Australian Year Book of International Law
It has now been almost 50 years since Hersch Lauterpacht advocated a serious reappraisal of the doctrine of foreign state immunity. He described the principle as an ‘essentially insignifican[t] problem which had tended to infuse an element of artificiality into international law’. Accordingly, it was time to ‘free … international law of the shackles of an archaic and cumbersome doctrine of controversial validity and usefulness’. In Lauterpacht’s view the plea of foreign state immunity served little purpose other than to frustrate the vindication of individual rights and justice. Immunity, at least in its absolute form, was contrary to the rule of law and should generally be abolished subject to a few, limited exceptions. The aim of this article is to recall the concerns of Lauterpacht and inquire afresh as to whether the doctrine of foreign state immunity should be retained. In considering whether immunity continues to perform a useful function in international law, a number of points will be noted.
First, it is now almost impossible to speak of a ‘customary international law’ of foreign state immunity given the divergences in state practice. Immunity has, in fact, become little more than a sub-branch of each state’s domestic law. In particular, there is disagreement among states subscribing to the restrictive theory as to the circumstances in which immunity should be excluded. Second, it may be argued that, given the diminishing role of the state both as a national and international actor, at least relative to the transnational corporation and the individual, a serious question arises as to a state’s continued entitlement to any special protection from the domestic jurisdiction of other states. Third the existing domestic law principles of private international law, which are becoming increasingly sophisticated and uniform among states, could now provide adequate jurisdictional safeguards for foreign states in the vast majority of cases. As will be discussed, the spheres of operation of the jurisdictional rules of private international law and the principles of foreign state immunity largely overlap. Before examining these propositions in detail, the rationale and history of foreign state immunity will be considered.
The doctrine of foreign state immunity grew out of two unrelated legal developments: the protection granted to diplomatic agents and consuls from foreign prosecution and the immunity of the forum state (or sovereign) before its own courts. Whereas the basis of diplomatic immunity was largely functional, that is, in order to facilitate international transactions and communication between states, the justification for local sovereign immunity was to preserve the dignity and independence of the sovereign.
By the eighteenth century, both these rationales, when combined with the accepted notion of the sovereign equality of states in international law, led to the emergence of a further species of immunity: immunity of foreign states from the jurisdiction of other national courts. The idea emerged that it was incompatible with a state’s sovereignty and dignity for it to be subject to another state’s jurisdiction.
There has always been some dispute as to whether, in its original form, foreign state immunity was ‘absolute’ in nature, that is, that under no circumstances could jurisdiction be exercised over a foreign state, or merely ‘restrictive’, which meant that jurisdiction may sometimes be permissible. While a number of states still adhere to a principle of absolute immunity, a movement towards exercising jurisdiction over foreign states in some matters has now firmly taken hold in the majority of states. However, the precise basis of this restrictive immunity and the time at which it was recognised in individual states differs markedly. Accordingly, while certain European states applied a form of restrictive immunity as early as the 1920s, it was not until the 1950s in other parts of Europe and the United States  and the 1970s in England, that the doctrine of absolute immunity was abandoned.
Despite the retention of absolute immunity in some states and its earlier acceptance in others, writers have doubted as to whether the doctrine of absolute immunity ever in fact formed part of international law. While the principle of the sovereign equality of states has always been a central plank of international law, it does not follow from this principle that a state could never exercise jurisdiction over the activities of another state. In fact, for international law to have required states to accord absolute immunity to others would have been inconsistent with another well-established international law principle, the doctrine of territorial sovereignty. Pursuant to this principle a state is considered to have exclusive, unqualified competence with regard to matters occurring within its territory. For absolute immunity to have existed as a rule of international law, therefore, it would need to have been as an exception to this principle. Evidence in support of such a view is difficult to find. So, a form of restrictive immunity has always formed part of customary international law, such that a forum state retained jurisdiction over certain acts of a foreign state on its territory.
However, the distinction between the local and extraterritorial acts of a foreign state was not explicitly endorsed in the practice of states as the basis of immunity until the 1970s. Such a distinction now forms the foundation of the law of immunity in most common law states. Under the United Kingdom State Immunity Act 1978 (SIA) and its progeny a number of the listed exceptions to immunity are based on the territorial connection between the action and the forum. For example, as regards employment contracts, it is provided that a foreign state is not immune where the contract was made in the United Kingdom or the work is wholly or partly to be performed there. Similarly, under the United States Foreign Sovereign Immunities Act 1976 (FSIA) an exception to immunity is provided for commercial activity performed by a foreign state where the activity has one of three specified connections to the forum state. The same pattern is evident in the case of torts involving personal injury or loss or damage to personal property. Under both the SIA and similar national legislation as well as the FSIA, a foreign state is not immune for such wrongs where they are caused by an act or omission in the forum.
Reliance on territorial nexus as a basis for determining immunity questions has also been supported by writers. In his 1951 article, Lauterpacht argued that as regards any right to immunity a foreign state should be placed in the same position as the forum state would be before its own courts. However, in three cases, immunity would continue to apply. First a foreign state would retain immunity where a claim concerned its legislative acts or executive and administrative acts on the state’s own territory. Second no local jurisdiction could be exercised over contracts that had no connection with the forum and third, no proceeding could be brought that conflicted with the principles of visiting armed forces or diplomatic immunity. Hence, according to Lauterpacht, suits should generally be permissible against a foreign state unless they concern events that occurred in the defendant state’s territory.
