Democratic Republic of Congo v FG Hemisphere Associates (No 1) [Hong Kong Special Administrative Region of the People's Republic of China, Court of Final Appeal]
| Jurisdiction | Hong Kong |
| Date | 08 June 2011 |
| Court | Court of Final Appeal (Hong Kong) |
| Docket Number | (Final Appeal Nos 5, 6 and 7 of 2010 (Civil)) |
Hong Kong Special Administrative Region of the People's Republic of China, Court of Final Appeal
(Bokhary, Chan and Ribeiro, Permanent Judges; Mortimer and Sir Anthony Mason, Non-Permanent Judges)
(Final Appeal Nos 5, 6 and 7 of 2010 (Civil))
State immunity Jurisdictional immunity Absolute and restrictive doctrines of immunity Customary international law Law applicable in Hong Kong Effect of the resumption of sovereignty by China United Kingdom legislation on State immunity ceasing to have effect in Hong Kong Common law applicable prior to resumption of sovereignty Adherence by China to the absolute doctrine of immunity United Nations Convention on the Jurisdictional Immunities of States, 2004 China signing but not ratifying Convention Whether act of signing Convention altering China's position regarding absolute doctrine Whether restrictive doctrine of immunity part of the law of the Hong Kong Special Administrative Region (HKSAR)
States Autonomous regions HKSAR Resumption of sovereignty by China International status of HKSAR HKSAR not a separate sovereign Application of international law in HKSAR Whether possible for HKSAR to apply doctrine of State immunity different from that adhered to by China Responsibility of China for acts of HKSAR Hong Kong Basic Law Responsibility of central government for foreign affairs
Sources of international law Customary international law Persistent objector principle Effect of treaties on customary international law State immunity United Nations Convention on the Jurisdictional Immunities of States, 2004
Relationship of international law and municipal law Customary international law State immunity Relationship between customary international law and common law China adhering to absolute immunity doctrine Whether HKSAR entitled to apply restrictive doctrine Role of courts and executive Independence of the judiciary The law of the Hong Kong Special Administrative Region of the People's Republic of China
Summary: The facts:2The respondent company, FG Hemisphere Associates LLC (FG), a United States company, acquired the benefit of arbitration awards made in France and Switzerland in April 2003 against the first appellant, the Democratic Republic of the Congo (DRC). FG sought to enforce the awards in Hong Kong and obtained injunctions against the second to fifth appellants, China Railway Group (Hong Kong) Limited, China Railway Resources Development Limited, China Railway Sino-Congo Mining Limited (the CR subsidiaries) and China Railway Group Limited (the CR parent), preventing them from transferring assets allegedly due to the DRC. The DRC maintained that it was entitled to State immunity, contending that the doctrine of restrictive immunity was not part of the law of the Hong Kong Special Administrative Region (HKSAR) and that, in any event, the relevant acts on which the proceedings were ultimately based were acts performed jure imperii. FG contended that the doctrine of restrictive immunity had the status of customary international law and formed part of the common law of Hong Kong before the United Kingdom State Immunity Act 1978 had been extended to Hong Kong by the State Immunity (Overseas Territories) Order 1979. The restrictive doctrine thus formed part of the law of the HKSAR by virtue of the transitional provisions laid down when Hong Kong was transferred by the United Kingdom to the People's Republic of China (China). FG maintained that, under that restrictive doctrine, the DRC was not entitled to immunity from suit and that the assets in question did not benefit from immunity from execution. FG further maintained that the DRC had waived any immunity it might have possessed.
The HKSAR Secretary for Justice placed before the courts a letter dated 20 November 2008 from the Office of the Commissioner of the Ministry of Foreign Affairs of China (OCMFA).3 That letter stated that the consistent position of China had been that a State enjoyed absolute immunity from
the jurisdiction of the courts of other States. A second letter, dated 21 May 2009, stated that China had signed, but not yet ratified, the United Nations Convention on the Jurisdictional Immunities of States, 2004, but that the Convention had not yet entered into force and was not binding upon China, which continued to recognize the doctrine of absolute immunity.4The Court of First Instance upheld the claim of immunity. The Court of Appeal held (142 ILR 216) that the DRC was not entitled to immunity. The DRC, the CR parent and the CR subsidiaries appealed. The Department of Justice of the HKSAR intervened in support of the appeals.5 While the case was pending before the Court of Final Appeal, the Department of Justice submitted a third letter from OCMFA, dated 25 August 2010. That third letter reiterated the position of China that absolute immunity applied and stated that for the courts of the HKSAR to adopt a different position would be contrary to the principle that the conduct of foreign relations was a matter for the Government of China.6
Held (by three votes to two, Bokhary PJ and Mortimer NPJ dissenting):The appeals were allowed with a number of questions regarding the provisions of the Basic Law being referred to the Standing Committee of the National People's Congress.
