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New United States Policy Limiting Sovereign Immunity

Published online by Cambridge University Press:  20 April 2017

William W. Bishop Jr.
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Editorial Comment
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American Journal of International Law , Volume 47 , Issue 1 , January 1953 , pp. 93 - 106
Copyright
Copyright © American Society of International Law 1953

References

1 Department of State Bulletin, Vol. 26 (June 23, 1952), p. 984.

2 On April 9, 1948, a press officer of the Department of State announced that the Department was reconsidering the policy of requesting immunity for foreign government-owned and government-operated merchant vessels in view of the increasing tendency of such vessels to engage in commercial operations. The New York Times, April 10, 1948, p. 27, col. 3. This announcement was issued in response to questions concerning the grant of immunity to the Soviet vessel Rossia, 1948 A.M.C. 814 (S.D.N.Y., April 6, 1948).

3 Mr. Tate added: “There is agreement by proponents of both theories, supported by practice, that sovereign immunity should not be claimed or granted in actions with respect to real property (diplomatic and perhaps consular property excepted) or with respect to the disposition of the property of a deceased person even though a foreign sovereign is the beneficiary.”

4 Based upon an elaborate survey of national court decisions throughout the world.

5 Cf. J. G.Castel, “ Immunity of a Foreign State from Execution: French Practice,” this Journal, Vol. 46 (1952), p. 520.

6 See note by Paul Abel, this Journal, Vol. 45 (1951), p. 354.

7 The Parlement Belge, 5 P.D. 197 (Ct. App., 1880); The Porto Alexandre, [1920] P. 30 (Ct. App.); The Jupiter, [1924] P. 236 (Ct. App.).

8 Reprinted in this Journal, Vol. 32 (1938), p. 824.

9 Lords Thankerton, Macmillan and Maugham, in their respective opinions stated that they felt free to reconsider the question of The Porto Alexandre. Lord Macmillan specified that “I should hesitate to lay down that it is a part of the law of England that an ordinary foreign trading vessel is immune from civil process within this realm by reason merely of the fact that it is owned by a foreign State, for such a principle must be an importation from international law and there is no proved consensus of international opinion or practice to this effect. On the contrary the subject is one on which divergent views exist and have been expressed among the nations. … I recognize that the Courts of this country have already … gone a long way in extending the doctrine of immunity; but the cases which have gone furthest have not been hitherto considered in this House.” [1938] A.C. 485, 498.

Lord Maugham said that there was “neither principle nor any authority binding this House to support the view that the mere claim by a Government or an ambassador or by any of his servants would be sufficient to bar the jurisdiction of the Court, except in such cases as ships of war and other notoriously public vessels or other public property belonging to the State.” [1938] A.C. 485, 516. Criticizing conclusions drawn from The Parlement Belge and subsequent cases in the Court of Appeal, he added: “I have indicated my unwillingness to follow what I must admit to be the recent current of authority in our Courts as regards State-owned trading ships. In what follows I shall merely be indicating the opinion I have formed—one which I believe is shared by many judges and by nearly all persons engaged in maritime pursuits—that it is high time steps were taken to put an end to a state of things which in addition to being anomalous is most unjust to our own nationals.” Ibid. 521.

See also the language of Viscount Simon for the Privy Council in Sultan of Johore v. Abubakar Tunku Aris Bendahar, [1952] A.C. 318, digested infra, p. 153, recognizing that the majority of the court in The Cristina reserved the case of a government-owned ship engaged in ordinary commerce.

10 See 2 Hackworth’s Digest of International Law 463; 176 League of Nations Treaty Series 199; 3 Hudson, International Legislation 1837; 6 id. 868.

11 Treaty of Versailles, Art. 281; Treaty of St.-Germain-en-Laye, Art. 233; Treaty of Trianon, Art. 216.

12 Treaties and Other International Acts Series, No. 1965, Art. 24, par. 6. Similar provisions are included in the more recent treaties of the United States. Compare the arrangements elaborated in various agreements with the Soviet Union, such as the Temporary Commercial Agreement between the United Kingdom and the U.S.S.R., signed Feb. 16, 1934, 149 League of Nations Treaty Series 445.

