Alcom Ltd v Republic of Colombia: HL 1984

A bank account used to cover the day-to-day expenses of an Embassy, clearly served sovereign purposes and therefore was immune from enforcement measures. The Act of 1978 must be read against the background of customary international law current in 1978. It is highly unlikely that Parliament intended to require United Kingdom courts to act contrary to international law unless the clear language of the statute compels such a conclusion.
Lord Diplock said: ‘The Act, as its short title indicates, deals primarily with relations between sovereign states, though its provisions are capable of extension by Order in Council to relations between the United Kingdom and the constituent territories of federal states. Accordingly its provisions fall to be construed against the background of those principles of public international law as are generally recognised by the family of nations.’ and ‘The State Immunity Act 1978, whose long title states as its first purpose to make new provision with respect to proceedings in the United Kingdom by or against other states, purports in Part I to deal comprehensively with the jurisdiction of courts of law in the United Kingdom both (1) to adjudicate upon claims against foreign states (‘adjudicative jurisdiction’); and (2) to enforce by legal process (‘enforcement jurisdiction’) judgments pronounced and orders made in the exercise of their adjudicative jurisdiction . . the Act . . draws a clear distinction between the adjudicative jurisdiction and the enforcement jurisdiction of courts of law in the United Kingdom. Sections 2 to 11 deal with adjudicative jurisdiction. Sections 12 to 14 deal with procedure and of these, sections 13(2) to (6) and 14(3) and (4) deal in particular with enforcement jurisdiction.’
In the case of a bank account, the onus is on the judgment creditor to show that the use or intended use of the account is, apart from minimal exceptions, for commercial purposes within the meaning of the Act.
‘The crucial question of construction for your Lordships is whether a debt which has these legal characteristics falls within the description contained in section 13(4) of ‘property which is for the time being in use or intended for use for commercial purposes.’ To speak of a debt as ‘being used or intended for use’ for any purposes by the creditor to whom the debt is owed involves employing ordinary English words in what is not their natural sense, even if the phrase ‘commercial purposes’ is given the ordinary meaning of jure gestionis in contrast to jure imperii that is generally attributed to it in the context of rights to sovereign immunity in public international law; though it might be permissible to apply the phrase intelligibly to the credit balance in a bank account that was earmarked by the state for exclusive use for transactions into which it entered jure gestionis. What is clear beyond all question is that if the expression ‘commercial purposes’ in section 13(4) bore what would be its ordinary and natural meaning in the context in which it there appears, a debt representing the balance standing to the credit of a diplomatic mission in a current bank account used for meeting the day-to-day expenses of running the mission would fall outside the subsection.
‘Commercial purposes,’ however, is given by section 17(1) the extended meaning which takes one back to the comprehensive definition of ‘commercial transaction’ in section 3(3). Paragraph (a) of this tripartite definition refers to any contract for the supply of goods or services, without making any exception for contracts in either of these two classes that are entered into for purposes of enabling a foreign state to do things in the exercise of its sovereign authority either in the United Kingdom or elsewhere. This is to be contrasted with the other paragraph of the definition that is relevant to the instant case, paragraph (c), which on the face of it would be comprehensive enough to include all transactions into which a state might enter, were it not that it does specifically preserve immunity from adjudicative jurisdiction for transactions or activities into which a state enters or in which it engages in the exercise of sovereign authority, other than those transactions that are specifically referred to either in paragraph (a) or in paragraph (b), with the latter of which the instant appeal is not concerned . . My Lords, the decisive question for your Lordships is whether in the context of the other provisions of the Act to which I have referred, and against the background of its subject matter, public international law, the words ‘property which is for the time being in use or intended for use for commercial purposes,’ appearing as an exception to a general immunity to the enforcement jurisdiction of United Kingdom courts accorded by section 13(2) to the property of a foreign state, are apt to describe the debt represented by the balance standing to the credit of a current account kept with a commercial banker for the purpose of meeting the expenditure incurred in the day-to-day running of the diplomatic mission of a foreign state.
Such expenditure will, no doubt, include some moneys due under contracts for the supply of goods or services to the mission, to meet which the mission will draw upon its current bank account; but the account will also be drawn upon to meet many other items of expenditure which fall outside even the extended definition of ‘commercial purposes’ for which section 17(1) and section 3(3) provide. The debt owed by the bank to the foreign sovereign state and represented by the credit balance in the current account kept by the diplomatic mission of that state as a possible subject matter of the enforcement jurisdiction of the court is, however, one and indivisible; it is not susceptible of anticipatory dissection into the various uses to which moneys drawn upon it might have been put in the future if it had not been subjected to attachment by garnishee proceedings. Unless it can be shown by the judgment creditor who is seeking to attach the credit balance by garnishee proceedings that the bank account was earmarked by the foreign state solely (save for de minimis exceptions) for being drawn upon to settle liabilities incurred in commercial transactions, as for example by issuing documentary credits in payment of the price of goods sold to the state, it cannot, in my view, be sensibly brought within the crucial words of the exception for which section 13(4) provides.’
Lord Diplock, Lords Fraser of Tullybelton, Keith of Kinkel, Roskill and Templeman
[1984] AC 580, [1984] 2 WLR 750, [1984] 2 Lloyds Rep 24, [1984] 2 All ER 6
State Immunity Act 1978
England and Wales
Citing:
CitedCalvin’s case 1606
Sir Edward Coke said: ‘If this alien becomes an enemy (as all alien friends may) then he is utterly disabled to maintain any action, or get anything within this realm.’ and ‘If a King comes to a kingdom by conquest, he may change and alter the laws . .

