Firebird Global Master Fund II Ltd v Republic of Nauru

Court of Appeal (NSW)|2014-10-14|Before: Bathurst CJ, Beazley P, Basten JA, Act J

WORDS AND PHRASES - "judgment" - Foreign States Immunities Act 1985 (Cth), s 27 - whether order to register judgment is a judgment

JURISDICTION - sovereign immunity - application of immunity - whether application to register foreign judgment is a proceeding - Foreign States Immunities Act 1985 (Cth), s 9

WORDS AND PHRASES - "proceeding" - Foreign States Immunities Act 1985 (Cth), s 9 - whether application to register a foreign judgment is a proceeding

JURISDICTION - sovereign immunity - exceptions - whether proceeding "concerns" a commercial transaction - whether application to register a foreign judgment under Foreign Judgments Act 1991 (Cth) is a proceeding concerning a commercial transaction - Foreign States Immunities Act 1985 (Cth), ss 11(1), (3)

STATUTORY INTERPRETATION - principles - consideration of text - consequences of particular interpretation - whether legislature intended provision to have an ambulatory meaning - whether principle of developing meaning of term in enactment with developing circumstances should be applied - role of legislature

EVIDENCE - proof - sufficiency - Blatch v Archer (1774) 1 Cowper 63; (1774) 98 ER 969 - urgency of proceedings - lack of findings of fact by trial judge - certificate under Foreign States Immunities Act 1985 (Cth), s 41 - evidence of senior member of government

JURISIDICTION - sovereign immunity from execution - exceptions - funds in bank accounts - whether commercial property - whether funds in use - whether in use for substantially commercial purposes

PUBLIC INTERNATIONAL LAW - sovereign immunity - nature of sovereign immunity - whether the Foreign States Immunities Act 1985 (Cth) should be construed in light of international developments in the doctrine of sovereign immunity Legislation Cited: Acts Interpretation Act 1901 (Cth), ss 2C and 15AB Administration of Justice Act 1924 (NSW) Civil Jurisdiction and Judgments Act 1982 (UK), s 31 Civil Procedure Act 2005 (NSW), ss 8 and 9 Constitution, ss 51(xxix) and 109 Diplomatic Privileges and Immunities Act 1967 (Cth) Foreign Judgments Act 1973 (NSW), s 8 Foreign Judgments Act 1991 (Cth), ss 5-7, 12, 14, 17 and Pt 2 Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) Foreign Sovereign Immunities Act 1976 (US) Foreign States Immunities Act 1985 (Cth), ss 9-27, 28, 30, 32, 38, 39, 41 Pts II, III and IV Judiciary Act 1903 (Cth), ss 79 and 80 Reciprocal Enforcement of Judgments Act 1959 (Qld), s 5 State Immunity Act 1978 (UK), s 3(1) State Immunity Act 1985 (Can), s 5 Supreme Court Act 1970 (NSW), ss 23 and 101(2) Supreme Court Civil Rules 2006 (SA), r 311(2) Trade Practices Act 1974 (Cth), Pt IV UN Convention on Jurisdictional Immunities of States and Their Property (2004) Uniform Civil Procedure Rules 2005 (NSW), rr 6.1A, 11.5, 18.2, 36.15, 36.16, 52.3, 53.6 and Pt 53 Cases Cited: Abdi v Release on Licence Board (1987) 10 NSWLR 294 AIG Capital Partners Inc v Republic of Kazakhstan (National Bank of Kazakhstan intervening) [2006] 1 WLR 1420 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 Alcom Ltd v Republic of Colombia [1984] AC 580 Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 Blatch v Archer (1774) 1 Cowper 63; (1774) 98 ER 969 Bombardier Inc v AS Estonian Air and the Republic of Estonia (2013) 115 OR (3d) 183 Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 CIC Insurance Limited v Bankstown Football Club Limited [1997] HCA 2; (1997) 187 CLR 384 Commissioner of Police v Eaton [2013] HCA 2; (2013) 87 ALJR 267 Compania Naviera Vascongado v Steamship "Cristina" [1938] AC 485 Dorais v Saudi Arabian General Investment Authority (2013) CarswellQue 9504 Dsane v Hagan [1962] Ch 193 Ex Parte Caucasian Trading Corporation Limited; In re A Bankruptcy Petition (1896) 1 QB 368 Export-Import Bank of the Republic of China v Grenada [2014] F 3d WL 4773451 C.A.2 Ferdinands v Commissioner for Public Employment [2006] HCA 5; (2006) 225 CLR 130 FG Hemisphere Associates LLC v Democratic Republic of the Congo [2010] 2 HKLRD 66 Firebird Global Master Fund II Ltd v Republic of Nauru [2014] NSWSC 1358 Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; (2007) 231 CLR 531 Hore v Albury Radio Taxis Co-operative Society Ltd [2002] NSWSC 1130; (2002) 56 NSWLR 210 Hunt v BP Exploration Co (Libya) Limited [1980] HCA 7; (1980) 144 CLR 565 Jurisdictional Immunities of the State (Germany v Italy, Greece intervening) [2012] ICJ Reports 99 Kais v Abu Dhabi Education Council (2011) Carswell Ont 36 Kuwait Airways Corporation v Republic of Iraq and Bombardier Aerospace [2010] 2 SCR 571 Li v Zhou [2014] NSWCA 176; (2014) 310 ALR 66 Liberian Eastern Timber Corp v Government of Republic of Liberia (1987) 659 F Supp 606 McIvor v Watson [1960] HCA 43; (1960) 103 CLR 658 NML Capital Ltd v Republic of Argentina [2011] UKSC 31; [2011] 2 AC 495 Philippine Admiral v Wallem Shipping (Hong Kong) Ltd [1977] AC 373 Plaintiff M61/2010E v The Commonwealth of Australia (Offshore Processing Case) [2010] HCA 41; (2010) 243 CLR 319 Playa Larga (Owners of Cargo Lately Laden on Board) v I Congreso del Partido [1983] 1 AC 244 Pt Bayan Resources Tbk v BcBc Singapore Pte Ltd [2014] WASCA 178 PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; (2012) 247 CLR 240 Re Ley; Ex Parte Best (1949) 14 ABC 191 Re Macks; Ex Parte Saint [2000] HCA 62; (2000) 204 CLR 158 Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 Solomons v District Court of New South Wales [2002] HCA 47; (2002) 211 CLR 119 Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2007] QB 886 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; (2013) 87 ALJR 410 Technical Products Pty Limited v State Government Insurance Office (Queensland) [1989] HCA 24; (1989) 167 CLR 45 Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529 Victory Transport Inc v Comisaria General 336 F2d 354 (2nd Cir 1964) Texts Cited: Australian Law Reform Commission, Foreign State Immunity, Report No 24 (1984) Bennion on Statutory Interpretation (5th ed 2008, LexisNexis) Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia, (9th ed 2014, LexisNexis Butterworths) Hazel Fox and Philippa Webb, The Law of State Immunity (3rd ed 2013, Oxford University Press) James Crawford, "International Legal and Foreign Sovereigns: Distinguishing Immune Transactions" (1983) 54 BYIL 75 Category: Principal judgment Parties: In matter 2014/290988 Firebird Global Master Fund II Ltd (Applicant) Republic of Nauru (First respondent) Westpac Banking Corporation (ACN 007 457 141) (Second respondent)

In matter 2014/293924 Commonwealth of Australia (Applicant) Firebird Global Master Fund II Ltd (First respondent) Republic of Nauru (Second Respondent) Westpac Banking Corporation (ACN 007 457 141) (Third respondent) Representation: In matter 2014/293924 Counsel: T G R Parker SC / J A C Potts (Applicant) R A Dick SC / D Barnett / N Oreb (First respondent) R Harris (solicitor) (Second respondent)

Solicitors: Clayton Utz (Applicant) Ashurst (First respondent) Allens (Second respondent)

In matter 2014/293924 Counsel: N M Bender (Applicant) T G R Parker SC / J A C Potts (First respondent) R A Dick SC / D Barnett / N Oreb (Second respondent) R Harris (solicitor) (Third respondent)

Solicitors: King & Wood Mallesons (Applicant) Clayton Utz (First respondent) Ashurst (Second respondent) Allens (Third respondent) File Number(s): 2014/290988; 2014/293924 Decision under appeal Court or tribunal: Supreme Court of New South Wales Citation: [2014] NSWSC 1358 Date of Decision: 03 October 2014 Before: Young AJA File Number(s): 2012/147600

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

[This headnote is not to be read as part of the judgment] On 28 October 2011, a judgment was given in the Tokyo District Court in favour of the applicant, Firebird, against the Republic of Nauru ("Nauru") in the sum of 1.3 billion Yen plus interest. Firebird filed a summons in the Common Law Division of the Supreme Court seeking registration of the Japanese judgment under Part 2 of the Foreign Judgments Act 1991 (Cth). The summons was never served on Nauru. On 6 June 2012, orders were made to register the judgment. Firebird sought and was granted leave to serve a notice of registration of judgment outside Australia. Nauru conducted its banking through a number of bank accounts held by Westpac Banking Corporation ("Westpac"). On 10 September 2014, a garnishee order was made requiring Westpac to pay the full amount of the judgment debt within 14 days of the service of the order. Nauru filed a notice of motion seeking to have the garnishee order set aside or stayed. On 3 October 2014, Young AJA set aside the registration of the foreign judgment and the consequential garnishee order: Firebird Global Master Fund II Ltd v Republic of Nauru [2014] NSWSC 1358. Firebird appealed to this Court. The issues on appeal concerned whether Firebird was required to comply with the service requirements for commencing proceedings against a foreign State under Part III of the Foreign States Immunities Act 1985 (Cth) ("Immunities Act"); whether Nauru was out of time to apply under s 38 of the Immunities Act to set aside the registered judgment; whether Nauru was immune from jurisdiction in the proceeding to register the Japanese judgment under s 9 of the Immunities Act; and whether the Westpac accounts fell within an exception to the immunity from execution under s 30 of the Immunities Act because the funds were used substantially for commercial purposes. The Court dismissed the appeal: Compliance with service requirements of the Immunities Act

The Immunities Act implicitly requires that a foreign judgment cannot be entered against a foreign State unless there has been compliance with the requirements of service under Pt III. Those requirements do not conflict with the Foreign Judgments Act, which neither requires nor prohibits service. Accordingly, no issue of implied repeal by the Foreign Judgments Act arises: [44], [48]-[49] (Bathurst CJ); [210] (Beazley P); [251], [261]-[262] (Basten JA) Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1; Ferdinands v Commissioner for Public Employment [2006] HCA 5; (2006) 225 CLR 130; Commissioner of Police v Eaton [2013] HCA 2; (2013) 87 ALJR 267; Pt Bayan Resources Tbk v BcBc Singapore Pte Ltd [2014] WASCA 178.
An order for registration of a judgment is a "judgment" for the purposes of s 27 of the Immunities Act: [51]-[53] (Bathurst CJ); [210] (Beazley P) TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; (2013) 87 ALJR 410. Setting aside the judgment
If service of the initiating process under the Immunities Act is required, relief under s 38 to set aside the judgment is available - regardless of the time limit under the Foreign Judgment Act for an application to set aside a judgment: [55]-[56] (Bathurst CJ); [210] (Beazley P); [270] (Basten JA). Nauru's immunity under the Immunities Act
An application to register a foreign judgment constitutes a "proceeding" for the purposes of s 9 of the Immunities Act: [59]-[60] (Bathurst CJ); [210] (Beazley P); [240]-[241], [243]-[246] (Basten JA) PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; (2012) 247 CLR 240; Re Lay; Ex Parte Best (1949) 14 ABC 191; Ex Parte Caucasian Trading Corporation Limited; In re A Bankruptcy Petition (1896) 1 QB 368; Kuwait Airways Corporation v Republic of Iraq and Bombardier Aerospace [2010] 2 SCR 571.
The immunity granted by s 9 is a freedom from the liability from the imposition of duties by the process of the Australian Courts: [61]-[62] (Bathurst CJ); [210] (Beazley P) Hunt v BP Exploration Co (Libya) Limited [1980] HCA 7; (1980) 144 CLR 565 (considered); PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; (2012) 247 CLR 240
The filing of a notice of motion seeking to set aside the garnishee order was an assertion of immunity by Nauru; it was not a submission to the jurisdiction of the Court under s 10 of the Immunities Act: [64], [67] (Bathurst CJ); [210] (Beazley P)
The exception to immunity under s 11 where a proceeding "concerns a commercial transaction" does not apply to the registration of a foreign judgment. The word "concerns" has a narrow meaning and does not extend to considering whether the underlying subject matter of a judgment is a "commercial transaction": [69]-[90] (Bathurst CJ); [210] (Beazley P); [292], [293]-[294], [297] [307] (Basten JA) NML Capital Ltd v Republic of Argentina [2011] UKSC 31; [2011] 2 AC 495; Kuwait Airways Corporation v Republic of Iraq and Bombardier Aerospace [2010] 2 SCR 571 Immunity of bank accounts from execution
The immunity from execution does not apply where property is used substantially for commercial purposes. If funds are to be used for the purpose of government administration, performance of government's civic duties and functions to its citizens or for the advancement of the community, the fact that that object is achieved by entering into commercial transactions does not necessarily mean that the funds are used for commercial purposes: [172] (Bathurst CJ); [210] (Beazley P) Bombardier Inc v AS Estonian Air and the Republic of Estonia (2013) 115 OR (3d) 183; FG Hemisphere Associates LLC v Democratic Republic of the Congo [2010] 2 HKLRD 66; Dorais v Saudi Arabian General Investment Authority (2013) CarswellQue 9504; Export-Import Bank of the Republic of China v Grenada [2014] F 3d WL 4773451 C.A. 2 AIG Capital Partners Inc v Republic of Kazakhstan (National Bank of Kazakhstan intervening) [2006] 1 WLR 1420.
The bank accounts are immune from execution of the garnishee order under s 30 as the evidence and the individual circumstances of Nauru establish that the funds were set aside for purposes other than commercial purposes: [206] (Bathurst CJ); [210] (Beazley P) Liberian Eastern Timber Corp v Government of Republic of Liberia (1987) 659 F Supp 606.

Judgment

BATHURST CJ: On 28 October 2011 judgment was given in the Tokyo District Court in favour of the Applicant (Firebird) against the Republic of Nauru (Nauru) in the sum of 1.3 billion Yen plus interest (the Japanese judgment). The proceedings related to Japanese Yen bearer bond certificates held by Firebird, issued by the Republic of Nauru Finance Corporation and guaranteed by Nauru. There was no dispute in the current proceedings that the Japanese Court had had jurisdiction.
On 9 May 2012 Firebird filed a summons (the Originating Process) in the Common Law Division of this Court, seeking registration of the Japanese judgment under Part 2 of the Foreign Judgments Act 1991 (Cth) (Foreign Judgments Act). Neither the Originating Process nor the supporting affidavit were served on Nauru.
On 6 June 2012 a Deputy Registrar registered the Japanese judgment under Part 2 of the Foreign Judgments Act (the Registered judgment). The order to register the Japanese judgment provided that Nauru may, within 14 days after service of the notice of registration of the judgment, apply to have it set aside.
Thereafter Firebird applied for leave to serve a notice of registration of the judgment outside Australia and that it be effected by means of private process on the Secretary for Justice of Nauru.
On 19 March 2013 Schmidt J made the following orders: "1. Pursuant to rule 18.2(2) of the Uniform Civil Procedure Rules 2005 (NSW) (the Rules) the Plaintiff may proceed without service on the Defendant of the notice of motion filed 8 March 2013. 2. Pursuant to rule 53.2(3) of the Rules, the Plaintiff may proceed without service of the summons filed 9 May 2012 on the Defendant. 3. Pursuant to rule 11.5 of the Rules, the Plaintiff be granted leave to serve the Notice of Registration of Judgment annexed to the notice of motion filed 8 March 2013 and marked 'A' outside Australia. 4. Pursuant to rule 11.5 of the Rules, the Plaintiff be granted leave to serve the Notice of Change of Solicitor filed 8 March 2013 outside Australia. 5. Pursuant to rule 53.6(2) of the Rules, service of the Notice of Registration of Judgment be effected by way of private process server on the Secretary for Justice of the Defendant. 6. The costs of the motion are costs in the cause."
It should be noted that Order 1 of her Honour's orders related to the motion to serve outside Australia whilst Order 2 related to the summons seeking registration of the Japanese judgment.
On 18 August 2014 a notice of registration of the Registered judgment was purportedly served by leaving the documents at the office of the Secretary for Justice in Nauru.
On 5 September 2014 Firebird filed a notice of motion seeking a garnishee order. On 10 September a garnishee order was made against Westpac Banking Corporation (Westpac) in the following terms (the Garnishee order): 1. It is ordered that all debts that are due or accruing from the garnishee to the judgment debtor at the time of service of this order are attached to the extent of $31,242,825.81 to answer a judgment in these proceedings. 2. You are ordered to pay any amount so attached to the judgment creditor within 14 days after the date on which the order is served on the garnishee or, if the debt attached is a debt that falls due after that date, within 14 days after the date on which the debt becomes due.
On 19 September 2014 Nauru filed a notice of motion seeking to set aside or stay the Garnishee order. The hearing of that notice of motion commenced on 22 September but was adjourned from 23 September for further hearing on 29 September.
On 25 September 2014 Nauru filed an amended notice of motion seeking orders setting aside the Registered judgment as well as the Garnishee order.
The primary judge ordered that the Registered judgment and the consequential Garnishee order be set aside. This order is the subject of Firebird's appeal.
The primary judge, however, also indicated that if he had not set the Registered judgment aside he would have upheld the Garnishee order at least in part. By a notice of contention Nauru contends that this conclusion was incorrect.
The Garnishee order covered 30 bank accounts held by Westpac on behalf of Nauru. As at 22 September 2014 the accounts had a combined balance totalling $32,491,914.65. One of the accounts, described as an AusAID account, contained money said to have been donated by the Commonwealth of Australia. The Commonwealth filed a notice of motion seeking to set aside the Garnishee order in so far as it related to this account. In addition to supporting the arguments raised by Nauru it asserted that the funds in the AusAid account were the subject of a trust of the nature of that considered by the House of Lords in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. The Commonwealth seeks to maintain that argument, which was not finally dealt with by the primary judge, in the event that Firebird's appeal is successful. It was agreed, having regard to the urgency of the matter, that this issue would be postponed.
Because of the urgency of the matter I have not set out the reasons of the primary judge in any detail, nor have I referred to all of the parties' submissions. However, the reasons and the whole of the parties' written and oral submissions have been taken into account in reaching the conclusions to which I have referred below.
To understand the issues raised in the appeal it is necessary to have regard to the legislative regime dealing with State immunity in the Foreign States Immunities Act 1985 (Cth) (Immunities Act) and the regime dealing the registration of foreign judgments contained in the Foreign Judgments Act.

