State Sovereignty in Civil and Commerical Litigation

In the landmark judgment of First Global Funds PCC & Anor vs The Financial Services Commission of Mauritius and the Government of The Republic of Indonesia & Anor 2016 SCJ 14 (the “Judgment”), the Supreme Court of Mauritius has determined the capacity to sue a foreign State in the Republic of Mauritius and to what extent national sovereignty applies in our country. The Judgment relates only to civil and commercial cases.

The Supreme Court dealt with those fundamental points, namely whether a foreign state is immune from the jurisdiction of Mauritius on the basis of the doctrine of state immunity; whether a foreign state is considered to have submitted itself to the jurisdiction of Mauritius by raising the defense of state immunity; and whether the Courts of Mauritius are the appropriate forum when there are existing related proceedings in another jurisdiction.

By way of background, Mauritius does not have any legislation which provides for state immunity and is not party to the United Nations Convention on Jurisdictional Immunities of States and their Property (the “Convention”). It is to be noted that the Convention is not yet in force.

Nonetheless, in the case of Jordan vs Jordan 2000 SCJ 57, it was stated that “rules of customary international law which are usually recognized by all civilized nations are the exceptions since they do not require any formal incorporation before they are acknowledged in domestic Courts”.

Furthermore, quoting the International Court of Justice in the case of Jurisdictional Immunities of the State (Germany v Italy: Greece Intervening), the Supreme Court confirmed that state immunity is applicable in Mauritius despite the lack of legislation and the fact that Mauritius is not party to the Convention.

However, the Honourable Judges of the Supreme Court made a distinction between absolute immunity and restrictive immunity. While absolute immunity is immunity for any act done by a State, restrictive immunity is limited to immunity for acts other than acts of a commercial nature. According to the Judgment, in Mauritius, only restrictive immunity is granted to foreign states.

Basing themselves on article 2 of the Convention and section 3 of the State Immunity Act 1978 of the United Kingdom, the Honourable Judges of the Supreme Court determined that “the nature of the contract or the transaction is the decisive element” to determine whether an act of a foreign state is of a commercial nature or not.

A definition of what type of acts would trigger state immunity was given by the Supreme Court which quoted the case of Empire of Iran (1963) 45 ILR 57 given by the German Federal Constitutional Court which held that “the activities of the authorities responsible for foreign and military affairs, legislation and exercise of police power and the administration of justice” non-exhaustively constituted such acts.

The second point that was raised was whether the Republic of Indonesia had submitted itself to the jurisdiction of Mauritius by intervening in the current matter.

The general principle is that a State cannot claim state immunity if it has voluntarily submitted itself to the jurisdiction of a foreign court. However, the Supreme Court determined that if the State has only intervened to claim state immunity, it does not constitute submission to the courts of Mauritius.

Finally, the Honourable Judges of the Supreme Court ruled on whether the Courts of Mauritius were the appropriate forum when there were existing related proceedings in another jurisdiction.

Quoting several judgments, the Supreme Court set out the following criteria to be met with regard to the determination of the proper forum namely, among others, whether there is another available forum having competent jurisdiction in which the case may be tried more suitably for the interests of all the parties and the ends of justice and what is the natural forum, that is the forum with which the action has the most real and substantial connection.

Interestingly, the Honourable Judges made a final observation which can be translated as a clear warning against forum shopping in the hope of obtaining a favourable decision in Mauritius:

The Honourable Judges had this to say:

It is inappropriate to attempt to use Mauritian Courts as a forum to appeal against a decision reached by a Court in another jurisdiction, the more so when appeal proceedings are already pending in that other jurisdiction.

By Ashwin Mudhoo – Senior Legal Executive