Reddy v Ambassador of the Independent State of Papua New Guinea [1999] FJLawRp 41; [1999] 45 FLR 142 (30 July 1999)

[1999] 45 FLR 142

HIGH COURT OF FIJI ISLANDS

GOVIND REDDY

v

THE AMBASSADOR OF
THE INDEPENDENT STATE OF PAPUA NEW GUINEA

[HIGH COURT, 1999 (Fatiaki J) 30 July]

Civil Jurisdiction

Conflict of laws- jurisdiction of the court- immunity of diplomatic agent- sovereign immunity- Diplomatic Privileges and Immunities Act (8) Section 3 (1).

An ambassador reached an agreement with a local builo renovate his official resl residence. Following differences between the parties the builder commenced legal proceedings. On the facts the High Court HELD: that the ambassador had not waived the diplomatic immunity granted to him by statute. The court also examined the common law doctrine of sovereign immunity both in its absolute and in its qualified form. It HELD: that the contract was not exclusively a private or commercial transaction and that accordingly it was subject to a plea in bar of sovereign immunity.

Cases cited:
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A Co. Ltd v. Republic of X (1990) 2 Lloyds Reps p>

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‘Christina’ (1938) 60 Lloyds Reps./p>

Claim against the Empire of Iran (1963) 45 IR/p>

G>GovernoPitcairn v. Sutton [1995] 1 N.Z.L.R. 4>

‘Harmattan’ (1976) 1 Lloyds Re

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&#8216ngreso Del Partido’ [1983] A.C. p>

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K>Kahan v. Pakistan Federation [1951] 2 K.B3

Migi>Mighe Sultan of Johore [1893] UKLawRpKQB 198; (1894) 1 Q.B. 149&#82>&#82>‘Parlement Belge’ [1880] UKLawRpPro 10; (1880) 5 P.D. 197

‘Phillipine Admiral’&#160(1976) 1 Lloyds Reps 234

Planmount Ltd v. Zaire [1981] 1 All E.R. 1110

R v. Madan [1961] 2 Q.B.

Senguptngupta v. Republic of India (1983) I.C.R. 221<160;<160;
Interlocutory application in the High Cour>;
P. Howard for the PlafA. i>A. Khan fo Defendefendant
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ki J:This case concerns a ns a Fiji Standard Form of Building Contract entered into on the 17th of November 1995 between the plaintiff &#TRADI LANDMARK CONSTRUNSTRUCTION’ and ‘THE INDEPENDEPENDENT STATE OF PAPUA NEW GUINEA’ albeit executed by its Ambassador to Fiji His Excellency Babani Maranga (‘the defendant Ambassador’).

Thtter fact is highlighhlighted insofar as the plaintiff’s action ambiguously cites The Ambassador as the singular defendant and not the actual contracting .

The nature of the workb to be performed unde under the aforesaid building contract entailed renovating the existing Head of Mission’s official residence at 12 Milne Road, Muanikau, Suva for an agreed contract sum of $565,685.00. The architect who prepared the very extensive drawings and specifications and under whose supervision the works were to be executed was Stuart Huggett of Architect Services Limited.

In terms of tntract thet the works were to be completed eight months after possession of the building site had been given and certainly by 19th August 1996 the specified Date of Completion.

No muchnown about the nthe nahe nature and quality of the works executed pursuant to the contract although, judging by the information ded in the plaintiff’s claim No.9 dated 25th November 1996, it is clear that works weks were not completed by the completion date albeit that almost two thirds of the contract sum had been paid out.

Be that as y on the 27te 27th of September 1996 a winding up order was made by the High Court against Landmark Construction (Suva) Limited and, on learning of this the proarchitect by letter dated 13th December 1996 wrote to the pthe plaintiff terminating the contract ‘... in accordance with Clause 25(2) of the contract ... with effect from 27th September 1996’.

