Jurisdictional Immunities of States and Their Property - Information and Materials Submitted by Governments: Addendum

Document: A/CN.4/343/Add.1 Jurisdictional immunities of States and their property - Information and materials submitted by Governments: Addendum

Topic: Jurisdictional immunities of States and their property

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A/CN.U/3*3/Add.l GENERAL 16 April 1981 ENGLISH ASSEMBLY ORIGINAL: ARABIC/ENGLISH/ FRENCH

INTERNATIONAL LAW COMMISSION Thirty-third session h May-2U July 1981

JURISDICnONAL IMMUNITIES OF STATES AND THEIR PROPERTY

Information and materials submitted by Governmeots

Addendum

CONTENTS

Page

II. MATERIALS SUBMITTED BY GOVERNMENTS TOGETHER WITH THEIR REILIES TO THE QUESTIONNAIRE \ 3

A. National legislation 3 1. Syrian Arab Republic 3 Legislative Decree No. 189 3 2. United Kingdom of Great Britain and Northern Ir.ils.nd ...... 5 (a) State Immunity Act of 1978 5 (b) International Immunities and Privileges, The State Immunity (Overseas Territories) Order 1979 19 3. United States of America 21 (a) Foreign Sovereign Immunities Act of 1976 21 (b) Department of the Treasury, Internal Revenue Service (26 CFR Part 1) Income of Foreign Governments (Notice of Proposed Rulemaking) . 32 U. Yugoslavia 39 (a) Excerpt from the Lav on Litigious Procedure 39 (b) Excerpt from the Law on Executive Procedure ^0 (c) Excerpts from the Lav on the General .Administrative Procedure ^0 (d) Excerpt from the Law on Maritime and Inland 'Javigation . . ho

GE.8l-6:.62o English Page 2

CONTESTS (continued)

B. Other materials kl 1, Federal Republic of Germany kl (a) Note of 7 August 1979 from the Charge d1 Affaires of. the Permanent Mission of the Federal Republic of Gernany to the United Nations addressed to the Secretary-General . , *+l (b) General principles of some major decisions on the subject rendered by courts of the Federal Republic of Germany . . k2 2. Netherlands k6 Summary of a report submitted by C. C. A. Voskuil to the Netherlands International Law Association (1973) k6 A/CN.U/3U3/Add.l Eagi-1' ~h Page 3

II. MATERIALS SUBMITTED BY GOVERNMENTS TOGETHER WITH THEIR REPLIES TO THE QUESTIONNAIRE A. NATIONAL LEGISLATION

l-: SYRIAN ARAB REPUBLIC

/Oiiginal: Arabic/

LEGISLATIVE DECREE NO. 189 1/ PROMULGATED ON 1 APRIL 19^2 CONCERNING CONDITIONS ON WHICH NON-SYRIANS MAY OWN IMMOVABLE PROPEITY, AS AMENDED BY LEGISLATIVE DECREE NO. 155 OF 15 NOVEMBER 1952, LEGISLATIVE DECREE NO, 123 OF 6 OCTOBER 1953 2/ AND LEGISLATIVE DECREE NO. 75 OF 28 JULY 1962

The President of the State and Chairman of the Council of Ministers decrees as follows:

ARTICLE 1 3/

1. The establishment, change or transfer of any -eal right in lands of the Syrian Arab Republic in the name of or for the use of any non-Syrian natural or juridical person is prohibited. The drawing up of contracts fcr agricultural rental and exploitation of such lands for a period exceeding three years in the name of or for the use of such persons is also prohibited.

2. Where immovable property, not being a built-on area in the centre of a Governorate, passes to a non-Syrian by way of inheritance, transfer, testament or liquidation of a religious endowment, the heir's right to inherit, transfer, bequeath by testament and liquidate shall lapse and the immovable property in question shall revert to the Administration of State.Property in return for the estimated price in accordance with the Expropriation Act.

3. Notwithstanding the provisions; of the two preceding paragraphs, non-Syrian Arabs may acquire real rights in immovable property within the Limits of the right accorded by the legislation of their countries to Syrians; such acquisition shall be subject to a permit issued (by a decree of the Minister o: tie Interior) by a Republican decree, k/

1/ Under Legislative; Decree No.'75 of 28 July 1962 the woris "President of the State" were replaced by the words "Minister for the Interior", the words "Minister of Justice" by the words "Minister of Agrarian Reform1 and the expression "Republican Decree" by the words "Decree of the Minister of the Interior" wherever they occur in this Legislative Decree. 2/ Under Legislative Decree No. 133 of 6 October 1953, the provisions of articles 1 and 2 become effective as of the date of implementation of Legislative Decree No. 155 of 15 November 1952. 3/ As amended by Legislative Decree' No. 123 of 6 October 1?53. kj ^his expression ras changed by Legislative Decree ITo. 1<33 of 12 August 1969. A/CN.U/3U3/Md.l English Page h

ARTICLE 2

By way of exception from the provisions of the preceding article, non-Syrians may acquire any real right in immovable property situated in buil'^-on areas in the centre of a governorate.

ARTICLE 3

A non-Syrian may not acquire any right under the provisions of article 2 except by prior acquisition of a permit accorded by a decree of the Minister of the Interior.

ARTICLE k

An application for a permit shall be submitted to the immovable property registrar of the district in respect of each contract and each dei»d separately.

The immovable property registrar shall, after completing the customary legal procedures, refer such applications to the Governor, who shall make an investigation of his own responsibility by all means which he deems necessary in order to arrive at the truth.

The Governor shall draw up a report on the results of the investigation,, accompanied by his opinion, and refer it with the application to i.he immovable property registrar.

The immovable property registrar shall submit the application, together with the records of the investigation, to the Minister of Agrarian Reform through the General Directorate of Immovable Property Interests.

ARTICLE 5

A final decision shall be taken on the application for a permit within one. month from the arrival of the file at the office of the Ministry cf the Interior.

ARTICLE 6

The Minister of the Interior's refusal to grant a permit shaJl be final and not subject to any appeal. However, the application may be resubiitted after the expiry of one year from the date of the refusal.

ARTICLE 7

Any contract concluded in contravention of the provisions of this Legislative Decree and any contract concluded in the name of a fictitious person with a view to evasion of its provisions shall be deemed null and void. All subsidiary provisions entered into for the purpose of guaranteeing the implenentation of such contracts shall be deemed null and void. A/CN.U/3U3/Add.l English Page 5

ARTICLE 8

1. A penalty of imprisonment for a term of one to three years and a fine equivalent to tht amount of the funds anc" rights dealt with in the contract or one of these two penalties shall b

2. The Public Prosecutor shall institute proceedings in the competent courts for the invalidation of contracts registered in contravention of the' provisions of this Legislative Decree and shall be responsible for following up the implementation of the decisions handed down in such cases.

ARTICLE 9

Legislative Decree Ho. lU3 of 28 July 19^3 and all texts wiich conflict with the provisions of the present Legislative Decree are hereby rescinded.

ARTICLE 10

This; Legislative Decree shall be published and transmitted to those responsible for enforcing its provisions.

2. UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

/Original: English/ IJ, July 197£7

(a) STATE IMMUNITY ACT OF 1978 .

1978 CHAPTER 33

An Act to make new provision with respect to proceedings ir. the United Kingdom by or against other States; to provide for the effect of judgmei.ts given against the United Kingdom in the courts of States parties to the European Convention on State Immunity; to make new provision with respect to the immunities and privileges of heads of State:; and for connected purposes. _ /20tl- July 1978/

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, ir this present Parliament assembled, and by the authority of the same, as follows:- A/CN.U/3U3/Add.l English Page 6

PART I

PROCEEDINGS IK UNITED KINGDOM BY OR AGAIIIST OTHER STATES

Immunity frot jurisdiction

l.-(l) A State is imir.une from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act,,

(2) A court shall give effect to the immunity conferred by bhis action even though the State does not appear in the proceedings in question.

Exceptions from immunity

2.-(l] A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom.

(2) A State may submit after the dispute giving rise to the proceedings has arisen or by a prior written agreement; but a provision in any agreement that it is to be governed by the law of the United Kingdom is not to be regarded as a submission.

(3) A State is deemed to have submitted -

(EO if it has instituted the proceedings i or

(b_) subject to subsections (h) and (5) below, if it ha; intervened or taken any step in the proceedings.

(k) Subsection (3)(b_) above does not apply to intervention :>r any step taken for the purpose only of -

(_a) claiming immunity: or

(b_) asserting an interest in property in circumstances such that the State would have been entitled to immunity if the proceedings had been brought against it.

(5) £!ubsection (3)(b_) above does not apply to any step take:i by the State in ignorance of facts entitling it to immunity if those facts cou Ld not reasonably have been ascertained and immunity is claimed as soon as reasonably practicable.

(6) A submission in respect of any proceedings extends to a ay appeal but not to any counter-claim unless it arises out of the same legal relationship or facts as the claim.

(T) The head of a State's diplomatic mission in the United kingdom, or the person for the time being performing his functions, shall be deemed to have authority to submit on behalf of the State in respect of any proceedings; and any person who has entered into a contract on behalf of and with the authority o.f a State shall be deemed to have authority to submit on its behalf i:i respect of proceedings arising out of the contract. A/CN.U/3l»3/Add.l English Page 7

3.-(l) A State is not immune as respects proceedings relating to -

(a_) a commercial transaction entered into by the State; or

(b_) an obligation of the State which by virtue of a contract (whether a conmercLal transaction or not) falls to be pei formed wholly or partly in the United Kingdom.

(2) This section does not apply if the parties to the dispute are Steites or have otherwise agreed in writing", and subsection (l)(b_) above does not aipply if the contract (not being a commercial transaction) -was made in the territory of the State concerned and the obligation in question is governed 1>y its administrative law.

(3) In this section "commercial transaction" means -

(a_) any contract for the supply of goods or services ;

(b_) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and

(c_) any other transaction or activity (whether of a :ommercial, industris.1, financial, professional or other sinilar character) into which a State enters or in which it engages otherwise than in the exercise of sovereign authority; but neither paragraph of subsection (l) above applies to a contract of employment between a State and an individual.

U.-{l) A State is not immune as respects proceedings relating to a contract of employment between the State and an individual where the contract was made in the United Kingdom or the work is to be wholly or partly performed there.

(2) Subject to subsections (3) and (k) belov, this secticn does not apply if -

(a) at the time when the proceedings are brought the individual is a national of the State concerned; or

(bj at the time when the contract was made the individual was neither a national of the United Kingdom nor habitually resident there; or

(c_) the parties to the contract have otherwise agreed in writing.

(3) Tfhere the work is for an office, agency or establish!lent maintained by the State in the United Kingdom for commercial purposes, subsection (2)(a} and (b_) above do not exclude the application of this section unless th<; individual was, at the time when the contract was made, habitually resident in that State,. A/CN.U/3U3/Add.l English Page 8

(U) Subsection (2)(c_) above does not exclude the application of this, section where the law of the United Kingdom requires the proceedings to be brought before a court of the United Kingdom.

(5) In ..subsection (2)(b_) above "national of the United Kingdom" means a citizen of the United Kingdom and Colonies, a person who is a British subject by- virtue of section 2, 13 or .16 of the British Nationality Act 19^8 or by virtue of the British Nationality Act 19&5, a British protected person within the meaning of the said Act of 19^8 or a citizen of Southern Rhodesia.

(6) In. this section "proceedings relating to a contract of employment" includes juroceedings between the parties to such a contract in rssp.ect of any statutory rights or duties to which they are entitled or subject as employer or employee.

5. A State is not immune as respects proceedings in respe;t of -

(a_) death or personal injury; or

(b_) damage to cr loss of tangible property, caused by an act or omission in the United Kingdom.

••S,*--(lJ A State is net ionune as respects, proceedings relating to -

(ji) any interest of the State in, or its possession-or use of, immovable property in the United Kirgdom; or

(b_) any obligation of the State arising out of its interest in, or its- • possession or use of, any such property.

(2) A State is not immune as respects proceedings relating to any interest of the St£:te in-movable or immovable property, being an interest arising -by way of succession, gift or bona vacantia.

(3) The fact that a State has or claims an interest in any property shall not preclude s.ny court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency,, the winding up of companies or the administration of trusts.

(k) A court may entertain proceedings against-a person oth<;r than a State notwithstanding that the proceedings relate to property -

(a) which is in the possession or control of a State; or

(b_) i-n which a State claims an interest, if the Ste.te would not have been immune, had the proceedings been brought against it or, in a case within paragraph (b) above, if the claim is neither admitted nor supported by prima facie evidence. A/CN.U/3&3/Add.l English Page 9

7. A State is not immune as respects proceedings relating to -

(a_) any patent, trade-mark, design or plant breeders' rights belonging to the State and registered or protected in the United Kingdom or -?or whic'ri the State has nplied in the United Kingdom;

(b_) an alleged infringement by the State in the Un: ted Kingdom of any patent, trade-mark, design, plant breeders' rights or copyright; or

(c_) the right to use a trade or business name in the United Kingdom.

