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

Greylag Goose Leasing 1410 Designated Activity Company v P.T. Garuda Indonesia Ltd - [2024] HCA 21 - HCA 2024 case summary — Zoe

[11]

P.T. Garuda Indonesia Ltd ("Garuda") is a company incorporated in the Republic of Indonesia and is the national airline of the Republic of Indonesia. Garuda is registered as a foreign company under Div 2 of Pt 5B.2 of the Corporations Act. Garuda is for that reason a "Part 5.7 body" within the meaning of the Corporations Act.
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 Garuda.
Greylag Goose made demands on Garuda for the payment of amounts of US$193,003,254.55 and US$244,968,492.29 said to be owed by Garuda.
By originating process filed in the Supreme Court of New South Wales, Greylag Goose subsequently commenced a Part 5.7 proceeding seeking orders that Garuda be wound up "on the basis that [Garuda] is unable to pay its debts or otherwise that it is just and equitable to do so".
In seeking orders for the winding up of Garuda on the first basis identified in the originating process, Greylag Goose relied on s 583(c)(i) of the Corporations Act in combination with s 585(a) of the Corporations Act. Section 583(c)(i) allows for a Part 5.7 body to be wound up "if the Part 5.7 body is unable to pay its debts". Section 585(a) provides for a Part 5.7 body to be "taken to be unable to pay its debts" if the Part 5.7 body has failed within a specified period to meet a statutory demand for payment of a debt made by a creditor.
In seeking orders for the winding up of Garuda on the alternative basis identified in the originating process, Greylag Goose relied on s 583(c)(ii) of the Corporations Act. Section 583(c)(ii) allows for a Part 5.7 body to be wound up "if the Court is of opinion that it is just and equitable that the Part 5.7 body should be wound up".
By notice of motion filed in the Part 5.7 proceeding, Garuda sought an order that the originating process be set aside on the basis that the Supreme Court lacked jurisdiction by operation of ss 9 and 22 of the Immunities Act. On the hearing of that notice of motion, it was common ground that Garuda is an agency or instrumentality of the Republic of Indonesia and is on that basis a separate entity of a foreign State within the meaning of the Immunities Act. That remains common ground. Hence, it was and is common ground that Garuda is entitled to the immunity from jurisdiction conferred on a separate entity of a foreign State by ss 9 and 22 of the Immunities Act in the Part 5.7 proceeding unless an exception to that immunity can be established to be applicable.
Greylag Goose's sole answer to the immunity from jurisdiction relied on by Garuda was and remains that the exception for which provision is made in ss 14(3)(a) and 22 of the Immunities Act applied to the Part 5.7 proceeding. Greylag Goose did not and does not argue, by reference to any transaction underlying either of the two debts in respect of which Greylag Goose had demanded payment or otherwise, that the Part 5.7 proceeding "concern[ed] a commercial transaction" such that the exception to the immunity from jurisdiction for which provision is made in ss 11 and 22 of the Immunities Act applied to the proceeding. Nothing in these reasons for judgment should be taken to express any view as to whether the proceeding might be capable of bearing that characterisation.
At first instance, Hammerschlag CJ in Eq rejected the argument of Greylag Goose that the exception in ss 14(3)(a) and 22 of the Immunities Act applied to the Part 5.7 proceeding.[1] His Honour accordingly set aside the originating process on the basis that the Supreme Court lacked jurisdiction to hear and determine the Part 5.7 proceeding by operation of ss 9 and 22 of the Immunities Act in the absence of an applicable exception.[2]
The order setting aside the originating process was upheld on appeal to the Court of Appeal of the Supreme Court of New South Wales by Bell CJ, with whom Meagher and Kirk JJA agreed.[3] This appeal is by special leave from that decision.

[12]

This Court has examined the legislative history and structure of the Immunities Act in three past decisions.[4] The earliest of those past decisions happens also to have concerned Garuda and to have proceeded similarly upon an acceptance that Garuda was a separate entity of a foreign State within the meaning of the Immunities Act.[5]
Without rehearsing the detail of those prior examinations of the Immunities Act, it is necessary in addressing the question raised in the appeal to recall that the purpose of the Immunities Act was "to set out in clear and accessible form the law relating to the jurisdiction of Australian courts over foreign states, their agencies and instrumentalities".[6] It is necessary also to recall that the Immunities Act was enacted on the recommendation of the Australian Law Reform Commission ("the ALRC") in a comprehensive report ("the ALRC Report")[7] to which was appended a draft Bill for the Immunities Act.
The ALRC Report drew on what was then a recent interim report of the International Law Commission ("the ILC") on "Jurisdictional Immunities of States and Their Property" ("the 1983 ILC Interim Report").[8] The work then being done by the ILC would later culminate in its 1991 Draft Articles on Jurisdictional Immunities of States and Their Property which, with some amendments, would come to be incorporated into the United Nations Convention on Jurisdictional Immunities of States and Their Property adopted by the General Assembly of the United Nations in 2004.[9]
The provisions of the Immunities Act that are of present relevance are contained within Pt II of the Act. Part II is headed "Immunity from jurisdiction" and comprises ss 9 to 22. The lead provision is s 9, headed "General immunity from jurisdiction". The section provides: "Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding". The "proceeding" to which the section refers extends to any application for the making of an order in civil jurisdiction.[10] The "immunity" from "jurisdiction" which the section confers is not an immunity from substantive law but is to be "understood as a freedom from liability to the imposition of duties by the process of Australian courts".[11]
Sections 10 to 21 of the Immunities Act create exceptions to the general immunity from jurisdiction which s 9 confers. Together, they "set out exhaustively the circumstances in which the general rule of immunity is to be relaxed".[12] Like s 9, ss 10 to 21 are addressed to the immunity from jurisdiction of a "foreign State". Apart from s 10, which is headed "Submission to jurisdiction", each is expressed in terms that a foreign State is not immune in a proceeding in so far as the proceeding concerns one or more identified subject-matters. For present purposes, it is necessary to note the subject-matters of only some of them.
The subject-matter of the exception created by s 11 of the Immunities Act is identified in s 11(1) as "a commercial transaction". That expression is defined in s 11(3) to mean "a commercial, trading, business, professional or industrial or like transaction into which the foreign State has entered or a like activity in which the State has engaged" but to exclude "a contract of employment" or "a bill of exchange". Those are the distinct subject-matters of the exceptions created by ss 12 and 19 respectively.
The various subject-matters of the exception created by s 14 of the Immunities Act are indicated by the heading to that section: "Ownership, possession and use of property etc". The section provides:

[41]

