[1980-1994] Van LR 16
IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
CIVIL JURISDICTION
Civil Case No. 200 of 1981
 
BETWEEN:
 DINH VAN THO
trading as the Hotel Santo
Plaintiff
 AND:
 ETAT FRANCAIS
Defendant
Coram: Chief Justice Cooke
Counsel: M Leder for plaintiff
M de Preville for defendant
 
JUDGMENT
[INTERNATIONAL LAW - sovereign immunity - PROTOCOL - interpretation]
It is accepted as a fact that an Independent Sovereign State may not be sued in the Courts in most countries against its will and without its consent. This immunity from the jurisdiction is derived from the rules of international law, which has become the laws of all countries. It arises and is accorded upon 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. Comity here meaning the comity of nations being the courteous and friendly understanding by which each nation respects the laws and usages of every other so far as may be without prejudice to its own rights and interests. In the case of the Sultan of Johore (Malaysia) v. Abubaker Tunku Aris Bendahor [1952] 1 All ER 1261 at 1268 it was held by their Lordships in England (House of Lords case) that there has not been finally established in England ... any absolute rule that a foreign independent sovereign cannot be impleaded in the Courts in England in any circumstances. The general principle is undoubtedly that, except by consent, the Courts in England and indeed in Vanuatu will not issue their process so as to entertain a claim against a foreign sovereign for debt or damages. That principle has been applied in the case of Mellenger v. New Brunswick Development Corporation [1971] 2 All ER 593 and Swiss Israel Trade Bank v. Government of Salta and Banco Provincial de Salta (1972) 1 Lloyd's Reports 497. The general principle has also been recognised by European Countries in the European Convention of 1972 on state immunity. Article 15 says that a contracting state shall be entitled to immunity from the Jurisdiction of the Court of another contracting state if the proceedings do not fall within certain exceptions. It has also been recognised in the United States of America in Isbrandtsen Tanker v. President of India (1971) 446 F. 2d. 1198. The Court of Appeal of the second circuit in New York upheld the claim to sovereign immunity. The reason given was a judicial decision against the government of a foreign nation could conceivably cause severe international repercussions, the full consequences of which the Courts are in no position to predict.
The general principle therefore must be applied unless it comes within any of the recognised exceptions. The exceptions seem to fall under four heads.
First, a foreigner has no immunity in respect of land situated in another state or Vanuatu. If he takes a lease of land and fails to pay the rent, the lessor can take proceedings for forfeiture. The same applies if he borrows money on mortgage of land here and fails to pay the interest, the mortgagee can use the remedies permitted to him.
Secondly, under English law a foreign sovereign has no immunity in respect of trust funds in England or money lodged there for the payment of creditors. The English beneficiary or creditor can ask the English Court to adjudicate on the claim, even though the foreign government declines to appear. The case of Lariviere v. Morgan (1872) 7 Chancery Appeals, page 550 is an authority for this proposition. In that case the French Government made a contract in England and lodged money in the hands of agents in England for payment of the sums of money due under the contract, it was held that the Court will not refuse relief to the contractor because the contract was with a foreign government, nor because the foreign government does not appear before the Court. Where goods are to be paid for when received and money is lodged for payment on the production of certificates from an agent of the purchaser, the Court, if certificates are refused, may direct an inquiry and order payment of what is due to the contractor who had supplied the goods. The French Government actually contracted in England for the purchase of a large number of cartridges, which were to be inspected, and when accepted were to be paid for through the French Ambassador; and bankers in England, who had in their hands funds belonging to the French Government, wrote to the contractor in England that a special credit for £40,000.00 had been opened in his favour and would be paid to him upon receipt of certificates from the French Ambassador. Some cartridges were supplied and paid for and others were delivered to agents for the French Government; but other agents of the French Government alleged that the time for the delivery had expired. Certificates were refused and the bankers refused to make any further payments. The contractor thereupon filed his bill against the bankers and the French Government praying to have the balance of £40,000.00 brought into Court, and for an inquiry and payment. The French Government did not appear. The bankers were ordered to bring the money into Court; and the contractor was declared to be entitled to payment for all cartridges delivered under the contract; and enquiries as to what cartridges had been delivered were directed.
Thirdly, a foreign sovereign has no immunity in respect of debts incurred here for services rendered to its property here. For example if the foreign government owns a vehicle here and sends it to a garage here to be repaired, the repairer is entitled to be paid and, if not paid, he can claim a lien on the car. This exception is supported by the decision of the Hong Kong Court of Appeal in "The Philippine Admiral" and appears in [1976] 1 All ER 78. It was held in that case that a foreign government was not entitled to claim sovereign immunity in cases where an action in rem was brought against a vessel owned by that Government if the vessel was being used, either by the Government itself or by a third party, for trading purposes and not for the public service.