(1) At the time of the 1997 resumption of sovereignty by China over Hong Kong, the theory of State immunity applied by the Hong Kong courts was a restrictive theory, recognizing a commercial exception to what was otherwise an absolute immunity. That followed from extension to Hong Kong in 1979 of the UK State Immunity Act 1978, which ceased to have effect on 1 July 1997, and from the common law, which had adopted the restrictive theory as a result of the decision of the Judicial Committee of the Privy Council in The Philippine Admiral in 1975 (64 ILR 90), the judgment of the Court of Appeal of England and Wales in Trendtex Trading Corporation v. Central Bank of Nigeria in 1977 (64 ILR 111) and the decision of the House of Lords in I Congreso del Partido in 1981 (64 ILR 307) (paras. 21322).
(2) Following the resumption of sovereignty by China, it was not open to the courts of the HKSAR to apply a theory of immunity which was different from the policy consistently applied by China. That policy had been described in the three letters from OCMFA. The fact that China had signed the United Nations Convention did not amount to an abandonment of that policy. The grant or withholding of immunity was a matter in which the courts and the executive should speak with one voice. Moreover, the law on State immunity was part of international law binding upon the State as a whole. The HKSAR
was not a separate sovereign entity and had no responsibility for foreign affairs. It could not, therefore, apply a different doctrine of immunity from that applied by the State of which it was part. The HKSAR courts were not in a position to question whether the approach to State immunity adopted by China was appropriate. The executive was in a position to tailor its response to a dispute involving a foreign State on a case-by-case or treaty-by-treaty basis. Courts could not do so (paras. 22386)(3) It was not the case that the adoption by the HKSAR courts of a divergent policy on immunity could have no adverse effect on China. Such a course of action would be contrary to the responsibility for foreign affairs of all China, including the HKSAR, which was constitutionally vested in the central government. It would undermine the consistency of China's approach to questions of immunity and expose China to claims by impleaded States (paras. 28791).
(4) The requirement that the courts and the executive should speak with one voice on questions of State immunity was not in conflict with the principle of judicial independence. The letters from OCMFA were not an attempt improperly to influence the courts but a reasonable instance of the executive putting before the courts certain facts of State (paras. 2929).
(5) For the courts to recognize the immunity of a foreign State from their jurisdiction was not inconsistent with fundamental values regarding access to justice (paras. 3006).
(6) The Basic Law of the HKSAR provided for a high degree of autonomy for the HKSAR but that autonomy did not extend to matters of foreign relations. The common law applicable in Hong Kong prior to the resumption of sovereignty continued to apply but had to be applied in a way which was consistent with the principles of the Basic Law. The responsibility of central government for foreign relations meant that to apply the common law of restrictive immunity in the courts of the HKSAR would be to run counter to the Basic Law (paras. 30755 and 3645).
(7) It was not necessary for the Court to obtain from the Chief Executive of the HKSAR a certificate under Article 19(3) of the Basic Law.7 That provision was relevant to a case in which one party asserted that a non-justiciable act of State was involved. It was a method of resolving questions of fact and was not applicable to the present case, where the relevant facts had already been established (paras. 35663).
(8) The fact that, at the time of the resumption of sovereignty, there was no local Hong Kong legislation giving effect to the provisions of the UK State Immunity Act, whose application in Hong Kong lapsed on 30 June 1997, was the result of a deliberate choice and reflected the policy of adherence to the absolute immunity doctrine consistently followed by China (paras. 36673).
(9) The DRC had not waived its immunity by entering into the agreement for arbitration. Even if the agreement to arbitrate entailed a waiver of immunity
with respect to the courts of the seat of arbitration on matters concerning the conduct of the arbitration, it was not a waiver of immunity from enforcement of the award before the courts of a third State. There was no equivalent in the...To continue reading
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