The common law has long accepted that certain issues involving transactions between sovereign States should be non-justiciable, even if they arise in civil proceedings.Footnote 1 The precise boundaries of foreign affairs non-justiciability, however, remain ‘shot through with indeterminacy’.Footnote 2 In 2017, the UK Supreme Court in Belhaj v Straw Footnote 3 boldly sought to give shape to foreign affairs non-justiciability, collectively endorsing its existence and systematising its various limbs. Though the Court was divided, a limited consensus on important aspects of the law was discernible: in particular, Lord Neuberger's majority judgment defined non-justiciability as a rule barring adjudication on certain sovereign acts performed in high-level inter-State transactions, subject to a public policy exception for certain breaches of fundamental norms. The Court also identified the constitutional separation of powers as the rule's theoretical foundation. Belhaj, then, seemed to give foreign affairs non-justiciability new life and a relatively firm position in international litigation.Footnote 4
Less than half a decade later, however, this picture of a reinvigorated rule seems to be coming undone. In two important decisions since—High Commissioner for Pakistan v Prince Muffakham Jah Footnote 5 and The Law Debenture Trust Corpn plc v Ukraine Footnote 6—the High Court and Court of Appeal respectively narrowed foreign affairs non-justiciability, beyond the substance of the majority judgment in Belhaj. This, as their reasoning suggests, is attributable to courts’ reluctance to obstruct ordinary rules of private law with what they see as a redundant rule. This article traces and analyses these decisions. It argues that the general approach taken by these courts, turning to private international law for answers on inter-State transaction disputes, is defensible because Belhaj's theoretical foundations based on the constitutional separation of powers are shaky. Judicial restraint, however, remains appropriate for these inter-State disputes: private international law itself provides sound reasons for restraint, arising from values like efficiency in dispute resolution which underlie in the doctrine of forum non conveniens.
II. TAKING STOCK: FROM BUTTES GAS TO BELHAJ
Foreign affairs non-justiciability has its roots in the heretofore undifferentiated mass of rules collectively known as the ‘foreign act of state doctrine’. In Duke of Brunswick v King of Hanover, the House of Lords held that courts ‘cannot sit in judgment upon an act of a [foreign] Sovereign, effected by virtue of his Sovereign authority abroad’.Footnote 7 In its early years, the doctrine was indistinguishable from a plea of sovereign immunity, under a public international law that recognised a very broad notion of State sovereignty.Footnote 8 Post-World War II, the doctrine was frequently invoked in property disputes in States experiencing revolutions and civil wars, to preclude claims that title to property situated overseas had been vested by constitutionally-suspect foreign decrees.Footnote 9
A. The Background: Buttes Gas and Kuwait Airways
Only in Buttes Gas & Oil Co v Hammer Footnote 10 did English courts start tackling the ‘foreign act of state doctrine’ in earnest. Buttes and Occidental were issued concessions to exploit an oil-rich area by two States, Sharjah and Umm al Qaiwain respectively, which had competing claims to sovereignty over the area. When Occidental claimed that Buttes had conspired with Sharjah to harm its rights, Buttes sued in defamation, and Occidental pleaded justification and brought a counterclaim in unlawful means conspiracy. In response, Buttes argued, inter alia, that Occidental's defence and counterclaim should be struck out on the basis of the doctrine of sovereign immunity and a rule of non-justiciability.Footnote 11 Lord Wilberforce, for the House of Lords, swiftly rejected Buttes’ argument on sovereign immunity, reasoning that Occidental's pleadings did not contain any ‘attack, direct or indirect, upon any property of any of the relevant sovereigns, nor [were] any of them impleaded directly or indirectly’.Footnote 12
The ‘foreign act of state doctrine’, however, was broader than sovereign immunity, and could apply even in cases where a foreign State was not directly or indirectly impleaded. Outside situations where an act of the Crown was impugned, which was not squarely the case in the dispute before the court,Footnote 13 the doctrine could be separated into two rules. First, there was a rule which required the forum court to presume the validity and legality of foreign legislative and executive acts carried out within the foreign State's territory.Footnote 14 This rule fell ‘within the area of the conflict of laws’, being ‘concerned essentially with the choice of the proper law to be applied’, and was subject to a public policy exception.Footnote 15 This rule, though, was inapplicable to the dispute before the court, because Occidental's arguments on Sharjah's acts were not based on municipal law but public international law.Footnote 16
Second, there was also a ‘wider principle’ of ‘judicial restraint or abstention’, which required courts to refrain from ‘adjudicat[ing] upon the transactions of foreign sovereign states’.Footnote 17 Lord Wilberforce called this ‘a principle of non-justiciability by the English courts of a certain class of sovereign acts’.Footnote 18 He also described it as an ‘immunity from jurisdiction ratione materiae’,Footnote 19 but this could not have been a reference to the immunity afforded to former State officials for acts performed in the course of their official functions,Footnote 20 since neither of the parties before the court had held such positions; instead, the ‘immunity’ from adjudication in question was purely one which covered the subject matter of parties’ dispute,Footnote 21 rather than the parties themselves. Moreover, unlike the above rule of presumed validity and legality, Lord Wilberforce did not contemplate that this principle could be subject to a public policy exception. It was this principle of non-justiciability that applied to the facts: Lord Wilberforce agreed with Buttes and stayed proceedings entirely, on the grounds that the parties’ claims required the court to ‘review transactions in which four sovereign states were involved’, reached through ‘diplomacy and the use of force’.Footnote 22
After Buttes Gas, the ‘foreign act of state doctrine’ arose again in Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5).Footnote 23 The House of Lords faced a dispute involving Iraq's annexation of Kuwait and its transfer and confiscation by decree of Kuwaiti aircraft in favour of its national airline. Kuwait Airways sued Iraqi Airways for conversion, which raised the question whether the Iraqi decree effectively vested title over the aircraft in Iraqi Airways. That question implicated both rules identified by Lord Wilberforce in Buttes Gas. The fact that the confiscatory decree was issued after Iraq moved the aircraft into its territory implicated the rule that English courts could not declare foreign legislation applicable within a foreign State's territory invalid. However, this rule of presumed validity could be circumvented if courts simply applied private international law's public policy exception to deny recognition of, without denying the validity of, the Iraqi decree. Yet, because the grounds upon which Kuwait Airways sought to invoke the exception was the infringement of Kuwait's territorial sovereignty by Iraq's annexation of it, the issue before the court also implicated the rule that certain transactions between sovereign States, particularly those involving aggression and annexation, were non-justiciable.
