A State’s court may not rule on the legality of a measure taken by another State (par in parem non habet iurisdictionem). This principle is known as state immunity. It only applies to measures taken in the pursuance of sovereign prerogatives (acta iure imperii). Conversely, where a State has acted in a purely commercial context (acta iure gestionis), the defence is not available. Borderline cases occur every so often and give rise to complex litigation, although savvy parties will insist on arbitration and immunity waiver clauses to avoid such disputes from the outset.
- Even where immunity may, depending on the circumstances, not be available as a defence in litigation or arbitration, it may still be available as a defence in enforcement proceedings, if the assets targeted are required and used for the purposes of exercising sovereign powers. A good immunity waiver clause must therefore also anticipate enforcement hazards.
- The immunity and privileges of intergovernmental organisations are typically contained in organization’s charter or other founding document. Headquarter and/or host-state agreements may contain additional provisions. Intergovernmental organisations, too, may waive immunity, and contractors will usually ask for such waivers before entering into contracts requiring work to be done before payments can be expected.
Relevant Experience of BODENHEIMER Attorneys
Axel Benjamin Herzberg and Dr Rouven F Bodenheimer routinely advise both, investors and governments on international investment law issues. Mr Herzberg also handled a number of ISDS cases as Deputy Counsel at the Secretariat of the ICC International Court of Arbitration in Paris. He has advised businesses on sovereign immunity waivers in dealings with multilateral development banks.
Dr Nicolas Klein worked for German Federal Constitutional Court Justice Professor Dr Andreas Paulus, himself a renowned public international law specialist who represented Germany, inter alia, before the International Court of Justice in the LaGrand case against the United States. Both, Dr Klein’s doctoral thesis and his LL.M. studies at Columbia University (New York) revolved around issues of international investment law, in particular the scope of application ratione personae of bilateral investment treaties.
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