issue of which criterion to apply arose only if the parties to the activity had not agreed on the application of a specific criterion, and proposes that the draft articles simply refer to "commercial contracts or transactions” without further explication.

On the concept of a “State enterprise”, the Commission considered the institution of segregated State property, whereby in the socialist countries, State enterprises, as legal entities, were understood to possess a segregated portion of national property. Some participants felt that that legal device made it necessary to “pierce the veil of the juridical personality” so that the State could not escape liability. There was concern also that States not be able to claim immunity when they had taken rights in property in violation of international law. The Commission proposes that immunity be unavailable when an entity engages in commercial transaction as an authorized agent of the State; or when the State acts as a guarantor of a liability.

The Commission proposes, with respect to employment contracts, that States not be allowed to invoke immunity from jurisdiction in proceedings relating to employment contracts, unless the employee had been “recruited to perform functions in the exercise of governmental authority”, with particular reference to diplomatic and consular staff.

It further proposes that no measures of constraint, such as attachment, arrest and execution, could be taken against State property in connection with another State's court proceeding, unless: the first State has expressly consented in writing to such measures; or it has allocated or earmarked property to satisfy the claim at issue; or the property in question is in the territory of the other State, being used for non-governmental purposes, and is linked to the claim at issue.

Statements

AHCENE KERMA (Algeria) referred to the five suggestions proposed by the working group. He said the first proposal, defining the concept of State for purpose of immunity, had been intensely debated in the past. The new ideas put forward by the working group could help overcome difficulties some states might have. Its proposal on the criteria for determining the commercial character of a contract or transaction seemed well balanced. He hoped that a satisfactory compromise could be achieved.

Different approaches had been put forward by delegations on the issue of the concept of a State enterprise or other entity in relation to commercial transactions. Some States felt their own legal jurisprudence on the issue should be taken into account in resolving the question.

Regarding measures of constraint against State property, he said that reducing the status of the State to that of an individual entity would call into question the sacred principle of international law relating to states’ sovereign immunity. The Commission had been cautious in its approach to the issue. Compromise solutions suggested in the past had not helped. He hoped the working group’s proposals would help narrow the gaps in opposing viewpoints. Given the sensitive nature of the subject, he said it would be premature to pursue the issue at present.

More attention should be given to the subject of jurisdictional immunities of States and their property given its sensitivity and its complexity, he said. Account should also be taken of the various legal systems and the economic issues at stake.

RONNY ABRAHAM (France) said his country wondered whether the proposed concept of “State” might not be overly broad. As for the criteria that could be used to determine the commercial nature of a contract or transaction, he said the word “operation” could replace “transaction”.

France was satisfied with proposals to take into account the purpose of a transaction, he said. France welcomed article 11 of the draft articles, by which a State might invoke jurisdictional immunity if the employment were linked to the exercise of public authority. Generally, French practice applied two before allowing foreign States to invoke jurisdictional immunity. The beneficiary of the contract must be involved in public service and must exercise specific public responsibility.

On the issue of measures of constraint against State property, he said the question depended on the nature of the property. French practice was comparable to those cited in the report of the Commission’s working group. French courts were reluctant to order measures of constraint against State property that was necessary for the exercise of sovereign functions. To be the object of such measures, the property must be utilized in economic or commercial activity under private law.

UMBERTO LEANZA (Italy) said the Commission in its report had rightly underlined the importance of incorporating comments from States in its work. Issues before the Commission were often being discussed in regional forums as well. It would be useful for the Commission to take the outcomes of those discussions into account. The draft articles on nationality of natural persons were clear and sensible. They did not remove the issue of nationality from the domain of the national legislation of states. The focus of the draft articles was rightly on the protection of human rights.

In general, Italy would prefer that the draft articles take the form of a convention rather than that of a declaration. Inasmuch as they were linked to a protection of human rights, he preferred that their obligations be more legally binding on States. He reiterated Italy’s position that work on the issue of nationality of legal persons in relation to succession of States not be abandoned. The issue was essential to progressive development.

Turning to jurisdictional immunities of States, he said it was a particularly sensitive matter and recent trends should be reflected in the draft. There were changes in international practice due to the increasing involvement of States in economic activities. He noted that distinctions among various types of state activity were often difficult to make. Noting that there had been a detailed analysis of proposals for changes to the draft articles, he said there must be further examination of the suggestions of the working group, to delete all references to the “nature and purpose” of state activities. Adding “purpose” criteria introduced significant subjective elements and could lead to a conferring of immunity beyond that which was actually recognized in international law.

DAVID ANDREWS (United States) said the Commission appeared to have had another good and productive year, most notably with respect to the completion of the draft articles on nationality in relation to succession of States. The Commission had done its work with the experience of the former Soviet Union and Eastern Europe fresh in mind. Current developments elsewhere, however, were a reminder that these were recurring issues, so any text adopted must be appropriate for the full range of possible future situations.

The articles for the most part articulated useful rules of general applicability, he said. However, there were some details of potential concern, such as the narrow issue of the treatment by third countries of stateless persons, and the meaning of article 19. There should be no implication that a third country could not deport a stateless person to a successor State whose nationality he could acquire. There was also a need to reflect on issues of habitual residence as they bore on attribution of nationality. Nationality protection might be most important to persons involved in irregular situations. The United States recognized a right of expatriation, even if it resulted in statelessness. Also, United States’ law permitted the revocation of fraudulently obtained naturalization, even if it caused the individual to become stateless.

Turning to State responsibility, he said the Commission’s work on the subject was potentially historic, once it was complete. A distinction should be drawn between those States specifically injured by an internationally wrongful act, and those other States that had a legal interest in the performance of the relevant obligations, but did not suffer economically quantifiable injury. Also, it was a long established principle of customary international law that a wrong-doing State must provide compensation to the specifically injured State. That compensation should include interest. Counter-measures also played an important role in the regime of State responsibility; the relevant draft articles contained unsupported restrictions on their use. He supported inclusion of an “intent” requirement in the provisions of the draft.

The rules of the Vienna Convention on the Law of Treaties did not provide an appropriate framework for analyzing the legal effects of unilateral acts, he said. Following completion of the second reading on the draft articles on prevention of transboundary damage from hazardous activities, a pause in the Commission’s work might be in order to allow international practice to develop in that area.

PHAM TRUONG GIANG (Viet Nam) said the topic of jurisdictional immunities was of great interest to his country. The rapid development and globalization of the world economy had embraced the participation of many different actors, ranging from States and their entities to individuals. The question of whether States were entitled to absolute or restrictive jurisdictional immunity in their economic and commercial transactions was controversial.

The elaboration of an international legal framework to govern such activities was attracting attention, and Viet Nam appreciated the work carried out by the Commission on the subject. He would like to see the term “commercial transactions” -– a key element in the Commission’s draft articles –- clearly defined, with the nature and purpose of the transactions taken into account. Similarly, the equality of the entities participating in commercial and economic activities should be ensured, with account taken of the practices applied in developing countries.

Turning to the topic of international liability for injurious consequences arising out of acts not prohibited by international law, he said that it required regulation, in accordance with the basic principles of international law. Viet Nam welcomed the idea that States must take appropriate measures to prevent or to minimize the risk of causing damage to others. The Commission’s draft articles on the subject should have a provision covering the requirement or “prior authorization” of “prior consultation” before dangerous acts were undertaken.