The Immunities Act

Up to at least the early 1970s the common law adopted what has been described as a doctrine of "absolute immunity". The doctrine was described by Lord Atkin in Compania Naviera Vascongado v Steamship "Cristina" [1938] AC 485 in the following terms at 490: "The foundation for the application to set aside the writ and arrest the ship is to be found in two propositions of international law engrafted into our domestic law which seem to me to be well established and to be beyond dispute. The first is that courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages. The second is 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. There has been some difference in the practice of nations as to possible limitations of this second principle as to whether it extends to property only used for the commercial purposes of the sovereign or to personal private property. In this country it is in my opinion well settled that it applies to both." See also Hazel Fox and Philippa Webb, The Law of State Immunity, (3rd ed 2013, Oxford University Press) (Fox on State Immunity) at 26-32.
However, with the increasing involvement of sovereign states in commercial activities, public international law developed what came to be termed the "restrictive theory" of sovereign immunity. That theory distinguished between activities which a State undertakes jure imperii, that is, in the exercise of sovereign authority, and activities which it undertakes jure gestionis, that is transactions of a kind which might appropriately be undertaken by private individuals instead of sovereign States. In that context the jurisdiction of national courts was exercised over foreign States in claims against them which arose out of commercial or trading transactions into which they had entered with private individuals. The doctrine was adopted as part of the common law by the Privy Council in the Philippine Admiral v Wallem Shipping (Hong Kong) Ltd [1977] AC 373 and Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529. See also Alcom Ltd v Republic of Colombia [1984] AC 580 at 597-598. In the United Kingdom, the restrictive theory was first given statutory recognition in the State Immunity Act 1978 (UK) (the UK State Immunity Act) and in the United States in the Foreign Sovereign Immunities Act 1976 (US).
Following Report No. 24 Foreign State Immunity by the Australian Law Reform Commission in 1984 (the Foreign State Immunity Report) statutory recognition was given to the doctrine of restrictive immunity in the Immunities Act. The Immunities Act deals with questions of immunity from jurisdiction (Part II) and enforcement (Part IV) separately.
Section 9 of the Immunities Act contains a general immunity. The section is in the following terms: "Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding."
That immunity, however, is subject to a number of exceptions. The first is in circumstances where a foreign State submits to the court's jurisdiction. Relevant for present purposes are s 10(1), s 10(6) and s 10(7) of the Immunities Act. These sections provide as follows: "(1) A foreign State is not immune in a proceeding in which it has submitted to the jurisdiction in accordance with this section." … "(6) Subject to subsections (7), (8) and (9), a foreign State may submit to the jurisdiction in a proceeding by: (a) instituting the proceeding; or (b) intervening in, or taking a step as a party to, the proceeding. (7) A foreign State shall not be taken to have submitted to the jurisdiction in a proceeding by reason only that: (a) It has made an application for costs; or (b) It has intervened, or has taken a step, in the proceeding for the purpose or in the course of asserting immunity."
Section 11 of the Immunities Act provides a general exception to what are described as "commercial transactions". The section is in the following terms: "(1) A foreign State is not immune in a proceeding in so far as the proceeding concerns a commercial transaction. (2) Subsection (1) does not apply: (a) if all the parties to the proceeding: (i) are foreign States or are the Commonwealth and one or more foreign States; or (ii) have otherwise agreed in writing; or (b) in so far as the proceeding concerns a payment in respect of a grant, a scholarship, a pension or a payment of a like kind. (3) In this section, commercial transaction means a commercial, trading, business, professional or industrial or like transaction into which the foreign State has entered or a like activity in which the State has engaged and, without limiting the generality of the foregoing, includes: (a) a contract for the supply of goods or services; (b) an agreement for a loan or some other transaction for or in respect of the provision of finance; and (c) a guarantee or indemnity in respect of a financial obligation; but does not include a contract of employment or a bill of exchange."
Sections 12 to 20 of the Immunities Act deal with certain specific exceptions to the immunity. It is not necessary to set them out in detail, although they do have some bearing on the construction of s 11.
Part III of the Immunities Act deals with service and judgments. Sections 23 and 24 provide for service by agreement, or through what is described as the diplomatic channel. Section 25 provides that service, other than in accordance with those sections, is ineffective.
Section 27 of the Immunities Act deals with judgment in default of appearance. It is in the following terms: "(1) A judgment in default of appearance shall not be entered against a foreign State unless: (a) it is proved that service of the initiating process was effected in accordance with this Act and that the time for appearance has expired; and (b) the court is satisfied that, in the proceeding, the foreign State is not immune. (2) A judgment in default of appearance shall not be entered against a separate entity of a foreign State unless the court is satisfied that, in the proceeding, the separate entity is not immune."
Section 28 of the Immunities Act imposes restrictions on the enforcement of default judgments.
Part IV of the Immunities Act deals with enforcement. Section 30 is in the following terms: "Except as provided by this Part, the property of a foreign State is not subject to any process or order (whether interim or final) of the courts of Australia for the satisfaction or enforcement of a judgment, order or arbitration award or, in Admiralty proceedings, for the arrest, detention or sale of the property."
Section 32 of the Immunities Act, however, permits enforcement against commercial property. This section provides as follows: "(1) Subject to the operation of any submission that is effective by reason of section 10, section 30 does not apply in relation to commercial property. (2) Where a foreign State is not immune in a proceeding against or in connection with a ship or cargo, section 30 does not prevent the arrest, detention or sale of the ship or cargo if, at the time of the arrest or detention: (a) the ship or cargo was commercial property; and (b) in the case of a cargo that was then being carried by a ship belonging to the same or to some other foreign State - the ship was commercial property. (3) For the purposes of this section: (a) commercial property is property, other than diplomatic property or military property, that is in use by the foreign State concerned substantially for commercial purposes; and (b) property that is apparently vacant or apparently not in use shall be taken to be being used for commercial purposes unless the court is satisfied that it has been set aside otherwise than for commercial purposes."
Finally, s 38 of the Immunities Act deals with the power to set aside a process. It provides as follows: "Where, on the application of a foreign State or a separate entity of a foreign State, a court is satisfied that a judgment, order or process of the court made or issued in a proceeding with respect to the foreign State or entity is inconsistent with an immunity conferred by or under this Act, the court shall set aside the judgment, order or process so far as it is so inconsistent."

The Foreign Judgments Act

The Foreign Judgments Act provides for the enforcement of judgments rendered by superior and specified inferior courts in countries to which the act has been extended by regulation. Such an extension is only made if substantially reciprocal arrangements have been made for the enforcement of judgments of Australian courts in the overseas countries concerned (see generally, Davies, Bell and Brereton, Nygh's Conflict of Laws in Australia, (9th ed 2014, LexisNexis Butterworths) (Nygh's Conflict of Laws in Australia) at [41.4]-[41.8]). There is no issue that the Tokyo District Court was a court whose judgments could be enforced pursuant to this section.
The Foreign Judgments Act replaced a series of similar state acts including, so far as New South Wales was concerned, the Foreign Judgments Act 1973 (NSW) (the earlier NSW Act).
Section 6 of the Foreign Judgments Act deals with applications for, and the effect of, registration of foreign judgments. That section, so far as relevant, provides as follows: "(1) A judgment creditor under a judgment to which this Part applies may apply to the appropriate court at any time within 6 years after: (a) the date of the judgment; or (b) where there have been proceedings by way of appeal against the judgment, the date of the last judgment in those proceedings; to have the judgment registered in the court. … (3) Subject to this Act and to proof of the matters prescribed by the applicable Rules of Court, if an application is made under this section, the Supreme Court of a State or Territory or the Federal Court of Australia is to order the judgment to be registered. (4) The court's order must state the period within which an application may be made under section 7 to have the registration of the judgment set aside. (5) The court may, by order, extend the period within which such an application may be made. (6) A judgment is not to be registered if at the date of the application: (a) It has been wholly satisfied; or (b) It could not be enforced in the country of the original court. (7) Subject to sections 7 and 14: (a) a registered judgment has, for the purposes of enforcement, the same force and effect; and (b) proceedings may be taken on a registered judgment; and (c) the amount for which a judgment is registered carries interest; and (d) the registering court has the same control over the enforcement of a registered judgment; as if the judgment had been originally given in the court in which it is registered and entered on the date of registration. … (10) Action is not to be taken to enforce a registered judgment: (a) during the period fixed under subsection (4) (including any extensions of that period under subsection (5)) as the period during which a party may apply to have the registration of the judgment set aside; or (b) where such an application has been made, until after the application has been finally determined."
It should be noted that the earlier NSW Act contained provisions substantially in the same form as s 6(3) and s 6(7).
Section 7 of the Foreign Judgments Act deals with setting aside a registered judgment. That section provides as follows: "7 Setting aside a registered judgment (1) A party against whom a registered judgment is enforceable, or would be enforceable but for an order under section 8, may seek to have the registration of the judgment set aside by duly applying to the court in which the judgment was registered, or (where applicable) a court in which the judgment was registered under Part 6 of the Service and Execution of Process Act 1992, to have the registration of the judgment set aside. (2) Where a judgment debtor duly applies to have the registration of the judgment set aside, the court: (a) must set the registration of that judgment aside if it is satisfied: (i) that the judgment is not, or has ceased to be, a judgment to which this Part applies; or (ii) that the judgment was registered for an amount greater than the amount payable under it at the date of registration; or (iii) that the judgment was registered in contravention of this Act; or (iv) that the courts of the country of the original court had no jurisdiction in the circumstances of the case; or (v) that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear; or (vi) that the judgment was obtained by fraud; or (vii) that the judgment has been reversed on appeal or otherwise set aside in the courts of the country of the original court; or (viii) that the rights under the judgment are not vested in the person by whom the application for registration was made; or (ix) that the judgment has been discharged; or (x) that the judgment has been wholly satisfied; or (xi) that the enforcement of the judgment, not being a judgment under which an amount of money is payable in respect of New Zealand tax, would be contrary to public policy; or (b) may set the registration of the judgment aside if it is satisfied that the matter in dispute in the proceedings in the original court had before the date of the judgment in the original court been the subject of a final and conclusive judgment by a court having jurisdiction in the matter. (3) For the purposes of subparagraph (2)(a)(iv) and subject to subsection (4), the courts of the country of the original court are taken to have had jurisdiction: (a) in the case of a judgment given in an action in personam: (i) if the judgment debtor voluntarily submitted to the jurisdiction of the original court; or (ii) if the judgment debtor was plaintiff in, or counter‑claimed in, the proceedings in the original court; or (iii) if the judgment debtor was a defendant in the original court and had agreed, in respect of the subject matter of the proceedings, before the proceedings commenced, to submit to the jurisdiction of that court or of the courts of the country of that court; or (iv) if the judgment debtor was a defendant in the original court and, at the time when the proceedings were instituted, resided in, or (being a body corporate) had its principal place of business in, the country of that court; or (v) if the judgment debtor was a defendant in the original court and the proceedings in that court were in respect of a transaction effected through or at an office or place of business that the judgment debtor had in the country of that court; or (vi) if there is an amount of money payable in respect of New Zealand tax under the judgment; or (b) in the case of a judgment given in an action of which the subject matter was immovable property or in an action in rem of which the subject matter was movable property - if the property in question was, at the time of the proceedings in the original, court situated in the country of that court; or (c) in the case of a judgment given in an action other than an action of the kind referred to in paragraph (a) or (b) - if the jurisdiction of the original court is recognised by the law in force in the State or Territory in which the judgment is registered. (4) In spite of subsection (3), the courts of the country of the original court are not taken to have had jurisdiction: (a) if the subject matter of the proceedings was immovable property situated outside the country of the original court; or (b) except in the cases referred to in subparagraphs (3)(a)(i), (ii) and (iii) and paragraph (3)(c), if the bringing of the proceedings in the country of the original court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of the country of that court; or (c) if the judgment debtor, being a defendant in the original proceedings, was a person who under the rules of public international law was entitled to immunity from the jurisdiction of the courts of the country of the original court and did not submit to the jurisdiction of that court. (5) For the purposes of subparagraph (3)(a)(i), a person does not voluntarily submit to the jurisdiction of a court by: (a) entering an appearance in proceedings in the court; or (b) participating in proceedings in the court only to such extent as is necessary; for the purpose only of one or more of the following: (c) protecting, or obtaining the release of: (i) property seized, or threatened with seizure, in the proceedings; or (ii) property subject to an order restraining its disposition or disposal; (d) contesting the jurisdiction of the court; (e) inviting the court in its discretion not to exercise its jurisdiction in the proceedings. (6) Where the registration of a judgment is set aside on an application to a court in which the judgment was registered under Part IV of the Service and Execution of Process Act 1901, the applicant must: (a) forthwith notify the Registrar of the court in which the judgment was registered under this Act of the order setting the judgment aside; and (b) within 7 days lodge a certified copy of the order in that court."
Somewhat similar provisions were contained in s 8 of the earlier NSW Act and in equivalent legislation in other States. In particular, it should be noted that s 7(4)(c) of the Foreign Judgments Act reproduced provisions in the earlier State acts of which s 8(3)(c) of the earlier NSW Act is an example.
Section 17 of the Foreign Judgments Act confers a rule making power on the Court. Rule 53 of the Rules deals with matters arising under the Foreign Judgments Act. Rule 53.2 provides: "(1) Proceedings for registration of a judgment under Part 2 of the Foreign Judgments Act 1991 of the Commonwealth are to be commenced in the Supreme Court. (2) In any such proceedings, the judgment creditor is to be the plaintiff and the judgment debtor is to be the defendant. (3) Unless the Supreme Court otherwise orders, the judgment creditor may proceed without service of the summons on the judgment debtor. (4) If the judgment creditor adds to the summons a request that the application be granted under this rule, the Supreme Court may make the order in the absence of the public and without any attendance by or on behalf of the judgment creditor."
The aim of the Foreign Judgments Act has been described as being to establish a nationwide Commonwealth State co-operative scheme in which each jurisdiction would be regarded as identical to each other and hence with results akin to what might have been achieved by a wholly Commonwealth scheme (see Nygh's Conflict of Laws in Australia at [41.1]).

The issues which arise in the proceedings

The appeal gives rise to the following questions: 1. Did the Foreign Judgments Act empower the Court to register the Japanese judgment without service of the Originating Process on Nauru in accordance with the provisions of the Immunities Act? 2. Was Nauru entitled to bring an application under s 38 of the Immunities Act to set aside the Registered judgment notwithstanding that the time prescribed under s 6(4) of the Foreign Judgments Act for making an application had expired? 3. Did the application for registration of a foreign judgment constitute a "proceeding" within the meaning of s 9 of the Immunities Act? 4. If the answer to question 3 is in the affirmative, did Nauru submit to the jurisdiction of the Court as provided for by s 10(6) of the Immunities Act or did the proceedings concern a commercial transaction so the exception to immunity in s 11(1) of the Immunities Act applies? 5. If Firebird was entitled to register the Japanese judgment, was the judgment liable to be enforced by garnishee of the Westpac accounts? 6. Did the Court in the circumstances of the present case have discretion to set aside the Garnishee order?
It is convenient to deal with questions one and two together.

Question (1): Did the Foreign Judgments Act empower the Court to register the Japanese judgment without service of the Originating Process on Nauru in accordance with the provisions of the Immunities Act

Question (2): Was Nauru entitled to bring an application under s 38 of the Immunities Act to set aside the Registered judgment notwithstanding that the time prescribed under s 6(4) of the Foreign Judgments Act for making an application had expired?

