[1997] HCA 2
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390
[1955] HCA 27
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
[1981] HCA 26
Firebird Global Master Fund II Ltd v Republic of Nauru (2014) 89 NSWLR 477
[2014] NSWCA 360
Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31
Source
Original judgment source is linked above.
Catchwords
[1997] HCA 2
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390[1955] HCA 27
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297[1981] HCA 26
Firebird Global Master Fund II Ltd v Republic of Nauru (2014) 89 NSWLR 477[2014] NSWCA 360
Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31[2015] HCA 43
Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l (2023) 97 ALJR 276[2023] HCA 11
Li v Zhou (2014) 87 NSWLR 20[2014] NSWCA 176
Newcastle City Council v GIO General Ltd (1997) 191 CLR 85[1997] HCA 53
Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404[1994] HCA 54
Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission (2016) 116 ACSR 473[2016] NSWCA 298
PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301[1995] HCA 36
Potter v Broken Hill Pty Company Ltd (1906) 3 CLR 479[1906] HCA 88
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355[1998] HCA 28
PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1[2015] HCA 36
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240
[2012] HCA 33
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2011) 192 FCR 393
[2018] FCAFC 64
Saraswati v The Queen (1991) 172 CLR 1
[1991] HCA 21
Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1
[2005] VSCA 76
Walker v Vanuatu [2011] FCAFC 138
Zhang v Zemin (2010) 79 NSWLR 513
Judgment (7 paragraphs)
[1]
Introduction
Greylag Goose Leasing 1410 Designated Activity Company and Greylag Goose Leasing 1446 Designated Activity Company (together, the Appellants or Greylag Goose) are companies incorporated in Ireland which lease aircraft to PT Garuda Indonesia Limited (the Respondent or Garuda).
Garuda is a foreign company registered under Div 2 of Pt 5B.2 of the Corporations Act 2001 (Cth) and is the national airline of Indonesia. More particularly for present purposes, it was common ground that Garuda is a "separate entity" of a foreign State within the meaning of that term in the Foreign States Immunities Act 1985 (Cth) (FSIA) and thus, although not falling within the extended definition of a "foreign state" under s 3(3) of that Act, nevertheless is the beneficiary of s 22 of the FSIA which applies the provisions of Part II of the FSIA to a separate entity of a foreign State as they apply in relation to the foreign State (other than subparagraph 11(2)(a)(i), paragraph 16(1)(a) and subsection 17(3) which are not material for the purposes of the present appeal.)
Garuda was similarly recognised as a "separate entity" of Indonesia for the purposes of the FSIA in PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240; [2012] HCA 33 (PT Garuda).
Section 9 of the FSIA, headed "General Immunity from jurisdiction" provides that "[e]xcept as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding" (emphasis added) The combined effect of s 22 of the FSIA together with s 9 is that, except as provided by or under the Act, Garuda, as a separate entity of a foreign state, is immune from the jurisdiction of the courts of Australia in a proceeding.
By originating process filed in the Supreme Court of New South Wales on 15 August 2022, Greylag Goose applied for orders that Garuda be wound up "on the basis that it is unable to pay its debts or otherwise that it is just and equitable to do so".
On 22 September 2022, Garuda filed a notice of motion seeking a declaration that the Court had no jurisdiction over it by reason of s 9 of the FSIA.
The Appellants in turn resisted Garuda's application, invoking s 14(3) of the FSIA as a statutory provision which qualified the operation of s 9. Section 14(3) provides:
"A foreign State is not immune in a proceeding in so far as the proceeding concerns:
(a) bankruptcy, insolvency or the winding up of a body corporate; or
(b) the administration of a trust, of the estate of a deceased person or of the estate of a person of unsound mind."
The Appellants' simple contention was that, by virtue of s 22, Garuda as a separate entity was a "foreign state" for the purposes of s 14(3) of the FSIA and that the winding up proceedings which Greylag Goose commenced were proceedings concerning the winding up of a body corporate, namely Garuda, or were proceedings concerning insolvency in that Garuda's failure to meet creditors' demands for payment of two debts in the sums of US$193,003,254.55 and US$224,968,492.29 gave rise to a deemed insolvency of Garuda pursuant to s 583(c)(i) of the Corporations Act. Accordingly, it was contended that, as the proceedings concerned "insolvency or the winding up of a body corporate", Garuda, as statutory surrogate of a foreign State (Indonesia), lacked immunity which s 9 of the FSIA otherwise provided because they fell within the exception to immunity supplied by s 14(3)(a).
This superficially attractive argument was rejected by Hammerschlag CJ in Eq (the primary judge) who acknowledged its apparent force: Greylag Goose Leasing 1410 Designated Activity Company v PT Garuda Indonesia Ltd [2022] NSWSC 1623. The core of his Honour's reasoning was as follows:
"[21] Grammatically and literally, the words "a proceeding insofar as the proceeding concerns... the winding up of a body corporate" in s 14(3) are susceptible to the reading that the proceeding concerns the winding up of any body corporate, including the foreign State or separate entity whose immunity the section removes.
[22] But in my view, this is not a sensible way to read them. Rather, the words of the chapeau to s 14(3) refer to the object of the immunity (the foreign State or separate entity as the case may be) whereas the body corporate referred to in s 14(3)(a) is not the object of the immunity but someone different, namely the body corporate the winding up of which the proceedings concern.
[23] Greylag Goose's construction imports to the legislature an unlikely intention to refer to the same person in two different ways. Its construction is also tortuous because, in effect, it requires it to operate against Garuda even though, when practically read, the provision says Garuda has no immunity in winding up proceedings against a body corporate. The presence of the indefinite article is against Greylag Goose's construction, not in favour of it. There would have been more force in Greylag Goose's argument if the definite article had been used.
[24] I consider that had the legislature intended to suscept the foreign State or separate entity to a winding up by this Court, where no other exception to the immunity provided by the Immunities Act applies, it would clearly have said so. In my view, the section does not have this in mind.
[25] One significant consequence of upholding Greylag Goose's construction is that it would logically follow that s 14(3) removes the immunity of natural persons who fall within the definition of foreign State (such as the head of a foreign State) or separate entity so that they could be bankrupted in Australia in circumstances where no other exception to the immunity provided by the Immunities Act (such as in relation to commercial transactions - see [34] below) applies. There is no warrant to assume that the section would operate differently with respect to natural persons as opposed to bodies corporate. This, I consider, adds force to a construction that the bankruptcy, insolvency or winding up in question is not that of the foreign State or separate entity itself.
[26] It is not necessary to examine what are the outer reaches of the operation of s 14(3). It suffices to observe that it would operate at least with respect to recovery of property belonging to a corporation being wound up, to judicial determination of alleged voidable transactions within Pt 5.7B of the Corporations Act to which the foreign State or separate entity was party, and to make the foreign State or separate entity amenable to have to attend compulsory examination."
