| Fiji Islands - Reddy v The Ambassador of The Independent State of Papua New Guinea - Pacific Law Materials |
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. 0153 OF 1998
BETWEEN:
:
GOVIND REDDY
s/o Venkat Reddy
Plaintiff
AND:
THE AMBASSADOR
THE INDEPENDENT STATE OF PAPU GUINEA
Defendant
Mr. P. Howard for tae Plaintiff
Mr. A. Khan for the Defendant
JUDGMENT
This case concerns a Fiji Standard Form of Building Contract entered into on the 17th vember 1995 between then the plaintiff 'TRADING AS LANDMARK CONSTRUCTION' and 'THE INDEPENDENT STATE OF PAPUA NEW GUINEA' albeit executed by its Ambassador to Fiji His Excellency Babani Maranga ('the defendant Ambassador').
This latter fact is highlighted insofar as the plaintiff's action ambiguously cites 'The Ambassador' as the singular defendant and not the actual contracting party.
The nature of the works to be performed under the aforesaid building contract entailed 'renovating the existing Head of Mission's official residence' at 12 Milne Road, Muanikau, Suva for an agreed contract sum of $565,685.00. The architect who prepared the very extensive drawings and specifications and under whose supervision the works were to be executed
was Stuart Huggett of Architect Services Limited.
In terms of the contract the works were to be completed eight (8) months after possession of the building site had been given and certainly by 19th August 1996 the specified Date of Completion.
Nothing much is known about the nature and quality of the works executed pursuant to the contract although, judging by the information
provided in the plaintiff's claim No. 9 dated 25th November 1996, it is clear that works were not completed by the completion date albeit that almost two thirds of the contract sum had been paid out.
Be that as it may on the 27th of September 1996 a winding up order was made by the High Court against Landmark Construction (Suva) Limited and, on learning of this the project architect by letter dated 13th December 1996 wrote to the plaintiff terminating the contract '... in accordance with Clause 25(2) of the contract ... with effect from 27th September 1996'.
The plaintiff on receiving the termination notice immediately disputed the notice in a letter dated 16th December 1996 in which he claimed that:
'The contract has been signed and sealed under the personal name of Govind Reddy with annexe trading as Landmark Construction.
The liquidation of Landmark Construction (Suva) Ltd. company should have no legal effect on the above contract and therefore the liquidators
or receivers have no right of access to this particular contract.'
If I may say so this letter contrasts even contradicts, quite categorically, an earlier letter dated 29th January 1996 written by the plaintiff to the defendants wherein he stated:
'We confirm by this letter that Landmark Construction (Suva) Ltd. is the principal contractor on the above project.'
Fifteen (15) months passed without any apparent resolution and on the 11th of March 1998 the plaintiff finally issued an Originating Summons seeking various declarations concerning the correct parties to the contract and the validity of the termination letter.
He also sought the return of various plant and machinery left at the construction site and damages for unpaid work.
On 19th March 1998 the defendant by their solicitor's acknowledged service of the Originating Summons and on 8th April 1998 the defendant's solicitors lodged an application pursuant to Section 5 of the Arbitration Act (Cap. 38) for a stay of the proceedings pending the referral of the dispute between the parties to arbitration as contractually agreed (See: Clause 33 of the building contract).
Affidavits were filed on behalf of both parties and after numerous adjournments, the papers were finally placed before the Court for
directions on the 3rd of August, 1998.
Upon perusing the papers I became immediately concerned at the clear possibility that the plaintiff's claim constituted an action
impleading a Sovereign State or, at the very least, the diplomatic agent of an independent sovereign state to whom various privileges
and immunities are accorded.
I was mindful of the principle of international law set out in para. 1548 of Vol. 18 of Halsbury's Laws of England (4th edn) which reads:
'An independent sovereign state may not be sued in the ... courts against its will and without its consent. This immunity from the
jurisdiction is derived from the rules of international law, which in this respect have become part of the law ... It is accorded
on the grounds that the exercise of jurisdiction would be incompatible with the dignity and independence of any superior authority
enjoyed by every sovereign state. The principle involved is not founded upon any technical rules of law, but upon broad considerations
of public policy, international law and comity.'