13 See B. D. Watkins, The State as Party Litigant (1927), pp. 189–191; E. W. Allen, The Position of Foreign States before National Courts, Chiefly in Continental Europe (1933); P. Shepard, Sovereignty and State-owned Commercial Enterprises (1951); Jasper Y. Brinton, “Suits against Foreign States,” this Journal, Vol. 25 (1931), p. 50; J. W.Garner, “Immunities of State-owned Ships Employed in Commerce,” 1925 British Year Book of International Law 128; J. G.Hervey, “The Immunity of Foreign States when Engaged in Commercial Enterprises: A Proposed Solution,” 27 Michigan Law Review (1929) 751; Note, “Sovereign Immunity for Commercial Instrumentalities of Foreign Governments,” 58 Yale Law Journal (1948) 176; BernardFensterwald, “Sovereign Immunity and Soviet State Trading,” 63 Harvard Law Eeview (1950) 614.

See, however, G. G. Fitzmaurice, “State Immunity from Proceedings in Foreign Courts,” 1933 British Year Book of International Law 101.

14 This Journal, Supp., Vol. 26 (1932), p. 451, at 597 ff.

15 Ibid., p. 606.

16 See Secretary Lansing to the Atty. Gen., Nov. 8, 1918, 2 Haekworth’s Digest of International Law 429; the Department of State to the Italian Embassy, March 31, 1921, ibid. 437; the Solicitor for the Department of State (Nielsen) to Judge Julian W. Mack, Aug. 2, 1921, ibid. 438–439, also quoted in The Pesaro, 277 Fed. 473 (S.D.N.Y. 1921); Secretary Hughes to American diplomatic and consular officers, Jan. 11, 1923, 2 Hackworth’s Digest 439–440; Secretary Hughes to the Minister to Portugal, Aug. 26, 1924, ibid. 441. The Department took a corresponding position, asserting that no principle of international law would be violated if a municipality imposed taxes on property belonging to a foreign government and acquired for commercial purposes. Secretary Lansing to the Italian Ambassador, April 2, 1918, 2 Haekworth’s Digest 465; Acting Secretary Polk to the Russian chargé d’affaires, March 6, 1919, ibid. 467.

17 Reprinted in this Joubnai, Vol. 20 (1926), p. 811.

18 See The Davis, 10 Wall. 15 (U. S. 1870); Long v. The Tampico, 16 Fed. 491 (S.D.N.Y. 1883); The Johnson Lighterage No. U, 231 Fed. 365 (D.N.J. 1916); The Navemar, 303 U. S. 68 (1938); Ervin v. Quintanilla, 99 F. 2d 935 (C.C.A. 5th 1938); Republic of Mexico v. Hoffman, 324 U. S. 30 (1945). Cf. The Carlo Poma, 259 Fed. 369 (C.C.A. 2d 1919).

19 Coale v. Soeiété Co-operative Suisse des Charbons, 21 F. 2d 180 (S.D.N.Y. 1921); United States v. Deutsches Kalisyndikat Gesellschaft, 31 F. 2d 199 (S.D.N.Y. 1929); Ulen & Co. v. Bank Gospodarstwa Krajowego, 261 App. Div. 1, 24 N.Y.S. (2d) 201 (1940); The Uxmal, 40 F. Supp. 258 (D. Mass. 1941); Plesch v. Banque Nationale de la République d’Haiti, 273 App. Div. 224, 77 N.Y.S. (2d) 43 (1948); Hannes v. Kingdom of Roumania Monopolies Institute, 260 App. Div. 189, 20 N.Y.S. (2d) 825 (1940).

20 Ex Parte Muir, 254 IT. S. 522 (1921); The Pesaro, 255 U. S. 216 (1921); The Sao Vicente, 260 U. S. 151 (1922); The Gul Djemal, 264 U. S. 90 (1924).

