Grovit v De Nederlandsche Bank & Ors

The Judgments Regulation is to be read subject to the international law of state immunity. It does not permit proceedings against a foreign state, separate entity or officials in respect of acts performed in the exercise of sovereign authority.

A claim is outside the Regulation’s concept of a civil matter where it concerns public authorities exercising public powers. Allegations of malice do not, without more, remove immunity. The relevant question is the nature and character of the activity, rather than the alleged motive. State immunity may be proportionate under Article 6 of the European Convention on Human Rights where it reflects established international law and protects comity and respect for state sovereignty.

The claimant brought libel proceedings against the central bank of the Netherlands and two employees concerning a letter sent during the Bank’s statutory supervision of a Dutch money-transfer business. The claim was issued in England under Article 5(3) of Council Regulation (EC) No 44/2001. The defendants applied for a declaration that the court had no jurisdiction because they were entitled to immunity under the State Immunity Act 1978 and at common law.

The claimant argued that the Regulation displaced state immunity, that the proceedings were a civil matter, and that alleged malice prevented the defendants from relying on immunity. A further issue arose under Article 6 of the European Convention on Human Rights.

1. The defendants’ applications succeeded. All three defendants enjoyed state immunity under section 14(2) of the State Immunity Act 1978.

2. The Judgments Regulation was to be read subject to the international law of state immunity. Article 71 supported that conclusion, and the mandatory nature of the Regulation did not exclude an established rule of international law. The same result followed from the principle that treaties should be interpreted consistently with relevant international law.

3. Alternatively, the proceedings were not civil matters within Article 1. The claim arose from a letter issued in the exercise of governmental supervisory functions. Applying the approach in Sonntag v Waidmann, the relevant question was whether the defendants were public authorities exercising public powers. The characterisation of the claim as defamation did not determine the issue.

4. The alleged malice did not take the conduct outside section 14(2). The court had to examine the nature and character of the activity rather than the alleged motive. Officials and employees could retain immunity for acts done in the exercise of sovereign authority, even where unlawful or malicious conduct was alleged, subject to the exceptional category of torture, another international crime or breach of jus cogens. The allegations here fell well below that category.

5. Article 6 did not require a different result. State immunity pursued the legitimate aim of complying with international law and promoting comity and good relations between states. Applying the principles in Holland v Lampen-Wolfe and the Strasbourg authorities, reliance on immunity was proportionate. The dispute concerned the exercise of Dutch sovereign authority, and the Dutch courts were better placed to determine the relevant issues.

6. The claim for state immunity succeeded in all three actions.

First-instance decision. No prior appellate decision is stated in the judgment.