Cited by:
CitedRegina v Bartle and The Commissioner Of Police For The Metropolis and Others Ex Parte Pinochet Ugarte, Regina v Evans and Another and The Commissioner of Police For The Metropolis and Others (No 1) HL 22-Nov-1998
The government of Spain had issued an arrest warrant and application for extradition in respect of Pinochet Ugarte for his alleged crimes whilst president of Chile. He was arrested in England. He pleaded that he had immunity from prosecution.
CitedAziz v Republic of Yemen CA 17-Jun-2005
The claimant had made a claim for unfair dismissal. The defendant state had filed a defence instead of claiming state immunity. It then sought to assert such immunity. The claimant said the state had waived its immunity.
Held: Section 2(7) of . .
CitedRegina v Bartle and Commissioner of Police for the Metropolis and Others, ex parte Pinochet Ugarte; Regina v Evans and Similar (No 3) HL 24-Mar-1999
An application to extradite a former head of state for an offence which was not at the time an offence under English law would fail, but could proceed in respect of allegations of acts after that time. No immunity was intended for heads of state. . .
CitedJones v Ministry of Interior for the Kingdom of Saudi Arabia and others HL 14-Jun-2006
The claimants said that they had been tortured by Saudi police when arrested on false charges. They sought damages, and appealed against an order denying jurisdiction over the defendants. They said that the allegation of torture allowed an exception . .
CitedSmith, Regina (on The Application of) v Secretary of State for Defence and Oxfordshire Assistant Deputy Coroner (Equality and Human Rights Commission intervening) SC 30-Jun-2010
The deceased soldier died of heat exhaustion whilst on active service in Iraq. It was said that he was owed a duty under human rights laws, and that any coroner’s inquest should be a fuller one to satisfy the state’s duty under Article 2.
CitedSerVaas Incorporated v Rafidian Bank and Others SC 17-Aug-2012
The appellant had contracted to construct a factory in Iraq. On the imposition of sanctions, the respondent bank’s assets were frozen. The appellant sought to recover the sums due to it, and obtained judgment in France. After the fall of Hussain, . .
CitedAIC Ltd v Federal Government of Nigeria QBD 13-Jun-2003
The court was asked: ‘i. whether a judgment against a State may be registered under section 9 of the Administration of Justice Act 1920 and enforced in this country; and
ii. whether moneys in a bank account of a central bank that is a separate . .
CitedThe United States of America v Nolan SC 21-Oct-2015
Mrs Nolan had been employed at a US airbase. When it closed, and she was made redundant, she complained that the appellant had not consulted properly on the redundancies. The US denied that it had responsibility to consult, and now appealed.
CitedBenkharbouche v Secretary of State for Foreign and Commonwealth Affairs SC 18-Oct-2017
The court was asked as to the compatibility of provisions in the 1978 Act with the human rights of the appellant. The claimants, Moroccan nationals were employed as domestic staff in embassies in London. They alleged both race discrimination and . .

These lists may be incomplete.
Updated: 06 March 2021; Ref: scu.220687