Another commentator who has advocated a territorial approach to foreign state immunity is Don Greig. During the Australian Law Reform Commission reference on immunity, Greig proposed a model that would have removed immunity for acts of a foreign state committed within the forum but preserved it for acts performed outside. Although the Commission, in its report, had some sympathy with the Greig approach it ultimately did not adopt his view in the drafting of the Australian immunity statute for fear of ‘differing considerably in appearance from overseas texts.’
In contrast to the territorial approach, a number of European states, of the civil law tradition have developed an exception to immunity based on the nature of the acts engaged in by the foreign state. Specifically, a foreign state remains immune from jurisdiction for its public or sovereign acts but may be liable for its private or commercial acts. The notion that a foreign state should be denied immunity for its commercial or private transactions emerged at the beginning of the twentieth century in response to increased activity of foreign states in the economic and industrial spheres. In particular, it was felt unjust that a foreign state could freely enter into a commercial contract and, in so doing, act similarly to a private entity and then renege on its obligations without liability. Application of an approach based on the nature of the acts performed obviously differs from the territorial model because it has no regard for the place in which the events giving rise to the action occurred. Instead, a single generic test is applied to all acts of a foreign state to determine whether they are public or private.
Even in those common law states where a territorial approach has been generally taken to immunity issues, it is now generally accepted that certain commercial transactions of a foreign state should be subject to local jurisdiction. Accordingly, in the FSIA, immunity is excluded where a foreign state engages in ‘commercial activity’, while in the SIA and its progeny local jurisdiction may be exercised over a ‘commercial transaction’.
However, under these enactments, unlike the civil law public/private acts test, concrete examples of commercial activity are also provided, with the aim of reducing the scope for abstract reasoning and limiting the discretion of courts. For example, under the SIA and similar national legislation[20 ] a commercial transaction is defined to include:
(a) any contract for the supply of goods or services; (b) any loan or other transaction for the provision of finance and any guarantee or indemnity in respect of any such transaction or of any other financial obligation; and (c) any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a state enters or in which it engages otherwise than in the exercise of sovereign authority.
Furthermore, under these acts, specific provision is made for other types of ‘commercial’ transaction for which immunity cannot be claimed. For example, local jurisdiction may be exercised over claims relating to contracts of employment, certain intellectual property rights and membership of corporations involving foreign states where a territorial link exists between the transaction and the forum.
Hence, while there is some agreement between the common law states with immunity legislation and the civil law states that commercial transactions are not generally subject to immunity, the different methods adopted to giving effect to this principle render it difficult to say that there is a clear and uniform international law approach to this issue. Moreover, the more specific and detailed approach to defining commercial activity of the states with immunity legislation has not eliminated all the problems of distinguishing immune and non-immune activities. There remain a number of contentious issues common to both these jurisdictions and the civil law states applying the public/private distinction.
First, is it appropriate to take into account the object or purpose of a particular transaction in determining whether it is private or commercial or should the legal form or ‘nature’ of the transaction be the sole criterion? Second, is it even possible to distinguish the ‘nature’ and ‘purpose’ of a transaction entered into by a foreign state since every such transaction is likely to have at least some sovereign aspect? Third, in determining whether a private or commercial act is involved, which ‘act’ is to be focused upon, for example, in a breach of contract claim, is it the contract itself or the breach?
The decision of the House of Lords in Kuwait Airways Corporation v Iraqi Airways Co  illustrates how some of these problems have persisted. In that case, Kuwait Airlines brought actions in England against the Iraqi state-owned airline for (i) the seizure of ten civilian aircraft from Kuwait airport after the invasion of Kuwait in 1990 and (ii) their subsequent retention and use by the Iraqi airline. Before the second series of events occurred, the Iraqi government had issued an executive decree (Resolution 369) which purported to dissolve the Kuwaiti airline and vest all its assets (including the aircraft) in the Iraqi airline.
The Iraqi airline sought to claim immunity from jurisdiction for both acts, which the trial judge rejected on the basis that the purpose of the confiscation of the Kuwaiti aircraft was to improve the fleet of the Iraqi airline. Such a purpose was commercial and so there was ‘commercial activity’ sufficient to satisfy the exception to immunity in section 3 of the SIA. The House of Lords disagreed with the trial judge’s reasoning on this point, saying that only the ‘nature’, not the purpose of motive underlying the transaction, must be considered in characterising an act as sovereign or commercial.
As has been noted by commentators, the problem with asserting that only the ‘nature’ of an act rather than its purpose be considered is that it strips the act of any context or meaning. Under the ‘nature’ approach the question to be asked is whether a particular act could be performed equally by a private individual or a government. Obviously virtually any act could fall into this category unless it was government legislation or executive acts, since governments, like private corporations, act through the medium of individuals and so, in theory, should be physically capable of performing the same acts.
The International Law Commission, in its Draft Articles on the Jurisdictional Immunities of Foreign States, appears to have appreciated this point by including a definition of ‘commercial transaction’ that refers to both the nature and the purpose. However, despite the difficulties in ignoring the context or purpose of the transaction in determining whether an act of a foreign state is sovereign or commercial, the House of Lords in Kuwait unanimously endorsed the ‘nature’ test.
