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Article Excerpt
The involvement of foreign states in domestic courts sits at the intersection between private and public international law. Whilst courts are becoming increasingly prepared to defer underlying notions of sovereignty and territoriality to protect private rights, they remain at times hesitant in adjudicating on matters concerning foreign states. The doctrine of non-justiciability affords protection to both foreign states and the forum executive in determining that courts will not adjudicate on the transactions of foreign states. This article examines the doctrine as adopted in the United Kingdom and applied in Australia, as well as the political question doctrine of the United States and the merits-based approach followed in Canada. The article argues that foreign states are no longer sacrosanct in Australian courts, and a correct understanding of executive certification and the Australian executive's prerogative in foreign affairs ameliorates the need for the doctrine.
CONTENTS I Introduction II Foreign States in the Conflict of Laws A Foreign State Defendants B Paradoxical Treatment of Foreign Laws and Interests C The Separate Doctrine of Non-Justiciability III Transactions of Foreign States in Domestic Courts A Comparative Approaches 1 UK: The Doctrine of Non-Justiciability 2 US: The Political Question Doctrine 3 Canada: A Merits-Based Approach B Australian Considerations 1 Executive Prerogative in Foreign Affairs 2 Executive Certificates IV Australian Application of the Doctrine of Non-Justiciability A Lack of Manageable Standards B Executive Embarrassment 1 The One Voice Principle 2 Judicial Notions of Embarrassment V Conclusion
I INTRODUCTION
In a globalised world, where international trade and commerce is unexceptional, so too is the expectation that courts will be at the service of litigants. Be they individuals, multinational corporations or governments, confidence in access to courts when disputes arise is often of great reassurance when parties enter into cross-border transactions. Occasionally, these disputes involve issues of concern to states, much as they might concern others not privy to those transactions. Despite this, parties operating on a global stage would rightfully expect their interests and, where necessary, vindication of their private rights, to be prioritised over these concerns on a level playing field in the courts. Any doctrine obstructive of these expectations would require strong justification.
In Buttes Gas and Oil Co v Hammer (No 3), (1) the House of Lords articulated a doctrine of non-justiciability. Pursuant to this doctrine, a court may abstain from adjudication in cases touching on issues involving foreign states on either of two accounts: that there are 'no judicial or manageable standards' by which a court can judge those issues; or because adjudication of such issues would cause 'embarrassment' to the forum's executive. (2) The doctrine is one of private international law, but sits uneasily at the intersection with public international law. Whilst courts were once predisposed to uphold notions of state sovereignty and territoriality, they are becoming increasingly reluctant to do so, particularly when the enforcement of private rights is at stake. (3) In this context the doctrine has attracted substantial criticism, which is hardly surprising given that it can render litigation between private parties non-justiciable. (4) Despite these criticisms, this approach has been applied in Australia. (5) In analysing that application, this article doubts the desirability of the doctrine.
It will be argued that the doctrine of non-justiciability, in seeking to protect both the forum executive and the interests of foreign states, undermines private rights and weakens the separation of powers. In so doing, the article will unpack the assumptions underlying Australian courts' hesitation to adjudicate on matters involving foreign states. This hesitation has manifested itself in the notion that, in the area of foreign relations, the executive and judiciary should speak with 'one voice', even if this means that the enforceability of legal claims might rest on executive discretion. It will be argued that a correct understanding of the Australian Executive's prerogative, including the practice of executive certification, reveals this notion as unsolicited complicity, which, in purporting to uphold the separation of powers, can lead to its flagrant breach. While there are other instances in which the subject matter of a dispute might render it non-justiciable, these will not be investigated; (6) nor will the elusive meaning of justiciability. (7) In cases attracting the application of the doctrine, courts have jurisdiction, but perceive that some issues involving foreign states are of such magnitude that they are not fit for judicial determination. (8)
This article begins by describing how foreign states already play a legitimate role in Australian courts. Then, it examines the doctrine as adopted in the United Kingdom, as well as the political question doctrine of the United States and the merits-based approach of Canada. Next, it explains the prerogative of the Australian Executive, including the use of executive certificates in courts. Finally, in analysing the two strands of the doctrine of non-justiciability, it suggests that these executive certificates can ameliorate a 'lack of manageable standards', and that executive 'embarrassment' is neither reasonable nor sufficient to deny adjudication. Confidence in the ability to assert private rights should advance in a world of transnational litigation. Accordingly, the attendant influence of foreign state interests must retreat.