Through the operation of s 22 of the Immunities Act, s 9 applies in relation to a separate entity of a foreign State as s 9 applies in relation to a foreign State. Through the operation of s 22 of the Immunities Act, s 14(3)(a) likewise applies in relation to a separate entity of a foreign State as s 14(3)(a) applies in relation to a foreign State. The refutation of Greylag Goose's central argument on the appeal concerning the application of s 14(3)(a) in relation to a separate entity of a foreign State lies in a proper understanding of the operation of s 22.
Section 14(3)(a) in terms provides that "[a] foreign State is not immune in a proceeding in so far as the proceeding concerns ... bankruptcy, insolvency or the winding up of a body corporate". It is important to recognise that, as the provision applies in relation to a foreign State, the "foreign State" to which the provision refers can only be an entity that is different from the "body corporate" to which the provision refers. Obviously, a foreign State is not a body corporate, and, obviously, a foreign State is incapable of being wound up as a body corporate.
Therefore, as s 14(3)(a) applies in relation to a foreign State: the "foreign State" is the object of the exception from immunity; the "body corporate" is an entity other than the foreign State; and the winding up of that other entity is the subject-matter of the exception from immunity.
The central argument of Greylag Goose is a textual one. The argument is that, in its application through s 22 in relation to a separate entity, s 14(3)(a) is to be read as providing that "[a separate entity] is not immune in a proceeding in so far as the proceeding concerns ... bankruptcy, insolvency or the winding up of a body corporate". Given that "separate entity" is defined to include "a body corporate" that is an agency or instrumentality of the foreign State, so Greylag Goose's textual argument continues, there is no reason why the "separate entity" to which s 14(3)(a) (on Greylag Goose's reading) refers needs to be an entity different from the "body corporate" to which s 14(3)(a) refers. Textually, Greylag Goose's argument concludes, that means that the body corporate that is the object of the exception from immunity and the body corporate that is the entity the winding up of which is the subject-matter of the exception from immunity can be one and the same.
Greylag Goose's textual argument is misconceived. The argument is founded on a wrong understanding of the operation of s 22 of the Immunities Act. Section 22 is not definitional; it is substantive. In providing that the provisions to which it refers "apply in relation to a separate entity of a foreign State as they apply in relation to the foreign State", the section does not operate to require the definition of "separate entity" to be read into each of ss 9 to 21 in place of the definition of "foreign State"; it operates to confer on a separate entity of a foreign State the same immunity from jurisdiction as s 9 confers on the foreign State itself.
The ALRC Report explained the underlying policy of s 22 to be that "separate entities should be treated in the same way as foreign states for the purposes of the provisions on immunity from jurisdiction".[15] Though the ALRC noted that a "good deal of … difficulty" would be avoided were an agency or instrumentality having separate legal personality wholly denied immunity, the ALRC took the view that it was "not desirable that Australia be the first country to legislate in terms which say to foreign states that the type of entity through which they have chosen to carry out an activity will determine the availability of immunity".[16] However, if Greylag Goose's argument is correct, whether immunity is available will depend on the type of entity through which a foreign State carries on the activity. If the foreign State were to conduct the relevant activity through a body corporate then it would be amenable to being wound up but if it were to conduct the activity through, for example, a government department then it would not.
For the immunity of a separate entity to be equated to the immunity of a foreign State through the operation of s 22 of the Immunities Act, the subject-matter of the exception for which s 14(3)(a) makes provision in its application in relation to a separate entity must be the same as the subject-matter of the exception for which s 14(3)(a) makes provision in its application in relation to a foreign State. The entity that is the object of the exception from immunity ‒ be it a foreign State or a separate entity of a foreign State ‒ cannot be the entity the winding up of which is the subject-matter of the exception from immunity.
Therefore, as s 14(3)(a) applies through the operation of s 22 in relation to a separate entity of a foreign State: the separate entity (like the foreign State itself) is the object of the exception from immunity; the "body corporate" is an entity other than the separate entity of the foreign State (just as it is an entity other than the foreign State itself); and the winding up of that other entity is the subject-matter of the exception.
To accept Greylag Goose's textual argument would be to defy that substantive operation of s 22 of the Immunities Act. To accept the argument would be to countenance a divergence of the scope of the immunity from jurisdiction produced through the application of the exception in s 14(3)(a) to a separate entity in comparison with the scope of the immunity from jurisdiction produced through the application of the same exception to a foreign State. It would lessen the immunity of a separate entity in comparison with the immunity of a foreign State. It would expand the subject-matter of the exception in its application to a separate entity beyond the subject-matter of the exception in its application to a foreign State.
Greylag Goose's central textual argument concerning the application of s 14(3)(a) in relation to a separate entity of a foreign State is therefore incapable of being sustained on a proper understanding of the operation of s 22 of the Immunities Act. Greylag Goose's subsidiary arguments are incapable of overcoming that defect. Each subsidiary argument is in any event erroneous for reasons now to be explained.

[44]

Greylag Goose seeks to derive further support for its textual argument concerning the application of s 14(3)(a) of the Immunities Act to a separate entity of a foreign State by advancing the proposition that an "overarching policy" of the exceptions for which ss 10 to 21 provide to the general immunity from jurisdiction which s 9 confers "is that commercial or trading activities conducted by or on behalf of foreign States should not attract an immunity". Greylag Goose asserts that the result sought to be produced by its textual argument is "more consistent" with a policy to that effect.
This assertion, that Greylag Goose's textual argument is more consistent with a policy to the effect that commercial or trading activities of foreign States should not attract immunity from jurisdiction, overlooks the reality that the winding up of a body corporate need bear no relationship to any commercial or trading activity of the body corporate to be wound up. So much is illustrated within the context of Pt 5.7 of the Corporations Act by the availability under s 583(c)(ii) of the Corporations Act of the "just and equitable" ground for the winding up of a Part 5.7 body, a provision upon which Greylag Goose chose to rely in seeking orders for the winding up of Garuda in the present case.
More problematic is Greylag Goose's proposition that the exceptions for which provision is made in ss 10 to 21 of the Immunities Act to the general immunity from jurisdiction conferred by s 9 are manifestations of some overarching unified policy; they are not. The proposition is fundamentally erroneous: it is diametrically opposed to the justification for the enactment of the exceptions advanced by the ALRC in explaining the structure of Pt II of the Immunities Act.
The Immunities Act was framed by the ALRC at a time when the so-called "absolute theory" of foreign State immunity was seen to be giving way to a "restrictive theory" of foreign State immunity[22] but also when the metes and bounds of the emergent restrictive theory at common law were perceived to be uncertain.[23]
Against that background, the ALRC noted that there were two broad approaches to distinguishing between circumstances of immunity and circumstances of lack of immunity. One, which coincided with a view of the emergent restrictive theory at common law, was to draw a single distinction between the "public" and "private" dealings of foreign States. The other, adopted in overseas legislation on foreign State immunity and favoured by the ILC, involved "a more complex set of distinctions, based on multiple criteria not reducible to any formula".[24]
The ALRC unambiguously adopted the second of those approaches in the design of the Immunities Act. The ALRC was adamant that the Immunities Act should not adopt "a single distinction between immune and non-immune cases ... whether it is a distinction between 'private' and 'public' law, or between 'commercial' and 'governmental' transactions", but should instead "deal with the various categories or classes of cases that can arise" and "fashion specific rules for each category, taking into account the reasons for according immunity or for asserting jurisdiction in that specific context".[25] The ALRC explained that "[t]he considerations favouring local jurisdiction (or immunity from it)" were "based on a variety of rules, principles and policies".[26]
Thus, Pt II of the Immunities Act reflected the ALRC's view that Australian legislation should be "designed so as to reflect not a single governmental/commercial dichotomy but rather the full range of considerations" bearing on the appropriateness of conferring immunity from jurisdiction.[27] Within the scheme of the Part, commercial transactions were to be treated as "one amongst a number of exceptions"[28] to foreign State immunity which were to "reflect more precisely the various considerations governing whether immunity is to be withheld".[29]
Moreover, the various exceptions from immunity for which provision was to be made in ss 10 to 21 of the Immunities Act were to be "read disjunctively" in the sense that a proceeding which did not fall within one exception might fall within another exception if the facts permitted.[30] The result is that, save to the extent that the subject-matter of one exception is properly interpreted to exclude the subject-matter of another (as in the case of the express exclusion from the subject-matter of s 11 of the subject-matters of ss 12 and 19), the exceptions "may overlap with each other".[31]