I was also mindful of the observations of Lord Parker C.J. in R. v. Madan (1961) 2 Q.B. 1 when he said at p.7:
'Certain things are, we think clear. In the first place, it is not for someone who is entitled to diplomatic immunity to claim it
in the courts. It is unnecessary to refer to the authorities, but ... certainly civil proceedings brought against somebody entitled
to diplomatic immunity, are, in fact, proceedings without jurisdiction and null and void, unless and until there is a valid waiver
which, as it were, would bring the proceedings to life and give jurisdiction to the court.'
Accordingly, the Court with the agreement of counsels, formulated a preliminary question as follows:
'Assuming that the Independent State of Papua New Guinea is the proper defendant. Does this court have jurisdiction to entertain this
claim by the plaintiff?'
Submissions were ordered and these were finally provided on 4th November 1998. I am grateful to counsels for their assistance on this rather infrequently encountered question of sovereign immunity.
Before turning to consider the submissions however, mention should be made of a further procedural question which arises from the
plaintiff's claim, namely, what is the appropriate procedure (if any) for suing and serving an independent Sovereign State?
Is it, as the plaintiff has done in this instance, by issuing proceedings in the name of the local 'diplomatic agent' of the State and serving it on him in this country?; or ought the proceedings in this Court, as in an ordinary action against Government, be entitled in the name of the Attorney General of the State with service effected upon him after obtaining leave to serve out of the court's jurisdiction pursuant to Or. 11 of the High Court Rules 1988?; or, is it the case, that a suit against an independent-sovereign State may only be instituted in the domestic Courts of that State? This issue was not raised before me or addressed in counsel's submissions however, and need not further concern me in this application.
Suffice it to say that the answer to the question remains unclear.
Counsel for the plaintiff in his brief written submission, without specifically addressing the formulated question or discussing the
nature, effect, and differences between sovereign and diplomatic immunity, boldly submits that 'the defendant as Head of Mission of the Independent State of Papua New Guinea in Fiji has waived his immunities in this case (by signing and initialling each page of the building contract) and as such is deemed to be a waiver by that State'.
As authority for this proposition reference is made to Art. 32(2) of the Vienna Convention on Diplomatic Relations which, pursuant to Section 3(1) of the Diplomatic Privileges and Immunities Act (Cap. 8), '... shall have the force of law in Fiji' and also, to para. 1575 of Vol. 18 of Halsbury's Laws of England (4th edn.) which reads in part:
'the privileges and immunities of diplomatic agents ... may be waived by the sending state. A waiver by the head of the mission ...
is deemed to be a waiver by that State. Waiver must always be express. Accordingly, even if a person entitled to immunity has entered
an appearance ... he may at a later stage prove that his government has not consented to a waiver of his immunity.'
Defence counsel in a fuller, more closely reasoned submission argues that the defendant Ambassador as the Head of Mission of the Independent State of Papua New Guinea is entitled to the privileges and immunities accorded under Art. 31 of the Convention and, as such, is improperly joined in this proceedings for which there has been no express waiver by the Independent State of Papua New Guinea.
Needless to say counsel submits that 'entering into an agreement, the proper law of which is the law of Fiji, does not constitute submission to the jurisdiction of the
Fijian Courts'. Furthermore the agreement in question concerns the construction of an official residence for the Ambassador and 'as such (is) exclusively and particularly concerned with the conduct of the Independent State of Papua New Guinea as a diplomatic mission and ...
hardly capable of being classed as commercial activities'.
As to the question of 'waiver' counsel submits in reply that:
'Waiver as it is understood in the diplomatic parlance is nothing short of an express open act which indicates that the State does
not wish to be bound by the terms of the Convention. Such an act, having the ramifications that it must, is hardly available to be
invoked in this scenario, where the mere execution of the agreement does not of itself amount to waiver in the diplomatic sense.'
I can now deal quite briefly with the question of 'diplomatic immunity' which in this country is statutorily provided for under the Diplomatic Privileges and Immunities Act (Cap. 8) ('the Act') which incorporates into the domestic law of Fiji, 'the provisions of Articles 1,22 and 24 inclusive, and 27 to 41 inclusive, of the (Vienna Convention on Diplomatic Relations)' ('the Convention').