The Court then proceeded to consider whether the particular acts were commercial. The first set of acts considered was the seizure and removal of the aircraft which all judges agreed were governmental acts. In performing these acts, the Iraqi airline was merely acting as an instrument of government policy, which had been to seize certain Kuwaiti property during the invasion. The airline therefore was immune from suit for these acts. However the Court split on the characterisation of the subsequent acts, that is the treatment of the aircraft by the Kuwaiti airline as part of its fleet and their use on internal, commercial flights.
The majority judges concluded that such acts were private or commercial and not sovereign. In their view, the critical factor was the issuing of the executive decree after confiscation and removal to Iraq of the aircraft that purported to dissolve the Kuwaiti airline and vest all its assets in the Iraqi airline. The majority felt that the effect of this decree was to change the character of the subsequent acts, namely the retention and use of the aircraft, from governmental acts to private or commercial acts. These subsequent acts became, as a result of the decree, ‘fresh acts of conversion’. The fact that the earlier act of seizure by the airline was governmental did not matter, since, applying the test from 1 Congreso del Partido, what had to be focused on was the specific act in question. The majority here found that the acts of retention and use were acts that could have been performed by a private party.
In a powerful dissent, Lords Mustill and Slynn concluded that the acts of retention and use could not in any way be described as ‘commercial’ or private. In reality, these acts were part of an entire transaction of events pursuant to the invasion and it was artificial to focus on individual stages and attempt to characterise them separately as required by Congreso. It is implicit in these judges’ comments that, in some cases, an approach which examines the overall transaction must be taken in determining whether certain activity is commercial or sovereign. However, the minority said that, even if the acts were to be considered in isolation, they were not private or commercial but taken at the behest and direction of the Iraqi government.
The Kuwait Case shows that the problem of distinguishing commercial from non-commercial acts remains intractable. Many transactions will exhibit both private and sovereign aspects and to determine the question of immunity, it will be necessary to focus on one aspect or another, a largely arbitrary process. It seems likely in the future that these problems of characterisation will continue to haunt actions against foreign states, even in those jurisdictions where a more detailed, legislative definition of commercial activity applies.
From the above discussion it is obvious that there is no clear customary international law rules of foreign state immunity. There remain a number of states that continue to follow the absolute immunity doctrine. Although there is some agreement between states adhering to the restrictive view as to what matters may be adjudicated, there remain significant differences in approach, even between states of the same legal tradition. Furthermore, as was noted above, the most important exception to immunity, that is, where a foreign state engages in commercial or private acts, remains very difficult to apply, even in those states with national immunity legislation. There would therefore seem to be a strong argument for the adoption of a new approach to the question of adjudication of the acts of foreign states.
A final observation on the law of foreign state immunity is that there also exists, in addition to immunity from jurisdiction, the right of a foreign state to immunity from execution of any judgment awarded against it. Accordingly, even if a plaintiff manages to overcome the barrier of jurisdictional immunity, a foreign state may still avoid having to make redress by pleading immunity from execution. The general position with respect to execution of a judgment against a foreign state is that it can only be made against property of the state used for ‘commercial purposes’. This principle has been used to frustrate plaintiffs on occasions.
It is suggested that this separate and additional immunity for foreign states is anomalous and leads to injustice. The retention of this principle also lends further weight to the view that the general position of foreign state defendants before national courts should be reviewed.
In the preceding discussion it was argued that no ‘international law’ of foreign state immunity exists owing to the divergent national approaches to the issue. On the positive side, however, there may be elements in the national practice earlier considered that could suggest an alternative solution to the problem of domestic adjudication of the acts of foreign states.
It will be recalled that immunity acts as a bar to the forum state exercising jurisdiction over a foreign state defendant. However, before the question of immunity is even reached, the forum state must first have jurisdiction under its own principles of private international law over the foreign state defendant before a claim can proceed. Such rules will normally require valid service upon the foreign state. According to the law of most states, this requires service through the diplomatic channel, that is by the foreign office of the forum state on the foreign office of the foreign state.[37 ] If the foreign state defendant is a state-owned corporation rather than a division of the government itself, then it seems that service may be effected in the same manner as with a private defendant, that is, upon an office of the corporation or its agent. If such office lies within the territory of the forum state, then jurisdiction is established.
However, if such an office lies outside the forum territory or if a part of the government of the foreign state itself is being sued (as distinct from a separate corporation) then the requirements for ‘long-arm’ or extended jurisdiction must be satisfied before the forum can adjudicate the claim. According to states of the English common law tradition, extended jurisdiction is only established where there exists a nexus between the cause of action and the forum. For example, in the case of a contract action, the contract must have been entered into, breached in or governed by the law of the forum. Similarly, in the case of a tortious claim, it is necessary for the plaintiff to show that the tort occurred in the forum or that some damage was suffered there.
Under United States law, by contrast, a ‘nexus’ is also required between the forum and the claim but in less tangible and physical terms. For extended jurisdiction, the plaintiff must show that there are ‘minimum contacts’ between the foreign defendant and the forum and that its claim arises out of such contacts. In practice, this test is often satisfied by proof of similar elements to those required under English common law principles.