[45]

Finally, Greylag Goose argues that the purpose of s 14(3)(a) is not limited to the purpose of allowing an Australian court to adjudicate on the interests of a foreign State in a bankruptcy, insolvency or winding up. That argument too is refuted by the legislative history.
Even when the so-called "absolute theory" of foreign State immunity prevailed in common law jurisdictions, foreign State immunity was not truly absolute. One recognised exception was that a foreign State had no immunity in respect of an interest in land located within the jurisdiction; another exception of long standing was that a foreign State had no immunity in respect of an interest in a trust administered within the jurisdiction.[32] The latter exception was explained to "depend essentially on the existence of a trust fund or other item of trust property within the area of jurisdiction of the Chancery courts: given the trust fund or property there is a trust to be administered by the court and it was evidently the belief of the judges who were responsible for the equity jurisdiction that they had a responsibility for administering and in due course determining the rights to such property, even though a foreign sovereign might be known to be a possible or certain claimant to an interest in it".[33] The exception recognised in respect of an interest of a foreign State in a trust administered within the jurisdiction was carried over to the winding up of a company in consequence of which proprietary interests of a foreign State might be affected.[34]
Each of those previously recognised exceptions came to be reflected in the State Immunity Act 1978 (UK) ("the UK Act"). Section 6(1) of the UK Act provided that "[a] State is not immune as respects proceedings relating to … any interest of the State in, or its possession or use of, immovable property in the United Kingdom; or … any obligation of the State arising out of its interest in, or its possession or use of, any such property". Section 6(3) provided that "[t]he 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". Equivalent provisions came also to be included in cognate legislation in Singapore[35] and Pakistan[36].
By that time, the European Convention on State Immunity[37] ("the European Convention") already provided in Art 10 that "[a] Contracting State cannot claim immunity from the jurisdiction of a court of another Contracting State if the proceedings relate to a right in movable or immovable property arising by way of succession, gift or bona vacantia" and in Art 14 that "[n]othing 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".
More elaborate exceptions along similar lines then came to be included in "Draft articles on jurisdictional immunities of States and their property" ("the ILC 1983 Draft Articles") which were provisionally adopted by the ILC and set out in the 1983 ILC Interim Report.[38] Article 15 of the ILC 1983 Draft Articles was headed "Ownership, possession and use of property". Paragraph 1 of Art 15 was as follows:

[58]

In support of the first sentence within that quotation, the ALRC cited the explanation in the 1983 ILC Interim Report for the inclusion of Art 15 of the ILC 1983 Draft Articles already quoted.[43] The "overseas legislation" to which the ALRC referred in the penultimate sentence included the United Kingdom, Singaporean and Pakistani legislation to which reference has also been made, as well as Art 14 of the European Convention and sub-paras (c), (d) and (e) of para 1 of Art 15 of the ILC 1983 Draft Articles.[44]
In its summary of recommendations, the ALRC repeated the substance of the explanation it had given in relation to movable property, but this time under the heading "Other Property Disputes".[45]
In light of that twice-stated explanation in the ALRC Report, it could hardly be clearer that the ALRC did not intend in its framing of s 14(3)(a) of the Immunities Act to adopt or implement a purpose beyond ensuring that an Australian court exercising jurisdiction in a bankruptcy, insolvency or winding up proceeding would be able to adjudicate on the proprietary interests of all the interested parties, including the proprietary interests of a foreign State. It is not to the point that the purpose might have been reflected more clearly in the text of s 14(3)(a) had the ALRC in framing s 14(3)(a) adhered more closely to the language of the UK Act, and cognate Singaporean and Pakistani legislation, or to the language of Art 14 of the European Convention, or sub-para (d) of para 1 of Art 15 of the ILC 1983 Draft Articles. The purpose and context informs the correct reading of the text, noting that the text was framed by the ALRC to give effect to the purpose and was enacted on the recommendation of the ALRC.
Section 16 of the Immunities Act does not point to s 14(3)(a) having any wider purpose. Section 16 was adapted from s 8 of the UK Act which sat comfortably alongside s 6(3) of the UK Act. The justification for inclusion of the exemption for which s 16 provides was separately explained in the ALRC Report in terms that "Australia has an interest in seeing that the internal affairs of bodies set up under its law are capable of supervision by Australian courts" and that "[h]aving elected to participate in such bodies the foreign state can hardly complain when local law is applied to it".[46] That justification for s 16 provides no basis for treating the purpose of s 14(3)(a) as extending to permit an Australian court to wind up a separate entity which has become registered as a foreign company under Div 2 of Pt 5B.2 of the Corporations Act.