II FOREIGN STATES IN THE CONFLICT OF LAWS
A Foreign State Defendants
The days where foreign states were sacrosanct in court proceedings are times past. (9) Foreign states do not enjoy any special treatment in the application of principles of personal jurisdiction and appropriate forum. Plaintiffs in Australian courts are able to serve proceedings on a foreign state, effected through the Department of Foreign Affairs and Trade. (10) This formality aside, the procedure to authorise service out of jurisdiction over a foreign state is then the same as that which would apply to any defendant situated outside of Australia in cases where prior leave of the court is required. (11)
If there exists a basis for service out, (12) then the court must be persuaded by the plaintiff that it is not a 'clearly inappropriate forum' in which to hear the case. (13) Whilst the court might consider interests of foreign state defendants in applying this test, those interests are not determinative of the matter, and other relevant factors will be taken into account. These include the connections with the applicable law; (14) the availability of relief in a foreign forum; (15) the location of the parties and the evidence; (16) and any relevant personal or juridical advantages available in the forum. (17) Even if the foreign state defendant applies to seek a stay of proceedings on the basis that the Australian court is clearly inappropriate, the same factors will be weighed in the balance to decide whether one should be granted. (18)
This highlights the role of the courts in adjudicating legitimate disputes involving private litigants. Courts will not deny jurisdiction simply because a foreign state is named as defendant. If these requirements of personal jurisdiction and appropriate forum are satisfied, then a plaintiff is able to proceed with an action against a foreign state in an Australian court. (19) This approach is congruent with the realisation that it is 'not every impleading of a sovereign that requires judicial restraint or gives rise to a legitimate fear of giving offence'. (20) As with private litigants, foreign states are also legitimate players in the litigation process. Consequently, where jurisdiction exists, the courts should entertain disputes that come before them.
B Paradoxical Treatment of Foreign Laws and Interests
In certain situations, Australian law excludes the application of foreign laws and interests. Policy considerations in the conflict of laws determine that courts will not allow an assertion of authority by a foreign state within that court's territory; to do so would be contrary to the concept of independent sovereignty. (21) In line with this broad policy, Australian courts will not enforce foreign laws that infringe domestic public policy, (22) involve the exercise of foreign governmental power, (23) or are of a penal or revenue-raising character. (24)
However, courts have become increasingly willing to compromise this 'hands-off approach in order to differentiate between sovereign power and private rights, thereby prioritising the enforcement of the latter. Accordingly, a penal law involving punishment or retribution will not be enforced, (25) but one involving private rights, in particular the fight of compensation, might be. (26) Likewise, an action will not necessarily be refused if private debts are being sought for the mere fact that the majority of these debts are owed to a foreign state which might benefit financially from judgment in the litigant's favour. (27) In these instances, courts recognise that the desire to exclude foreign sovereign power, and the maintenance of the principle of state sovereignty, should not hinder the vindication of private rights.
Despite these refusals to enforce foreign state interests, and the priority afforded to private rights, Australian law has remained stubbornly persistent in its maintenance of protection for some forms of foreign state interests. Again, a broader policy is manifest: courts are loath to infringe upon governmental sovereignty. A foreign state defendant can claim immunity from suit over its sovereign (but not commercial) activities, a principle of public international law codified in the Foreign State Immunities Act 1985 (Cth). (28) Under the act of state doctrine, Australian courts may not pass judgment upon the acts of a foreign state within its own territory. (29) The rationale behind this doctrine is said to be comity based on 'respect for the independence of every other sovereign state'. (30) Pursuant to the Mocambique rule, (31) most Australian courts will not exercise jurisdiction in relation to an action involving title or trespass to foreign land. (32) Further, Australian courts give effect to governmental expropriations of assets situated in a foreign state, even where no compensation is provided. (33)
Collectively, these doctrines of abstention offer foreign states elements of protection not available to others in the litigation process. This gives rise to a paradoxical state of affairs: courts recognise the legitimacy of establishing jurisdiction over foreign state defendants, and the need to vindicate private rights, but might subsequently allow deference to foreign states to subordinate those very rights that gave rise to jurisdiction in the first place. Whilst at times courts are prepared to defer underlying notions of sovereignty and territoriality to defend private rights, subsequent indifference is apparent in the application of these doctrines of abstention.