21 See Act of Sept. 7, 1916, waiving immunity of IT. S. Shipping Board vessels, 39 Stat. 728, 730, later repealed; Suits in Admiralty Act of March 9, 1920, 41 Stat. 525, 46 U. S. Code §§741–752; Public Vessels Act of March 3, 1925, 43 Stat. 1112, 46 U. S. Code §§81–799.

22 60 Stat. 842. See also 28 U. S. Code $ 1346.

23 Bank of the United States v. Planters’ Bank of Georgia, 9 Wheat. 904, 907 (U. S. 1824). Of course Marshall’s statement related to one of the States of the United States, rather than to a state in the international law sense, and he was concerned with a corporation owned by such a State (in which case immunity is generally refused on the basis of the distinction between the corporation and its stockholders); but the reasoning seems apposite.

24 Judge Mack’s opinion, which seems far sounder than that of the Supreme Court in Berizzi Bros. Co. v. S. S. Pesaro, 271 U. 8. 562 (1926), is worth careful study. It is the chief American decision in which the court adopted the restricted view of sovereign immunity now espoused by the Department of State.

25 In The Porto Alexandre, [1920] P. 30, 38–39, Lord Justice Scrutton felt constrained by precedent to uphold the immunity of a Portuguese government-owned merchant vessel from salvage proceedings, but he said: “no one can shut his eyes, now that the fashion of nationalisation is in the air, to the fact that many states are trading, or are about to trade, with ships belonging to themselves; and if these national ships wander about without liabilities, many trading affairs will become difficult. … But there are practical commercial remedies. If ships of the state find themselves left on the mud because no one will salve them when the state refuses any legal remedy for salvage, their owners will be apt to change their views. If the owners of cargoes on national ships find that the ship runs away and leaves them to bear all the expenses of salvage, as has been done in this case, there may be found a difficulty in getting cargoes for national ships.”

26 [1938] A.C. 485, 513, at 521–522; also this Journal, Vol. 32 (1938), p. 824, at p. 847.

27 Reprinted in this Joubnal, Vol. 38 (1944), p. 132. Despite the usual practice in the United States of denying immunity to corporations owned or controlled by foreign governments, in Stone Engineering Co. v. Petroleos Mexicanos, 352 Pa. St. 12 (1945), and in Matter of United States of Mexico v. Schmuck, 293 N.T. 264 (1944), the courts felt themselves bound to accord immunity to such a corporation because the Department of State informed the courts that it “recognized and allowed” the immunity claimed. See also A. B. Lyons, “The Conclusiveness of the ‘Suggestion’ and Certificate of the American State Department,” 1947 British Year Book of International Law 116.

28 This salutary principle was not followed in Berizzi Bros. Co. v. The Pesaro, 271 U. S. 562, where the court allowed the immunity, for the first time, to a merchant vessel owned by a foreign government and in its possession and service, although the State Department had declined to recognize the immunity. The propriety of thus extending the immunity where the political branch of the government had refused to act was not considered.

“Since the vessel here, although owned by the Mexican Government, was not in its possession and service, we have no occasion to consider the questions presented in the Berizzi case. It is enough that we find no persuasive ground for allowing the immunity in this case, an important reason being that the State Department has declined to recognize it.” [Footnote by the Court.]

29 In an editorial entitled “Has the Supreme Court Abdicated One of its Functions?” this Journal, Vol. 40 (1946), p. 168, Prof. Jessup criticizes the approach of the Court in Mexico v. Hoffman, as requiring that “the State Department must also determine the basic legal principle governing the immunity,” and prefers that the question be treated as one of law rather than one of respect for policy of the Department. The same position is taken by Ruttenberg in a note in 97 U. Pa. Law Eeview (1948) 79. An opposite view is taken by E. D.Dickinson and W. S.Andrews, “A Decade of Admiralty in the Supreme Court of the United States,” 36 Cal. Law Review (1948) 169, 215.

