USA v Gammon Layton

CourtObsolete Court (Pakistan)
Date02 November 1970
Pakistan, High Court of West Pakistan.

(Dorab Patel and Muhammad Haleem JJ.)

Secretary of State of the United States of America

Sovereign immunity Foreign State Restrictive theory of immunity Contract for building embassy premises Arbitration clause Whether arbitration clause defeated by sovereign immunity Pakistan Civil Procedure Code, Section 86 Whether applicable to actions against foreign States or merely foreign rulers International law in general Relationship of international law and municipal law The law of Pakistan

Summary: The facts:The respondent, Messrs Gammon-Layton, acting under a written contract with the United States of America, had constructed a building for the United States Embassy. Following disputes over the contract, the respondent invoked the arbitration clause and secured an arbitration award in its favour, which it then sought to have made a rule of court. The U.S.A. claimed sovereign immunity. This claim was rejected and the U.S.A. appealed, contending that it was entitled to immunity either by virtue of the Pakistan Civil Procedure Code, Section 861 which provided that actions against the ruler or ambassador of a foreign State might be instituted only with the consent of the Government of Pakistan, or under general international law.

Held:The appeal was dismissed.

(1) The Civil Procedure Code, Section 86, applied only to actions against the ruler of a foreign State, not to actions against the State itself.

(2) Section 86 did not apply to arbitration proceedings, which were distinct from proceedings in the courts.

(3) International law as interpreted by the courts of Pakistan did not confer absolute immunity upon a State. The absolute theory of sovereign immunity no longer commanded general acceptance in the international community.

The following is the text of the judgment of the Court, delivered by Dorab Patel J.:

The dispute in this Letters Patent Appeal relates to the construction of the Chancery Building of the American Embassy in Karachi. The building was constructed by the respondent in pursuance of a written contract dated 2861957 between the respondent and the appellant, and we may observe here that it was signed on behalf of the appellant by a Secretary of State of the American Government through its local Charge-de-Affairs. The agreement contained

an arbitration clause and, as disputes arose between the parties, the respondent invoked this clause and appointed Mr. Manzar-e-Alam (now deceased) as its arbitrator. Further, as the appellant did not appoint an arbitrator, in the events that happened, the respondent appointed Mr. Manzar-e-Alam the sole arbitrator under section 8 of the Arbitration Act, 1940. Thereafter, the sole arbitrator entered on the reference and gave notice to the parties. Mr. S. Shaikh, Advocate, appeared before him on behalf of the appellant and challenged the validity of his appointment as sole arbitrator and also his jurisdiction as arbitrator on the ground that the appellant was entitled to immunity as a sovereign State. The arbitrator rejected the appellant's objections and adjourned the case for the filing of claims, evidence etc. by the parties. On the adjourned date, as Mr. Shaikh was out of Karachi, an Advocate appeared on behalf of the appellant and sought a further adjournment which was granted. On the next date the respondent filed his claim and produced his evidence, and we may point out here that the appellant was represented on this day by two Advocates. The arbitrator then adjourned the case to allow the counsel of both the parties to inspect documents. But when the case came up for hearing before him again, the Advocates for the appellant again stated that they challenged his jurisdiction and apparently therefore they walked out of the proceedings. The arbitrator then heard arguments, and by award dated 31st May 1963 he awarded a sum of Rs. 15,56,864.74 with costs to the respondent. On 13th August 1963 he filed an application under section 14 of the Arbitration Act, 1940 in the Karachi Seat of the West Pakistan High Court for making the award the rule of the Court. The Court gave notice of this application to the parties, and on receipt of this notice, the appellant filed an application under section 151, C. P. C. in which it claimed sovereign immunity as a foreign State and submitted that the Court had therefore no jurisdiction even to issue a notice to it. By his judgment dated the 1st February 1965 Awan, J. dismissed this application on the ground that the appellant was not entitled to immunity under section 86, C. P. C., and as no objections had been filed to the award, he decreed it by the said judgment. The appellant has now come before us against this judgment of Awan, J.