8.-.(l) A State is not immune as respects proceedings re]ating to its membership of a body corporate, an unincorporated body or a pe.rtnership which -

(a_) has members other than States; and

(b_) is incorporated or constituted under the lav ol' the United Kingdom or is controlled from or has its principal place of business in the United kingdom, being proceedings arising between the State and the body or its other members or, as the case may be, between the State and the other partners.

(2) This section does not apply if provision to the contrary has been made by an agreement in writing between the parties to the dispute or by the constitution or other instrument establishing or regulating the body or partnership in question.

9.-(l) Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate ~;o the arbitration.

(2) This section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between States.

10.-(l) This section arolie? to -

(aj Admiralty proceedings; and

(b_) proceedings on any claim which could be made the subject of Admiralty proceedings.

{?.) A State is not immune as respects -

(a_) an action in rem against a ship belonging to that State; or

(b_) an action in personam for enforcing a claim in connexion with such a ship, if, at the time when the cause of action arose, the ship was in use or intended for use for commercial purposes. English Page 10

(3) Where an action in rem is brought against a ship belonging to a State for enforcing a claim in connexion with another ship belonging to that State, subsection (2)(a_) above does not apply as; respects the first-mentioned ship unless, at the time when the cause of action relating to the other ship arose, both ships were in use or intended for use for commercial purposes.

(k) A State is not immune as respects -

(a_) an action in x-ui; ^gcinst a cargo belonging to that State if both the cargo and the ship carrying it were, at the time when the cause of action arose, in use or intended for use for commercial purposes; or

(b_) an action in personam for enforcing a claim in connexion with such a cargo if the ship carrying it was then in use or intended for use as aforesaid.

(5) In the foregoing provisions references to a ship or cargo belonging to a State include references to a ship or cargo in its possession or control or in which it claims an interest; and, subject to subsection (U) above, subsection (2) above applies to property other than a ship as it applies to a siip.

(6) Sections 3 to 5 above do not apply to proceedings of fae kind described in subsection (l) above if the State in question is a party to tiie Brussels Convention and the claim relates to the operation of a ship ownei or operated by that State, the carriage of cargo or passengers on any such ship or the carriage of cargo owned by that State on any other ship.

11. A State is not immune as respects proceedings relating to its liability for -

(a_) value added tax, any duty of customs or excise or any agricultural levy; or

(b_) rates in respect of pi-emie.es occupied by it for commercial purposes.

Procedure

12.-(l) Any writ or eth;r document required to be served f^r instituting proceedings against a State shall be served.by being transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs of the State and service shall be deemed to have been effected when the writ or document is received at the Ministry.

(2) Any time for entering an appearance (whether prescribe! by rules of court or otherwise) shall begin to run tvo months after the date on which the writ or document is received as aforesaid.

(3) A State which appears in proceedings cannot thereafter object that subsection (l) above has not been complied with in the case of t lose proceedings. English Page 11

(U) No judgement in default of appearance shall be given against a State except on proof that subsection (l) above has been complied with and that the time for entering an appearance as extended by subsection (2) above has expired.

(5) A copy of any Judgement given against a State in default of appearance shall be transmitted through the Foreign and Commonwealth Office to the Ministry of Foreign Affairs of that State and any time for applying to have the Judgement set aside (whether prescribed by rules of court or otherwise) shall begin to run two months after the date on which the copy of the judgement is received at the Ministry.

(6) Subsection (l) above does not prevent the service of a writ or other document in any manner to which the State has agreed and subsections (2) and (k) above do not apply where service is effected in any such manner.

(7) This section shall not be construed as applying to proceedings against a State by way of counter-claim or to an action in rem; and subsection (l) above shall not be construed as affecting any rules of court whereby leave is required for the service of process outside the jurisdiction.

13.-(l) No penalty by way of committal or fine shall be imposed in respect of any failure or refusal by or on behalf of a State to disclose cr produce any document or other information for the purposes of proceedings to which it is a party.

(2) Subject to subsections (3) and (U) below -

(a_) relief shall not be given against a State by way of injunction or order for specific performance or for..the recovery of land or other property; and

(b_) the property of a State shall not be subject to any process for the enforcement of a judgement or arbitration award or, in an action in rem, for :/ts arrest, detention or sale.

(3) Subsection (2) above does not prevent the giving of any relief or the issue of any process with the written consent of the State concerned; and any such consent (which may be contained in a prior agreement) may be expressed so as to apply to a limited extent or generally; -but a provision merely submitting to the jurisdiction of the courts is not to be regarded as a consent for the purposes of this subsection.

(h) Subsection (2)'b_) above does not prevent the issue of any process in respect of property which is for the time being in use or intended for use for commercial purposes; but, in a case not falling-within section 10 above, this subsection applies to property of a State party to the Europear Convention on State Imnunity only if -

(a_) the process is for enforcing a judgement which is final within the meaning of section l8(l)(b_) below and the State has made a declaration under Article 2U of the Convention; or A/CN.U/3U3/Add.l English Page 12

(b_) the process is for enforcing an arbitration award.

(5) The head of a State's diplomatic: mission in the United Kingdom, or the person for the time "being performing his functions, shall be deeited to have authority to give on behalf of the State any such consent as is irentioned in subsection (3) above and, for the purpose:; of subsec+ion (U) abo\e, his certificate to the effect that any property is not in use or intended for use by or on behalf of the State for commercial, purposes shall be accepted as sufficient evidence of that fact unless the contrary it.proved.

(6) In the application of this section to Scotland -

(a_) the reference to "injunction" shall be construed as a reference to "interdict";

(b_) for paragraph (b_) of subsection (2) above there stall be substituted the following paragraph -

"(b_) the property of a State shall not be subject to any diligence for enforcing a judgement or order of a court or a decree arbitral or, in an action in rem, to arrestment or sale."; and

(c_) any reference to "process" shall be construed as s reference to "diligence", any reference to "the issue of any piocess" as a reference to "the doing of diligence" and the reference in subsection h(b) above to "an arbitration award" as a reference to "a decree arbitral".

Supplementary provisions

The immunities and privileges conferred by this Pait of this Act apply to any foreign or commonwealth State other than the United Kingdcm; and references to a State include references to -

(a_) the sovereign or other head of that State in his jublic capacity;

(b_) the government of that State; and

(c_) any department of that government, but not to any entity (hereafter referred to as a "separate entity") which is distinct from the executive organs of the government of the State and capable of suing or being sued.

(2) A separate entity is immune from the jurisdiction of tte courts of the United Kingdom if, and only if -

(§_) the proceedings relate to anything done by it in the exercise of sovereign authority; and A/CN.V343/Add.l English Page 13

(b_) the circumstances are such that a State (or, in the case of proceedings to which section 10 above applies, a State which is not a party to the Brussels Convention) would have been so immune. (3) If a separate entity (not bein~ a State's central, bank or other monetary authority) submits to the jurisdiction in respect of proceedings in the case of which it is entitled to immunit?/ by virtue of subsection (2) above, subsections (l) to (U) of section 13 above shall apply to it in respect of these proceedings as if references to a State were references to that entity.

(1+) Property of a State's central bank or other monetary authority shall not be regarded for the purposes of subsection (U) of section 13 above as in use or intended for use for conmercial purposes; and where any such bank or authority is a separate entity subsecti'.on (l) to (3) of that section shall apply to it as if references to a State we:re references to the bank or authority.

(5) Section 12 above applies to proceedings against the constituent territories of a federal State; and Her Majesty may by Order in Council provide for the other provisions; of this Part of this Act to apply to any such constituent territory specified in the Order as they apply to a State.

(6) Where the provisions of this Part of this Act do not apply to a constituent territory bjr virtue of any such Order subsections (2) and (3) above shall apply to it as if it were a separate entity.

15--(l) If it appears to Her Majesty that the immunities and privileges conferred by this Part of this Act in relation to any State -

(a_) exceed those accorded by the law of that State in relation to the United Kingdom; or

(b_) .are less than those required by any treaty, convention or other international agreement to which that State and the United Kingdom are parties. Her Majesty may by Order in Council provide for restricting or, as the case may be, extending those immunities and privileges to such extent as appears to Her Majesty to be appropriate.

(2) Any statutory instrument containing an Order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

l6.-(l) This Part of this Act does not affect any immunity or privilege conferred by the Diplomatic Privileges Act 196U or the Consular Relations Act 19-68; and -

(a_) section U above does not apply to proceedings concerning the employment of the members of a mission within the meaning of the Convention scheduled to the said Act of 196U or of the members of a consular post within the meaning of the Convention scheduled to the said Act of 1968; English Page Ik

(b_) section 6(l) above does not apply to proceedings concerning a State's title to or its possession of property used for the purposes of a diplomatic mission.

(2) This Part of this Act does not apply to proceedings relating to anything done "by or in relation to the armed forces of a State while present in the United Kingdom and, in particular, has effect subject to the Visiting Forces Act 1952.

(3) This Part of this Act does not apply to proceedings to which section 17(6) of the Nuclear Installations Act 19-65 applies.

(h) This Part of this Act does not apply to criminal proceedings.

(5) This Part of this Act does not apply to any proceedings relating to taxation other than those mentioned in section 11 above.

17.-;l) In this Part of this Act -

"the Brussels Convention" means the International Convention for the Unification of Certain Rules Concerning the Immunity of State-owned Ships signed in Brussels on 10th April 1926;

"commercial purposes" means purposes of such transactions or activities as are mentioned in section 3(3) above;

"ship" includes hovercraft.

(2) In sections 2(2) and 13(3) above references to an agresment include references; to a treaty, convention or other international agreement.

(3) For the purposes of sections 3 to 8 above the territory of the United Kingdom shall be deemed tc include any dependent territory in respect of which the United Kingdom is a party to the European Convention on State Immunity.

(k) In sections 3(l), Ml), 5 and 16(2) above references f> the United Kingdom include references to its territorial waters and any area, designated under section l(7) of the Continental Shelf Act 196k.

(5) In relation to Scotland in this Part of this Act "action in rem" means such an action only in relation to Admiralty proceedings.

PAST II

JUDGEMENTS AGAINST UNITED KINGDOM IN CONVENTION STATES

18.-(l) This section applies to any judgement given against the United Kingdom by a court in another State party to the European Convention on State Immunity, being a judgement - English Page 15

(a) given in proceedings in which the United Kingdcm was not entitled to immunity by virtue of provisions corresponding to those of sections 2 to 11 above •, and

(b_) which is final, that is to say, which is not or is no longer subject to appeal or, if given in default of appearance , liable to be set aside.

(2) Subject to section 19 below, a judgement to which this section applies shall bs recognized in any court in the United Kingdom as conclusive between the parties thereto in all proceedings founded on the. same cause of action and may be relied on by way of defence or counter-claim in such proceedings.

(3) Subsection (2) above (but not sect. 19 below) shall have effect also in relation to any settlement entered into by the United Kingdom before a court in another State party to the Convention which under the law of tiiat State is treated as equivalent to a judgement.

(1+) In this section references to a court in a State party to the Convention include references to a court in any territory in respect of wiich it is a party.

19.-(l) A court need not give effect to section 18 above in the case of a J udgement -

(a_) if to do so would be manifestly contrary to pub Lie policy or if any party to the proceedings in which the judgement was given had no adequate opportunity to present his case; or

(b_) if the judgement was given without provisions corresponding to those of section 12 above having been complied with and the United Kingdom has not entered an appearance or applied to hav<: the judgement set aside.

(2) A court need not give effect to section 18 above in the case of a judgement -

(a) if proceedings between the same parties, bas^d on the same facts and having the same purpose -

(i) are pending before a court in the United Kingdom and were the first to be instituted; or

(ii) are pending before a court in another State party to the Convention, were the first to be institutec. and may result in a judgement to which that section will app]y; or

(b_) if the result of the judgement is inconsistent vith the result of another judgement given in proceedings between the same parties and - English Page 16

(i) the.ether judgement is by a court in the United Kingdom and either those proceedings were the first to be instituted or the judgement of tha.t court was given before the first-mentioned judgement became final within the meaning of subsection l(b_) of section 18 above; or

(ii) the other judgement is by a court in another State party to the Convention and that section has already become applicable to it.

(3) Where the judgement was given against the United Kingdom in proceedings in respect of which the United Kingdomvwas not entitled to immunity by virtue of a provision corresponding to section 6(2) above, a court need not give effect to section 18 above in respect of the judgement if the court that gave the judgement -

(a_) would not have had jurisdiction in the matter if it had applied rules of jurisdiction corresponding to those applicable to such matters in the United Kingdom; or

(b_) applied a law other than that indicated by the Inited Kingdom rules of private international law and would have reached a different conclusion if it had applied the law so indicated.

