Mr Justice Tugendhat :
1. On 15th February 2005 G. issued a claim against the three Defendants
for libel contained in a letter dated 16th July 2004. The first Defendant
is the B. bank of The Netherlands. The second Defendant is the head of
the Bank's Money Transaction and Trust Office Department, and the third
Defendant is a supervisor in that department.
2. The Claim Form carried the statement that the High Court has power
under Council Regulation (EC) number 44/2001 of 22nd December 2000
(on jurisdiction and the recognition and enforcement of judgments in civil
and commercial matters) to hear the claim. I shall refer to this as the
Judgements Regulation.
3. On the same date similar proceedings were issued by two other
claimants, T. and G. On 6th September 2005 solicitors on behalf of
all three Defendants issued an Application Notice in each of the three
actions. The applications, which are now before the Court, are for a
declaration that the Court has no jurisdiction in these matters on the
grounds that the Defendants are entitled to immunity under the State
Immunity Act 1978 ("the 1978 Act") and/or at common law, with
consequential orders to dispose of the proceedings by a strike out or stay,
or as may be appropriate.
4. It will be necessary to consider the 1978 Act in more detail, but section
2 of the Act provides that state immunity may be lost by submission to
the jurisdiction of the Court. By section 2(3) a state is deemed to have
submitted subject to sub-sections (4), if it has intervened or taken any
step in the proceedings, unless the only intervention made is for the
purpose of claming immunity. Accordingly, the Application Notice on the
part of the Defendants does not claim any other relief, or rely upon any
other grounds for the relief that it does claim. Should the application that
the Defendants make fail, they have made clear that there would be other
applications that they would be minded to make to bring the proceedings
to an end, based on allegations of abuse of process (relying on Jameel v
Dow Jones [2005] EWCA Civ 75; [2005] QB 946). These are not matters
which can arise for consideration by me at this stage.
5. Mr G. describes himself as follows in his Particulars of Claim:
"The Claimant is the Business Development Manager of T., a money
transfer company. T. is a Panamanian company registered at UK
Companies House with an office at....., London… The Claimant lives
and works in London. T. is a company associated with the C. through a
common holding company. C. operates Bureau de Change outlets in H.
is an Irish company, registered at UK Companies House, whose offices
are at ..., London… it is part of C. and operates Bureau de Change outlets
in the UK. CA. is part of C.. It is a Dutch Antilles company with offices
at ..., Netherlands. Until 26th October 2004 when it was closed by the
First Defendant it operated a Bureau de Change outlet in Holland and was
the agent for T. in Holland."
6. Under the heading Publication, the following allegations are made
in the Particulars of Claim. It is said that each of the three Defendants
published or caused to be published the letter dated 16th July in the form
of a fax sent to a machine at the offices of H. in London. The fax was in
Dutch. It was translated into English. It was read in full in Dutch by the
translator and in English by five individuals three of whom are identified
as working for the company that carried out the translation. It is alleged
that there was a subsequent publication of the letter to an employee of
H. during the course of her preparation of letters written in response to
the first Defendant which were dated 21st July and 27th July 2004. In the
case of the claim by Mr G. the other two publishees are Mr G. and Mr T..
7. The Dutch original version of the fax is headed with the name of the
Bank and is signed by the Second and Third Defendants. Their job titles
appear under their signatures. It covers ten very closely typed pages. A
substantial extract from it is set out as the words complained of in the
Particulars of Claim. This includes the title to the letter, which gives the
gist of it in one sentence. It reads as follows:
"Re: Intention to decide that the trustworthiness of directors and joint
policy making executives is open to question, intention not to allow entry
in the registry, and also invitation to notify position".
8. The letter continues as follows:
"Gentlemen,
In view of the request for entry in the register as intended in article 2 and
in article 48 (section 2) and article 44, section 1 of the Act concerning
Money Transaction Offices (AMTO) of CA.… C. (CP), [the Bank] would like
to inform you of the following considerations.
The assessment of the trustworthiness of the directors and the joint
policy-making executives of CP is an important aspect in the assessment
of your request concerning registration. [The Bank] intends to decide that
the trustworthiness of the directors and joint policy-making executives of
CP is no longer beyond doubt.
F. G. (G. Sr.)
S. (G. Jr)…
D.T. …
By virtue of article 2, section 1a of the AMTO and article 2, section 1b of
the AMTO, [the Bank] intends to:
Reject the request of CP to be entered in the AMTO registry for the
execution of money transfer transactions:
Delete the registration of CP in the AMTO registry for executing the
activities as listed in Article 1, Section C sub 1 and 2 of the AMTO
The aforesaid intentions are based on the reasons set forth below."
9. Detailed factual allegations are then set out on the basis of which
the Bank states that it has reached the intention that it sets out at the
beginning of the letter.
10. Under the heading Defamatory Meaning, the Particulars of Claim
include the following:
"In their natural and ordinary meaning the words referred to … meant and
were understood to mean that the Claimant:
12.1 is a dishonest fraudster who is directly responsible for a number of
fraudulent acts committed by him on behalf of CA. in relation to its tax
declarations to the Dutch tax authorities; and/or
12.2 has, for several years failed to comply with legal requirements for his
own personal benefit; and/or
12.3 deliberately misrepresents facts for his own personal benefit; and/or
12.4 is not honest, law abiding, open, truthful, prudent or punctual and is
lacking in integrity; and/or
12.5 in the premises, is not a fit or proper person to be granted
registration by the Dutch National Bank for the execution of money
transfer transactions".