The plaintn receiving ting the termination notice immediately disputed the notice in a letter dated 16th Der 1996 in which he claimelaimed that:

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The liquidiquidation of Landmark Construction (Suva) Ltd. company should have no lego legal effect on the above contract and therefore the liquidators or receivers have no right of access to this particular contract.’

If I may say so tetter tter contrasts even contradicts, quite categorically, an earlier letter dated 29th January 1996 written by the plaintiff t defendants wherein he stated:

‘We confirm by this letter that LandmLandmark Construction (Suva) Ltd. is the principal contractor on the above project.’

Fifteenhs passed withouithout any apparent resolution and on the 1f March 1998 the plaintiff tiff finally issued an Originating Summons seeking various declarations concerning the correct parties to ontract and the validity ofty of the termination letter. He also sought the return of various plant and machinery left at the construction site and damages for unpaid work.

On 19th Mar98 the defendefendant by their solicitor’s acknowledged service of the Originating Summons and on 8th April 1998 the defendant’s solicitors lodged an application pursuant to Sectiof the Arbitration Act (Cap.3r a stay of the proceproceedings pending the referral of the dispute between the parties to arbitration as contractually agreed (See: Clause 33 of the building act).

Affidavits were fin behn behalf of both both parties and after numerous adjournments, the papers were finally placed before the Court for directions on the 3rd of August, 1998.

Upon perusing the papers I became immediately concerned at the clear possibility that the plaintiff’s claim constituted an action impleading a Sovereign State or, at the very lease diplomatic agent of an independent sovereign state to whoo whom various privileges and immunities are accorded.

I was ul of the principinciple of international law set out in para.1548 of Vol.18 of Halsburys LawEnglandd (4th which read>

‘An independent sovereign state may not be sued in the the ... courts against its will and withos con This immunity from the jurisdiction is derived fved from the rules of international law, waw, which in this respect have become part of the law ... It is accorded on the grounds that the exercise of jurisdiction would be incompatible with the dignity and independence of any superior authority enjoyed by every sovereign state. The principle involved is not founded upon any technical rules of law, but upon broad considerations of public policy, international law and comity.’

I was also mindful of the observations of Lord Parker C.J. in R. v. Madan [1261] .1 when he said at p at p.7:

‘Cn things are, we think clear. In the first place, it is not for someone who is entitled to d to diplomatic immunity to claim it in thrts. unnery to r to refer efer to the authorities, but ... certainly civil proceedings brought againagainst somebody entitled to diplomatic immunity, are, in fact, proceedings without jurisdiction and null and void, unless and until there is a valid waiver which, as it were, would bring the proceedings to life and give jurisdiction to the court.’

‘Assumint thet the Independent StatPapua New Guinea is the proper defendant, does this court hurt have jurisdiction to entertain this claim by the plaintiff?’
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Submissions were ordered and these were finally providrovided on 4th November 1998. I am grateful to counsel for their assistance on this rather infrequently encountered question of sovereign immunity.

Before tu to consider tder the submissions however, mention should be made of a further procedural question which arises from the plaintiff’s claim, namely, what i appropriate procedure (if any) for suing and serving an inan independent Sovereign State?

Counsel for the piff inff in his brief written submission, without specifically addressing the formulated question or discussing the nature, effect, and differences between sovereign and diplomatic immunity, boldly submits that ‘the defendant as Head of Mission of the Independent State of Papua New Guinea in Fiji has waived his immunities in this case (by signing and initialling each page of the building contract) and as such is deemed to be a waiver by that State’.

As auty for this proposroposition reference is made to Art.32(2) of the Vienna Convention on Diplomatic Relations which, pursuant to Sn 3(1) of the Diplomaticmatic Privileges and Immunities Act (C, ‘... shall have tave the force of law in Fiji’ and also, to para.1575 of Vol.18 of Halsbury Laws of Englan (4th) which reads in part:

‘the privileges and immunitiesities of diplomatic agents ... may be waiv the ng state. A waiver by the head of the mission ... is deemed to be a waiver by thay that Stat State. Waiver must always be express. Acngly, even if a person enti entitled to immunity has entered an appearance ... he may at a later stage prove that his government has not consented to a waiver of his immunity.’