The Foreign Judgments Act does not in its terms require an application for registration of a judgment to be served on the judgment debtor. Rule 53.2 of the Rules, which I have set out above, provides that unless the Supreme Court otherwise orders, the judgment creditor may proceed without service. No such order was made in the present case, as neither the Deputy Registrar nor Schmidt J were referred to the Immunities Act by the applicant.
In submitting that the service of the Originating Process was not required, Firebird made two submissions. First, the order registering the Japanese judgment was not a "judgment in default of appearance" and so the service requirements in Part III of the Immunities Act were not enlivened. Second, even if they were, the failure to comply with such requirements did not result in the invalidity of the order to register the Japanese judgment. Firebird submitted the proceedings were essentially ex parte proceedings and did not require service. It submitted that to the extent that those service provisions in the Immunities Act would otherwise apply, they had been impliedly repealed by the Foreign Judgments Act.
Considered on its own, in my opinion, Part III of the Immunities Act at least implicitly requires that a judgment against a foreign State shall not be entered against it unless the proceedings have been served on the State in accordance with that part. The relevant legislation must be considered by reference to the words used having regard to the purpose and context of the provision in question: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47] and Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [23]-[24], [68]-[70] and [88].
The relevant context of the present case is that the Immunities Act operates as a restriction on the immunity of sovereign States. It assumes that a State will have the opportunity to assert immunity in respect of proceedings which are brought against it. Even in the case of a judgment in default of appearance, the Court is required by s 27 of the Immunities Act to be satisfied that the foreign State is not immune.
In dealing with the issue of default judgments the following remarks were made in the Foreign State Immunity Report at [156]: "Default Judgments. Under the ordinary rules where the defendant fails to appear the plaintiff, on proof of service etc, may obtain a final judgment (if the claim is for a liquidated amount), an interlocutory judgment for the assessment of damages (if the claim is for un-liquidated damages), or may move for judgment (if seeking equitable relief). The overseas legislation on restrictive immunity is consistent in modifying this position in two ways. First it is made clear that mere failure to appear is not sufficient to allow the plaintiff to proceed in default. The court must also satisfy itself that the foreign state is not entitled to immunity. This is clearly appropriate and similar provision should be made in the proposed legislation. The second modification is that a copy of the default judgment must be served on the foreign state either by any manner provided in the legislation for service on a foreign state or exclusively by the diplomatic channel. The objective is to ensure that the foreign state is aware of the action against it and that a default judgment has resulted. Service exclusively by the diplomatic channel is recommended as it is more likely to meet these objectives..." (References omitted).
In my opinion, it is implicit in the terms of the Immunities Act that a judgment cannot be entered against a foreign State unless the process which gives rise to the judgment has been served as required by Part III of the Immunities Act and the relevant time has elapsed since service.
I agree with the submission of Firebird that the order authorising the registration of the Japanese judgment is not a default judgment to which s 27 of the Immunities Act applies. That section plainly relates to a judgment in default of appearance after service has been effected in accordance with Part III (note s 27(1)(a)). A judgment in default of appearance is a judgment in reliance on a failure to appear, not a judgment entered into in circumstances where no appearance was sought or required: see Dsane v Hagan [1962] Ch 193 at 199.
However, there remains the question of whether the effect of the Foreign Judgments Act renders service of the application to register the Japanese judgment unnecessary, contrary to the effect of the Immunities Act as explained above at [44]. Firebird submitted that registration is dealt with exclusively in the Foreign Judgments Act and, as a consequence, the Immunities Act was impliedly repealed to the extent that service of the Originating Process was required under the latter act. It further submitted that the only basis on which an application to set aside the Registered judgment could be made was under s 7 of the Foreign Judgments Act and the time fixed for making such an application had expired. In these circumstances it submitted that there was no basis for making an application under s 38 of the Immunities Act. Firebird also argued that the Foreign Judgments Act impliedly repealed s 38 of the Immunities Act in so far as it related to applications to set aside the judgments registered under the Foreign Judgments Act.
It would be surprising, in my opinion, if the Foreign Judgments Act, which as I indicated was largely based on pre-existing state acts, has the effect of impliedly repealing the Immunities Act.
The principles to determine whether a later statute effects an implied repeal of an earlier statute are well established. As was pointed out in Ferdinands v Commissioner for Public Employment [2006] HCA 5; (2006) 225 CLR 130 (Ferdinands) at [18], inconsistency is at the heart of the principle of implied repeal. The law presumes that one statute does not contradict the other. The question of whether the two statutes can be accommodated requires consideration of, and close attention to, the particular provisions in question: Ferdinands at [54]-[55] and Commissioner of Police v Eaton [2013] HCA 2; (2013) 87 ALJR 267 at [48].
In the present case the two statutes can be accommodated. The Foreign Judgments Act does not prohibit service prior to the registration of a judgment, although it envisages the possibility of registration without service. Rule 53.2 of the Rules reflects this approach by dispensing with service unless the court otherwise orders. To the extent that the Foreign Judgments Act can be used to register judgments obtained against a foreign State, an order requiring service is not inconsistent with any of the provisions of the Immunities Act.
In this context, as was noted by the Court of Appeal of Western Australia in Pt Bayan Resources Tbk v BcBc Singapore Pte Ltd [2014] WASCA 178 per Buss JA at [253], McLure P and Murphy JA agreeing, the Foreign Judgments Act does not exclusively provide the measures which the Supreme Courts of the States and Territories and the Federal Court may take or implement when exercising jurisdiction under the Foreign Judgments Act to enforce foreign judgments, including matters of practice and procedure.
Firebird also contended that an order for registration of a judgment is not a judgment for the purposes of section 27 of the Immunities Act. It pointed to Re Macks; Ex Parte Saint [2000] HCA 62; (2000) 204 CLR 158. In that case the High Court upheld the validity of a state act which provided that ineffectual Federal Court judgments were to be treated as judgments of the Supreme Court. The majority of the Court emphasised at [25] and [351] that the legislation did not vary the operation of the orders of the Federal Court, rather, the legislature took those orders as the factual point of reference for the creation of the rights and liabilities prescribed by the statute.
There seem to me to be two difficulties with Firebird's argument. The first is that although the existence of the foreign judgment forms the basis of the application for registration, the rights and obligations which arise upon registration result from the exercise of judicial power involved in determining whether first, the matters provided for by the Foreign Judgments Act and the rules (in the case of this Court rule 53) have been satisfied and second, the registration of the judgment is not precluded by reason of either s 6(1) or s 6(6) of the Foreign Judgments Act. As with the enforcement of an arbitral award, the registration of the judgment occurs in accordance with judicial process and involves a determination of questions of legal right, at least as to the existence of the foreign judgment. The registration operates of its own force to create a new charter of rights: TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; (2013) 87 ALJR 410 (TCL Air Conditioner) at [32].
The second difficulty is this. What falls for consideration is the question of whether a judgment which takes effect as a judgment of this Court pursuant to the Foreign Judgments Act is a judgment for the purpose of the Immunities Act. Having regard to the purpose of the Immunities Act, there seems to be no reason to read the word "judgment" in a restrictive manner to exclude a judgment obtained by virtue of registration under the Foreign Judgments Act.
It was also suggested that s 7(4)(c) of the Foreign Judgments Act indicated a legislative intention that foreign State immunity was to be dealt with in that act and the sole basis for the immunity was if the claim fell within s 7(4)(c). I do not agree. That subsection says nothing about immunity in this country; it only deals with immunity in the country where the original judgment was obtained. The Immunities Act deals with the former topic and for the reasons that I have given none of its provisions have been impliedly repealed.
Finally, it was contended that s 38 of the Immunities Act had no application, and an application to set aside the judgment could only be made under s 7 of the Foreign Judgments Act within the time prescribed by s 6(4) of the latter act.
I do not agree. There is no inconsistency between ss 6(4) and 7 of the Foreign Judgments Act and s 38 of the Immunities Act. Section 7 of the Foreign Judgments Act sets out the particular grounds on which registration of a judgment may be set aside. With the exception of the ground that the foreign court had no jurisdiction because of immunity in the country of that court (s 7(2)(a)(iv) in conjunction with s 7(4)(c)), s 7 does not deal with foreign State immunity at all. That is dealt with in the Immunities Act. Section 6(4) expressly applies only to applications to set aside registered judgments under s 7. Section 6(4) does not impose any time constraints on the making of an order pursuant to an application to set aside a judgment under the Immunities Act.
For these reasons the first question should be answered in the negative and the second question in the affirmative. The Japanese judgment should not have been registered and Nauru was entitled to apply under s 38 of the Immunities Act to have it set aside. For these reasons alone, leave to appeal should be granted and the appeal dismissed.

Question (3): Did the application for registration of a foreign judgment constitute a "proceeding" within the meaning of s 9 of the Immunities Act?

Section 9 of the Immunities Act provides for immunity from the jurisdiction of the courts of Australia in a proceeding. In PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; (2012) 247 CLR 240 (PT Garuda), the plurality stated at [17] that in s 9 the term "jurisdiction" is used to identify the amenability of a defendant to the process of the Australian Court. It stated that the notion expressed by the term "immunity" is that Australian courts are not, by their processes, to make a foreign State against its will a party to legal proceedings.
There seems to be little doubt that the application to register a judgment is a proceeding. It involves an application to the court seeking an order for registration based on evidence required to be adduced in support of the application. Such an application, in my opinion, constitutes a proceeding.
This conclusion is consistent with cases such as Re Ley; Ex Parte Best (1949) 14 ABC 191, which held that an application to register a judgment obtained in England under the Administration of Justice Act 1924 (NSW) constituted a civil proceeding, and Ex Parte Caucasian Trading Corporation Limited; In re A Bankruptcy Petition (1896) 1 QB 368 which held an application to enforce an arbitral award was a civil proceeding in the High Court. Each of these cases was cited without disapproval in McIvor v Watson [1960] HCA 43; (1960) 103 CLR 658 at 664. In Kuwait Airways Corporation v Republic of Iraq and Bombardier Aerospace [2010] 2 SCR 571 (Kuwait Airways v Iraq), LeBel J stated at [20] that with respect to the Canadian equivalent, albeit differently worded provision, an application to register a foreign judgment was a proceeding as it involved "a judicial demand that gives rise to an adversarial relationship to which the general rules of civil procedure apply…".
The more difficult question is whether the application has the effect of making the foreign State, against its will, a party to legal proceedings. Firebird submitted that it did not do so, relying particularly on the fact that service was not required and there was no demand directed to the foreign State to appear. It pointed to what was said in Hunt v BP Exploration Co (Libya) Limited [1980] HCA 7; (1980) 144 CLR 565 at 573 that an application for the registration of a judgment under s 5 of the Reciprocal Enforcement of Judgments Act 1959 (Qld) (the Queensland predecessor to the Foreign Judgments Act) did not involve an action in personam requiring service of the court's process.
The Court was not in that case dealing with sovereign State immunity. I have already dealt with the question of service. Further, for the purpose of s 9, the immunity is a freedom of liability from the imposition of duties by the process of the Australian Courts: PT Garuda [17]. The registration of a judgment in this case has the effect of exposing Nauru to execution against its property in the event that judgment is not met. In this sense, it impleads the foreign State even though the Foreign Judgments Act does not require or command an appearance. For these reasons, unless one of the exceptions to s 9 applies, Nauru was immune from registration of the Japanese judgment.

Question (4): If the answer to question 3 is in the affirmative, did Nauru submit to the jurisdiction of the Court as provided for by s 10(6) of the Immunities Act or did the proceedings concern a commercial transaction so the exception to immunity in s 11(1) of the Immunities Act applies?

The submission to jurisdiction was said to occur by reason of the fact that the original motion filed by Nauru only sought to set aside the Garnishee order and not the registration of the Japanese judgment.
I have set out the relevant provisions of s 10 of the Immunities Act above. By filing a notice of motion seeking to set aside the Garnishee order, Nauru was taking a step as a party to the proceedings within the meaning of s 10(6) of the Immunities Act. The critical question is whether the step was taken for the purpose of, or in the course of, asserting immunity, such that s 10(7) applied.
The original notice of motion was filed along with a supporting affidavit sworn on 18 September 2014 by the Honourable David Adeang MP (Mr Adeang). That affidavit made it clear that what was relied upon was the fact that the property in the bank accounts was immune from execution. It also stated that Nauru was investigating whether there were grounds to set aside the Registered judgment.
The provisions concerning submission to jurisdiction contained in ss 10(6) and (7) of the Immunities Act are somewhat more liberal than the position at general law. The reason was explained in the Foreign State Immunity Report in the following terms at [82]: "By Appearing or Intervening in Proceedings. It is recommended that the proposed legislation follow both international law and the common law and treat as binding the submission to the jurisdiction to be implied when a foreign state appears before a local court and addresses the merits of the dispute. At the same time it needs to be made clear that appearance or intervention made for the purpose of asserting immunity does not constitute a waiver. Sound decisions on state immunity are more likely to result where argument has been heard from the foreign state. Assurances need to be given to states that by engaging in such argument they will not thereby worsen their position on immunity from jurisdiction. It is recommended that the proposed legislation contain a clear statement to this effect. Ordinary defendants are allowed a measure of tolerance in running alternative arguments or arguments that to some degree enter into the merits while at the same time objecting to jurisdiction. A foreign state would benefit from this general tolerance as long as it remains clear that the claim of immunity is being maintained. In this respect it is sufficient to provide that steps taken 'for the purpose or in the course of' claiming immunity do not constitute submission. Similarly, in the interests of making the position clear to foreign states the legislation should provide that intervention by the foreign state in order to secure the release of its property is not a submission to the jurisdiction…" (References omitted).
In the present case the original notice of motion sought immunity. Although the immunity sought was immunity from execution, that seems to me to fall within s 10(7)(b) of the Immunities Act. In these circumstances, there has not been a submission to the jurisdiction of the Court.
However, there remains the question of whether the proceedings concerned a commercial transaction such that the exception to the immunity in s 11(1) of the Immunities Act applied. None of the parties disputed the fact that the proceedings, the subject of the Japanese judgment, concerned a commercial transaction. However, the subsection requires focus on the proceeding commenced by the Originating Process, namely the application to register the Japanese judgment.

Do the proceedings commenced by the Originating Process "concern" a commercial transaction?

The proceedings commenced by the Originating Process could be said as a matter of practical reality to concern a commercial transaction, namely the question of liability under the bonds: see NML Capital Ltd v Republic of Argentina [2011] UKSC 31; [2011] 2 AC 495 (NML Capital) at [111] per Lord Collins JSC, Lord Walker JSC agreeing. I shall refer to this as the broader construction of "concerns".
However, the proceedings commenced by the Originating Process themselves do not concern liability under the bonds. They concern the registration of the Japanese judgment. The issues involved in such proceedings, namely whether an application for registration under s 6 of the Foreign Judgments Act is to be made or an application to set the judgment aside under s 7, do not concern the underlying transaction the subject of the proceedings out of which the judgment arose. For the purpose of the application for registration the rights of the parties are not governed by the terms of issues of the bonds, but rather the terms of the judgment sought to be registered: cf TCL Air Conditioner. On this analysis the proceedings commenced by the Originating Process do not concern a commercial transaction and consequentially s 11(1) of the Immunities Act would not have any application. I shall refer to this as the narrower construction of "concerns".
In considering whether the broader or narrower construction should be adopted there is little assistance to be gained from any extrinsic material. The Foreign State Immunity Report did not deal with this issue. The question thus depends entirely on the text of the provision considered in the context of the Immunities Act as a whole.
The words "proceeding concerns" would tend to suggest that what is to be looked at is the issues raised by the proceedings themselves. That is supported by the use of the words "in so far". That recognises that proceedings may in part concern a commercial transaction in respect of which no claim for immunity can be made and in part concern matters for which such a claim may be made. These words lend support to the narrower construction.
There also are some contextual matters which support this narrower approach. Section 17(2) of the Immunities Act is in the following terms: "Where: (a) apart from the operation of subparagraph 11(2)(a)(ii), subsection 12(4) or subsection 16(2), a foreign State would not be immune in a proceeding concerning a transaction or event; and (b) the foreign State is a party to an agreement to submit to arbitration a dispute about the transaction or event; then, subject to any inconsistent provision in the agreement, the foreign State is not immune in a proceeding concerning the recognition as binding for any purpose, or for the enforcement, of an award made pursuant to the arbitration, wherever the award was made."
If the broader interpretation of "concerns" was correct, s 17(2) of the Immunities Act would not be necessary, at least where the underlying transaction, the subject of the arbitral award, was a commercial transaction.
Further support can be gained for the narrower construction by consideration of s 21 of the Immunities Act. This section provides as follows: "Where, by virtue of the operation of the preceding provisions of this Part, a foreign State is not immune in a proceeding in so far as the proceeding concerns a matter, it is not immune in any other proceeding (including an appeal) that arises out of and relates to the first‑mentioned proceeding in so far as that other proceeding concerns that matter."
That section makes it clear that when a proceeding arises out of an earlier proceeding where there was no claim for immunity, then there would be no immunity in respect of the second proceedings. That tends to show that the focus is on the proceedings themselves rather than the transactions which underpin them or any original proceeding.
The contextual support for the narrower construction is limited. Furthermore it may be said to be anomalous that there would be no immunity attaching to proceedings in respect of a commercial transaction whilst immunity would arise in respect of registration of a judgment obtained in such proceedings.
However, it must be borne in mind that the legislation removed a well established immunity. If it was intended that the immunity would depend on whether or not the underlying transaction in the proceedings in the foreign court was a commercial transaction it would have been relatively easy to provide for it. The legislation, however, chose to focus on the proceeding itself.
For these reasons what I have described as a narrower construction of "concerns" should be adopted.
In reaching this conclusion I have not relied on any overseas authorities. These authorities only provide limited assistance having regard to the differences in the wording of the legislation and statutory regimes.
NML Capital concerned an application to register in the United Kingdom, a judgment of a New York court obtained on default by Argentina in repayment of certain commercial bonds. The relevant legislation, s 3(1) of the UK State Immunity Act, was in different terms to s 11(1) of the Immunities Act, providing that a State is not immune "as respects proceedings relating to a commercial transaction entered into by the State". However, in addition, the UK Parliament had passed the Civil Jurisdiction and Judgment Act 1982 (UK). Section 31(1) of the Civil Jurisdiction and Judgment Act provided as follows: "A judgment given by a court of an overseas country against a state other than the United Kingdom or the state to which that court belongs shall be recognised and enforced in the United Kingdom if, and only if ‑ (a) it would be so recognised and enforced if it had not been given against a state; and (b) that court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the State Immunity Act 1978."
All members of the Supreme Court held that a New York judgment could be enforced by reason of s 31(1) of the Civil Jurisdiction and Judgment Act. However, the majority held that the application for registration of the judgment was not a proceeding relating to a commercial transaction for the purpose of the UK State Immunity Act. In reaching his conclusion Lord Mance JSC emphasised at [85] that a claim on a cause of action commonly gives rise to different issues from those which arise from a claim based on a judgment given in respect of a cause of action. He stated at [91] that at the time of the UK State Immunity Act, English common law was in development and not finally settled on the point that States were not immune in respect of commercial transactions. He stated at [97] that he saw no basis for giving the phrase "relating to" what he described as an "updated meaning". He stated that it was implausible to suggest that Parliament intended that its meaning or application could, over time, expand to remove immunity in respect of judgments. He stated that that would amount to altering the scope of the UK State Immunity Act.
Lord Collins, with whom Lord Walker agreed, reached the same conclusion. He said at [114] that it was not likely to be in doubt that at the time of the UK State Immunity Act it would not have been envisaged that s 3 would have applied to the enforcement at common law of a foreign judgment against a foreign State based on a commercial transaction. He said at [116] that but for s 31 of the Civil Jurisdiction and Judgment Act, it might have been desirable as a matter of policy to give s 3 a wider meaning. However, he stated there was no principled basis to come to that conclusion.
Lord Phillips PSC and Lord Clarke JSC dissented. The former stated at [39] that he could see no justification for giving s 3(1)(a) of the UK State Immunity Act a narrower interpretation. He stated his conclusion was consistent with the decision reached by the Supreme Court of Canada in Kuwait Airways v Iraq.
Lord Clarke JSC stated at [141] that to look at the circumstances as they existed at the time the UK State Immunity Act was enacted was to approach the construction of s 3(1) of that Act too narrowly. He stated at [142] that the enactment was intended to develop in meaning with developing circumstances and should be given what was described in Bennion on Statutory Interpretation (5th ed 2008, LexisNexis) an "updated meaning". He concluded that, approached in that way, the section would apply where a foreign judgment related to an underlying commercial transaction.
In circumstances where the legislation in its terms did not consider the question of registration of foreign judgments, where at the time it was passed the extent of the restriction on the immunity was uncertain and the words in question are narrower than the words "relating to" in the UK State Immunity Act, it does not seem to me appropriate to adopt an "updated" construction. It is of significance in this regard that no amendment to the Immunities Act was made consequent upon the enactment of the Foreign Judgments Act.
In Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; (2007) 231 CLR 531 the plurality at [39] described terminology that there was a rebuttable presumption favouring an ambulatory approach to statutory construction as apt to mislead. They stated that what is involved is an exercise in statutory interpretation which seeks to discern the intention of the legislature in enacting the specific provision in question, having regard to its context, scope and purpose. It seems to me that it cannot be discerned from the sections in question that the word "concerns" in s 11(1) of the Immunities Act was to have an ambulatory meaning depending on principles of international law which existed from time to time. This is particularly for the reasons which I have set out in paragraph [86] above.
In Kuwait Airways v Iraq, the legislation in question, s 5 of the Canadian State Immunity Act 1985, RSC 1985, c S-18, provided that a foreign State was not immune from "the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state". LeBel J, who delivered the judgment of the Court, held that the immunity would not prevent registration of a foreign judgment based on an underlying commercial transaction. However, the words of the section are wider than the legislation in question in the present case and the issue, the subject of these proceedings, was not the subject of detailed consideration.
In these circumstances the narrower construction of "concerns" should be adopted. It may be that this construction is contrary to what is now regarded as the appropriate position in international law: see Fox on State Immunity at 220 and Jurisdictional Immunities of the State (Germany v Italy, Greece intervening) [2012] ICJ Reps 99 at [130]. However that, in my opinion, is a matter for the legislature to deal with if it thinks fit.
For these reasons the proceedings to register the Japanese judgment did not concern a commercial transaction and the exception to immunity in s 11(1) of the Immunities Act did not apply.

Question (5): If Firebird was entitled to register the Japanese judgment, was the judgment liable to be enforced by garnishee of the Westpac accounts?

