HL Deb 16 March 1978 vol 389 cc1480-6

3.31 p.m.

The LORD CHANCELLOR (Lord Elwyn-Jones)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord Aberdare in the Chair.]

Clause 1 agreed to.

Clause 2 [Submission to jurisdiction]:

Baroness ELLES moved Amendment No. 1: Page 2, line 1, after (" submit ") insert (" (a)").

The noble Baroness said: With the leave of the Committee, I will discuss Amendments Nos. 1, 2 and 3 together. First, I think it should be clarified that all the Amendments put down in my name on the Marshalled List are on the assumption that the Government will be making a declaration under Article 24 and, therefore, that the provisions of this Bill do not have necessarily to follow within the precise meaning of Articles 1 to 13 of the Convention. Secondly, as the United States' Foreign Service Immunities Act was recently passed by Congress, it has provided guidelines for some of the clauses which will be considered this afternoon, and therefore some of the Amendments, the ones that I have put down, have been drawn from that Act.

Amendment No. 3—Amendments Nos. 1 and 2 are paving Amendments to Amendment No. 6—concerns the waiver of immunity by a foreign State from the jurisdiction of a United Kingdom court prior to submission. This introduces a welcome change in the law in relation to decisions made in a series of cases such as the Duff Development Company and Kahan v. The Federation of Pakistan. This will be welcomed.

The United States Act in Section 1605A referred to a waiver, "either explicitly or implicitly "; that is, the necessity for a provision in a written agreement specifically referring to waiver would not be necessary in order to remove a State's immunity. Nor would that have to be a written agreement. Not all agreements are concluded in written form and not all dealings with foreign States may contain a written agreement as to waiver. There may be sufficient evidence for a court to conclude that the State had the intention of submitting to a United Kingdom court at the time that the agreement was concluded. As to the manner of concluding agreements, they can be concluded nowadays even on the telephone or by telex. Would the conclusion of an agreement by telex be a written agreement? That would need clarification.

Secondly, on the very nature of agreements between States and foreign individuals or companies, certain types of cases have been established where the intention to submit to the jurisdiction may be implied and not necessarily relating only to the commercial activities which would fall within Clauses 3 and 5 of the Bill as they stand.

Therefore it should be asked whether the fact that a prior agreement to waive immunity is not in writing would protect absolutely a foreign State from submitting to the jurisdiction. It has been said in a work by Professor O'Connell that a waiver can now not only be antecedent but in any form. This is confirmed in the wording of the United States Act. I should be grateful if the noble and learned Lord would comment on these three Amendments. I beg to move.


As I understand it, we are now discussing Amendments Nos. 1, 2 and 6 and possibly Amendment No. 3 as well. The object of Amendments Nos. 1, 2 and 6, as I understand them, is to ensure that a waiver of immunity cannot later be withdrawn except in accordance with any provisions agreed at the time that the waiver was made. The subsection provides for waiver by written agreement. Where there has been such an agreement, it of course becomes binding on the parties and cannot be altered unilaterally. A waiver of immunity is no different from any other agreement; nor is a State in a better position than an individual which would allow it unilaterally to break its contracts. Accordingly, I do not think that Amendments Nos. 1, 2 and 6 are necessary. Indeed, my respectful submission is that they are otiose for the reasons I have given.

With regard to Amendment No. 3, this seeks to enable States to waive immunity from jurisdiction by prior oral agreement; whereas subsection (2) of Clause 2, as it now stands, requires a written agreement. The subsection accords with Article 2 of the European Convention, which provides that a State cannot claim immunity if it has undertaken to submit to the jurisdiction of a court by an express term contained in a contract in writing. It seems not unreasonable that waiver of immunity should be made in a formal manner, of which writing is normally the best evidence. If the Government's main Amendments (to which we shall be coming in due course) are adopted, immunity will, by and large, remain only in respect of Acts of a sovereign nature. States would expect to be immune in respect of such Acts and the courts which, under our law, accord immunity of their own motion will expect them to have it.

In those circumstances, it is not, I think, unreasonable to expect a plaintiff who wishes to have his proceedings entertained, to be able to produce the State's written agreement. It may be argued, and it has been suggested already, that many international transactions (including those which States may engage in) are habitually made by telex, by telephone, even by word of mouth or in a form which attracts a jurisdiction clause only indirectly by reference to some standard terms referred to in the contract.

