The Concept Of State Immunity In India & Section 86 Of CPC

History And Development Of The Concept Of State Immunity:

State immunity developed in close connection with the development of the concept of sovereignty and the territorial state.^[1] The concept can be traced back to the principle of par in parem non habet imperium, mentioned as early as 1354, by Bartolus de Saxoferrato in his Tractatus de regimine civitatis. It stipulates that a sovereign should not have jurisdiction over another sovereign.^[2]

With the end of the period of absolutism, the State started to emerge as an entity, which was distinct from the ruler. State immunity evolved at this point as a separate concept, next to the immunity of the head of State and diplomatic immunity.^[3] As states became more involved in trade and commerce, it was viewed that it would no longer be appropriate for a state to enjoy total immunity from jurisdiction where it was acting in a manner similar to a private entity. In the process, the states started distinguishing "governmental" or "public" or "Sovereign" acts, i.e., acta jure imperii, from those of a "non-governmental" or "private" or "commercial", i.e., acta jure gestionis character in order to restrict absolute sovereign immunity. The states proved to be a different entity from ruler, by the time the period of absolutism ended.

Immunity was accorded to a state only for its act's jure imperii (Sovereign) and not jure gestionis (Commercial). This (restrictive) theory is ostensibly based on the premise that when a state, through its government-department or any other instrumentality, undertakes commercial transactions (with transnational effects) with a foreign firm or corporation, it is not entitled to immunity from the jurisdiction of other states for such transactions as that jurisdiction does not involve either a challenge or a threat to the dignity of a state concerned nor interferes with its sovereign functions.

The doctrine of foreign state immunity, like most legal doctrines, has evolved and changed over the last centuries, progressing through several distinct periods. The first period, covering the eighteenth and nineteenth centuries, has been called the period of absolute immunity, because foreign states are said to have enjoyed complete immunity from domestic legal proceedings. The second period emerged during the early twentieth century, when Western nations adopted a restrictive approach to immunity in response to the increased participation of state governments in international trade. The idea of granting blanket immunity for all acts of states was found unworkable as this would amount to granting the state operating as a trader or private person, a privileged position as compared with private individuals.

State Immunity Law In India:

India does not have a comprehensive legislation on the inviolability of a foreign state, unlike the United States, United Kingdom, and other common law countries. If we look at the national immunity acts of various countries, we will find an elaborate definition of the term "foreign State", which has been given for the purposes of granting immunity. Generally, when a foreign state is sued in a court of law, immunity, which protects them relies on the definition of a State according to general rules of international law. A number of specific issues also arise in view of the question of whether certain sub structures or agencies, or even representatives of a State, are also protected. For example, the Foreign Sovereign Immunity Act, 1976 of the United States, which represents the first effort of codification of the law governing litigation with foreign states and their instrumentalities in the United States, defines a foreign State to include "its political subdivisions; agencies and instrumentalities". In US, the scope of a foreign state's immunity is determined by judiciary, rather than executive, authorities. The role of executive is rather limited in suits against foreign states. The Sovereign Immunity Act, 1978 of the United Kingdom, too, refers to the term foreign state (for the immunities and privileges conferred on it by the Act) to include: sovereign or other head of a foreign State in his public capacity; its government and government departments. It does not confer state status on an entity of a foreign State which is distinct from the executive organs of that government and is capable of suing or being sued.

As far as State immunity is concerned, India has adopted a restrictive approach, and, precisely, only Section 86 of the Civil Procedure Code, governs the issue of State immunity, which says that no foreign State may be sued in any Court without the Prior consent from the central government. Section 86 of the Civil Procedure Code, being lex fori (law of the country), binds the courts in India in matters pertaining to the jurisdictional immunity of foreign States.^[4] A foreign State, therefore, cannot rely on the doctrine of sovereign immunity under international law and rules relating thereto when the Central Government has given its consent to the filing of a suit in India against such foreign State.^[5]

The central government has the discretion to grant the consent, however, the approval will depend on the specific facts of the case and would only be applied in following circumstances where the foreign State:

a) has instituted a suit in the Court against the person desiring to sue it, or

b) by itself or another, trades within the local limits of the jurisdiction of the Court, or

c) is in possession of immovable property situated within those limits and is to sued with reference to such property or for money charged thereon, or

d) has expressly or impliedly or impliedly waived the privilege accorded to it by this section.