30 There would be obvious advantages if international agreement on the extent and limitations of sovereign immunity could be reached by treaty. In the absence of treaty, some have suggested that the change in American policy to the restrictive concept of immunity should be effected by concurrent action of Congress as well as by executive statement. See J. Q.Hervey, “The Immunity of Foreign States when Engaged in Commercial Enterprises: A Proposed Solution,” loc. cit., at pp. 774–775 (1929); Note, “Sovereign Immunity for Commercial Instrumentalities of Foreign Governments,” loc. cit., at p. 182 (1948). Although perhaps desirable, such legislation would not appear to be at all essential.

31 Certiorari denied, 282 U. S. 896 (1931). For comments on this case, see notes in 29 Michigan Law Review (1931) 894, and this Journal, Vol. 25 (1931), p. 335. Payment was eventually made by the Swedish Government of a sum in settlement of the judgment; see 2 Hackworth’s Digest 480; Kuhn, “ Immunity of the Property of Foreign States against Execution,” this Journal, Vol. 28 (1934), p. 119.

In accord with the Dexter & Carpenter case, see the British case of Duff Development Co. v. Kelantan, [1924] A.C. 797; and the German case of Von Hellfeld v. Imperial Russian Government, translated in this Journal, Vol. 5 (1911), p. 490.

32 See, however, Fitzmaurice G. G., “State Immunity from Proceedings in Foreign Courts,” loc. cit., at p. 124, stressing the immunity from execution and declaring that therefore “The truth is that states can never be effectively sued against their will.”

33 See views expressed by the Harvard Research in International Law, Draft Convention on Competence of Courts in Regard to Foreign States, Art. 23, this Journal, Supp., Vol. 26 (1932), p. 700 et seq.

Compare the French practice discussed by Castel, “Immunity of a Foreign State from Execution: French Practice,” this Journal, loc. cit. See also E. Loewenfeld, “Some Legal Aspects of the Immunity of State Property,” 34 Grotius Society Transactions (1949) 111.

34 Apparently accepting the idea that the state conducting the activity would decide its sovereign or private character, Fitzmaurice writes: “In this respect it is noticeable that the distinction between sovereign and non-sovereign acts breaks down in the very cases in which it is most desired to apply it. It is usually said that a sovereign act is an act which only a government can perform and that a non-sovereign act is any act which any private citizen might have performed. In a country such as Soviet Russia, however, private citizens are forbidden by law to perform acts which in other countries private citizens can normally carry out. All commercial activities are by law government monopolies and are carried out by virtue of the state’s imperium. It is, therefore, clear that whenever the Russian Government or one of its trade delegations enters into a commercial transaction, it is acting by virtue of its imperium and is performing a sovereign act, at any rate in the sense of an act which under Russian law only the State can perform and which private Russian citizens are forbidden to carry out. It seems to follow, therefore, that even in those countries where a distinction is drawn between sovereign and non-sovereign acts, the Soviet Government could not properly be sued in respect of any commercial activity. Yet this is the very type of case which the distinction in question was intended to meet.” (“State Immunity from Proceedings in Foreign Courts,” loc. cit., p. 123.)

35 In the case of the Brussels Convention, supra, the rule is laid down that “Seagoing vessels owned or operated by States, cargoes owned by them, and cargoes and passengers carried on Government vessels, and the States owning or operating such vessels, or owning such cargoes, are subject in respect of claims relating to the operation of such vessels or the carriage of such cargoes, to the same rules of liability and to the same obligations as those applicable to private vessels, cargoes and equipments.” This is in the most general terms, and then it is stated that “The provisions … shall not be applicable to ships of war, Government yachts, patrol vessels, hospital ships, auxiliary vessels, supply ships, and other craft owned or operated by a State, and used at the time a cause of action arises exclusively on Governmental and non-commercial service.”

36 See such classic cases of the restrictive theory of immunity as the Belgian case of Société anonyme des chemins de fer Liégeois-Luxembourgeois c. État néerlandais, 1903 Pasicrisie Beige 1.294; and the Italian case of Ferrovie Federali Svizzere v. Commune di Tronzano, 1929 Foro Italiano 1.1145. See also Harvard Research in International Law, Competence of Courts in Eegard to Foreign States, loc. cit., p. 669 et seq.