11. Under the heading Damages there is a claim for aggravated damages
against all three Defendants. It is stated that by a letter dated 19th July
2004 from the Amsterdam Tax Department to the Bank, the Amsterdam
Tax Department responded to enquiries made of it by it by the Bank. It
is stated that contrary to the allegations in the words complained of the
Amsterdam Tax Department stated that CA.'s conduct did not amount
to offences under Dutch legislation, that there was no evidence of CA.
having any criminal intent in relation to its corporate tax filings, that
CA.'s conduct which had led to the imposition of certain fines could not
be qualified as an offence and that the management of C. could not be
qualified as intentionally filing an incorrect tax return and could not be
said to have committed an offence under Dutch legislation. Accordingly,
(so it is stated in the pleading), it is to be inferred from the foregoing that
the Defendants and each of them published or caused to be published
the words complained of knowing they were false or recklessly not caring
whether they were true or false and/or with the dominant or improper
motive of injuring the Claimant.
12. In support of the Defendants' application there is a witness statement
of Professor Doctor S., RA, who is one of the five members of the
Governing Board of the Bank. He confirms that the Bank is the B. Bank
of the Netherlands and that the Second and Third Defendants are and
were employees of the Bank. He sets out an outline of the legal status
and functions of the Bank, and in particular, its functions in relation
to the supervision of money transaction offices. He states that the
letter dated 16th July, which he refers to as "The Intended Decision
Letter", was drawn up and despatched by the Bank to CA. as part of the
applicable statutory procedure in the Netherlands, and in the exercise
of governmental functions. He states that the Bank is a public limited
liability company capable of suing and being sued in its own name in the
Netherlands. The Kingdom of the Netherlands is the sole shareholder.
13. Professor Doctor S. states that the functions of the Bank are set out
in the Bank Act 1998, Chapter 2 Division 1. The operations and functions
of the Bank are twofold. It is an integral part of the European System of
B. Banks in respect of the tasks and duties which the Treaty establishing
the European Community confers upon that system. Secondly, it is
an autonomous administrative authority under Dutch law. That is an
administrative authority, not being an advisory body, entrusted with public
authority which acts independently from the Minister. The Bank is such an
authority in so far as it performs tasks which include supervising financial
institutions in pursuance of the statutory regulations set out in the Bank
Act 1998 Section 4(1).
14. He summarises the position stating:
"The statements in the Intended Decision Letter complained of by the
Claimant were made by [the Bank] in its role as an administrative
authority carrying out governmental supervisory functions, delegated to it
by the Dutch government, to protect the integrity of the financial system
in the Netherlands. Thus, [the Bank] was exercising sovereign authority.
It is therefore respectfully submitted that [the Bank] and its employees
are immune from the jurisdiction of the English Court as regards these
proceedings".
15. It is not necessary to set out the provisions of Dutch law referred to
in any detail because it is accepted by the Claimants that the Bank carried
out the functions and is constituted in the way described by Professor
Doctor S..
16. There is before me a witness statement dated 16th November
2005 made at the request of the Claimants by a Dutch lawyer Joseph
van Vlijmen. His instructions were to identify under Dutch law the
circumstances where the act of an employee or group of employees
will be taken to be within the scope of his or her employment rendering
the employer liable. He concludes that an employer is liable for the
acts of an employee if the employee in question has committed a
fault, if a relationship of subordination exists and if there is a sufficient
professional link between the employees work and the fault. This applies
to government bodies.
17. There is a witness statement dated 16th November 2005 and filed
on behalf of the Claimant by Mr Ralph Odle who is also a Dutch lawyer.
His instructions were to identify the source and derivation of the rules
and regulations to be applied by the Bank in exercising its delegated
supervisory duties and powers as an administrative authority to regulate
money transaction offices pursuant to the Dutch legislation known as
AMTO within the framework of the General Administrative Law Act and
the Bank Act 1998. He states that the Dutch legislation referred to by
Professor Doctor S. implements the EC Money Laundering Directives
(Directives 91/308 and 2001/97) and Directive EC 2000/12. He also
identifies the source and the derivation of the Dutch data protection
legislation as EC Data Protection Directive no 95/46 of 24 October 1995.
None of this gives rise to any issue which I have to decide at this stage of
the proceedings.
COUNCIL REGULATION (EC) No 44/2001
18. The Judgments Regulation on jurisdiction in civil and commercial
matters supersedes, so far as the United Kingdom and the Netherlands
are concerned, the Brussels Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters concluded
on 27th September 1968 and amended from time to time (the "Brussels
Convention"). The Judgments Regulation includes the following (as does
the Brussels Convention):
"Article 1
This regulation shall apply in civil and commercial matters whatever the
nature of the court or tribunal. It shall not extend in particular, to revenue
customs or administrative matters …
Article 2
Subject to this Regulation, persons domiciled in a Member State shall,
whatever their nationality, be sued in the courts of that member state…
Article 5
A person domiciled in a Member State may, in another Member State, be
sued: … (3) in matters relating to tort…in the courts for the place where
the harmful event occurred… "
19. It is by reliance on Article 5 (3) that the proceedings are brought
in this court in England. There can be no dispute that a libel action can
in principle be brought in the courts of a Member State in which the
words complained of are put into circulation and read by a person who
understands the language in which it is written. Whether or not the
Claimants were entitled to bring proceedings in this court in England
pursuant to the Judgments Regulation Art 5(3) (which is an issue in this
case), none of the arguments raised before me in this Court would be
a bar to them being able, at their own option, to sue the Bank in the
Netherlands under Article 2, and the Second and Third Defendants also,
assuming they are domiciled there.
