Greylag Goose Leasing 1410 Designated Activity Company v P.T. Garuda Indonesia Ltd

Introduction

1. 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).
2. 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.)
3. 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).
4. 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.
5. 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".
6. 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.
7. 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."
8. 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).
9. 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."
10. 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).
11. 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.
12. 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."
13. 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).

Consideration

1. 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.
2. 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).
3. 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.'"

The FSIA

1. 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."
2. 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).
3. 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)

The ALRC Report - general

1. 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.
2. 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."

The ALRC Report and s 14(3) of the FSIA

1. 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.
2. 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."

Conclusion

1. For all the above reasons, leave to appeal in this important and skilfully argued case should be granted but the appeal dismissed with costs.
2. MEAGHER JA: I agree with the Chief Justice.
3. KIRK JA: I agree with Bell CJ.

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