On appeal, the Appellants urged upon the Court the plain or literal meaning of s 14(3) of the FSIA and that the reference to "a body corporate" in s 14(3)(a) could be to both a body corporate that was a "separate entity" within the meaning of that term as defined in the FSIA as well as a body corporate more generally, and that the primary judge's observation at [24] of his reasons that the legislature would have made its intention clear if it intended to suscept the foreign State (and its separate entities) to a winding up, was, at best, a neutral factor, and appeared not to account for what was described as the presumption that a superior court's jurisdiction should be construed broadly: see Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 426; [1994] HCA 54 (Shin Kobe Maru).
The Appellants also contended that the context and purpose of s 14(3)(a) supported their construction, arguing that the purpose of the FSIA was to give effect to the so-called restrictive theory of foreign State immunity, a concept that was referred to both in the Australian Law Reform Commission's Report concerning Foreign State Immunity (Report No 24, 10 October 1984) (ALRC Report) at xvi and the second reading speech of the FSIA (which will be referred to more fully below). In support of this general purpose, the Appellants noted that the FSIA created a series of broad exceptions from immunity, extending from commercial transactions (s 11), to employment (s 12), to personal injury (s 13), to taxation (s 20). These were said to demonstrate that the purpose of the FSIA was derogation from the former position of absolute immunity for foreign states, which, in turn, was said to tell in favour of a broad and literal construction of the exception to immunity in s 14(3)(a) urged by the Appellants.
The Appellants further submitted, by reference to PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2011) 192 FCR 393; [2011] FCAFC 52 (Garuda FCAFC), that:
"Just as the legislature can be taken to have intended that separate entities not escape litigation in respect of misleading or deceptive conduct or anti-competitive behaviour, the legislature can be taken to have intended to facilitate the winding up of an insolvent entity and the equitable distribution of its assets, regardless of whether that entity happens to be a foreign State or a separate entity of a foreign State."
In my opinion, for the reasons given by the primary judge and the additional reasons set out below, his Honour was correct in his construction of s 14(3)(a) of the FSIA and the challenge to it, by way of appeal, should be rejected (although leave to appeal from what was an interlocutory decision should be granted given the size of the claim, its consequences if the appeal were upheld and the general importance of the construction of the FSIA: Supreme Court Act 1970 (NSW) s 101(2)(e).
[2]
Consideration
The literal meaning of a statutory provision will not always accord with its legal meaning, which is to be derived from a full consideration of the language of the statute viewed as a whole and the context, general purpose and policy of the statute or a provision within it, to the extent that that is separately discernible: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [78]; Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320; [1981] HCA 26; Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397, [1955] HCA 27; Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204 (Sydney Seaplanes) at [26]; Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission (2016) 116 ACSR 473; [2016] NSWCA 298 at [77]. While the legal and the literal meaning of a statute will often coincide, it is the legal meaning of a statutory provision to which this Court must give effect.
To the extent that the primary judge did not favour what the Appellants contended was the plain or literal meaning of s 14(3)(a), that fact does not in and of itself bespeak error on his Honour's part and, as will be seen, the Appellants' submission in that regard tended to focus on the words of s 14(3)(a) in isolation from the balance of the subsection and indeed s 14 as a whole. It also paid insufficient regard to the modern approach to statutory interpretation which insists upon the importance of context in the construction of statutes and not merely at some later stage in the process if and when ambiguity might be thought to arise. "Context" is to be understood in its widest sense to include such matters as the existing state of the law and the mischief which the statute was intended to remedy, to the extent that that is discernible: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2 (CIC).
In Sydney Seaplanes, I made the uncontroversial observation that words, whether used in a statute or more generally, always exist in and take their meaning from the particular context in which they are used, and that that context may expose any mischief which a statute is directed towards redressing and may reveal the purpose underpinning the enactment: at [31]. I went on to observe (at [33]) that:
"Emphasis on the importance of context in statutory interpretation at least overlaps with and reinforces the need for purposive construction. This is not so much a matter of "constructional choice" as legislative fiat because, by s 33 of the Interpretation Act 1987 (NSW), and its Commonwealth analogue (s 15AA of the Acts Interpretation Act 1901 (Cth)), it is provided that:
'In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.'"
[3]
The FSIA
The key provisions of the FSIA for the purposes of the present case have already been noted in the introductory section of these reasons however the full text of s 14 should be set out. It supplies one of a number of exceptions to the general principle of immunity given effect by s 9 of the FSIA and provides as follows:
"14 Ownership, possession and use of property etc.
(1) A foreign State is not immune in a proceeding in so far as the proceeding concerns:
(a) an interest of the State in, or the possession or use by the State of, immovable property in Australia; or
(b) an obligation of the State that arises out of its interest in, or its possession or use of, property of that kind.
(2) A foreign State is not immune in a proceeding in so far as the proceeding concerns an interest of the State in property that arose by way of gift made in Australia or by succession.
(3) A foreign State is not immune in a proceeding in so far as the proceeding concerns:
(a) bankruptcy, insolvency or the winding up of a body corporate; or
(b) the administration of a trust, of the estate of a deceased person or of the estate of a person of unsound mind."
The FSIA has been considered on three occasions in the High Court: PT Garuda, concerning the construction of s 11 of the FSIA, the "commercial transactions" exception to s 9's general immunity, and whether it was limited to proceedings concerning "private law rights"; Firebird, concerning whether the "commercial transactions" exception extends to a proceeding to register a foreign judgment (which it does, if the underlying judgment concerns a "commercial transaction" within the meaning of s 11); and, most recently, Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l (2023) 97 ALJR 276; [2023] HCA 11 (Kingdom of Spain), concerning the distinction between recognition, enforcement and execution of arbitral awards in the context of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965).
Unsurprisingly, all three of these High Court decisions make extensive reference to the ALRC Report: PT Garuda at [7], [18]; Firebird at [5]-[11], [140]-[142], [173]-[198]; and Kingdom of Spain at [11], [17]-[18]. In none of these decisions, however, has s 14 of the FSIA been considered directly although the joint judgment of Nettle and Gordon JJ in Firebird makes some general observations in relation to the suite of exceptions to the general immunity conferred by s 9 in ss 12-16 of the FSIA. Thus, their Honours observed at [199] that, taken together, ss 12-16:
"reflect the idea that, although a foreign state is, generally speaking, immune to the jurisdiction of Australian courts, there are some acts and omissions and some forms of property which are so closely connected to Australia that it is appropriate that a foreign state be amenable to the jurisdiction of Australian courts in proceedings concerning such matters." (emphasis added)
[4]
The ALRC Report - general
As with the Insurance Contracts Act and the Admiralty Act, the origins of the FSIA can be tracked directly to the work of the Australian Law Reform Commission and, in the case of the FSIA, the ALRC Report. None of the Insurance Contracts Act, the Admiralty Act nor the FSIA in any material sense replaced previous statutory regimes. Unlike the other two statutes that emerged from the statutory maternity ward or laboratory that was the Australian Law Reform Commission of the 1980s, however, the FSIA's conception coincided with a number of similar exercises in law reform that were taking place or had recently taken place throughout the world as globalisation grew and governmental power came increasingly to be devolved through state instrumentalities and state owned corporations.