(k) In subsection [2) above references to a court in the United Kingdom include references to a court in any dependent territory in respect of which the United Kingdom is a party to the Convention, and references to a court in another State party to the Convention include references to a court in any territory in respect of which it is a party.

PART III

MISCELLANEOUS AND SUPPLEMENTARY

20.-(l) Subject to the provisions of this section and to any necessary modifications, the Diplomatic Privileges Act 196k shall apply i;o -

(a_) a sovereign or other head of State;

(b_) members of his family forming part of his household; and

(c_) his private servants, as it applies to the head of a diplomatic mission, to members of his family forming part of his household and to his private servants.

(2) The immunities and privileges conferred by virtue of subsection (l)(a_) and (b_) above shall not be subject to the restrictions by reference to nationality or residence mentioned in Article 37(l) or 38 in Schedule 1 to the said Act of 196k. English Page 17

(3) Subject to any direction to the contrary by the Secretary of State, a person on whom immunities and privileges are conferred by virtue of subsection (l) above she;ll be entitled to the exemption conferred by section 8'3) of the Immigration Act 1971.

(h) Except as respects value added tax and duties of customs or excise, this section does not affect any question whether a person is exempt from, or immune as respects proceedings relating to, taxation.

(5) This section applies to the sovereign or other head o:' any State on which immunities and privileges are conferred by Part I of this Act and is without prejudice to the application of that Part to any such sovereign or head of State in his public capacity.

21. A certificate by or on behalf of the Secretary of State shall be conclusive evidence on any question -

(a_) whether any country is a State for the purposes cf Part I of this Act, whether any territory is a constituent territory of a federal State for those purposes or as to the person or jersons to be regarded for those purposes as the head or goverrment of a State;

(b_) whether a State is a party to the Brussels Convention mentioned in Part I of this Act;

(c_) whether a State is a party to the European Convention on State Immunity, whether it has made a declaration under Article 2k of that Convention or as to the territories in respect of which the United Kingdom or any other State is a party;

(d_) whether, and if so when, a document has been served or received as mentioned in section 12(l) or (5) above.

22.-(l) In this Act "court" includes any tribunal or body exercising judicial functions: and references to the courts or law of the United Kingdom include references to the courts or law of any part of the United Kingdon.

(2) In this Act references to entry of appearance and judgements in default of appearance1 include references to any corresponding procedures.

(3) In this Act "the European Convention on State Immunity ' means the Convention of that name signed in Basle on 1,6th May 1972.

(h) In this Act "dependent territory" means -

(a_) any of the Channel Islands;

(b_) the Isle of Man; A/OT.l*/3li3/AdcL.l English- ' Page 18

(c_) any colony other than one for whose external relations a country • other than the United Kingdom is responsible'; or

(d_) any country or territory outside Her Majesty's dominions in which Her Majesty has jurisdiction in right of the government of. the United Kingdom.

(5) Any power conferred by this Act to make an Order in Council includes power to vary or revoke a previous Order.

23. --(l) This Act may be cited as xthe State Immunity Act of 1978.'

(2) Section 13 of the Administration of Justice (Miscellaieous Provisions) Act 1938 and section 7 of the Law Reform (Miscellaneous Provisisns) (Scotland) Act 19^0 (which become unnecessary in consequence of Part I of this Act) are hereby repealed,,

(3) Subject to subsection (U) below, Parts I and II of this Act do not apply to proceedings in respect of matters that occurred before the date of the coming into force of this Act ar.d, in particular - '

(a_) sections 2.(2) and 13(3) do not apply to any prior agreement, and

(b_) sections 3, h and 9 do not apply to any transaction, contract or arbitration agreement, entered into before that date.

(h) Section 12 above applies to any proceedings instituted after the coming into force of this Act.

(5) This Act shall come into force on such date as may be specified by an order made by the Lord Chancellor by statutory instrument.

(6) This Act extends to Northern Ireland.

(7) Her Majesty may by Order in Council extend any of.the provisions of this Act, with or without modification, to any dependent territory. English Page 19

(b) INTERNATIONAL IMMUNITIES AMD PRIVILEGES

The State Immunity (Overseas Territories) Order 1979

1979 No. ^58

Made 11th April 197S

Coming into Operation 2nd May 197$

At the Court at Windsor Castle, the 11th day of Apiil 1979

Present,

The Queen's Most Excellent Majesty in Council Her Majesty, in exercise of the powers conferred upon Her by section 23(7) of the State Immunity Act 1978(a) or otherwise in Her Majesty vested, is pleased, by and with the advice of Her Privy Council, to order, and it is herety ordered, as follows: -

1. This Order may be cited as the State Immunity (Overseas Territories) Order 1979 and shall come into operation on 2nd May 1979.

2. The provisions of the State Immunity Act 1978 shall extend to each of the territories specified in Schedule 1 to this Order with the adaptations and modifications specified In Schedule 2 to this Order.

3. For the purpose of construing the said Act as so extended as part of the lav of a territory to which it extends "'the Territory" means that territory and "any Territory" means any of the Territories to which it extends.

N. E. Leigh, Clerk cf the Privy Council,

SCHEDULE 1 Belize British Antarctic Territory- British Virgin Islands Cayman Islands Falkland Islands and Dependencies Gilbert Islands Hong Kong Montserrat Pitcairn, Henderson, Duc:Le and Oeno Islands Sovereign Base Areas of Akrotiri and Dhekelia Turks and Caicos Islands

(a) 1978 c. 33. English Page 20

SCHEDULE 2

l.-(a) For the references to the United Kingdom in sections l(l), 2(l), 9(l), 14(2), 16T2), 18(1) and (3) arid 19(l) and (3) there shall be substituted a reference to the Territory.

(b_) To the reference to the United Kingdom in section 2(2) there shall be added a reference to any Territory.

2. Save as is provided otherwise, any reference to any enactment of the United Kingdom shall be construed as a reference to that enactment as applying or extended to the Territory.

3. In section 12(1; any writ or document required to be served and in section 12(5) a copy of any judgement given against a State in default of appearance shall be transmitted to the Governor of the territory (or in the case of Hong Kong to the Chief Secretary, and in the case of the Sovereign Base areas of Akrotiri and Dhekelia to the Administrjitor) and by him to the Foreign and Cozrmonwealth Office for onward transmission to the State concerned.

k. (a_) In the application of section l6(l) to Belize, British Antarctic Territory, Cayman Islands, Falkland Islands and Dependencies and. Hong Kong: -

(i) for the words and numerals "Diplomatic Privileges Act 19-6U or the Consular Relations Act 19

"Diplomatic Privileges and Consular Conventions Ordinance (Chapter 1'76) or the Consular Relations Ordinance 1972" in the case of Belize;

"Diplomatic Privileges (Extension) Ordinance (Chs/pter 20)" in the case of British Antarctic Territory and Falkland Islands;

"Consular Relations and Diplomatic Immunities and Privileges Law (Revised)" in the case of the Cayman Islands;

"International Organisations and Diplomatic Privileges Ordinance (Chapter 190) or the Consular Relations Ordinance (Chapter 259)" in the case of Hong Kong; and

(ii) for the words and numerals "said Act of 196U" anl "said Act of, 1968" there shall be substituted respectively the words and numerals ' "Diplomatic Privileges Act 196U" and "Consular Relations, Act. 1968";

(b_) In the application of section 20 to Belize, British Aitarctic Territory, Cayman Islands, Falkland Islands and Dependencies and Hong Kong: -

(i) in subsection (l) for the words and numerals "Diplomatic Privileges Act 196V there shall be substituted the words aid numerals: A/CM.U/3U3/Add.1 English Page 21

, "Diplomatic Privileges' and Consular Conventions Ordinance (Chapter 176)': in the case of Belize.;

"Diplomatic .Privileges (Extension) Ordinance (Chapter 20)" in the case of British Antarctic Territory and Falkland Islands;

"Consular Relations and DinLonatic Immunities and Irivileges Law (Revised):: in the case of \,he Caynan Islands.,

''international Organisations and Diplcmatic Privileges- Ordinance (Chapter 190)" in the case of Hong Kong;, and , ,.

• (ii) in subsection (2) for the words and numerals "said Act of 196V there shall be substituted the words and numerals ''Diplonatic Privileges Act 196^ and to any corresponding restrictions in the law of the Territory"»

5. For the reference in section 20(3) to ;!the exemption corf erred by section 8(3) of the Innigration Act 197i;? there shall be substituted a reference to "exemption from immigration restrictions and regulations1'.

6. For section 23(5) there shall be substituted the following subsection: -

"(5) This Act shall come into force on the coming into'cperation of the Order in Council extending it to the Territory."

EXPLANATORY NOTE

(This Note is not part of the Order.)

This Order extends to the dependent territories specified in Schedule 1 the provisions of the State Immunity Act 1973, with minor adaptations set out in Schedule 2. This will enable effect to be given to the provisions of the European Convention on State Immunity (Cmnd. 5O8l)3 the International Convention for the Unification of Certain Rules concerning the Immunity of State-owned Ships (Cmd. 5672) and the Supplementary Protocol thereto (Cad. 5673).

3. UNITED STATES OF .AMERICA

/Original: English/ /31 Aigust 19797

(a) FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976

For Legislative History of Act,, see p. 66Oh

An Act to define the jurisdiction of United States courts in suits against foreign Sts.tes, the circumstances in which foreign States are immune from suit and in which execution may not be levied on their property, and for other purposes. A/CS.k/3k3/A6A.l. English ' • ; Page; 22

Be it enacted by the Senate and House of Representatives of the United SteAes of Americe. in Congress assembled, That this Act may be cited as -;he "Foreign Sovereign Immunities Act of 1976".

SEC. 2. (a) That chapter 05 of title 28S United States Code, is amended by inserting immediately before section 1331 the following new sect:.on:

"§1330. Actions against foreign.States

"(a) The district courts shall- have original jurisdiction without regard to amount in controversy of any nonjury civil action agains"; a foreign State as defined in section l603(a) of this title as to any claim for relief in personam with respect to which the foreign State lz r.ot entitled to immunity either under sections l605-l607 of this title or under any applicable international agreement.

"(b) Personal jurisdiction over a foreign State shall oxist as to every. claim for relief, over which the district courts have jurisd iction under subsection (a) where service has been made under section-l6i)8 of this title.

"(c) For purposes of subsection (b), an appearance by a foreign State does not confer personal jurisdiction with respect to any claim :"or relief not arising out of any transaction or occurrence enumerated in sections l6O5-l6O7 of this title.".

(b) By inserting in the chapter analysis of that chapter before -

"1331. Federal question- amount in controversy- costs." the following new item:

"1330. Action against foreign States.".

SEC. 3. That section 1332 of title 28, United States Code, is amended by striking subsections (a) (2) and (3) and substituting in their place the following:

"(2) citizens of a State and cixizens or subjects of a foreign State;

"(3) citizens of different States and in which citizens or subjects of a foreign State are additional parties 5 and

a foreign State, defined in section l603(a) of this title, as plaintiff and citizens of a State or of different States.".

SEC. k (a) That title 28, United States Code, is amended tj inserting after chapter 95 the following new chapter: A/C]I.U/3k3/Add.l EngMsh 23

"Chapter.97. - JURISDICTIONAL IMMUNITIES OF FOREIGN STATES

"Sec. "l602. Findings and declaration of purpose. "l603,., Definitions. nl60k. Immunity of a foreign state from jurisdiction. "l6O5. General exceptions to the jurisdietional immunity of a foreign state. "l606. Extent of liability. "Sec. "l60T. Counterclaims. "1608. Serviced time to answer default. "1609. Immunity from attachment and execution of property of s. foreign state. "l6lO. Exceptions to the immunity from attachment or executior. "l6ll. Certain types of property immune from execution. •• -

"§l602. Findings and declaration of purpose

"The Congress finds that the determination by United States courts of the claims of foreign states to immunity from the jurisdiction of such courts would serve the interests of justice and would protect the rijtfts of both foreign states and litigants in United States courts. Under irternational law, states are not immune from the jurisdiction of foreign coirts insofar as their commercial activities are concerned, and their commercial property may be levied upon for the satisfaction of judgments rendered against them in connection with their commercial activities. Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter.

"§1603. Definitions

"For purposes of this chapter -

"(a) A 'foreign state* except as used in section 1603 of this title includes a political subdivision of a foreign state Dr an agency or instrumentality of a'foreign state as defined in subsection (b).