[59]

Sections 9 and 22 of the Immunities Act render a body corporate that is a separate entity of a foreign State immune from the jurisdiction of an Australian court in a proceeding. Sections 14(3)(a) and 22 create an exception from that immunity. The exception applies to a Part 5.7 proceeding only if and in so far as the proceeding concerns the winding up of another body corporate.
The appeal should be dismissed with costs.
GORDON AND STEWARD JJ. The appellants ("Greylag"), incorporated in Ireland, lease aircraft to the respondent ("Garuda"). Garuda, incorporated in the Republic of Indonesia ("Indonesia"), is the national airline carrier of Indonesia. Garuda carries on business in Australia and is registered as a foreign company in Australia under Div 2 of Pt 5B.2 of the Corporations Act 2001 (Cth).
In 2022, Greylag filed an originating process in the Supreme Court of New South Wales seeking orders that Garuda be wound up in insolvency pursuant to s 583(c)(i) or (ii) of the Corporations Act "on the basis that [Garuda] is unable to pay its debts or otherwise that it is just and equitable to do so". The originating process was founded on Garuda's failure to meet creditors' demands issued by Greylag under s 585(a) of the Corporations Act for payment of two alleged unpaid debts of US$193,003,255 and US$224,968,492, relating to its lease of aircraft from Greylag, which gave rise to a deemed insolvency of Garuda under s 583(c)(i), read with s 95A of the Corporations Act.
Garuda, by notice of motion, sought a declaration that the Supreme Court had no jurisdiction over it by reason of s 9 of the Foreign States Immunities Act 1985 (Cth) ("FSIA") and also sought an order setting aside Greylag's originating process.
Part II of the FSIA, headed "Immunity from jurisdiction", contains ss 9 to 22. Section 9, 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". That immunity applies to a separate entity of a foreign State under s 22 of the Act.[47] A "separate entity", in relation to a foreign State, is defined to mean "a natural person (other than an Australian citizen), or 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".[48] "[F]oreign State" is relevantly defined to mean "a country the territory of which is outside Australia, being a country that is ... an independent sovereign state".[49] There is no dispute that Indonesia is a foreign State and that, in relation to Indonesia, Garuda is a "separate entity" within the meaning of s 3(1) of the FSIA.
Greylag sought to resist Garuda's motion by invoking the exception to foreign State immunity in s 14(3)(a) of the FSIA which, when read with s 22, can be expressed as follows:

[71]

Section 9 is expressly subject to other provisions of the FSIA, namely the exceptions to immunity in ss 11 to 21. These enumerated exceptions generally[60] reflect the overarching policy that "commercial or trading activities conducted by or on behalf of foreign governments should not attract the special jurisdictional immunity enjoyed by foreign States".[61]
That policy is reflected in s 11 of the FSIA, but not exclusively so. So much is apparent from other enumerated exceptions in Pt II. Section 11 provides the general exclusion from immunity insofar as a proceeding concerns a commercial transaction, but there are also other exceptions which reflect, to varying degrees, an exception for transactions that are likely to be commercial: s 12 (contracts of employment); s 15 (copyright, patents, trade marks etc); s 17 (arbitrations); s 19 (bills of exchange); and s 20 (taxes). This is consistent with, and reflects the adoption of, the ALRC's recommendations. After recognising that other jurisdictions have dealt with "commercial activity" as a single category of exception, the ALRC Report recommended that "[f]or Australian purposes ... it would be better to subdivide the category of 'commercial activity'. A series of provisions can reflect more precisely the various considerations governing whether immunity is to be withheld."[62] Section 14 forms part of that series. The exceptions are not mutually exclusive. While they are to be read "disjunctively",[63] this Court has observed that they may also overlap.[64] Before turning to consider s 14(3)(a), one other aspect of Pt II of the FSIA should be noted.
The series of provisions of which s 14(3) forms part not only was intended to reflect the overarching policy that commercial or trading activities conducted by foreign governments should not attract the special jurisdictional immunity enjoyed by foreign States but also, at the same time, sought to identify when to deny foreign State immunity to an entity with separate legal personality from the foreign State by extending the application of certain exceptions to immunity to a "separate entity". A separate entity, in relation to a foreign State - relevantly defined in s 3(1) as a body corporate (except one established by or under a law of Australia) that is also an agency or instrumentality of the foreign State and is not a department or organ of the executive government of a foreign State - was intended to be less privileged.[65] The rationale was that the activities of such separate entities "will seldom be of a kind which are immune when performed by the state itself".[66]

[73]

"The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose."[67] Context should be regarded at the first stage of the construction exercise, not merely at some later stage, and it should be taken "in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means ... , one may discern the statute was intended to remedy".[68]
First, there is nothing in s 14(3)(a) that limits the exception to proceedings where the body corporate being wound up is an entity other than a separate entity of a foreign State. In one of its operations, s 14(3)(a) will deny a foreign State immunity where the proceedings concern the insolvency or winding up of a body corporate. In such a case, the body corporate will necessarily be an entity other than the foreign State. But that particular example does not support, let alone entail, a general rule that s 14(3)(a) applies only in the winding up of companies unconnected with a foreign State. Or, to put the point in other words, it provides no basis on which to limit the reach of the general words "winding up of a body corporate". Likewise, describing the argument against limiting the reach of those general words as "textual" provides no sound basis for rejecting the construction adopted in these reasons.
Second, sub-ss (1) and (2) of s 14 reveal that where the legislature wished to limit exempt proceedings to those concerning an interest of a foreign State in property, it did so explicitly. Those sub-sections focus on "an interest of the State in" certain types of property. By contrast, while the proceedings referred to in sub‑s (3) may relate to property (for example, the property of a corporation being wound up or the estate of a bankrupt), the provision is not limited to proceedings in which a foreign State has or claims an interest in property that falls to be administered in an Australian court in the winding up of a body corporate, or the administration of an individual's or body corporate's affairs. The Parliament could have adopted a similar format to that in s 14(1) and (2) for s 14(3)(a), but it did not.
Third, elsewhere in the FSIA, where the Parliament intended to limit the types of bodies corporate to which a provision applied, it did so expressly.[69] Again, the Parliament could have used a similar drafting mechanism for s 14(3)(a) to exclude separate entities from the "body corporate" referred to in that section, but it did not.
The construction of s 14(3)(a) adopted in these reasons is consistent with and reinforces the idea in s 11 that separate entities of foreign States are not immune where they engage in commercial activities, because it enables a creditor to execute a statutory demand against a debtor body corporate that is a separate entity of a foreign State. By contrast, the construction adopted by the courts below and advanced by Garuda before this Court is inconsistent with the overarching policy of the regime created in Pt II, because, if accepted, it would mean that the exception in s 14(3)(a) is inapplicable in the obvious example of the winding up of a body corporate for being unable to pay its commercial debts, simply because that body corporate is a separate entity of a foreign State. The result would be that where, as here, a separate entity of a foreign State carries on business in Australia (and is therefore required to be registered as a foreign company under the Corporations Act),[70] it can, nonetheless, continue to trade in Australia while insolvent without the ability of any of its creditors to insist upon its winding up.
To confine s 14(3)(a) in that way - namely, to read it so that the body corporate identified in s 14(3)(a) is an entity different to the foreign State or separate entity referred to in the chapeau to s 14(3) - would also undermine the operation of the ordinary litigation process. Take the example of a claim made by a creditor against a body corporate which was a separate entity of a foreign State, where the claim arose out of a dispute relating to a contract for the supply of goods or services, but where the body corporate was now insolvent. In those circumstances, the creditor could commence proceedings under s 11 against the body corporate to prosecute its claim. However, on Garuda's construction, the creditor could not commence proceedings to seek the body corporate's winding up. As a matter of logic, that would be an odd result.
It would also be at odds with the enforcement regime in Pt IV of the FSIA.[71] As counsel for Garuda accepted during the course of oral argument, Garuda's construction would not exclude seizure of a separate entity's assets by the sheriff if the exceptions for execution set out in Pt IV of the FSIA were otherwise enlivened. Section 30 (headed "Immunity from execution") in Pt IV relevantly provides that, except as provided by Pt IV, the property of a foreign State is not subject to any process or order of the courts of Australia for the satisfaction or enforcement of a judgment, order or arbitration award for the arrest, detention or sale of the property. Similarly to s 9, the immunity in s 30 is then subject to a number of exceptions set out in the remainder of Pt IV (ss 31 to 35). Most relevantly for present purposes is s 35, which makes clear that the extent to which Pt IV (and the immunity in s 30) applies to separate entities of foreign States is limited. As a threshold issue, if a separate entity is not the central bank or monetary authority of the foreign State, then Pt IV (and the immunity from execution in s 30) does not apply to the separate entity as it applies to the foreign State.[72] This indicates that Parliament turned its mind to the issue of enforcement against separate entities of foreign States and expressly chose not to extend the immunity in s 30 to all separate entities of foreign States generally.[73] This, again, is consistent with the principal rationale for the restrictive immunity theory underpinning the FSIA.[74]
Applications to wind up a separate entity are relevant to, and may arise in the context of, Pt II or Pt IV of the FSIA. That is, an application to wind up a separate entity can arise either following the non-payment of a statutory demand made by a creditor or following the attempted, but unsuccessful, enforcement by a creditor of a judgment debt separately obtained. The relevant exception to immunity upon which the creditor in question would rely in bringing the application to wind up the separate entity lies in Pt II (either in s 14(3)(a) or possibly s 11).

