FG Hemisphere Associates v Congo [Hong Kong Special Administrative Region, Court of Appeal]
| Jurisdiction | Hong Kong |
| Court | Court of Appeal (Hong Kong) |
| Date | 10 February 2010 |
Hong Kong Special Administrative Region, Court of Appeal
(Stock VP; Yeung and Yuen JJA)
State immunity Immunity from jurisdiction and execution Arbitration award Enforcement against monies owed to respondent State Doctrine of restrictive immunity Whether part of law of the Hong Kong Special Administrative Region People's Republic of China resuming sovereignty over Hong Kong on 1 July 1997 Hong Kong inalienable part of People's Republic of China Government of People's Republic of China responsible for foreign affairs of Hong Kong under Article 13 of Basic Law People's Republic of China adhering to doctrine of absolute immunity Democratic Republic of Congo submitting to arbitration Whether Democratic Republic of Congo waiving right to State immunity
Relationship of international law and municipal law Restrictive immunity doctrine Whether part of customary international law Whether widespread practice and belief to be legally obligatory Whether part of common law by incorporation Whether conflicting with municipal law The law of Hong Kong Special Administrative Region
Summary: The facts:The plaintiff company FG Hemisphere Associates LLC (FG), a United States limited liability company which specialized in investing in emerging markets and distressed assets, acquired the benefit of
arbitral awards made in April 2003 in France and Switzerland2 against the Democratic Republic of Congo (DRC).3FG obtained leave in Hong Kong to enforce the awards, and injunctions to prevent third parties from transferring assets allegedly due to the DRC. The DRC claimed immunity from jurisdiction and from execution. The Court of First Instance set aside leave and the injunctions, holding that the relevant transaction was not commercial in nature. FG appealed.
The DRC maintained that it was entitled to immunity from jurisdiction. It argued that, in any event, it enjoyed absolute immunity from suit and execution since the doctrine of restrictive immunity was not part of Hong Kong law. Even if it were, the relevant acts were acta jure imperii, and there were no Congolese assets in Hong Kong against which execution could be levied.
FG contended that the restrictive immunity doctrine had the status of customary international law and was, in any event, part of Hong Kong law, surviving the constitutional transition.4 Since the relevant act underlying the awards was commercial, there was no immunity from suit. The DRC had failed to prove that the monies due to the DRC were intended for public purposes and thus immune from execution.
Held (by two votes to one, Yeung JA dissenting):The appeal was allowed. The doctrine of restrictive immunity continued to apply in Hong Kong after the People's Republic of China (the PRC) resumed sovereignty on 1 July 1997.
Per Stock VP (concurring): (1) The Court had jurisdiction to determine whether the DRC was entitled to State immunity from suit and from execution (paras. 3444).
(2) State immunity was a doctrine of customary international law, becoming part of common law by incorporation. Traditionally, when customary international law changed, the common law incorporated those changes save to the extent of conflict with domestic law. For a rule of customary international law, practice must be settled, generally accepted and believed by States to be legally obligatory5 (paras. 4560).
(3) The common law of Hong Kong recognized the doctrine of sovereign immunity as at 30 June 1997. This common law was constitutionally prescribed to remain in force after the PRC resumed sovereignty except where
inconsistent with the Basic Law or local legislation. Since there was no relevant local or national legislation, the restrictive doctrine remained applicable unless the common law itself had changed. Since the common law had not been altered by customary international law, change could only be demanded by its constitutional and societal setting, Hong Kong having become an inalienable part of the PRC, which adhered to the absolute immunity doctrine. While the doctrine of restrictive immunity from suit and execution had developed into a customary international law rule, it was one to which the PRC had persistently objected, notwithstanding its signature to the unratified 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property Convention, and was not bound. The PRC had maintained this position in the two ministry letters6 and consistently (paras. 73116)(4) The doctrine of restrictive immunity continued to apply in Hong Kong. There was no resulting infringement to PRC sovereignty and no prejudice to any future objection the PRC might advance. An adaptation of common law to its status quo ante was a regressive step. There were hints of movement towards the restrictive doctrine in the PRC's overall approach; had Hong Kong courts been intended to apply the absolute doctrine, this would have been given effect by legislation (paras. 11723).
(5) The DRC's submission to arbitration did not constitute a submission to the jurisdiction of Hong Kong courts to consider an application for leave to enforce those awards or a waiver of immunity from execution. With the lapse of the UK State Immunity Act 1978 on 1 July 1997, Hong Kong was relegated to the common law position which required express waiver (paras. 12477).