"(b) An 'agency of instrumentality of a foreign stats' means any entity -

"(l) which is a separate legal person, corporate or otherwise, and

"(2) which is an organ of a foreign state or poLitical subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and

"(3) which- is neither a citizen of a State of tie United States as defined in section 1332 (c) and (d) of this title, not created under the laws of any third country. A/CH.U/3U3/Add4 English •• •-'•'••^.\ :-.!- •'

Page 2k ;: "•

"(c) The 'United States' iijoiuilco all territory fill waters, . • continental or insular, subject to the jurisdiction of ;he United States,

"(d) A 'conur.arcial activity' csans either a regula:' course of commercial conduct or a particular commercial transaction or' act.' 'the commercial character of an activity shall be determined by reference to the nature of the • ecu.i£>e of conduct or particular transaction or .- act," rather than by reference tu its purpos e.

"(e) A 'comrercial activity carried on in the United States by a- foreign state1 means co::;;erci?l activity carried on-by ;uch state" and having substantial centsTG with, the United States.

"§l6olt. Immunity of a foreign stcte from jurisdiction

"Subject to existing ir^eriirlicnal agreements to which ;he United States; is a party at the tin^ cf tn?.ct:u:i:t of this Act a foreign state shall be immune froa the juris-actlon of the covrfcs of the United States and of the States except as provided in sections l£05 to 1607 of this chapter,.

"§l60^. . General, exceptions to the jurisdiction?! i:.r;7iunity o * a foreign state

tr(a) A foreign state shall not tb irz^une fro^i the jurisiliction of courts'of the United States or cf the Gtates in any case -

"(l) in which the forei&n state hes vrdvsd its imm'inity either explicitly or by implication, notvithst'irdir.g any withdrawal of the vaiver which the foreign ctste ray purpcrb to effect exoept in siccordance with th? ter:,is of tl.s waiver;

"(2) in which the cctio.-i is ba3ed upon, a ocsn2rcia. activity carried on in the United States Yy the for3.i.en state; or upon an act performed in the United Zir.tz'^ in cr"vi?cticn ui^h a commercial activity cf the foreign state elcsvrtierc; or upon en cct outside -;he territory of the United States in connection with a cov^eercial activity of the foreign state else;-,-:-.-re and th^^ :-ct causes 3 direct efi'ect in the United otates;

"(3) in which rights in •nrop'trty tai:e:i in violation of internsitional law are in issue ar:d f.:..-; p-;.^-;:ty or r.-.y property exchanged for such property is present in the U.i?ted Str/';es in connection with a commercial activity carried on in tlie United States by the foreign state; or that property or any property exchen^^d for su^h property is owned or operated by an agency cr ii;ctriv.entality of ths foreign state and that agency or instrun12r.tal-.ty i^ er^r^cd.ir. a comaicrcial activity in the Lhited States;

v{h) in which, rights in property in the United Sta1.es acquired by succession or gift or rights in irr^ovable property situated in the United States are in issue; or A'CN.lt/3fc3/Add. 1 Eiglish Page 25

"(5) not otherwise encompassed in paragraph (2) abo-re, in which money damages are sought against a foreign state for personal injurjr or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of thai; foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment;, except this paragraph shall not apply to -

"(A) any claim based upon'the exercise or performance or the failure to exercise or perform a discretionary fund ion regardless of whether the discretion be abused, or

"(B) any claim arising out of malicious proseci.tion, abuse; of process, libel, slander, misrepresentation, deceit, or interference with contract rights.

"(b) A foreign state shall not be immune from the jurisdiction of the courts of the United States in any case in which a suit in adniralty is brought to enforce a maritime lien against a vessel or cargo of the foreign state, which maritime l.ien is based upon a commercial activity of the foreign state: Provided, That -

"(l) notice of the suit is given by delivery of a copy of the summons and of the complaint to the person, or his agent, having possession of the vessel or cargo against which the maritime lien is asserted; but such notice shall not be deemed to have been delivered, nor may it thereafter be delivered, if the vessel or cargo is arrested pursuant to' process obtained on behalf of the party bringing the suit - unless the party wa.s unaware that the vessel or cargo of a. foreign state was involved, in which event the service of process of arrest shall be deemed to constitute valid delivery of such notice; and

"(2) notice tc the foreign state of the commencement of suit as provided in section 1608 of this title is initiated withiI ten days either of the delivery of notice a.s provided in subsectioi (b) (l) of this section or, in the case of a party who was unaware t.iat the vessel or cargo of a foreign state was involved, of the "ate sue I party determined the existence of the foreign state's interest.

Whenever notice is delivered under subsection (b) (l) of this section, the maritime lien shall thereafter be deemed to be an in personam olaim against the foreign state which at that time owns the vessel or cargo involved- Provided, That a court may not award judgement against the foreign state in an amount greater than the value of the vessel or cargo upon which the maritime; lien arose, such value to be determined as of the tim<; notice is served ^Lnder subsection (b) (l) of this section. A/CN.U/3l<3/Add.l English Page 26

"§1606. Extent of liability

"As to any claim for relief with respect to which a foreign state is not entitled to. immunity under section 1605 or 16OT of thin chapter, the foreign state shall be liable in the same manner and to th<; same extent as a private individual under like circumstances; but a foreign state except for" an agency or instrumentality thereof shall noL ">e liable for punitive damages; if, however, in auy case wherein de^ch wis caused, the law of the place-where the action or oiiission occurred provides, or has been construed to provide, for damages only punitive in nature, the foreign state shall be liable for actual or compensatory damages measure 1 by the pecuniary injuries resulting from such death which were incurred by ;he persons for whose benefit the. action was brought.

"§1607. Counterclaims

"In any action brought by a foreign state, or in which a foreign state intervenes, in-a court of the United States or of a State, the foreign • state shall not be accorded immunity with respect to any counterclaim -

"(a) for which a foreign state would not be entitled to immunity under section 1605 of this chapter had such claim been brought in a separate action against the foreign state; or

"(b)- arising out of the transaction or occurrence that is the subject matter of the claim of the foreign state; or

"(c) to the extent that the counterclaim does rot seek relief exceeding in amount or differing in kind from that scught by the foreign state.

"§l608. Service; time to answer; default

"(a) Service in the courts of the United States and of the States shall be made upon a foreign state or political subdivision of a foreign s-ta.te:

"(l) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service "between the plaintiff and the foreign state or political subdivision; or

"(2) if no special arrangement exists, by delivery of a copy of the summons and complaint in accordance with an applicable international convention on service of judicial documents; or

"(3) if service cannot be made under paragraphs (l) or (2), by sending a copy of the summons and complaint and a notice of suit, together with a translation of each into the official, language of the foreign state, by any form of mail requiring a signel receipt, to be A'CN.U/3U3/Add.l Eiglish Pige 27

addressed and dispatched by the clerk of the court ;o the head of the ministry of foreign affairs of the foreign state concerned, or

"(M if service cannot be made within 30 days under paragraph (3)s by sending two copies of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatcher by the clerk of t-*e court to the Secretary of State in Washington, District of Columbia, to the attention of the Director of Special Consular Services - and the Secretary shall transmit one copy of the papers through diplomatic channels to the foreign state and shall send to the clerk of the court a certified copy of the diplomatic note indicating when the papers were transmitted.

As used in this subsection, a 'notice of suit' shall mear. a notice a.ddressed to a foreign state and in a form prescribed by the Secretary of State by regulation.

"(b) Service in the courts of the United States anc of the States shall be made upon an agency or instrumentality of a foreign state:

"(l) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the agency or instrumentality; or

"(2) if no special arrangement exists, by delivery of a copy of the summons and complaint either to an officer, a managing or general agent, or to sny other agent authorized by appointmeit or by law to receive service of process in the United States: or in accordance with an applicable international convention on service of judicial documents; or

"(3) if service cannot be made under paragraph; (l) or (2), and if reasonably calculated to give actual notice, by delivery of a copy of the summons and complaint, together with a translation of each into the official language of the foreign state -

"(A) as directed by an authority of the foreign state or political subdivision in response to a letter rogatory or request or

"(B) by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the coirt to the agency or instrumentality to be served, or

"(C) as directed by order of the court consistent with the law of the place where service is to be made. A/CN.y.3^3/AdcL.l English Page 28

"(c) Service shall be deemed to have been made -

"(l) in the case of service under subsection (a) (M, as of the date of transmittal indicated in the certified copy of ths diplomatic not ei and

"(2) in' any other case under this section, as of the date of receipt, indicated in the certification, signed and returned postal receipt, or other proof of service applicable to the' method of service employed.

"(d) In any actior. brought in a court of the United'States or of a State,, a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state shall serve an answer or other responsive pleading to the complaint within sixty days after service has been made under this section.

"(e) No judgment by default shall be entered by a court of the United States or of a State age.inst a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his; claim or right to relief by evidence satisfactory to the court. A copy of any such default judgment shall be sent to the foreign state or political subdivision in the manner prescribed for service in this section.

"§1609. Immunity from attachment and execution of property of a foreign state

''Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and l6ll of this chapter.

"§l6lO. Exceptions to the immunity from attachment or execution

"(a) The property in the United States of a foreign state, as defined in section 1603 (a) of this chapter, used for a commercial activity in the United Statt.o, shall not be immune fron attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State after the effective date of this Act, if -

"(l) the foreign state has waived its immunity fron attachment in aid of execution or from execution either explicitly cr by implication, notwithstanding any withdrawal of the waivei the foreign state may purport to effect except in accordance with the terms of ths waiver., or

"(2) the property is or was used for the commercial activity upon which the claim is based, or English 29

"(3) the execution relates to a judgment establishing rights in property which has. tie en taken in violation of international law or which has been exchanged for property taken in violat:.on of international law, or

"(U) the execution relates to a judgment establishing rights in proper4"v -

"(A) which is acquired by succession or gifi;, or

''(B) which is immovable and situated in the United States: Provided. That such property is not' used for pui'poses of maintaining a diplomatic or consular mission or -;he residence of the Chief of such .mission, or

"(5) the property consists of any contractual obligation or any proceeds from such a contractual obligation to indemnify or hold harmless the foreign, state or its employees under a policy of automobile or other liability or casualty insurance covering the claim which merged into the judgment.

"(b) In addition to subsection (a), any property in ;he United States of &.n agency or instrumentality of a foreign state engaged in commercial activity in the United States shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered b;r a court of the United States or. of a State after the effective date of th-Ls Act, if -

"(l) the agency or instrumentality has waived its immunity from attachment in aid of execution or from execution either explicitly or implicitly, notwithstanding any withdrawal of the waiver the agency or instrumentality may purport to effect except in accorlance with the terms of the waiver, or

"(2) the judgment relates to a claim for which tie agency or instrumentality is not immune by virtue of section 16 35 (a) (2), (3), or (5) or 1605 (b) of this copter, regardless of whether the property is or .,as used -for..the activity upon which the claim is based.

"(c) No attachment or execution referred to in subsecsions (a) and (b.) of this section shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following the entry of judgment and th; giving of any notice required under section 1608 (e) of this chapter.

"(d) The property of a foreign state, as defined in section 1603 (a) of this chapter, used for a commercial activity in the United States, shall not be immune from attachment prior to the entry of judgment ii any action brought in a court of the United States or of a State, or prior to the elapse of the period of time provided in subsection (c) of this section, if - English Page 30

"(l) the foreign state has explicitly waived its immunity from attachment prior to judgment, notwithstanding any withdrawal of the waiver, the foreign state may purport to effect except in accordance with the terms of the waiver, and

"(2) the purpose of the attachment is to secure satisfaction of a judgment that has been or may ^lltimately be entered against the foreign state, and not to obtain jurisdiction.

"§l6ll. Certain types of property immune from execution

"(a) Notwithstanding the provisions of section 1610 of this chapter, the property of those organizations designated by the Presi dent as being entitled to enjoy the privileges, exemptions, and immunities provided by the International Organizations Immunities Act shall not b« subject to attachment or any other judicial process impeding the disbursement of funds to, or on the order of, a foreign state as the result of ai. action-brought in the courts of the United States or of the States.

"(b) Notwithstanding the provisions of section 1610 o:" this chapter, the property of a foreign state shall be immune from attachment and from execution, if -

"(l) the property is that of a foreign central biink or monetary- authority held for its own account, unless such bank or .authority, or its parent foreign government, has explicitly waived its immunity from attachment in aid of execution, or from execution, notwithstanding any withdrawal of the waiver which tho bank, authority or government may purport to effect except in accordance with the terms of the waiver; or

"(2) the property is, or is intended to be, used in connection with a military activity and

"(A) is of a military character, or

"(B) is under the control of a military authority or defense agency."

(b) That the analysis of "PART IV.- JURISDICTION AND /ENUE" of title 28, United States Code, is amended by inserting after -

"95- Customs Court.",

the following new item:

"97• Jurisdictional Immunities of Foreign States.". English Page 31

SEC. 5. That section 1391 of title 28, United States Code, is amended by adding at the end thereof the following new subsectioi:

"(f) A civil action against a foreign state as defiled in section 1603 (a) of this title may be brought -

in any judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action Ls situated;

"(2) in any judicial district in which the vessel or cargo of a foreign state is situated, if the claim is asserted under section 1605 (b) of this title;

"(3) in any judicial district in which the ageicy or instrumentality is licensed to do business or is doing business, if the action is brought against an agency or instrumentality of a fDreign state as defined in section 1603 (b) of this title; or

"(h) in the United States District Court for tie District of Columbia if the action is brought against a foreign state or political subdivision thereof.'1.

