2

JUAN YSMAEL & COMPANY INCORPORATED…… APPELLANTS;

AND

GOVERNMENT OF THE REPUBLIC OF INDONESIA …… RESPONDENTS.

[AND CONNECTED APPEAL.]

[1955] A.C. 72 (J.C.P.C.)

ON APPEAL FROM THE APPEAL COURT OF HONG KONG.

Conflict of Laws—Sovereign immunity—Foreign State not a party to proceedings—Alleged interest in property in suit—Necessity for proof that claim not illusory or founded on defective title—Action to be stayed at point when it is established that conflicting rights have to be decided—Action in rem for possession of ship—Claim by Indonesian government to own it.

A foreign government claiming that its interest in property will be affected by the judgment in an action to which it is not a party and in which it alleges that it is indirectly impleaded, is not bound as a condition of obtaining immunity to prove its title to the interest claimed, but it must produce evidence to satisfy the court that its claim is not merely illusory, nor founded on a title manifestly defective. The court must be satisfied that conflicting rights have to be decided in relation to the foreign government's claim. When the court reaches that point it must decline to decide the rights and must stay the action, but it ought not to stay the action before that point is reached.

The view of Scrutton L.J. in The Jupiter [1924] P. 236; 40 T.L.R. 815 that a mere assertion of a claim by a foreign government to property the subject of an action compels the court to stay the action and decline jurisdiction is against the weight of authority and cannot be supported in principle.

Compania Naviera Vascongado v. S.S. Cristina [1938] A.C 485; 54 T.L.R. 512; [1938] 1 All E.R. 719, United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. and Bank of England [1952] A.C. 582; [1952] 1 T.L.R. 541; [1952] 1 All E.R. 572; Haile Selassie v. Cable and Wireless Ld. [1938] Ch. 839; 54 T.L.R. 996; [1938] 3 All E.R. 384, and The Arantzazu Mendi [1939] P. 37; 55 T.L.R. 71; [1938] 4 All E.R. 267; [1939] A.C. 256; 55 T.L.R. 454; [1939] 1 All E.R. 719 considered.

Where, therefore, on an action in rem by the appellant company against a steamship of which they claimed possession as owners, a foreign government, to whom the vessel had been chartered by the appellants and used for carrying troops, alleging that they had bought the vessel through an agent of the appellants and were the owners of it, sought to have the writ and all subsequent proceedings set aside on the ground that the writ impleaded a foreign sovereign State, and the evidence established that the appellant's agent had no authority to sell the ship on the terms specified in the agreement of sale and that the agent acting for the foreign government was fully aware of that fact, the title of the foreign government to the ship (legal possession of which had admittedly never passed to them) was manifestly defective and they had not established that they possessed such an interest in the vessel as would show that they were impleaded, and there was accordingly no ground for setting the writ aside.

Judgment of the Appeal Court of Hong Kong reversed.

CONSOLIDATED APPEALS (Nos. 45 and 46 of 1953) from a judgment of the Appeal Court of Hong Kong (December 18, 1952) reversing a judgment of Reece J. in the Supreme Court of Hong Kong (Admiralty Jurisdiction) (September 15, 1952) and setting aside the writs and all subsequent proceedings in two actions, namely, action No. 6 and action No. 8 in the Supreme Court of Hong Kong (Admiralty Jurisdiction). Action No. 6 was an action brought against the steamship Tasikmalaja by the respondent Anthony Loh for ship's necessaries. It was conceded in argument that that action could be ignored, and the judgment in the present appeal was therefore confined to action No. 8.

The appellants, who were a company incorporated under the laws of the Philippine Islands, issued the writ in the action on June 27, 1952. It was a writ in rem against the steamship Tasitrnalaja addressed to all parties interested in the said steamship, and by the statement of claim endorsed thereon the plaintiffs as the owners of the said steamship claimed to have legal possession of the vessel decreed to them.