The fifth question would only arise if Firebird were successful on the matters already dealt with above.
The primary judge concluded that the exception in s 32 of the Immunities Act only applied to property which was diplomatic or military property. The parties agreed that this was incorrect. The issue is to be determined by consideration of whether the property in question is used substantially for commercial purposes. However, property apparently not in use is to be assumed to be being used for commercial purposes unless it can be shown that it has been set aside other than for such purposes.
The evidence on this issue was essentially confined to a certificate under s 41 of the Immunities Act given by the Consul General for Nauru (the Certificate), the affidavit of Mr Adeang to which I have referred earlier and oral evidence given by Mr Adeang. The evidence may be summarised as follows:

BusinessOne Account

The Certificate stated the funds in this account were used "as the primary operating account" for Nauru. The funds were used to pay for the salaries of 1,200 public servants employed by Nauru's government in addition to services, equipment and supplies provided by the departments of Nauru's government.
Mr Adeang gave evidence confirming the above. He clarified in cross-examination that the "services" referred to in the Certificate did not include services for which the people of Nauru had to pay. He gave the example of the police force, although he recognised that if you went to the police to obtain a licence you would be charged a fee, and in that sense you were paying for a service.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014, various withdrawals and deposits had been made from and into the account.

USD RON Treasury Account

The Certificate stated the funds in this account were used "to purchase fuel to supply to the population" of Nauru and businesses located on Nauru. The main customers for the fuel are the Nauru Utility Corporation, a government owed corporation (which operates the sole power plant on the island), Nauru Airlines (the government national airline and also a government owned corporation) and Transfield Services (the contractor who operates the Regional Processing Centres).
Mr Adeang gave evidence that the size of the country meant, due to economies of scale that no one else would provide fuel, and therefore the government provides fuel. He stated the government did not make a profit out of the provision of fuel.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014, a withdrawal and deposit had been made from and into the account.

Yaren Aircraft Leasing Co Accounts

There were two different bank accounts titled Yaren Aircraft Leasing Co. The Certificate stated the funds in these accounts were used to "provide government loans to Nauru Airlines for the procurement and maintenance of its aircraft." The loans were said to be provided on a "non-interest/ non-profit" basis and to have been repaid.
Mr Adeang gave evidence that, again due to economies of scale, the government provides a national airline to operate air services to Nauru, as private airlines (such as Qantas and Virgin) were not interested in providing services to the country. He stated the airline did not make money although he ideally would like that to happen.
In cross examination Mr Adeang was referred to 2011/2012 Nauru budget papers that referred to "Norfolk Air" and "Heavy Lift" contracts. Mr Adeang said he believed they were commercial contracts entered into by the airline, but he did not know if the airline still had those contracts. He believed the Heavy Lift contracts were no longer held by the airline. Mr Adeang was also taken to a reference to "ad hoc charter for business". He agreed that the airline was still operating on a charter basis and that that was a very competitive market.
Mr Adeang stated in cross examination that the government owned four aircraft through government corporations, "PALco" (which Mr Adeang thought had been decommissioned) and "YALco".
Bank account statements before the court with respect to these accounts showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account.

2-1-22 Pacific NCD Program

The Certificate stated the funds in this account were used "for the purpose of funding health programs to prevent and control non-communicable diseases in the population".
Mr Adeang gave evidence confirming the above.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee and the accrual of interest.

AusAid Account

The Certificate stated the funds in this account were used "for the purpose of providing Government Services" to Nauru, including but not limited to operating schools and education programs, health programs and medical clinics, and infrastructure programs related to the provision of water and electricity to the population.
Mr Adeang gave evidence confirming the above. He also said the money was used to fund the position of three or four Deputy Secretaries of Finance. However, he agreed in cross-examination that the "vast majority of the payments" out of this account were payments for goods and services. In cross examination Mr Adeang also agreed that some of the services were performed by contractors and that the provision of some of the services involved the purchase by the government of plant, equipment and goods, and such purchases were made from commercial suppliers.
Mr Adeang was referred to certain withdrawals from this account. He said, in relation to one withdrawal relating to the supply of drugs, that the government charged people for certain medications but not all. In relation to a withdrawal made out to the University of New England, Mr Adeang said the payment was "perhaps to provide training for teachers". Mr Adeang agreed that that was something where the government of Nauru had entered into "some sort of contract with the university".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made.

CIE-Nauru GEF Small GRA Account

The Certificate stated the funds in this account were used "for the purpose of providing government loans to small business to assist in setting up businesses."
Mr Adeang gave evidence that the funds were used "to assist us address small projects to the community at the grass roots level" and included providing micro-loans for small businesses. Mr Adeang said the government did not make a profit out of the small loans, the policy being "to diversify the community and provide subsistence to struggling Nauruan families". He said it was "not a commercial venture". In cross-examination he agreed the payments were loans not gifts and had to be repaid. He said that there were written guidelines and a list of whom the loans were made to was kept in the Department of Commerce, Industry and Environment, but that that was not his department and so he did not have the list.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

CIE Account

The Certificate stated the funds in this account were used "for the purpose of providing Government Services to the population" including but not limited to funding agricultural programs and scientific research undertaken by Nauru into the eradication of the fruit fly and climate change and other scientific research associated with environmental issues.
Mr Adeang gave evidence that "CIE" stood for "the department of Commerce Industry and the Environment".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made.

Development Fund Account

The Certificate stated the funds in this account were used "for the purpose of funding programs to achieve UN objectives with regard to human rights, community building, climate change and to conduct population surveys."
Mr Adeang gave evidence confirming the above.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 one withdrawal had been made from the account.

EU Rep 5 Account

The Certificate stated the funds in this account were used "to provide infrastructure and technical assistance… to provide Government Services to the population".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

GF R7 HIV/AIDS account

The Certificate stated the funds in this account were used "for the purpose of funding awareness programs to achieve the prevention of [HIV/AIDS] in the population".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

Japan NPGA Account

The Certificate stated the funds in this account were used "for the purpose of providing budget support" to the Treasury of Nauru in order to purchase fuel.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

JICA Account

The Certificate stated the funds in this account were used "for the purpose of providing technical assistance to assist in delivering Government Services".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 one withdrawal had been made from the account, excluding the charging of an associated bank fee.

Nauru Disabled NDPA Account

The Certificate stated the funds in this account were used "to fund the Nauru Disability Group, an association which provides assistance to citizens of Nauru that have disabilities".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the accrual of interest.

Nauru Fisheries Savings account

The Certificate stated the funds in this account were used "to fund the operations of the Nauru Fisheries and Marine Resources Authority, a governmental department".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 one deposit had been made into the account.

NZAID Account

The Certificate stated the funds in this account were used "for the purpose of providing government services" including but not limited to providing training and assistance to the Nauru Department of Justice (including funding the salary of the Solicitor-General of Nauru, the Public Legal Defender, the Registrar of the Supreme Court and Magistrates) and operating schools, education and health programs.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals had been made from the account.

Pacific Aircraft Leasing Company account

The Certificate stated the funds in this account were used for the same purpose as the Yaren Aircraft Leasing Co accounts.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee and the accrual of interest.

Rehabilitation Funds A account

The Certificate stated the funds in this account were used "for the purposes of paying compensation to landowners of the leasing of land to conduct the phosphate mining operations; and environmental rehabilitation programs to restore land used for phosphate mining" on Nauru, and "payment of salaries of those government employees involved in the rehabilitation programs".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the accrual of interest.

RON Australian Sports Com Account

The Certificate stated the funds in this account were used "to fund fitness and sport programmes" run on Nauru and "to pay the salaries of those government employees involved in those programmes".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals had been made from the account.

RON Consulate Account

The Certificate stated the funds in this account were used "for the purpose of funding the day-to-day expenditure to operate the [Nauru] Diplomatic Consulate located in Brisbane, Australia including office expenses, rent, the salary of the Consul General, vice-consul, office manager and assistant".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made from and into the account.

RON Fuel Account

The Certificate stated the funds in this account were used "predominantly for the purpose of providing Government Services".
Mr Adeang said he was responsible for the fuel accounts. He said the cost of fuel was calculated in a way which sought to cover the government's costs. This involved working out the "landed cost" and then adding on "the cost of providing that fuel for the operations of the utilities". Mr Adeang said there were rates for businesses and rates for the general public. He said the account would have been drawn on some time in the last few weeks or months as the government makes regular purchases of fuel.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made from and into the account.

RON SPC Account

The Certificate stated the funds in this account were used "as aid to [Nauru]", specifically to fund South Pacific Commission programs related to "education, health, maritime management and geoscience research".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

RON Treasury Account

The Certificate stated the funds in this account were used "for the provision of Government Services and the payment of salaries of … [Nauru] Government employees".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made from and into the account.

RON UNCCD Account

The Certificate stated the funds in this account were used "to fund the land degradation projects overseen by the Department of Commerce Industry & Environment".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

RON Utilities Authority Account

The Certificate stated the funds in this account were used "for the purpose of supplying electricity and water to the population of Nauru".
Mr Adeang said the President of Nauru was responsible for the utilities corporation. He said the government charges for the provision of electricity and water and sought to cover its costs although the government did not necessarily meet those costs.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 various withdrawals and deposits had been made from and into the account.

WHO Global Fund Account

The Certificate stated the funds in this account were used "for the purpose of providing health programmes to the population of … [Nauru] including the payment of health workers employed by … [Nauru Government] to deliver services under those programmes".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

World Diabetes account

The Certificate stated the funds in this account were used "for the purpose of providing health programmes to the population of … [Nauru] aimed at preventing and treating diabetes including the payment of health worked [sic] employed by … [the Nauru] Government to deliver services under those programmes".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

World Health Organization account

The Certificate stated the funds in this account were used "for the purpose of providing health programmes to the population of … [Nauru] including the payment of salaries to health worker[s] employed by … [the Nauru] Government to deliver services under those programmes".
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account, other than the charging of an associated bank fee.

EU RON Treasury Account

The Certificate stated the funds in this account were used "for the purpose of providing infrastructure programmes and technical assistance" to the Nauru Government.
Bank account statements before the Court with respect to this account showed that from 25 August 2014 to 23 September 2014 no withdrawals or deposits had been made from or into the account.

Trust Account

The Certificate stated the funds in this account "are derived from … [the Nauru] Government Revenue and are held by … [the Nauru] Government Treasury as cash reserves to provide future Government Services".

Evidence as to the finances of Nauru

In addition to the above evidence, Mr Adeang gave evidence that, due to the small size of Nauru both geographically and economically, he had intimate knowledge of the accounts and had the authority to approve any payments over $1,000.00. He said that to his knowledge the government of Nauru had never published financial statements. He had no record to identify at a particular point in time what the assets and liabilities of Nauru were.
With respect to the accounts he said he was "one of the anchor signatures" for the accounts and his delegate, the Secretary of Finance had the responsibility to decide into which account money was placed.
He said that the government of Nauru had some money outside that held in the Westpac accounts. He said, however, that those funds were being used to pay the salaries of public servants and was decreasing to the point where, at the time of giving evidence on 22 September 2014, he thought the following day "may well be" the last time the government was able to make the necessary fortnightly salary payments to its employees.
Mr Adeang agreed that the Consul-General did not "operate [the accounts] on a day-to-day basis" and it was possible that the majority of what she had put in the Certificate was based on what she was told by someone else. However, Mr Adeang said the Consul-General was a signatory on all the accounts and would at times pass on instructions concerning the accounts from Mr Adeang or the President to the Secretary of Finance.
Mr Adeang said he was "pretty sure" that the government of Nauru would have, and could have produced, the records of who opened the accounts, who authorised them, for what purpose and how they were to be used. He also agreed in cross examination that it would be possible for the government to produce records on when the accounts were most recently drawn. He said that it was not likely that the accounts had not been drawn on for some considerable time as the government drew on the accounts "on a daily basis". Mr Adeang agreed with the proposition that there would be people in his department available to give evidence on when each of the accounts was last drawn on.
The above evidence was criticised by Firebird. It was submitted that the evidence was inadequate to prove that the funds were either in use but not in use for commercial purposes, or, if not in use, set aside for purposes other than commercial purposes. Reliance was placed on Blatch v Archer (1774) 1 Cowper 63; (1774) 98 ER 969 where Lord Mansfield said that all evidence is to be weighed according to the proof which it was in the power of the party to produce. As a corollary, where further evidence is available, a tribunal is entitled to consider that factor when assessing whether a party has produced evidence sufficient to satisfy the requisite standard of proof: Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 at [144] and [216].
In the present case it may have been possible for further evidence to have been adduced. However, where the legislature specifically provides for a certificate of the nature of that given, and where in the context of urgent final proceedings a senior member of the government of Nauru gives evidence, it does not seem to me that the principle has significant effect in assessing whether the evidence meets the requisite standard.
It was also submitted that the evidence as it was, demonstrated that the funds were not in use at all, or had not been put aside. Therefore it was said that s 32(3)(b) applied to preclude Nauru's reliance on s 32 of the Immunities Act. Leaving aside the Trust account, the suggestion that the accounts were not in use at all, or that the funds in those accounts had not been set aside for some purpose, was implicitly if not explicitly rejected by the content of the Certificate before the Court. Mr Adeang also gave evidence that it was not likely to be the case that some of these accounts had not been drawn on for some considerable time. To the extent that the bank statements showed inactivity for the period of one month over some of the accounts, this is itself insufficient to detract from the evidence of the Certificate and Mr Adeang. All that remains is to ascertain the use for which the funds in each of the accounts was in fact to be put.
The expression "commercial property" is defined in s 32(3) of the Immunities Act by reference to property in use substantially for commercial purposes. However, "commercial purposes" itself is not defined. It does not seem to me that the fact that money is expended or proposed to be expended on what might be described as commercial transactions necessarily means it is in use for commercial purposes. If the funds are to be used for the purpose of government administration, performance of government's civic duties and functions to its citizens, or for the advancement of the community, it does not seem to me that the fact that that object is achieved by entering into commercial transactions means that the funds are used for commercial purposes: see Bombardier Inc v AS Estonian Air and the Republic of Estonia (2013) 115 OR (3d) 183 (Bombardier v AS Estonian Air) at [49] in which it was said "the state does not lose its sovereign immunity just because it implements public policy through a corporate vehicle". By contrast, if the money was in use for investment in a commercial venture, even if the object was to obtain funds for a governmental purpose or to promote the welfare of citizens, the money would most likely be in use for commercial purposes. What is necessary is to have regard to the purpose for which the funds are to be used and then to determine whether that can properly be characterised as a commercial purpose. The subjective motive of the person responsible for the use of the funds is, in my opinion, generally speaking, is irrelevant.
In FG Hemisphere Associates LLC v Democratic Republic of the Congo [2010] 2 HKLRD 66 the correct test was stated by Stock V-P at [179] to be the use for which the property is to be put; if for a sovereign or public purpose, then the funds are immune from the process of execution, if for a private or purely commercial purpose, then they are not. Although this decision was overturned on appeal, this reasoning was not criticised and I would respectfully adopt it as an accurate statement of the test to be applied. An analytical approach that focuses on the nature of the legislation to ensure a proper legal characterization must be conducted: Kais v Abu Dhabi Education Council (2011) Carswell Ont 36.
It is also significant that the Immunities Act speaks of "substantially for commercial purposes". In Dorais v Saudi Arabian General Investment Authority (2013) CarswellQue 9504 at [31], it was said when an activity is multi-faceted and can have both commercial and sovereign aspects, "it is necessary to consider which aspect of that activity is most relevant to the proceedings…". In that case, reference was made at [35] to the fact that Dorais's action, being for a "sum of money, nothing more" was not "likely to interfere with the defendants' exercise of their sovereign mandate". Although in the present case the action is for a sum of money and nothing more, the same arguably cannot be said as regards to the impact on Nauru's sovereign mandate.
In Export-Import Bank of the Republic of China v Grenada [2014] F 3d WL 4773451 C.A.2 a bank sought to execute a $21 million judgment in its favour against Grenada. The bank attempted to execute against funds that commercial third parties owed to Grenadian statutory corporations, which Grenada created to perform various civic functions, such as managing Grenada's airports, seaports and similar facilities. In noting the importance of what the money is used for, rather than how it was raised, the court concluded the funds were not used for commercial activity although they were "precisely the kinds of services purchased from private vendors around the world". The funds were devoted to carrying out public functions in Grenada and were used for the maintenance of facilities and services in Grenada.
In determining substantial commercial purpose it is also important to bear in mind the individual circumstances of Nauru. Its remote location and small geographical size and population render the provision of many commercial services uncommercial for private entities (such as banking and aviation services and the provision of fuel). Mr Adeang gave evidence that as there is no manufacturing capacity on the island, everything that is manufactured has to be imported. It is in this context that the government operates many services (such as the provision of fuel) beyond what may be considered core functions of government (such as police and fire fighting services) in order that its citizens may survive. Furthermore, the method of the government providing services, such as certain health care programs, is largely dependent on the arrangements Nauru enters into with foreign countries. At one extreme, Mr Adeang gave evidence that some countries, such as Taiwan, provide health care support not by way of funds at all but by sending doctors who work for free. At the other end of the spectrum was another example given by Mr Adeang of using funds from the AusAid account to enter into a contractual agreement with the University of New England to "possibly" provide training for teachers. I would hesitate before drawing the conclusion that two sets of funds used for the provision of the same service (whether it be health care or education or something else) were to be classified differently (one for commercial purposes and the other for sovereign purposes), determined purely on the individual minutia of two different agreements Nauru happened to enter into with two foreign countries. Clearly the purpose Nauru is seeking to achieve with the funds, and therefore the substantial purpose for which the funds are being used, is the same in either case, although for political and diplomatic reasons the manner in which the funds are dispensed may be structured differently in the two cases.
A further complication which arises out of Nauru's unique situation is the fact that it does not presently have a central bank. However, for all intents and purposes Westpac is treated as its central bank. Mr Adeang gave evidence that the government of Nauru had some money outside the money in the accounts held by Westpac. Indeed, the very urgency attending the disposition of this appeal is caused precisely because the 30 accounts held by Westpac are the government of Nauru's source of revenue for the country. In such circumstances it is likely that what are effectively Nauru's reserves are to be used for government and sovereign purposes: AIG Capital Partners Inc v Republic of Kazakhstan (National Bank of Kazakhstan intervening) [2006] 1 WLR 1420.
It is in that context that the individual accounts fall to be considered.

Consideration of BusinessOne Account

The purpose of this account was said to be to pay public service salaries in addition to providing government services, such as the police force. Mr Adeang agreed that some of these services involved a fee being paid by members of the public. However, this appears to be a clear example where funds are used for a sovereign state to perform its sovereign duty to its citizens, and in so doing, while some commercial transactions are involved, that does not lead to the loss of the immunity (see Bombardier v AS Estonian Air). The funds are not used substantially for commercial purposes. These comments also apply to the RON Utilities Authority account.
Furthermore, the use of the funds to pay the salaries of public servants is analogous to funds being used in diplomatic or consular embassies (see the discussion below with respect to the RON Consulate account). This seems to me to plainly be an example of funds for a sovereign not commercial purpose according to the relevant authorities (Liberian Eastern Timber Corp v Government of Republic of Liberia (1987) 659 F Supp 606 (Liberian Eastern Timber Corp)). Thus, the evidence establishes that this account was exempt from execution irrespective of whether it could be said the moneys were in use or not.
For similar reasons to those given above, and also below with respect to the 2-1-22 Pacific NCD Program account, the funds in the RON Treasury account are used for sovereign rather than commercial purposes.