Such international activity was reflected in the terms of reference which ultimately resulted in the ALRC Report. These were as follows:
"I, NEIL ANTHONY BROWN, Minister for Communications, acting for and on behalf of the Attorney-General, HAVING REGARD TO THE FOLLOWING:
(a) the function of the Law Reform Commission, pursuant to references to the Commission by the Attorney-General, of reviewing laws, including rules of the common law, to which the Act applies;
(b) the rules of the common law concerning foreign State (or 'sovereign') immunity;
(c) legislation recently enacted, or under consideration, in other countries on the subject of foreign State immunity;
(d) the recommendation in paragraph 18.2 of the Report of the Joint Committee of the Law Council of Australia and the Maritime Law Association of Australia and New Zealand on Admiralty Jurisdiction in Australia; and
(e) the work of the United Nations International Law Commission on the 'Jurisdictional immunities of States and their property',
HEREBY REFER to the Law Reform Commission for INQUIRY, REVIEW and REPORT :
(a) the law in Australia of foreign State immunity including
- substantive immunity from the jurisdiction of Australian courts and tribunals,
- procedural immunities with respect to the service of process, discovery, joinder of parties, counter-claims, set-offs and cross-demands, and
- immunities from interim and final enforcement of judgements and orders of Australian courts and tribunals,
Of -
- foreign States,
- their agencies, instrumentalities (including State-owned corporations) and subdivisions, and
- foreign heads of State; and
(b) whether there is a need for Commonwealth legislation with respect to foreign State immunity and, if so, the principles on which such legislation should be based."
[5]
The ALRC Report and s 14(3) of the FSIA
The only divergence (and an immaterial one for present purposes) between the ultimate text of s 14(3) of the FSIA and the Foreign States Immunities Bill which formed Appendix A to the ALRC Report was that, whereas the former employed the expression "in a proceeding in so far as the proceeding concerns", the latter used the expression "in a proceeding concerning". An identical and similarly immaterial change was made in s 14(1) and (2) of the FSIA to what had been provided in the corresponding clauses of the Bill and indeed in other exceptions to the general immunity supplied by s 9: see PT Garuda at [11] and Firebird at [177] where it was observed that the expression "in so far as" indicated that the exception is capable of application to a proceeding which is only partly concerned with the subject matter of the particular exception.
The ALRC addressed what became s 14 of the FSIA at [116]-[117] under the heading "Ownership, Possession and Use of Property". Those paragraphs, omitting footnotes, were in the following terms:
"[116] Immovable Property. It is generally accepted that there should be no immunity in actions arising out of the ownership by the foreign state of immovable property in the forum state. This is, of course, subject to the inviolability of diplomatic and consular premises under the Vienna Conventions. The immovable property exception to the general rule of immunity derives from the private international law rule giving courts of the forum paramount if not exclusive jurisdiction to decide title to such property.' If foreign state immunity acts as a bar to the exercise of this jurisdiction it is likely that no court, even in the foreign state, will be able to determine the issue. All the overseas legislation removes immunity in this way except the State Immunity Act 1982 (Canada). It is recommended that the proposed legislation follow the general trend. It should provide that a foreign state is not immune in proceedings concerning its interest in, or its possession or use of, immovable property in Australia nor any obligation arising out of its interest, possession or use. Such a provision should be interpreted broadly. As the Explanatory Report to the European Convention on State Immunity notes, its equivalent provision, art 9, is intended to cover such things as actions for nuisance and occupier's liability, and actions requiring the repair or demolition of dilapidated property.
[117] Movable Property. In addition to the immovable property exception, the common law has long recognised a further exception relating to movable property, based on a similar rationale to the immovable property exception. Where a local court is administering, or supervising the administration of, property it is appropriate that it should be able to adjudicate on all the conflicting claims to such property. Situations where this might arise include bankruptcy, insolvency, the winding up of companies, and the administration of trusts, of estates of deceased persons or of estates of persons of unsound mind. Some of the overseas legislation has explicit provision denying immunity in these situations. It is recommended that the proposed legislation do likewise."
[6]
Conclusion
For all the above reasons, leave to appeal in this important and skilfully argued case should be granted but the appeal dismissed with costs.
MEAGHER JA: I agree with the Chief Justice.
KIRK JA: I agree with Bell CJ.
[7]
Amendments
14 June 2023 - At [47] - counsel for the respondent was incorrectly referred to as Mr Leopold SC (who appeared for the appellants). The amendment was made to refer to the respondent's counsel Ms Beechey.
14 June 2023 - At [47] - Further change made to the first sentence. The reference to "... as Ms Beechey, who appeared for Garuda, accepted" is deleted as the conclusion of that sentence should refer to the proposition accepted by Mr Leopold SC, who appeared for Greylag Goose.