[75]

Garuda objected to the availability of the winding up of a separate entity on the basis that such a proceeding, or the outcome of it, would expose the foreign State or its separate entity to the supplanting of its management and the alteration of its status, or would interfere with sovereign or governmental activity insofar as the proceeding could involve the potential scrutiny of the operations of the instrumentality of the foreign State by an organ of the Australian State, being an Australian court. That submission is wrong and should be rejected.
A separate entity that is involved in commercial activity in Australia has chosen to submit itself to the requirements of the Corporations Act by choosing to carry on that business in Australia. Such activities are not immune from jurisdiction. Indeed, in Pt III of the FSIA (headed "Service and judgments"), s 29 addresses the power to grant relief and it relevantly provides that, subject to an exception in relation to employment contracts, "a court may make any order (including an order for interim or final relief) against a foreign State that it may otherwise lawfully make unless the order would be inconsistent with an immunity under" the FSIA.[75]
In this context, it must be recalled that the Corporations Act is not displaced in whole or in part[76] and that is unsurprising. The availability of relief under the Corporations Act is consistent with the restrictive immunity theory.[77] Indeed, as we have just seen, if a separate entity is not the central bank or monetary authority of the foreign State, then Pt IV of the FSIA (and the immunity from execution in s 30) does not apply to the separate entity as it applies to the foreign State.[78] Parliament turned its mind to the issue of relief and then enforcement against separate entities of foreign States in the FSIA and expressly chose not to extend the immunity in s 30 to all separate entities of foreign States generally.[79]
It must also be recalled that a foreign company must not carry on business[80] in Australia unless it is registered under Pt 5B.2 of the Corporations Act.[81] A registered foreign company is required to have a registered office in Australia and at least one local agent.[82] The local agent is answerable for the doing of all acts, matters and things that the foreign company is required by or under the Corporations Act to do and, in some circumstances, is personally liable to a penalty imposed on the foreign company for a contravention of the Corporations Act.[83] A registered foreign company must lodge balance sheets and other documents.[84] A registered foreign company cannot trade while insolvent.[85] Pursuant to s 583 of the Corporations Act, a Pt 5.7 body (which includes a foreign company registered under Pt 5B.2)[86] can be wound up on the grounds of insolvency.[87]
That is consistent with s 16 of the FSIA which, as the ALRC recommended,[88] was a specific provision included to address the participation by a foreign State in the membership of a body corporate, an unincorporated association or a partnership which is incorporated or has been established under the law of Australia or is controlled from, or has its principal place of business in, Australia. Section 16 was inserted as a separate exception to ensure that "all the relevant matters are covered, to provide greater precision, and to avoid overworking the language of the commercial transaction provision", namely s 11.[89] The stated rationale was that:[90]

[78]

Another reason why objections to the availability of the winding up of a separate entity ought to be rejected is that a separate entity registered in Australia, because it is carrying on business in Australia, is not conducted by a foreign State; it, like any corporation[91] in Australia, is ordinarily conducted by its directors, not its shareholders.[92] The duties imposed by Div 1 of Pt 2D.1 of the Corporations Act upon directors of a corporation - such as the duty of care and diligence[93] and the duty to act in good faith in the best interests of the corporation and for a proper purpose[94] - are also imposed on the directors of a foreign company to the extent that, among other things, their acts or omissions occur in connection with the foreign company carrying on business in Australia.[95] Similarly, s 588G of the Corporations Act, which states that directors have a duty to prevent insolvent trading by a company, applies to the directors of a foreign company registered in Australia.[96]
The winding up of a foreign company registered in Australia is directed to and affects that company's status and activities in Australia. It was not submitted in this appeal that the winding up would affect the company's status under the laws of its home jurisdiction. To render a separate entity of a foreign State amenable to winding up proceedings where that entity has chosen to carry on business (engage in commercial activities) in Australia, and thereby submit itself, its directors and its local agent(s) to the regulatory requirements of the Corporations Act, is neither a threat to the dignity of a foreign State, nor an interference with its sovereign functions.[97] And as was recognised in Kingdom of Spain v Infrastructure Services Luxembourg Sàrl,[98] it cannot be assumed that proceedings can be filed against a separate entity of a foreign State in its home jurisdiction or that countries permit enforcement of a debt obtained in another country. These concerns are not new.[99]
The difficulty with Garuda's construction is put into sharper relief when one contemplates the not uncommon circumstance of multiple creditors seeking to execute in relation to their debts over the limited property of a body corporate. Counsel for Garuda submitted that, where such a situation arises in relation to a separate entity, the options for creditors would be either to engage in a "race to the court insofar as individual execution is concerned" or pursue the debtor body corporate in its home jurisdiction under its home laws. The first is contrary to the provisions of the Corporations Act to which Garuda subjected itself when it registered in Australia under that Act as a foreign company; and the second, as we have seen,[100] is far from certain.
The winding up of an insolvent company is concerned with ensuring that where "debtors have insufficient or no property to discharge their liabilities", a procedure exists "to ensure an orderly and rateable distribution of that property, if any, among the creditors".[101] As this Court said in G & M Aldridge Pty Ltd v Walsh,[102] a primary objective of the Corporations Act "is that of securing equality of distribution amongst creditors of the same class. The pursuit of that objective has the consequential effect of deterring the 'race to the courthouse' and that, in turn, enhances the prospect of enabling debtors to trade out of their difficulties without undue and discriminatory risk to creditors". That objective would be thwarted if Garuda's construction of s 14(3)(a) were adopted.
In support of its construction, Garuda submitted that the purpose of s 14(3)(a) is limited to allowing domestic courts to adjudicate on all conflicting claims to property in a bankruptcy, insolvency or winding up, including claims by a foreign State. As we have seen, aspects of s 14 of the FSIA were the subject of discussion in the ALRC Report,[103] which referred to both the work of the International Law Commission ("the ILC"), culminating in the 1991 Draft Articles on Jurisdictional Immunities of States and Their Property, and legislation adopted in other countries. Section 14(3)(a), however, is in different terms and is a creature of its own context. A close review of the accompanying commentary on Art 15 of the ILC 1983 Draft Articles, headed "Ownership, possession and use of property", also reveals that while the exception provided therein "need not concern or relate to the determination of a right or interest of the State in property",[104] nothing was said to the effect that the exception could not concern or relate to the adjudication of the proprietary interests of a foreign State. And, in any event, even assuming that is a purpose of s 14(3)(a), that purpose is fulfilled on the construction of s 14(3)(a) which has been described.

