ARGUMENTS ADVANCED

ISSUE 3

Whether IBC enjoys sovereign protection/immunity from the jurisdiction of Katalonian

Courts?

1. It is humbly submitted that the IBC doesn’t enjoys sovereign protection/immunity from
the jurisdiction of katalonian courts as it is not a sovereign entity and merely an agro-
pharmaceutical company. And IBC also had submitted to the jurisdiction of katalonian
law and katalonian courts as per the clause 20.1 of the Friendship and Cooperation
Agreement (hereinafter to be reffered as FCA).

3.1: Weather IBC is a agency/instrumentality of royal kingdom of Zanzibar?

2. It is most respectfully submitted that IBC is neither a agency nor a instrumentality of

royal kingdom of Zanzibar. It is mearly a company with its registered office in Kanpur,
capital of kingdom of Zanzibar. And also the crown prince of kingdom of Zanzibar holds
the 20% stake in IBC in his individual capacity, that share cannot be treated as a share of
kingdom of Zanzibar , so no interest of kingdom is connected with the ibc. Also it cannot
be stated that ibc is a instrumentality of royal kingdom of Zanzibar as ibc os not
discharging any such function which only a sovereign state can discharge.
3. It is humbly submitted that the initial burden is on the corporation who asks for sovereign
immunity to establish its claim of being a department/agent/instrumentality of the foreign
state, if that burden is duly discharged by such entity than only the onus shifts on the
other party to disprove any such claim.1

3.2: Weather benefit of sovereign protection/immunity should be rendered to IBC?

4. It is humbly submitted that benefit of sovereign immunity should not be rendered to IBC
as mere holding of stake in IBC by the royal prince would not make it immune from the

1
V.D.S. Rostock (DSP Lines) Dept. of GDR Vs N.C. Jute Mills Co. Ltd.
 jurisdiction of the katalonian courts as according to the international law principle of
restrictive immunity a state owned entity is not entitled to immunity for acts of
commercial nature, jure gestionis. In the modern era where there is close interconnection
between different countries as far as trade, commerce and business are concerned, the
principle of sovereign immunity can no longer be absolute in the way that it much earlier
was. Countries who participate in trade, commerce and business with other countries
ought to be subject to normal rules of the market. If state owned entities would be able to
operate with impunity, the rule of law would be degraded and international trade,
commerce and business would come to an grinding hault.2
5. It is humbly submitted that state of katalonia has only signed the UN Convention on
Jurisdictional Immunities of States and their Property but yet not ratified the same, so
mere being a signatory to a un convention doesnot has binding obligation on state of
katalonia to strictly follow the mandates of that convention.
6. It is humbly submitted that even if we consider that by virtue of being a signatory to un
convention on jurisdictional immunities of state and their property it is an obligation on
state of katalonia to adhere to the provisions of such un convention. Than by virtue of
article 7(1)(b) IBC cannot claim the benefit of sovereign immunity as IBC itself
submitted to the jurisdiction of katalonian courts by the clause 20.1 of the FCA and by
virtue of that written agreement IBC itself waived its any such immunity. Article 7(1)(b)
of un convention on jurisdictional immunities of state and their properties is as follows:
“Article 7
Express consent to exercise of jurisdiction
1. A State cannot invoke immunity from jurisdiction in a proceeding before a court of
another State with regard to a matter or case if it has expressly consented to the
exercise of jurisdiction by the court with regard to the matter or case:
a. by international agreement;
b. in a written contract;”
7. As per Article 10 of United Nation Convention on a Jurisdictional Immunties of state and
their Property if a state engages in a commercial transaction with a foreign natural or
juridical person, and by virtue of the applicable rules of private international law,

2
Ethopian airlines vs ganesh narain saboo
 differences relating to the commercial transaction fall within the jurisdiction of the court
of another state, the state cannot invoke immunity form that jurisdiction in a proceeding
arising out of that commercial transaction. Article 10(1) read as follows:
“Article 10
Commercial transactions
1. If a State engages in a commercial transaction with a foreign natural or juridical
person and, by virtue of the applicable rules of private international law, differences
relating to the commercial transaction fall within the jurisdiction of a court of another
State, the State cannot invoke immunity from that jurisdiction in a proceeding arising
out of that commercial transaction.”
8. State Immunity is a principal of international law. The law on state immunity was based
on the absolute principle and was a well-established rule in international law. However,
this rule created complications because it was difficult to distinguish clearly between
agents of the state that are not immune and state agencies. In the Trendtex Trading Co v
Central Bank of Nigeria3, the court of Appeal developed the restrictive theory. With the
increase in state activities and the development of restrictive theory of immunity, it
became difficult for a country to claim immunity if it is dealing in commercial nature
work.

9. In a later case of I Congreso del Partido4 The House of Lords adhereing to what was held
in trendtex trading cor. case restricted the doctrine of state immunity so as to exclude
trading and commercial activities from immunity, and held:

“It is apparent that under the restrictive rule states may only enjoy immunity from the
jurisdiction of local courts only in regard to certain classes of acts. Thus a distinction
needs to be made between acts jure imperii and acts jure gestionis. Acts jure imperii are
acts of a sovereign nature and are subjected to immunity. Acts jure gestionis are
commercial acts in respect of which the state is not immune but is subject to the
jurisdiction of the territorial sovereign. The distinction is significant because it draws the
line to show the situation whereby a state can be treated as a normal litigant and as a

3
[1977] 1 QB 529
4
[1983] 1 AC 244
 sovereign when it exercises power of sovereign. In effect, the restrictive theory provides
that a state should have immunity only when it is acting as a state despite being involved
in a variety of capacities.”

10. In a latest landmark decision of the UK Supreme Court in NML Capital Limited v
Republic of Argentina5 confirms that states cannot claim immunity in commercial cases.
11. Therefore it is humbly submitted that taking into view the present factual situation of this
case and the precedents concerned it is pleaded that the benefit of sovereign immunity
should not be rendered to IBC.

5
[2011] UKSC 31)