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: 14 June 2023
Parties
Applicant/Plaintiff:
Greylag Goose Leasing 1410 Designated Activity Company
Respondent/Defendant:
P.T. Garuda Indonesia Ltd
Legislation Cited (10)
(South Africa) Foreign States Immunities Act 1985(Cth)ss 3(3), 9, 11, 12, 13, 14, 22, 33
Punishment, opened for signature 10 December 1984, 1465 UNTS 85 (entered into force on 26 June 1987)
Convention on the Settlement of Investment Disputes between States and nationals of other States 575 UNTS (entered into force on 18 March 1965)
UN Convention on Jurisdictional Immunities of States and their Property: General Assembly Resolution, 59/38, Annex, (2 December 2004)
Cases Cited: Australian International Islamic College Board Inc v Kingdom of Saudi Arabia [2014] 2 Qd R 1; [2013] QCA 129
Banco Nacional de Cuba v Cosmos Trading Corp [2001] 1 BCLC 813
British South Africa Co v Companhia de Mocambique [1893] AC 602
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2
Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390; [1955] HCA 27
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26
Firebird Global Master Fund II Ltd v Republic of Nauru (2014) 89 NSWLR 477; [2014] NSWCA 360
Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31; [2015] HCA 43
Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l (2023) 97 ALJR 276; [2023] HCA 11
Li v Zhou (2014) 87 NSWLR 20; [2014] NSWCA 176
Newcastle City Council v GIO General Ltd (1997) 191 CLR 85; [1997] HCA 53
Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404; [1994] HCA 54
Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission (2016) 116 ACSR 473; [2016] NSWCA 298
PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301; [1995] HCA 36
Potter v Broken Hill Pty Company Ltd (1906) 3 CLR 479; [1906] HCA 88
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28
PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240; [2012] HCA 33
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2011) 192 FCR 393; [2011] FCAFC 52
Rahimtoola v Nizam of Hyderabad [1958] AC 379
Re Rafidain Bank [1992] BCLC 301
Republic of Italy (Ministry of Foreign Affairs and International Cooperation Adelaide Consulate) v Benvenuto (2018) 261 FCR 19; [2018] FCAFC 64
Saraswati v The Queen (1991) 172 CLR 1; [1991] HCA 21
Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204
The Philippine Admiral (Owners) v Wallem Shipping (Hong Kong) Ltd [1977] AC 373
Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529
Victorian Aircraft Leasing Ltd v United States of America (2005) 12 VR 340; [2005] VSCA 76
Walker v Vanuatu [2011] FCAFC 138
Zhang v Zemin (2010) 79 NSWLR 513; [2010] NSWCA 255
Texts Cited: Australian Law Reform Commission, Admiralty Jurisdiction (Report No 33, 2 December 1986)
Australian Law Reform Commission, Foreign State Immunity (Report No 24, 10 October 1984)
Australian Law Reform Commission, Insurance Contracts (Report No 20, 16 December 1982)
Dicey, Morris & Collins on the Conflict of Laws (16th ed, 2022, Sweet & Maxwell)
H Lauterpacht, 'The Problem of Jurisdictional Immunities of Foreign States' (1951) 28 British Yearbook of International Law 220
I Brownlie, Principles of Public International Law (3rd ed, 1979, Oxford (1985 reprint))
IA Shearer, Starke's International Law (11th ed, 1994, Butterworths)
International Law Commission, Report on the work of its Thirty-second session, 5 May - 25 July 1980, Official Records of the General Assembly, Thirty-fifth session, Supplement No. 10
P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Lawbook Co)
R Garnett, "Should Foreign State Immunity be Abolished?" 20 Australian Year Book of International Law 175 (1999)
Category: Principal judgment
Parties: Greylag Goose Leasing 1410 Designated Activity Company (First Appellant)
Greylag Goose Leasing 1446 Designated Activity Company (Second Appellant)
P.T. Garuda Indonesia Ltd (Respondent)
Representation: Counsel:
The purpose (or purposes, for there may be a number) of any particular statute may be expressly stated, may be discerned only by inference upon examination of the legislation as a whole, or may be revealed from the nature and context of a particular statute's enactment: Saraswati v The Queen (1991) 172 CLR 1 at 21; [1991] HCA 21; Sydney Seaplanes at [34]-[37].
Purpose may also be disclosed, in particular cases, by reference to secondary materials including the reports of law reform bodies which form part of the context of a statute: CIC at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 112; [1997] HCA 53. Both of those decisions made extensive reference to the Australian Law Reform Commission's Report No 20, Insurance Contracts, issued in 1982 and which led to the passage of the Insurance Contracts Act 1984 (Cth). In CIC at 408, Brennan CJ, Dawson, Toohey and Gummow JJ noted that:
"It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure."
See also Sydney Seaplanes at [41] and, separately, Shin Kobe Maru at 416-417 as an example of the High Court's reliance upon the Australian Law Reform Commission's Report No. 33, Admiralty Jurisdiction when construing the Admiralty Act 1988 (Cth).
The FSIA was the direct product of the ALRC's Report No. 24, Foreign State Immunity (1984). The Commissioner in Charge of that report was the late Professor James Crawford AC SC FBA, then of the University of Adelaide Law School and subsequently the Whewell Professor of International Law at the University of Cambridge and ultimately a judge of the International Court of Justice.
The bridge or lineage between the ALRC Report and the FSIA is made plain by recourse to both the Second Reading Speech for the Foreign State Immunities Bill 1985 and the Explanatory Memorandum to the FSIA, the latter of which, at p 2, states clearly that:
"The proposed legislation is based upon a report and recommendations of the Law Reform Commission (ALRC 24, Foreign State Immunity (1984)) which involved a thorough review of developments in other countries and at the international level, including the work of the International Law Commission."
To similar effect, the then Attorney General Bowen (Commonwealth, Parliamentary Debates, House of Representatives, 21 August 1985, 141) noted that:
"The legislation will implement the recommendations of the Law Reform Commission in report No. 24 on foreign state immunity; which was tabled in the Parliament on 10 October 1984. The report was prepared after thorough examination of similar legislation in other countries and extensive consultation with relevant organisations and individuals."
As Nettle and Gordon J observed in Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31; [2015] HCA 43 (Firebird) at [173], "the ALRC report is significant because, although it cannot displace the clear meaning of the Immunities Act, it assists in ascertaining the legislative context and purpose and the particular mischief that the legislation is seeking to remedy". The ALRC Report was also considered at length in this Court's previous consideration of the FSIA in Zhang v Zemin (2010) 79 NSWLR 513; [2010] NSWCA 255 (Zhang) at [138]-[148], [158], [161].
Attention is first turned to the text of the legislation.
The Appellants placed reliance upon the following two passages from the joint judgment of French CJ and Kiefel J in Firebird at [44] and [80]:
"[44] The construction contended for by Firebird suffers from the additional disadvantage that it does not give full effect to the jurisdictional immunity of a foreign State which is recognised by international law. Section 9 ought, so far as its language permits, to be construed in conformity with international law. Especially is this so where the statute implements or codifies Australia's obligations under international law.
…
[80] Consistently with the approach taken to the construction of s 9, where "proceeding" is given its widest meaning in order to give effect to the general immunity from the jurisdiction of Australian courts, a wider meaning should be given to "the proceeding concerns a commercial transaction" in order to give effect to the restriction on immunity which s 11(1) seeks to achieve. Such a construction of the two provisions gives effect to Australia's international obligations."
The references in these two passages to "Australia's obligations under international law" and "Australia's international obligations" are, with respect, somewhat elusive in the context of sovereign immunity.
Unlike, for example, the International Arbitration Act 1974 (Cth) and the Civil Aviation (Carriers' Liability) Act 1959 (Cth), which give effect to the New York Convention and the Warsaw Convention respectively, there was no international instrument at the time of passage of the FSIA which provided a source of Australia's international obligations in relation to sovereign immunity, and it has been said, at least as late as 1999, that there were no clear customary international law rules of foreign state immunity: R Garnett "Should Foreign State Immunity be Abolished?" (1999) 20 Australian Year Book of International Law 175 (Garnett) at 175, 182; I Brownlie, Principles of Public International Law (3rd ed, 1979, Oxford (1985 reprint)) (Brownlie (3rd ed) at 333. In Zhang, Spigelman CJ observed at [139] that "[a]t the time that the ALRC Report was presented and acted upon by the Commonwealth Parliament, there was no clarity in the principles of international law which determined what kinds of official conduct were entitled to immunity"; see also Rahimtoola v Nizam of Hyderabad [1958] AC 379 (Nizam of Hyderabad) at 417-418, quoted in Zhang at [139].
It was not until 2 December 2004 that the General Assembly of the United Nations adopted the UN Convention on Jurisdictional Immunities of States and their Property: General Assembly Resolution 59/38, Annex, 2 December 2004.