Consideration of USD Ron Treasury Account

This account is more problematic, primarily because the provision of fuel is not an activity which one immediately identifies as a sovereign function. However, regard must be had to the peculiar circumstances of Nauru. In that context it seems to me that the activities of a government in purchasing fuel to supply to its citizens on a not-for-profit basis in circumstances where fuel would otherwise be unavailable would not be a commercial purpose within the meaning of the expression to which I have referred above. It is significant that two out of the three main customers of fuel were identified as government owned corporations.
For the same reasons the RON Fuel Account, the RON Utilities Authority account and the Japan NPGA account were not in use for a commercial purpose. It is perhaps significant to note that the latter account illustrates the different ways in which foreign countries provide support to Nauru, as I alluded to above.

Consideration of the Yaren Aircraft Leasing Co Accounts

This account may be considered along with the Pacific Aircraft Leasing Company account. The evidence which I have outlined above indicates that the government of Nauru operates an airline which is funded, at least in part, through these accounts. The reason for the operation of the airline according to Mr Adeang is that private airlines do not provide services to Nauru.
In these circumstances it does not seem to me that funds were in use for a commercial purpose. The question has been considered in two cases dealing with similar factual problems (Bombardier v AS Estonian Air and Kuwait Airways v Iraq). In Bombardier v AS Estonian Air the court considered whether the Estonian government's investment in an airline run for profit fell within the relevant exception in the Canadian State Immunity Act 1985 (CA). The court accepted at [54] the proposition advanced by Estonia that the strengthening of the national economy through an increase in direct flight connections had been a strategic goal of the Republic since at least October 2006 and that the pursuit of that goal was the reason why the Republic held shares in Estonian Air and had invested money in the airline on various occasions. In those circumstances, the court held that the exception to the immunity did not apply.
Recognising the difference in the legislation under consideration in that case, it does seem to me that the evidence establishes that the primary purpose of the investment in Nauru was to provide aircraft services to what would otherwise have been an isolated community. In these circumstances it does not seem to me that the moneys in the bank account were used for purposes which, whether by loans or other investment, could be said to be for commercial purposes.
In reaching this conclusion I have taken into account the fact that the airline engages in some commercial activities including flights on a charter basis. However, the relevant question is whether the money in the bank account is used substantially for commercial purposes. The fact that the airline itself engages in commercial activity does not mean, in my opinion, that the purpose for which the funds in the bank account are used are commercial purposes as distinct from the sovereign purpose of providing air services to Nauru.

Consideration of the 2-1-22 Pacific NCD Program account

The money in this account may be considered along with the money in the AusAID account, the CIE account, the Development Fund account, the EU Rep 5 account, the GF R7 HIV-AIDS account, the Nauru Disabled NDPA account, the NZAID account, the Rehabilitation Funds Aid account, the RON Australian Sports Com account, the RON SPC account, the RON UNCCD account, the World Diabetes account, the World Health Organization account and the WHO Global Fund account.
I have set out above the evidence relating to the use to which these funds were put or intended to be put. On their face, they were not in use for commercial purposes; rather the funds were for uses that may readily be described as main functions of a sovereign government. In fact for many of these accounts it was not at all apparent how the funds were being used for anything approaching commercial activity, other than expenditure that was purely incidental or peripheral (for example, the funds in the Development Fund account were to be used to conduct population surveys amongst other things, while the funds in the RON SPC account were to be used for activities such as geoscience research).
Firebird submitted that because the programs or services (for which the money in the accounts were used), were, or may be, facilitated by the entry into contracts with commercial suppliers, they were used for commercial purposes. I do not think the transactions should be characterised in that way. Such an approach improperly states that the means or transaction through which the use of the funds was intended to be achieved is necessarily equivalent with the use of the funds. This is inaccurate and contrary to authority. Rather, it is necessary to look at the purpose for which those transactions were entered into. Once it is established that the transactions in each case were not for a commercial purpose, as was the case with these accounts, it could not be said, in my opinion, that the money was substantially in use for commercial purposes. This is consistent with the authorities to which I have referred in pars [172] - [177] above.
With reference to the CIE account, it is significant in so far as it gives an indication of the sovereign purpose of the funds that "CIE" stood for a department of the government of Nauru. This money was set aside to be spent by a department of the government of Nauru in providing services to the population, which incidentally included such seemingly non-commercial ventures as undertaking scientific research.
Similarly the funds in the Nauru Fisheries Savings account were used to fund the operations of the Nauru Fisheries and Marine Resources Authority which was described in the Certificate as a governmental department. Moneys used for funding a department are not, in my opinion, moneys in use for a commercial purpose. There was no evidence to suggest that the Fisheries Department engaged substantially in commercial ventures such as might lead to a different conclusion.
The funds in the NZAID account were also used to provide government services, including by assisting a government department (the Nauru Department of Justice). Moreover, akin to the use to which the funds in the BusinessOne account were put, some of the funds in the NZAID account were used to pay the salary of the Solicitor-General of Nauru, the Public Legal Defender and the Registrar of the Supreme Court and Magistrates. In such circumstances it is clear that these funds were not substantially for commercial purposes.
The RON UNCCD account was said to be used to fund land degradation projects as overseen by the Department of Commerce Industry and Environment. This does not seem to me to be substantially a commercial purpose, rather an environmental one. There was nothing to suggest that the government of Nauru gained or expected to gain any profit from such activities apart from contributing to the overall welfare of its citizens.
In relation to the RON Australian Sports Com account, it is again significant that the account was used to pay the salaries of government employees involved in those programs. This seems to indicate that the fitness and sport programs were for a sovereign rather than commercial purpose.
With respect to the Nauru Disabled NDPA account, the evidence was not clear as to the degree of government ownership or control over the Nauru Disability Group, which was funded by the funds in the Nauru Disabled NDPA account to provide assistance to citizens of Nauru with disabilities. Nonetheless, even the payment by a government to corporate entities at arms length from the government to engineer the provision of services to the community will not necessarily be substantially for commercial purposes. I am satisfied that, given the state of the evidence, the use of the funds is for a sovereign rather than commercial purpose.
With reference to the AusAid account, in addition to the general comments made at [189]-[190] above I note that some of the funds in the AusAid account were used to fund the positions of Deputy Secretaries of Finance.
Some of the funds in the Rehabilitation Funds A account were also used to pay for the salaries of government employees involved in rehabilitation programs. Although the use of funds to conduct phosphate mining operations on Nauru may possibly be funds used substantially for commercial purposes, it is noteworthy that the funds in this account are not directed at the facilitation of the phosphate mining, but as part of government policy to compensate landowners whose land has mining operations conducted on it. In these circumstances, combined with the fact that the program is carried out by government employees, rather than a third commercial entity, I am satisfied that the funds in this account are not used for commercial purposes but rather sovereign purposes consistent with government policy as currently held.

Consideration of the RON Consulate account

The funds in the RON Consulate account were used for the purpose of funding the day-to-day expenditure to operate the Nauru Diplomatic Consulate. It was in evidence that such expenditure included payments for rent and office expenses in addition to the salaries of the Consul General, amongst others. No evidence was led as to what proportion of the funds was to be used for the latter as opposed to the former expense.
In Liberian Eastern Timber Corp although the questions and legislation in issue were different to the present case, when discussing whether to quash writs of attachment to the bank accounts of the Liberian Embassy, the Court described the essential character of the activity for which the funds in the account were used to undoubtedly be of a "public or governmental nature". With a similar caveat I note the decision of Alcom Ltd v Republic of Colombia [1984] AC 580.
Bearing in mind the comments made above as to the need to have regard not to the transactions through which a purpose is effected but to the purpose itself, I am satisfied that the use of the funds is not for a commercial purpose but a sovereign one.

Consideration of the CIE-Nauru GEF Small GRA account

The CIE-Nauru GEF Small GRA account was said to be used for providing loans to small businesses. Mr Adeang's evidence was the Government did not make a profit out of the small loans and they were not a commercial venture. He said that the policy was to "diversify the community and provide subsistence for struggling Nauruan families". Having regard to the particular circumstances of Nauru to which I have referred in paragraph [176] above, this does not seem to me to be a commercial purpose. An analogy could be drawn between this policy, with the policy of the Republic of Estonia to strengthen the economy of the country, as was discussed in Bombardier v AS Estonian Air. It is sufficient to observe that the evidence sufficiently establishes that the funds were for a non-commercial purpose despite involving commercial transactions.

Consideration of the JICA account

The evidence in relation to the JICA account is vague. However, it does establish that the moneys were used in relation to providing technical assistance in the delivery of government services. Whilst such technical assistance may involve the government entering into contracts with commercial suppliers (as was discussed in relation to the 2-1-22 Pacific NCD Program account), there was no evidence to that effect, and it would be inappropriate to speculate. As was discussed above, it is incorrect to characterise the use of funds with sole reference to the identification of commercial transactions through which the purpose of the funds is given effect. Insofar as the technical assistance assists in the delivering of government services, it is a feature of the provision of government services. For the reasons discussed in relation to the 2-1-22 Pacific NCD Program account above, the funds were not in use for commercial purposes.

Consideration of the EU RON Treasury and Trust accounts

The evidence relating to the EU RON Treasury and the Trust accounts is scanty in the extreme. However, in relation to the Treasury account, it seems to me that the statement in the Certificate that the purpose of those funds was to provide infrastructure programs and technical assistance to the government of Nauru is sufficient to establish that the funds were not in use for commercial purposes (also see 2-1-22 Pacific NCD Program account above).
So far as the Trust account was concerned, Firebird submitted correctly, in my opinion, that the funds were not in use. In contradistinction to the other accounts, there was a lack of evidence as to what the funds in the Trust account were intended to be used for or that they had recently been used for any particular purpose. In those circumstances it is necessary for the Court to be satisfied that the funds were set aside for purposes other than commercial purposes (see Immunities Act s 32(3)(b)). There is no reason to doubt the correctness of the Certificate that the funds are held as cash reserves to provide future government services. In this sense they have been set aside so that the government of Nauru may, pursuant to its sovereign mandate, perform its functions as they arise. In the absence of any evidence to suggest the government of Nauru carries on any commercial activities with the cash reserves in the Trust account, I am satisfied that the government services for which the funds have been set aside for are non-commercial. In those circumstances the funds, in my opinion, have been set aside for purposes other than commercial purposes.
For these reasons the funds in all of the bank accounts are immune from execution under the Garnishee order.
In these circumstances it is unnecessary to consider the last and final question.

Conclusion

In the result, leave to appeal should be granted but the appeal dismissed. I would make the following orders: (1) With respect to the summons filed by Firebird Global Master Fund II Ltd in matter 2014/290988: (i) Grant the applicant leave to appeal. (ii) Dismiss the appeal and order that the summons filed in the Common Law Division on 9 May 2012 be dismissed. (iii) Order that the applicant pay the costs of the Republic of Nauru in this Court. (2) In relation to the summons filed by the Commonwealth of Australia in matter 2014/293924: (i) Refuse the applicant leave to appeal. (ii) No order as to the costs of the summons.
This being the final judgment of the Court, it is desirable that the precise operation of the stay first granted by the trial judge, confirmed by the President and extended by this Court at the hearing of the appeal, should be restated. A stay will operate in the following terms: 1. Vacate all previous orders with respect to the coming into effect of order (1) made on 3 October 2014 in the Common Law Division (namely, registration of foreign judgment and consequential garnishee order set aside with costs). 2. Stay the order made and entered on 3 October 2014 setting aside (a) the registration of the foreign judgment and (b) the garnishee order made and issued on 10 September 2014 in favour of the applicant against Westpac Banking Corporation - until 5pm (Sydney time) on Monday, 27 October 2014. 3. Order that the garnishee order made not be complied with during the period of any stay with respect to the order setting aside the garnishee order.
BEAZLEY P: I have had the considerable advantage of reading in draft the reasons of the Chief Justice and Justice Basten. To the extent that there is a difference in approach to the questions raised in the case and, in particular, in respect of the approach to the construction of s 11(1) of the Immunities Act, I prefer the reasons of the Chief Justice. I agree with the orders proposed.
BASTEN JA: The applicant, Firebird Global Master Fund II Ltd, obtained a judgment in the Tokyo District Court, which, with accrued interest, now exceeds $A31 million. By summons filed in the Common Law Division of the Supreme Court on 9 May 2012 the applicant sought to register the foreign judgment, the defendant being the Republic of Nauru ("Nauru"). On 6 June 2012, without notice to Nauru, a sovereign State, a Registrar made orders registering the judgment. By motion dated 8 March 2013 the applicant sought leave to serve a notice of registration of judgment outside Australia, pursuant to the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"), r 11.5. On 19 March 2013, a judge in the Common Law Division (Schmidt J) granted that leave and directed that service be effected "by way of private process server on the Secretary for Justice of the Defendant [Nauru]."
All of Nauru's banking is done through a number of accounts held by Westpac Banking Corporation ("Westpac"), located in Sydney. By motion dated 5 September 2014, the applicant sought a garnishee order against Westpac for an amount in excess of $A30 million. (The actual figure was identified, as in the judgment, in Japanese yen.)
On 10 September 2014 a garnishee order was made ex parte (that is, in the absence of Nauru) by a Registrar of the Supreme Court. Pursuant to the garnishee order, Westpac was required to pay the full amount within 14 days after service of the order. It appears that the first notice Nauru had of the proceedings in this Court was a freeze placed by Westpac on its dealings with its accounts.
On 19 September 2014 Nauru filed a notice of motion seeking to have the garnishee order set aside, or stayed pending further order. The notice of motion was amended on 25 September 2014 to include further relief, seeking to set aside the registration of the foreign judgment and the order for service made by Schmidt J. Following a hearing on 22, 23, 29 and 30 September 2014 Young AJA (in the Equity Division) delivered judgment on 3 October 2014 setting aside the registration of the foreign judgment and the consequential garnishee order: Firebird Global Master Fund II Ltd v Republic of Nauru [2014] NSWSC 1358.
On the same day, 3 October, the applicant filed a summons seeking leave to appeal to this Court, with a draft notice of appeal. The matter was listed before Beazley ACJ on 7 October 2014 and set down for hearing in this Court on 13 October 2014. The operation of the orders of the trial judge was stayed. As explained by counsel for Nauru, the "real urgency is that the consolidated revenue of Nauru is contained in those accounts and without access to them there is prejudice in effect every day by not being able to use the funds for the purposes that are the subject of the accounts": Tcpt, 07/10/14, p 5(42). There was an expectation that quite shortly "the business of government [in Nauru] would come to a grinding halt." Although Nauru was successful before the primary judge, the applicant was anxious to preserve the subject matter of its proceedings, in circumstances where the full amount in the Westpac accounts was roughly equal to the amount of the judgment debt. The parties reached an agreement in the course of the hearing in this Court to maintain the status quo until three days after the judgment of this Court.
The applicant sought leave to appeal on the basis that the judgment was probably to be characterised as interlocutory, for the purposes of the Supreme Court Act 1970 (NSW), s 101(2)(e). Accepting that to be so, no party suggested that the issues raised were not of significant public importance and warranting a grant of leave. There should be a grant of leave to appeal, but, for the reasons indicated below, the appeal should be dismissed. The applicant must pay the costs of the respondent (Nauru) in this Court.

Outline of issues

The process outlined above by which a sovereign State became subject to the registration in this Court of a judgment obtained against it in another country and had its bank accounts garnisheed without any notice to it, let alone in accordance with the statutory requirements for service through diplomatic channels, is troubling. The process adopted by the applicant relied upon what it contended was the sole statutory scheme for the registration of a foreign judgment, which was to be found in the Foreign Judgments Act 1991 (Cth). The applicant submitted that, having satisfied the requirements of s 6 of that Act, it was entitled as of right to have the foreign judgment registered. Further, absent satisfaction of any specific ground in s 7, Nauru was not entitled to have the registration set aside.
The Foreign Judgments Act neither identifies nor addresses issues which can arise with respect to foreign States. Those issues are addressed in the Foreign States Immunities Act 1985 (Cth), which (a) deals with the circumstances in which foreign States are immune from the jurisdiction of Australian courts (s 9), (b) provides for service of initiating process (ss 23-27) and (c) provides immunity for the property of a foreign State from process for the enforcement of a judgment (s 30), with an exception with respect to "commercial property" (s 32). Although the applicant was meticulous in addressing all of the matters required to satisfy the terms of the Foreign Judgments Act, neither Schmidt J, nor either of the Registrars who made the impugned orders, had their attention drawn to the provisions of the Foreign States Immunities Act.
The primary position of the applicant was that the Foreign Judgments Act provided a "code" regardless of the identity of the judgment debtor. To the extent that there was thought to be inconsistency with the Foreign States Immunities Act, the latter was the earlier Act in time and should be treated as impliedly repealed to the extent of any inconsistency with the Foreign Judgments Act.
In the alternative, the applicant submitted that the various provisions of the Foreign States Immunities Act relied upon by Nauru were not engaged in the circumstances of the case. Identification of the specific issues raised is best undertaken by reference to the relevant statutory provisions.