[79]

In seeking to confine the construction of s 14(3)(a), Garuda submitted that one, undesirable, consequence of Greylag's construction is that foreign sovereigns and heads of State could be bankrupted in Australia if they were personally present, had a place of business, or were carrying on business in Australia.[105]
The possibility of bankruptcy of a head of a foreign State is not a reason to limit the construction of s 14(3)(a). Heads of State have immunity under s 9 if they are operating in a public capacity.[106] The immunities of the head of a foreign State acting in their private capacity are of a different category and are to be determined in accordance with s 36 of the FSIA and the Diplomatic Privileges and Immunities Act 1967 (Cth). Further, as counsel for Greylag submitted during oral argument, it is difficult to envisage a circumstance in which a foreign head of State could be bankrupted in respect of acts done in their public capacity where those acts did not involve a commercial transaction (which would otherwise be the subject of the exception in s 11 of the FSIA). Recourse to "extreme examples and distorting possibilities"[107] is not a basis for confining the proper construction of s 14(3)(a).
It is also no objection to Greylag's construction that a foreign State is incapable under Australian law of being wound up. Section 22 of the FSIA should not be taken to require s 14(3)(a) to operate in exactly the same way, in practice, as against a separate entity as it does against a foreign State. Section 22 does not provide that the separate entity is to be equally immune as the foreign State is immune. That is, it does not mandate that the immunity in each case covers or is confined to the same field of operation. It simply provides that when the relevant provisions of Pt II "apply" to a separate entity, that entity is to be treated as if it were a foreign State. How those provisions are to "apply" to the entity depends on the language of each provision.
The FSIA expressly recognises that to be so. Unless the contrary intention appears in the Act, a "foreign State" includes a political subdivision of a foreign State.[108] On the other hand, an agency or instrumentality of a foreign State, but not a department or organ of the executive government of the foreign State, can be a separate entity.[109] The FSIA recognises that the Act gives rise to circumstances in which it cannot have any application to certain emanations of a foreign State under Australian law.
Section 16 of the FSIA is instructive. Under Australian law, shares can only be held (whether beneficially or non-beneficially) by a natural person, a body corporate or a body politic.[110] A political subdivision of a foreign State, although included in the definition as a "foreign State" under s 3(3), is not a natural person, a body corporate or a body politic who can own shares directly and be a member of a company limited by shares as one form of "body corporate" within the chapeau of s 16(1). There can be no complete identity of operation of the Act to what is defined under the Act to be a "foreign State", let alone between a "foreign State" and a "separate entity". And the FSIA expressly recognises that to be so. In any event, as explained earlier, the language of s 14(3)(a) does not compel that the scope of immunity is the same. If that had been intended, that would have been said.

[82]

Is a State-owned corporation, whose activity in Australia may be limited to trading and commercial activities, immune under Australian law from being wound up in insolvency and at liberty under Australian law to trade while insolvent, leaving Australian judgment creditors in a race to execution of their judgments on a first come, first served basis?
The appellants ("Greylag") are lessors of aircraft to P.T. Garuda Indonesia Ltd ("Garuda"). Greylag seeks to wind up Garuda in insolvency for allegedly unpaid debts or on the basis that it is "just and equitable" for Garuda to be wound up.[111] The question above appears to be the startling question that is raised by Greylag's appeal. But, ultimately, only a much narrower question needs to be answered on this appeal.
The primary judge set aside Greylag's originating process to wind up Garuda on the basis that the originating process was inconsistent with the immunity conferred on Garuda under the Foreign States Immunities Act 1985 (Cth) ("the Immunities Act"). But the only basis upon which that immunity was contested was s 14(3) of the Immunities Act. The Court of Appeal of the Supreme Court of New South Wales dismissed an appeal which concerned only s 14(3). It has therefore been assumed at all stages in this litigation, including in this Court, that Garuda is a "separate entity of a foreign State" within s 22 of the Immunities Act. It has also been assumed that a proceeding for winding up a corporation based on the failure to pay a debt arising from a commercial contract is not "a proceeding [that] concerns a commercial transaction" within s 11(1) of the Immunities Act.
The absence of any dispute about s 11(1) or s 22 does not require interpretation of s 14(3) without reference to the scope of the inextricably interlinked provisions of ss 11(1) and 22. It would not be appropriate in the absence of argument to determine finally the scope of ss 11(1) and 22. But the interpretation of ss 11(1) and 22 is so closely related to s 14(3), and the insolvency consequences arising from a decision in favour of immunity for Garuda are so startling, that the interpretation of ss 11(1) and 22 cannot be ignored or assumed.
The meaning of s 14(3) of the Immunities Act also should not be identified by a textual fundamentalism that divorces the words from their context and purpose. Both Garuda and Greylag therefore correctly placed heavy reliance upon the influential report of the Australian Law Reform Commission ("the ALRC Report")[112] which recommended, and contained a draft Bill for, an Act containing a provision in materially the same terms as s 14.
Garuda submitted that the purpose of s 14 was relevantly limited to enabling an Australian court to adjudicate upon the proprietary interests of a foreign State in a winding up. The ALRC Report, understood against the history of foreign State immunity that it addressed, reveals that s 14 does have such a purpose. But is that the only purpose of s 14?
On one view, the ALRC Report proposed s 14 only as a narrow exception, as Garuda submitted. On another view, however, the ALRC Report proposed s 14 as a wider exception by reference to the same general commercial notions which inform s 11. The ALRC Report treated s 14 as part of a series of provisions dealing with "commercial activity", which included the exception to foreign State immunity in s 11 in respect of proceedings concerning "a commercial transaction".[113] The text of s 14 could support either view. The narrow view might be seen as a development of a confined historical exception concerning bankruptcy and winding up, as well as being consistent with approaches canvassed in the ALRC Report and the lack of any express acknowledgement of a wider purpose by the Australian Law Reform Commission ("the ALRC"). But the broader view is consistent with the overall objective of the series of provisions of which s 14 is part, which is generally to exempt commercial activity from foreign State immunity.
If the effect of the narrow view were that every trading corporation that is a separate entity of a foreign State were to be immune from winding up, then the startling insolvency consequences described at the start of these reasons might create a significant inconsistency with the overall objective of the series of provisions of which s 14 is part. It would then be very difficult to confine the purpose of s 14 in this way. However, for the reasons below, there is a real possibility that the proper interpretation of ss 11 and 22 would preclude the potentially startling insolvency consequences raised at the start of these reasons. In that context, the narrow view of the purpose of s 14 adopted by the ALRC should be preferred, consistently with the express terms in which that purpose was expressed by the ALRC Report and with the history of the exception in s 14(3). The appeal should dismissed.