Putting this paradox to one side, it appears that courts are becoming increasingly willing to attenuate this irregularity. The principle of restrictive state immunity has transformed foreign state immunity from 'absolute' to its displacement in relation to commercial activity. (34) Pursuant to this restriction, foreign states taking part in commercial transactions are placed on the same footing as private litigants. (35) There have also been attempts to find exceptions to the act of state doctrine. In Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5), (36) the House of Lords held that, as well as in cases where the application of this doctrine would be contrary to English public policy (37) (such as a grave infringement of human rights), (38) acts amounting to a clear breach of public international law should not be recognised. (39) In a similar vein, there have been palpable attempts to cut down the expropriation rule in relation to cases involving discriminatory expropriation of assets. (40) The High Court of Australia has also suggested that it may review the status of the Mocambique rule in an appropriate case. (41) Aside from these attenuations, Australian courts even have the power to issue an anti-suit injunction to restrain a party from suing in another forum: an indirect interference with a foreign court's processes. (42)
The increasing rate of litigation combined with greater expectations of litigants has rendered the traditional 'hands-off' approach of the courts to matters involving state sovereignty unsustainable. Judicial disguising of the key tenets of public international law behind private international law may have passed unnoticed when transnational litigation was uncommon. However, in a world where international trade and commerce is ubiquitous, it has become ever apparent that courts should be at the service of litigants, and political influence should not affect the fulfilment of private rights.
The rising number of cross-border conflicts increases the probability that the protections afforded will be manipulated by defendants. Whilst they might hope, at this intersection of private and public international law, that courts will cower behind political concerns, the choice between reverence of governmental sovereignty and the upholding of private rights is not as stark as it might once have been. In light of this, the foundations of these doctrines of abstention are by no means impermeable. To the extent that deference to the interests of foreign states affords protection in litigation, courts should be willing to remove this shield where it is not warranted.
C The Separate Doctrine of Non-Justiciability
It is important not to view these protections afforded by the courts as positioned within a single colossal doctrine of abstention in this paradoxical haze. The merger of the act of state doctrine and the doctrine of non-justiciability has been evident in England, (43) despite Lord Wilberforce's concerns to keep them separate from and 'not as a variety' of each other. (44) In Australia, courts have considered whether the act of state and non-justiciability doctrines are not entirely separate, but rather 'interrelated' (45)--one a manifestation of the other. (46)
It is unhelpful to treat the two doctrines as such merely because of the presence of issues concerning foreign states. Whilst this might determine that the doctrines fall within the same paradigm, they are distinct in terms of their operation, inquiry, and consequence. (47)
The act of state doctrine operates in respect of legislative and executive acts, directing its inquiry towards the nature and site of the act in question, with the consequence that the court must treat an act of a foreign government within its own territory as valid (subject to certain exceptions). (48) In one case, an attempt in England by former owners to reclaim goods confiscated in Russia by the Soviet Government was not permissible, because the acts of state occurred in that state's jurisdiction and could not be questioned by English courts. (49) In another, a ship whose title was transferred by the Ukrainian Government to itself by decree could not be used to satisfy an unpaid contractual claim against the former owner of the ship, because the court could not review the transfer as an act of the Ukrainian Government within its own territory. (50)
The doctrine of non-justiciability applies to issues such as disputes over territorial boundaries; directs its inquiry towards the nature of those issues and what their resolution would involve; and has the consequence of a court refusing to adjudicate because those issues exist. In one case, the court would not determine a dispute involving two oil companies operating in an area of contested sovereignty, because resolution of that dispute might have involved determining the boundaries of sovereign nations. (51)
Whilst the doctrine of non-justiciability might be seen as part of a package of foreign state protections, including foreign state immunity and act of state, consideration of the doctrine in isolation is justified because it exists on its own accord and, as these examples illustrate, it has a unique operation. Applications of the doctrine of non-justiciability have by themselves, without recourse to other doctrines of abstention, resulted in courts refusing to adjudicate cases. (52) Some commentators have advocated the abolition of the act of state doctrine, (53) and if this is to occur with greater ease, it is essential to keep the two doctrines conceptually separate. As will be shown, the doctrine of non-justiciability exists as a separate principle in an area where Australian courts have exhibited unprincipled approaches to abstention from adjudication.
