French Supreme Court decision in Commisimpex dispute heralds significant change in approach to sovereign immunity

In Cour de cassation, Chambre civile 1, 13 May 2015, n° 13-17751, the French Cour de cassation (Supreme Court) considered an appeal from a Versailles Court of Appeal judgment in the long-running dispute between the Republic of the Congo and the Congolese company, Commissions Import Export SA (Commisimpex). The Supreme Court considered whether, under customary international law, diplomatic missions benefit from an autonomous form of immunity from execution which can only be waived in an express and specific manner.

In the latest instalment in the long-running saga between the Republic of the Congo (Congo) and the Congolese company, Commissions Import Export SA (Commisimpex), the French Cour de cassation (Supreme Court) has overturned a Versailles Court of Appeal judgment ordering the discharge of attachments, obtained by Commisimpex, of a number of bank accounts held by the Congo in France. The case will now be reheard by the Paris Court of Appeal.

This decision potentially heralds a significant change in the French courts' recent approach to questions of sovereign immunity. In recent years, the French courts have tended to adopt a stricter approach to waivers of immunity from execution, with the suggestion being that any waiver had to be both express and specific. However, the Supreme Court here found that "customary international law does not require a waiver of immunity from execution [that is anything] other than express", thereby appearing to abandon the requirement that the waiver be "specific", and to simply require that it be express.

This represents a potentially significant development in French law in this area and may indicate the adoption of a more flexible approach to questions of sovereign immunity. It remains to be seen how the French courts will approach the issue in other contexts. However, if it materialises, such a change would be a welcome development, particularly given the uncertainty as to exactly how a clause should be drafted if a waiver of sovereign immunity is to be regarded as "specific". (Cour de cassation, Chambre civile 1, 13 May 2015, n° 13-17751.)

Facts

The origins of the dispute between the Republic of the Congo (Congo) and the Congolese company, Commissions Import Export SA (Commisimpex) are to be found in a series of contracts for public works concluded in the 1980s. In 1992, the parties entered into a memorandum of understanding regarding the payment of the Congo’s outstanding debts. On 3 March 1993, the Congo issued a letter of undertaking in which it waived its right to "invoke, in the context of the settlement of a dispute relating to the undertakings which are the subject of this letter, any immunity of jurisdiction as well as any immunity of execution".

These steps failed to settle the disputes between the parties. In December 2000, an International Chamber of Commerce (ICC) arbitral tribunal appointed under the memorandum of understanding issued an award in Commisimpex’s favour. The parties subsequently entered into a further debt settlement agreement in 2003. In April 2009, Commisimpex commenced a second arbitration requesting payments due under the 2003 agreement. In January 2013, an arbitral tribunal sitting under the 2003 agreement issued an arbitral award, again in Commisimpex’s favour.

Commisimpex sought to enforce the 2000 award and in October 2011 obtained the attachment of a number of accounts held in the name of the Congo’s diplomatic mission, and delegation to UNESCO, in Paris. In a judgment handed down on 15 November 2012, the Versailles Court of Appeal confirmed a lower decision ordering the discharge of the attachments on the ground that, under customary international law, diplomatic missions benefit from an autonomous form of immunity from execution, which can only be waived in an express and specific (expresse et speciale) manner. The court found that the March 1993 letter did not satisfy this test.

The Versailles Court of Appeal also refused to order the disclosure of documentation relating to the accounts, including the agreements opening the accounts (and any amendments) and detailed statements listing movements into and out of the accounts in the previous year.

Commisimpex appealed to the French Cour de cassation (Supreme Court) against both the decision to confirm the discharge of the attachments and the refusal to order the disclosure of documentation relating to the accounts.

Regarding the discharge of the attachments, Commisimpex submitted that diplomatic missions do not benefit from an autonomous form of immunity from execution distinct from that enjoyed by the states that they represent. Commisimpex further argued that the Versailles Court of Appeal had misunderstood the nature of customary international law, citing in support of this argument the definition given in article 38(1)b of the Statute of the International Court of Justice, which describes it as "a general practice accepted as law". In this instance, no such consensus existed and the suggestion that diplomatic missions enjoy an autonomous form of immunity from execution, which can only be waived in an express and specific manner, was expressly contested.

In the alternative, Commisimpex submitted that, even if an "autonomous form of sovereign immunity" does in fact exist, given the date of the waiver, there was no particular requirement that it take a specific form. Furthermore, in finding that Commisimpex bore the burden of proving that the affected accounts had not been opened for the purposes of the Congo’s diplomatic missions in France, rather than requiring the Congo to prove the contrary, the Court of Appeal had reversed the burden of proof.

Regarding the refusal to order the Congo to disclose the requested documentation, Commisimpex submitted that, although it bore the burden of proving its case, a demand for the production of evidence held by the other party had to be granted when that evidence was necessary to establish that the claims were well-founded. As such, the refusal to order disclosure amounted to a reversal of the burden of proof.

Decision

The Supreme Court accepted Commisimpex’s initial submission regarding the discharge of the attachment of the accounts, clarifying that customary international law requires nothing more than an "express" waiver of immunity from execution. As a result, in ruling that diplomatic missions enjoy an autonomous form of immunity from execution, which can only be waived in an "express and specific" manner, the Court of Appeal had misunderstood customary international law.

Since Commisimpex’s primary submission had succeeded, the Supreme Court did not consider the other grounds of appeal. The case will now be reheard by the Paris Court of Appeal.

Comment

This decision potentially heralds a significant change in the French courts' recent approach to questions of sovereign immunity. In recent years, the French courts have tended to adopt a stricter approach to waivers of immunity from execution, with the suggestion being that any waiver had to be both express and specific. For example, in Cour de cassation, Chambre civile 1, 28 September 2011, 09-72.057, the Supreme Court stated that the diplomatic missions of foreign states enjoy "an autonomous immunity from execution which can only be waived in an express and specific manner".

Given this, the broad terms in which the Commisimpex decision is formulated is striking. The Supreme Court's general statement that "customary international law does not require a waiver of immunity from execution [that is anything] other than express" appears to abandon the requirement that the waiver be "specific", and to simply require that it be express. This represents a potentially significant development in French law in this area, and may indicate the adoption of a more flexible approach to questions of sovereign immunity.

It remains to be seen how the French courts will approach the issue in other contexts. However, if it materialises, such a change would be a welcome development – particularly given the uncertainty as to exactly how a clause should be drafted if a waiver of sovereign immunity is to be regarded as "specific".

For further information, please contact Laurence Franc-Menget, Of Counsel, Peter Archer, Associate or your usual Herbert Smith Freehills contact.

A version of this article has previously been published by Peter Archer, Herbert Smith Freehills LLP on PLC Arbitration.