De counsel in a fuller,ller, more closely reasoned submission argues that the defendant Ambassador as the Head of Mission of the Independent State of Papua New Guinea is entitled to the privilend immunities accorded unde under Art.31 of the Convention and, as such, is improperly joined in this proceedings for which there has been no express waiver by the Independent State of Papua New Guinea.

Needless to sunsel subm submits that ‘entering into an agreement, the proper law of which is the law of Fiji, does not constitute submission to the jurisdiction of thean Courts’. Furthermore the agreement in question conn concerns the construction of an official residence for the Ambassador and ‘as such (is) exclusively and particularly concerned with the conduct of the Independent State of Papua New Guinea as a diplomatic mission and ... hardly capable of being classed as commercial activities’.

As to the question of waiver counsel submits in reply that:

‘Waiver ais u is understood in the diplomatic parlance is nothing shf an express open act which indicates that the State does not wish to be bound by the termsterms of the Convention. Such an act, havie ramifications that it must must, is hardly available to be invoked in this scenario, where the mere execution of the agreement does not of itself amount to waiver in the diplomatic sense.’

I can now deal quiteflyiefly with the question of diplomatic immunity which in this country is statutorily provided for under the Diplomatic Privileges and Immunities Act&#/a> (Cap.88216;the Act’) 17;) which incorporates into the domesaw of Fiji, ‘the provisions of Articles 1,22 and 24 i 24 inclusive, and 27 to 41 inclusive, of the (Vienna Convention on DiplomRelations)’ (‘t216;the Convention’).

Tlevant Articles of thef the Convention for present purposes are: Article 1 containing various definitions and Articles 31 & 32 which deal with the jurisdictional immunities of a diplomatict, and the manner and circucircumstances under which such immunity might be waived.

In pular, Art.31 of thef the Convention provides (with three irrelevant exceptions not relied upon by the plaintiff) that:

‘1. ـ� Aomatic agent shall enjoy njoy immunity from the cthe criminal jurisdiction of the receiving State. He shall also enjoy immufrom ivil dministrative jurisdiction.

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2. ـ҈ A60; A diplodiplomatic agent is not obliged to give evidence as a witness.’
&#1r>In case undisputed that, bynitioe defendant Ambassabassador idor is a ds a diplomatic agent being the accredited ited head head of the diplomatic mission of the Independent State of Papua New Guinea in Fiji. Furthermore, the premises at 12 Milne Road, Muanikau, Suva which the plaintiff claims he was contracted to renovate is the existing head of mission official residence in Fiji and in terms of Art.22 of the Convention ‘shall be inviolable’.

Article 32 whay be conv conveniently described as the ‘waiver’ article, is relied upon by the plaintiff. It, relevantly provides:

‘1. ҈ mmunity nity jurisdurisdiction of diplomaticmatic agents ... may be waived by the sending State.

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40;᠐;ټ 660; W of ity from jurisdictioiction in n in resperespect ofct of civil ... proceedings shall not be h be held to imply waiver of immunity in respect of the exon ofjudgmfor which a separseparate wate waiveraiver shall be necessary.’

Section 3(6) of the Act further provides by way of expansion, in paragraph (d) that:

‘... reference in Article 32 to waiver by the sending State shall be constru including a waiver by the head of the mission of the sendisending State ...’

Prima facerefore, in thin the absencan express waiver, the defe defendant Ambassador is entitled to claim and is immune from the civil jurisdiction of this court. The plff however has named the Ambassador as the defendant in then these proceedings on the singular basis that in executing the building contract and in initialling every page thereof he had thereby expressly waived his diplomatic immunity. I cannot agree.