SOME MATTERS OF BACKGROUND
20. By way of background the evidence before me includes an explanation
given on both sides as to why the letter of 16th July 2004 was faxed
in the way it was. There is a dispute about the reasons for this which
does not require to be resolved for the purposes of this application. Also
by way of background, I have been informed of subsequent events in
relation to the matters to which the July letter refers. There was a Final
Decision Letter on 12th October 2004 which came to the conclusion,
notice of which had been given in the Intended Decision Letter. Dutch
law provides means by which a person aggrieved by such a decision can
challenge it through the Dutch courts. I am told that CA. did challenge
it, although the three personal Claimants, I am told did not. CA. brought
proceedings which were heard in the District Court of Rotterdam on
22nd October 2004. An application for an interim order suspending the
Bank's final decision was refused by that court. I am told that the Bank
reconsidered its decision on the basis of an objection by CA., and on 6th
January 2005 the Bank concluded that the objection was unfounded and
upheld its earlier decision. CA. challenged that decision by the Bank in
the administrative chamber of the District Court of Rotterdam on 16th
February 2005. Those proceedings are currently pending. In the event
that CA.'s application to the court should be unsuccessful, CA. will have
a right of appeal to the Trade and Industry Appeal Tribunal, which is an
administrative court.
21. There is therefore no question of any claim before me on the part
of the Bank or its employees that they are immune from being sued at
all in respect of the decisions made and the publication of the letter. The
immunity that they claim in this Court is immunity from being sued in this
jurisdiction.
22. Also by way of background it is to be noted that the General
Administrative Law Act of the Netherlands provides for what in English
law would be referred to as natural justice or due process, or as in the
European Convention on Human Rights, provisions for a fair hearing. That
Act requires that before the Bank decides not to register an applicant
it should give the applicant an opportunity to express its view, either in
person or in writing, and that it give the same opportunity to any person
whose integrity has been assessed.
23. Of course, if the libel proceedings were to continue in this jurisdiction
(or for that matter in the Netherlands if recommenced under Article 2
of the Judgments Regulation), the Bank and its employees could, if so
advised, claim an immunity under English libel law in the form of the
public policy defence known as qualified privilege. If they chose to do
that, there would, so I understand, be a Reply alleging malice along
the lines of the matters pleaded in the claim for aggravated damages.
At this stage there is in fact no issue of malice in relation to the cause
of action in libel. Libel is a tort of strict liability, the ingredients being
the ones pleaded in the Particulars of Claim. These are communication
(referred to as 'publication') by the defendant, to at least one person
other than the Claimant, of words which both refer to the Claimant, and
are defamatory of him. The state of mind of a Defendant is not relevant
(except as to damages) if the defence relied on is truth (or justification as
it is commonly known).
24. The three Claimants in these libel proceedings have, I am told, also
commenced civil proceedings in Amsterdam against the Bank on 19th
October 2005, claiming a declaration that the Bank acted unlawfully in
relation to the 16th July letter, and in other respects, for which they claim
damages.
STATE IMMUNITY AND THE STATE IMMUNITY ACT 1978
25. There is a basic principle of English common law that a foreign state
is immune from the jurisdiction of the courts of this country, subject to
certain exceptions, and that the immunity extends to persons carrying out
acts in the exercise of the sovereign authority of the state. In the words
of Lord Clyde in Holland v Lampen-Wolfe [2000] 1 WLR 1573 at p1580:
"It is has been recognised that there is an international principle that
sovereign states cannot claim jurisdiction over each other. In I Congreso
del Partido [1983] 1 A.C. 244, 262 Lord Wilberforce was content to find
the basis for this in the (albeit analytical) maxim par in parem non habet
imperium. More generally, as can be seen from the speeches in Compania
Naviera Vascongado v. S.S. Cristina [1938] A.C. 485, the principle has
been attributed not only to that maxim but to such ideas as comity or
reciprocity, the practicability of enforcement, or the respect for the dignity
of other states. As matters stand I consider that we have to proceed upon
the assumption that the eventual basis for the principle is to be found in
such international considerations."
26. For the purposes of the present case what is important is that this
is a rule of public international law, and that it became a part of English
common law long ago for that reason: see Trendtex Trading Corporation v
Central Bank of Nigeria [1977] QB 529, 553-4, 567-569, 578-579 (CA).
27. The principle in English law has evolved, from being one of absolute
immunity to one of immunity subject to exceptions, partly by the
development of international law, which the common law followed (see
Trendtex above and I Congreso del Partido [1983] AC 244) and partly by
statute in the form of the State Immunity Act 1978.
28. The provisions of the State Immunity Act 1978 upon which the
Defendants rely are the following:
"1(1) A State is immune from the jurisdiction of the courts of the United
Kingdom except as provided in the following provisions of this Part of this
Act….
14 (1) The immunities and privileges conferred by this Part of this Act
apply to any foreign or commonwealth State other than the United
Kingdom; and references to a State include references to:
(a) the sovereign or other head of that State in his public capacity
(b) the government of that State; and
(c) any department of that government, but not to any entity (hereafter
referred to as a "separate entity") which is distinct from the executive
organs of the government of the State and capable of suing or being
sued.
(2) A separate entity is immune from the jurisdiction of the courts of the
United Kingdom if, and only if—
(a) the proceedings relate to anything done by it in the exercise of
sovereign authority; and
(b) the circumstances are such that a State (or, in the case of proceedings
to which section 10 above applies, a State which is not a party to the
Brussels Convention) would have been so immune."
THE CONTENTIONS OF THE PARTIES
29. It is not submitted that the Bank, still less the Second and Third
Defendants, are a State within the meaning of Section 14 (1). What
is submitted is that the Bank is a separate entity as defined in that
subsection, namely an entity which is distinct from the executive organs
of the government of a state which is capable of suing or being sued.
Accordingly it does not have immunity by reason of its status or, in the
Latin phrase ratione personae. The immunity claimed is under Section
14 (2). This immunity is said to arise by reason of the subject matter
of the impugned actions, or, in the Latin phrase, ratione materiae. It
is submitted that the proceedings relate to things done by the Bank in
the exercise of sovereign authority, and if they had been done by the
state directly the state would have been immune from being sued in this
country pursuant to s.1 of the 1978 Act.
