The law on jurisdictional immunities: on the border of law and politics
The State Duma Committee on Property finalized a draft law titled On the jurisdictional immunity of a foreign state and the property of a foreign state in the Russian Federation, which it submitted to the State Duma on 5 August 2015. In accordance with the bill, from 1 January 2016, the courts will have the authority to limit the immunity of foreign states with respect to disputes arising from civil transactions, business activities, labor relations, participation in organizations, as well as disputes relating to property rights, compensation for damages, intellectual property, and the operation of the vessel. In addition, the bill contains provisions governing interim measures against a foreign state and the enforcement of judgments.
The legal regulation of limitations on the jurisdictional immunity of a foreign state is nothing new. Such laws are in existence in the United States, Britain, and other countries.
The explanatory note to the bill states that law is necessary due to the expansion of foreign economic relations, a tendency to refuse jurisdictional immunity, the spread of restrictions to immunity, as well as the increased number of claims against the Russian Federation. In addition, the bill is a response to the attempt of Belgium and France to limit the jurisdictional immunity of Russia. After the international arbitration decisions in the Hague on the Yukos case, enforcement proceedings began in these states, which impounded Russian Federation state property.
The Russian government developed the draft law. According to Prime Minister Dmitry Medvedev, for the first time, the bill limits the immunity of a foreign state to participate in proceedings, to take interim measures, and to enforce judicial acts, based on the principle of reciprocity. The bill determines the limits of this immunity as well. The prime minister also stressed that the Russian Federation should have the right to impose reciprocal restrictions on states, including the refusal to provide a state with immunity.
The bill clearly defines the application of its rules. In particular, the law may not restrict immunity with respect to the functioning of diplomatic missions, consular offices, and representative offices of international organizations. Similarly, it does not affect the privileges and immunities of heads of state, governments, and foreign ministers. Thus, the bill respects the commitments of the Russian Federation arising from international agreements.
The bill establishes the long-standing principle of reciprocity that the courts use. Article 5 states that the courts, on the basis of this principle, have the right to assume that a country has the same amount of jurisdictional immunity that the Russian Federation enjoys in that foreign country. The Russian Foreign Ministry will have the authority to determine the jurisdictional immunities of a foreign state.
Article 8 of the draft reflects the functional immunity doctrine, according to which a foreign state, its agencies, and property enjoy immunity only when the state exercises sovereign functions. Thus, the bill limits the immunity of a foreign state with respect to business activities in the Russian Federation. A significant drawback of this notion is its evaluative character: in each case, the court will have to establish whether a transaction is connected with the implementation of a state’s sovereign powers, depending on the nature and purpose of the transaction.
If the bill is passed, in order to implement its provisions and unify legal regulation, the Code of Civil Procedure, the Arbitration Code, and the Federal Law On Enforcement Proceedings will require amendments. All contain provisions defining cases involving foreign parties, including the recognition and enforcement of foreign judgments.
Applying aspects of jurisprudence that have developed over the years, the courts will limit the jurisdictional immunity of foreign states in disputes arising from business activities, according to pp. 6-7 of the Informational letter of the Presidium of the Supreme Arbitration Court of the Russian Federation of 18 January 2001, No. 58. However, the main purpose of the bill is to curb the threats to repossess Russian state property abroad. Implementing the principle of reciprocity will provide the courts with a legal basis to limit the immunity of a foreign state in retaliation for a similar action it may take against the Russian Federation.
It is unlikely that the bill will change law enforcement practices dramatically with respect to disputes arising from the business activities of foreign states on the territory of the Russian Federation. At the same time, a legal basis related to restrictions on jurisdictional immunity, grounded on the principle of reciprocity, is necessary.
The draft bill is available here