Fourthly, a foreign sovereign has no immunity when it enters into a commercial transaction with a trader and a dispute arises which is properly within the territorial jurisdiction of the Courts of the country in which the dispute took place.
These four exceptions were enumerated by Lord Denning in the case of Thai - Europe v. Government of Pakistan (1975) 3 All E.R. 961 at pages 965 - 966. It was held in that case that the general principle was that, except by consent, the English Courts would not issue their process so as to entertain a claim against a foreign sovereign for debt or damages. The Plaintiff's action in that case did not fall into any of the recognised exceptions to the rule since the cause of action had arisen entirely out of a commercial transaction, none of the incidents of which had taken place within the Jurisdiction.
Accordingly the writ was set aside.
Lord Aikin in the case of Compania Naviera Vascongada v. S.S. Cristina [1938] 1 All ER 719 said that the law is to be found in two propositions of international law engrafted into our domestic law. He said "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". Lord Aikin then did refer to the fact that there were some possible limitations on the second principle. Lord Thanketon introduced a lot of doubt as to the universality of the assertion made by Lord Aikin and that doubt has been developed by subsequent obiter dicta of the Courts in England. His doubt was whether the proposition that a foreign sovereign state cannot be impleaded is an absolute one. He quoted a well known passage from the judgment in the Parliament Belge case [1874-1880] All ER 104. Brett J. in that case said - "The exemption of the person of every sovereign from adverse suit is admitted to be part of the law of nations. An equal exemption from interference by any process of any Court of some property of every sovereign is admitted to be a part of the law of nations". Lord Thankerton then said - "This passage suggests that the absolute exemption is of the person of the sovereign from adverse suit, but that, in the case where property of a sovereign is not admitted by the agreement of nations to be exempt, action in rem against such property which is within the territorial jurisdiction is available, even if the sovereign be invited to contest the suit, if he so chooses".
From the authorities which I have read it seems clear that today there is a developing view that some property of a sovereign may not be entitled to the benefit of the doctrine of sovereign immunity when that property is within the territorial jurisdiction. We are in this case concerned with a plea of immunity from the suit of property belonging to, or claimed by, a foreign sovereign within the territory of our jurisdiction. It has not been made clear to me by Counsel for the Plaintiff what that property is but unless there is property within the jurisdiction I will find myself in the difficulty of giving judgment, should I so hold, in favour of the Plaintiff.
I agree with the statement made by Lord MacMillan in the Cristina case [1918-1919] All ER p. 615 when he said - "It is an essential attribute of the sovereignty of this realm (and the same applies for the Republic of Vanuatu) as it is of all sovereign independent states, that it should possess jurisdiction over all persons and things within its territorial limits, and in all causes, civil and criminal, arising within these limits".
A further authority bearing relevance here was the Trendtex Trading Corporation Ltd v. Central Bank of Nigeria case [1977] 1 All ER 881 which concerned the Central Bank of a foreign state which had a separate legal entity incorporated by legislative enactment. It did not declare itself to be a department of state but was responsible for the issue of currency and entrusted with government's banking and foreign exchange transactions and it engaged in ordinary banking transactions but had limited power to act as a private banker. The question was - whether a bank, a department or organ of government was entitled to claim sovereign immunity in respect of a commercial transaction. It was held that the bank was not entitled to plead sovereign immunity for the following reasons: the bank was not entitled to plead sovereign immunity as a department or organ of a foreign state because, having regard to its Constitution, its functions and the control over it, it had not established that it was a department of the State of Nigeria even though it had been established by the state under statute as a separate legal entity.