30. For the Claimants it is submitted that because they allege that the
letter was written maliciously, that takes the case outside s.14 (2) (a) of
the 1978 Act. It is submitted that a letter written maliciously cannot be a
thing done in the exercise of sovereign authority. Further, or alternatively,
the 1978 Act does not provide immunity to employees of a separate
entity, in any event when they are acting maliciously. The Claimants
also submit that where the Judgments Regulation (in this case Article
5(3)) applies, it precludes a party from invoking state immunity, or,
alternatively that Article 6 of the European Convention of Human Rights
("ECHR") as applied by the Human Rights Act 1998 precludes a claim for
state immunity on the facts of this case.
31. Alternatively, both parties submit that to the extent that the matter is
to be determined under the common law precisely the same arguments
apply.
JUDGMENTS REGULATION AND STATE IMMUNITY
32. Although put last in the Claimants' argument, the submission that
state immunity cannot be raised in proceedings served in accordance with
the Regulation Art 5(3) is logically the first point.
33. This is a novel submission. The possibility that there may be a
problem is raised briefly by the editors of Cheshire & North's Private
International Law 13th ed 1999 at p402 and mentioned even more briefly
in Briggs and Rees on Civil Jurisdiction and Judgments 4th ed (2005)
at para 4.09. It does not appear in other academic commentaries on
the Regulation, or in the commentaries on the Brussels Convention,
including those of Professors Jenard and Schlosser, to which attention
was directed in the Civil Jurisdiction and Judgments Act 1982 when the
Brussels Convention became part of English law.
34. The point can be divided into two issues: Is the Regulation to be read
subject to, or as excluding, the doctrine of state immunity in international
law? Are the present proceedings a civil matter within Art 1 (which sets
out the scope of the Regulation)?
35. The argument of Mr Kennelly for the Claimants is that the words of
the Regulation (set out above at para 18) are plain. Both the Bank and
the individual Defendants are persons (which is common ground), and
if jurisdiction is established under the Regulation, that is the end of the
matter. Mr Kennelly did not have to address me on what the position
would be if one of the defendants were a state.
36. He submits, and there is no dispute, that the provisions of the
Regulation are mandatory. He accepts that state immunity is a doctrine
of international law, and submits that while EU law has regard to
international law, it is not subject to it, except in the cases expressly
provided for by the Convention. He cites Owusu v Jackson [2005] ECR
I-1383 para 37:
"It must be observed that Art 2 of the Brussels Convention is mandatory
in nature and that, according to its terms, there can be no derogation
from the principle it lays down except in the cases expressly provided for
by the Convention…"
37. Briggs and Rees suggest that it is expressly provided for by the
Convention. They suggest precedence may be accorded to the Basle
Convention (The European Convention on State Immunity drawn up
within the Council of Europe and opened to signature by the member
states of the Council in 1972 at Basle: ETS No 074). This results from the
express exception in Art 71 of the Regulation:
"This Regulation shall not affect any conventions to which the Member
States are parties and which, in relation to particular matters, govern
jurisdiction …"
38. The Basle Convention which the Act 1978 implements), Article 33,
provides: "Nothing in the present Convention shall affect existing or
future international agreements in special fields which relate to matters
dealt with in the present Convention".
39. The Brussels Convention was in existence in 1972. Mr Barnes QC
referred me to an Explanatory Report prepared by a committee of experts
and submitted to the Committee of Ministers of the Council of Europe. The
Brussels Convention is not mentioned in the Basle Convention, or in the
Explanatory Report (para 118 is the commentary upon Article 33), and
the Regulation does not in terms mention the Basle Convention.
40. Mr Kennelly accepts that the Basle Convention does govern
jurisdiction, but he argues that it is not made clear in Art 71 of the
Regulation that precedence is to be accorded to the Basle Convention.
41. Mr Barnes QC submits that the Judgements Regulation does not affect
or detract from state immunity. He adopts the suggestion of Briggs and
Rees, based on Art 71, only with hesitation. His concern is that the state
immunity is a rule of international law which is fundamental, and applies
whether or not a state is party to the Basle Convention. The principle of
international law existed before any convention. Whether or not reference
to that Convention might provide a solution to the problem in the present
case, it might not always do so.
42. Mr Barnes QC submits that the Judgements Regulation is (like the
Brussels Convention before it) to be interpreted subject to international
law. The principle he relies on has just been restated by the House of
Lords in A (FC) and others (FC) (Appellants) v. Secretary of State for the
Home Department [2005] UKHL 71 para 29:
"29. Article 31 of the Vienna Convention on the Law of Treaties, reflecting
principles of customary international law, provides in article 31(3)(c)
that in interpreting a treaty there shall be taken into account, together
with the context, any relevant rules of international law applicable in the
relations between the parties. The European Court has recognised this
principle (Golder v United Kingdom (1975) 1 EHRR 524, para 29, HN v
Poland (Application No 77710/01, 13 September 2005, unreported, para
75)), and in Al-Adsani v United Kingdom (2001) 34 EHRR 273, para 55, it
said (footnotes omitted):
'55. The Court must next assess whether the restriction was proportionate
to the aim pursued. It recalls that the Convention has to be interpreted in
the light of the rules set out in the Vienna Convention of 23 May 1969 on
the Law of Treaties, and that Article 31(3)(c) of that treaty indicates that
account is to be taken of 'any relevant rules of international law applicable
in the relations between the parties'. The Convention, in including Article
6, cannot be interpreted in a vacuum. The Court must be mindful of the
Convention's special character as a human rights treaty, and it must also
take the relevant rules of international law into account. The Convention
should so far as possible be interpreted in harmony with other rules of
international law of which it forms part, including those relating to the
grant of State immunity.'