However, such consent may not be required where the matter is governed by a special law (for, eg, the Carriage by Air Act 1972, Consumer Protection Act 1986) or where the legal proceedings are not in the nature of a suit, such as an industrial dispute under the Industrial Disputes Act 1947.^[6] Recently, Delhi High Court has held that a foreign state cannot claim sovereign immunity under Section 86 of the Code of Civil Procedure against enforcement of an arbitral award arising out of a commercial transaction.

Interpretation Of Section 86 Through Case Laws:

Section 86 of the Civil Procedure Code, interpreted by the Supreme Court of India, symbolizes the law on the jurisdiction of foreign states in India and thus encourages the application of international law governing the inviolability of a foreign state in the Indian Court. One of the most landmark cases dealing with the issue of sovereign immunity in India is Harbhajan Singh Dhalla v Union of India.^[8] The Ministry in this case, refused to grant the permission on "political grounds" to sue the Algerian Embassy and then Algerian Ambassador, for non-payment of money for the construction work carried out in the embassy and also contended that under section 86 petitioner failed to bring out prima facie a case against them. The Supreme Court observed that, "the disputes have to be resolved in accordance with the laws of this country, both under the principles of Lex Loci contractus (law of the place where the contract is made) as well as lex situs (law of the place where the property is situated)". The court also observed that even though Union of India has the jurisdiction and obligation in the appropriate case to give sanction but it cannot determine the claims in an arbitrary manner or administratively adjudicate those disputes. The court further mentioned that it is not for the Central Government to attempt to adjudicate upon merits of the case. It is the function of the courts of competent jurisdiction, which Central Government cannot usurp under Section 86, and the power given to the Central Government must be exercised with proper reasoning and on permissible grounds.

One of the cases to touch upon the law vigorously on Section 86 was the case of Mirza Ali Akbar Kashani vs. United Arab Republic and Anr.^[9] It was held in this case by the Supreme Court that the permission of the government is required under Section 86 of the Civil Procedure Code, 1908 to pursue the case. However, it was also held that if the government does not give permission to sue, there must be a cogent reason in writing for the refusal, which should be explicit and clear. Merely not giving permission on the political ground will not suffice. Furthermore, the Apex Court also affirmed that although, Section 86 of Civil Procedure Code, 1908 is administrative in nature, it must follow the principle of natural justice, since it decides the right of the parties.

In Ehiopian Airlines v. Ganesh Narain Saboo,^[10] the Supreme Court of India reiterated the consistent view in India that the doctrine of sovereign immunity in India was not absolute, and that foreign states do not have immunity from judicial proceedings in cases involving their commercial and trading activities and contractual obligations undertaken by them in India.

In the case of Qatar Airways versus Shapoorji Pallonji,^[11] the Bombay High Court observed that unfortunately however, how the 'commercial activities' qualification fits with the language of section 86 is far from clear. The statute contains no exception to the consent requirement on the basis of the nature of the activities to which the suit relates. The only reference to the nature of the activities is in section 86(2)(b) which states that the Government may not grant consent unless the foreign state by itself or another, trades within the local limits of the jurisdiction of the Court. This is therefore a negative qualification restricting the power of the Central Government to grant consent, and is not an exception to the consent requirement.

UN Convention on Jurisdictional Immunity:

The UN Convention on Jurisdictional Immunities of States and Their property, 2004, is the first modern multilateral instrument to formulate a comprehensive approach towards the issue of immunity of states, from suits, in foreign courts. The Convention represents a point of intersection between international law and national procedural law, and institutionalizes the transaction from absolute to restrictive rule of jurisdictional immunity. On 12 January 2007 India, signed this Convention. However, it has neither been ratified nor accepted or acceded by India. The Convention itself awaits to be in force.

The way out:

Though the purpose of Section 86 of the Civil Procedure Code, is to provide the central government with the discretion to prevent any attempt to sue a foreign State, as well as any company or organization and to avoid any kind of harassment or prosecution directed towards them, this system still needs to be reformed on certain parameters. It is necessary to bring Indian law of State immunity in line with other contemporary systems of state law and practice. The possible solution for India, may, lie in either the amendment of the language of Section 86, or, in drafting of a comprehensive legislation on State immunity like the ones in USA and UK and other identical statutes, working in many common law countries. Bringing a separate immunity act may be extra onerous for the already encumbered Indian Judicial system, nevertheless, the current system does not endeavour to be the best in the contemporary times.

The author is a Delhi based lawyer. Views are Personal