Democratic Republic of the Congo V. FG
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Judgment Summary FACV Nos 5, 6 & 7 of 2010 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NOS 5, 6 & 7 OF 2010 (CIVIL) (ON APPEAL FROM CACV NOS 373 OF 2008 AND 43 OF 2009) _____________________ Between: DEMOCRATIC REPUBLIC OF THE CONGO 1st Appellant CHINA RAILWAY GROUP (HONG KONG) LIMITED 2nd Appellant CHINA RAILWAY RESOURCES DEVELOPMENT 3rd Appellant LIMITED CHINA RAILWAY SINO-CONGO MINING LIMITED 4th Appellant CHINA RAILWAY GROUP LIMITED 5th Appellant SECRETARY FOR JUSTICE 6th Appellant - and - FG HEMISPHERE ASSOCIATES LLC Respondent _____________________ Coram : Mr Justice Bokhary PJ, Mr Justice Chan PJ Mr Justice Ribeiro PJ, Mr Justice Mortimer NPJ and Sir Anthony Mason NPJ Dates of Hearing : 21-25, 28 & 29 March 2011 Date of Judgment : 8 June 2011 - 2 - J U D G M E N T Mr Justice Bokhary PJ : 1. It has always been known that the day would come when the Court has to give a decision on judicial independence. That day has come. Judicial independence is not to be found in what the courts merely say. It is to be found in what the courts actually do. In other words, it is to be found in what the courts decide. My judgment continues under the following sub-headings :- Paras (1) Core question of law : absolute or restrictive immunity?......... 2 – 5 (2) Facts…………………………………………………………. 6 – 18 (3) Saw J’s ex parte order : enforcement, service and injunctions 19 – 20 (4) Discharged inter partes by Reyes J………………………….. 21 (5) Restored by Court of Appeal subject to a remitter ………….. 22 – 23 (6) Reyes J’s reasons …………………………………………… 24 – 27 (7) Court of Appeal divided 2:1 ………………………………… 28 – 29 (8) Reasons given in the Court of Appeal ………………………. 30 – 31 (9) Present appeals brought ……………………………………... 32 – 33 (10) Conditions precedent satisfied ……………………………… 34 (11) Article 158(3) interpretation/art.19(3) certificate? ………….. 35 – 61 (12) State immunity before the handover ………………………… 62 – 77 (13) Court free to decide and decide independently ……………... 78 – 129 (14) Restrictive immunity now …………………………………... 130 – 141 (15) Transactions underlying the awards ...…..…………………... 142 – 147 (16) No immunity ……………………………………………….... 148 (17) Waiver of immunity (if absolute) …………………………… 149 – 165 (18) Either before the court or at an earlier stage ………..……….. 166 – 178 (19) Restrictive. Waived if absolute …………………………….. 179 (20) Conclusion …………………………………………………... 180 (1) Core question of law : absolute or restrictive immunity? 2. The core question of law in this case is about the extent of the state immunity from suit and execution available in the courts of Hong Kong. Is it absolute immunity or is it restrictive immunity which does not extend to commercial transactions? I speak of “state immunity”, but “sovereign - 3 - immunity” means the same thing. Latin appears to have maintained a firmer hold on international law than it has on our municipal law. Certainly the terms acta jure imperii (meaning sovereign activities) and acta jure gestionis (meaning commercial activities) are still very much in use. And the question of whether immunity is absolute or restrictive can be put like this. Is sovereign immunity confined to sovereign activities or does it extend to commercial activities? 3. As was said by an American court in the 1960s and repeated in the House of Lords by Lord Edmund-Davies in I Congreso del Partido [1983] 1 AC 244 at p.276D : “Sovereign immunity is a derogation from the normal exercise of jurisdiction by the courts and should be accorded only in clear cases”. That is in harmony with the statement in The Lotus 1927 PCIJ Rep, Series A, No.10 at p.14 that “[r]estrictions upon the independence of States cannot be presumed”. For the Permanent Court of International Justice made that statement after pointing out that it was “not a question of stating principles which would permit Turkey to take proceedings, but of formulating principles, if any, which might have been violated by such proceedings”. The circumstances were these. A collision between a French steamer, the Lotus, and a Turkish collier on the high seas resulted in the sinking of the Turkish vessel and the loss of eight Turkish nationals on board. When the Lotus arrived in Constantinople, her French officer of the watch, Lieutenant Demons, and the master of the Turkish vessel were charged with manslaughter. In the result, Lieutenant Demons was sentenced to 80 days’ imprisonment and the master of the Turkish vessel received a slightly heavier sentence. By the casting vote of the President, the Permanent Court held that Turkey had not acted in conflict with international law by instituting criminal