Apart from the three instances where it has been considered in the High Court, the FSIA has also been the subject of some eight intermediate appellate decisions in Australian courts: Garuda FCAFC; Walker v Vanuatu [2011] FCAFC 138, concerning the general s 9 immunity in the context of the Admiralty Act and the seizure of a ship; Republic of Italy (Ministry of Foreign Affairs and International Cooperation Adelaide Consulate) v Benvenuto (2018) 261 FCR 19; [2018] FCAFC 64, concerning unpaid wage claims and the construction of s 12 of the FSIA; Victorian Aircraft Leasing Ltd v United States of America (2005) 12 VR 340; [2005] VSCA 76, concerning the construction of the "commercial transactions" exception in s 11, and whether certain promises in respect of loans and economic assistance were "commercial"; Zhang, concerning whether a party must raise the s 9 immunity and whether the immunity applies to officers of a foreign state based on their status at the time of the alleged conduct, or as at the institution of proceedings, and whether further exceptions to immunity could be derived from jus cogens norms of international law; Australian International Islamic College Board Inc v Kingdom of Saudi Arabia [2014] 2 Qd R 1; [2013] QCA 129, concerning the construction of "scholarship" in s 11(b), and in particular whether payment to an educational institution for the education of children was a "scholarship"; Li v Zhou (2014) 87 NSWLR 20; [2014] NSWCA 176, concerning whether China's accession and ratification of the Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment amounted to "submission" for the purpose of s 10; and Firebird Global Master Fund II Ltd v Republic of Nauru (2014) 89 NSWLR 477; [2014] NSWCA 360 which went on appeal to the High Court.
The Appellants placed reliance upon the judgment of Rares J (with whom Lander and Greenwood JJ generally agreed) in Garuda FCAFC. In that judgment, his Honour said (at [207]) of the exception to immunity in s 11 of the FSIA:
"Section 11 operates as an exception to the general immunity conferred in s 9. A statutory exception from a general protection should be construed in a way that will promote the purpose or object underlying the Act: s 15AA of the Acts Interpretation Act. The [FSIA] reflects the intention of the Parliament to the doctrine of restrictive immunity."
Rares J went on to use that purpose to justify a broad reading of the exception created by s 11, saying at [218] that:
"A broad reading of the exclusion created by s 11 is conformable with both the restrictive theory and constructions of similar provisions by the ultimate courts of appeal of the United Kingdom in I Congreso del Partido [1983] 1 AC 144, the United States in Saudi Arabia v Nelson [1993] USSC 33; 507 US 349 and, very recently, Canada in Kuwait Airways Corporation v Republic of Iraq [2010] 2 SCR 571 at [29]-[30]."
The Appellants contended that this passage justified a similarly broad reading of the exception in s 14(3)(a). None of the decisions referred to in the above passage in terms refers to giving exceptions to the principle of immunity a "broad reading"; rather, their concerns were to ensure that the relevant exception was to be given some work to do consistent with the restrictive theory of immunity. It is preferable to adopt the observations of Spigelman CJ in Zhang that "[w]here, as here, an Australian statute applies to circumstances to which international law also applies, an Australian court must apply the local statute in accordance with its terms", subject to all principles of statutory interpretation: at [125].
Contrary to the Appellants' submission, I do not consider that the "presumption" associated with Shin Kobe Maru, namely that a superior court's jurisdiction should be construed broadly, is applicable in this context. As has been observed, the statement made in that case "does not mean that the express words are to be given their broadest possible construction, regardless of all considerations of context, purpose or consequences": P Herzfeld and T Prince, Interpretation (2nd ed., 2020, Lawbook Co) at [9.700]. The principle is, as the authors suggest, accurately formulated in PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301 at 313; [1995] HCA 36 where it was said that "a provision conferring a power to be exercised judicially should be construed as liberally as its terms and context permit".
It might also be observed that s 14(3)(a) does not bear the character of "a provision conferring a power to be exercised judicially". For that reason, the Appellants' reliance upon the observation in PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1; [2015] HCA 36 at [29] that the "relevant general principle of statutory interpretation is that "a law of the Commonwealth is not to be interpreted as withdrawing or limiting a conferral of jurisdiction unless the implication appears clearly and unmistakably" misses the mark.
Furthermore, where the effect of s 14 is to qualify the general immunity in s 9, it is inapposite to say that the exceptions to immunity should be read broadly. Rather, the provisions of the FSIA - both the general immunity and the catalogue of exceptions - must be construed as a whole, purposively and in context.
One of the weaknesses of the Appellants' argument is that it focussed almost exclusively on the text of s 14(3)(a) without paying sufficient or any real regard to the immediate context of that subsection or s 14 as a whole cf. the authorities referred to at [14] above. Section 14(3) is concerned with a variety of types of judicial proceedings which involve questions of property including potential claims in respect of property.
That focus on property is only reinforced by the terms of s 14(1) and (2). Sections 14(1), in particular, reflects an almost universal notion that disputes concerning immoveable property should and, for practical purposes, invariably must, be heard locally: see British South Africa Co v Companhia de Mocambique [1893] AC 602; Potter v Broken Hill Pty Company Ltd (1906) 3 CLR 479; [1906] HCA 88. The strength of that principle extends, by virtue of s 14(1) and (2) of the FSIA, to cases where a foreign State had or claimed or was given or bequeathed an interest in such property; see also in this context, s 33 of the FSIA.
The interconnection between immoveable and moveable property is reflected in the common treatment of those two topics in s 14 of the FSIA as well as in the ALRC Report, considered further below. There is also a common rationale. In the administration of an estate, trust proceedings, bankruptcy, insolvency and winding up proceedings, there will frequently be competing claims or asserted interests in property. Practicality and, ultimately, considerations of justice and equal treatment (subject to statutory priorities) dictate that such claims be resolved in one place at the one time. In [26] of his reasons extracted at [9] above, the primary judge gave some examples as to how a foreign State's interest in property may need to be dealt with in a bankruptcy, winding up or other insolvency proceedings.
Further, as was observed in Re Rafidain Bank [1992] BCLC 301 at 304 in relation to s 6(3) of the State Immunity Act 1978 (UK), one of the statutory analogues to s 14(3) referred to in the ALRC Report and the text of which is extracted at [70] below, "the winding up of a company does not directly implead a foreign State which is simply a creditor". As Sir Nicholas Browne-Wilkinson V-C went on to say:
"It is true that if a debt is disputed in the winding up, the sovereign State may be forced to litigate to establish its debt. But that is part of the winding up process. If, as s 6(3) makes clear, the court has jurisdiction to wind up the company, it must of necessity have power to fix the list of creditors."
The effect of s 6(3) of the State Immunity Act 1978 (UK) is reflected in Exception 6 to Rule 22 relating to jurisdictional immunity in the 16th edition of Dicey, Morris & Collins: on the Conflict of Laws (2022, Sweet & Maxwell) at [9E-055] as follows:
"A State is not immune as respects proceedings relating to an interest arising by way of succession, gift or bona vacantia in movable or immovable properly, nor does any interest of a State in property prevent exercise of any jurisdiction relating to the estates of the deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts."