The Court has in its decisions invoked a wide range of international
instruments, including the United Nations Convention on the Rights of the
Child 1989 and the Beijing Rules (V v United Kingdom (1999) 30 EHRR
121, paras 76- 77), the Council of Europe Standard Minimum Rules for
the Treatment of Prisoners (S v Switzerland (1991) 14 EHRR 670, para
48) and the 1975 Declaration referred to in para 31 below (Ireland v
United Kingdom (1978) 2 EHRR 25, para 167). More pertinently to these
appeals, the Court has repeatedly invoked the provisions of the Torture
Convention: see, for example, Aydin v Turkey (1997) 25 EHRR 251, para
103; Selmouni v France (1999) 29 EHRR 403, para 97."
43. So far as EU law is concerned, Mr Barnes QC relies on the statement
in Poulsen and Diva Case C-286/90 [1992] ECR 1-06019 para 9:
"As a preliminary point, it must be observed, first that the European
Community must respect international law in the exercise of its powers
and that consequently Art 6 [of Council Regulation (EEC) No 3094/86
laying down technical measures for the conservation of fish stocks] above
mentioned must be interpreted, and its scope limited, in the light of the
relevant rules of the international law of the sea".
44. Mr Kennelly submits that that statement is limited to its context, and
in particular to a convention to which the EU was itself a party. I do not so
read it.
45. Mr Barnes QC also points to the Civil Jurisdiction and Judgments
Act 1982 s31. He submits that this shows that Parliament assumed that
state immunity would continue to apply, including to entities separate
from states, after the Brussels Convention became part of English law,. It
reads:
"31(1) A judgment given by a court of an overseas country against a state
other than the United Kingdom or the state to which that court belongs
shall be recognised and enforced in the United Kingdom if, and only if …
(b) that court would have had jurisdiction in the matter if it had applied
rules corresponding to those applicable to such matters in the United
Kingdom in accordance with sections 2 to 11 of the State Immunity Act
1978.
(2) References in subsection (1) to a judgment given against a state
include references to judgments of any of the following descriptions given
in relation to a state – … (c) judgments against any … [entity which is
distinct from the executive organs of government] given in proceedings
relating to anything done by it in the exercise of the sovereign authority
of the state".
46. Mr Barnes QC also pointed to the far reaching consequences if it
were held that the state immunity could not relied upon by a person
sued in accordance with the Regulation, including in particular diplomats,
judges and officers of states whose offices have hitherto been accepted as
according them the immunity of the state.
47. In my judgment the submissions for the Defendants are to be
preferred. The Judgments Regulation (like the Brussels Convention) is
to be read subject to the international law of state immunity, and not as
precluding reliance upon state immunity.
48. In case I am wrong in this conclusion, I consider next whether these
proceedings are a civil matter within the meaning of the Judgments
Regulation.
49. For the Defendants it is submitted that the test of whether a case is
or is not a civil matter is to be determined partly by the characterisation
of the claim itself, and partly by the context in which it is brought, in
particular where the claim is brought against a public authority.
50. Mr Barnes QC refers to Sonntag v Waidmann C-172/91, [1993] ECR
I-1963, in particular at para 20. In that case the ECJ was asked the
question:
"2. (a) Where the holder of a public office who has caused injury to
another person by reason of an unlawful breach of his official duties
is personally sued by that person for damages, does such an action
constitute a civil matter within the meaning of the first sentence of the
first paragraph of Article 1 of the Convention?"
51. There were two considerations addressed in answering that question.
The first does not assist in the present case: it arose out of the fact that
the claim happened to be brought in the course of criminal proceedings.
That fact was held to be immaterial. The second consideration arose out
of the fact that the claim was against a teacher who had the status of a
civil servant.
52. The answer to the question given by the Court was as follows:
"17 It must next be determined whether an action for damages against
a teacher in a State school who caused injury to a pupil during a school
trip as a result of a breach of his official duties constitutes a "civil matter"
within the meaning of the first sentence of the first paragraph of Article 1
of the Convention.
18 As the Court has consistently held (see, in particular, Case 29/76 LTU v
Eurocontrol [1976] ECR 1541, paragraphs 3 and 4; Case 133/78 Gourdain
v Nadler [1979] ECR 733, paragraph 3; and Case 814/79 Netherlands v
Rueffer [1980] 3807, paragraphs 7 and 8), the concept of "civil matters"
in Article 1 of the Convention must be regarded as an independent
concept to be interpreted by reference, first, to the objectives and scheme
of the Convention and, secondly, to the general principles which stem
from the corpus of the national legal systems.
19 …
20 It follows from the judgments in the LTU and Rueffer cases, cited
above, that such an action falls outside the scope of the Convention
only where the author of the damage against whom it is brought must
be regarded as a public authority which acted in the exercise of public
powers.
21 The first point to be noted in that respect is that the fact that a teacher
has the status of civil servant and acts in that capacity is not conclusive.
Even though he acts on behalf of the State, a civil servant does not
always exercise public powers.
22 Secondly, in the majority of the legal systems of the Member States
the conduct of a teacher in a State school, in his function as a person
in charge of pupils during a school trip, does not constitute an exercise
of public powers, since such conduct does not entail the exercise of any
powers going beyond those existing under the rules applicable to relations
between private individuals.
23 Thirdly, a teacher in a State school assumes the same functions vis-à-
vis his pupils, in a case such as that in point in the main proceedings, as
those assumed by a teacher in a private school.
24 Fourthly, the Court has already held, although in a different factual and
legal context, in Case 66/85 Lawrie-Blum v Land Baden-Wuerttemberg
[1986] ECR 2121, paragraph 28 in conjunction with paragraph 24, that a
teacher does not exercise public powers even when he awards marks to
pupils and participates in the decisions on whether they should move to a
higher class. That must be so a fortiori in relation to the duty of a teacher,
as a person in charge of pupils, to supervise them during a school trip.