proceedings against Lieutenant Demons. - 4 - 4. While a good deal was said – and had inevitably to be said – about states in the course of the argument, there is another side to the coin which cannot be ignored or downgraded. It is the justice to individuals which Lord Wilberforce spoke of in I Congreso del Partido at p.262D. They are the individuals who have commercial transactions with states. And the justice due to them is being able to bring such transactions before the courts. Whether they will win or lose in court depends on the circumstances. That is how judicial justice is done. The judicial oath in Hong Kong is to uphold the constitution, safeguard the law and administer justice. It is to do all three of those things, omitting none of them. 5. A large body of cases and writings has been cited. Much of it is helpful. Some of it, once the statements therein are read in context, turns out not to bear upon anything with which the present case is concerned. Falling into this latter category is, for example, the advisory opinion of the International Court of Justice in Difference Relating to Immunity from Legal Process of a Special Rapporteur of the Commission on Human Rights 1999 ICJ Rep 62. As its name suggests and its contents confirm, that matter is not concerned with state immunity. It is concerned with the immunity that a special rapporteur needs in order to perform his or her task. (2) Facts 6. When dealing with the facts, I will speak of the Democratic Republic of the Congo (“the Congo”) even when referring to the time before it succeeded the former state of Zaire. As reduced to their essentials, the facts may be stated as follows. 7. The story of the case begins in the 1980s. That was when a company headquartered in Sarajevo, in what was then Yugoslavia, was engaged - 5 - in constructing a hydro-electric facility and high-tension electric transmission lines in the Congo. This company was Energoinvest DD (“Energoinvest”). The works executed by Energoinvest were eventually completed and accepted. So construction was not the problem. The problem was of a very different nature. Shortly stated, the problem was this. In order to finance the works, the Congo had entered into credit agreements with Energoinvest. Under these agreements, credit was extended by Energoinvest to the Congo and a Congolese state-owned electricity company, Société Nationale ď Electricité (“SNd’E”). Despite revision and rescheduling, the Congo and SNd’E defaulted on their repayment obligations. 8. Each credit agreement contained an International Chamber of Commerce (“ICC”) arbitration clause. In 2001 Energoinvest referred its claims against the Congo and SNd’E to arbitration. Two arbitrations ensued. One took place in Paris and the other took place in Zurich. France and Switzerland are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“the New York Convention”). And the New York Convention applies to Hong Kong. The Congo and SNd’E had signed terms of reference by which they agreed to each arbitration being conducted in accordance with the 1998 version of the ICC’s rules of arbitration, rule 28.6 of which provides : “Every Award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.” 9. I interrupt the narrative to mention certain provisions of the Arbitration Ordinance, Cap.341. It is provided in the interpretation clause, namely s.2(1) that “Convention award” means - 6 - “an award to which Part IV applies, namely, an award made in pursuance of an arbitration agreement in a State or territory, other than China or any part thereof, which is a party to the New York Convention.” Section 2GG reads : “(1) An award, order or direction made or given in or in relation to arbitration proceedings by an arbitral tribunal is enforceable in the same way as a judgment, order or direction of the Court that has the same effect, but only with the leave of the Court or a judge of the Court. If that leave is given, the Court or judge may enter judgment in terms of the award, order or direction. (2) Notwithstanding anything in this Ordinance, this section applies to an award, order and direction made or given whether in or outside Hong Kong. As to Convention awards in particular, s.42 (which is in Part IV) provides : “(1) A Convention award shall, subject to this Part, be enforceable either by action or in the same manner as the award of an arbitrator is enforceable by virtue of section 2GG. (2) Any Convention award which would be enforceable under this Part shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in Hong Kong and any reference in this Part to enforcing a Convention award shall be construed as including references to relying on such an award.” 10.