In the course of his judgment, Lord Denning at p. 892 referred to the modern rule of international law and said - "If the dispute brings into question, for instance, the legislative or international transactions of a foreign government, or the policy of its executive, the Court should grant immunity if asked to do so, because it does offend the dignity of a foreign sovereign to have the merits of such a dispute conversed in the domestic Courts of another country; but if the dispute concerns, for instance, the commercial transactions of a foreign government (whether carried on by its own departments or agencies or by setting up separate legal entities), and it arises properly within the territorial jurisdiction of our Courts, there is no ground for granting immunity. Lord Denning restated this view in Thai-Europe Tapioea Service Ltd, v. Government of Pakistan [1975] 3 All ER 96 he said - "A foreign sovereign has no immunity when it enters into a commercial transaction with a trader here and a dispute arises which is properly within the territorial jurisdiction of the English Courts. If a foreign government incorporates a legal entity which buys commodities on the London market, or if it has a state department which charters ships on the Baltic exchange, it thereby enters into the market place of the world, and international comity requires that it should abide by the rules of the market". The more recent cases of Philippine Admiral (owners) v. Wallem Shipping (Hong Kong) Ltd. [1976] 1 All ER 78 (Privy Council) and Alfred Dunhill of London Inc. v. Republic of Cuba No. 73-1288 (U.S. Supreme Court, May, 1976) seem to confirm the views expressed by Lord Denning.
The German Courts had to deal with a precisely similar point in the case of Youssef M. Nada Establishment v. Central Bank of Nigeria (District Court, Frankfurt) File No. 3/80 - 14/76 of the 25th August, 1976. There the Ministry of Defence in Nigeria in February, 1975 agreed to purchase 240,000 tons of cement from a firm in Liechtenstein. The Central Bank of Nigeria issued letters of credit through its correspondent, the Deutshe Bank in Frankfurt. The goods were shipped; the price paid. The vessel arrived at Lagos but, owing to the congestion, had to wait. The holders of letters of credit claimed demurrage. They levied distress on the assets of the Central Bank of Nigeria then in Germany. The Central Bank claimed the release of these assets on the ground of sovereign immunity. On the 2nd December, 1975 the commercial Court of Frankfurt rejected the plea. The Court's reasons were as follows: "According to the decisions of the Federal Constitutional Court of 1962 and 1963, a foreign state may be granted immunity from German jurisdiction only in respect of its sovereign activity (acta jure imperii), but not in respect of its non-sovereign activity (acta jure gestionis), because no general rule of public international law exists under which the domestic jurisdiction is precluded for actions against a foreign state in relation to its non-sovereign activities". That decision of the German Court was of course subject to appeal. I do not know whether such decision was reversed on appeal or not but it shows that the German Court decided in just the same way and for just the same reasons as Denning J. in Trendtex Trading Corporation v. Central Bank of Nigeria.
I have given careful consideration to the submission made by Mr. de Preville who appeared for the French Government (Defendant) and Mr. Leder who appeared for Dhin Van Tho (Plaintiff) but I had to research English, German and American cases to ascertain the international view of the matter before me.
I must make reference to one recent case which bears light on this subject. The latest decision in the English Courts was that of Planmount Ltd. v. Republic of Zaire [1981] 1 All ER 1110 where under a contract dated the 10th January, 1978 the Plaintiffs agreed to carry out certain building work for the Republic of Zaire at the official London residence of their Ambassador. The Plaintiffs were given leave to serve the write outside the jurisdiction. The Republic of Zaire applied to have the writ set aside on the ground that it was an independent sovereign state and as such entitled to sovereign immunity. It was held:
	1. On the true analysis of the authorities a foreign sovereign state was not entitled to absolute sovereign immunity in English Courts either in actions in rem or in actions in personam but could only invoke the doctrine in respect of governmental acts. A foreign sovereign state's commercial transactions were therefore not protected.
	2. The defence of sovereign immunity was accordingly not available to the Republic of Zaire because it was not acting in a governmental but in a private or commercial capacity when it entered into the contract with the Plaintiffs.
I have set out authorities on this interesting subject and from such it seems clear to me that all laws, whether they be French, English, American, German or indeed any country, have combined together and agreed an international understanding applicable to sovereign states.
Turning now to the facts of the matter before me I must express an opinion, applying the decisions mentioned aforesaid, whether such facts before me attract sovereign immunity or not. It is an unique case and one requiring much thought and consideration. The New Hebrides (now Vanuatu) was governed by two powers, France and Britain, for many years. In Vila there was a representative of each of the two powers who, under a Protocol of 1906 and 1914, were bound to govern the Country jointly: French Nationals were tried under French laws in French Courts and the same applied in respect of British Nationals. Laws in the Country in respect of certain matters had to be dealt with under Joint Regulations agreed by the two powers. An agreement for Independence of the Country was reached between the two powers and the elected Government of the Country but some persons opposing the Government on the 25th May, 1980 created a disturbance on the island of Santo and attempted to set up their own government there. On the 24th July, 1980 M. Robert, who was described as the representative extraordinaire of the French Government, went to Santo and there made a requisition order taking possession of three vehicles from the Plaintiff, a French National, for the use of French Nationals presumably to contain the disturbances there. When the disturbances were over and law and order restored two vehicles were returned to the Plaintiff in a damaged condition, the third vehicle has absolutely disappeared. He was paid rent for the three vehicles. The Plaintiff has therefore commenced an action against the French Government for the cost of repairs to his two vehicles and for compensation for the loss of his third vehicle.