SEC. 6. That section lUUl of title 28, United States Code, is amended by adding at the end thereof the following new subsection:

"(d) Any civil action brought in a State court against a foreign state as defined in section 1603 (a) of this title may bs removed by the foreign state to the district court of the United States for the district and division embra.cing the place where such action is pending. Upon removal the action shall be tried by the court without jury. Where removal in based upon this subsection, the time limitations of ssction lhk6 (b) of this chapter may be enlarged at any time for cause shown.".

SEC. 7. If any provision of this Act or the application thereof to any foreign state is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SEC. 8. Thisi Act shall take effect ninety days after the date of its enactment.

Approved October 21, 1976.

LEGISLATIVE HISTORY: HOUSE REPORT No. 9U-1U67 (Comm. on the Judiciary). SENATE REPORT No. 9^-1310 accompanying S.3553 (Comm. on the Judiciary). CONGRESSIONAL RECORD, Vol. 122 (1976): Sept. 29, considered and passed House. Oct. 1, considered ard passed Senate. WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 12, No. k': : Oct. 22, Presidential statement. English Page 32

(b) DEPARTMENT OF THE TREASURY*

Internal Revenue Service

/26 CFR Part 1_7

/LR-106-75.7

IHCOME OF FOREIGN GOVERNMENTS

Notice of Proposed Rulemaking

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations relating -;o the taxation of income' of foreign governments. The regulations would provide guidance for taxing foreign sovereigns on their income from commercial activr.ties within the United States.

DATES: Written comments and requests for a public hearing must "be delivered or mailed on or before October 16, 1978. The amendments relating "i;o the taxation of income earned by integral parts of a foreign sovereign are proposed to be effective for all taxable years. The amendments relating to tho taxation of income earned by controlled entities are proposed to be effective with respect to income earned after /the date, these regulations are filed ai; the FEDERAL REGISTER as a Treasury decision/.

ADDRESS: Send comments and requests for a public hearing to: Commissioner of Internal Revenue, Attention: CC:LR:T (LR-106-75), Washington, D.C. 2022U.

FOR FURTHER INFORMATION CONTACT:

Anthony Bor.anno of the Legislation and Regulations Division, Office of the Chief Counsel, Internal Revenue Service, 1111 Constitution .Avenue NW, Washington, D.C. 20221+, Attention: CC:LR:T, 202-566-3829, not a toll-free call.

_ * Federal Register, vol. k3, No. 156, 11 August 1978, pp. 36111-36111*. /Foot-notes marked by asterisks in the present document are supplied by the _ Secretariat. Those marked by numbers or letters were in the original texts_V A/'3N.U/3U3/Add.l English 33

SUPPLEMENTABY INFORMATION:

BACKGROUND

This document contains proposed amendments to the income -;ax regulations (26 CFR Part l) under section 892 of the Internal Revenue Code of 195k. These amendments are proposed to clarify the regulations and are to oe issued under the authority coatained in section 7805 of the Internal Revenue Code of 195^ (68A Stat. 917; 26 U.S.C. 7805).

Section 892 provides in general that income from sources ^ri.thin the United States received by a foreign government is not to be included :^n gross income; and is to be exempt from taxation. Neither section 892 nor th>; current regulations defines the term ''foreign government". For purposes of section 892, a foreign government consists only of integral parts or controlled entities of a foreign sovereign. The proposed regulations generally provide that income derived by a foreign sovereign from commercial activities in the United States is not income of a foreign government for purposes of the exemption provided in section 892.

The proposed regulations provide definitions for the term; "integral part" of a foreign sovereign and "controlled entity" of a foreign sovereign. The proposed regulations further provide guidelines for the determination of what constitutes commercial activities within the United State:;.

In most respects, the requirements relating to controlled entities parallel the requirements of Rev. Rul. 75-298, relating to certain organizations created by foreign governments that are eligible for the section 892 exemption. The regulations generally required that a controlled entity must be organized under the laws of the foreign sovereign by which it is owned.

The proposed regulations also provide that the income fron the de minimi's commercial activities of a controlled entity is subject to tax.

COMMENTS AND REQUESTS FOR A PUBLIC HEARING

Before adopting these proposed regulations, consideration will be given to any written comments that are submitted (preferably six copies) to the Commissioner of Internal Revenue. All coiraents will be available for public inspection and copying. A public hearing will be held upon written request to the Commissioner by any person who has submitted written comments. If a public hearing is held, notice of the time and place will be published in the FEDERAL REGISTER.

DRAFTING IZJFORIIATIOIT

The principal author of these proposed regulations was Anthony Bonanno of the Legislation and Regulations Division of the Office of the Ohief Counsel, English Page 3k

Internal Revenue Service. Eowever, personnel from other offices of the Internal Revenue Service and Treasury Department participated in developing the regulation, both on matters of substance1 and style.

PROPOSED AlffiFDIIENTS TO THE REGULATIONS

The proposed amendments to 26 CFR Part 1 are as follows:

§1.892 /Removed/

PARAGRAPH 1. Section 1.892 is deleted.

PAR. 2. Section 1.892-1 is amended as follows:

1. The title to §1.892-1 is revised.

2. Paragraph (a) is deleted and in lieu thereof new paragraphs (a) through (l) are added.

3. Paragraphs (To) (l) and (2) are redesignated as paragraphs (a) and (b) respectively of a new §1.892-2. The amended §1.892-1 and new §1.^92-2 read as follows:

§1.892 1 Income of foreign governments.

(a) Manner of taxing.-- (l) In general. Section 892 provides, in general, that the income of a foreign government from sources within the Urited States is excluded from gross in cone and exempt from taxation". Paragraph (b) of this section describes the extent -to"which either an entity constituting the governing authority of a foreign sovereign or an organization erected by a foreign sovereign will be treated as a foreign government for purposes of section 892. To the extent that income is derived by such an entity or organization of a foreign sovereign which does not qualify as a fcreign government as defined in paragraph (b) of this section, a foreign sovereign shall be subject to tax on the income in accordance with the rules of ttis section.

(2) Foreign government exemption. The income derived by an integral part or controlled entity of a foreign sovereign from investments in the United States in stocks, bonds, or other domestic securities, owned by si.ch-integral part or controlled entity, or from interests on deposits in banks in the United States of moneys belonging to such integral part or controlled entity, or from any other source within the United States, shall generally be treated as income of a foreign government, shall not be included in gross income", and shall be exempt from taxation.

(3) Foreign government exemption not available, (l) Amounts derived by a foreign sovereign from commercial activities in the United States is not income of a foreign government for purposes of the exemption from taxation provi~^d in English Page 35

section 892. Such amounts shall be included in the income of the foreign sovereign and taxed under section 88l or 882 (whichever is applicable).

(ii) Income derived by an organisation created by a foreign sovereign that does not qualify as a controlled entity of the foreign £overeign.under paragraph (b) (3) of this section shall be included in the gioss income of tne organization and taxed under the provisions of section 11, 12 01, 88l, or 882 (whichever is applicable).

(iii) Income derived by a controlled entity from commercial activities in the United States even though en a de minimis basis does not qualify as income, of the foreign government and shall be included in grcss inccme of the foreign sovereign and taxed under the provisions of section 11, 1201 33l, or 382 (whichever is applicable).

(b) Foreign government defined.- (l) Classes of a forei gn government. For purposes of this section, a foreign government consists only of integral parts or controlled entities of a foreign sovereign.

(2) Integral part. An "integral part" of a foreign sovereign is any person, body cf persons, organization, agency, bureau, instrumentality, or body, however designated, that constitutes the governing authority of a foreign country that is not engaged in commercial activities in the United Spates. The net earnings of the governing authority must be credited to its own account or to other accounts of the foreign sovereign, with no portion inuring to the benefit of any private person. It does not include any individual who is a sovereign, official, or administrator acting in a private or personal capacity.

(3) Controlled entity. A "controlled entity" of a foreign sovereign is any organization (including a foreign central bank of issue qual:.fying under section 895) created by a foreign sovereign that is not an integral part and that meets the following requirements-

(i) It is wholly owned and controlled by a foreign sovereign;

(ii) It is organized under the laws of the foreign sovereign by which it is owned or, if the law of a State of the United S;ates requires, organized under the law of that State;

(i:Li) Its net earnings are credited either to its own ac lount or to other accounts of the foreign sovereign, with no portion of its income inuring to the benefit of smy private person;

(iv) Its assets must vest in the foreign sovereign upon dissolution; and

(v) It does not engage in the United States in commercial activities on more than a de minimis basis. A/CN.U/3k3/Add.l English Fage 36

The terra "controlled entity" does not include any entity wholly owned and controlled by more than one foreign sovereign. Thus, a foreign financial organization organized and wholly owned and controlled by several foreign sovereigns to foster economic, financial and technical co-operation between various foreign nations is not a controlled entity for purposes of bhis section.

(k) Political subdivision and transnational entity. The rules that apply to a foreign sovereign apply to politica subdivisions of a foreign country and to transnational entities. A transnational entity is an organization created by several foreign sovereigns that has broad powers over external and iomestic affairs of all participating foreign countries stretching beyond economic subjects to those concerning legal relations and transcending state or political boundaries.

(c) Characterization of activities.- (l) Commercial activities. For purposes of this section, "commercial activities" generally include activities that constitute a "trade cr business within the United States'1 within ths meaning of section 86k (b). ''Commercial activities" also include activities customarily attributable to and carried on by private enterprise for profit in the United States. The commercial character of an activity is determined by reference to a course of conduct cr particular transaction rather than by reference to its purpose. The fact that in some instances Federal, State, or local governments cf the United States also are' engaged in the same or similar activity does not irean that the activity will not be considered commercial. For example, even though the U.S. Government is; engaged in the activity of operating a railroad, operating a railroad is a commercial activity.

(2) Net lease. Obtaining and holding "net leases" on property is considered to be a commercial activity.

(3) Certain activities that are not commercial. The following activities, among others, are not commercial activities--

(i) Investments in the United States in stocks, bonds, or other domestic securities, or the holding cf deposits in banks in the United States which produce interest or dividends not effectively connected with the conduc4- of a trade or business within the United States;

(ii) Performances and exhibitions within the United States devoted to the promotion of the arts by cultural organizations; and

(iii) The mere purchase of goods in the United States for use of the foreign sovereign.

(d) Other operative sections. In determining whether income is from sources vithin or without the United States, see sections 86l through 863 and the regulations thereunder. For purposes of determining whether income is effectively connected with a trade or business, see section 86U (c) and the regulations thereunder. For rules with respect to withholding of tax at source under section 1^2 in the case of foreign corporations, see § English Page 37

(e) Accounting roT.es.- (l) Choice of method of accounting. A foreign sovereign may choose any method of accounting permissible under section kU6 (c) and the regulations thsreunder. Changes in the method of accounting are subject to the requirements of section hk6 (e) and the regulations thereunder.

(2) Choice of annual accounting period. A foreign sovereign may choose its annual accounting period in accordance with section UUl ;md the regulations thereunder. Changes in the annual acccanting period are subject to the requirements of section kk2 and the regulations thereunder.

(f) Filing of returns. A return with respect to income taxes under subtitle A shall be made by a foreign sovereign, political subdivision, or a transnational entity -with respect to all amounts included in gross income under paragraph (a) (3).(i) of this section-, and by every controlled entity subject to tax under paragraph (a) (3) (iii) of this section. See section 6012 for other persons required to make returns of income.

(g) Relationship of section 892 to certain code sections.- (1) Section 893. The term ''foreign government" referred to in section 893 (reLating to the exemption of compensation of employees of foreign government 3) shall have the same meaning as given such term in paragraph (b) of this section.

(2) Section 893- A foreign central bank of issue (as lefined in §1.89!J-1 (b)) that fails to qualify fcr the exemption from tax provided by this section may nevertheless be exempt from tax on the items of income described in section 895- Thus, a foreign central bank of issue that Ls not wholly owned and controlled by a foreign sovereign, although not qualifying for exemption under this section, may be exempt under section"895 on the items of income enumerated in such section.

(3) Section lUUgl. No withholding is required under section 1UU2 and §l.lUU2-l in the case of income exempt from taxation and not included in gross income under paragraph (a) (2) of this section.