On June 27, 1952, the vessel was arrested by process of the court in the action, and at all material times thereafter remained in the legal custody of the head bailiff of the Supreme Court. On June 30, 1952, an appearance under protest was entered by the Government of Indonesia without prejudice to an application to dismiss the action. On July 9, 1952, the Government of Indonesia gave notice of motion for an order that the writ and all subsequent proceedings be set aside on the grounds that the writ impleaded a foreign sovereign State and that the Government of Indonesia was the owner of the vessel by buying it from an agent of the appellant company, one Starr, or was in possession or control or entitled to possession of the vessel. Affidavits were sworn in support of the motion by various persons, including in particular Kwee Djie Hoo, described as Consul General for the Government of Indonesia at Hong Kong, and Pamoe Rahardjo, described as a Major in the Army of the Republic of Indonesia. On July 25, 1952, the appellants gave notice of their intention to crossexamine those deponents, and applied for leave to do so, and on August 25 Reece J. granted such leave. Thereupon the Government of Indonesia claimed diplomatic privilege for the deponents, but on August 27 Reece J. ruled that the deponents were not entitled to diplomatic privilege. Summonses were accordingly issued to the depondents to attend for crossexamination, which they failed to do, and on September 15, 1952, Reece J. ordered the affidavits of the two deponents to be removed from the file. There was no appeal before the Judicial Committee against the orders of the judge overruling the claim to diplomatic privilege, and directing the two affidavits to be removed from the file, and the Board expressed no opinion on the propriety of such orders.

On September 15, 1952, Reece J. gave judgment dismissing the motion of the Government of Indonesia claiming immunity from being sued, and on the same day that Government gave notice of appeal from the said order to the Appeal Court. On October 24, 1952, the action came to trial before Reece J., who decreed possession of the vessel to the appellants subject to the claim of the Hong Kong & Whampoa Dock Co. Ld. for the cost of work done on the vessel. On December 8, the appeal of the Government of Indonesia against the order of Reece J. of September 15, 1952, refusing immunity, came before the Appeal Court. The three following submissions were made to the Appeal Court by counsel on behalf of the Indonesian Government: (i) That the trial judge erred in making the orders for the crossexamination of Mr. Kwee Djie Hoo and Major Pamoe Rahardjo; (ii) that the trial judge erred in refusing to grant to those persons the diplomatic immunity claimed for them; (iii) that even if the trial judge was correct in his decisions on points (i) and (ii), there was left upon the record ample material upon which the impleading motions should have been allowed.

The Appeal Court (Howe P. and Williams J.) decided to hear the third point first, as a decision on that point would render it unnecessary to determine points (i) and (ii). The court came to the conclusion that on the material before them the impleading motions should have been allowed. They pronounced no decision on points (i) and (ii). Accordingly the judgment of the court rescinded the judgment of Reece J. of September 15, 1952, ordered that the writ and all subsequent proceedings and orders in the said action be set aside on the ground that the said action impleaded the Government of Indonesia, a foreign sovereign State, declared that the judgment of Reece J. dated October 24,1952, was null and void for want of jurisdiction and ordered the appellants to pay the costs of the Government of Indonesia of the said appeal and the said notice of motion. The question before the Board was whether that judgment was right.

1954. April 5, 6, 7, 8, 12, 13; May 26. Lord Hailsham Q.C. and R. O. Wilberforce QC. for the appellants. The sole question is whether the plea for immunity on the ground of impleading is well or ill founded in the circumstances of this case. For practical purposes it will simplify matters if the argument is confined to action No. 8[1action No. 6 will follow the result of action No. 8. In support of their notice of motion the respondents to this appeal filed a number of affidavits. Once a person has chosen to depose to certain facts in a court it is preposterous to refuse to be crossexamined on them simply because he is a person who would otherwise have diplomatic immunity. That is plain beyond peradventure simply as a matter of logic. This matter, however, is only on the fringe of the case, because when the matter came before the Appeal Court of Hong Kong there were in effect three appeals and three arguments. The first from the refusal to grant diplomatic immunity; the second from the striking out of the affidavits; and the third from the refusal of the substantive motion. Only the third of those is now before the Board, the first two being still pending in the Hong Kong Appeal Court, and the diplomatic immunity point may indeed in due course come before this Board, so it is not desirable to treat it as a substantive ground of appeal now.