The relevant Articles of 'the Convention' for present purposes are: Article 1 containing various definitions and Articles 31 & 32 which deal with the jurisdictional immunities of a 'diplomatic agent', and the manner and circumstances under which such immunity might be waived.
In particular, Art. 31 of 'the Convention' provides (with three (3) irrelevant exceptions not relied upon by the plaintiff) that:
'1. A diplomatic agent shall enjoy immunity from the criminal jurisdiction of the receiving State. He shall also enjoy immunity from
its civil and administrative jurisdiction.
and
2. A diplomatic agent is not obliged to give evidence as a witness.'
In this case it is undisputed that, by definition, the defendant Ambassador is a 'diplomatic agent' being the accredited head of the diplomatic mission of the Independent State of Papua New Guinea in Fiji. Furthermore, the premises at 12 Milne Road, Muanikau, Suva which the plaintiff claims he was contracted to renovate is 'the existing head of mission official residence' in Fiji and in terms of Art. 22 of the Convention 'shall be inviolable'.
Article 32 which may be conveniently described as the 'waiver' article, is relied upon by the plaintiff. It, relevantly provides:
'1. The immunity from jurisdiction of diplomatic agents ... may be waived by the sending State.
2. Waiver must always be expressed.
and
4. Waiver of immunity from jurisdiction in respect of civil ... proceedings shall not be held to imply waiver of immunity in respect
of the execution of the judgment, for which a separate waiver shall be necessary.'
Section 3(6) of 'the Act' further provides by way of expansion, in paragraph (d) that:
'... reference in Article 32 to waiver by the sending State shall be construed as including a waiver by the head of the mission of
the sending State ...'
Prima facie therefore, in the absence of an express waiver, the defendant Ambassador is entitled to claim and is immune from the civil jurisdiction
of this court. The plaintiff however has named the Ambassador as the defendant in these proceedings on the singular basis that in executing the building contract and in initialling every page
thereof he had thereby expressly waived his diplomatic immunity. I cannot agree.
There is not the slightest doubt in my mind that in executing the building contract and in initialling every page thereof, the Ambassador
was acting at all times, in his official capacity as Ambassador for and on behalf of the Independent State of Papua New Guinea and cannot be said, by any stretch of the imagination, to have either expressly (as opposed to impliedly) waived diplomatic immunity
or been engaged in a 'commercial activity ... outside his official functions' which is an excepted category in Art. 31.
Needless to say it cannot be and has never been suggested that the premises being renovated by the plaintiff is the defendant Ambassador's
'private immovable property' or that he is either personally or contractually liable under the building contract merely because he signed it.
I accept that Clause 33(5) of the building contract expressly provides that:
'The law of Fiji shall be the proper law of this Contract and in particular (but not so as Chapter 30) shall apply to any arbitration under this Contract wherever the same or any part of it, shall be conducted.'
but that inter partes agreement cannot and does not imply an express waiver of immunity nor does it amount to an actual submission or undertaking given
to this court, in these proceedings, to exercise jurisdiction over the defendant Ambassador (See: Kahan v. Pakistan Federation (1951) 2 K.B. 1003).
What's more the relevant time or occasion when waiver must occur or be expressed '... is when the Court is about or is being asked to exercise jurisdiction ... and not at any previous time' (per Lord Esher M.R. in Mighell v. Sultan of Johore [1893] UKLawRpKQB 198; (1894) 1 Q.B. 149 at p.159).
In similar vein are the observations of Kay L.J. when his lordship said (ibid. at p.163):
'... the time at which immunity is to be waived must be when action is brought against the foreign sovereign, and when it is brought
to the attention of the Court by reason of its judicial knowledge or from other information that the person sued is a foreign sovereign.'
In light of the foregoing and in the absence of a clear and express waiver of diplomatic immunity given to this Court by either the
defendant Ambassador or the Independent State of Papua New Guinea as the 'sending State', I am constrained to rule that the defendant Ambassador is immune from the civil jurisdiction of this Court, is improperly named
and/or joined in the present proceedings and the Originating Summons must be and is hereby set aside against him.
I turn next to consider the doctrine of 'sovereign immunity' as it applies to the present proceedings which cites the Independent State of Papua New Guinea as a defendant.