Even if the plaintiff can establish the requisite link between the cause of action and the forum, the defendant foreign state or state-owned corporation may still be able to avoid suit in the forum by seeking a stay of proceedings on the ground of forum non conveniens. Such a principle is now widely accepted in common law states, with the general principle being that, to obtain a stay, the defendant must show that the local forum is either less appropriate than another located overseas for resolution of the dispute or ‘clearly inappropriate’.
It is suggested that there would be substantial scope for a foreign state to argue that a forum was inappropriate where, for example, the law governing the transaction was that of the foreign state, where the case involved events that almost wholly took place inside foreign state’s territory or where the plaintiff held the nationality of the foreign state. Similarly, it would seem possible in a forum non conveniens application for a foreign state to argue that a local court should not exercise jurisdiction over a claim because to do so would unduly compromise its sovereignty or security interests. Actions concerning activity at diplomatic missions or the armed forces of a foreign state are possible examples. As a result then, many of the arguments that are traditionally raised in a foreign state immunity inquiry could be encapsulated within a forum non conveniens determination. The effect of such an approach would be that factors that would amount to automatic bars to jurisdiction under foreign state immunity, for example, the presence of a ‘sovereign’ as opposed to a ‘commercial’ transaction, could now be taken into account as discretionary matters by a court in deciding whether to assume jurisdiction. The forum would therefore have much greater flexibility to weigh factors of sovereignty, against other circumstances pointing in favour of the exercise of jurisdiction, such as possible injustice to the plaintiff. However, under the doctrine of restrictive immunity as applied in most common law states, there is a presumption of immunity that may only be displaced where one of the express exceptions is satisfied. Such an approach obviously provides a forum court with much less scope to adjust jurisdictional outcomes to the facts of the case.
Therefore, it should not be assumed that the proposed abolition of foreign state immunity would automatically mean a vastly increased exercise of jurisdiction over foreign states since there is ample scope under the common law rules of private international law for recognition of such states’ interests. In fact, it should be noted that, under private international law principles, there is capacity for a state to limit its jurisdictional exposure to foreign courts in advance.
In contracts, particularly involving commercial transactions, it is common for private parties to include a jurisdiction or arbitration clause. Where an exclusive jurisdiction clause is provided in a contract (that is, a clause stipulating that only the courts of a particular state may hear the claim), English, Australian and United States common law principles provide that it will be enforced unless there are strong reasons to the contrary. In the case of arbitration, almost all common law and civil law states have adopted the 1958 United Nations Convention on the Recognition and Enforcement of Arbitral Awards and Agreements. Pursuant to Article II of this Convention, the courts of a Contracting state must generally decline jurisdiction where confronted with an agreement providing for arbitration in a foreign state.
Accordingly, it is open to a foreign state at the time of entering a contract to reduce the risk of being sued before another state’s courts by the inclusion of either an exclusive jurisdiction clause (in favour of its own courts) or an arbitration clause.
Finally, although a proposal to abolish foreign state immunity may seem radical, it could be argued that, in their recent immunity legislation, common law states have already moved part of the way towards placing the doctrine within the rubric of private international law. This movement can be detected in the increasing reliance on criteria of territorial nexus to resolve immunity questions; principles that are similar to the private international law rules for determining jurisdiction. It may therefore be argued that collapsing the immunity and jurisdiction inquiries into one would provide for simpler and more efficient litigation, given the increasing overlap in their coverage.
For example, in the case of personal injury and property torts, the immunity legislation of most common law states provides that jurisdiction may be exercised over foreign state defendants where the wrongful act or omission occurs in the forum. In comparison, the rules of private international law allow a court to exercise jurisdiction both on the same basis and, in relation to a tort occurring outside the forum, where damage is suffered in the forum. While it appears that a foreign state tortfeasor would be more disadvantaged under the rules of private international law, such a conclusion ignores the possible operation of the forum non conveniens principle. In fact, there is clear authority that in the case of a tort having little connection with the forum a plea of forum non conveniens is likely to be successful. Hence, it is suggested that the ‘tort exception’ to foreign state immunity adds little of substance to the existing private international law rules of jurisdiction and so could safely be discarded.
Similarly in the case of contracts of employment, it was noted earlier that national immunity legislation has created an exception to immunity where the contract is made in the forum or the work is to be wholly or partly performed there. Jurisdiction will generally not be exercised, however, where the employee has a close link to the foreign state.[50 ] By contrast, under the common law jurisdictional rules, a contract claim may be brought in the forum where it is made or breached there or governed by local law and the forum court chooses not to decline jurisdiction on discretionary grounds.
In addition the effects of the immunity provisions and the private international law rules on the jurisdictional position of the foreign state are likely to be similar. Claims with a territorial link to the forum will generally be adjudicated but other actions will not proceed. Once more, it may be argued that the immunity rules are superfluous.
