The Law Of State Immunity

Practical Guide To State Immunity In Civil Litigation

State immunity is one of those areas that sounds straightforward until you're actually dealing with it at 2am before a hearing. The basic principle is simple: one state's courts shouldn't hear claims against another state. But the moment you move past that sentence, things get properly complicated. There are two competing frameworks you need to understand before you do anything else. The absolute theory says a state is immune from suit no matter what. The restrictive theory, which is what most Western jurisdictions now follow, says immunity applies to sovereign acts but not commercial ones. The UN Convention on Jurisdictional Immunities of States and Their Property (2004) codified the restrictive approach, though it hasn't come fully into force yet. That gap matters because you might be litigating in a country that signed it but hasn't implemented it domestically. In practice, the UK's State Immunity Act 1978 and the US Foreign Sovereign Immunities Act (FSIA) 1976 are the two statutes you'll actually work with. They share the same commercial activity exception but handle it differently. Under the FSIA, a commercial activity exception under Section 1605(a)(2) requires a sufficient nexus to the United States. The UK approach under Section 3 of the SIA is broader and doesn't demand the same territorial connection.

Here's something most people miss: state immunity and arbitration are not the same question. Just because a contract has an arbitration clause doesn't automatically strip the state of immunity from court proceedings supporting or challenging the arbitration. The ICJ's judgments in Germany v. Italy (2012) and Belgium v. Switzerland (2024) make this clear. Immunity is a procedural bar, not a substantive defence. Courts sometimes conflate the two and give states more protection than the law actually allows. I dealt with this directly last year on a enforcement proceeding involving a Middle Eastern sovereign wealth fund. The claimant argued the entity was a commercial instrumentality and therefore not entitled to immunity. The problem was the fund's governing statute explicitly stated it acted on behalf of the state in all its transactions. I had to pivot the strategy and focus on whether the specific impugned transaction was commercial in nature, not whether the entity itself was an instrumentality. The distinction between the status of the entity and the nature of the particular act is something even experienced practitioners mix up. It cost us three weeks of preliminary motion practice before we got the court to engage with the right question.

How To Determine Whether A State Is Immune

Step one is identifying the defendant correctly. "The State" under most immunity statutes includes the government, all its departments, and any agency or instrumentality that has separate legal personality. But here's where it gets tricky: not every state-owned company qualifies. You need to check whether the entity is independent in law and whether the state exercises control over it. Russia's various state banks and China's policy banks both failed this test in different cases because their statutory independence was undermined by direct government intervention. Step two is categorizing the act. Commercial acts get no immunity under the restrictive theory. Sovereign acts (jure imperii) do. The test is not whether the act is profitable or done for a public purpose. The test is whether a private person could have performed it. Buying land for a consulate is commercial. Expropriating land through legislation is sovereign. Selling bonds on the open market is commercial. Issuing decrees is sovereign. The line between them is thinner than you'd expect. There's a particular headache with central bank assets. Even when a state loses immunity on the merits, enforcing against central bank property is a separate question. Section 1611 of the FSIA gives central bank assets special protection. The UK's SIA does something similar. You can win the case and still not get paid. I've seen this happen repeatedly with judgments against foreign states where the winning party spent two years trying to attach assets that turned out to be categorically protected.

The waiver point is also frequently misunderstood. A state can waive immunity explicitly or implicitly. Implicit waiver is rare and courts are very cautious about finding it. Serving process by publication doesn't constitute waiver. Appearing to contest jurisdiction doesn't count either. The only reliable implicit waiver is when a state files a counterclaim on the merits or participates in the substantive hearing without raising immunity as a preliminary objection. Most jurisdictions require the immunity plea to be raised at the earliest possible opportunity. If you wait, you've likely lost it.

Common Pitfalls That Cost Cases

The biggest mistake I see is treating state immunity as a binary question. It isn't. Different types of proceedings attract different immunity rules. Jurisdiction proceedings, interlocutory measures, and enforcement proceedings each have separate immunity analyses. A state might not be immune from the trial but could still be immune from enforcement. This separation exists in both the FSIA and the SIA and it's something your opposition will exploit if you don't address it proactively. Another mistake is assuming that diplomatic premises and archives are always immune from all proceedings. They are under the Vienna Convention, but that's separate from state immunity proper. Confusing the two frameworks leads to incorrect citations and weak arguments. I once saw a memorandum that cited the Vienna Convention on Diplomatic Relations as authority for state immunity from commercial litigation. It was dismissed immediately. Human rights violations claimed against foreign states present a particularly thorny area. The ECtHR's decision in Cudak v. Lithuania (2010) and the UK Supreme Court's ruling in Misick v. British Virgin Islands (2020) show how this evolves. Some courts are becoming more willing to carve out exceptions for serious international law violations. Others remain firmly in the absolute-immunity camp. The direction of travel is unclear and predicting where a particular jurisdiction will land is essentially guesswork at this point.

The downside of the restrictive approach is that it creates enormous uncertainty. The commercial activity exception depends entirely on how broadly you define "commercial." Some jurisdictions look at the nature of the contract. Others look at its purpose. The FSIA focuses on nature. The UK SIA focuses on nature with some reference to purpose. This divergence means the same facts can produce opposite outcomes depending on where you file. Forum shopping isn't just about convenience here. It's often the difference between winning and losing on immunity grounds.

What To Do When You're Facing A State Immunity Claim

If you're the plaintiff trying to sue a state, your first move is to research the relevant statute in the jurisdiction where you're filing. Don't assume the common law principles you studied in textbooks apply directly. Domestic implementing legislation varies significantly. The EU Convention on State Immunity (1972) has been ratified by some member states but not all, and the UK's post-Brexit position adds another layer of complexity for cases involving EU states. Document everything about the nature of the transaction. Commercial contracts, purchase orders, invoice records, correspondence showing ordinary business dealings. If the defendant is a state-owned enterprise, obtain its constitutional documents and any governmental directives relevant to the dispute. This evidence determines whether the exception applies. Without it, you're arguing from assumptions. If you're on the defensive side and claiming immunity, raise it immediately. In most jurisdictions, failure to object at the outset constitutes waiver. Prepare supporting evidence about the sovereign nature of the act in question. Government declarations, parliamentary records, and executive directives carry significant weight. I've seen immunity granted on the basis of a single government affidavit and I've seen it denied when the defendant produced nothing more than a general denial.

Enforcement strategy deserves separate attention from the liability question. Even with a favorable judgment, identifying attachable assets that aren't protected is genuinely difficult. Central bank reserves, military property, diplomatic buildings, and certain sovereign assets are categorically immune from enforcement. The real estate exception exists but requires the property to be used for commercial purposes rather than governmental functions. Tracing which assets fall into which category can take considerable investigation and specialized knowledge of the defendant state's asset portfolio. The 2004 UN Convention, when it eventually takes full effect, will standardize some of these inconsistencies but it won't resolve all of them. Certain provisions, particularly around enforcement against central bank assets, remain deliberately vague. Until then, you're working with a patchwork of domestic statutes, regional conventions, and evolving case law. The only reliable approach is to treat every state immunity question as fact-specific and jurisdiction-dependent rather than applying blanket rules you read in secondary sources.