In the absence of domestic legislation dealing with this type of immunity such as exists in New Zealand (State Immunity act 1978) Australia (Foreign States Immunities Act 1985) and the United Kingdom (State Immunity Act 1978), I turn to the common law to ascertain the nature and extent of this widely-held doctrine of international
law.
In doing so I am immediately faced with two (2) schools of thought, with the older school being in favour of an absolute rule of sovereign immunity, and the other, more recent view,
favouring a more limited or restrictive approach.
I begin with the absolute view which is best expressed in the very well-known dicta of Lord Atkin in the 'Christina' (1938) 60 Lloyds Reps. 147 where his Lordship said at p.156:
'The foundation for the application to set aside the writ and arrest of the ship is to be found in two propositions of international
law engrafted into our domestic law which seems to me to be well established and beyond dispute. The first is that the Courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his
will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific
property or damages.
The second, is that they will not by their process, whether the sovereign is a party to the proceedings or not, seize or detain property which
is his or of which he is in possession or control.'
(my underlining)
There are many reasons that have been advanced in support of the absolute rule including:
'... that of 'par in parem' which effectively means that the sovereign or government act of one State are not matters upon which the Courts of other states will
adjudicate' (per Lord Wilberforce in the 'I Congreso' post at p.262); and
'that the exercise of such jurisdiction would be incompatible with regal dignity - that is to say, with (the sovereign's) absolute independence of any superior authority' (per Brett L.J. in the 'Parlement Belge'[1880] UKLawRpPro 10; (1880) 5 P.D. 197 at 207);
and
'that, if the Courts ... once entertained the claim, and in consequence, gave judgment against the foreign sovereign (for debt or damages) they could be called upon to enforce it by execution against its property here. Such execution might imperil our relations with that
country and lead to repercussions impossible to foresee (or predict). (per Lord Denning M.R. in the 'Harmattan' (1976) 1 Lloyds Reps. 1 at p.4).
The restrictive school of thought on the other hand, owes its modern Commonwealth origins to the judgment of the Privy Council in the 'Phillipine Admiral' (1976) 1 Lloyds Reps. 234 where the Privy Council adopted a restrictive doctrine of sovereign immunity which requires a Court faced with a claim for sovereign immunity (ibid. at p.244):
'to draw a distinction between acts of a State which are done jure imperii (i.e. public or sovereign acts) and acts done by it 'jure gestionis' (private actions) and (to) accord the foreign State no immunity either in actions in personam or in actions in rem in respect of transactions falling under the
second head.'
The rationalisation often advanced for this more limited rule of sovereign immunity stems from the view that the activities of Sovereigns
and independent States at the time when the doctrine of absolute immunity was first developed, has so dramatically transformed especially
in the fields of banking, trade and commerce as to warrant some limitation or exception being made to the absolute rule.
One of the reasons advanced by the Privy Council for preferring the restrictive theory of sovereign immunity in its application 'to ordinary trading transactions' was that it 'is more consonant with justice' insofar as (ibid. at p.248):
'In this country - and no doubt in most countries in the western world - the State can be sued in its own courts on commercial contracts
into which it has entered and there is no apparent reason why foreign states cannot be equally liable to be sued there in respect
of such transactions.'
Lord Wilberforce in the 'I Congreso' (post) identified two reasons for the limitation when he said (at p.262):
'It appears to have two main foundations: (a) It is necessary in the interests of justice to individuals having (commercial or private law) transactions with States to allow them to bring such transactions before the Courts. (b) To require a State to answer a claim based
upon such transaction does not involve a challenge to or inquiry into any act of sovereignty or governmental act of that state. It
is ... neither a threat to the dignity of the State nor any interference with its sovereign functions.'
In the 'I Congreso Del Partido' (1983) A.C. 244 the House of Lords approved and applied the restrictive doctrine, but Lord Wilberforce recognising the difficulties inherent in drawing the distinction said, at p.264:
'The activities of States cannot always be compartmentalised into trading or government activities; and what is one to make of a case
where a state has, and in the relevant circumstances, clearly displayed, both a commercial interest and a sovereign or government
interest? To which is the critical action to be attributed?'
His Lordship then considered how various foreign courts have sought to answer the question and concludes with the following 'test' at p.267:
'... in considering ... whether state immunity should be granted or not, the court must consider the whole context in which the claim
against the State is made, with a view to deciding whether the relevant act(s) upon which the claim is based, should, in that context,
be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the
State has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within
the sphere of governmental or sovereign activity.'