[93]

If s 14(3) were read without the context of, and purpose described in, the ALRC Report, it could comfortably be understood to apply so that the foreign State is not immune in a proceeding so far as the proceeding concerns the winding up of any body corporate and accordingly, by operation of s 22, a separate entity of a foreign State would also not be immune from the winding up of any body corporate. Hence, as Greylag submitted, a separate entity of a foreign State that is a body corporate would not be immune from the winding up of any body corporate, including itself.
This interpretation is more grammatically and textually consistent with the terms of s 14(3), read with s 22, than the interpretation advanced by Garuda. The interpretation advanced by Garuda is textually strained. That interpretation is that the removal by s 14(3), read with s 22, of the immunity of a separate entity of a foreign State does not extend to the winding up of "any"[115] body corporate (which would include the winding up of a body corporate that is also the "separate entity of a foreign State"). On Garuda's interpretation, the winding up of "a" body corporate does not extend to "the particular body corporate which would - absent the operation of the exception - be the object of the immunity".
Unless the purpose and context of s 14 are entirely equivocal, the question of interpretation should not be resolved by reference to linguistic nuance. It is true that, in Taylor v Owners - Strata Plan No 11564,[116] French CJ, Crennan and Bell JJ suggested that a court would not be "justified in reading a statutory provision as if it contained additional words or omitted words" if to do so would make "an insertion which is 'too big, or too much at variance with the language in fact used by the legislature'".[117] But this was not a clarion call for textual fundamentalism without regard for context or purpose. Nor did their Honours subordinate the role of context or purpose to the range of literal meanings of the text. Rather, their Honours were saying only that the Parliament communicates to the public through the words of its legislation and those words are usually chosen more carefully than everyday speech acts.
Legislative text, context and purpose exist in the same symbiotic relationship as they do for everyday speech acts with the meaning and application of legislative words to be understood in light of their context and purpose.[118] If context and purpose clearly require a variance from the range of literal meanings of the text, then the text can bear even the opposite of its literal meaning(s). Where it is clear from context or purpose that the words were intended to bear a meaning outside their literal range, "there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed".[119]

[96]

Two foundational decisions in the nineteenth century, one in the United States[123] and one in England,[124] led some judges in the twentieth century to the view that there existed a theory of "absolute" immunity of a foreign State. In Compania Naviera Vascongado v Steamship "Cristina" ("The Cristina"),[125] Lord Atkin thought that it was "beyond dispute" that foreign State immunity had two aspects. The first was that a foreign sovereign could not be compelled to be a respondent to the proceedings of a domestic court. In other words, a foreign sovereign was immune from being compelled to defend a claim in the courts of another sovereign.[126] The second aspect was that domestic courts would not seize or detain property (including personal property or property used for commercial purposes) which was in the possession or control of the foreign sovereign.[127] Lord Wright agreed with the first aspect and thought that the second aspect was a "logical evolution" of the law.[128]
It was sometimes said that there were "exceptions" to this absolute immunity, although it might have been debatable whether the examples were exceptions to the two aspects of "absolute" immunity or whether they were merely circumstances that did not fall within either aspect of the "absolute" immunity. In 1975, Lord Denning MR described three of the "exceptions" as: (i) claims "in respect of land situate in England"; (ii) claims in respect of trust funds in England or money lodged in England for the payment of creditors; and (iii) claims for a lien or an arrest of property for debts incurred in England for services rendered in England to the property of a foreign sovereign in England.[129]
Lord Atkin's broad rule involving the two aspects of so-called absolute immunity was generally applied in England and Australia for several decades.[130] But, perhaps unsurprisingly for a rule whose boundaries are identified by reference to broad considerations of public policy, international law and comity, the second aspect of the so-called absolute immunity theory was always controversial.[131] In The Cristina, Lords Thankerton, Macmillan and Maugham, whilst admitting the "absolute exemption" of the person of the sovereign, doubted whether it extended to all property of the sovereign and, in particular, doubted whether it extended to the use of property in "ordinary commerce".[132] Lord Maugham thought that a general exception for commercial or non-public activity - in the context of a ship that was neither a ship of war nor "a vessel publicis usibus destinata" - should exist together with other "exceptions". One of the other exceptions to which his Lordship referred was:[133]

[98]

