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Sovereign immunity: Difference between revisions
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===What [[sovereign immunity]] is=== | ===What [[sovereign immunity]] is=== | ||
[[Sovereign immunity]] comes in two varieties, both relating to forms of [[litigation]]: | [[Sovereign immunity]] comes in two varieties, both relating to forms of [[litigation]]: | ||
*'''[[Immunity from suit]]''': wherein one cannot take court action for [[breach of contract]] against a [[sovereign]] ''at all''<ref>[[Sovereign immunity]] does of course cover non-contractual disputes and infractions — the drunken ambassador who seeks to avoid prosecution for running over a local fishwife on his way back from a saucy cabaret is the paradigm case, but it is not relevant to the [[JC]] so we shall not speak of it.</ref> | *'''[[Immunity from suit]]''': wherein one cannot take court action for [[breach of contract]] against a [[sovereign]] ''at all'';<ref>[[Sovereign immunity]] does of course cover non-contractual disputes and infractions — the drunken ambassador who seeks to avoid prosecution for running over a local fishwife on his way back from a saucy cabaret is the paradigm case, but it is not relevant to the [[JC]] so we shall not speak of it.</ref> and | ||
*'''[[Immunity from enforcement]]''': having successfully taken court action for [[breach of contract]] against a [[sovereign]] ''somewhere else'', one cannot then [[Enforcement|enforce]] that judgment against the sovereign’s assets by way of getting your money back. | *'''[[Immunity from enforcement]]''': having successfully taken court action for [[breach of contract]] against a [[sovereign]] ''somewhere else'', one cannot then [[Enforcement|enforce]] that judgment against the sovereign’s assets by way of getting your money back. | ||
===What [[sovereign immunity]] isn’t=== | ===What [[sovereign immunity]] isn’t=== | ||
====It doesn’t void your contract altogether==== | ====It doesn’t void your contract altogether==== | ||
[[Sovereign immunity]] can’t immunise a sovereign against parts of a [[commercial contract]] it has already performed, since the aggrieved commoner doesn’t have to take action to recover sums it has already been paid. If the [[sovereign]] pays a sum owed, it stays paid. Immunity can’t help the [[sovereign]] here. It cannot — by legal means — recover moneys it has paid, unless it takes court action, and doubtless your [[legal opinion]]s will tell you ''that won’t work'' (and will operate to [[Waiver of immunities - ISDA Provision|waive]] [[sovereign immunity]] anyway)<ref>To be sure, a bossy [[sovereign]] can park its tanks on your lawn, waterboard you, and throw your children to its pet crocodile, but this is an [[extra-legal]] act, not a legal one and the [[JC]] cares not one whit for practical, extra-legal acts. What can one say about them, other than, “that was horrid”?</ref> | [[Sovereign immunity]] can’t immunise a sovereign against parts of a [[commercial contract]] it has already performed, since the aggrieved commoner doesn’t have to take action to recover sums it has already been paid. If the [[sovereign]] pays a sum owed, it stays paid. Immunity can’t help the [[sovereign]] here. It cannot — by legal means — recover moneys it has paid, unless it takes court action, and doubtless your [[legal opinion]]s will tell you ''that won’t work'' (and will operate to [[Waiver of immunities - ISDA Provision|waive]] [[sovereign immunity]] anyway).<ref>To be sure, a bossy [[sovereign]] can park its tanks on your lawn, waterboard you, and throw your children to its pet crocodile, but this is an [[extra-legal]] act, not a legal one and the [[JC]] cares not one whit for practical, extra-legal acts. What can one say about them, other than, “that was horrid”?</ref> | ||
In the context of an {{isdama}}, therefore, all payments, [[collateral]] and [[initial margin]] a [[sovereign]] has already ponied up<ref>Assuming you can persuade a sovereign to pony up initial margin of course.</ref> before it decides to walk away, you get to keep. Your risk is the market movements from when the [[sovereign]] breaches your contract until you can [[close out]] your positions. [[Netting]] also works, because it is a self-help mechanism that doesn’t oblige you to take legal action to enforce it. | In the context of an {{isdama}}, therefore, all payments, [[collateral]] and [[initial margin]] a [[sovereign]] has already ponied up<ref>Assuming you can persuade a sovereign to pony up initial margin of course.</ref> before it decides to walk away, you get to keep. Your risk is the market movements from when the [[sovereign]] breaches your contract until you can [[close out]] your positions. [[Netting]] also works, because it is a self-help mechanism that doesn’t oblige you to take legal action to enforce it. | ||
If the [[sovereign]] wants to dispute payments it has already made it can either (i) dangle your children over its crocodile pit and ask you what you plan to do — again this is extra-legal behaviour and the [[JC]] can’t really comment on it (other that to agree it is horrid); or (ii) proceed against you in a court of law in which case it will still need compelling arguments<ref>If the sovereign is in a developed country. If in Somalia, maybe not so much, but there your problem is not sovereign immunity so much as trading in Somalia.</ref> | If the [[sovereign]] wants to dispute payments it has already made it can either (i) dangle your children over its crocodile pit and ask you what you plan to do — again this is extra-legal behaviour and the [[JC]] can’t really comment on it (other that to agree it is horrid); or (ii) proceed against you in a court of law in which case it will still need compelling arguments,<ref>If the sovereign is in a developed country. If in Somalia, maybe not so much, but there your problem is not sovereign immunity so much as ''trading in Somalia''.</ref> which on our theory won’t exist ''and it will have waived its [[sovereign immunity]] [[QED]]''. | ||
====It isn’t [[ultra vires]]==== | ====It isn’t [[ultra vires]]==== | ||
{{sovereign immunity and ultra vires}} | {{sovereign immunity and ultra vires}} | ||
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==Sovereign immunity under English law — a special case== | ==Sovereign immunity under English law — a special case== | ||
===The [[Sovereign Immunity Act 1978]]=== | ===The [[Sovereign Immunity Act 1978]]=== | ||
The [[Sovereign Immunity Act 1978]]<ref>https://www.legislation.gov.uk/ukpga/1978/33</ref> | The [[Sovereign Immunity Act 1978]],<ref>https://www.legislation.gov.uk/ukpga/1978/33</ref> which provides (among other things) that a State is ''not'' immune as respects proceedings relating to a commercial transaction entered into by the State; or an obligation of the State which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom. | ||
It’s a bit nuanced, but not much. The commercial contracts exception allows a sovereign to be sued in the UK courts, but other part of the Act protect it against [[Injunction|injunctions]], the enforcement of judgments and [[Arbitration|arbitral]] awards. | It’s a bit nuanced, but not much. The commercial contracts exception allows a sovereign to be sued in the UK courts, but other part of the Act protect it against [[Injunction|injunctions]], the enforcement of judgments and [[Arbitration|arbitral]] awards. | ||