The accompanying commentary to that stated exception (at [9-056]) is also illuminating:
"Prior to the 1978 Act it was recognised that the Chancery Division had jurisdiction to distribute a trust fund among the beneficiaries, notwithstanding the entitlement of a foreign sovereign to an interest therein, and that the Companies Court had jurisdiction to wind up a company, even though a foreign sovereign might be interested in any surplus assets. The effect of Exception 6 is that a foreign State which is a creditor of an insolvent company cannot claim its debts in priority to other creditors, since a winding up order does not of itself affect the property of the State, i.e. the chose in action represented by a bank deposit."
Returning to the FSIA, the purpose of s 14(3) and indeed the whole of s 14 emerges with clarity from the ALRC Report which forms a vital part of the context within which s 14(3) must be interpreted: see [18]-[22] above and [53]ff below. Contrary to the Appellants' submissions, the significance of that Report extends far beyond the purpose of the Act expressed at a very high level of generality, namely what they described as being to "give effect to the so-called restrictive theory of foreign State immunity".
As will be seen, reference to the ALRC Report makes plain that the legislative reforms recommended by it in partial implementation of a restrictive view of sovereign immunity were in no way intended to subject a foreign body corporate which the FSIA, by operation of s 22, treated as having the benefits of a foreign State's immunity, to winding up proceedings in Australia. Moreover, as will be seen, the ALRC Report provides direct and clear guidance as to the purpose of what became s 14 of the FSIA.
The body corporate being referred to in s 14(3)(a) and which is not otherwise defined in the FSIA should be understood and interpreted as referring to a body corporate "in and of the Commonwealth": Acts Interpretation Act 1901 (Cth) s 21(1)(b). On this basis, the expression "winding up of a body corporate" in s 14(3)(a) cannot refer to Garuda. In this context, it is as well to emphasise that a "separate entity in relation to a foreign State" is a term relevantly defined in s 3 of the FSIA as a body corporate or corporation sole (other than a body corporate or corporation sole that has been established by or under a law of Australia), who or that (a) is an agency or instrumentality of the foreign State; and (b) is not a department or organ of the executive government of the foreign State.
There is the added consideration that the reference to a "foreign State" in the chapeau to s 14(3) of the FSIA does not only apply to foreign bodies corporate which may be separate entities in relation to a foreign State such as Garuda. It applies, in terms, to the foreign State itself. By s 3(3) of the FSIA, that term is given the following extended definition:
"(a) a province, state, self-governing territory or other political subdivision (by whatever name known) of a foreign State;
(b) the head of a foreign State, or of a political subdivision of a foreign State, in his or her public capacity; and
(c) the executive government or part of the executive government of a foreign State or of a political subdivision of a foreign State, including a department or organ of the executive government of a foreign State or subdivision."
Neither a foreign State nor a province, state, self-governing territory or other political subdivision (by whatever name known) of a foreign State nor a department or organ of the executive government of a foreign State is capable of being placed into bankruptcy or subjected to insolvency proceedings in an Australian court, as Mr Leopold SC, who appeared for Greylag Goose, accepted. It follows that the "proceeding" to which s 14(3) is referring cannot be a proceeding concerning the foreign State's bankruptcy or insolvency. In short, as the primary judge put the matter succinctly, the foreign state is the subject and not the object of s 14(3)(a).
Another consequence of the Appellants' argument is that, given that the head of a foreign State or of a political subdivision of a foreign State falls within the extended definition of a foreign State (see [46] above), such an individual could be the subject of bankruptcy proceedings in Australia. While I would not go so far as Sir Richard Scott VC in Banco Nacional de Cuba v Cosmos Trading Corp [2001] 1 BCLC 813 at 820 in a related context in describing this consequence as "a ludicrous one", Mr Leopold was constrained to accept that it is a necessary consequence of the construction which the Appellants propound. As will be seen below, such a construction or consequence garners no support whatsoever from the ALRC Report or from commentaries on cognate provisions in other countries: see, for example, the commentary in Dicey, Morris & Collins noted at [42] above.
Although the Appellants contend that the construction of s 14 favoured by the primary judge (and with which I agree) works against the interests of the creditors of a separate entity of a foreign State, it is important not to overlook the fact that s 11(1) of the FSIA, the exception considered by the High Court in PT Garuda and Firebird, provides that a "foreign State is not immune in a proceeding in so far as the proceeding concerns a commercial transaction."
A matter related to this last point, although not ultimately necessary to decide, was raised by way of Notice of Contention, namely that Parliament has legislated a specific form of execution against foreign States in Part IV of the FSIA, and allowing that to be circumvented by s 14(3)(a) on the basis that it would permit the winding up of Garuda would undermine that purpose. As the Respondent put it:
"The existence of Part IV demonstrates a legislative intention for execution against the property of foreign States to be dealt with in a specific, restricted manner. Clearly, the legislature turned its mind to questions of enforcement and enacted a specific regime to deal with enforcement. The correct construction of s 14(3)(a) is one that respects this deliberate choice, rather than one which sidesteps the limitations on enforcement found in Part IV by allowing the courts to bankrupt or wind up foreign States or their separate entities in reliance on an exception concerned with whether a foreign State has immunity "in a proceeding", as distinct from immunity against enforcement."
The foregoing analysis as well as the primary judge's construction of s 14(3)(a) of the FSIA, rejecting the Appellants' proposed construction, is powerfully reinforced by consideration of the ALRC Report to which attention is now turned.
Consideration of the ALRC Report also supplies a compelling answer to an additional argument which the Appellants sought to advance for the first time on appeal, namely that, if they were wrong in relation to proper construction of the phrase "winding up of a body corporate" in s 14(3)(a) with the consequence that it did not extend to a foreign body corporate which was "a separate entity in relation to a foreign State", the reference to "insolvency" in s 14(3)(a) was not so qualified and was "at large" with the consequence that their application to wind up Garuda on the basis of its deemed insolvency under the Corporations Act (see [8] above) brought the proceedings within the exception to immunity.
The "work of the United Nations International Law Commission on the 'Jurisdictional immunities of States and their property'" was a reference to that body's report on the work of its Thirty-fifth session, 3 May - 22 July 1983, reproduced in 1983 Yearbook of the International Law Commission vol II (2) at pp.17-36.
The reference to "legislation recently enacted, or under consideration, in other countries on the subject of foreign State immunity" was a reference to at least the State Immunity Act 1978 (UK), the State Immunity Act 1979 (Singapore); the State Immunity Ordinance 1981 (Pakistan), the Foreign Sovereign Immunity Act 1981 (South Africa) and the State Immunity Act 1982 (Canada).