The ratio decidendi of Reece J. on the substantive motion is contained in one sentence of his decision, where he said: "I am of the opinion that the state of the law on the question of the "impleading of sovereign States requires the foreign State claiming immunity from the jurisdiction "of the court to satisfy the court that it has at least an interest in the property whose release is sought "and this can only be done by evidence which has been found to be satisfactory and trustworthy." The judge simply said that without the affidavits the respondents could not prove their case. The question is whether, even assuming that the judge was right on the diplomatic immunity point and in striking out the affidavits, the Court of Appeal were right in saying that there was nevertheless material on which the judge could have come to a different conclusion on the impleading motion.

Where an action is not in name against a sovereign State—but is, e.g., in rem against a ship—the sovereign State has to establish facts on which it can rely in order to enjoy immunity— facts which prove a proprietary right with which the judgment in the action would interfere. Under the relevant charter in this case—a time charter—the owners through their master and crew were in possession of the vessel. The original documents of title to the vessel have never passed out of the ownership of the appellants. It is submitted that there is no material on which the Appeal court could hold that there was a contract of sale. On the facts here there is no basis for finding possession in the respondents.

The authorities establish that bare assertion of a right is not enough to entitle the sovereign State to immunity; it is not enough for it to say simply that it is entitled to the property. It is not accepted that the appellants impleaded anybody directly except the ship. The test whether a government is impleaded is an objective, not a subjective, test. The strength of the appellants' case resides in the fact that there never was any authority to sell the ship at all. If the respondents at the time when they sought to claim immunity had nothing more than a bare assertion that they were owners, they are not impleaded and are not entitled to claim immunity in a case of this character.

The first proposition is that there is no absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances The direct authority for that is Sultan of Johore v. Abubakar Tunku Aris Bendalzar,[1] where Viscount 19.; Simon, giving the judgment of the Board, said: "Their Lord ships do not consider that there has been finally established in "England . . . any absolute rule that a foreign independent sovereign cannot be impleaded in our "courts in any "circumstances." But there is a general principle, support for which is found in The Parlement Belge,[2] which contains perhaps the most frequently cited passage in this connexion: "The principle to be deduced from all these cases is that, as a consequence of the absolute "independence of every sovereign authority, and of the international comity which induces every "sovereign State to respect the independence and dignity of every other sovereign State, each and "every one declines to exercise by means of its courts any of its territorial jurisdiction over the "person of any sovereign or ambassador of any other State, or over the public property of any State "which is destined to public use...." That passage enshrines the general principle, which was also stated in Compania Naviera Vasconyado v. S.S. Cristina[3] by Lord Atkin as follows: "The first "proposition is that the courts of a country will not implead a foreign sovereign, that is, they will "not by their process make him against his will a party to legal proceedings whether the "proceedings involve process against his person or seek to recover from him specific property or "damages. The second is that they will not by their process, whether the sovereign is a party to the "proceedings or not, seize or detain property which is his or of which he is in possession or "control." There has been a gloss put on that passage in United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. and Bank of England.[4]

The second proposition is that to claim immunity the foreign sovereign has to show that the jurisdiction would have to be exercised either over the person of the sovereign or his ambassador, or over what is the public property of the State; and that means something which is State property, not which is said to be such property. The next proposition is that the courts have now reached the stage when no further extension of the principle of immunity will be permitted: the Dollfus Mieg case.[5] Next, a mere assertion by a foreign sovereign State that it possesses a right is not to be accepted as bringing proceedings within the first or second principle that the jurisdiction would have to be exercised over person or property. A mere assertion is not enough: The Cristina.[6] There is no halfway house, and even if there were, the respondents have not reached it on the evidence. Kahan v. Pakistan Federation[7] is an illustration of the way in which the first rule of Lord Atkin in The Christina[8] is applied.