Foreign Judgments Act

The primary operative provisions of the Foreign Judgments Act are contained in Pt 2 which applies to judgments of the courts of foreign countries, on the basis of reciprocity: s 5. The Part applies to the judgments of the Tokyo District Court in Japan. Applications for registration are made pursuant to s 6. That section provides that a "judgment creditor under a judgment to which this Part applies may apply to the appropriate court … to have the judgment registered in the court": s 6(1). The appropriate court, in the present case, is a Supreme Court of a State or Territory, and hence includes this Court: s 6(2)(c). The function of the court is then identified in subs (3) which is to the following effect: (3) Subject to this Act and to proof of the matters prescribed by the applicable Rules of Court, if an application is made under this section, the Supreme Court of a State … is to order the judgment to be registered.
Subject to certain transitional provisions, there is provision for the making of rules of court in s 17, which provides: 17 Rules of Court (1) The power of an authority to make rules regulating the practice and procedure of a superior court extends to making any rules, not inconsistent with this Act or with any regulations made under this Act, prescribing all matters necessary or convenient to be prescribed for carrying out or giving effect to this Act, including the following: … (b) prescribing the matters to be proved on an application for the registration of a judgment and for regulating the mode of proving those matters; (c) providing for the service on the judgment debtor of notice of the registration of a judgment; (d) making provision with respect to the extension of the period within which an application may be made to have the registration of a judgment set aside; (e) relating to the method of determining a question arising under this Act as to: (i) whether a judgment given in a country in relation to which this Part extends can be enforced in the country of the original court; or (ii) what interest is payable under a judgment under the law of the original court. (2) This section does not affect any power to make rules under any other law.
In this State, there is a "Uniform Rules Committee" established under s 8 of the Civil Procedure Act 2005 (NSW) which has the following powers: 9 Uniform rules (1) The Uniform Rules Committee may make rules, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed by rules or that is necessary or convenient to be prescribed by rules for carrying out or giving effect to this Act. (2) Without limiting subsection (1), rules under this section may make provision, in relation to all civil proceedings in respect of which a court has jurisdiction (however arising), for or with respect to the matters specified in Schedule 3. Clearly this provision did not empower the Committee to make rules under federal legislation: that function can only be sourced to the Foreign Judgments Act. In any event, the relevant rules now appear in Pt 53 of the UCPR: they are of only incidental relevance to the primary arguments, but will be identified as the need arises.
The applicant submitted that s 6(3), using the language "is to order", coupled a power with a duty, in circumstances where the identified requirements were complied with. The absence of discretion was confirmed by identification of the circumstances in which a judgment "is not to be registered" (subs (6)), and the conclusive effect of registration, giving the judgment the same force and effect "as if the judgment had been originally given in the court in which it is registered and entered on the date of registration": s 6(7).
Further, the applicant relied upon the comprehensive language adopted in s 7 dealing with the setting aside of registration. The Rules require that an applicant when seeking registration address the matters which could lead to such an order being set aside: UCPR, r 53.3(1)(h)(ii). Section 6(7) qualifies the effect of registration by reference to setting aside under s 7 and the possibility of a judgment ceasing to be enforceable because of regulations, pursuant to s 14. (Section 14 has no further relevance to the present argument.) Section 7, dealing with setting aside a registered judgment, is lengthy: it is set out by the Chief Justice at [33] and need not be repeated here.
At the heart of the applicant's argument were two primary propositions. First, subs (2)(a) sets out a number of specific circumstances in which the court "must set the registration of that judgment aside". While there is a further discretionary power in par (b), it is limited to a particular situation, where there appear to have been duplicate final decisions. Otherwise, the applicant submitted, there was no power to set aside a registered judgment.
The second matter upon which the applicant placed reliance was the reference in subs (4)(c) to immunity under rules of public international law. While that provision did not identify any such immunity as extending to the registration process, it did suggest that the legislature had been mindful of such immunities when enacting the Foreign Judgments Act.
Before turning to the Foreign States Immunities Act, it is convenient to note the limited weight which attends each part of the applicant's case under the Foreign Judgments Act. First, as will be considered further below, to describe a statute as a "code" in order to infer that it was intended to operate to the exclusion of other statutes of the same legislature is a fraught exercise. The fact that the Foreign Judgments Act is definitive in its terms as to when a judgment may be registered and when registration may be set aside is not necessarily to imply that it is intended to exclude the operation of other statutes.
Secondly, the language of s 7(4)(c) is more ambivalent than the applicant was inclined to concede. Thus, the argument assumed that the reference to "a person" was apt to include a sovereign State. The applicant noted that s 2C of the Acts Interpretation Act 1901 (Cth) stated that "in any Act, expressions used to denote persons generally … include a body politic or corporate as well as an individual": s 2C(1). However, s 2C post-dates the Foreign Judgments Act; further it does not necessarily follow that, absent express language, statutes tending to impose obligations on "a person" should be understood as referring to foreign States. Indeed, the terms of s 7(4)(c) do not require any assessment of the operation of the Foreign States Immunities Act, nor indeed any equivalent legislation in the country of the original court. Rather, reference is made to "the rules of public international law" with respect to immunity, not to exclude jurisdiction but, somewhat curiously, as a matter indicating that the court of the other country was "not taken to have had jurisdiction". Subsection (4) is said to operate "in spite of subsection (3)", which indicates when the courts of the other country "are taken to have had jurisdiction" for the purposes of subs (2)(a)(iv). That provision requires that the court must set aside the registration of the judgment if satisfied that the country of the original court "had no jurisdiction". The interrelationship and operation of these provisions is obscure.
Thirdly, the public policy basis for setting aside registration under s 7(2)(a)(xi) might well extend to registration of a judgment against a foreign State entitled to immunity in this country: NML Capital Ltd v Republic of Argentina [2011] UKSC 31; [2011] 2 AC 495 at [16] (Lord Phillips of Worth Matravers PSC). After referring to the equivalent to s 7(4)(c) in the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK), Lord Phillips noted at [18]: "The 1933 Act contains no provision, however, that permits enforcement of such a judgment against property owned by a state. Furthermore section 2(1)(b) of the Act precludes recognition of a judgment that cannot be enforced by execution in the country of the original court, and section 4(1)(a)(v) requires the registration of a judgment to be set aside if enforcement would be contrary to the public policy of the registering court. So long as the absolute doctrine of state immunity prevailed in the United Kingdom it is hard to envisage registration of a foreign judgment against a judgment debtor who had been entitled to state immunity, but who had submitted to the foreign jurisdiction, except perhaps a diplomat in respect of whom his state had waived diplomatic immunity. There does not seem to be any recorded instance of such a case."

Foreign States Immunities Act

As this Court noted in Li v Zhou [2014] NSWCA 176; 310 ALR 66 at [36]: "In considering national jurisdiction, a critical rule of international law which shall be taken into account, together with context, is identified in the maxim par in parem non habet imperium - one sovereign state is not subject to the jurisdiction of another: see H Fox and P Webb, The Law of State Immunity (3rd ed, 2013, OUP) at 26-27."
As further explained at [37]: "The concept underlying foreign State immunity should be understood as a reflection of the political principle that those who are independent and autonomous cannot, except by consent, exercise authority over, or establish an external source of authority over, others of independent and autonomous status: H Charlesworth and C Chinkin, The boundaries of international law - A feminist analysis (2000, Manchester UP), at 124, 145."
There have, however, been changes with respect to the operation of the underlying principle of immunity during the course of the 20th century. The broad tendency has been a diminution of an "absolute doctrine of State immunity", leading to one qualified, primarily, by withdrawal of immunity with respect to commercial transactions: see Lord Phillips in NML Capital Ltd at [8]-[18]. This change was reflected in legislation in the UK (and in other countries) and finds its Australian counterpart in the Foreign States Immunities Act (enacted seven years after the equivalent UK legislation considered in NML Capital, but not in identical terms).

(a) immunity from jurisdiction; immunity from execution

Against this background it is necessary to consider the primary operative provisions of the Foreign States Immunities Act. These occur in Pt II - Immunity from Jurisdiction, Pt III - Service and Judgments and Pt IV - Enforcement. Part II works from the broad principle of immunity: 9 General immunity from jurisdiction Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding.
There are further sections in Pt II (ss 10-22) dealing with exceptions to that principle. The exception invoked in the present case was that relating to commercial transactions: 11 Commercial transactions (1) A foreign State is not immune in a proceeding in so far as the proceeding concerns a commercial transaction. (2) Subsection (1) does not apply: (a) if all the parties to the proceeding: (i) are foreign States or are the Commonwealth and one or more foreign States; or (ii) have otherwise agreed in writing; or (b) in so far as the proceeding concerns a payment in respect of a grant, a scholarship, a pension or a payment of a like kind. (3) In this section, commercial transaction means a commercial, trading, business, professional or industrial or like transaction into which the foreign State has entered or a like activity in which the State has engaged and, without limiting the generality of the foregoing, includes: (a) a contract for the supply of goods or services; (b) an agreement for a loan or some other transaction for or in respect of the provision of finance; and (c) a guarantee or indemnity in respect of a financial obligation; but does not include a contract of employment or a bill of exchange.
It was contended by the applicant that the proceeding in the Tokyo District Court concerned a commercial transaction, being a proceeding on a bond guaranteed by the government of Nauru. The question was how the proceedings in this Court for the registration of the foreign judgment should be characterised. One possibility was that the proceeding should be considered under Pt IV relating to enforcement and the application (or otherwise) of immunity from execution against the property of a foreign State, as provided in s 30. 30 Immunity from execution Except as provided by this Part, the property of a foreign State is not subject to any process or order (whether interim or final) of the courts of Australia for the satisfaction or enforcement of a judgment, order or arbitration award or, in Admiralty proceedings, for the arrest, detention or sale of the property.
That provision was subject to its own exception, not by reference to commercial transactions, but by reference to "commercial property". 32 Execution against commercial property (1) Subject to the operation of any submission that is effective by reason of section 10, section 30 does not apply in relation to commercial property. (2) Where a foreign State is not immune in a proceeding against or in connection with a ship or cargo, section 30 does not prevent the arrest, detention or sale of the ship or cargo if, at the time of the arrest or detention: (a) the ship or cargo was commercial property; and (b) in the case of a cargo that was then being carried by a ship belonging to the same or to some other foreign State - the ship was commercial property. (3) For the purposes of this section: (a) commercial property is property, other than diplomatic property or military property, that is in use by the foreign State concerned substantially for commercial purposes; and (b) property that is apparently vacant or apparently not in use shall be taken to be being used for commercial purposes unless the court is satisfied that it has been set aside otherwise than for commercial purposes.
Nauru submitted that the Australian proceedings could not be dealt with purely under Pt IV in isolation from Pt II, but were to be dealt with sequentially. That followed, Nauru contended, from the terms of s 7(4) which states: 7 Application … (4) Part IV only applies where, by virtue of a provision of Part II, the foreign State is not immune from the jurisdiction of the courts of Australia in the proceeding concerned.

(b) requirements for service

Whether the proceedings were to be dealt with under Pt II, Pt IV or both, it was also necessary to address the operation of Pt III dealing with service of process. 23 Service of initiating process by agreement Service of initiating process on a foreign State or on a separate entity of a foreign State may be effected in accordance with an agreement (wherever made and whether made before or after the commencement of this Act) to which the State or entity is a party. 24 Service through the diplomatic channel (1) Initiating process that is to be served on a foreign State may be delivered to the Attorney-General for transmission by the Department of Foreign Affairs to the department or organ of the foreign State that is equivalent to that Department. … (7) The time for entering an appearance begins to run at the expiration of 2 months after the date on which service of the initiating process was effected. … 25 Other service ineffective Purported service of an initiating process upon a foreign State in Australia otherwise than as allowed or provided by section 23 or 24 is ineffective. … 27 Judgment in default of appearance (1) A judgment in default of appearance shall not be entered against a foreign State unless: (a) it is proved that service of the initiating process was effected in accordance with this Act and that the time for appearance has expired; and (b) the court is satisfied that, in the proceeding, the foreign State is not immune. (2) A judgment in default of appearance shall not be entered against a separate entity of a foreign State unless the court is satisfied that, in the proceeding, the separate entity is not immune.

Immunity from Jurisdiction engaged

For the purposes of s 9, the applicant submitted that the absence of a requirement under the Foreign Judgments Act for the judgment debtor to be named as a party indicated that the application for registration was not a "proceeding". However, to the extent that the rules govern the obligation of the Court to register the judgment under s 6(3), those rules require that the judgment debtor be named as the defendant: UCPR, r 53.2(2). The fact that the proceedings may be conducted ex parte (in the absence of the defendant) does not mean that they do not constitute a proceeding for the purposes of the Foreign States Immunities Act. They involve a request by a private party to an Australian court to exercise state power to impose a civil obligation upon a foreign sovereign State. Whether or not the court accedes to the application, state judicial power is invoked: that is sufficient to engage the principles of foreign State immunity under international law. In the language of international law, the foreign State is thus "impleaded": PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; 247 CLR 240 at [17].
On that basis, "the proceeding" was the proceeding for registration of the judgment obtained in Japan and the process to which the property of Nauru was sought to be subjected was the motion for the issue of a garnishee order.
That characterisation of the nature of the proceedings was said to find support in the fact that the jurisdiction of the Supreme Court was engaged by the issue of a summons, being the appropriate initiating process in original jurisdiction, seeking various orders, including an order that the judgment of the Tokyo District Court be registered under Pt 2 of the Foreign Judgments Act. In support of that summons the applicant filed evidence, by way of a solicitor's affidavit, addressing each of the elements to be satisfied in order to engage Pt 2 of the Foreign Judgments Act. That evidence included information to the effect that none of the grounds on which registration must be set aside under s 7(2) would arise.

An "initiating process"

The applicant raised a number of bases for saying that, even if Pt III did require service of an "initiating process", the summons by which the applicant invoked the authority of this Court and sought registration of the foreign judgment did not constitute an "initiating process". The argument acknowledged the definition of "initiating process" in s 3(1) as meaning "an instrument (including a statement of claim, application, summons, writ, order or third party notice) by reference to which a person becomes a party to a proceeding." It submitted, however, that the application for registration of the foreign judgment was not "a proceeding" because there was no need for a defendant, pursuant to the terms of the Foreign Judgments Act. In support of that contention, the applicant referred to what it described as South Australian rules which did not involve the naming of a defendant. (The reference was presumably to the rule stating that a party "may seek the registration of a judgment under the Act by filing a summons in which no defendant is named": Supreme Court Civil Rules 2006 (SA), r 346(2).)
This argument should not be accepted. The fact that proceedings may be brought without a contradictor does not mean they cease to be proceedings for the purposes of legislation governing the powers and functions of courts. For the purposes of seeking orders from the Supreme Court, the applicant was dependent upon an implied conferral of federal jurisdiction on the Supreme Court by virtue of s 6(2)(c) of the Foreign Judgments Act. There was no suggestion that the power being exercised by the Supreme Court in making the orders sought constituted the exercise of some non-curial authority or procedure of a kind which did not constitute an exercise of federal judicial power: cf Solomons v District Court of New South Wales [2002] HCA 47; 211 CLR 119 at [23]. The term "proceeding" when referring to steps taken in a court involves no more than the invocation and carrying through of its function in the exercise of some part of its jurisdiction. Whatever may be the effect of the South Australian rules (the validity and scope of which were not in issue in the present proceedings) the UCPR provide that there is to be a defendant, being the judgment debtor: r 53.2(2). In this regard, it is not inconsistent that the UCPR expressly refer to "proceedings that may be commenced without joining any person as a defendant": r 6.1A. That this rule does not refer to Pt 53 is understandable, given the terms of r 53.2(2); the point is rather that the use of the term "proceedings" in relation to the exercise of judicial power where there is no defendant is conventional.
Although the UCPR use the term "originating process", nothing turns on that fact; language in legislation intended to operate across jurisdictions should be construed flexibly in order to accommodate linguistic variations: Abdi v Release on Licence Board (1987) 10 NSWLR 294 at 295 (Kirby P), 300 (Priestley JA, Samuels JA agreeing); Bermingham v Corrective Services Commission (1988) 15 NSWLR 292.
The issue of a summons seeking registration under the Foreign Judgments Act thus commenced a "proceeding" under s 9 and the summons constituted an "initiating process" within the terms of s 23.

Service: registration proceedings

Section 23 appears to assume that an initiating process involving a party which is a foreign State will need to be served on the foreign State.
The applicant rejected the assumption: in its view, the absence of any requirement in the Foreign Judgments Act that the proceedings seeking registration be served on any other party, including the party against whom the judgment would be enforced, was not qualified by Pt II of the Foreign States Immunities Act. Consistently with that view, the applicant noted that the rules of court provide that unless the Supreme Court otherwise orders, the judgment creditor may proceed without service of the summons on the judgment debtor: UCPR, r 53.2(3).
The fact that the Court was being invited to implead a sovereign State, in circumstances where it was at least reasonably arguable that the defendant was immune under Commonwealth legislation, should have led to two consequences. First, the applicant, properly advised, should have disclosed that possibility to the Court in seeking to have the application dealt with ex parte. Secondly, the Court should have given serious consideration to the propriety of proceeding ex parte against a sovereign State. The failure to take those steps resulted in (a) a failure to order service of the summons and, (b) an inappropriate order for service of the notice of registration of judgment, in disregard of the requirements for service under Pt III of the Foreign States Immunities Act. While an argument was open that the terms of that Act were not engaged because the notice of the registration of the judgment was not an "initiating process", the underlying principles of international law reflected in the Act were undoubtedly engaged by the prior issue of the summons. Further, the very fact that the initiating process had not been served might have given the Court pause for consideration as to the appropriate means of serving the notice of registration of judgment.
The proper construction of Pt III of the Foreign States Immunities Act should take account of its operation in 1985 (when enacted), at which time the registration of foreign judgments took place under state law. In New South Wales the relevant Act was the Foreign Judgments Act 1973 (NSW) ("1973 State Act"). Apart from distinguishing between countries of the British Commonwealth and other countries, the structure of the Act and, indeed, much of its language came to be reflected in the Commonwealth Act of 1991. In particular, there was a precise equivalent to s 7(4)(c) (dealing with immunity under the rules of public international law), namely s 8(3)(c) of the 1973 State Act. To the extent that the Foreign States Immunities Act was inconsistent with any provision of state law, including the 1973 State Act, the Commonwealth Act would prevail: Constitution, s 109. Given the subject matter of the Foreign States Immunities Act and the source of federal constitutional power (being "external affairs", Constitution, s 51(xxix)) there would have been strong grounds for concluding that that Act was intended to cover the field with respect to the circumstances in which a foreign sovereign State could be subject to the exercise of governmental power by Australian courts. That is not to say that the Commonwealth Act was intended to provide a procedural code with respect to proceedings in an Australian court exercising jurisdiction with respect to a foreign State; rather, the Act assumed certain powers and procedures were available in such proceedings and would operate subject to any specific constraints imposed by the Act, such as in the case of a failure or refusal by a foreign State to disclose or produce a document or furnish information: s 39.
The critical question is whether Pt III of the Foreign States Immunities Act assumes a requirement under court rules for service of an initiating process on the party sought to be affected by the orders and merely regulates the manner of service, or whether it imposes, at least implicitly, a requirement for service of initiating process, to be carried out in the manner prescribed.
The applicant contended for the former construction, noting that Pt III was not a comprehensive code for service. The latter point may be accepted: for example, no section provides for service of the initiating process in a proceeding commenced as an action in rem: s 24(8). Further, s 24(7) provides for the commencement of a period for entering an appearance, but assumes that the outer limit is otherwise prescribed, no doubt by court rules. The applicant also noted that purported service upon a foreign State in Australia otherwise than as allowed or provided by Pt III is ineffective (see s 25), but nothing is said about the effectiveness of service in a foreign country, otherwise than in compliance with provisions of Pt III.
The Law Reform Commission, Foreign State Immunity, Report No 24 (1984) provided by way of an appendix a draft bill, which is closely followed by the Act, together with draft explanatory notes. With respect to Pt III, the Commission's draft explanatory note stated: "In addition to the immunities from jurisdiction conferred by Part II, it is appropriate to extend certain procedural immunities to foreign States, and to make provision for service of process and for the entry of, and service of notice of default judgments."
With respect to draft cl 23 (now s 23), the Commission stated in the draft notes: "The Present Position. There is considerable uncertainty about the appropriate way in which to serve a foreign State. Rules of court do not generally make express provision about service on foreign States. If service is effected within the foreign State, there may be problems arising out of its own law. Service on a foreign State's diplomatic mission in Australia without its agreement may be contrary to diplomatic practice."
With respect to cl 25 (now s 25) the Commission noted: "To avoid harassment of visiting State officials, heads of State and local embassies etc (which may be embarrassing to Australia), and for reasons of reciprocity, the methods of service on a foreign State in Australia provided by cl 24 and 25 are to be exclusive."
The commendably sparse language of s 23 was designed to permit service according to any agreement entered into by the foreign State whether by contract with the plaintiff or by treaty with Australia: Report, par 149. After noting the difficulties which can attend service on foreign States in the event of a diversity of methods, the Commission stated at par 150: "Accordingly it is recommended that there be only two methods allowed in the proposed legislation for service upon the foreign state itself, the diplomatic channel and any method to which the state has agreed. To avoid the risk of plaintiffs attempting private service in Australia and thereby harassing diplomats or visiting state representatives all other local service should be excluded. At the same time it should be provided that, where service has been attempted by some other method and the foreign state appears without raising any objection to the method of service, the foreign state may not subsequently question the validity of service."
That the Court is entitled to have regard to such material was not doubted in the present proceedings and is available in accordance with both general principle and s 15AB of the Acts Interpretation Act: see generally CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).
The Foreign States Immunities Act both affirms a general principle of public international law, namely that one State will not seek to exercise "imperium" over another independent sovereign State, and identifies specific areas in which there is to be derogation from that principle. The hypothesis that an Australian court is entitled to exercise jurisdiction over a foreign State without notice to it would itself constitute a derogation from the fundamental principle: there is no suggestion that the legislature intended that outcome. Furthermore, the grant of immunity from jurisdiction would be of limited effect, and the limitations on derogation would be of limited effect, if the foreign State were not given appropriate notice to allow it to assert its immunity, either generally or in the specific context of an exception relied upon by the other party. Thus, prior to 1991, the Foreign States Immunities Act, Pt III, imposed a requirement as to the fact of service and, with respect to the manner of service, in so far as it purported to prescribe the latter. To the extent that a state law either did not permit or did not require service on a foreign State, that law would have been inconsistent with the Commonwealth Act and the latter would, to the extent of the inconsistency, have prevailed: Constitution, s 109.
The manner in which the Court should approach the operation of potentially inconsistent statutes enacted by one legislature is not the same as that which applies where there is a paramountcy principle (such as s 109) in operation. Rather, there is a general presumption that both provisions should operate and that a finding of such inconsistency that the two cannot be reconciled will only be reached after careful consideration of each provision: Saraswati v The Queen [1991] HCA 21; 172 CLR 1 at 17 (Gaudron J); Ferdinands v Commissioner for Public Employment [2006] HCA 5; 225 CLR 130 at [4] (Gleeson CJ), [18] and [48]-[49] (Gummow and Hayne JJ), [61] (Kirby J); Commissioner of Police v Eaton [2013] HCA 2; 87 ALJR 267 at [45]-[48] (Crennan, Kiefel and Bell JJ), [95]-[100] (Gageler J).
The present case concerns the interrelationship of two Commonwealth statutes, both dealing with aspects of external affairs, but each directed at a separate topic. Neither expressly refers to the other and, if they can operate harmoniously together, no question of implied repeal by the later statute of the former, should arise.
Two statutes can operate harmoniously if both can be complied with, even if one imposes an additional layer of regulation upon the subject matter dealt with in the other. In this case, each deals with a broad topic, with a quite limited area of overlap between the two. Thus, the Foreign Judgments Act is directed to the registration and enforcement of judgments given in courts of other countries, of which judgments involving a foreign State will be but a small subset (if they were envisaged at all). On the other hand, the Foreign States Immunities Act addresses the jurisdiction of Australian courts with respect to foreign States and their entities, of which proceedings for enforcement of foreign judgments will be but a small subset (if they were envisaged at all). To the extent that the Foreign Judgments Act deals with the question of service of the initiating process, it does so by way of omission: it neither requires nor prohibits service. To the extent that the rules of court are relevant, they permit service by order of the court, but do not require it. By contrast, the Foreign States Immunities Act requires service in respect of all proceedings involving a foreign State. The important focus for its purposes is not the existence or otherwise of a judgment against the foreign State or an obligation arising from the judgment of a foreign court in favour of the plaintiff; the focus is upon the circumstances in which an Australian court can exercise jurisdiction over a foreign State. To the extent that the Foreign States Immunities Act imposes a requirement that the initiating or originating process in an Australian court be served upon the foreign State, that requirement gives rise to no conflict with, nor repugnancy to, the Foreign Judgments Act.
That such a requirement existed whilst foreign judgments were registerable only under a state law is a significant aspect of the legislative history. There is nothing in the Foreign Judgments Act which suggests that any different effect was achieved with respect to the relationship between Australian courts and foreign States by its enactment. There is no occasion to deem some implied repeal by the 1991 Act of the 1985 Act.