There is not the slightest doubt in my mind that in executing the building contract and in initialling every page thereof, the Ambassador was acting at all times, in his official capacity as Ambassador for and on behalf of the Independent State of Papua New Guinea and cannot be said, by any stretch of the imagination, to have either expressly (as opposed to impliedly) waived diplomatic immunity or been engaged in a ‘commercial activity ... outside his official functions’ which is an excepted category in Art.31.

Nee to say it cannot beot be and has never been suggested that the premises being renovated by the plaintiff are the defendant Ambassador’s private immovable property or that he is either personally or contractually liable under the building contract merely because he signed it.

&#82e law of Fiji siji shall be the proper law of this Contract and in particular shall apply t arbitration under this Cons Contract wherever the same or any part of it, shall be conducted.’

but that inter partes agreement cannot and does not imply an express waiver of immunity nor does it amount to an actual submission or undertaking givenhis court, in these proceedings, to exercise jurisdiction over the defendant Ambassador (Ser (See: Kahan v. Pakistan Federation [1951] 2 K.B. 1003).
&What is more the relevant time or occasion when waiver must occur or be expressed 6;... is when the Court is about or is being asked to exercise jurisdiction ... and not at t at any previous time’ (per Lord Esher M.R. in Mighell v. Sultanohore (1894) 1 Q.B.149 159).
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In similar vee the obse observations of Kay L.J. when his lordship said (ibid at p.163):

‘.e time at w at which immunity is to be waived must be actiobrought against tnst the foreign sovereign, and when it is t is brought to the attention of the Court by reason of its judicial knowlor from other information tion that the person sued is a foreign sovereign.’

In lif the foregoing anng and in the absence of a clear and express waiver of diplomatic immunity given to this Court by either the defendant Ambassador or the Indept State of Papua New Guinea as the sending State, I am cons constrained to rule that the defendant Ambassador is immune from the civil jurisdiction of this Court, is improperly named and/or joined in the present proceedings and the Originating Summons must be and is hereby set aside against him.

I turn next to der the the doctrine of sovereign immunity as it applies to the present proceedings which cites the Independent State of Papua New Guinea as a defendant.

In so I am immediatelyately faced with two schools of thought, with the older school being in favour of an absolute rule of sovereign immunity, and the other, more recent view, favouring a more ed or restrictive approach.oach.

I begin with the absolute view which is best expressed in the very well-known dicta of Lord Atkin in the ‘Christina’ (1938) 60 Lloyds Reps.147 where his Lordship said at p.156:

&#The ftion for ther the appl application to set aside the writ and arrest of the ship is to be found in two propositions of internatioaw engrafted into our domestic law which seems to me to be well established and beyond disp dispute. The first is that thrts of a country ntry will not implead a foreign sovereign, that is, they will not by their process make him against his wipartyegal proceedings whether the proceedings involve process against his person or seor seek toek to recover from him specific property or damages.

e second, is this that they will not by their process, whether the sovereign is a party to the proceedings or not, seize or detain property which is his or of which he is in possession or control.’

(my underlining)

There are many rs that that have been advanced in support of the absolute rule including:

‘... of ̵‘par in parem’ which effectively means that the sovereign or government act of one State are not matters upich the Courts of other states will adjudicate’ (per Lord Wilberforce in the ‘<216;I Congreso’ post at p.262); and

‘the exercisercise of such jurisdiction would be incompatible with regal dignity - that is to say, with (the sovereign’s) absolute independence of any superior authority’ (per Brett L.J. in the ‘Parlement Belge’[1880] UKLawRpPro 10; (1880) 5 P.D. 197 at 207); and

&#that, if the Cour Courts ... once entertained the claim, and in consequence, gave judgment against the foreign sovereign (for debt or damages) they could be called upon to enforce it by execution against its property here. Such execution might imperil our relations with that country and lead to repercussions impossible to foresee (or predict). (per Lord Denning M.R. in the ‘Harmattan’ (1976) 1 Lloyds Reps.1 at p.4).