III TRANSACTIONS OF FOREIGN STATES IN DOMESTIC COURTS
A Comparative Approaches
Given the scarcity of autochthonous case law and commentary on the doctrine of non-justiciability in Australia, (54) it is appropriate to consider how similar doctrines operate in other jurisdictions. This part considers three approaches: first, the doctrine as espoused by the House of Lords in Buttes and applied in the UK; second, the political question doctrine of the US; and third, the merits-based approach of Canada, where no such doctrine of abstention exists.
1 UK: The Doctrine of Non-Justiciability
Before exploring the application of the doctrine of non-justiciability in the UK, reference to the facts of Buttes is necessary. The case involved two oil companies, Buttes Gas and Occidental, operating in the Persian Gulf under the territorial seas of Sharjah and Umm Al Qaiwain. In February 1970, Occidental found oil in an area of contested sovereignty between these two emirates and Iran. After intervention by the UK Government, including a display of military force, the ruler of Umm Al Qaiwain accepted a decree published by the ruler of Sharjah in April 1970. This decree was backdated to September 1969 and purported to extend Sharjah's territorial waters to include the contested area. After the ruler of Umm Al Qaiwain terminated the concession of Occidental, its chairman made a public statement accusing Buttes of using improper methods and colluding with the ruler of Sharjah. Buttes sued in defamation. Occidental pleaded justification and counterclaimed for damages for fraudulent conspiracy by Buttes and the ruler of Sharjah. After a lengthy litigation battle, (55) which also took place in the US (discussed below), the House of Lords stayed Occidental's defence and counterclaim and held Buttes to an agreement to withdraw its claim. (56)
Lord Wilberforce delivered the leading judgment with which all other members of the House agreed. (57) His Lordship decided that there was an 'effective and compelling' principle already in existence in English law, 'not ... of discretion, but ... inherent in the very nature of the judicial process'. (58) Following this principle, a domestic court deciding the issues in the Buttes litigation 'would be in a judicial no-man's land'. (59) The court would have to determine the boundaries between Sharjah, Umm Al Qaiwain and Iran; whether Sharjah had breached international law; and, if Occidental had rights to explore the contested area in the first place, whether it had been deprived of those rights. Their Lordships did not seek the advice of the UK Government on the issue of territorial recognition. Instead, Lord Wilberforce was concerned to avoid bringing the transactions of four sovereign states--which after the use of force and through diplomacy had been brought to a 'precarious settlement'--into the realm of judicial inspection. (60) On this basis, his Lordship enunciated and applied a doctrine of non-justiciability so that the House could avoid such scrutiny. (61)
Lord Wilberforce relied on a hotchpotch of cases, which are hardly convincing to support 'a more general principle that the courts will not adjudicate upon the transactions of foreign sovereign states'. (62) These cases are either readily explicable on other grounds, (63) or fall within the category of acts of state. (64) Lest this disparate collection be taken as evidence of the doctrine's existence for over three centuries, the approach of Lord Wilberforce in 'carry[ing] the doctrine of non-justiciability into a wider area of transactions in the international field' should be seen for what it is: the first time an English court rendered non-justiciable a dispute based on a wide notion of judicial restraint in private international law. (65) Whilst some commentators advocated a confined interpretation of Buttes to its facts, (66) treatment of the decision has led to a distinctly separate doctrine.
Following Buttes, English courts utilised a wide application of the doctrine to justify the denial of adjudication. In refusing to allow an action to be brought by private creditors against certain member states of the International Tin Council (an organisation formed by treaty), (67) the House of Lords propounded the viewpoint that issues arising from transactions between states 'are not issues upon which a municipal court is capable of passing'. (68) Taken to its logical extreme, on this view any case involving...
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