Professor Garnett has dated the origin of calls for a serious reappraisal of foreign state immunity to Professor Lauterpacht's article 'The Problem of Jurisdictional Immunities of Foreign States' published in (1951) 28 British Yearbook of International Law 220: see Garnett at 175.
Professor Shearer identified as important landmarks on the way to legislative reform the "Tate letter" of 1952, signalling a shift in United States State Department's approach to requests for sovereign immunity by foreign states, the decision of Lord Denning in Nizam of Hyderabad at 422, the 1972 European Convention on State Immunity and Additional Protocol, the Foreign Sovereign Immunities Act 1976 (United States) and the decisions of the Privy Council and Court of Appeal for England and Wales in The Philippine Admiral (Owners) v Wallem Shipping (Hong Kong) Ltd [1977] AC 373 (The Philippine Admiral) and Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529 (Trendtex) respectively: I A Shearer, Starke's International Law (11th ed, 1994, Butterworths) at 196-199. The significance of the Philippine Admiral and Trendtex was noted by Nettle and Gordon JJ in Firebird at [169].
A similar but more detailed chronological overview may be found in Brownlie 3rd ed at 326-339. But perhaps the most detailed review of the evolution and at times divergence in approaches of various states to the doctrine of sovereign immunity is to be found in Chapter 2 of the ALRC Report itself.
The nature and desirable extent of the reach of the doctrine of sovereign immunity was (and remains) highly contestable as a matter of both theory and policy, some commentators considering it outmoded, confused, fragmented and anathema to the rule of law, and making the point that there are "no clear customary international law rules of foreign state immunity": Garnett at 182 and passim.
The Australian Law Reform Commission in its Report adopted a model of a general principle of immunity with enumerated exceptions designed so as to reflect "not a single governmental/commercial dichotomy but rather the full range of considerations outlined in chapter 3" of the Report: at [65]. Although rejecting reciprocity as a criterion for identifying exceptions or derogations from a starting point of immunity, the ALRC Report noted the importance of adopting a "careful and balanced position": at [38].
One type of matter identified in Chapter 3 of the ALRC Report as appropriate for derogation from immunity concerned "title to immoveable property within the jurisdiction, the administration of local trust funds or the law relating to local companies" on the basis that "the local courts may be the only appropriate local forum": at [42] (emphasis added). As shall be seen, this observation was linked to more detailed discussion later in the ALRC Report which in turn led to what became s 14(3) of the FSIA.
In support of the second sentence of [117], reference was made to para 92 of the International Law Commission Report (ILC Report) which stated that:
"Draft article 15 as submitted by the Special Rapporteur, concerning ownership, possession and use of property as an exception to State immunity, was generally supported. The exception was based on the exclusive authority of the courts of the State of the forum to determine legal issues concerning immovable property situated in the forum State. It was also based on the need for the courts of the State of the forum to be able to adjudicate upon conflicting claims to property being administered by those courts. Where the foreign State appeared as one among several claimants endeavouring to assert title to property or a claim to an inheritance, it was natural that the State concerned should be deemed to have consented to the exercise of jurisdiction by a court of the territorial State competent to adjudicate the claim. Once title had been recognized, the court of the territorial State might well decline the exercise of further jurisdiction in the case, had there been no other reasons for entertaining the proceeding beyond the establishment of title to property."
The text of article 15 to which reference was made in this passage was as follows:
''Article 15. Ownership, possession and use of property
1. The immunity of a State cannot be invoked to prevent a court of another State which is otherwise competent from exercising its jurisdiction in a proceeding which relates to the determination of:
(a) any right or interest of the State in, or its possession or use of, or any obligation of the State arising out of its interest in, or its possession or use of, immovable property situated in the State of the forum; or
(b) any right or interest of the State in movable or immovable property arising by way of succession, gift or bona vacantia; or
(c) any right or interest of the State in the administration of property forming part of the estate of a deceased person or of a person of unsound mind or of a bankrupt; or
(d) any right or interest of the State in the administration of property of a company in the event of its dissolution or winding up; or
(e) any right or interest of the State in the administration of trust property or property otherwise held on a fiduciary basis.
2. A court of another State shall not be prevented from exercising jurisdiction in any proceeding brought before it against a person other than a State, notwithstanding the fact that the proceeding relates to, or is designed to deprive the State of, property:
(a) which is in the possession or control of the State; or
(b) in which the State claims a right or interest, if the State itself could not have invoked immunity had the proceeding been instituted against it, or if the right or interest claimed by the State is neither admitted nor supported by prima facie evidence.
3. The preceding paragraphs are without prejudice to the immunities of States in respect of their property from attachment and execution, or the inviolability of the premises of a diplomatic or special or other official mission or of consular premises, or the jurisdictional immunity enjoyed by a diplomatic agent in respect of private immovable property held on behalf of the sending State for the purposes of the mission."
The "overseas legislation" which was identified in a footnote in support of the penultimate sentence of [117] of the ALRC Report was the European Convention on State Immunity, art 14; the State Immunity Act 1978 (UK) s 6(3); the State Immunity Act 1979 (Singapore) s 8(3); and the State Immunity Ordinance 1981 (Pakistan) s 7(3). It was also noted that "The International Law Commission has provisionally adopted an article containing a provision to similar effect: ILC, 35th Report, para 95, art 15(1)(c)-(e)."
Given that the final sentence of [117] of the ALRC Report made plain that the legislation it proposed should achieve the same outcomes as the "overseas legislation" that was referred to, it is relevant to set out the respective statutory provisions, acknowledging that, whilst they are not identical, they are all directed to the same functional end to which the ALRC Report indicated its proposed s 14(3) was itself directed.
Article 14 of the European Convention on State Immunity (1972), provides, consistently with the ILC Report:
"Nothing in this Convention shall be interpreted as preventing a court of a Contracting State from administering or supervising or arranging for the administration of property, such as trust property or the estate of a bankrupt, solely on account of the fact that another Contracting State has a right or interest in the property."
Section 6(3) of the State Immunity Act 1978 (UK) provides:
"The fact that a State has or claims an interest in any property shall not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts."
Section 8(3) of the State Immunity Act 1979 (Singapore) was in almost identical terms:
"The fact that a State has or claims an interest in any property does not preclude any court from exercising in respect of it any jurisdiction relating to the estates of deceased persons or mentally disordered persons or to insolvency, the winding up of companies or the administration of trusts."
Section 7(3) of the State Immunity Ordinance 1981 (Pakistan) was also almost identical:
"The fact that a State has or claims an interest in any property does not preclude any court from exercising in respect of such property any Jurisdiction relating to the estates of deceased persons or persons of unsound mind or to insolvency, the winding up of companies or the administration of trusts."
It is tolerably clear from these statutory extracts and draft Article 15 of the International Law Commission (also extracted above) that all were directed towards a circumstance where a State had or claimed an interest in property that fell to be administered in a local court, whether the form of the administration was the administration of a deceased estate or a trust, the judicial administration of the affairs of a person of unsound mind in the exercise of a local's court's protective jurisdiction, or the orderly winding up and administration of an individual or a corporation's affairs.