Another advantage of abolishing the rules relating to foreign state immunity is that it may assist individuals seeking redress for human rights abuses against foreign states. Currently, the territorial limitation on the tort exception to immunity has made it very difficult to sue a foreign state for acts committed within its territory. Moreover, the position for claimants is not helped by the fact that only in the United States legislation is there an express ‘human rights exception’ to immunity and, even then, only very limited in scope. National courts have also been notably reticent to imply such an exception to enable them to assume jurisdiction.[52 ]
However, if a claimant only had to satisfy the common law rules of private international law to bring an action for human rights breaches, it may have more chance of success. Assuming the plaintiff could show the suffering of some damage in the forum, then it would be a matter for the court, in its discretion, to determine if the claim should proceed, instead of its being barred at the outset. Additionally, the court could, in a forum non conveniens inquiry, take into account a much wider range of factors in determining the jurisdictional question in a human rights case than is possible under current immunity law. For example, the concern of a foreign state at having its dignity or security compromised may be weighed against the need of the claimant for redress and the international interest in deterring the commission of human rights violations generally.
There remain certain issues under the immunity legislation of common law countries that are not resolved by reference to criteria of territorial nexus. One example is actions relating to employment at diplomatic missions which, to varying degrees, are currently barred from adjudication under these enactments. However, as discussed above, it is suggested that the jurisdictional rules of private international law are sufficiently flexible to take account of the competing interests of plaintiff and foreign state defendant in deciding whether jurisdiction should be exercised in such a case.
A possible objection to the proposed model that may be raised is that the jurisdictional rules of private international law are not uniform across states and, in particular, the flexibility which is characteristic of common law rules of jurisdiction is absent from the rules of civil law states. The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968 (Brussels Convention), which applies throughout the European Union and by extension, the European Economic Area, is broadly representative of the civil law approach to jurisdiction. Significantly, the terms of the Convention also apply to certain proceedings brought before English and Irish courts, both of which are common law jurisdictions.
The first main principle of the Convention is that it applies to ‘civil and commercial matters’; wording that could, not unreasonably, be interpreted to cover the majority of civil claims brought against foreign states. The second main principle of the Convention is that its jurisdictional rules only apply where the defendant is domiciled in a ‘contracting state’. Article 2 then lays down a presumption that a defendant domiciled in a contracting state is subject to the jurisdiction of the courts of that state. If the defendant is to be sued in the court of another state then this can only occur in a few, specified situations.
Although the notion of domicile is slightly odd in the context of a foreign state defendant, if Article 2 were extended to include proceedings against such an entity (assuming that it is a party to the Brussels Convention) the presumptive place of suit would be that state’s own courts. The effect of such a conclusion would be to make the doctrine of foreign state immunity redundant because under Article 2 no other national court would have jurisdiction over the state. However, there may be situations where an individual plaintiff should be entitled to have recourse to his or her own courts for actions against foreign states because of the overwhelming connection between the action and the plaintiff’s state or the risk of injustice in suing in the defendant state. Significantly, there is scope under the Convention for suing a defendant outside its place of domicile in a number of situations.
First, under Article 5(1), in matters relating to a contract, a defendant may be sued in the courts for the place of performance of the obligation in question. In the case of a contract of employment, this place is the state where the employee habitually carries out its work. Second, under Article 5(3), in matters relating to tort, a defendant may be sued in the courts of the place where the harmful event occurred. Third, under Article 16(1) of the Convention, proceedings concerning immovable property are to be brought in the courts of the contracting state in which the property is located. Finally, under Article 17, there is recognition given to exclusive jurisdiction clauses. Where parties to a contract have included such a clause in their agreement, the designated state’s courts must hear any suit. For the purposes of this article, the important issue to consider is the effect of these provisions when applied to the context of suits against foreign states. The result seems to be that a clear territorial division would be struck between actions predominantly connected with the forum (which may proceed there) and those more closely linked with the foreign state (which may only be brought in that state’s courts).
It is suggested that such an outcome is broadly similar to that achieved by applying the common law principles of jurisdiction above. Although it is admitted that the absence of any doctrine of forum non conveniens under the Convention does limit courts’ flexibility in determining the place of adjudication, this omission is unlikely to make a great difference in result. As was noted, the major cases in which pleas of forum non conveniens (in its various forms) have been successful have involved actions with little geographical connection to the forum. In other words, territoriality is the common theme running through both common law and civil law approaches to jurisdiction.
Moreover, it is possible that soon the differences between the common law and civil law jurisdictional rules will be bridged. The Hague Conference on Private International Law has, after consultation with many states, recently prepared a draft convention on jurisdiction and enforcement of foreign judgments. In the draft convention, an attempt has been made to strike a compromise between the Anglo-American common law approach to jurisdiction and that represented in the Brussels Convention, with the aim of creating a single, universal law.
Consequently, there are a number of provisions in the draft that resemble those in the Brussels Convention. For example, under Article 3, jurisdiction is presumptively granted to the courts of the state where the defendant is habitually resident, has its statutory seat or has its central administration. However a plaintiff may sue in a jurisdiction other than that specified in Article 3 in a number of situations. First, in the case of contracts for the sale of goods or services, suit may be brought in the place where the goods or services were supplied. Second, in the case of contracts of employment, an employee may sue in the place where he or she habitually carries out his or her work. Third, in the case of torts, a claim may be filed in the place where the act or omission that caused injury occurred or in which the injury arose. Also, similar to the Brussels Convention, exclusive jurisdiction is vested in a court the subject of an exclusive jurisdiction clause or in which immovable property or registrable intellectual property rights are located.[64 ]
However, the influence of the common law is also apparent in the draft Convention by the express inclusion of a forum non conveniens-type provision. Under Article 22(1), a court may suspend its proceedings if it considers itself ‘clearly inappropriate … to exercise jurisdiction and if a court of another State has jurisdiction and is clearly more appropriate to resolve the dispute’. In paragraph (2), there are listed a number of factors to be considered by the court in exercising its discretion in (1), although considerable flexibility is retained.