Tstrictive school of thof thought on the other hand, owes its modern Commonwealth origins to the judgment of the Privy Council in the ‘Phillipine Admira’ (1976) 1 Lloyds Reps.234 where the Privy Council adil adopted a restrictive doctrine of sovereign immunity which requires a Court faced with a claim for sovereign immunity (ibid at p.244):

‘to draw tincstinction between acts of a State which are done jure imperii (i.e. public or sovereign acts) and acts done by it ‘jure gestionis’ (private actiand (to) accord the foreign State no immunity either in actn actions in personam or in actions in rem in respect of transactions falling under the second head.’

The rationalisatiten aden advanced for this more limited rule of sovereign immunity stems from the view that the activities of Sovereigns and independent States at the time when the doctrine of absolute immunis first developed, has so d so dramatically transformed especially in the fields of banking, trade and commerce as to warrant some limitation or exception being made to the absolute rule.

One of the reasons advanced by the Privy Council for preferring the restrictive theory of sovereign immunity in its application to ordinary trading transactions was that it is more consonath justice insofar as (ibid at p.248):

&#8p>‘Is coun country - and no doubt in most countries in the western world - the State can be sued in its own courts on commercial contracts into which it has entered and there is no apparent reasonforeign states cannot be eqbe equally liable to be sued there in respect of such transactions.’

Lord Wilberforce i &#82 ‘I Congreso’ (post) identified two reasons for the limitation when he said (at p.262):

In ‘I Congrel Del Partido’ [1983] A.C.244 the House of Lords approved and applied the restrictive doctrine, but Lord Wilberforce recognising the difficulties inherent in drawing the distinction said, at p.264:

His Lop then considereddered how various foreign courts have sought to answer the question and concludes with the following test at p.267:

‘...onsid ...g ... whether state immunity should be granted or d or not, the court must consider the whole context in which the claim agathe State is made, with a view to deciding whether the relevant act(s) upon which the claimclaim is based, should, in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the State has chosen to engage, or whether the relevant act(s) should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.’

The difficulty in drawing the distinction may be said to arise in the present case. On the one hand, it might be said that in entering into a contract to carry out renovation works to mbassador’s official residence in Fiji, the Governmenrnment of Papua New Guinea was undertaking an ordinary contractual obligation of a private or commercial nature which any private citizen could have entered into.

This was certainly the view expressed by Lloyd J. in Plnt Ltd. v. Zaire&#/u> [1981]l E.R. 1110 where thee the plaintiff company, a small of builders, agreed to carry out certain building works for the Republic of Zaire at the ofhe official London residence of its ambassador;plaintiff was paid only pary part of the contract price and it issued a writ against the Republic claiming the balance.

jecting the Republicic’s claim to sovereign immunity and in granting the plaintiff leave to serve the writ out of the jiction, Lloyd J. said, at p.1114:

‘To my mind,sit is hard to imagineagine a clearer case of an act or a transaction of a private commercial nature than the repairs to the ambassador’s residence.’

There is also thesion ef the Federal Constitnstitutional Court of the German Federal Republic in the Claim against mpire of I of Iran&#1603) 45 ILR.57 which was a claim for the cost of repairs to the heating system of the Iraniananian Embassy and in which immunity was re and in which the Court said (at p.80):

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‘means fans for determining the distinction between acts jure imperii and jure gestionis one should rather refer to the nature of the State transaction or the resulting legal relationships, andto the motive or purpose ofse of the State activity.’

On the other hand, the absolutist would argue that the provision of a safe and suitable residence for its accredited Ambassador in Fiji is undoubtedly and legitimately a concern, even a duf the Independent State of Papua New Guinea as the sending ding State and, therefore, any building contract entered into to achieve that end is and ought to be categorised as an act jure imperii.

