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Entico Corporation Ltd v UNESCO, 18 March 2008, [2008] EWHC 531 (Comm), [2008] 2 All ER (Comm) 97

Chanaka Wickremasinghe[1]

Relevance of the case

This case provides the most detailed examination to date by a United Kingdom court of the relationship between the immunity of an international organization, UNESCO, and the right of access to a court, as it is implied in the interpretation of art. 6 of the European Convention on Human Rights (ECHR). It raises an interesting question about the applicability of the much-cited judgment in Waite and Kennedy1 in the context of a UN Specialised Agency.

I. Facts of the case

The claimant, a British company, sought to enter into a contract with UNESCO for the printing and production of a calendar. Draft contract terms were proposed by the claimant, and discussed by the parties, including a provision for the settlement of disputes by arbitration under the UNCITRAL rules. However before the contract had been formally concluded UNESCO indicated that it did not wish to proceed with the project. The claimant alleged that the cancellation was contrary to the implied contract between them and sued for compensation in the Commercial Court in London. UNESCO did not take part in the proceedings, and the claimant sought a judgment in default.

II. The legal question

In seeking to enter a default judgment, the claimant sought to overcome the immunity enjoyed by UNESCO under art. III, Section 4 of the 1947 Convention on the Privileges and Immunities of the Specialised Agencies (1947 Convention). In this respect, the claimant challenged the UK legislation which implemented the 1947 Convention in UK law on the basis that it was incompatible with the right of access to a court implicit under art. 6 of the ECHR. The Secretary of State for Foreign and Commonwealth Affairs intervened to submit that there was no incompatibility.

III. Excerpts

Mr Justice Tomlinson:

[...]

17. At the outset it should be stressed that the immunity given to UNESCO in this jurisdiction has been given solely in order to comply with the UK’s obligations under public international law. I have already set out the source of this obligation at paragraph 2 above, the 1947 Convention. It is an obligation owed to virtually the entire international community. I have already set out Sections 4 and 5 of Article III which is headed ‘PROPERTY, FUNDS AND ASSETS’. It should be noted that Section 4 makes no provision for any waiver whatsoever so far as concerns the immunity from execution. Article IX, headed ‘SETTLEMENT OF DISPUTES’ includes Section 31 which provides:

‘Each specialised agency shall make provision for appropriate modes of settlement of: (a) Disputes arising out of contracts or other disputes of private character to which the specialised agency is a party; (b) Disputes involving any official of a specialised agency who by reason of his official position enjoys immunity, if immunity has not been waived in accordance with the provisions of section 22.’

It necessarily follows that an ‘appropriate’ mode of settlement does not include within it submission to the process of execution. A specialised agency cannot waive its immunity in that regard. There is nothing in the Convention to make enjoyment of the privileges and immunities conferred by Sections 4 and 5 dependent upon compliance with section 31. Section 31 itself offers no criteria pursuant to which the appropriateness of a mode of settlement is to be judged. Importantly, section 31 does not say that the mode of settlement for which provision is made must be effective. It would be wholly inimical to the international scheme envisaged if individual States party arrogated to themselves the power to determine whether the provision made by each specialised agency for the settlement of disputes is adequate, whether considered generally or by reference to the facts of a particular case.

  • 18. The 1947 Convention must be interpreted in accordance with the principles codified in Articles 31-33 of the Vienna Convention on the Law of Treaties, 1969, which require that a treaty be interpreted in good faith, in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of the treaty’s object and purpose. Sections 4 and 5 of the 1947 Convention are clear, unequivocal and unconditional. They plainly require the parties to recognise and to give effect to a broad jurisdictional immunity possessed by each specialised agency. There is in my judgment no room for ‘reading down’ [i.e. limiting by process of interpretation] the provisions of the 1947 Convention in order to take account of the provisions of the subsequent ECHR, a treaty which is binding upon only a minority of the parties to the 1947 Convention.
  • 19. Article 31.3(c) of the Vienna Convention provides:

‘There shall be taken into account, together with the context: . . . (c) any relevant rules of international law applicable in the relations between the parties . . .’