At the outset of the case Mr de Preville, on behalf of the French Government, has claimed immunity.
The question I have to ask myself is whether M. Robert had the power to make the requisition order in so far as the Country was supposed to be administered jointly and that being so, did not the requisition order have to be countersigned by the British Representative in the Country to make it a valid document. At first the answer to the question seemed simple but to find the answer to this question I had to delve into the depths of the Protocol agreement, which also can be described as a unique document as the English texts and the French texts do not always mean the same. From the texts of the agreement between the two powers in 1906, and which was not altered by the 1944 Convention, it is clear each power intended something different. The British avoids the notion that the territory is, for British citizens, British territory, and refers to jurisdiction but the French accepts the proposition that the territory is, for French citizens, French territory.
The English text reads as follows : British Subjects and French Citizens take with them to the New Hebrides, with their nationality, the qualities, duties and rights attached to that nationality. But henceforth the two Nations, who formerly exercised only a personal jurisdiction over their own Nationals, assume a quasi-territorial jurisdiction. For the British resident that jurisdiction will be British, for the French it will be French.
 The French text reads:
	Les citoyens Français et les sujets Anglais emportent aux Nouvelles-Hebrides, avec leur nationalité, les qualités, devoirs, et droits attachés a cette nationalité. Mais la loi nationale, qui les regissait jusqu'a présent a titre personnel, les régit dorénavant à titre territorial; pour les Français, l'archipel est territoire Français, pour les Anglais, territoire Anglais.
 
The English translation of the French text is as follows:
	British Subjects and French Citizens take with them to the New Hebrides, with their nationality, the qualities, duties and rights attached to that Nationality. However the National law, which had so far governed them as private individuals, now applies to them on the basis of territorial jurisdiction. For the French, the group is French territory, for the British it is British territory.
 
It is clear from the French text the jurisdiction is "a titre territorial"; this means that the territory is, for French citizens, and indeed for aliens who opt for the French system, French territory, and that France exercises over it the same competence in relation to them as it exercises over them in France.
Many ambiguities appear in the English version of some articles when compared with the translation of the French version of those articles. This is a blatant example of such. From the English version, in my opinion, it was never intended that the New Hebrides be part of British or French territory and I am indeed surprised that the British representatives to the agreements allowed the French version to stand. Be that as it may, I have now to apply the French version to the facts of this case.
M. Robert, being a diplomatic agent, is under a duty to respect the laws of this Country and to abstain from interfering wrongly in its internal affairs (Vienna Convention on Diplomatic Relations ((Vienna 18th April, 1961: T5 19, 1963; Cmnd. 2563)) art. 41 para. 1). In 1969 the General Assembly of United Nations adopted a Convention on special missions with an Optional protocol concerning the Compulsory Settlement of Disputes (U.N. General Assembly, 8th December, 1969; Misc. 3, 1970; Cmnd. 4300) which seems to have been signed by France. Robert, in this case, signed himself as Ambassador Extraordinaire of the French Republic. I am of the opinion that he was acting with the cognisance of the French Government on all actions taken by him at the time of the requisition and I must so hold because they confirm his action by paying rent for the cars. In this case however M. Robert followed the French version of the article of the Protocol and made the requisition order as he was entitled to do assuming that such was permissible being French territory and the person he was dealing with was a French National. On such assumption, which was correct in the English translation of the French Article, he did not have to have the concurrence of his British counterpart. He made the requisition order in the name of the French Republic which he was in close contact with during the trouble period in Santo. If this case was not so unique and on the facts I may easily have held that this case came within the fourth exception referred to by Lord Denning but taking into consideration the circumstances here and the authorities which I have referred to, particularly the case of Planmount Ltd v Republic of Zaire and the English translation of the Article, I also have referred to, I must therefore, with some reluctance, hold that when making the requisition order, M. Robert was acting, in a governmental capacity and the defence of sovereign immunity is available to the French Government.
The action against the French Government is therefore dismissed. In view of the complexity of the case no costs will be awarded.
28 October 1981
FREDERICK G. COOKE
CHIEF JUSTICE