25 Finally, it should be added that even if the activity of supervising
pupils is characterized in the Contracting State of origin of the teacher
concerned as an exercise of public powers, that fact does not affect the
characterization of the dispute in the main proceedings in the light of
Article 1 of the Convention.
26 It follows from all the foregoing considerations that the action for
damages brought in the main proceedings against the State-school
teacher by the parties seeking enforcement is covered by the term "civil
matters" within the meaning of the first sentence of the first paragraph of
Article 1 of the Convention ."
53. Mr Barnes also referred to other cases in which the ECJ considered
whether claims brought by public authorities were civil matters, namely
Gemeente Steenbergen v Baten Case C-271/00, [2002] ECR I-10489 at
para 28 and Verein fur Konsumenteninformation v Henkel Case C-167/00,
[2002] ECR I-8111 at para 26. In these cases the Court re-affirmed
what it had stated in the Sonntag judgment at para 20. In Verein fur
Konsumenteninformation the Court said that the concept of a civil matter
was "to be interpreted by reference, first, to the objectives and, secondly,
to the general principles which stem from the national legal systems as a
whole".
54. Mr Barnes QC submits that in the present case the First Defendant is
a public authority, and that it appears from the Particulars of Claim and
the letter complained of, that all three Defendants are sued as having
acted in the exercise of public powers. Accordingly, he submits that the
case is not a civil matter.
55. Mr Kennelly submits first, that the claim is overwhelmingly private
in nature, being a defamation action. Second he submits that it will be
his clients' case that (on the basis of Dutch law as set out in the witness
statement referred to in para 16 above) the malicious acts of the Second
and Third Defendants were not acts done in the exercise of public powers.
56. Mr Kennelly's second point can be put on one side at once. First, the
Particulars of Claim does not distinguish between the three Defendants,
and the Bank can be liable (as sued) only if the acts of the Second and
Third Defendants were acts in the exercise of their duties for which the
Bank is liable. There is accordingly no suggestion in the claim that the
acts of the Second and Third Defendants were not acts in the exercise of
the Bank's powers. This point might not be conclusive, since the claims
could have been brought against each Defendant separately or against
the Second and Third Defendants without the Bank. Mr Kennelly notes
that in Al-Adsani v United Kingdom (2001) 34 EHRR 273at para 58 the
ECtHR accepted that the ill treatment alleged by the applicant against
Kuwait in his pleadings in the domestic court, namely repeated beatings
by prison guards over a period of days with the aim of extracting a
confession, can properly be categorized as torture. On the strength of
that he asks me to accept that the allegations of malice alleged by the
Claimants in relation to aggravated damages can properly be said to
mean that the Defendants, or at least the Second and Third Defendants,
were not acting in the exercise of public powers.
57. If Mr Kennelly is correct, then the issue of whether the Defendants
enjoy immunity might be decided on a false basis. The allegation at
present pleaded in support of the claim for aggravated damages is
very similar to an allegation of malice, such as might be advanced in
response to a defense of qualified privilege. It is well established that
such allegations are very difficult to prove for reasons given in Horrocks v
Lowe [1975] AC 135. It is therefore not uncommon for defendants faced
with such allegations to apply to strike them out. I express no view as
to whether, in this case, any such application would succeed. The point
is that, if the court is simply to assume the truth of such allegations
(and that they take the case outside the scope of the exercise of public
powers), then that assumption may prove false within a very short time of
the court having held that there is no state immunity. But by that time it
would be too late to rectify the injustice.
58. In my judgment it would not be right for me to decide this important
issue of state immunity on an assumption of the kind suggested.
59. Mr Kennelly's first point (that a defamation action is overwhelmingly
private in nature) is at first sight attractive. However, I am addressing this
point only on the hypothesis that I was wrong to hold that state immunity
was unavailable in a case where service has been affected pursuant to
the Judgments Regulation Art 5(3). I remind myself that I must interpret
the concept of a civil matter by reference, first, to the objectives of the
Regulation and, secondly, to the general principles which stem from the
national legal systems as a whole.
60. The objectives of the Regulation, as set out in the Recitals, give no
support to the view that it was intended to enable claimants to implead
natural or legal persons in proceedings relating to anything done by
them in the exercise of the sovereign authority of foreign state. And the
general principles of law include the principle of state immunity in public
international law. In the light of those considerations, and the guidance
in para 20 of Sonntag, I have no hesitation in holding that this action,
brought on this Intended Decision Letter (which was written against the
public law background set out above) is not a civil matter within the
meaning of the Regulation.
61. I have referred to this issue arising in this case where service has
been affected pursuant to the Judgments Regulation Art 5(3). It could
arise in other cases under the Judgments Regulation. Suppose, for
example, that one of the Defendants, exercising the right of freedom
of movement and employed by the Bank, happened to be domiciled in
England (as provided in Art 59). That defendant could then be sued in
England, if the Claimants are right.
EMPLOYEES AND STATE IMMUNITY
62. Mr Kennelly accepts that if he fails on the point under the Judgments
Regulation, the Bank must enjoy state immunity in this case if it adopted
the acts of its employees. He also accepts that, in principle, employees
of the Bank may enjoy state immunity, in relation to acts done in the
exercise of sovereign authority. But he submits that the alleged malice
means that they cannot rely on s.14(2) because the Claimants' case is
that they were not carrying on the business of the state.
63. Mr Barnes QC submits that the authorities clearly establish that
states, separate entities, and their employees, can all enjoy state
immunity even in cases where there are allegations of malice made
against them, including serious criminal conduct, subject only to cases
where the allegation is one of torture, or another international crime, or
a breach of jus cogens. He relies on the decision of the Court of Appeal
in Jones v Ministry of Interior of Saudi Arabia [2004] EWCA Civ 1394;
[2005] QB 699. The position is fully explained in the judgment of Mance
LJ, and succinctly summarised by Lord Phillips of Worth Matravers MR.