As was pointed out by the ECt.HR in Bankovic v. Belgium 123 ILR 94 at paragraph 57 of the judgment, the ECHR is itself an instrument which must be construed in the light of this article. Moreover Article 30.4(b) of the Vienna Convention has the effect that the need to comply with the requirements of the ECHR does not excuse compliance with an earlier convention to which more states are party than are party to the ECHR. As Mr Greenwood QC, for the Secretary of State, submitted, it is in the highest degree implausible that when the states party drafted and acceded to the ECHR they intended thereby to place themselves in violation of their existing international obligations. Their existing international obligations, owed to many more states than were or are party to the ECHR, required them to recognise and to give effect to a broad and unqualified jurisdictional immunity enjoyed by each specialised agency. It would therefore be surprising if Article 6 of the ECHR was intended to render this regime non-compliant, thereby plunging all states party to both the ECHR and the 1947 Convention into a position in which their obligations conflicted.

[...]

  • 23. It is unnecessary for me to decide whether Article 6 of the ECHR is in these circumstances in fact engaged at all. In the context of State immunity Lord Millett in Holland v. Lampen-Wolfe [2000] 1 WLR 1573 at 1588 pointed out that while Article 6 ‘forbids a contracting state from denying individuals the benefit of its powers of adjudication it does not extend those powers’. In Jones v. Saudi Arabia [2007] 1 AC 270 both Lord Bingham at paragraph 14 and Lord Hoffmann at paragraph 64 expressed their agreement with Lord Millett’s approach. As Lord Hoffmann put it, ‘there is not even a prima facie breach of Article 6 if a State fails to make available a jurisdiction which it does not possess’. When the UK became party to the ECHR it possessed no jurisdiction over UNESCO unless UNESCO chose to waive its immunity.
  • 24. Since recognition of the immunity of an international organisation is equally required by international law, there can be no reason for regarding this approach as not equally applicable to recognition of organisational immunity as it is to recognition of State immunity. Certainly when considering whether the grant of immunity to an international organisation pursues a legitimate aim, the ECt.HR has drawn no distinction—see Waite and Kennedy v. Germany [1999] 30 EHRR 261 at paragraph 63. In that case however Germany conceded that Article 6 was engaged and the court proceeded on the basis that it was applicable. That case was moreover concerned with the European Space Agency (‘the ESA’), an international organisation created by a small group of European States all of which were parties to the ECHR and had been so for some years before the establishment of the ESA.
  • 25. In the present case it makes no difference to the outcome of this application whether Article 6 is regarded as engaged or not. I turn therefore to consider whether, on the assumption that Article 6 is engaged, the grant of immunity to UNESCO pursues a legitimate aim and if there is a reasonable relationship of proportionality between the means employed and the aim sought to be achieved.
  • 26. In relation to the first question, it was as I understood it the submission of Ms Fatima [i.e. Counsel for the claimant] that the court is concerned with the question whether the grant of immunity to UNESCO and similar organisations is itself a legitimate aim in the sense of being necessary to its or their proper functioning. In my judgment jurisprudence of which I must take account demonstrates that this is not the appropriate question. In its separate judgments in the trilogy of cases Al-Adsani v. United Kingdom (2001) 34 EHRR 273, Fogarty v. United Kingdom (2001) 34 EHRR 302, and McElhinney v. Ireland (2001) 34 EHRR 323, the Grand Chamber of the ECt. HR included, in identical terms, the following passage:

‘The Court must first examine whether the limitation pursued a legitimate aim. It notes in this connection that sovereign immunity is a concept of international law, developed out of the principle par in parem non habet imperium, by virtue of which one State shall not be subject to the jurisdiction of another State. The Court considers that the grant of sovereign immunity to a state in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between States through the respect of another State’s sovereignty.