It is true that, for such transactions, written agreements may be inappropriate. Indeed, the United Kingdom has pressed strongly in other international contexts for the recognition of informal agreements on jurisdiction. But all relevant agreements that we are concerned in in the Bill are likely to be of a commercial or similar nature and will come under the new clause in Amendment No. 9, which will greatly limit the sphere of immunity and which I shall be inserting in due course. Amendment No. 9, which will come after Clause 2, defines where States will have no immunity. In the circumstances, therefore, I hope that the noble Baroness may think that what is already provided for in the Bill is reasonable for general and normal purposes.


I would support the Amendment. This is a most important part of the Bill because, by a decision in 1954, a State could not give its consent to the jurisdiction of our courts by a prior agreement. It could only be done in the course of the court proceedings by submission to the appearance of the court. Our jurisdiction has been hampered in that way. In the United States, they have a much wider jurisdiction, allowing a State, by agreement, to submit to the jurisdiction of the courts.

We ought to do the same. Otherwise, our city of London may, in some circumstances, not be able to compete with the United States in some of these contractual dealings—loans, and the like. There is no reason whatever, it seems to me, why it should be confined to a written agreement. If there is an agreement, whether it be orally, on the telephone, or whatever, and whether it be in a case of a commercial nature or in a case of another nature, and a person agrees beforehand to submit to the jurisdiction of our courts, I see no reason why that person should not be held to the agreement. Therefore, I would submit the Amendment without the qualifications which the noble and learned Lord the Lord Chancellor has put forward.

3.41 p.m.


My Lords, I, too, ask the noble and learned Lord the Lord Chancellor whether he will think again about this. I do not believe that this is a question of wording so that what the noble Baroness has proposed is otiose. On the contrary, there is a serious point of principle here which lies near the heart of this Bill. The principle is whether we follow the traditional system which says that the State can submit to the jurisdiction of the court by appearing before it, and so on, and that submission at any one stage does not carry submission at a later stage (you have to submit at every successive stage before you can enforce anything), or whether, on the contrary, you go over to the more modern system which I believe has been followed by the United States. That contemplates that States may, when entering into an agreement, then and there decide to waive their immunity and then provide, as the United States does, and as Amendment No. 6 does, that you cannot withdraw a waiver which you have once given unless you have so provided in the terms of the waiver. That this is not theoretical can be shown by the terms of a typical clause which I am told is used in a great many agreements of a commercial character. This has been supplied to me by those who are familiar with this type of business. This is dealing with loan agreements.

To the extent that the Borrower may in any jurisdiction in which the proceedings are at any time taken for the enforcement of this Agreement claim for itself or its assets immunity from suit, execution … and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed) "— Now come the important words— the Borrower hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity to the full extent permitted by the laws of such jurisdiction. It is that type of clause, which I believe is not at all uncommon, which the noble Baroness is evidently thinking about in her Amendment No. 6. It is a different system, as noble Lords will see, from the traditional one of submitting to jurisdiction as the Bill at present provides. It says that certain things are submissions and certain things are not submissions, and when you submit for one purpose you have to submit for another. It is a different system from that which enables States to waive immunity and says that if they once waive immunity then they are stuck with it unless they reserve the right to resile at a later stage. There are important consequences later on when one deals with enforcement. I want to show my hand completely on this matter: I know that the noble and learned Lord does not think the same as some of us about it.

This has important consequences when one tries to get enforcement against assets under the Amendment of the noble Baroness as provided in other Amendments. This paves the way for possible enforcement of judgments against States unless, in the initial waiver of jurisdiction, they have expressly provided that the waiver does not extend to enforcement, or whatever it is. Fully recognising that this is a question of principle and not of drafting, I would, with great respect, ask the noble and learned Lord to see whether he can come some way to meet the proposed Amendment, whether the waiver is written or not. I have nothing to add to what my noble and learned friend Lord Denning and the noble Baroness have said.


While I submit that nearly all the agreements that we are talking about are likely to be of a commercial or similar nature, and by reason of the considerable limitations which the Bill, with the proposed Amendments, will impose on State immunity, I still doubt whether these Amendments are really necessary. However, in the light of the submissions which have been made, I am very willing to consider them again. Perhaps we can return to them at a later stage if the noble Baroness is disposed not to press Amendments Nos. 1, 2, 3 and 6.

Baroness ELLES

I thank the noble and learned Lord for the way in which he has dealt with these particular Amendments. I am happy to withdraw them, by leave of the Committee, if he will reconsider them in the light of the statements of the noble and learned Lords, Lord Denning and Lord Wilberforce.

Amendment, by leave, withdrawn.

[Amendments Nos. 2 and 3 not moved.]


My Lords, with the leave of the Committee, I suggest that this may be a good moment to hear the Statement which is being made in another place. I beg to move that the House do now resume.

Moved, that the House do now resume.—(Lord Strabolgi.)

On Question, Motion agreed to.

House resumed.