(h) Illustrations. This section may be illustrated by the following examples:

Example (1)• For 1979, the Office of the President of a foreign country invests funds from the foreign sovereign's treasury in publicly traded stocks, bonds and other domestic securities, and interest bearing bank deposits, the income from which is not effectively connected with the conduct of a trade or business within the United States. The Office of the President has also purchased in 1979 a hotel in the United States which is operated by a U.S. agent. Income from its investments that do not constitute commercial activities under paragraph (c) (3) (i) of this section is exempt from taxaticn pursuant to paragraph (a) (2) of this section. Income derived from the operation of the hotel is subject to tax pursuant to paragraph (a) (3) (i) of this section since the Office of the President is engaged in commercial activities in the United States by reason of its hotel operations. By reason of section 86U (c) (3) English Page 38

and §1.86U-U (b), this income is effectively connected for 1979 witi the conduct of a trade or business within the United States by the Office of th? President and is taxed under section 862.

Example (2). Pursuant to a general agreement on contracts, exchanges, and cooperation between the United States and a foreign country, the S:ate Concert Bureau,, a bureau of a foreign sovereign, entered into four separate contracts to be performed in 1979 with a U.S. corporation engaged in the busiiess of promoting international cultural programs. Under the first contrac;, the State Concert Eureau agreed to send a singer and accompanists on tour for 3 weeks in the United States. Under the second contract, the Bureau agreed to send a conductor on tour for h weeks in the United States. Under the thirl contract, the Bureau agreed to send the State ensemble of folk dance on tour For 5 weeks in the United States. Under the fourth contract, the Bureau agreed to send the State ballet and opera troupe on tour for 6 weeks in the United Stabes. The State Concert Bureau received approximately $80,000 from the perfornances and from the sale of programs from the tours. During 1979, the income received by the State Concert Bureau is exempt from taxation under paragraph (a) (2) of this section since the activities of the Bureau are not commercial activities under paragraph (c) (3) (ii ) of this section. Depending on the facts and circumstances, the State Concert Bureau may be engaged in commercial activities where it receives income from sources vithin the United States derived from the tour groups' radio or television appearances, motion picture productions, or record and tape recordings.

Example (3). (a) In 1979 a foreign sovereign organizes under its law M Corp. as a wholly owned government corporation under the auspices of the Ministry of Industry and Tourism. K Corp. engages in the purchasing in the United States of grain and other agricultural goods for free distribution to the poor in its foreign country. In addition, when purchases of grain exceed demand in its foreign country (which rarely occurs). M Corp. engages in the sale of the grain in the United States on a de minims basis, *T Corp. also engages in the trading of commodities futures through a resident broker. It does not have an office or other fixed place of business in the United States through which or by the direction of which the transactions in comirDdities futures are effected'. The purchasing and trading activities of M Corp. are not commercial activities under paragraph (c) of this section. M Corp. is a controlled entity •under paragraph (b) (3) of this section. Accordingly, the income from these activities derived by M Corp. from sources within the United States is exempt from tax under paragraph (a) (2) of this section, Any income derived by M Corp. from its sale of grain in the United States on a de minimis basis is not considered to te income of a foreign government and is subject to tax pursuant tc paragraph (a) (3) (iii) of this section.

(b) The facts sire the same as in example (3) (a),, except that in 1979, M Corp. opens an office in Washington, D.C. through which transactions of selling commodities futures in the United States are effected. Since M is now considered to be engaged in a. trade or business in the United States under section 86U, these E,ctivities are commercial activities under paragraph (c) of this section. Since A/CN.V3U3/Add.l Engli sh Page 39

M engages in commercial activities on more than a de minimis oasis, it is not a controlled entity. I1! is net entitled to the exemption from tax provided by- section 892. Accordingly, M Corp. is taxed under the applicaDle provisions of sections 881 and 882. In addition,, under paragraph (g) (i) of this section, M Corp.. is not a foreign government for purposes of section 8?3.

(i) Effective date. The provisions of this section rel iting to controlled entities are effective with respect to income derived after A;he date_ these regulations are filed at the FEDERAL REGISTER as a Treasury decision/.

§1.892 2 Income of international organizations.

(a,) Exempt from tax. * * *

(t) Income received prior to Presidential designation. '• * *

JEROJffi IURTZ, Commissioner of Interr al Revenue.

/FR Doc. 78-22731* Filed 8-IU-78; 8:^5 am7

k. YUGOSLAVIA

/Ori ginal: Engli sh/ /12 August 198o7

(a) EXCERPT FROM THE LAW OF LITIGIOUS PROCEELJRE

Article 26

With reference to the competences of Yugoslav courts for instituting court proceedings against foreign nationals e:njoying immunities in tie Socialist Federal Republic of Yugoslavia and for instituting court proceedings against foreign States and international organizations, the provisions of international law are applicable.

In case of doubt as to the existence and the extent, of th» right of immunity the explanation is rendered by the Federal Organ for Administration of Justice. A/CN.U/3U3/Add.l English Page ko

(b) EXCERPT FROM THE LAW ON EXECUTIVE PROCEDURE

Article 13

The property of a foreign State in the Socialist Federal Republic of Yugoslavia, is not isubject to execution nor attachment, without the prior consent of the Federal O~ga,n

Article 26

(1) With reference to the competences of the Yugoslav organs in matters when a party is a foreign national enjoying the right to immunity in Yugoslavia, a foreign State or an international organization, the provisions of international law, recognized by the Socialist Federal Republic of Yugoslavia, are applicable.

(2) In case of doubt as to the existence or the extent of :he right to immunity, the explanation is rendered by the Federal Organ for Administration of Justice:.

(3) Official actions relating to persons enjoying the riglr; to immunity are carried out through a federal organ competent for foreign affairs.

(d) EXCERPT FROM THE LAW ON MARITIME AND INLAND NAV[GATION

Article 869

The following cannot be subject to execution or attachment:

(1) Foreign and Yugoslav vessels and vessels enjoying equal status, public and sanitary vessels j

(2) Foreign vessels on innocent passage through the v. err it Drial sea or inland waters of the SFR cf Yugoslavia.and which comply with the international or inter-State navigation regime;

(3) Foreign vessels, stopping at inland maritime waters, psrts and harbours of the SFR of Yugoslavia either due to vis majeure or navigationil needs, for the duration of the vis ma.jeure or the na.vigational needs. Vessels referred to in items 2 and 3 of paragraph 1 of this Article can be subject t :> execution or insurance if the procedure is undertaken in connection with execution or security of costs incurred, during the paE;sage or delay of the vessel in the territory of the SFR of Yugoslavia. English Page Ul

B. OTHER MATERIALS

1. FEDERAL REPUBLIC OF GERMANY

/Ori jinal: French/' /T Aigust 19T£7

(a) NOTE OF 7 AUGUST 1979 FROM THE CHARGE D'AFFAIRES OF THE PERMANENT MISSION OF THE FEDERAL REPUBLIC OF GSFMANY TO THE UNITED NATIONS ADDRESSED TO THE SECRETARY-GENERAL

Tl:ie legal order of the Federal Republic of Germany makes no special provision (laws or regulations) for jurisdictional immunity for foreign States and their property (.see also H. Steinberger: International Law Association, State Immunity, Law and Practice in the United States and Europe, Proceedings of Conference held on 17 November 1978, pp. 17-18).

However, article 25 of the Basic Law of the Federal Republic of Germany states that the general rules of public international law forri part of federal law and that they take precedence over the laws. If, in the course of litigation, there are doubts as to whether a rule, as a general rule of international law, forms part of federal law, the court shall submit the question to the Federal Constitutional Court for a ruling (Basic Law, j.rt. 100, paLra. 2).

It is thus the courts which first decide whether, and to what extent, foreign States and their property may enjoy jurisdictional immunity ii. the FederaJ. Republic of Germany, with the Federal Constitutional Court playing a particular role in this connexion. In proceedings to determine whether cr not certain rules of general international law form part of federal law (Lasic Law, art. 100, para. 2), the Federal Constitutional Court also gives the Federal Government an opportunity to state its position.

Since the decisions taken by the Federal Constitutional Court on 30 October 1962 (Decisions of the Federal Constitutional Court , 15/25) and 30 April 1963 (Decisions of the Federal Constitutional Court, 16/27), which have the force of law (Act establishing the Federal Constitutional Court, art. 31, para. 2)3 the courts of the Federal Republic of Germany have 1 eld that customary international law, as i~ now stands, affords immunity to States only in respect of their sovereign activities, and not of their non-sovereign activities. In its note verbale of 20' December 1973 to all diplomatic missiors and consular posts in the Federal Republic of Germany, the Federal Ministry of Foreign Affairs drew attention to this legal situation. English Page k2

On 13 December 1977, the Federal Constitutional Court ruled that the principle that immunity was; functionally limited to sovereign activities applied not only to trial proceedings but also to execution proceedings (Decisions of the Federal Constitutional Court, 1+6/3^2). At the same time, the Federal Constitutional Court held that general international law did not allov the levying of- forced execution on property used by a fore: gn State for sovereign purports, including a bank account maintained in the Slate of the forum by a foreign State to cover the costs and expenses o± its embassy.

These rulings by the Federal Constitutional Court raise the following question: under what law is it possible to distinguish between sovereign and non-sovereign activities and purposes? The Federal Constitutional Court decided tc make the distinction between acts .juris imperii and acts .juris gestionis on the basis of the lex forj, since in its view no precise rule had been established on that point in international practice. However, the applicability - which' is not in itself desirable - of the lex fori is in turn liiiited by the fact that international law takes precedence over it whenever a i.arge majority of Estates is of the view that the act complained of actually constitutes sovereign conduct.

- The general principles of the major decisions rendered by the courtis of the Federal Republic of Germany, translated into French, are attached

In its statement of position to the Federal Constitutional Dourt in connexion with the proceedings leading to the decision of 13 December 1977, the Federal Government expressly declared its support for the doctrile of limited immunity. International law does not, of course, prohibit the granting of absolute immunity. However, the Federal Government's argument was that international law required immunity only in respect of sovereign acts (acts juris Lmperii) or of property used for sovereign purposes.

(b) GENERAL PRINCIPLES OF SOME MAJOR DECISIONS ON THE SUBJECT PANDERED BY COURTS OF THE FEDERAL REPUBLIC OF GER^IANY

I. DECISION OF THE FEDERAL CONSTITUTIONAL COURT OF 13 DECEMBER 1977 - 2 BvM 1/76

Article 2|5 and article 100 (II) of the Basic Law (forced execution of judgement against a foreign State)

1. In the context of the: submission procedure under article ICO (II) of the Basic Law, court orders for the taking of evidence must be regarded as decisions for which a ruling on the question submitted is necessary, at least when the proposed taking of evidence involves the risk of a violation of international law vis-a-vis the foreign State. A/CK.U/3U3/Ada.l English Page U3

2. At present, any exemption of foreign States from German jurisdiction in respect of execution derives, under article 25 of the Basic Law, only from general rules of internetional law.

3. International treat.y provisions must be interpreted and applied in the light of the general ru].es and principles of international law relating to the subject-matter of the provisions concerned.

h. Within the territory of the Federal Republic of Germany, procedural law allows private parties - like foreign States - to invoke general rules of international lav in the same way as any other abstract law. Is abstract law, general rules of interns.tional law may - according to their individual substance, and usually as a preliminary question -• affect the private party's legal petition and thus require a ruling.

5. It does not follow., simply because general customary international law embodies the minimum obligation, in the case of trial proceedings, to grant immunity in respect of sovereign acts (acts jure imperil), thai it also demands only relative immunity in the case of execution.

6. In order to identify norms of customary international law, one must focus primarily on the acts relevant to international law of those State organs which are responsible, under international law or domestic law, for representing the State in international relations. In addition, however, such practice may also be ascertained from the acts of other State organs, like the legislature or the courts, at least in so far as their actions are of direct relevance to international law. In the case of decisions by national courts, this applies in particular where, as in the field of jiirisdictional immunity of foreign States, domestic law permits national courts to apply international lad1 directly.

7. At present, there is no custom which is as yet sufficiently general and is backed by the necessary legal consensus to constitute a gen2ral rule of customary international law whereby the State of the forum is debarred outright from taking measures of forced execution against a foreign Rtaie.

8. There exists a general rule of international law whereby forced execution of judgement by the State of the forum.; under a writ of execution against a foreign State which has been issued in respect of non-sovereigi acts (acts jure gestionis) of that State, on property of that State which is present or situated in the territory of the State of the forum is inadmissible without the consent of the foreign State if, at the time of the initiation of the measure of execution, such property serves sovereign purposes }f the foreign State.

9- Preventive measures or measures of execution against a foreign State may not, under international law, be levied on property which at tie relevant time was being used by its diplomatic mission for the performance of its official functions (ne impediatur legatio). A/CN.U/3U3/Add.l English Page kh

10. Because of the difficulties of delimitation involved in judging whether that ability to function is; endangered, and because of the potential for abuse, general international law makes the area of protection enjoyed by the foreign State very wide and refers to the typical abstract danger, but not to the specific threat to the ability of the diplomatic mission to function.