Failure to serve: relief

If service on Nauru were required in accordance with the Foreign State Immunities Act it was not in dispute that there was non-compliance. There remained, according to the applicant, a question as to the availability of relief. So far as the Foreign Judgments Act was concerned, the applicant submitted that there was no power to set aside a registered judgment for failure to serve the summons seeking the order. Further, any application for such an order was to be made within the time specified in s 6(4) which, in accordance with the orders made by the Registrar on 6 June 2012, required application within 14 days after service of the notice of registration of the foreign judgment. That order not having been complied with, and there being no application to extend time pursuant to s 6(5), any application to set aside the judgment under the Foreign Judgments Act would be futile.
To the extent that reliance was placed on relief available under the Foreign States Immunities Act, the only source of power was said to be in s 38 which provides: 38 Power to set aside process etc. Where, on the application of a foreign State or a separate entity of a foreign State, a court is satisfied that a judgment, order or process of the court made or issued in a proceeding with respect to the foreign State or entity is inconsistent with an immunity conferred by or under this Act, the court shall set aside the judgment, order or process so far as it is so inconsistent.
The applicant submitted that s 38 did not assist Nauru because a complaint about non-service under Pt III did not raise "an immunity conferred by or under" the Act. The concept of "immunity" was concerned with either immunity from jurisdiction under Pt II or immunity from execution under Pt IV. Non-compliance with Pt III did not constitute conduct inconsistent with an immunity.
There are three possible responses to these submissions. The first is that the Foreign Judgments Act permits the setting aside of a judgment on the basis that enforcement would be contrary to public policy: s 7(2)(a)(xi). It is at least arguable that if a judgment has been entered against a foreign State in contravention of proper procedure and particularly procedures which would be required under public international law or the Foreign States Immunities Act, this ground might apply: see [230] above. Further, a failure to give proper notice in advance of the registration of the judgment, would provide a sound basis for an extension of time under s 6(5).
Secondly, with respect to the Foreign States Immunities Act, if that Act imposes an obligation to serve initiating process in accordance with its procedures, it is apt to describe the requirements of Pt III as extending "certain procedural immunities" to foreign States, to use the language of the Law Reform Commission note set out at [253] above. On the other hand, it is true that the Act itself uses the terms "immune" and "immunity" in the context of Pts II and IV. When used in Pt III, such as in s 27, immunity appears to refer to immunity from jurisdiction under Pt II. On the other hand, in Pt V, in which s 38 appears, there is also reference to the Diplomatic Privileges and Immunities Act 1967 (Cth) which confers immunities on heads of foreign States and their spouses. There is no reason to suppose that, whatever the effect of the Foreign Judgments Act might be, s 38 was intended to supply a constrained right of relief for breach of its provisions. While the immunities conferred in terms in Pts II and IV might be said to be conferred "by" the Act, it is an available construction that the consequence of failure to comply with Pt III is also an immunity conferred "under" the Act. That construction is to be preferred.
Thirdly, to the extent that s 38 is not a sufficient basis for setting aside the registration of a foreign judgment in circumstances where such relief would otherwise be appropriate, the Court has both statutory power (pursuant to s 23 of the Supreme Court Act), and under the UCPR (rr 36.15 and 36.16) to set aside an order made irregularly, by way of a default judgment or otherwise constituting an abuse of process. These provisions will apply in federal jurisdiction unless inconsistent with federal law: Judiciary Act 1903 (Cth), ss 79 and 80.
There was discussion as to whether the judgment entered by the Registrar could properly be described as a judgment "in default of appearance" for the purposes of s 27 (see [239] above). On one view, the section assumed an opportunity for appearance, without which there would be no default. That reading would be consistent with the terms of par (a) which require proof that the initiating process was served in accordance with the Act. On the other hand, it would be inconsistent with the tenor of s 27 to allow a judgment to be entered by default in circumstances where the foreign State had not been served at all. Accordingly, s 27 gives substance to the reading of Pt III that it incorporates, by necessary implication, a requirement for service. Further, s 27(1)(b) requires that the Court be satisfied that the foreign State is "not immune." There can be little doubt that s 38 would permit a foreign State to set aside a judgment entered without appearance on the basis that it was in fact immune. That being so, it would be absurd to think that s 38 did not allow the foreign State to prove that it had not been served for the purposes of par (a).
On the basis that both Commonwealth Acts apply with respect to the registration of a foreign judgment against a sovereign State, it is not necessary to decide whether relief is available under the Foreign Judgments Act itself. It is sufficient to conclude that if service of the initiating process was a requirement under the Foreign States Immunities Act (as held above) relief is available under s 38 of that Act. Even if s 38 did not provide a sufficient basis for setting aside the registration order, it is not inconsistent with general powers of this Court permitting that course to be taken in circumstances where to leave the order on foot would constitute an abuse of the Court's process.

Was Nauru immune from jurisdiction?

