UK Court of Appeal considers the immunity from suit of the family of a head of state

The Court of Appeal has examined the extent to which foreign heads of state and their families can claim immunity under the State Immunity Act 1978 (the SIA) when acting in their personal capacity.

The Court of Appeal has confirmed that only close relatives of a head of state, who form part of his or her household, benefit from immunity from suit in the UK under s20(1) of the SIA. Relatives other than the spouse (or equivalent) of the head of state and dependants will not benefit from immunity under the SIA.

The Court also considered the commercial activity exception in Article 31(1) of the Vienna Convention on Diplomatic Relations (the Vienna Convention), opining that immunity applies to non-official commercial activities conducted outside the UK, but not those conducted within it.

As the Court pointed out, international commercial disputes are frequently adjudicated in the UK. This decision is noteworthy for its clarification of the extent to which relatives of a foreign head of state can claim immunity in respect of their personal activities when they appear before UK courts.

Background

The recent case of (1) HRH Prince Abdulaziz Bin Mishal Bin Abdulaziz Al Saud and (2) HRH Prince Mishal Bin Abdulaziz Al Saud v. Apex Global Management Limited [2013] EWCA Civ 642 concerned an unfair prejudice petition brought by Apex Global Management Limited (Apex) in respect of a UK company in which it held shares. The respondents were two Saudi Princes: Prince Mishal and his son Prince Abdulaziz, who held shares in the company through a foreign corporate vehicle. Prince Mishal is a senior member of the Saudi royal family and half-brother to the King.

The Court of Appeal considered two issues:

• Whether of the Princes were entitled to claim immunity from suit under s20(1)(b) of the SIA as a member of the King's family forming part of his household; 
• If so, whether the immunity fell within the commercial exception and was excluded, because the Princes were pursuing a commercial activity outside their official functions.

Were the Princes members of the household of the King?

Section 20 of the SIA confers limited immunity from criminal and civil suit upon heads of state and "members of his family forming part of his household". It does so by stating that the immunity conferred on diplomatic agents by the Diplomatic Privileges Act 1964 (the DPA) applies to heads of state, subject to "any necessary modifications".

The Princes argued that they were part of the household of the King, despite being non-dependent adults with families of their own. At first instance, the judge concluded that a non-dependent non-cohabiting adult could be part of a head of state's household, provided that he or she exercised sufficiently important constitutional functions.

The Court of Appeal, considering prior case law, the Vienna Convention, and state practice, took a different view. There was no interpretational basis for giving the phrase "members of his family forming part of his household" a wider meaning in relation to heads of state than to diplomats.  The purpose of the immunity conferred upon heads of states is to protect the dignity of the head of state, and allow him to exercise his functions; it is not to protect his family. Approving guidance issued by the Immigration Directorate of the Home Office, the Court of Appeal considered that only a spouse (or equivalent) and dependent relatives should be considered to form part of the head of state's household. Any extension of the meaning of household beyond spouses, civil partners and dependent relatives would lead to uncertainty as to where the boundary is set.

As neither Prince was dependent upon the King, the Court concluded neither was entitled to claim immunity under the SIA.

What was the scope of the commercial transaction exception?

The Court of Appeal emphasised that the ratio of its decision related to the household issue, not to the scope of immunity for personal commercial transactions. Nonetheless, because of the importance of the issue, the Court set out its views even though it was not necessary to decide the point, given the conclusion that the Princes were not part of the household of the head of state. The Court criticised the trial judge's conclusions, opining that heads of state and their families, like diplomatic agents, should benefit from immunity in respect of their personal commercial transactions conducted abroad.

"Necessary modifications"

The DPA grants immunity to diplomatic agents pursuant to Article 31 of the Vienna Convention (enacted in UK law via incorporation in Schedule 1 to the DPA). However, Article 31(1)(c) contains an exception to the immunity: a diplomatic agent will not have immunity in respect of "professional or commercial activity exercised…in the receiving State outside of his official functions."

The trial judge had found that it was necessary to modify the immunity conferred upon diplomatic agents when applying it to heads of states and their families by disapplying the words 'in the receiving state' from the exception in Article 31(1)(c). The effect of this would have been to preclude heads of state and their families from benefiting from immunity in respect of their personal commercial activity wherever that activity took place. The trial judge reasoned that heads of state do not enjoy ratione materiae immunity in respect of their official commercial activities, irrespective of where that official commercial activity occurs, and that consistency demanded that their ratione personae immunity be similarly restricted.

The Court of Appeal disagreed, referring to the House of Lords decision in R v Bow Street Magistrate, Ex p. Pinochet [2000] 1 A.C. 61 (in which Herbert Smith LLP represented the Chilean government), this being the only other case in which the 'necessary modifications' provision in s20 of the SIA had been considered.

The Court of Appeal considered that the arguments adopted by the trial court, at their highest, made it desirable to modify the scope of the immunity, but distinguished desirability from necessity. It is only necessary to make a modification to the scope of the immunity, the Court said, if there was evidence that Parliament had intended such a modification to be made. The Court accepted that Parliament had not engaged with the difficulties raised by the present issue, but concluded that this in itself was not sufficient.

As a result, the Court concluded that it was not necessary to modify the scope of the immunity conferred by the DPA upon diplomatic agents when applying it to heads of states and members of their household under the SIA. Accordingly, heads of state and their families will enjoy immunity in respect of their professional or commercial activities outside of their official functions outside the UK, but not within the UK.

Comment

The decision is to be welcomed for the certainty it creates. Whereas the High Court had suggested that the constitutional function of a family member should determine membership of the head of state's household, such an approach would have led to uncertain results: a very distant relative of a head of state could, under the right circumstances, benefit from immunity. The Court of Appeal has instead adopted a stricter and more limited approach as to those who may benefit from such immunity, which is determined by their relationship, in particular their dependency, on the head of state.

Although its comments were obiter, the Court of Appeal also provided guidance in respect of when it will be necessary to modify the immunity granted to diplomatic agents under the DPA when applying such immunity to heads of state under the SIA.

It should be noted that this case deals with personal immunity (ratione personae), rather than functional immunity (ratione materiae), which operates when an individual acts in his official capacity on behalf of his state.

While the decision does provide some additional clarity in this area, when contracting with any member of the family of a head of state, it is advisable to seek a clear and comprehensive waiver of immunity. Whilst such waiver may not be effective in all jurisdictions, it will serve to reduce the risk that the counterparty will be able to claim immunity.

Should you wish to discuss the issues raised by this case, please contact Matthew Weiniger, Partner, Andrew Cannon, Senior Associate, or your usual Herbert Smith Freehills contact.