11. Claim:; arising out of a general current bank account of the embassy of a foreign State wl. .ch is mair.tained in the State of the forUui for the purpose of covering the emuassy's costs and expenses are not subject to measures of execution by the State of the forum.

12. For the executing authorities of the receiving State to require the sendinj State, without its consent, to provide details concerning the existence or the past, present or future purposes of funds in such an account would constitute interference, contrary to international law, in matters within the exclusive competence of the sending State.

13. Ho ruling ir> given on whether, and according to what criteria,, claims and other rights arising out of other accounts of a foreign State with banks in the State of the forum, such as special accounts in connexion idth procurement purchases or the granting cf loans, or general-purpose accounts, are to be considered sovereign or non-sovereign property, and what limits, if any, imposed by international law are to be observed when it comes to obtaining evidence in that respect.

There is nothing to prevent a private party wishing to enter into private business relations with a foreign State from protecting his interests as much as possible, for instance, through agreements on the manner in which business is to be transacted, the procedure in case of dispute - particularly a waiver of immunity, which is in principle irrevocable - or the furnishing of guarantees.

ih. Ths principle of sovereign equality of States is a fundamental principle cf contemporary general international law which, at least in the field of diplomatic intercourse among States, demands formal equality of treatment on a bread scale:. Any differential treatment cf States in the field of diplomatic iiL7.uan.ity according to their respective financial capacities would be incompatible -.r'th that princi Le.

-L.J.. DECISION OF THE FEDERAL CONSTITUTIONAL COURT OF 30 APRIL 19-63 - 2 BvM 1/62

(a) A rule of international law whereby domestic jurisdiction in respect ol legal actions against a foreign State relating to its non-sovereign activities is excluded does not form part of federal law.

(b) (1) The dec is I.--" criterion for distinguishing between sovereign and non-sovereign State activities is the nature of the State activity.

(2) The determination of a State activity as sovereign or nan-sovereign is in principle to be made according to national law. / • English Pa;e h5

III. DECISION OF THE FEDERAL CONSTITUTIONAL COURT OF 30 OCTOBER 1962 - 2 BvM 1/60

1. Submissions under article 100;, paragraph 2, of the Basic Lav are admissible even where:

(a) The submitting court merely has doubts regarding the s:ope of a rule of international law; or

(b) The submitting court doubts whether any rule of internitional law exists but not whether a rule of international law is a general rule of international law; or

(c) The rule of international law, by reason of its substance3 is not such as to directly create rights and duties for private parties but applies only to States and their organs.

2. A rule of international law under which domestic jurisdiction in respect of actioni; against a foreign State relating to its embassy premises is in all cases excluded does not form part of federal law.

In the case of actions against a foreign State seeking consent to rectification of the land register with respect to the ownership of its embassy premises, German jurisdiction is not excluded under a general rule of international law (Basic Law, art. 25).

IV. DECISION OF THE.FEDERAL COURT OF JUSTICE, OF 26 SEPTEMBER 1978

With respect to sovereign acts (acts juris imperii), sovereign States enjoy in accordance with customary international law, which under article 25 of the Basic Law is binding on German courts, absolute immunity, which also extends to their official agents.

V. DECISION OF TIE LAND HIGH COURT AT FRANKFURT OF 30 JUNE 197S

Leading principles:

1. Foreign States are subject to German jurisdiction if they carry on business under private law within the country. Tneir immunity extends orly to sovereign activities.

2. The activities of Spianish Government tourist bureaux.are o.i' a private-law nature, even if such bureaux are organized as official agencies.

3. The use of copyrighted film scores in publicity films of the Spanish tourist bureaux witouht the permission of GEM. (Society for the Approval of Musical Performances.and Recordings) does not constitute a permissible public use within the meaning of article 52, paragraph 1 (l), of the Copyright Ad;, since, showings of such films serve at least indirectly the "gainful purposes" of the Spanish State. A/CN.U/3H3/Ada.l English Page k6

2. NETHERLANDS /Or igi lal: Engli sh/ /17 JuLy 1980.7

SUMMARY OF A REPORT SUBMITTED BY C. C. A. VOSKUIL TO THE NETHERLANDS INTERNATIONAL LAW ASSOCIATION (1973)

Decisions of Netherlands Courts involving State Immunity*

by C. C. A. Voskuil

Summary of a report submitted to the Netherlands International Law Association, 1973

I. Introduction

1. The report submitted by the present author to the Netherlands' International Law Association on the occasion of its annual meeting in 1973 deels with Dutch court practice in matters of State Immunity. It includes an analytical introduction (I), an explanation of some general principles regarding State Immunity, particularly in connection with the implementation of international customary law by the Dutch judiciary., as well as a review of the terminological problems involved (II), an explanation of the few statutory provisions affecting State Immunity which are in force in the Netherlands (III), and £.n extensive commentary on Dutch court practice in matters of State Immunity en the basis of the court decisions issued and published in this field since l8ko (IV). Abstracts of all relevant court decisions placed in chronological order have been added to the report (Annex).

The contents of Chapter IV will be summarized hereafter, supplemented by some of the observations made in the other chapters of the report .

II. Netherlands court practice in natters of State Immunity

A. Introduction

2. The law of State Immunity as developed by the judiciary is based on the well-known adage par in parem non habet iurisdictionem. There has long been uncertainty as to the validity of this principle of international, customary law and consequently the applicability of the rules to be derived from it, since article 3 of the General Provisions Act 1/ expressly forbids the application of customary law by the courts unless so authorized by statute.

* Netherlands International Law Review, vol. 20 (1973)i p. 302. 1/ Wet Algemene Bepalingen (Statute containing general provisions on legislation). Article 3 states that customary rules do not possess force of law unless expressly referred to by statute. English Page hj

The judiciary has generally taken the view that the provision of article 3 does not affect international customary law, but the legislator has nevertheless deemed it necessary to enact some provisions by which to sanction the enforceability of veil-established rules of international law in some particular fields.

As far as State Immunity is concerned the authorization required - if at all - by article 3 is laid down in article 13a of the General Previsions Act. 2/

3. In a note, previously published in this Review, I have pointed out that article 13a of the General Provisions Act was hastily conceived end enacted when, shortly after the first world war, one lower court deviated from the traditional course and den..ed the German State immunity from jurisdiction in a case in which that State was sued for damages inflicted upon tire plaintiff in Belgium during the war. Concern over its foreign relations promoted the government to propose the enactment of article 13a. 3/ This pro\ision has a purely negative function, its only significance being the elimination of any impact that article 3 might 'nave on the implementation of well-established rules of international customary law.

B. The State concept in "he law of State Immunity

k. The Latin of the above mentioned adage is usually paraphrased in the Netherlands as - "no State should be submitted against its will 1 o the jurisdiction of another State". The independence of the courts j'rom the administration involves that the judiciary takes an independent stand in defining the State concept for the purposes of the immunity rule:

Non-recognition of a foreign State on the part of the admin:.stration does not prevent the courts from granting jurisdictional immunity to that same entity. The interpretation of the State concept by the courts under the immunity rule is deemed to be of a purely legal nature. It should, according to the view prevailing in the Netherlands, be distinguished from the government's interpretation, which being bound up with the administration's foreign and diplomatic interests, is of a more political character. See in -;his connection:

Court of Appeal Amsterdam, April 3L , 19^2, TJJ (Nederlandse Jurisprudentie = Netherlands Court decisions) 19^2, 757 (non-recognition of -;he U.S.S.R. on the part of the Dutch government does not affect the position of the U.S.S.R. as a recognized State under the immunity rule).

2/ Article 13a states that the judicial jurisdiction of the courts and the execution of court decisions and of legal instruments drawn up b;r legal officials (actes authentiques) are subject to the exceptions recognized un ler the Law of Nations. 3/ See my Note on soir.e Netherlands court decisions concerni ig State immunity, this Review XVIII (1971) p. 62. A/CN.U/3U3/Add.l English Page UQ

District Court Rotterdam, August 2, 1937, NJ 1932, 912 (The Basque government was refused immunity on the ground that it has ac;ed as a private person iure gestionis. The fact that the Basque government'3 claim of representing a sovereign State had never been accepted by th; Dutch government was expressly left unanswered by the Court).

5. Even though recognition of a foreign State by the administration may not be decisive as regards the application of the immunity rule by the courts, such recognition may be of a-'major factual significance. It may be assumed that once a foreign State has been recognized by the Dutch government, the judiciary will regard it as such und€:r the law of jurisdictional immunity. (Cf. District Court Middelburg, October 2.2, 1938, NJ 1939, 96).

6. Immunity from jurisdiction is only granted to foreign States; no public entities other than foreign States will benefit from the law of immunity. See in this connection:

District Court The Hague, March 1, 1917, NJ 1917, 389. In this case the German Municipality o:f Lyck has been summoned to appear befcre the District Court, which decided that the reasons for not subjecting a sovereign State to the jurisdiction of another State are not applicable to a municipality. A similar judgement was given by the same District Court with regard to the German town of Cologne: District Court The Hague, December 11, 1923, NJ 192U, 207.

Foreign colonies were also deemed to fall outside the scope of the immunity rule: Pres. District Court Amsterdam (summary proceedings), July Ik, 1921, NJ 1921, 8U9. In this case the Union of South Africa, summoned to appear before the Court, w.as denied immunity from jurisdiction.

7. Where should the line be drawn between foreign public entit:.es which should be regarded as States and those entities which do not possess that quality ai.d which should consequently be denied jurisdictional iinmunity?

Problems of this kind did rise in relation to a member Stat; of a foreign federation, notably with regard to the State of Latvia: Distric : Court Amsterdam,, January lU, 19^1, NJ 19^1, _j8.

In this case the Republic of Latvia was summoned to appear before the Court. It was granted immunity on the ground that a member Stats of the U.S.S..R. should enjoy the same immunity as the federation itself.

On appeal the Court of Appeal Amsterdam, December 3, 19^2, PTJ 3k0 upheld the District Court's decision., considering that the sovereignty of Latvia as a State was provided for in the Constitution of the U.S.S.R. of which it formed part.

The argument on which the Court of Appeal based its decision to grant immunity to Latvia seems rather weak. The applicability of a rile of international 3i!nglish I'age U9 law is in fact roa.de dependent on the regulation of a national constitution, which may tee of great factual significance in view of the problem to be solved by the Court, but which can hardly be legally decisive.

Domestic legislation, such as the rules laid down in a constitution, do not provide the standards by which to judge the scope and applicability of ruJ.es of international law. A present-day example may well illustrate this: It would not be feasible to judge the international status of Bangla Desh by the constitutional law of Pakistan.

The reasoning followed by the District Court does not seen quite sound either. Deriving the international status of one of the federations' components from the recognized position of the federal State itself would seem to give way to an unreasonable extension of the immunity rule. At the time this judgment was rendered, there was nevertheless some backing for the Court's view in legal literature.. It has been argued that the immunity rule should be applied to foreign public entities in general, including provinces, municipalities, etc., on the ground that these entities may be regarded as representing the sovereign State they belong to when acting in their public capacity, h/ Nowadays this view is no longer propounded in literature nor accepted by the courts. Jurisdictional immunity is only granted to foreign sovereign slates. Other entities or persons may only invoke immunity when they performed the acts that gave rise to a law :suit on behalf of a foreign State. Imiiunity will then only be granted if "hose acts were performed jure imperii. The latter restriction is one usually classified under the heading: qualified £/ State immunity. In my report it is discussed in a separate subchapt«:r.

C. Limitation of state immunity; Acts performed "jure imperi: " or "jure gestionis"

8. The subject of this chapter was recently discussed in a r.ote, published in this review. Since the explanations given on this subject in my report to the Netherlands' International Law Association do not differ much from those given in that note, I shall here restrict myself to a very short sumriary which may serve as an introduction to a discussion of a recent, as yet ui.published, Supreme Court decision affecting this subject.

9. The extent to which immunity should be granted to foreign States cannot be determined without first settling the dilemma that has confronted the courts for so many years. Should immunity be granted to any defendant party which is, or may be identified with, a foreign State, or should this formal criterion by which to judge State immunity be complemented so as to make immunity relate not only to the personal status of the defendant, but also to the specific character of the legal relationship involved?

k/ Notably J. P. A. Frangois, Handboek van het Volkenreclrt I, Zwolle 19**9, p. 8U; idem, Grondlijnen, Zwolle 195^, p. 95. 5/ In the Netherlands this form of immunity is usually indicated as relatieve immuniteit, discussed in my Note mentioned in footnote 3, particularly at p. 63. / / •.. English Page 50

TKe former view, according to which State immunity should be Judged by the formal criterion alone, is known as the doctrine of "absolute" immunity, whereas the latter view is usually called the doctrine of "lelative" (qualified) immunity.