After summarising the position in relation to immunity ratione personae,
he went as follows:
"105 The dignity of a state may also be affronted if those who are or were
its officials are impleaded in relation to the conduct of its affairs before
the courts of another state. In those circumstances the state can normally
extend the cloak of its own immunity over those officials. It can be said
that to implead those officials amounts, indirectly, to impleading the state.
Where immunity is accorded in these circumstances it is on the grounds of
the subject matter of the litigation or ratione materiae. As the Latin terms
are used in some of the authorities that I shall be discussing I propose to
adopt them in this judgment.
106 Where a state official infringes the law of the state in the course of
carrying out the business of the state, the state is not thereby precluded
from claiming immunity ratione materiae.
107 These general principles of public international law are reflected in
the approach of this court in Propend Finance Pty Ltd v Sing 111 ILR
611 to the interpretation of the State Immunity Act 1978. Mance LJ has
summarised the relevant parts of that decision and the authorities upon
which it was based. I need add only that in the Propend case the claim
to immunity was raised in contempt proceedings. The conduct in issue
was the act of faxing information to Australia in breach of an undertaking
given to the High Court. This appeal raises the issue of whether the
reasoning in the Propend case applies where the conduct alleged against a
state official is not merely unlawful but amounts to torture.
108 The crime of torture has acquired a special status under international
law. It is an international crime or a breach of jus cogens."
64. In addition to Propend (in which the defendant's act of sending a fax
was a contempt of court) the English cases include Holland v Lampen-
Wolfe [2000] 1 WLR 1573. That was a claim for libel allegedly published in
a letter by an officer at a US airbase, where there was also an allegation
that the libel was published maliciously (1582F). Lord Clyde said (at p
1580E) that "It is the nature and character of the activity on which the
claim is based which has to be studied, rather than the motive or purpose
of it". Another English case where the claim to immunity was upheld was
Zoernsch v Waldock [1964] 1 WLR 675 (CA), where the Defendants were
accused of negligence and corruption.
65. Foreign cases discussed in Jones paras 34-35 included allegations of
very serious illegality and malicious conduct: Herbage v Meese (1990)
F Supp 60 at 67 (perjury to obtain an extradition); Jaffe v Miller (1993)
95 ILR 446 at 460-462 (conspiracy to kidnap and pervert the course of
justice). In Chuidian v Philippine National Bank (1990) 912 F.2d 1695 a
Philippine government official was alleged to have ordered the Bank to
dishonour a letter of credit out of malice towards the claimant. (The Court
of Appeal for the Ninth Circuit held, at 1106-7 [10] – [11], that the most
that this established was a convergence between the defendant's personal
interest and his official duty and authority, and that did not serve to make
his action any less an action of his sovereign).
66. I accept Mr Kennelly's submission that the reasoning in Jones is not
in principle confined to torture. The case does recognise a distinction
between acts performed in an official capacity, and acts outside the scope
of any proper exercise of sovereign authority: see for example paras
38-39. But it is clear from the judgments that the cases referred to above
are cited in Jones without there being any doubt cast upon them at all.
And the allegations of malice in this case correspond to, or fall well below,
the seriousness of some of the allegations in the other cases, both English
and foreign, in which the claim for state immunity has been upheld.
67. It follows that in my judgment all three Defendants enjoy state
immunity under s.14(2) of the 1978 Act, subject to Mr Kennelly's final
point under Art 6 of the ECHR.
ECHR Art 6 AND STATE IMMUNITY
68. The submission for the Claimant is as follows. The relevant provisions
of the HRA are as follows. The Human Rights Act 1988 s3(1) provides
that:
"So far as it is possible to do so, primary legislation and subordinate
legislation must be read and given effect in a way which is compatible
with the Convention rights."
69. Article 6(1) ECHR provides, so far as is material:
"(1) In the determination of his civil rights and obligations or of any
criminal charge against him, everyone is entitled to a fair and public
hearing within a reasonable time by an independent and impartial tribunal
established by law."
70. The European Court of Human Rights ("ECtHR") has accepted that a
plea of state immunity does in principle interfere with Article 6 rights: see
e.g. McElhinney v Ireland [2002] 34 EHRR 13, para 26; Fogarty v United
Kingdom [2002] 34 EHRR 12, para 28; and Al-Adsani v United Kingdom
[2002] 34 EHRR 273 para 52.
71. As Mance LJ put it in Jones at paras 82-83:
"The European Court of Human Rights in Al-Adsani was concerned with
the immunity from civil proceedings of the State of Kuwait, which the
majority correctly described as a form of immunity ratione personae (cf
paragraph 63). In the light of the reasoning in Al-Adsani, there can be
no doubt … that article 6(1) is also prima facie engaged in a case such
as the present. If the claimants are to be denied access to the English
courts, this must be shown to be in pursuit of a legitimate aim and to be
proportionate.
Approaching the matter from this angle, when one compares (a) a
state's claim to immunity ratione personae, which was the issue before
the European Court in Al-Adsani, with (b) a state's claim to immunity
ratione materiae in respect of a claim against one of its officials, I see
important distinctions. Above all, I find it impossible to identify any settled
international principle affording the state the right to claim immunity in
respect of claims directed against such an official, rather than against the
state itself or its head or diplomats."
72. It is conceded that in the cases referred to above, the ECtHR
also accepted that a defence of state immunity fulfilled the legitimate
aim: "of complying with international law to promote comity and
good relations between States through respect of another State's
sovereignty" (McElhinney, para 35; Fogarty, para 34; Al– Adsani, para
54). The ECtHR also accepted that the plea was, on the facts of those
cases, proportionate since it reflected the existing state of generally
recognised rules of public international law. For these reasons, the
ECtHR held that there was no violation of Article 6 in each of the above
decisions.