Hence, it seems that if the draft convention is ultimately adopted by a significant number of states, and applied to foreign state defendants, then a result similar to application of the existing common law rules would be achieved. Broadly speaking, forum state jurisdiction would be exercised over a foreign state in relation to the bulk of activities performed within the forum but only to a lesser degree over conduct in its own territory. In addition the forum non conveniens plea would be available, in special cases, where it was felt that local jurisdiction over a foreign state would be inappropriate. Such a result would be broadly similar to that achieved by application of the Lauterpacht and Greig views although both of those writers favoured the retention of immunity as a distinct plea.
It has been argued in this article that foreign state immunity should be abolished. While originally it was created to protect the dignity and independence of foreign states from intrusion by other states, it has become a confused and fragmented doctrine. In addition, with the emergence of increasingly uniform private international law rules of jurisdiction that achieve similar results to immunity, the doctrine is largely redundant. Moreover, on a broader level, it may be queried whether foreign states continue to deserve special protection from other states’ legal process. At a time when the significance of the state is declining relative to the transnational corporation, the privatisation of governmental bodies is continuing (at least in the developed world) and the demand for individual human rights protection grows, the immunity of foreign states has become an anachronism.
Akai v The People’s Insurance Company Ltd (1996) 188 CLR 418 11
Al Adsani v Government of Kuwait (1996) 107 ILR 536 13
Alcom v Republic of Colombia  AC 580 9
Condor and Filvem v Minister of Justice (1992) 101 ILR 394 9
Gulf Oil Corp v Gilbert  USSC 45; 330 US 501 (1947) 10
I Congreso del Partido  AC 244 7, 8
International Shoe Co v Washington  USSC 158; 326 US 310 (1945) 10
Island of Palmas Arbitration (1928) 2 RIAA 829; 4 ILR 103 3
Kuwait Airways Corporation v Iraqi Airways Co  1 WLR 1147. 6
Piper Aircraft Co v Reyno  USSC 28; 454 US 235 (1981) 10
R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No 3)  UKHL 17;  2 WLR 827 13
Re Harrods (Buenos Aires) Ltd  Ch 72 15
Schooner Exchange v MacFadden (1812) 7 Cranch’s Reports 116. 3
Siderman De Blake v Republic of Argentina  USCA9 1398; (1992) 965 F 2d 699 13
Spiliada Maritime Corp v Cansulex Ltd  AC 460 10
The Bremen v Zapata Off-Shore Co  USSC 129; 407 US 1 (1972) 11
The Eleftheria  P 94 11
The Philippine Embassy Case (1977) 65 ILR 146 9
Trendtex Trading Corporation v Central Bank of Nigeria  QB 529;  2 WLR 356 2
Voth v Manildra Flour Mills Ltd  HCA 55; (1990) 171 CLR 538 10
Foreign Sovereign Immunities Act 1976 (USA) 4
Foreign Sovereign Immunity Act 1981 (South Africa) 3
Foreign States Immunities Act 1985 (Australia) 3, 5, 6, 9, 10, 13
State Immunity Act 1978 (United Kingdom) 3
State Immunity Act 1979 (Singapore) 3
State Immunity Act 1982 (Canada) 3
State Immunity Ordinance 1981 (Pakistan) 3
Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters 1968 13, 14, 15
Draft Articles on the Jurisdictional Immunities of Foreign States 7
United Nations Convention on the Foreign Recognition and Enforcement of Arbitral Awards 1958 11
[∗] Senior Lecturer in Law, University of Melbourne.
 H Lauterpacht, ‘The Problem of Jurisdictional Immunities of Foreign States’ (1951) 28 British Yearbook of International Law 220, 247.
 C Lewis, State and Diplomatic Immunity (2nd ed, 1990) 15-16.
 In 1982, according to a survey by the United Nations, approximately 14 states still claimed to follow the principle of absolute immunity: see United Nations Materials on Jurisdictional Immunities of States and their Property (1982). However, since many of these states were of the former Soviet bloc, it may be that today the number would be significantly smaller. In any event, it has been argued that many of the so-called absolute immunity states did in fact apply a principle of reciprocity. Under this principle, a state would extend the same level of immunity to a foreign state as the latter state would have granted to the forum state had it been a defendant before the foreign state’s courts. See Australian Law Reform Commission, Foreign State Immunity Report No 24, 11 .
 See, especially, Belgium and Italy; Lauterpacht, above n 1, 251-259.
 Austria, Germany, France and the Netherlands moved to adopt the restrictive model in their judicial decisions after the Second World War: see S Sucharitkul, Fourth Report on Jurisdictional Immunities of States and Their Property, UN Doc A/CN 4/357, 31 March 1982 -. In the United States, the acceptance of restrictive immunity dates from the Tate letter in 1952 where the State Department confirmed that the US government had altered its position: see (1952) 26 Department of State Bulletin 984.