It is in connection with this doctrine of qualified immunity that the well-known distinction is made between acts Jure gestronis End acts iure ixroerii to the effect that a foreign State will only be entitled to immunity from jurisdiction when sued for acts performed jure imperii.

In tlis above mentioned note, published in this Review, I have explained that there is a tendency in Dutch court practice towards qualifying the immunity concept and consequently towards restricting the number of cases in which immunity from jurisdiction will be granted.

This tendency was recently confirmed by the Court of Appeal The Hague in N. V. Cabolent v. National Iranian Oil Co. (Court of Appeal The I.ague, November 2B, 1968," NJ 1969, b&*; 9 IIM (1970), pp. 152 ff., Netherlands Yearbook of International Law I (1970), pp. 225 ff.

In summing up the significance of the. decision rendered by "the Court, I indicated that this decision marks an important step in the proce ss of refining and restricting State immunity in the Netherlands, the Court having-applied the restriction comprised in the distinction between acts jure ge stionis and acts jure imperii in such a clear and positive way, that we nay expect other courts to be inclined to take this decision as a standard by which to judge State immunity in future.

10. Recently the Netherlands Supreme Court (Hoge Raad) has been given the opportunity to speak out en the matter.

Its decision of October 2o, 1973 in the case of Societe Eurcpeenne d'Etudes et d'Entreprises en liquid, vol. v. the Soc. Fed. Republic of Jugoslavia may well serve to complement the explanation given in the above mentioned note and in the report submitted to the Netherlands' International Law Association.

In this ca_a the Socxote Europeenni- d'Etudes et d'Enxreprises applied for the grant of execution of a Swiss arbitral award of July 2, 1956 against the Socialist Federal Republic of Jugoslavia. The latter pleaded izmunity from the Court's jurisdietion.

The Court of first instance (Rotterdam District Court, Noveriber 9, 1971, N.Y.I.L. (Netherlands Yearbook of International Law) III (1972), p. 29*0 granted immunity to the Republic of Jugoslavia, considering inter alia:

- "that the Socialist Federal Republic of Jugoslavia is a sovereign State;

that by virtue of the principle of immunity from jurisdiction in international law, a sovereign State cannot be made to sttburit to the jurisdiction of a foreign State against its will; English Page 51

that exception to this principle will only be made when and to the extent that a foreign State engages in trade as an ordinary enterprise;

that such an exception does not arise in"this case sine; the point at issue concerns the petitioner's commission to build a railway along the Greek- Jugoslav border between Vales and Prilep;

that"the Socialist Federal Republic of Jugoslavia has made an express claim for immunity in this respect;

that a sovereign State's acceptance of arbitration does by no means indicate a, voluntary submission to the jurisdiction of another State;" - etc.

For a more extensive report of the facts, see N.Y.I.L. :rv (1973), p. 390. The case was then brought before the Court of Appeal at The Hague. Judging the immunity plea made by the respondent, the Court of Appeal in its decision of September 8, 1972, N.Y.I.L. IV (1973), pp. 390/1, held inter alia:

- "that a State can only plead immunity from another Ste.te's jurisdiction in respect of purely governmental acts (acta. jure imperi i) and not in respect of other acts frequently referred to as acta jure gesticnis;

that a private transaction whereby a private legal persen such as the appellant is induced to construct a railway against payn.ent, with delivery of materials, is not a purely governmental act if it.is effected by the State;

that it makes no difference when the railroad concerned has a military or strategic character, quite apart from the question whether or not any railroad has or can have such a character;

that this applies still less when, as in this case, such a character of the railroad has not been expressed in the agreement or has not otherwise been made clear to the other party before the conclusion thereof," - etc.

The case was consequently brought before the Supreme Court by the Societe '.Europeenne, whose appeal to the Court of Appeal at The Hague had been successful as far as the immunity issue was concerned, but had been rejected on other grounds.

Judging the immunity question, raised by the Republic of Jugoslavia in appeal, the Supreme Court, in its decision of October 26, 1973 held inter alia:

- "that in subsection a (viz, of the incidental appeal instituted by the Republic of Jugoslavia - Vo.) it is argued that as an exception, recognized under the law of Nations, to the judicial jurisdiction, it should be accepted that a foreign State cannot against its will be submitted to the jurisdiction of another State; English Page 52

- th&t, however, no rule of international law involves that the jurisdictional immunity to which foreign States are entitled should have to be taken so absolutely as suggested in this subsection (viz• - of the incidental appeal - Vo.);

that clearly, there is a tendency apparent in the international practice of Treaties, in literature, as well as in the case law of national courts, to limit the extent to which a State may invoke immunity before a foreign Courti

that this trend has been induced by,, inter alia, the fact tiat in many States the government has increasingly deployed its activities in areas of the society where the legal relations are governed by private law and where consequently the State enters into a legal relationship on equal footing with individuals;

that it is deemed reasonable in such cases to grant a similar legal protection to the opposing party of the State concerned as would be granted if that party had dee.lt with an individual;

that on these: various; grounds it has to be assumed that the immunity from jurisdiction, to which a foreign state is entitled under tie prevailing international law, does -not extend to cases in which a State has acted as set out before."

D. Voluntary limitation of immunity

A State cannot be submitted to the judicial jurisdiction of a foreign State against its own will.

In two ways a State :may forgo the protection of the immunity rule:

(a) It may do so expressly by a choice of forum agreement with any person with whom it enters into a legal relationship.

(b) It may also do so tacitly by taking a stand in court .*rom which it may- be assumed that the State has in fact submitted itself to the jurisdiction of the foreign court.

With regard to (a), a State which has expressly agreed to i choice of forum (outside its own territory) cannot successfully invoke immunity before that chosen court in matters covered by the agreement.

Contractual choice of a foreign court will not bar the Stabe from pleading immunity in any foreign court other than the one specially indicated.

Nevertheless, the fact that a choice of forum was agreed upon may, by other (foreign) courts, be regarded as a matter of factual significance, namely as an indication that the legal relationship concerned is of a private nature and that A/CN.V3U3/Add.l English Page 53

consequently the State when entering into that relationship a:ted jure gestionis. The same goes mutatis mutandis for arbitral agreements concluied by a State with an individual part: it will not directly affect the immunity from jurisdiction by foreign courts, but it may be taken by a foreign court as indicating the private nature of the relationship to which th; contract of arbitration was linked.

See: ^he Hague District Court, April 15, 1965 (reported in N.Y.I.L. I (1970) pp. 22'j ft. in connection with Court of Appeal The Hague in r; N. V. Cabolent v. National Iranian Oil Co.; see also 5 I.L.M. (1966), pp. 1+77 fT., 9 I.L.M. (1970), pp. 152 ff.). Furthermore: Rotterdam District Court, November 9, 1971. in re Societe Europeenne - v. Socialist Federal Republic of Jugoslavia, referred to and partially quoted above.

Turning to (b), implied submission to the jurisidction o' a foreign court on the part of a State may be assumed from its attitude in the Court proceedings.

A foreign State will not be granted immunity when acting as plaintiff in the first instance proceedings.

Cf. : The Hague District Court, April 17, 1952, NJ 1953, ^35; Rotterdam District Court, Court of Appeal, The Hague and Supreme Court :.n Bank voor Handel en Scheepvaart H. V. v. United States of America etc., reported in k I.L.M.. (1969), pp. 25T ff., 9 I.L.M. (1970), pp. 758 ff.

Nor will a foreign State be granted immunity when appearing in court proceedings as defendant Unless it expressly invokes immunity.

Cf.: Court of Appeal Amsterdam, June kt 1959> NJ 1959, :50; Amsterdam District Court, November 8, 1957, published in connection witl Court of Appeal Amsterdam, April 9, 1959, NJ i960, 1^+9.

Default of appearance on the part of a foreign State, instead of appearance as defendant so as to invoke immunity, does not constitute a ground for the courts to assume a voluntary forgoing of immunity. This view, unchallenged in literature and frequently expressed in court decisions, was recently (and again) propounded by Haarlera District Court, !lay 25, 1959, published in connection with HR (Supreme Court) May 13, i960, NJ I960,

When a foreign State is summoned to appear in court, its appearance will only be taken as a waiver of immunity if by doing so the State may be assumed to engage in the legal debate- on matters of substance. Appearance in connection with purely procedural natter's will not have the same effect.

A foreign State which, for example, has been summoned to appear in court in answer to an application to consolidate separate actions brought against it 'by the plaintiff will not be deemed to have waived its immunity by appearing and stating that it will leave it to the discretion of the court to decide the question of consolidation. English Page 5h

Cf.: Amsterdam District Ccurt, January 12, i960; on appeal: Court of Appeal Acsterdaai, May 18, 1961; HR, January 26, 1962, IlJ 1962, lU.

In this case, the Amsterdam District Court expressly considered:

- "that, clearly, procedural incidents such as the one at r.ine (viz, a request for consolidation) and also the stand taken "by the parties concerned in such matters, only affect the organizational order of tl.e proceedings, which can be decided on without any examination of the correctness of the facts alleged in connection with the debate on matters of "1 ubstance arid without any examination of the soundness of what has been {.rgued by the parties with regard to the legal consequences of those facts;" - etc.

12. This pattern of court practice with regard to the implied traiver of immunity by foreign States, would aot be complete without some observations on the position of the foreign State which acting as a plaintiff - and consequently forgoing its immunity - invokes immunity when confronted with a counterclaim entered by its opposing party. Should immunity be granted in this case?

It vas this question which - as far as State Immunity is concerned - was the issue in the case of Bank voor Handel en Scheepvaart N. V. v. The United States of America, referred to above.

If the claim - submitted by a foreign State - and the counterclaim - entered against that State by the defendant - are not connected, immunity will be granted with regard to the latter claim. Cf_.: Rotterdam District Cour;, November 2k, 1922, NJ 1923, 618.

If, however, both claims are connected the courts may decile differently,,

In the case of Bank voor Handel en Scheepvaart N. V., Rotterdam District Court held,

- "that it is in conformity with international law that ths defendant in proceedings instituted by a foreign State may enter a counterclaim- r it "being irrelevant whether or not the proceedings involve acts performed iure imperii or jure' gestignis - provided that in substance the counterclaim is connex with the claim entered by the foreign State;" - etc.

In appeal the Court of Appeal (The Hague) rejected this view, taking a more restrictive stand. It considered that whenever a foreign State is confronted with a counterclaim .'n proceedings instituted by that State, iamunity would only be deemed to have' been waived with regard to questions specifically submitted to the court in connection with the claim originally entered by tie foreign State. Connexity of the counterclaim would not., as the Court considered, in itself be enough to lilt immunity.

The Supreme Or..:: I, finally, adhered to the less restricti\e view propounded by the District Court. English Page 55 •/

E. Miscellaneous a. Immunity in proceeding affecting" immovables.

The rule enacted in article 9 or" the Europenri Convention on State Immunity. may be regarded as being in conformity with court practice in the Netherlands.

Through qualif icat5.oii of tho immunity concept, as explailed earlier (sub C), application of that rule may often be avoided. Cf_.: Amsterdam Cantonal Court, August 12, 1965 (published only in my report for the Netherlands' International Law Association sub k2). b. Inmunity from execution.

The rule prevailing in the Netherlands with regard to immunity from execution may be formulated as follows:

Property belonging to a foreign State and designed fo:- public use, is not liable to execution.

The problem raised by this rule is not so much one of interpretation - a problem involved in all rules of law, of course - but rather one of a conflict of authorities within the State where the execution is to taki; place.

State immunity is normally dealt with by the courts, but when it comes to execution of a judgment on foreign State-owned property, the administration may interfere.

The .execution of court decisions in matters of private Iv.v is done through the services of a Deurwaarder (Bailiff). Article 13 of the Deurwj^ardersreglement (Regulations concerning the Bailiff) empowers the Minister of Justice to order the Bailiff to refuse to serve a writ if it would be deemed contrjxy to international law to do so. This provision states furthermore that a bailij'f who refuses to serve a writ on ministerial order, is not liable to damages. The obvious question is: who is to pay for the damages which may result from interference on the part of the administration in proceeding- in which judgment he.s been rendered by a court against a foreign State?

The answer is uncertain, though the Court of Appeal at Tie Hague did consider in the famous case of Cabolent II. V. v. National Irarian 6/ that if immunity cannot bar the competence of the Court, it cannot prevent the execution of that Court's judgment.

In my report I have suggested tha-; if the administration prevents the execution of a judgment, the administration itself - or for that matter the interfering State - would have to bear the consequences and stould be deemed liable to suit.

6/ See Note mentioned in footnote 3, pp. 67 ff. English Page 56

In actual practice such situations will hardly ever occur. In the past the government has shown its willingness to attempt, if necessary through diplomatic channels, a solution to the problems affecting the inlividual whom it barred from obtaining execution of a judgment rendered in his favour against a foreign state.