The difficulty in drawing the distinction may be said to arise in the present case. On the one hand, it might be said that in entering
into a contract to carry out renovation works to its Ambassador's official residence in Fiji, the Government of Papua New Guinea was undertaking an ordinary contractual obligation of a private or commercial nature which any private citizen could have entered
into.
This was certainly the view expressed by Lloyd J. in Planmount Ltd. v. Zaire (1981) 1 ALL E.R. 1110 where the plaintiff company, a small firm of builders, agreed to carry out certain building works for the Republic of Zaire at the official London residence of its ambassador; the plaintiff was paid only part of the contract price and it issued a writ against the Republic claiming the balance.
In rejecting the Republic's claim to sovereign immunity and in granting the plaintiff leave to serve the writ out of the jurisdiction, Lloyd J. said, at p. 1114:
'To my mind, it is hard to imagine a clearer case of an act or a transaction of a private commercial nature than the repairs to the
ambassador's residence.'
There is also the decision of the Federal Constitutional Court of the German Federal Republic in the Claim against the Empire of Iran (1963) 45 ILR 57 which was a claim for the cost of repairs to the heating system of the Iranian Embassy and in which immunity was refused and in which the Court said (at p.80):
'As a means for determining the distinction between acts jure imperii and jure gestionis one should rather refer to the nature of
the State transaction or the resulting legal relationships, and not to the motive or purpose of the State activity.'
On the other hand, the absolutist would argue that the provision of a safe and suitable residence for its accredited Ambassador in
Fiji is undoubtedly and legitimately a concern, even a duty, of the Independent State of Papua New Guinea as 'the sending State' and, therefore, any building contract entered into to achieve that end is and ought to be categorised as an act 'jure imperii'.
Richardson J. in rejecting a submission that the dismissal of a clerk was something which any employer might do and therefore did not involve the
power of the State, said at p.436:
Needless to say in the context of employment cases the above judgments quite plainly reject as overly simplistic the analysis that
since any private individual can hire and fire another private individual therefore the entry by a State into a contract of employment
is essentially a 'private' act giving rise to a mere contractual relationship of employer and employee unrelated to the exercise of any sovereign function.
In this case it is by no means an easy task to categorise with any confidence the essential nature of the contract between the parties,
involving as it does, the construction of the official residence of the Ambassador of Papua New Guinea in Fiji and I must confess that my view has waxed and waned between the restrictive view and the absolutist.
I am however finally and reluctantly driven to the conclusion that the contract between the parties is not so clearly and exclusively a private or commercial transaction that the restrictive view should inevitably prevail.
Needless to say the plaintiff must be taken to know that he was entering into a contract with an independent sovereign State and,
just as the parties agreed in the contract, to arbitrate their differences, so too could the Independent State of Papua New Guinea have expressly agreed to waive its sovereign immunity in similar terms to that contained in the agreement under consideration in:
A Co. Ltd. v. Republic of X (1990) 2 Lloyds Reps. 520 at p.522.
Furthermore this is not a case of a commercial transaction between a private contractor and a government-owned statutory body or shipping
company where there might be some difficulty in identifying the body or company with an Independent sovereign state or where there
could be any doubt that the body being contracted with was the 'alter-ego' of an independent sovereign state. Indeed this issue is only before the Court because the parties had not expressly agreed to the
waiver of the defendant State's Sovereign immunity.
What's more, unlike in a private building contract where the resultant building is subject to execution, the official residence of
the Ambassador of Papua New Guinea is by definition part of the 'premises of the mission' and therefore, in law, 'inviolable'. In the words of Art. 22 of 'the Convention' it '... shall be immune from search, requisition, attachment or execution' unless expressly waived (See: Art. 32(4) of 'the Convention').
If I am wrong however in my categorisation of the contract between the parties and in upholding the absolute immunity of the Independent State of Papua New Guinea, from the civil jurisdiction of this Court, then I have no hesitation whatsoever in granting the defendant's application for a stay
of the proceedings pursuant to an exercise of the court's discretion under Section 5 of the Arbitration Act (Cap. 38).
The proceedings are accordingly stayed.
D.V. Fatiaki
JUDGE