There was also uncertainty about the scope of the concept of the foreign State for which the immunity arose and whether it was limited to the body politic itself. In Baccus SRL v Servicio Nacional del Trigo,[134] a majority of the Court of Appeal of England and Wales held that a "foreign State" extended to a department of the State that was incorporated as a separate entity at least where, in the words of Jenkins LJ, the separate entity was a government ministry or department which had functions that were "wholly those of a department of State" and which was incorporated as "purely a matter of governmental machinery".[135] Similarly, Parker LJ held that the body corporate had foreign State immunity because it was a "department of State" and was "not a company limited by shares in which the State holds the whole or a controlling interest".[136] By contrast, Singleton LJ (whose reasoning was later described by Lord Denning MR as "very convincing"[137]) held that there should be no sovereign immunity "if a separate entity is set up and is allowed to trade with its own people conducting its business".[138]
During the twentieth century, there was a steady movement worldwide away from the broader, "absolute" theory of foreign State immunity (supported by Lords Atkin and Wright in The Cristina) towards the more "restrictive" theory (supported by Lords Thankerton, Macmillan and Maugham in The Cristina).[139] As Lord Denning MR observed in 1977 in Trendtex Trading Corporation v Central Bank of Nigeria,[140] the previous 50 years had seen "a complete transformation in the functions of a sovereign state. Nearly every country now engages in commercial activities."
With the growth of this "non-sovereign activity" of foreign States in the twentieth century, many States recognised the more restrictive theory based upon a distinction between foreign State immunity concerning the exercise of sovereign power (ius imperii) and foreign State immunity concerning the exercise of non-sovereign activities, such as private or commercial activity, by a foreign State (ius gestionis).[141] In 1972, the preamble to the European Convention on State Immunity recognised that in international law there was "a tendency to restrict the cases in which a State may claim immunity before foreign courts".
Against this background, in 1984 the ALRC produced the ALRC Report, under the guidance of Professor James Crawford as Commissioner in Charge. The ALRC recognised that there were "good arguments" for "limiting the scope" of foreign State immunity. But the ALRC observed that the common law was "uncertain in a number of respects". In particular, the ALRC said that the focus of the common law upon "commercial and governmental transactions" meant that there was no guidance "as to when non-commercial torts committed by the foreign state will be immune". The broad common law distinction between governmental transactions and commercial transactions was therefore "inappropriate or inadequate to deal with the full range of issues which Australian courts should have power to deal with". So the ALRC said that "Australia should articulate to foreign states more precise rules governing their liability to the jurisdiction of Australian courts".[142]

[110]

If the only possible exception from foreign State immunity that could apply to Garuda were s 14(3), then the effect of Garuda's interpretation would be that a registered foreign company in the position of Garuda would be able to trade while insolvent unless it were deregistered in Australia, such as where it had voluntarily ceased business.[164] A further effect of allowing such a separate entity to trade while insolvent is that the Immunities Act would have created a regime which Garuda accepted would involve a "race to the court" by creditors for execution against the property of the separate entity on a first come, first served basis, at least unless a creditor could rely upon a debt to wind up the separate entity in the home jurisdiction of the separate entity in order to cause the entity to cease trading in Australia.
These insolvency effects are inconsistent with the central justifications given in the ALRC Report for restricting the scope of foreign State immunity. The first of those justifications was that "the local courts may be the only appropriate forum" with respect to some matters and "the most natural or appropriate forum" with respect to others. The second of those justifications was the orderly resolution of private law disputes. And the third was fairness to litigants.[165] Even assuming that a foreign court would recognise the relevant Australian judgment debt, the foreign court would not be the most natural forum to address the insolvency issues in Australia arising from a judgment debt in favour of creditors in Australia of a corporation trading in Australia. Nor, in these circumstances, would a race to the court by creditors seeking execution, or a winding up in a foreign court if it were possible, promote the orderly resolution of private law disputes. Nor would it be fair to an Australian commercial creditor litigant, in respect of a debt that arose in Australia against a foreign corporation trading in Australia, to leave that litigant to race other creditors to execution or to confine the litigant to any possible remedy in a foreign court.
These insolvency effects are also fundamentally contrary to the intention of the ALRC to ringfence "commercial activity" (although not as a unitary concept) from foreign State immunity. They are fundamentally contrary to the "basic principle" stated by the ALRC, albeit at a "high level of generality", that "when a foreign state acts in a 'commercial' matter within the ordinary jurisdiction of local courts it should be subject to that jurisdiction".[166]
One attempted answer to such concerns, which was relied upon in a notice of contention by Garuda in the Court of Appeal but not in this Court, was that allowing the winding up of a separate entity of a foreign State would undermine the specific form of execution provided for in Pt IV of the Immunities Act. In other words, that contention was that Pt IV of the Immunities Act precluded the winding up of any foreign corporation that was a separate entity within the meaning of s 22. That contention by Garuda was not decided by the Court of Appeal.[167] It was not repeated in this Court.
There is also little force in Garuda's attempt to justify these insolvency effects by its submission that it would be a remarkable consequence if the removal of the immunity permitted "the internal management of that foreign government instrumentality [to be] displaced by the order of an Australian court" and "to be scrutinised by the judicial processes of the Australian courts". To the contrary, the ALRC contemplated precisely that possibility, at least where the foreign State was not the only member of the separate entity and where there were strong jurisdictional links to Australia:[168]

[112]

If Garuda's interpretation of s 14(3) were to have the remarkable insolvency effects that it sought to justify, then, at the very least, there would be serious doubt about that interpretation. It would be strongly arguable that, although the ALRC Report omitted any express reference to a purpose of s 14(3) beyond merely ensuring that an Australian court could adjudicate on all conflicting claims in a bankruptcy, a further purpose to exclude foreign State immunity for commercial consequences (such as winding up) of ownership, possession or use of property in trade or commerce might have been implied in s 14(3) of the Immunities Act as a way of giving effect to the broader justifications of the ALRC for restricting foreign State immunity. But the scope of ss 11(1) and 22 provide reason to doubt whether Garuda's interpretation of s 14(3) does have these effects.
Perhaps due to an acceptance by the parties of some of the propositions of law contained in the decision of the Full Court of the Federal Court of Australia in PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission,[169] no substantial submissions were made by the parties in this litigation concerning the operation of s 11(1) or s 22. Garuda accepted on this appeal that the aircraft leases entered into with Greylag were commercial transactions within the common meaning of that term. But Garuda denied that s 11(1) applied in these proceedings and neither the operation of s 11(1) nor s 22 was the subject of substantial argument.
Nevertheless, the interpretive role of this Court does not require hemianopsia. A court should interpret a provision with both eyes open to all context, within and outside the legislation. Sections 11(1) and 22 cannot be ignored when interpreting s 14. The issues in this appeal depend upon the concurrent operation of ss 14 and 22. As Garuda recognised, ss 11 and 14 "are in the same Part of the same Act; they are directed toward addressing the same legal problem". And, as explained above, the ALRC considered ss 11 and 14 to be part of a scheme equivalent to a distributed operation of the unitary, open-textured approach to "commercial activity" in the United States and Canada.
No authority in this Court requires that ss 11(1) and 22 be interpreted in a manner that would require Garuda's interpretation of s 14(3) to have these startling insolvency effects. For instance, if the meaning and application of a "separate entity of a foreign State" in s 22 (read with the definition in s 3(1)) were confined to corporations in the position of a government department or corporations that were generally serving the functional purposes of a government department, then there might be reason to doubt whether Garuda would be a separate entity within s 22.[170] Alternatively, if a proceeding for winding up a corporation based on the failure to pay a debt arising from a commercial contract were a "proceeding concerning a commercial transaction", then s 11(1) might have the effect that Garuda and other foreign entities like it would have no foreign State immunity in respect of such a proceeding. I am, therefore, satisfied that the elasticity of the concepts of a "commercial transaction" and "a separate entity of a foreign State" provides sufficient reason to doubt the insolvency effects discussed above. For that reason, those effects should not weigh in favour of Greylag's interpretation of s 14(3).

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