2. Dr. Mahmood submitted on behalf of the appellant that, as a foreign State, the appellant was entitled to immunity under section 86, C. P. C., because the proceedings against it had been admittedly instituted without the Central Government's permission under subsection (1) of section 86. In the alternative, he submitted that even if the appellant's claim did not fall under section 86 it was still entitled to immunity under the rules of private international law as interpreted by the English Courts. On the other hand, Mr. Pirzada submitted that section 86 applied to foreign Rulers and not to foreign States, and that, as the appellant was a foreign State, it was not entitled to benefit of section 86, C. P. C. Mr. Pirzada's second argument was that, in any event, section 86 applied only to suits, that the decree under appeal lad been passed in pursuance of an application under the Arbitration Act, therefore, as such applications did not fall under section 86, the appellant was not entitled to the benefit of that section. Finally, he denied the appellant's claim that it could claim immunity under the rules of private international law.

3. As both the learned counsel placed great stress on section 86, C. P. C. it will be convenient to quote this section. Section 86 reads as follows:

86(1) Any Ruler of a foreign State, and any ambassador or envoy of a foreign State, may with the consent of the Central Government, certified by the signature of a Secretary to that Government, but not without such consent, be sued in any competent Court.

(2) Such consent may be given with respect to a specified suit or to several specified suits, or with respect to all suits of any specified class or classes, and may specify, in the case of any suit or class of suits, the Court in which the Ruler, ambassador or envoy may be sued; but it shall not be given unless it appears to the consenting authority that the Ruler, ambassador or envoy,

(a) has instituted a suit in the Court against the person desiring to sue him, or

(b) by himself or another trades within the local limits of jurisdiction of the Court, or

(c) is in possession of immovable property situate within those limits and is to be sued with reference to such property or for money charged thereon.

(3) No such Ruler, ambassador or envoy stall be arrested under this Code, and, except with the consent of the Central Government, certified as aforesaid, no decree shall be executed against the property of any such Ruler, ambassador or envoy.

(4) The Central Government, may by notification in the official Gazette authorisea Provincial Government and any Secretary to that Government to exercise with respect to any Ruler, ambassador or envoy named in the notification the functions assigned by the foregoing subsections to the consenting authority and a certifying officer respectively.

(5) A person may, as a tenant of immovable property, sue without such consent as is mentioned in the section, a Ruler, from whom he holds or claims to hold the property.

(6) A person may, as a tenant of private immovable property belonging to an ambassador or envoy, or in respect of any immovable property belonging to such person and held by in ambassador or envoy in his private capacity sue, without such consent as is mentioned in this section, the ambassador of envoy from whom he holds or claims to hold the property or by whom the property is so held.

The question which arises for determination is the meaning of the words Ruler of a foreign Sate and Ruler in this section, and we have to point out here that these words, wherever they occur in this section, were substituted for the words Prince or Chief by an amendment to the section in 1960. As this amendment was made more than half a century after the enactment of the Code of Civil Procedure in 1908, it is not irrelevant to observe here that this half century saw great changes in private international law, of which the Legislature must have been aware when it amended section 86.

4. Turning now to the arguments of the learned counsel according to Dr. Mahmood, the words Ruler of a foreign State mean both the person who is the head of a foreign State and the foreign State itself, and in support of this interpretation learned counsel referred us to a passage in Maxwell's Interpretation of Statutes, which we shall presently consider. However, as the Legislature has used the words Ruler of a foreign State in contradistinction to the word State in sections 84 and 87, can we lightly disregard the language employed by it? Additionally, word in the same section must always be given the same meaning in the absence of express provision to the contrary. Now subsection (3) confers immunity with regard to the person and property of the Ruler, and it is clear that this immunity is for the person who is the head of a foreign State and not for the foreign State itself. Even Dr. Mahmood conceded that the word Ruler in this subsection meant only the person of the foreign State and not the foreign State, therefore, as the word Ruler should be given the same meaning in subsection (1), prima facie the words Ruler of a foreign State cannot mean a foreign State. Further, section 84, in so far as it is...

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