73. Mr Kennelly submits that the requirement that the scope of the
immunity conferred should be proportionate has been a clear requirement
of the ECtHR case-law since the first case considering state immunities,
namely Waite and Kennedy v Germany [2000] 30 EHRR 261 (a case
involving putative employment law proceedings against the European
Space Agency) at para 59 where the ECtHR stated:
".... Furthermore, a limitation will not be compatible with Article 6(1)
if it does not pursue a legitimate aim and if there is not a reasonable
relationship of proportionality between the means employed and the aim
sought to be achieved."
74. Mr Kennelly submits that the slim majority reasoning of Al Adsani
helps to illuminate the rationale of Jones. Jones concerned a claim against
the Emir of Kuwait and his Government, but the ECtHR emphasised
at para 62 and, effectively, at para 65 that it was different in kind to a
criminal complaint against an individual. The majority ECtHR decision
(reached 9:8) essentially turned upon the conclusion that official state
torture (as opposed to unauthorised acts of mistreatment) still benefited
from the defence of state immunity.
75. Mr Kennelly also accepts that in Holland the House of Lords
established, in the words of Lord Hope of Craighead at pp1577G-158G:
"In the absence of any directly relevant authority to the contrary, … article
6 of the Convention does not preclude a state from granting immunity
to a foreign state in accordance with its international law obligations in
respect of acts which can properly be characterised as jure imperii."
76. Mr Kennelly accepts that, but for the arguments under the directly
applicable Judgments Regulation, the Bank is entitled to rely on state
immunity rationae materiae under s14(2) of the 1978 Act, such being
in pursuit of legitimate aims recognised by public international law and
proportionate in general terms.
77. However, to apply state immunity to the Bank's employees is, he
submits, disproportionate and cannot be justified. He invites me to
note that the Act does not even address the subject of employees. He
draws attention to the detailed consideration given by Mance LJ to all the
relevant factors of Mr Jones's case available to the Court of Appeal, before
reaching the conclusion at para 96 that the matter had to be remitted to
the court below for further argument.
78. One of the factors considered relevant by Mance LJ (paras 85-86)
when considering proportionality was the availability of an effective
domestic remedy in the state in question. No one has suggested that
there is a lack of an effective domestic remedy in the Netherlands for
the matters the subject of the present action. Mance LJ also regarded
as relevant the gravity of each of the different allegations made by the
claimants in Jones (para 98).
79. The Claimants point to a number of factors to show what they
submit is the disproportionate impact of the proposed bar, including the
following:
i) The difficulty of ascertaining any principle by which unofficial activity by
agents should be cloaked with state immunity;
ii) The availability of the defence of qualified privilege if the case
proceeds;
iii) That the English courts will be as well equipped to deal with issues of
fact as to the belief or lack of belief of the Second and Third Defendants in
what they wrote.
80. The ECtHR in Al-Adjani considered the issue of proportionality in
paras 55-66. In doing so it focussed on matters of principle rather than
on facts particular to the applicant's case. It adopted a similar approach
in McElhinney: see paras 36-40. In Fogarty (in which the applicant
complained that she had been discriminated against as an applicant for
employment by the US embassy in London) the court adopted a similar
approach while remarking, at para 38, upon the sensitivity of issues
relating to recruitment of staff at foreign embassies and missions. In the
corresponding part of the judgment in Waite the ECtHR regarded it as
a material factor that the applicants had available to them reasonable
alternative means to protect effectively their rights under the Convention
(para 67).
81. It is not clear that in every case where state immunity is claimed it
is necessary for the court to conduct a full review of all the facts of the
case with a view to deciding the issue of proportionality. In most cases
that is likely to be a waste of time. The ECHR appears to have conducted
a more limited review of such matters than is commonly required in
deciding proportionality, on account of the high importance it attached
to the principle of state immunity. In the House of Lords in Holland Lord
Hope of Craighead and Clyde adopted a similar approach (delivering their
speeches only a few months before the Human Rights Act had come
into force): see p1578C, and 1581CE, none of the other speeches refer
to proportionality, although in Lord Millett's case that was because he
considered Art 6 was not engaged: p1588 (the Court of Appeal in Jones
held Lord Millett's view to be wrong: paras 82, 100, 135). The review
considered at paras 96-98 of Jones (which was the first of the English
cases on this issue decided after the Human Rights Act had come into
force) was in the context of an allegation of torture, which was treated
as being of a different order of seriousness from the allegations in other
cases.
82. If I am required to consider all the factors relied upon by the
Claimants, then in my judgment these factors do not establish that it
would be disproportionate to allow reliance on state immunity by any
of the defendants. If I accepted them as having any weight, that would
reduce the doctrine of state immunity to little more than a variant of
the doctrine of forum non conveniens. That doctrine has no place in the
scheme of the Judgments Regulation.
83. It seems to me that what is required for the integrity of the financial
system of the Netherlands, and whether or not an official might believe
that a person has committed any of the acts in relation to Dutch tax and
other matters referred to in the words complained of, and the Dutch law
on the scope of an employee's employment, are all matters on which the
Dutch courts would very much better placed to adjudicate than an English
court. But the point is more fundamental. The issues raised in this action
relate to the exercise of a sovereign authority. Comity and respect for the
dignity of other states make it wholly proportionate that the Claimants
should be precluded from raising these matters in an English court. In
terms of the gravity of the allegations made against the Defendants by
these Claimants, there is no comparison with the allegations of torture
considered in Jones.
84. It follows that the claim for state immunity made on behalf of each of
the three Defendants in all three actions succeeds.