37 See Mason v. Intercolonial Railroad of Canada, 197 Mass. 349, 83 N.E. 876 (1908); Bradford v. Director General of Railways of Mexico, 278 S.W. 251 (Tex. 1925); and the French and German cases cited by the Harvard Besearch in this Journal, Supp., Vol. 26 (1932), pp. 609–610.

38 See Italian case of Stato di Romania o. Trutta, 1926, Monitore dei Tribunali 1.288.

39 Kingdom of Roumania v. Guaranty Trust Co. of N.Y., 250 Fed. 341, 345 (CCA. 2d, 1918). See also this Journal, Supp., Vol. 26 (1932), p. 610 et seq.

40 Regarding the difficulties in distinguishing “sovereign” and “non-sovereign” functions of foreign states, see, inter alia, Dickinson E. D. , “ The Immunity of Public Ships Employed in Trade,” this Journal, Vol. 21 (1927), pp. 108, 110; G. G. Fitzmaurice, “State Immunity from Proceedings in Foreign Courts,” loc. cit., p. 123; W. T. B. Fox, “Competence of Courts in Begard to ‘Non-Sovereign’ Acts of Foreign States,” this Journal, Vol. 35 (1941), pp. 632, 636–640.

The Institut de Droit International in its 1891 Project specified that actions could be brought against a foreign state when they “relate to a commercial or industrial establishment or a railway operated by the foreign state within the territory” of the forum, apparently assuming that there would be little difficulty in determining what was covered by “commercial or industrial.” Annuaire de I’Institut de Droit International, 1889–1892, p. 437. (S.D.N.T., 1921): “in dealing with an unsettled problem in the application of sovereign immunity, the court must not only consider history and logic; it must also look behind and beyond both and inquire whether the public interests justify or require an extension of sovereign exemption from the usual processes of judicial justice. With the growth and development of state activity, it behooves the court to consider the consequences which would flow from a ruling removing from the ordinary judicial administration matters of vital importance to the community, which have for centuries been handled through the regular judicial processes. …

“In many phases of our law to-day it becomes necessary to distinguish between those cases in which it is, and those cases in which it is not, consistent with the public needs and interests to subject the state, its agencies and properties to the ordinary processes of the law. True it is that in certain cases, involving historic functions of the state, the law is too well settled to admit of doubt or of any nice balancing of interests to determine whether or not judicial processes may be evoked. But where the law cannot be said to be plainly settled, it becomes the duty of the court to determine whether or not the public needs militate against the enforcement through the appropriate judicial channels of the ordinary rules of justice.

“The question is not merely whether the function in issue is governmental or private; it is doubtful whether any activity of the state may properly be called private.”

Somewhat similarly, Prof. Hyde suggested that: “If the law of nations is to remain flexibly responsive to the requirements of international intercourse, definite principles should be enunciated and agreed upon, and these should be designed to safeguard and promote, rather than jeopardize and retard the commercial transactions of private concerns with foreign States. To that end, the commission of particular acts by such States, rather than phrases purporting to be descriptive of the legal aspect of their conduct, should be declared to be productive of such waivers of immunity from the local jurisdiction as are sought to be obtained.” 2 Hyde, International Law 849 (2d ed., 1945).

41 Art. 11, Draft Convention on Competence of Courts in Regard to Foreign States, this Jourkal, Supp., Vol. 26 (1932), p. 597 et seq. It will be observed that the quoted language would limit the notion of acts jure gestionis to cases in which the foreign state either conducted the “commercial” enterprise within the territory of the forum state, or else performed within that territory some act in connection with such enterprise conducted elsewhere. The denial of immunity in such cases might more easily be justified on the theory of waiver (by conducting the enterprise or performing the act within the territory of the forum), than if the immunity is to be refused where there is no such connection with the forum state. The Department’s letter does not appear to limit the field of liability to suit to those cases in which “private” acts of the foreign state are performed within the United States.