The ICJ firmly upholds principles of sovereign immunity in its recent judgment in the case of Germany v Italy

On 3 February 2012, the International Court of Justice (ICJ) gave judgment in favour of Germany in respect of proceedings against Italy alleging violations of sovereign immunity.  Sovereign immunity is one of the fundamental principles of international law, providing that States are immune from legal suit in other States, save where such immunity is waived or otherwise limited.

Although not a case dealing with commercial transactions, the judgment serves as a further reminder to companies entering into agreements with States and state-owned entities that it is important, as a matter of precaution, to include a waiver of immunity provision in any contractual documentation.  This waiver should extend not only to the State's immunity from jurisdiction but also to its immunity from enforcement.

The ICJ's decision

In these proceedings, Germany claimed that Italy had:

1. breached international law by permitting civil claims to be brought against it in the Italian courts for war crimes committed by the German armed forces during World War II;
2. violated its sovereign immunity by taking measures of constraint against a German property situated in Italy; and
3. violated its sovereign immunity by declaring enforceable a Greek judgment rendered against Germany concerning similar acts.

The ICJ found in favour of Germany on all three counts.  It held that Italy had acted in violation of international law by contravening Germany's right to immunity both from jurisdiction and from enforcement.

Immunity for acts committed by armed forces during times of war

The ICJ found that Germany was entitled to sovereign immunity as a matter of customary international law in respect of acts committed by its armed forces during the Second World War. The acts in question were clearly sovereign acts (acta jure imperii) and so attracted sovereign immunity.  Germany could not be prosecuted in Italian courts in respect of such acts, even if these had taken place on Italian soil.  The ICJ noted that it was not called upon in these proceedings to address the question of how international law treats the issue of State immunity for non-sovereign activities, especially private and commercial activities (acta jure gestionis) to which, under many laws, immunity does not apply.

To support its position, Italy claimed that States could not benefit from immunity in respect of acts occasioning death, personal injury or damage to property in the territory of another State (the so-called 'territorial tort' principle), or acts carried out in violation of peremptory norms of international law (jus cogens).

The ICJ rejected these arguments.  By reference to State practice, it concluded that customary international law continues to require that a State be accorded immunity in proceedings for torts allegedly committed on the territory of another State by its armed forces in the course of an armed conflict.  Further, a State is not deprived of immunity by reason of the gravity or seriousness of the violations of which it is accused, and this was true even if the proceedings involved violations of peremptory or fundamental (jus cogens) norms.  The ICJ noted the contrast in this regard between the rules applicable to States and those applicable to criminal proceedings against State officials (citing the English court judgments of Pinochet (No. 3) [2003] 1 AC 147 and Jones v Saudi Arabia [2007] 1 AC 270), whereby immunity may not apply to acts of officials that violate international criminal norms.

Immunity from enforcement

Germany's second complaint was that the Italian courts had enforced a Greek court judgment so as to enable Greek claimants to enter a legal charge against a German State-owned property.  Germany argued that this was a measure of constraint which violated its sovereign immunity.

The ICJ agreed with this.  Even if the courts of one State validly had jurisdiction over another State (by waiver of that other State's jurisdictional immunity or otherwise), that did not necessarily mean that any judgment issued by the courts could be enforced.  The rules governing immunity from jurisdiction and immunity from enforcement were distinct, and must be applied separately.  The ICJ did not, therefore, need to rule on the ability of the Greek courts to enter its original judgment, but could consider only the enforcement of that judgment in Italy.  The ICJ found that the property in question was in use for sovereign purposes (as an Italian-German cultural exchange centre), and that Germany had in no way waived its immunity or consented to measures of constraint being taken against it.  The imposition of the measures of constraint had therefore violated Germany's sovereign immunity.

Immunity from jurisdiction

Germany's third claim alleged that Italy had violated its immunity by declaring enforceable judgments rendered by the Greek courts against Germany in respect of claims arising from the Distomo massacre which occurred during the Second World War.  The ICJ held that this claim involved different principles from the second claim.  This claim concerned immunity from jurisdiction, (i.e. the court's jurisdiction to declare a foreign judgment enforceable), whereas the second claim concerned immunity from enforcement (i.e. the measures of constraint taken by way of execution of that foreign judgment).

In this situation, the ICJ held that the Italian court should have asked itself whether Germany enjoyed immunity from Italian jurisdiction, having regard to the nature of the judgment that was being enforced.  That is, the Italian court should not have relied on the assessment of the foreign (Greek) court, but should have considered whether, if it had been faced with an identical dispute, it would have been obliged under international law to accord immunity to the State.  The ICJ cited to this effect the recent UK Supreme Court case of NML Capital Limited v Argentina [2011] UKSC 31.  If it had done so, the Italian court would have been obliged to grant immunity to Germany given the sovereign nature of the acts in question.  By not doing so, Italy had violated German immunity.

Comment

The ICJ has accordingly issued a clear judgment on these matters, upholding and reinforcing the principle of State immunity in respect of acts carried out in a State's sovereign capacity.  This case reiterates the protections that States enjoy in international law, and the distinctions between sovereign and commercial acts, and jurisdictional and enforcement immunity.  Companies and individuals transacting with States are well-advised to bear these principles in mind, and to seek appropriate waivers of immunity wherever possible.

by Andrew Cannon, Senior Associate, Herbert Smith LLP