knowledge 28 October 2016 |

Court Reiterates Fundamental Principles on Foreign State Immunity

Principles

Broadly, the principles applied in Ireland are that a foreign state or state agent may be impleaded in Irish litigation if the subject-matter of the litigation is essentially contractual (jus gestionis) and does not involve the exercise of any state power (eg a contractual claim relating to a routine supply contract from an Irish supplier). However, a foreign state agent may not be impleaded where the litigation essentially challenges the exercise of public law powers by the foreign state or public body (jus imperii); where the defendant enjoys institutional immunity under a Convention², or where the litigation would necessarily involve the Irish court in passing judgment on the exercise of foreign executive power, albeit not necessarily by a party to the Irish action.

The Facts

In Brady, the plaintiffs were potato farmers who bought “Premier Elite” potato seed from an Irish seed supplier, who had in turn sourced the seed from a seed potato merchant in Northern Ireland. The seed was alleged to have been certified as “Premier Elite” by the Northern Ireland Department of Agriculture and Rural Development (DARD) as the statutory authority in Northern Ireland for crop certification. The plaintiffs claimed that the crop failed because the seed was not “Premier Elite” but was of inferior quality, contrary to its certification.

In an affidavit supporting its application to set aside service, DARD’s representative explained that that DARD was a statutory corporation which existed independently of the relevant Minister and had statutory powers, but was under the direction and control of the Minister by virtue of the Northern Ireland Act 1998; that executive power in Northern Ireland continued to be vested in the British Crown, and that departments such as DARD exercised executive powers on behalf of the Crown. DARD had no commercial role in seed marketing. The plaintiffs opposed the application, on grounds including that as Northern Ireland is a sub-state unit, it does not have separate capacity to enter into international relations and therefore its Departments cannot claim state immunity.

Traditional Immunity

The court began from the approach set out in Government of Canada v Employment Appeals Tribunal³ that: (1) it is doubtful if the doctrine of absolute sovereign immunity was ever conclusively established in Ireland; (2) assuming that it was, that doctrine has now expired; (3) the doctrine of absolute immunity flourished when sovereign states were concerned only with the conduct of their armed forces, foreign affairs and currency operations, and more recently with so many states engaged in trade, direct or indirect, a rule of absolute immunity is no longer appropriate, but (4) if the activity called into question truly touches the actual policy of the foreign government then immunity should still be accorded.

Similarly, in McElhinney v Williams and Secretary of State for Northern Ireland,⁴ the first defendant was a corporal in the British Army alleged to have assaulted the plaintiff on the Irish side of the border while carrying out duties at a border checkpoint. The Supreme Court held that while the principle of sovereign immunity no longer applies in respect of commercial or trading activities in which a foreign government participates, Corporal Williams was engaged in governmental activity on behalf of a sovereign state and was entitled to immunity.

Validity of Foreign Executive Action

The court in Brady also noted the authorities which establish that the Irish courts will not regard themselves as having jurisdiction to determine the validity of executive or administrative acts of the authorities of another state which are not claimed to have any legal effect outside the borders of the latter state, ie where the litigation would necessarily involve the Irish court in passing judgment on the exercise of a foreign executive power within its own territory, albeit not necessarily by a party to the action.⁵

The court held that it was clear from these decisions that once the actor concerned can properly be regarded as a state agent, regardless of whether he is an agent of the central state administration or of a substate unit, the only question is whether the activity concerned is of a public rather than private nature. It concluded that DARD was engaged in governmental activity, as agent and on behalf of the Crown, and that this was sufficient to ground a claim for immunity. The plaintiffs’ claim that DARD had acted in breach of relevant Northern Ireland regulations would necessarily have involved the Irish court in an analysis of those provisions and a determination of whether there had been compliance with them by DARD within Northern Ireland, which the authorities established the Irish court could not do.

Conclusion

There could of course have been an interesting broader question, of whether certification by a state authority of goods as compliant with a particular regulatory standard could give a right of action to a third party other than the presenter of those goods for certification - such as a person further down the supply chain - but the court having found that DARD enjoyed immunity from the claim did not have to address that problematic question.

Foreign state agents are likely to continue to enjoy immunity in the Irish courts (though they may of course be sued in their home courts) provided that the acts complained of involve the exercise of executive functions on behalf of the state, but foreign parties may also resist litigation in Ireland where the litigation would necessarily involve a challenge to the exercise of a foreign executive power within a foreign state’s own territory.