In Governor tcaPin v. SuttoSutton [1995] 1 N.. 426 the New Zeew Zealand Court of Appeal in upholding a claim for sovereign immunity in an action brought by a New Zd citemplos a typist/clerk in the appellant’#8217;s Au;s Auckland office, against her summary diry dismissal, Held:

&#821. Sutton’#8217;s employment in the Pitcairn Office necessarily involved her in the public acts of the British Crown; and tow consideration of a claim of unjustifiable dismissal in the Courts of New Zealand would inld intrude on the exercise of the sovereign functions exercised through the Governor of Pitcairn.’

Richardson J. in rejg aing a submission that the dismissal of a clerk was something which any employer might do and therefore did not involve the power of the State, said at p.436:#160;

‘In my view that suggested approach pose poses the question too narrowly and in a vacuum.

Thes must be on then the particular contractual relationship and responsibilities and their termination. If the employee is engagedarrying out the public functions of the foreign state, a challenge to the dismissal ... may. may well require consideration of how the work was done within the mission.’

In somewimilar vein Bron Browne-Wilkinson J. in Sengupta v. Republic diaIndia (1983) I.C.R.221, a summarymmary dismissal case involving an Indian national employed as a clerk in the I Highission in London,ndon, in rejecting the submission that the classification into ‘publ;public’ or ‘private’ acts depends wholly on the type of contract and not on the subject-matter of the contract, said at p.227:

‘Therebe case cases, particularly in relation to contracts of employment, where the performance of the contract is itself part of the rmance by the State of an essentially public or sovereign act. In my view it is necessary iary in each case to look at what is to be done under the contract in order to decide whether the entry into, and the performance of, that contract is a private act of the State or involves a necessary participation by the other contracting party in a public act of the State.’

Nes to say in the contecontext of employment cases the above judgments quite plainly reject as overly simplistic the analysis thate any private individual can hire and fire another private individual therefore the entry btry by a State into a contract of employment is essentially a private act giving rise to a mere contractual relationship of employer and employee unrelated to the exercise of any sovereign function.

In this case it is by ao means an easy task to categorise with any confidence the essential nature of the contract between the parties, involving as it does, the construction of the official residence of the Ambassof Papua New Guinea in Fiji Fiji and I must confess that my view has waxed and waned between the restrictive view and the absolutist.

I am however finald reld reluctantly driven to the conclusion that the contract between the parties is not so clearly and exclusively a private or commercial transaction that the restrictive view should inevitably prevail.

Needless tothe plaintifintiff must be taken to know that he was entering into a contract with an independent sovereign State and, just as trties agreed in the contract, to arbitrate their differences, so too could the Independent dent State of Papua New Guinea have expressly agreed to waive its sovereign immunity in similar terms to that contained in the agreement under consideration in: ALtd. v. Republic of X ( 2 Lloyds Reps.520 at p.52 p.522.

Furthermore this is noa a case of a commerciansaction between a private contractor and a government-owned statutory body or shipping cong company where there might be some difficultydentifying the body or company with an independent sovereigereign state or where there could be any doubt that the body being contracted with was the alter-ego of an independent sovereign state. Indeed this issue is only before the Court because the parties had not expressly agreed to the waiver of the defendant state’s sovereign immunity.

What is more, unlike in a private building contract where the resultant building is subject to execution, the official residence of the Ambassador of Papua uinea is by definition part of the ‘premises of the mission’ and therefore, in , in law, inviolable. In the words of Art.22 of the Convention it ‘... shall be immune from search, requisition, attachment or execution’ unless expressly waived (See: Art.32(4) of the Convention).

If I am wrowever in my n my categorisation of the contract between the parties and in upholding the absolute immunity of the Independent State of Papua New Guinea, from the civil jurisdiction of this Couhen I have no hesitation whon whatsoever in granting the defendant’s application for a stay of the proceedings pursuant to an exercise of the court’s discretion under Section 5 of the Arbitration Act (Cap.38).
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The proceproceedings are accordingly stayed.

(Aption granted; pro; proceedings stayed.)