The Court must next assess whether the restriction was proportionate to the aim pursued. It recalls that the Convention has to be interpreted in the light of the rules set out in the Vienna Convention of 23 May 1969 on the Law of Treaties, and that Article 31(3)(c) of that treaty indicates that account is to be taken of “any relevant rules of international law applicable in the relations between the parties.” The Convention, including Article 6, cannot be interpreted in a vacuum. The Court must be mindful of the Convention’s special character as a human rights treaty, and it must also take the relevant rules of international law into account. The Convention should so far as possible be interpreted in harmony with other rules of international law of which it forms part, including those relating to the grant of State immunity.

It follows that measures taken by a High Contracting Party which reflect generally recognised rules of public international law on State immunity cannot in principle be regarded as imposing a disproportionate restriction on the right of access to a court as embodied in Article 6 section 1. Just as the right of access to a court is an inherent part of the fair trial guarantee in that Article, so some restrictions on access must likewise be regarded as inherent, an example being those limitations generally accepted by the community of nations as part of the doctrine of State immunity.’

It follows in my judgment that compliance with obligations owed in international law is of itself pursuit of a legitimate aim. Furthermore, insofar as the 1974 Order reflects generally recognised rules of public international law on organisational immunity, which in my judgment it does, it cannot in principle be regarded as imposing a disproportionate restriction on the right of access to court as embodied in Article 6(1).

27. It is true that in the earlier case of Waite and Kennedy, which was concerned with organisational rather than State immunity, the ECt.HR did not express itself in quite such stark terms. However as I have also already pointed out, there can in fact be no principled basis upon which the approach can in the two situations be different. The Commission was in that case almost equally divided, a bare majority, 17-15, finding that Germany had not exceeded its margin of appreciation in limiting the applicants’ rights of access to the national courts in relation to an employment dispute with the ESA. The dissentients pointed out that the Commission was there concerned only with the immunities of international organisations created after the coming into force of the ECHR—see page 281. It is true that in considering proportionality the Court said that it regarded as a material factor whether the applicants had available to them means of redress which were a reasonable alternative to access to the German national courts—see paragraph 68 at page 287. At paragraph 73 of the judgment the Court said that it took into account in particular the alternative means of legal process available to the applicants, which involved an internal tribunal. However I note that the Court did not approach the matter upon the basis that it is a pre-requisite to the compatibility with Article 6 of organisational immunity that the organisation provide an alternative forum for dispute resolution. Furthermore the conceded applicability of Article 6 in that case to disputes involving the ESA created no possibility of conflict of international obligations. The Court was concerned only with the obligations of an ECHR State owed to other ECHR States and to an organisation created by such States long after they had acceded to the ECHR. In the light of the approach of the ECt.HR in the subsequent trilogy of State immunity cases it is not in my judgment safe to assume that the ECt.HR would in a case involving the immunity of a global organisation created prior to the ECHR adopt reasoning similar to that to be found in Waite and Kennedy. Indeed it is worth setting out in full what the Court did on that occasion say about the immunity of international organisations in the context of legitimate aim. At paragraph 63, a passage to which I have already drawn attention above, the Court said this:

‘Like the Commission, the Court points out that the attribution of privileges and immunities to international organisations is an essential means of ensuring the proper functioning of such organisations free from unilateral interference by individual governments.

The immunity from jurisdiction commonly accorded by States to international organisations under the organisations’ constituent instruments or supplementary agreements is a long-standing practice established in the interest of the good working of these organisations. The importance of this practice is enhanced by a trend towards extending and strengthening international co-operation in all domains of modern society.

Against this background, the Court finds that the rule of immunity from jurisdiction, which the German courts applied to ESA in the present case, has a legitimate objective.’

One can understand why in that case there was an argument for the applicability of Article 6, which was of course conceded. By contrast I can find no justification for reading a convention concluded some years before the ECHR, the majority of whose parties are not bound by that later Convention, in the light of the later principles espoused by only a small sub-set of the parties to the earlier convention.