(6) Leave was given to enforce the arbitral awards. The DRC was not immune from execution in respect of any entry fees due to the DRC and not intended to be used for sovereign purposes (paras. 1801).
Per Yeung JA (dissenting): (1) From a global perspective and mindful of the constitutional provisions of the HKSAR and the PRC's unequivocal foreign policy, the DRC enjoyed absolute immunity under the law of the HKSAR (para. 182).
(2) Although there was a trend in common law and customary international law towards the restrictive immunity doctrine, it was not part of customary international law. There was neither widespread practice nor a discernible sense of obligation among States to adopt the restrictive immunity doctrine; the United Nations Convention on Jurisdictional Immunities of States and their Property, 2004, had not entered into force (paras. 183214).
(3) Even if the restrictive immunity doctrine was part of customary international law or had been incorporated into common law, it was only applicable in the HKSAR if it did not conflict with HKSAR domestic law. The HKSAR was an inalienable part of the PRC; the PRC Government was responsible for its foreign affairs under Article 13 of the Basic Law. Since the PRC had consistently adhered to the absolute immunity doctrine as part of its foreign policy,
the HKSAR Constitution did not permit the application of the restrictive immunity doctrine in HKSAR courts (paras. 21528)(4) Since the DRC was entitled to absolute immunity, it had not waived its right to State immunity despite its submission to arbitration (paras. 22933).
(5) The DRC had not waived the right to claim immunity from execution in the HKSAR. The seizure and sale of a State's assets to satisfy a judgment against it could damage its ability to function properly. Since the transactions were the exercise by the PRC, through a consortium of Chinese Enterprises and the DRC, of sovereign authority in the interest of their citizens, they were not within the commercial trade exemption even if the restrictive doctrine applied (paras. 23445).
Per Yuen JA (concurring): (1) The customary international law principle of restrictive immunity had been incorporated into the common law of Hong Kong before the transfer of sovereignty in 1997. It continued as the law of Hong Kong after the PRC resumed sovereignty since no legislation replaced the lapsed UK State Immunity Act 1978 as extended to Hong Kong. Restrictive immunity had become international law; the common law simply incorporated it. The transfer of sovereignty could not therefore change what international law was; it could only change the rule's application such as the recognition by Hong Kong courts of PRC recognized sovereigns only. Maintaining the common law principle of restrictive immunity was not inconsistent with any provisions of the Basic Law (paras. 24657).
(2) The common law's flexibility was to reflect the changing norms of society to meet contemporary concepts of justice. Norms had not changed in Hong Kong so as to demand a reversal to absolute immunity, which had disintegrated as a rule of international law in 1983. The maintenance of restrictive immunity did not lead to any injustice. Its application by Hong Kong courts did not prejudice the sovereignty of the PRC, which as a persistent objector was not bound to restrictive immunity (paras. 25867).
(3) If absolute immunity were applicable, the DRC had not waived immunity by its agreement to arbitrate (para. 267).
(4) FG was entitled to leave to enforce the arbitration awards as a judgment. There was a good arguable case that the entry fees were the DRC's assets. They were immune from execution if they were intended to be used for public as opposed to commercial purposes (paras. 26882).
The following is the text of the judgments delivered in the Court:
Stock VP
1. In April 2003 arbitral awards were made in France and Switzerland against the Democratic Republic of Congo (DRC). France and Switzerland are parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The plaintiff company has acquired the benefit of those awards and has obtained leave in Hong Kong to enforce the awards and injunctions to prevent third parties transferring assets allegedly due to the DRC. The DRC has claimed immunity from jurisdiction and from the process of execution. The Court of First Instance has set aside leave and the injunctions. This is an appeal from that decision.
2. This appeal addresses the questions whether an application for leave to enforce an...
To continue reading
Request your trial
-
General Dynamics United Kingdom Ltd v State of Libya
...to apply. When applying such law, the Hong Kong Court of Appeal in FG Hemisphere Associates LLC v Democratic Republic of the Congo (2010) 142 ILR 216 upheld orders for alternative service when service by the diplomatic channels proved impossible. When the case came to the Court of Final App......
-
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]
...to recognize the doctrine of absolute immunity.4 The 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 interv......
-
The Hua Tian Long (No 3) [China, Hong Kong Special Administrative Region, Court of First Instance.]
...in rem. Very recently, also, in the Hong Kong Court of Appeal in FG Hemisphere Associates LLC v. Democratic Republic of the Congo & ors, [142 ILR 216], Judgment dated 10 February 2010, in a wide-ranging and scholarly judgment Stock JA took the opportunity to review the development of the ca......