Relativization of Sovereign Immunity

Every year countries turn to foreign private financial entities in order to obtain finance for several different reasons, from specific projects to be able to pay its short-term internal obligations. However, although it is not the rule, sometimes a country interrupts the payment of its debts with foreign private creditors, not performing its obligations assumed with such foreign private financial entities. And because of that, those financial entities have filed lawsuits in foreign courts in order to recover their losses from the defaults.

Such facts bring to discussion a matter that has been occupying scholars and judges for many years: if countries that are debtors do not perform their obligations assumed before foreign private creditors, can such foreign private creditors charge, in foreign courts, such debts? According to the traditional principle of sovereignty of nations, every and any judicial lawsuit against one State can only be filed in the national courts of such State. In the last decades, however, we have seen a relativization of this principle.

Sovereign immunity can be divided in two parts, that can not be confused: the immunity of jurisdiction, that is related to the immunity of a nation to have a lawsuit filed against it before a foreign court; and the immunity of enforcement, that is related to the immunity of a nation to have an enforcement lawsuit filed against it before a foreign court.

The sovereign immunity of nations with respect to the jurisdiction of foreign courts was derived, originally, from theoretical premises and political conceptions that, based in the essential equality of State sovereignty, considered the absolute character of immunity of jurisdiction of the States in connection with foreign courts.

From the 1970s, however, such orientation was modified because of the dynamism imposed by international relations, starting to prevail the understanding that immunity of jurisdiction was no longer absolute. The new vision of this matter was due to the fact that the immunity of jurisdiction of sovereign States, which was usually based in international practices, found juridical grounds in international conventions and in internal legislation of several countries. And this new legislative picture in the international scene permitted the construction of the theory of relative jurisdiction immunity of sovereign States.

In this regard, sovereign immunity is only applied to the exercise of acts of empire, as external public entities does not benefit from immunities any more when they carry out business or management activities with private parties. For business or management activities it is understood that a sovereign State acts as a private party in the same legal level as private entities.

Therefore, it is not viable to impose to citizens from any country the burden to litigate, around business, commercial, civil or labor matters before courts of other countries, if the fact that generated the judicial controversy is not only chargeable to a foreign country, but necessarily strange to the understanding of acts of empire, and derived from its strict performance as a private party, as it is the case of loans and securities issuances made by several countries.

The immunity of enforcement has a broader character, and it shall only be excepted, according to decisions of the Brazilian Supreme Court, in two exceptional hypothesis: (i) waiver, by the foreign State, of the privilege of intangibility of its own properties or goods; or (ii) existence, in the territory where the lawsuit was filed, of properties or goods that, although belonging to the foreign State, do not have any connection with diplomatic activities made in such country, as such properties or goods related to diplomatic activities are protected from attachment, seizure or related acts by the inviolability guaranteed by the Conventions of Vienna of 1961 and 1963.

As a result, countries that, for example, do not perform its obligations assumed in loan agreements or in securities issuances related to its external debt, could be submitted to foreign courts. Such obligations assumed before private foreign investors are private obligations, being considered acts of business, and not acts of empire. In addition, if any country in this situation looses a cognitive proceeding before a foreign court, its properties or goods that are not related to diplomatic activities can be enforced, even if such country does not waive its immunity of enforcement. On the other hand, if a country does not waive its enforcement immunity and does not have properties or goods in the country where the lawsuit is taking place, the only way that the private creditor has to claim its rights is before the national courts of such country.

Comments

[MOON MAN]

Very entertaining issue. I haven't heard of this one. It will be necessary to visit you on a thicket!

[debt collection services]

Why should any countries debts be treated different than the citizens that make up that country?

David

[Exhiphum]

Greetings!..
http://antergerd.com
Excellent forum with fantastic references and reading.... well done indeed...
All the best!

[structured settlement lump sum]

It seems that anybody can file a lawsuit.