The reasoning set out above is sufficient to support the order made by the trial judge that the registration of the foreign judgment be set aside. It would follow that the garnishee order which was dependent upon that registration must also be set aside. For these reasons, the appeal should be dismissed. However, there remains a question as to what, if any, consequential orders might flow. The Court has been invited to continue a stay, referred to at [215] above, with respect to the orders made by the trial judge. The basis of that stay may prove important for its continuation after the judgment of this Court. The first issue relevant to that question is whether Nauru was immune from the jurisdiction of this Court (under Part II) with respect to the proceedings brought by the applicant.
The issue with respect to immunity from jurisdiction turned on a short point, namely whether, pursuant to s 11(1), Nauru was "not immune in a proceeding in so far as the proceeding concern[ed] a commercial transaction." Nauru submitted that the proceeding concerned the foreign judgment, registration of which would create new rights and liabilities. That understanding was confirmed by the terms of the Foreign Judgments Act which both prevented further proceedings on the underlying cause of action (s 12(1)) and denied any power of the Court ordering registration, or dealing with an application to set aside registration, having regard to the merit of the underlying claim. The foreign judgment being a form of res judicata carried with it the implication that the original cause of action had merged in the judgment. For these reasons, Nauru contended, the proceeding in the Supreme Court did not "concern" a commercial transaction.
This analysis was consistent, Nauru contended, with the principles applied by the courts in enforcing or refusing to enforce an arbitral award. As explained by French CJ and Gageler J in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia [2013] HCA 5; 87 ALJR 410, at [34]: "Enforcement of an arbitral award is enforcement of the binding result of the agreement of the parties to submit their dispute to arbitration, not enforcement of any disputed right submitted to arbitration."
To similar effect, the joint reasons of Hayne, Crennan, Kiefel and Bell JJ stated: "[78] This gives rise to the general rule that an award made by an arbitrator pursuant to such authority is final and conclusive. Further, the arbitrator's making of an award in exercise of such authority both extinguishes the original cause of action and imposes new obligations on the parties in substitution for the rights and liabilities which were the subject of the dispute referred to arbitration. The former rights of the parties are discharged by an accord and satisfaction. The accord is the agreement to submit disputes to arbitration; the satisfaction is the making of an award in fulfilment of the agreement to arbitrate. [79] It follows that when an arbitral award is enforced by curial process, the obligations sought to be enforced are those which are created by the award in substitution for the rights and liabilities which were the subject of the dispute referred to arbitration. A party may sue on an award as a cause of action or, in some cases, as in this case, seek enforcement of the award pursuant to the [International Arbitration Act 1974 (Cth)]. [80] The proposition identified as underpinning TCL's submissions assumes, wrongly, that the rights and liabilities which are in dispute in an arbitration continue despite the making of an award. That is, it assumes, wrongly, that the courts will not give effect to the discharge of those pre-existing rights and liabilities by the accord and satisfaction which is effected by a reference to arbitration and the making of an award."
Nauru also sought to obtain support from the decision of the UK Supreme Court in NML Capital. However, before turning to that judgment, it is convenient to note the contrary submissions of the applicant.
As the applicant correctly noted, the word "concerns" is used to identify a connection or relationship between "the proceeding" and "a commercial transaction". The applicant stated that, "[t]he underlying subject matter of the proceedings in Japan was undoubtedly commercial in character, concerning as it did, bonds issued with the backing of [Nauru] into the international debt markets." (That characterisation was not conceded by Nauru, but may be accepted for the purposes of the present argument.) The applicant then submitted that the word "concerns" is a "broad term" sufficient to encompass the subject matter which underlay the Japanese court's judgment, so as to confer upon it the necessary relationship with the registration application. This reading was said to gain support from the reasoning of the High Court in PT Garuda, referred to at [240] above.
The question in PT Garuda was whether the airline, which was largely owned and controlled by the government of the Republic of Indonesia, was immune from the jurisdiction of the Federal Court invoked by the Australian Competition and Consumer Commission on the basis of alleged contraventions of Pt IV of the Trade Practices Act 1974 (Cth). Garuda's assertion of immunity was rejected in the Federal Court by the primary judge and by a Full Court on appeal. Garuda's further appeal to the High Court was also dismissed. In the course of the joint reasons of French CJ, Gummow, Hayne and Crennan JJ, analysis of a number of overseas authorities was eschewed because of differences in relevant legislation. The Court noted that both a Canadian case, Kuwait Airways Corporation v Republic of Iraq [2010] 2 SCR 571, and the UK decision in NML Capital, were concerned with the recognition of judgments obtained elsewhere against a foreign State. The joint reasons expressly stated that "[n]o consideration is given in these reasons to any issues concerning the interaction between the [Foreign States Immunities Act] and the Foreign Judgments Act 1991 (Cth)": at [34].
Nevertheless, the applicant claimed that two paragraphs in the joint reasons, at [41] and [42], and a passage in the reasons of Heydon J, at [69], supported the proposition that the word "concerns" was to be given a broad meaning. However, that was not so: what the relevant passages emphasised was that the definition of "commercial transaction" fixed upon "entry and engagement by the foreign State" and did not have "any limiting terms which would restrict the immunity … to a proceeding instituted against the foreign State by a party to the commercial transaction in question": at [42]. Reference to the word "concerns" in s 11(1) had been relied upon by Garuda in an attempt (rejected) to limit the exception to cases involving a vindication of a private law right, as opposed to an alleged contravention of Australian "public" law relating to the regulation of anti-competitive behaviour.
The applicant accepted that its submissions were inconsistent with the majority opinions in NML Capital, but distinguished that case on the basis that the UK Act provided that a State was not immune as respects proceedings "relating to" a commercial transaction entered into by the State: State Immunity Act 1978 (UK), s 3(1). That provision read: 3 Commercial transactions and contracts to be performed in United Kingdom (1) A State is not immune as respects proceedings relating to - (a) a commercial transaction entered into by the State; or (b) an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom.
In Garuda, the High Court noted that the language of the UK Act considered in NML Capital differed from that of our Act. First, the UK provision withdraws immunity "as respects proceedings"; the Australian provision is more tightly worded, providing that a State is not immune "in a proceeding". Secondly, the UK provision uses the term "relating to" to describe the connection between the proceedings and the commercial transaction, which has a broader connotation than the Australia expression "concerns", although in both cases context will be critical: cf Technical Products Pty Ltd v State Government Insurance Office (Qld) [1989] HCA 24; 167 CLR 45 at 47 noting that the words "in respect of" have "a chameleon-like quality in that they commonly reflect the context in which they appear" (Brennan, Deane and Gaudron JJ).
Critical to the outcome in NML Capital was the later enactment of a provision relating to the recognition and enforcement of judgments against a foreign State, the Civil Jurisdiction and Judgments Act 1982 (UK) providing: 31(1) A judgment given by a court of an overseas country against a state other than the United Kingdom or the state to which that court belongs shall be recognised and enforced in the United Kingdom if, and only if - (a) it would be so recognised and enforced if it had not been given against a State; and (b) that court would have had jurisdiction in the matter if it had applied rules corresponding to those applicable to such matters in the United Kingdom in accordance with sections 2 to 11 of the State Immunity Act 1978.
Bearing these statutory elements in mind, it is significant that the UK Supreme Court was unanimous in NML Capital in accepting that the UK legislation did not encompass applications to register foreign judgments when enacted: the minority, Lord Phillips and Lord Clarke of Stone-cum-Ebony JSC, adopted what Lord Clarke described as "an updating construction", the latter stating that "once it is concluded that an updating construction should be applied, the wider meaning would give effect to the practical reality that the sole purpose of the proceedings is to enforce Argentina's liability under a commercial transaction and that there is no impediment to such a construction in international law, both policy and principle lead to the conclusion that the wider interpretation is to be preferred": at [152].
Lord Phillips referred at [25] to a passage in the judgment of the Court of Appeal in Svenska Petroleum Exploration AB v Government of the Republic of Lithuania (No 2) [2007] QB 886 at [137] where the Court (including Lord Clarke) had stated: "In our view the expression 'relating to' is capable of bearing a broader or narrower meaning as the context requires. Section 3 is one of a group of sections dealing with the courts' adjudicative jurisdiction and it is natural, therefore, to interpret the phrase in that context as being directed to the subject matter of the proceedings themselves rather than the source of the legal relationship which has given rise to them."
Lord Phillips agreed with the first sentence in that passage, but not the second. Referring to the history, Lord Phillips noted that there was "no recorded instance of an attempt" to register foreign judgments against States, before 1978: at [42]. He continued: "In 1978 the Rules of Court made no provision for impleading a foreign sovereign, no doubt reflecting the previous absolute doctrine of State immunity. Section 12(1) of the 1978 Act made provision for service on a State and s 12(7) made it plain that such service required permission, which could only be granted in accordance with the rules of court governing service out of the jurisdiction. There was no provision in 1978 for service out of the jurisdiction of a claim to enforce a judgment. In these circumstances it is perhaps not surprising that the Act made no express provision in relation to proceedings to enforce foreign judgments, other than judgments against the United Kingdom covered by the [European Convention on State Immunity]."
Despite this history, Lord Phillips construed "proceedings relating to…a commercial transaction" as extending to proceedings to enforce a foreign judgment whose subject matter was a commercial transaction. He reasoned that because the "restrictive doctrine of state immunity" limited the immunity to governmental acts, as distinct from commercial activities of the government, it would be inconsistent with this doctrine if the underlying purpose did not control each stage of the litigation, stating at [26]: "Whether a state is immune from such a claim should, under the restrictive doctrine of state immunity, depend upon the nature of the underlying transaction that has given rise to the claim, not upon the nature of the process by which the claimant is seeking to enforce the claim. … The proceedings relate both to the foreign judgment and to the transaction underlying that judgment, but in the context of restrictive state immunity it only makes sense to focus on the latter."
The majority approach is found in the judgments of Lord Mance JSC and Lord Collins of Mapesbury JSC (with whom Lord Walker of Gestingthorpe JSC agreed). Lord Mance said at [85]: "The pursuit of a cause of action without the benefit of a foreign judgment is one thing; a suit based on a foreign judgment given in respect of a cause of action is another. … A claim on a cause of action normally involves establishing the facts constituting the cause of action. A suit based on a foreign judgment normally precludes re-investigation of the facts and law thereby decided."
Lord Mance rejected the "updated" meaning proposed by the minority on two grounds: first, he noted the difficulties of applying s 31 in its terms if s 3(1)(a) of the State Immunity Act already provided for registration of a foreign judgment against a foreign State: at [96]. Lord Mance continued at [97]: "I see no basis for giving the phrase 'relating to' in section 3(1)(a) what is described as an 'updated' meaning. What constitutes a family or cruel or inhuman treatment or a 'true and fair view' (to take three well-known examples) may vary, and has varied, with social or professional attitudes from time to time. But a connecting factor like 'relating to' is most unlikely to have this elasticity, and it is implausible to suggest that Parliament intended that its meaning or application in or under section 3(1)(a) could, over time, expand to remove immunity in respect of judgments."
Lord Collins reasoned that when the State Immunity Act was enacted in 1978 "it would not have been envisaged that section 3 would have applied to the enforcement at common law of a foreign judgment against a foreign State based on a commercial transaction": at [114]. He doubted that s 31 of the 1982 Act "would have been enacted in the form that it was enacted if Parliament had thought that the 1978 Act already applied to a class of foreign judgments." Accepting that neither point was conclusive, and that there was no impediment in public international law to adopting the wider construction, he nevertheless concluded at [116]: "But for section 31 of the 1982 Act, and the almost invariable employment of wide express waivers of immunity, it might have been desirable as a matter of policy to give section 3 the wider meaning. There would, however, be no principled basis on which to found such a conclusion. The proceedings in England relate to the New York judgment and not to the debt obligations on which the New York proceedings were based."
In the light of this final conclusion, and indeed the reasoning of the minority, the question for this Court is whether it is appropriate to adopt an "updated" construction of s 11(1), based on matters of policy.
In Australia, the equivalent principle of statutory construction is usually identified as describing language as "ambulatory" or as "constantly speaking in the present": Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; 231 CLR 531 at [3]. In dealing with a possible rebuttable presumption that a statute is "always speaking", the joint reasons of Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ stated at [39]: "The terminology of rebuttable presumption is apt to mislead. What it bespeaks is an exercise in statutory interpretation which seeks to discern what is called the intention of the legislature in enacting the specific provision, having regard to its context, scope and purpose."
A similar point was made by Campbell J in Hore v Albury Radio Taxis Co-op Society Ltd [2002] NSWSC 1130; 56 NSWLR 210 at [43].
In the context of the Foreign States Immunities Act, it is necessary to ask first whether, as with the UK legislation, it is appropriate to adopt the narrower construction of s 11(1), at the time of its enactment. Accepting that to be so (in line with the unanimous decision of the UK Supreme Court) the second question must be, what has changed which requires an ambulatory construction, with a different outcome? The parties did not seek to identify any legislation in Australia equivalent to s 31 of the Civil Jurisdiction and Judgments Act (UK). Although the argument was not clearly articulated in these terms, it must depend upon some broader changes to the doctrine of State immunity in public international law, beyond the "restrictive" interpretation already reflected in s 11(1). Even if some more recent development of public international law were accepted, that would not provide a sound basis for this Court to give a construction to the Foreign States Immunities Act at variance with one which would have prevailed at the time of its enactment. These conclusions flow for a number of reasons.
First, with respect to the original meaning of s 11(1), the international law background and the domestic arrangements for service on foreign States out of the jurisdiction were at a similar stage of development in Australia in mid-1984 (the date of the Law Reform Commission Report, from which the Foreign States Immunities Act emerged) as in the UK in 1978 (disregarding the 1982 Civil Jurisdiction and Judgments Act).
Secondly, the use of the word "concerns" in the Australian Act suggests a more limited and direct connection between the proceedings and their subject matter than did the UK expression, "relating to". The difference in the introductory words (see [280] above) supports that conclusion.
On that basis the decision of the Supreme Court of Canada in Kuwait Airways Corporation v Republic of Iraq (referred to at [277] above) permitting the registration in Canada of a UK judgment against Iraq is distinguishable. The Canadian equivalent of s 11(1) used the term "relate to", which is closer to the UK provision than to the Australian term "concerns". Further, the judgment concurred in by all members of the Supreme Court made no reference to the precise issue considered in NML Capital and now raised in this Court. It was found to be "unhelpful" in NML Capital, at [113] (Lord Collins).
By the time the Law Reform Commission reported in 1984, s 31(1) of the Civil Jurisdiction and Judgments Act 1982 (UK) had commenced. That provision post-dated the UK State Immunity Act 1978, which was carefully considered by the Law Reform Commission in 1984. However, the Commission did not refer to s 31(1) of the Civil Jurisdiction and Judgments Act. There was then no equivalent provision of which this Court is aware in Australian state and territory provisions relating to the recognition of foreign judgments nor, it might be thought, was that a matter properly to be dealt with in state legislation or rules of court. Significantly, no provision equivalent to s 31 was included in the Foreign Judgments Act in 1991. However, the later enactment of s 31(1) did not affect the reasoning in NML Capital as to the original meaning of s 3(1) of the State Immunity Act 1978.
Accordingly, the construction of s 11(1), when enacted, should conform to that adopted in NML Capital.
Whether the original meaning has changed depends on subsequent developments. In relation to international law, Fox and Webb, The Law of State Immunity (3rd ed, 2013, OUP) at 220 refers to the decision of the International Court of Justice, Jurisdictional Immunities of the State (Germany v Italy, Greece intervening) [2012] ICJ Reports 99. In considering proceedings brought against Germany in Greece, seeking to enforce a judgment of an Italian court, the Court said at [130]: "It follows from the foregoing that the court seised of an application for exequatur of a foreign judgment rendered against a third State has to ask itself whether the respondent State enjoys immunity from jurisdiction - having regard to the nature of the case in which that judgment was given - before the courts of the State in which exequatur proceedings have been instituted. In other words, it has to ask itself whether, in the event that it had itself been seised of the merits of a dispute identical to that which was the subject of the foreign judgment, it would have been obliged under international law to accord immunity to the respondent State."
This decision may indicate that the national law in Australia is out of step with public international law, but that does not provide a sufficient basis for this Court to reconstruct the Foreign States Immunities Act to bring it into conformity with a more restrictive view of the immunity available under public international law. (That case actually turned on the erroneous claim to jurisdiction on the part of the Italian court of trial.) Nor is the present case one where compliance with international obligations requires enforcement of obligations placed on the legislature or the executive by existing domestic law: cf Plaintiff M61/2010E v Commonwealth of Australia (Offshore Processing Case) [2010] HCA 41; 243 CLR 319 at [103].
The Law Reform Commission did not expressly deal with the issue of enforcement of judgments in other jurisdictions, although the problem was noted. In effect, the Commission treated enforcement as separate from jurisdictional immunity and dealt with questions of execution without addressing registration of foreign judgments. That appears from the following passage at par 119: "The Importance of Remedies. Providing for the exercise of local jurisdiction over foreign states in appropriate cases would be of limited value if there was no way of enforcing any judgment so obtained. It is true that the European Convention excludes direct measures of enforcement against foreign states, but it does include an agreement by contracting States to give effect to judgments against them, and it also makes provisions for recognition of such judgments in the courts of the defendant state. Such machinery is appropriate to an international convention but cannot be established unilaterally in the legislation of any one state. In the absence of satisfactory arrangements for securing compliance with judgments, the assertion of judicial jurisdiction over a foreign state entails an assertion of the right to enforce any resulting judgment, if it is not complied with, by appropriate means. On the other hand enforcement measures involving the seizure of state property are capable of raising special problems, and the proper scope of such measures is not necessarily determined by the provisions dealing with the initial subjection to jurisdiction. It has already been noted that immunity from execution is generally treated separately from the question of immunity from jurisdiction. The common law position on execution, unclear as it is, has been described. The civil law jurisprudence favouring restrictive immunity has also been noted."
The second sentence of the Report set out above, referring to the European Convention, noted that enforcement could be by way of agreement and by "recognition of such judgments in the courts of the defendant state." (Emphasis added.) There was no suggestion that the Commission's proposals covered registration of a foreign judgment at all, nor that "recognition" had been considered in States other than the State claiming immunity.
By way of emphasis of the last point, enforcement of arbitral awards was directly identified, as it was in the UK legislation considered in NML Capital. The Law Reform Commission Report stated at par 105: "Judicial supervision of arbitrations is based primarily on the acknowledged jurisdiction of the forum of the arbitration. The question of the recognition and enforcement of arbitral awards is a distinct one: the award for example may be foreign, with recognition and enforcement sought under established machinery for the recognition and enforcement of foreign arbitral awards."
The recommendations resulted in the Foreign States Immunities Act containing express provision with respect to arbitrations, including recognition and enforcement: 17 Arbitrations (1) Where a foreign State is a party to an agreement to submit a dispute to arbitration, then, subject to any inconsistent provision in the agreement, the foreign State is not immune in a proceeding for the exercise of the supervisory jurisdiction of a court in respect of the arbitration, including a proceeding: (a) by way of a case stated for the opinion of a court; (b) to determine a question as to the validity or operation of the agreement or as to the arbitration procedure; or (c) to set aside the award. (2) Where: (a) apart from the operation of subparagraph 11(2)(a)(ii), subsection 12(4) or subsection 16(2), a foreign State would not be immune in a proceeding concerning a transaction or event; and (b) the foreign State is a party to an agreement to submit to arbitration a dispute about the transaction or event; then, subject to any inconsistent provision in the agreement, the foreign State is not immune in a proceeding concerning the recognition as binding for any purpose, or for the enforcement, of an award made pursuant to the arbitration, wherever the award was made.
The limitation of these provisions to arbitrations is expressly based on the underlying agreement to submit a dispute to arbitration. Not only is the conceptual basis of registering an award based on an arbitration different from registration of a judgment, but the express provisions in s 17 with respect to arbitral awards contrast with the simple language of s 11(1).
These considerations in combination weigh heavily against construing s 11(1) as an exception to immunity with respect to proceedings brought for the purpose of registering a foreign judgment. The primary countervailing consideration is that, from the perspective of the plaintiff in the proceedings, there is a debt owing by the foreign State, the recovery of which is the purpose underlying (a) the initial proceedings, (b) the registration, if necessary, of the judgment in another country and (c) steps taken to enforce that judgment against property of the State. To distinguish between these steps would be, in the eyes of the plaintiff, to defy practical reality on the basis of legal technicality. While understandable, that view was expressly confronted in NML Capital and did not prevail. It cannot carry decisive weight in the present circumstances. As explained above, the principle of sovereign State immunity is a basic principle of public international law and not a legal technicality. In some respects and in some jurisdictions, exceptions to the immunity are based upon a local connection to the forum State. No such connection is required by s 11, but it does not follow that s 11 necessarily covers all elements of litigation in all countries. For example, immunity from execution is a separate topic dealt with in Pt IV of the Act. Success in the initial stage of obtaining a judgment in one country will not create a consequential entitlement to execute against property in another country. By the same logic, it will not necessarily lead to an entitlement to register the judgment in a third country.
A second proposition relied upon by the applicant was that the combination of a judgment obtained in Japan, together with the denial of the right to sue again on the same cause of action in Australia, means the applicant cannot recover against property of Nauru in Australia. That may well be the result in the present circumstances, but it flows from a combination of the doctrine of State immunity, the limited exceptions available under Australian law and the choice of the applicant to bring the original proceedings to recover the debt in Japan. It provides no significant ground for thinking that Australian law is otherwise than as explained above.
There are sound reasons not to adopt an "updated construction", where the effect is to restrict the operation of sovereign State immunity. That is in part because the relationship between Australian and independent sovereign States is very much a matter for the Federal government to assess and determine, rather than for a state court exercising federal jurisdiction. There have been significant developments in State practice and in the relevant international instruments since 1985, including the UN Convention on Jurisdictional Immunities of States and Their Property (2004), to which no attention was paid in the course of these proceedings. Once the reliance by the minority in NML Capital on an "updating construction" is eschewed, the reasoning of the majority in that case is persuasive.
For these reasons, the correct conclusion is that the proceedings brought by the applicant for registration of the foreign judgment in this Court should have been dismissed.

Immunity from enforcement

On the basis that it was entitled to maintain the registration of the Tokyo District Court judgment in this Court, the applicant sought to garnishee some 30 bank accounts, each apparently in the name of the Republic of Nauru Consulate. It was common ground that the moneys recorded in these accounts (or more precisely in legal terms, the choses in action against Westpac which they represented) were the property of the Government of Nauru. If the applicant is not entitled to maintain its registration of the Tokyo District Court judgment, the garnishee order must be set aside. On the other hand, if it were to maintain the registration of the foreign judgment, it would need to deal with the immunity from execution contained in s 30 of the Foreign States Immunities Act, which is set out at [236] above. Section 32 provides an exception in relation to "commercial property" upon which the applicant relied: see [237] above.
There was evidence before the trial judge as to the purpose for which each of the accounts was maintained. Nauru resisted the proposition that any of the accounts involved property which was "not in use" for the purposes of s 32(3)(b), so as to place upon Nauru the burden of establishing that the property was "set aside otherwise than for commercial purposes." With respect to property which was "in use", the applicant was required to establish that it was in use "substantially for commercial purposes".
In terms of public law principle, the abandonment of the absolute model of State immunity was in large part driven by the view that if the State entered the commercial marketplace, in order to conduct business with private operators, it should submit to the rules of the market, including as to the enforceability of contracts. As explained by Lord Wilberforce, in a judgment quoted by the Law Reform Commission, Playa Larga (Owners of Cargo Lately Laden on Board) v I Congreso del Partido (Owners) [1983] AC 244 at 262: "The relevant exception, or limitation which has been engrafted upon the principle of immunity of states under the so called 'restrictive theory', arises from the willingness of states to enter into commercial, or other private law, transactions with individuals. … When therefore a claim is brought against a state … and state immunity is claimed, it is necessary to consider what is the relevant act which forms the basis of the claim: is this, under the old terminology, an act 'jure gestionis' or is an act 'jure imperii' is it … a 'private act' or is it a 'sovereign or public act', a private act meaning in this context an act of a private law character such as a private citizen might have entered into?"
On one view, a State enters a private marketplace when it seeks to employ people in some arm of the public service. Nevertheless, employment contracts are dealt with separately in the Foreign States Immunities Act and, if they were to come under the rubric of a commercial transaction, there would be little left of State immunity. On the other hand, the applicant asserted that if the State contracted with a business to provide services that would fall within the concept of a commercial transaction even, counsel was driven to concede, if the contract were for the maintenance of Government House (or Parliament House, police barracks etc).
These are not abstract questions in the present case: the bank accounts the subject of the garnishee order were colloquially described as containing the "consolidated revenue" of Nauru. Some funds, including those in which the Commonwealth claimed a possible resulting trust, were supplied for purposes of health and education, including for services provided (the Court was told) by a university in this State.
In a chapter headed "The Concept of Commerciality" (Ch 12) Fox and Webb state at 395: "A commercial or private law exception is recognized in principle by all countries which adhere to the restrictive doctrine of State immunity, but its application is so diverse and the criterion by which it is determined so differently formulated as to prevent the articulation of the exception in terms acceptable to all. The purpose underlying the restrictive doctrine is plain: a State engaging in business in competition with private persons or corporations should be answerable in the courts of the country where the business is conducted. The commercial or private law exception is driven by '[i]ncreasing concern for private rights and public morality, coupled with the increasing entry of governments into what had previously been regarded as private pursuits'. [Victory Transport Inc v Comisaria General 336 F2d 354 (2nd Cir 1964)]. That concern is widespread, but establishing a legal formulation for the exception has proved more difficult; national systems classify public and private acts differently and the existence of such a classification in international law is questionable."
The footnote to the last proposition referred to an article by the Commissioner in charge of the Law Reform Commission reference, Professor James Crawford, "International Legal and Foreign Sovereigns: Distinguishing Immune Transactions" (1983) 54 BYIL 75 at 91. (The extract from Victory Transport in the US Federal Reporter, at 357 reads: "[g]rowing concern for individual rights and public morality, coupled with the increasing entry of governments into what had previously been regarded as private pursuits".)
These theoretical difficulties provide a reason for this Court not to embark upon the process of analysis in the circumstances of the present case. Those circumstances include the following matters. First, the trial judge appears to have treated the definition of commercial property as property other than diplomatic property or military property: at [91]. That finding (which was differently expressed in other passages in the reasons) was used as a basis for not attempting a classification of the various bank accounts. As a result, the necessary findings of fact were not made. Secondly, the evidence before the Court was sparse on these issues. That was partly because of the speed with which the matter was brought on for hearing. Thirdly, this Court is labouring under similar time constraints. It would have unfortunate practical consequences if this Court were delayed in finalising its judgment by the need to consider such factual issues. Fourthly, the factual issues would be determined for the first time in this Court, with no ready means of appeal. This would be unsatisfactory for either party if unsuccessful. On the other hand, time prevents remittal of the factual issues to a trial judge. The matter being disposed of on other grounds, I do not express a concluded view upon this issue.
However, the characterization of the accounts as not commercial property may be relevant for any continuation of the current stay. For that purpose I accept the reasons and conclusions of the Chief Justice.

Conclusions

For these reasons, it is clear that the applicant's appeal should be dismissed. The last matter discussed means that Nauru's notice of contention will not have been the subject of findings by the Court. The Commonwealth's summons seeking leave to appeal related to the failure of the trial judge to permit the Commonwealth to seek discharge of the garnishee order relating to an account in which moneys provided by the Commonwealth of Australia were held and in failing to conclude that such moneys were immune from execution pursuant to s 30 of the Foreign States Immunities Act. The Commonwealth also sought to raise issues as to a property interest which it might have in the debt represented by the account. As with the notice of contention, these issues have not been reached. The appropriate course with respect to the Commonwealth's summons is to refuse leave to appeal, without an order for costs.
Finally, Westpac was represented during the proceedings but played no part in the hearing, either by way of written or oral submissions, except to ensure that a particular submission which might have affected its interests was not being pressed. It did not seek costs.
I concur in the orders indicated by the Chief Justice.

Amendments 23 October 2014 - Internal references corrected Amended paragraphs: 267, 271, 295 03 March 2016 - typographical errors corrected 17 March 2016 - par [266] change [231] to [230] change "that would provide" to "would provide" par 274 change "International Arbitration Act" to "[International Arbitration Act" par [277] change "Foreign State Immunities Act" to "Foreign States Immunities Act" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 March 2016

Administration of Justice Act 1924(NSW)

Foreign Judgments Act 1973(NSW)

(US) Foreign States Immunities Act 1985(Cth)

Pts II, III and IV Judiciary Act 1903(Cth)

Reciprocal Enforcement of Judgments Act 1959(Qld)

Supreme Court Civil Rules 2006(SA)

Trade Practices Act 1974(Cth)

Arbitration Act 1974(Cth)

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