State Immunity: Restrictive Theory and Section 86 CPC

A state cannot ordinarily be sued in the courts of another state. This rule, known as state or sovereign immunity, flows from the sovereign equality of states: one equal has no authority over another (par in parem non habet imperium). As states began to trade and contract like private persons, most legal systems narrowed immunity to sovereign acts. This note covers the two theories, the UN Convention, the leading cases and the Indian law under section 86 CPC.

1. Two Theories

Figure 1: From absolute to restrictive immunity

• Schooner Exchange v McFaddon (US Supreme Court, 1812). Chief Justice Marshall held that a French warship in a US port was immune, explaining immunity as an implied waiver of territorial jurisdiction in favour of a foreign sovereign.
• Tate Letter, 1952. The US State Department announced that it would follow the restrictive theory, later codified in the Foreign Sovereign Immunities Act, 1976; the UK followed in the State Immunity Act, 1978.
• I Congreso del Partido (House of Lords, 1983). Under the restrictive theory, the court looks at the nature of the act in its whole context: whether the state acted as a sovereign or as a private party; Cuba's conduct in diverting sugar cargoes for political reasons was still commercial in nature.
• Nature or purpose. The UN Convention looks primarily to the nature of a contract, but its purpose is also relevant if the parties agreed or the forum state's practice treats it as relevant (Article 2(2))

2. The UN Convention, 2004

The UN Convention on Jurisdictional Immunities of States and Their Property, based on ILC drafts, was adopted in 2004 but is not yet in force, requiring thirty ratifications. India signed it on 12 January 2007 but has not ratified it. It largely reflects customary law on restrictive immunity.

Figure 2: Proceedings in which a state cannot claim immunity (Articles 10 to 17)

• Consent and waiver, Articles 7 to 9. A state cannot invoke immunity if it has expressly consented, instituted the proceedings, or taken a step on the merits.
• Immunity from execution, Articles 18 to 21. A separate and stricter immunity: measures of constraint against state property are allowed only with consent, against property earmarked for the claim, or, after judgment, against property used for commercial purposes; central bank, diplomatic and military property are protected.

3. The Leading Cases

• Jurisdictional Immunities of the State (Germany v Italy; Greece intervening), 3 February 2012. Italy violated Germany's immunity by allowing civil claims for Nazi era war crimes and by a measure of constraint against Villa Vigoni; the territorial tort exception does not cover acts of armed forces during armed conflict; immunity is procedural and does not conflict with substantive jus cogens; there is no last resort exception.
• Al-Adsani v United Kingdom (ECtHR, 2001). Granting Kuwait immunity from a civil claim for torture did not violate the right of access to court under Article 6, by nine votes to eight.
• Aftermath of Germany v Italy. The Italian Constitutional Court in 2014 refused to give effect to the judgment for grave crimes, leading to new litigation before the ICJ in 2022.

4. Indian Law: Section 86 CPC

Figure 3: Suits against foreign states in India

• Mirza Ali Akbar Kashani v United Arab Republic (1966). A suit for breach of contract against the United Arab Republic required the consent of the Central Government under section 86, which governs the matter in Indian courts in place of the general rules of international law on immunity.
• Harbhajan Singh Dhalla v Union of India (1986). The Central Government's decision to grant or refuse consent must be made on reasons and in accordance with principles of natural justice and international law, including the restrictive theory, and is subject to judicial review.
• Ethiopian Airlines v Ganesh Narain Saboo (2011). Section 86 does not apply to proceedings before consumer fora, which are governed by special statutes; Ethiopia, a party to the Warsaw Convention given effect by the Carriage by Air Act, had impliedly waived immunity, and a state airline engaged in commercial activity could not claim sovereign immunity.
• Diplomatic missions. Questions of whether missions can be sued in employment disputes continue to arise; immunity of diplomats themselves is governed by the 1972 Act (Topic 36)

5. Frequently Asked Questions

Can a foreign state be sued in an Indian civil court?

Only with the written consent of the Central Government under section 86 CPC. Consent may be given where the state has sued the plaintiff, trades in the court's jurisdiction, is concerned with immovable property in India, or has waived immunity, and the decision is reviewable.

Does immunity apply to war crimes committed by a state's armed forces?

According to the ICJ in Germany v Italy (2012), yes. Acts of armed forces in armed conflict are sovereign acts, and the gravity of the violations or their jus cogens character does not remove immunity from civil jurisdiction.

Is a state immune when it buys goods or hires a company abroad?

Under the restrictive theory, generally not. A commercial transaction is an act jure gestionis, judged mainly by its nature, so a state that contracts like a private party can be sued on that contract (Article 10 of the 2004 Convention; I Congreso del Partido, 1983).

Does winning a judgment against a foreign state guarantee recovery?

No. Immunity from execution is separate and stricter than immunity from jurisdiction. Property used for governmental purposes, such as embassy, central bank and military property, generally cannot be seized, and in India execution needs the Central Government's consent under section 86(3) CPC.

6. Related Topics

• Topic 10: Jus Cogens and Obligations Erga Omnes. Germany v Italy.
• Topic 34: Universal Jurisdiction. Immunity of officials.
• Topic 36: Diplomatic Immunity. Immunity of diplomats.