Lloyd's Maritime and Commercial Law Quarterly
STATE IMMUNITY ACT 1978
R. W. Hodgin
Lecturer in Law, University of Birmingham.
The State Immunity Act 1978 came into operation on Nov. 22 last year and is an attempt to bring certainty into an area of State immunity where hitherto certain confusion existed and where plaintiffs suing in United Kingdom courts or submitting to arbitration had been in a weak position. The Act puts the U.K. in tune with other States and follows, in general, the United States Foreign Sovereign Immunities Act 1976.
The Act deals only with civil jurisdiction, leaving the rules relating to immunity from criminal matters intact.
The main confusion prior to the Act was caused by two competing views; there were those cases that gave absolute immunity whereby a foreign Government or Government agency irrespective of the nature of the transaction in which it was engaged could not be sued in the U.K. courts (see The Cristina [1938] A.C. 485) and those cases whereby only restrictive immunity was granted (see The Philippine Admiral [1976] 1 All E.R. 78 and Trendtex Trading Corporation v. Central Bank of Nigeria [1977] 1 All E.R. 881). Lord Denning, M.R., in the Trendtex case considered at some length the competing views and came to the conclusion that the restrictive immunity approach reflected the present international law position and that the Court of Appeal need not wait for the House of Lords to resolve the issue. The Act in fact now reflects the more recent judgments and problems of precedent are thereby avoided.
Section 1 states the basic rule of general immunity afforded to foreign States, subject to the provisions that follow. Sections 2–11 contain the exceptions to general immunity. Section 2 states that there shall be no immunity where the State has submitted to the jurisdiction of the U.K. court, although a written agreement providing that it shall be governed by U.K. law is not to be regarded as a submission. The section goes on to spell out in greater detail what does and does not amount to a “submission to jurisdiction”. Section 3 is probably the core section of the Act in that it deals with commercial transactions and attempts to define what is meant by that phrase. This is particularly important because of the difficulty of distinguishing between a commercial transaction and an act of State, the latter which will still carry absolute immunity. Section 3(3) defines a “commercial transaction” as:
“(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 commercial, industrial, financial, professional or other similar character) into which a state enters or in which it engages otherwise than in the exercise of sovereign authority”.
Section 4 deals with contracts of employment. There will be no immunity in respect of proceedings between State and individual if the contract was made in the U.K. or the work is to be wholly or partly performed in the U.K. The section does not apply, however, subject to certain exceptions in s. 4(3), if the individual concerned is a
55