 Trendtex Trading Corporation v Central Bank of Nigeria  2 WLR 356.
 See, eg, Lauterpacht, above n 1, 227-229.
 Island of Palmas Arbitration (1928) 2 RIAA 829, 838.
 The case most often cited in support of the rule of absolute immunity is the United States Supreme Court decision in Schooner Exchange v MacFadden (1812) 7 Cranch’s Reports 116. However, as is noted by Lauterpacht, above n 1, 229 this case does not in fact stand for the proposition that foreign states are absolutely immune from the jurisdiction of the courts of other states. Instead, the court there stressed that the jurisdiction of the territorial state was absolute and any immunity enjoyed by a foreign state from such jurisdiction must be based on a waiver of its jurisdiction by the territorial state.
 Similar legislation was enacted in Singapore (State Immunity Act 1979), South Africa (Foreign Sovereign Immunity Act 1981), Pakistan (State Immunity Ordinance 1981), and, with some modifications, Canada
(State Immunity Act 1982) and Australia (Foreign States Immunities Act 1985) (Australian Act).
 Section 4(1). Immunity is restored under (2) where the employee is a national of the foreign state at the time proceedings are brought or not a national or habitual resident of the United Kingdom at the time the contract was made. If however the place of employment is ‘maintained for commercial purposes’ then immunity will only apply where the employee was an habitual resident of the foreign state at the time the contract was made: see (3). Immunity is, however, imposed in the case of employment at diplomatic or consular missions: see s 16(1)(a). Similar provisions exist in the other national legislation referred to ibid (except for Canada). For a fuller discussion of immunity and employment, see R Garnett, ‘State Immunity in Employment Matters’ (1997) 46 International and Comparative Law Quarterly 81.
 Under s 1605(a)(2) of the FSIA, a foreign state is not immune (i) in an action based upon a commercial activity carried on in the United States by the foreign state (ii) upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere or (iii) upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
 Section 5. Again, almost identical provisions have been enacted in Singapore, South Africa, Canada and Australia.
 Section 1605(a)(5).
[15 ] Australian Law Reform Commission, above n 3, 35 . A territorial approach to immunity has also been advocated by other writers: see, eg, M Singer, ‘Abandoning Restrictive Sovereign Immunity: An Analysis in Terms of Jurisdiction to Prescribe’ (1985) 26 Harvard International Law Journal 1.
 Section 1605(a)(2). See above n 12.
 Section 3(1).
 See the national legislation cited above n 10. In the Australian Act, an exception to immunity for commercial transactions is provided in s 11.
 Section 3(3).
[20 ] See the legislation cited above n 10. Under the Australian Act, the definition of ‘commercial transaction’ is very similar to the United Kingdom version, although the words ‘otherwise than in the exercise of sovereign authority’ have been omitted: see s 11(3). In addition, bills of exchange, which would probably fall within the definition of ‘commercial transaction’ in s 3(3) of the SIA, are made a separate exception to immunity in the Australian Act: see s 19.
 Section 4 of the SIA and equivalents in other national legislation cited above n 10; s 12 of the Australian Act.
 Section 7 of the SIA and equivalents in other national legislation ibid; s 15 of the Australian Act.
 Section 8 of the SIA and equivalents in other national legislation ibid; s 16 of the Australian Act.
  1 WLR 1147.
 Ibid 1161-1162.
 Ibid 1162 (Lord Goff with whom Lords Jauncey and Nicholls agreed).
 See, eg, Lauterpacht, above n 1, 224-225; Australian Law Reform Commission, above n 3, 28 .
 Eg, in I Congreso del Partido  AC 244 an issue arose as to whether a decision to repudiate a contract for the sale of goods by ordering the diversion of shipping to another destination was private or sovereign. If a strict ‘nature’ approach were applied to such an act, then because a government or private party would be both equally capable of repudiating a contract in this way, such an act could be classified as private or commercial. However, if the context in which such an act took place is taken into account — in Congreso, the decision by the government defendant to repudiate was a reaction to a change of government in the buyer country — then it becomes clear that it was a highly sovereign action. However, the House of Lords in that case refused to take account of the uniquely governmental context in which the decision to repudiate was made and so found the act to be private: see 268-269 (Lord Wilberforce).
 Article 2(2) provides that: ‘in determining whether a contract or transaction is a commercial transaction … reference should be made primarily to the nature of the contract or transaction but its purpose should also be taken into account if, in the practice of the State which is a party to it, that purpose is relevant to determining the non-commercial character of the contract or transaction’.
 Kuwait, above n 24, 1163 (Lord Goff with whom Lords Jauncey and Nicholls agreed); 1168 (Lord Mustill) 1172 (Lord Slynn).
 Ibid 1163.
 See above n 28.
 Kuwait, above n 24, 1172 (Lord Mustill) 1174 (Lord Slynn).
 Ibid 1174 (Lord Slynn).