That a State's interest or claimed interest in property was the focal point of these provisions is confirmed by the fact that each of the provisions noted in [67] above followed materially identical provisions in the same sections of each enactment to the effect that:
"A State is not immune as respects proceedings relating to -
(a) any interest of the State in, or its possession or use of, immovable property in the [the relevant country]; or
(b) any obligation of the State arising out of its interest in, or its possession or use of, any such property"
and that:
"A State is not immune as respects proceedings relating to any interest of the State in movable or immovable property, being an interest arising by way of succession, gift or bona vacantia."
The Appellants did not engage in any meaningful way with [116]-[117] of the ALRC Report.
None of the relevant statutory provisions referred to in either [116] or [117] of the ALRC Report lends any support to the submission, as advanced by the Appellants, that a corporate emanation of a foreign state (or indeed a head of a foreign state) could be made the subject of winding up, insolvency or bankruptcy proceedings in Australia. Indeed, in Chapter 3 of the ALRC Report, referred to at [62] above, the exception to immunity ultimately formulated in what became s 14(3) of the FSIA concerned "the law relating to local companies" and not foreign companies, with the local relationship of the company in insolvency and its administration in that financial state warranting an exception to the general immunity. In this context, insofar as a "separate entity" is a body corporate, it is "a body corporate or corporation sole (other than a body corporate or corporation sole that has been established by or under a law of Australia)": see the definition of "separate entity" in s 3 and [45] above.
Had what would have been a quite radical legislative initiative been recommended and intended, namely that a corporate or personal emanation of a foreign state be rendered susceptible to winding up, insolvency or bankrupt proceedings, one would have expected the thorough and scholarly ALRC Report of Professor Crawford to have gone into the merits of such a legislative initiative in considerable detail. There is no hint in the ALRC Report that such a reform was intended or recommended, and [116] and [117] of the ALRC Report in particular lend no support to that view.
In that context, part of the contextual significance of the ALRC Report lies in what it does not say.
The Appellants' additional argument noted in [52] above drawing on the word "insolvency" has the same limitation as the contentions relating to "the winding up of a body corporate" in that it focuses on one word, "insolvency", without taking into account the broader context of s 14(3) or the important context supplied by the ALRC's Report. The observations made in [74]-[76] above equally apply to this argument.
K&L Gates (Appellants)
Baker McKenzie (Respondent)
File Number(s): 2022/381918
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Equity - Corporations List
Citation: [2022] NSWSC 1623
Date of Decision: 28 November 2022
Before: Hammerschlag CJ in Eq
File Number(s): 2022/243923
HEADNOTE
[This headnote is not to be read as part of the judgment]
Greylag Goose Leasing 1410 Designated Activity Company and Greylag Goose Leasing 1446 Designated Activity Company (together Greylag Goose) are companies incorporated in Ireland which lease aircraft to PT Garuda Indonesia Limited (the Respondent or Garuda). Garuda is a foreign company registered under Div 2 of Pt 5B.2 of the Corporations Act 2001 (Cth) and is the national airline of Indonesia. Garuda is a "separate entity" of a foreign state within the meaning of that term in the Foreign States Immunities Act 1985 (Cth) (FSIA).
By originating process filed in the Supreme Court of New South Wales on 15 August 2022, Greylag Goose applied for orders that Garuda be wound up "on the basis that it is unable to pay its debts or otherwise that it is just and equitable to do so". On 22 September 2022, Garuda filed a notice of motion seeking a declaration that the Court had no jurisdiction over it by reason of the immunity from jurisdiction for foreign states in s 9 of the FSIA. Greylag Goose resisted Garuda's application on the basis of s 14(3) of the FSIA, as a qualification to the immunity in s 9. Specifically, Greylag Goose contended that Garuda, being a "foreign state [was] not immune…as the proceeding concern[ed]…insolvency or the winding up of a body corporate" (per s 14(3)(a) of the FSIA).
Hammerschlag CJ in Eq (the primary judge) held that Garuda was immune from the winding-up proceeding. His Honour acknowledged that the literal meaning of s 14(3)(a) favoured the construction advanced by Greylag Goose, but held that that construction should not be adopted for several reasons. These included that the s 14(3)(a) does not have the same subject and object, that a literal reading "imports to the legislature an unlikely intention to refer to the same person in two different ways", that the indefinite article, rather than the definite article in s 14(3), is used before "body corporate", and that if the legislature had intended to suscept a foreign State or separate entity to a winding-up, the legislature would have said so. Further, the primary judge considered that Greylag Goose's construction of s 14(3)(a) would have undesirable, far-reaching consequences, such as the removal of the immunity of natural persons who fall within the definition of "foreign State" (such as the head of a foreign State) in bankruptcy proceedings.
Greylag Goose sought leave to appeal.
The Court held (Bell CJ, Meagher JA and Kirk JA agreeing), granting leave to appeal but dismissing the appeal:
1. Section 14(3)(a) of the FSIA does not suscept a foreign State (or a separate entity of a foreign State) to a winding up proceeding: [13] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).
2. On its proper construction, s 14(3)(a) relates to a bankruptcy, insolvency or winding up in which a foreign state has or claims an interest in property with which the relevant proceeding is concerned: [38]-[49] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).
3. The Australian Law Reform Commission Report Foreign State Immunity (Report No 24, 10 October 1984), whose recommendations were wholly accepted and whose draft legislation formed the basis for the FSIA, supplied important context by reference to which the FSIA and s 14(3) was to be interpreted: [18]-[22], [51]-[52] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85; [1997] HCA 53, applied.
Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404; [1994] HCA 54; Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204, referred to.
1. Consideration of the historical context of s 14(3)(a) and the FSIA more broadly, analysing its genesis in the Australian Law Reform Commission's Report No. 24, Foreign State Immunity (1984): [53]-[77] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240; [2012] HCA 3; Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31; [2015] HCA 43; Kingdom of Spain v Infrastructure Services Luxembourg S.a.r.l (2023) 97 ALJR 276; [2023] HCA 11; PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2011) 192 FCR 393; [2011] FCAFC 52, considered.
1. Reference to the ALRC Report reinforced the conclusion that s 14 of the FSIA was directed towards cases where a foreign State held, or claimed, property interests in the estate of a bankrupt, insolvent company or body corporate that was being wound up, and was not intended to subject a foreign body corporate (which the FSIA, by operation of s 22, treated as having the benefits of a foreign State's immunity) to winding up proceedings in Australia: [44], [64]-[77] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).
2. The body corporate being referred to in s 14(3)(a) and which is not otherwise defined in the FSIA should be understood and interpreted as referring to a body corporate "in and of the Commonwealth" (pursuant to the Acts Interpretation Act 1901 (Cth) s 21(1)(b)): [45] (Bell CJ); [79] (Meagher JA); [80] (Kirk JA).