  • 28. If however, contrary to my view, it is relevant to take into account the availability of an alternative forum, it is clear that there is in the present case an available mode of dispute resolution, i.e. arbitration under UNCITRAL Rules. For the reasons already stated I find it inappropriate to assess its adequacy and likely efficacy, although I should record that it has certainly not been established that it is an inadequate remedy. It is the remedy which Entico itself put forward for acceptance. The immunity from execution of UNESCO is not incompatible with Article 6—see Kalogeropolou v. Greece 129 ILR 537, and is in any event irrelevant, UNESCO having stated that it will comply with any award. [...]
  • 29. In my judgment therefore if Article 6 is engaged there is no violation of Entico’s Article 6 rights. It has of course already been held by the Court of Appeal in Stretford v. The Football Association [2007] 2 Lloyd’s Rep 31, that voluntarily entering into an arbitration agreement amounts to a waiver of rights under Article
  • 6. However my principal conclusion is that the 1974 Order is not incompatible with Article 6 [...]

IV. Commentary

The judgment represents a rather careful assessment of the relationship of immunity of an international organization and the individual right of access to a court. In line with UK case-law the judgment starts by questioning whether art. 6 is engaged at all in cases where immunity is a requirement of international law. The position of the House of Lords, in the context of state immunity, is that where international law limits the scope of the jurisdiction of the national court, art. 6 cannot of itself extend the jurisdiction of the court beyond those limits.[2] However in this respect the position in UK law appears to diverge from the approach of the Strasbourg Court.[3] In the present case the Judge found that he did not have to come to a definitive conclusion on the point, since he found that maintaining immunity was compatible with art. 6 in any event.

As regards the compatibility of immunity with art. 6, the starting point is of course that the right of access to a court is not an unlimited right, but that any limitation must pursue a legitimate aim and be proportionate in the circumstances. The Judge had little difficulty in finding that the immunity deriving from the 1947 Convention, a treaty with a broad take up by states around the world, met these requirements. On the question of proportionality, it is interesting to note that the Judge resisted the approach, which is sometimes urged in the literature, of reading Waite and Kennedy as ipso facto requiring the provision of alternative remedies as prerequisite for the enjoyment of immunity by international organizations.[4] The judgment suggests that a more nuanced or contextual approach needs to be taken to the question. Whilst the provision of alternative remedies was undoubtedly an important factor weighed by the Court in Waite and Kennedy, that was in relation to the ESA, an organization established by European states, established after they had acceded to the ECHR. The judgment suggests that other considerations may weigh in the context of a global organization with its own established and widely followed regime of immunities. In this connection the judgment of the Strasbourg Court in the Mothers of Srebrenica case appears to bear this out.[5]

The huge variety of international organizations, including as regards their membership, structures, powers, and activities, means that the extent of their immunities must be fashioned in the case of each organization to meet their particular functional needs.[6] This suggests that the national court, as here, needs to approach generalizations in this area of the law with appropriate care, and with a full appreciation of the international legal context that governs the international organization in question.

  • [1] Legal Counsellor, Foreign and Commonwealth Office. This piece is written in a personal capacity.i See ch. 7.4.
  • [2] cf. Holland v Lampen-Wolfe, [2000] 1 WLR 157.
  • [3] cf. Jones and Mitchell v UK, judgment of 14 January 2014, paras 164-5.
  • [4] See, e.g., A. Reinisch ‘Transnational Judicial Conversations on the Personality, Privileges and Immunitiesof International Organizations—an Introduction’, in A. Reinisch (ed.) The Privileges and Immunities ofInternational Organizations in Domestic Courts (Oxford, Oxford University Press 2013), pp. 10-15.
  • [5] cf. StichtingMothers of Srebrenica and others v The Netherlands, decision of 11 June 2013, paras 161-5.
  • [6] cf. Commentaries to the ILC’s Articles on the Responsibility of International Organisations,paras 1-9.
 
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