The rising assault on sovereign immunity and implications for developing countries (Part 3)

By Ambassador Godknows Igali

The Double-faced Application of Sovereign Immunity among the Great Powers

The question recurrently raised by commentators on the subject matter is – how has sovereign immunity been upheld or denied amongst countries in the global north in their inter-relationships, as especially detailed by Christiana Akrivopoulou (2018)?

In the 2018 case between Belgium and the Netherlands, the former invoked immunity against the Dutch court ruling to pay damages to a Dutch citizen affected by Belgian nuclear waste. In the same line of cases between the Austrians and the Germans in 2019 in which the former invoked sovereign immunity against the ruling to pay damages to a German citizen who was affected by nuclear plant emission.

In 2019, France successfully pleaded sovereign immunity against a UK court ruling to pay UK citizens affected by French nuclear tests. In other cases, also on European soil, in 2020, the government of Greece successfully invoked sovereign immunity against a German court ruling to pay damages to Greek citizens affected by World War II. When Italy took Spain to court over damages to Italian citizens affected by the Spanish shipping company, the government of Spain successfully invoked sovereign immunity in 2019.

Other cases in the public domain which were essentially commercial were between the German state-owned bank (KLW) and Italian bond owners (2019); between French company (ENGIE) and Belgian counterpart (Fluxys) in 2018; UK Export Finance Ltd and Irish company, AerCap, as well as Spanish State Company (Repsol) and Portuguese counterpart in 2018.

Indeed, on its part, the US government has successfully pleaded and obtained judgement upholding sovereign immunity in several land dispute cases as far back as 1882. In 1981, the US Supreme Court upheld sovereign immunity for the US government in cases involving claims for damages relating to Native Americans’ land. By 1993, the US Court of Appeal (Federal Circuit) upheld sovereign immunity in a case involving contractor’s claim for payment.

The most spectacular was the 1994 case, where the US Supreme Court upheld sovereign immunity for the US government in a case involving claims for damages. In 2012, the US Supreme Court also upheld immunity in a case involving claims for tax reforms.

What can the weaker countries do?

It is obvious that the diminished claim of sovereign immunity has a north-south dichotomy. So, while Western countries have generally maintained strong sovereign immunity respect amongst themselves, poorer countries often have theirs being eroded in the same courts, apart from a few exceptions.

What the above patterns show is that poorer countries face the same challenges as it pertains to sovereign immunity as a result of many factors, which include but not limited to meagre economic resources, dependence on foreign aid and investment, their uneven diplomatic influence in world affairs and their inability to properly muster the resources to undertake high profile international legal representation.

It is, therefore, more difficult for them to defend their sovereign immunity and their hard-earned assets against powerful nations and in defence of their economic interests.

This disparity highlights the need for developing countries to adopt new models to be able to properly protect their interests at a time when international law is being given different shades of interpretations. There is need for them to come up with new paradigms and strategies to protect their interests. This could be done through:

i. Ensuring that they exercise more contractual discipline and decorum in their dealings. The arbitrary manner in which contracts are terminated or contractual obligations treated with levity must be brought to an end. Reckless behaviour in this regard, resulting in national shame, must be sanctioned;

ii. There is need for a stronger internal control mechanism to ensure that major contracts with foreign companies in particular are properly vetted by experts in the respective foreign ministries and ministries of justice. Indeed, there is a need to develop a common template to indemnify the national governments from contingent liabilities in which their assets in different countries could be seized. So contractual obligations must, therefore, always have clear exit clauses;

iii. Furthermore, the less developed countries must advocate for equitable laws and reforms which would spell, in more clear terms, the limit of national courts as it pertains to their unmitigated rulings on questions in which the liability of sovereign states are only tenuous. For example, situations like the extant case in Nigeria, where a sub-national unit, the state of Ogun in the country’s southwest, acting alone, and leading to the seizure of sovereign assets, should be excluded in clear terms in any agreement.

Such reforms could be handled at the level of the United Nations General Assembly (UNGA), the African Union, International Law Reform Commission (ILC) and International Arbitration Commission (IAC) and not the least the ICJ and the PCA;

iv. Developing countries also need to build up more effective diplomatic strategies that provide for back channel engagements when conflicts arise while negotiating such transactions. It is less effective for diplomacy to come in when litigations have gone far. This would enable the sovereign states to invoke the need to exhaust available G-to-G legwork in resolving disputes before resorting to law courts.

v. The Supreme Courts of both the US and UK have upturned some cases in which sovereign immunity was denied to Argentina, Saudi Arabia, China, Nigeria (PI&D case), etc, at lower or at appellate levels. This means there is still a hope to fight on. So, the right of appeal to apex courts, even in their lands, should at all times be fully exercised while robust diplomatic engagement as in the extant case with the Chinese company against Nigeria is afoot.

The fact that not only Nigeria but virtually all countries of the south are victims of the predatory and brusquely imperious gale of sovereign seizure of assets must not be allowed to be a new normal.

The countries of the global south must fight in more concerted diplomatic manner to protect their assets or risk a situation where they may wake up and see that stronger countries have appropriated even their existence.

In contrast, clearly, the big boys of the world have continued to navigate sovereign immunity in principle amongst themselves; even when the subject matters are very sensitive historical, political, and economic issues. However, until there are comprehensive reforms, there may be need to return to the International Court of Justice (ICJ) to give a ruling as to the level of jurisdiction which national courts can assume vis-à-vis such cases in which the sovereign immunity of countries, including diplomatic and consular premises or personal virtuals of Heads of States, such as Presidential jets, could be sequestered at will by national courts. This may help give some succour for now, but the fight must be sustained.

Dr. Igali is a career diplomat and award-winning writer.

ambigali.com