 See, eg, s 13(4) of the SIA and national legislation referred to in above n 10. In the Australian Act, a more restrictive approach has been taken to immunity from execution. While in suits against the foreign state itself (such as government departments or ministers) the ‘commercial purposes’ rule applies (see s 32) where the action is against a ‘separate entity’ of the foreign state (such as a state-owned corporation) execution may occur against any property. Such a rule effectively places foreign state-owned corporations on the same footing as private defendants. The FSIA is in slightly different form, allowing execution on the property of a foreign state ‘if the property is or was used for the commercial activity upon which the claim is based’: s 1610(a)(2). Italian and German practice is similar. See, respectively, The Philippine Embassy Case (1977) 65 ILR 146 and Condor and Filvem v Minister of Justice (1992) 101 ILR 394.
 See Alcom v Republic of Colombia  AC 580 where it was held that money in an embassy bank account to pay for the day-to-day expenses of the embassy was not commercial property for the purposes of the rule.
[37 ] See SIA s 12 and equivalents in other national legislation cited above n 10; Australian Act s 24; cf, FSIA s 1608(3) and (4).
 In the SIA and its progeny such a corporation is referred to as a ‘separate entity’ (SIA s 14; in the Australian Act, ss 3(1) and (22) and, in the FSIA, an ‘agency or instrumentality of a foreign state’ (s 1603(b)).
 Jurisdiction was established over the Iraqi defendant in the Kuwait Case on this basis: see above n 24, 1152-1154.
 Australian Act s 24(2)(b).
 See, eg, O 11 r 1(1)(d) of the RSC (Eng) and Pt 10 r 1A(1)(c) and r 1(1)(b) and (c) of the RSC (NSW).
 See, eg, O 11 r 1(1)(f) of the RSC (Eng) and Pt 10 r 1A(1)(d) and (e) of the RSC (NSW).
 International Shoe Co v Washington  USSC 158; 326 US 310 (1945).
 See, under English law, Spiliada Maritime Corp v Cansulex Ltd  AC 460 and under US law, Gulf Oil Corp v Gilbert  USSC 45; 330 US 501 (1947) and Piper Aircraft Co v Reyno  USSC 28; 454 US 235 (1981).
 Voth v Manildra Flour Mills Ltd  HCA 55; (1990) 171 CLR 538.
 See, under English law, The Eleftheria  P 94 (which has been approved by the High Court of Australia in Akai v The People’s Insurance Company Ltd (1996) 188 CLR 418) and under United States law, The Bremen v Zapata Off-Shore Co  USSC 129; 407 US 1 (1972).
 As of December 1999, 115 countries were party to the Convention.
 See text accompanying above nn 10-14.
 In Voth, above n 45, a stay of proceedings in New South Wales was ordered in relation to a claim in tort the elements of which occurred exclusively outside Australia, although with some damage suffered locally. Similarly, in Piper Aircraft, above n 44, the United States Supreme Court ordered a stay of personal injury proceedings where the wrongful act took place outside the United States of America.
[50 ] See above n 11.
 Section 1605(a)(7) of the FSIA provides that a foreign state is not immune in an action for personal injury or death that was caused by an act of torture, extrajudicial killing or provision of material support or resources for such an act. However the effect of this provision is severely narrowed by clauses which provide that a court should decline jurisdiction if (a) a foreign state is not designated by the Secretary of State as a ‘state sponsor of terrorism’ or (b) the victim was not a United States national at the time the terrorist act occurred. Currently the list of state sponsors of terrorism is limited to Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria. For a more detailed discussion of the state practice in relation to immunity and torture, see R Garnett, ‘The Defence of State Immunity for Acts of Torture’  AUYrBkIntLaw 3; (1997) 18 Aust YBIL 97.
[52 ] See, eg, Siderman De Blake v Republic of Argentina  USCA9 1398; (1992) 965 F 2d 699 and Al Adsani v Government of Kuwait (1996) 107 ILR 536. The decision of the House of Lords in the recent Pinochet litigation may suggest a new path but that case involved a criminal prosecution of an individual and not a civil suit against the foreign state itself: see R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet Ugarte (No 3)  UKHL 17;  2 WLR 827.
 See SIA s 16(a) and equivalent provisions in national legislation cited above n 10 and in the Australian Act, s 12(5).
 The main provisions of the Brussels Convention were adopted by the countries of the EEA in the Lugano Convention of 1988: see P North and J Fawcett, Cheshire and North’s Private International Law (12th ed, 1992) 340.
 K Clermont, ‘Jurisdictional Salvation and the Hague Treaty’ (1999) 85 Cornell Law Review 89, 91. For a more detailed comparison of the civil and common law approaches to jurisdiction: see F Juenger, ‘Judicial Jurisdiction in the United States and the European Communities: A Comparison’ (1984) 82 Michigan Law Review 1195.
[56 ] Cf North and Fawcett, above n 54, 277.
 English courts have, however, continued to apply the forum non conveniens doctrine to cases under the Brussels Convention where the alternative forum is a non-contracting state: see Re Harrods (Buenos Aires) Ltd  Ch 72. This approach has been strongly criticised by writers (eg, ibid 334) for undermining the goal of promoting uniformity of jurisdictional rules throughout the European Union.
 See text accompanying above n 49.
 The full title is the Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters. It was adopted by the Special Commission on 30 October 1999 and can be found at <http://hcch.net/e/conventions/draft36e.html> .
 Article 6.
 Article 8.
 Article 10.
 Article 4.
[64 ] Article 12.
 Currently in art 1(4) of the draft, the ‘privileges and immunities of foreign states’ are expressly preserved.