To entertain Kuwait Airways’ arguments on public policy, then, the House of Lords would have to qualify Buttes Gas’ principle of non-justiciability. Lord Nicholls of Birkenhead (with whom Lord Hoffman and Lord Scott of Foscote agreed on this point)Footnote 24 and Lord Hope of Craighead thus held that even the principle of non-justiciability was subject to a public policy exception, and set out to define its content.Footnote 25 In this they were joined by Lord Steyn, who saw the issue as a simple matter of invoking the public policy exception to the property choice of law rule.Footnote 26 All three accepted that the exception was clearly available for breaches of fundamental human rights, referring in this regard to Oppenheimer v Cattermole,Footnote 27 where a Nazi decree discriminating against Jews by depriving them of their German citizenship and thus their property in Germany was deemed ‘so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all’.Footnote 28 They also all accepted that Buttes Gas remained good authority;Footnote 29 and then attempted to extrapolate from Oppenheimer a more general basis of public policy based on certain breaches of international law, which would cover Iraq's acts of aggression and annexation but not those alleged in Buttes Gas. Lord Nicholls noted that Iraq had committed ‘a gross violation of established rules of international law of fundamental importance’, as ‘evidenced by the urgency with which the UN Security Council considered this incident and by its successive resolutions’.Footnote 30 Likewise, Lord Steyn and Lord Hope highlighted the ‘flagrant’ nature of Iraq's breachFootnote 31 and the ‘clearly established’ nature of the norm it breached respectively,Footnote 32 given the Security Council Resolution before them.Footnote 33 Kuwait Airways thus recognised both facets of the ‘foreign act of state doctrine’ identified in Buttes Gas, and also recognised a narrow, relatively well-defined public policy exception thereto: while acts of aggression and annexation were prima facie non-justiciable, they may trigger the public policy exception if condemned by the Security Council.
B. The Current State of Play: Belhaj
After Buttes Gas and Kuwait Airways, the law descended into confusion. Lower courts, introducing multiple qualifications and exceptions to Buttes Gas’ rules, turned the ‘foreign act of state doctrine’ into a ‘vague and undefined’Footnote 34 set of rules with apparently arbitrary results. This unfortunate situation continued until Belhaj. The plaintiffs had sued the UK government for assisting various foreign governments in their detention, rendition and torture of the plaintiffs, in various foreign States and onboard foreign aircraft. The cause of action they relied on was joint tort liability for furthering a common design, pleaded under English law.Footnote 35 The parties accepted that, to satisfy an element of that tort, the wrongfulness of the acts of the foreign governments involved had to be established under the corresponding foreign leges loci delicti.Footnote 36 The UK government then applied to strike out the plaintiffs’ claims on the basis of the ‘foreign act of state doctrine’.
In Belhaj, the Supreme Court collectively acknowledged the ‘foreign act of state doctrine’ described in Buttes Gas and disaggregated it further into three rules. The first and second rules required courts to presume the validity and legality of foreign legislation and executive acts respectively, if executed in the foreign State's territory. The third rule—foreign affairs non-justiciability—rendered certain transactions between States non-justiciable. The Court also agreed on the outcome of the government's application: it was dismissed. However, Lords Neuberger, Sumption and Mance, who gave substantive reasons for their decisions, disagreed on the specific form each of the three rules should take. Ultimately, Lord Neuberger carried the Court by a 4:3 majority; Lord Sumption was joined only by Lord Hughes, and Lord Mance stood alone. Lord Neuberger's reasoning is thus particularly important, although Lord Mance and Lord Sumption's reasoning also provides useful context.
As regards the first and second rules, Lord Neuberger's reasoning was clear. The first rule barred courts from assessing the validity or legality of all foreign legislative acts, because respect for a foreign State's ‘sovereignty’ required this.Footnote 37 In this, he was joined by Lord Sumption.Footnote 38 The second rule, also ‘close to being a general principle of private international law’,Footnote 39 precluded assessments of the validity or legality of foreign executive acts, but only those involving property situated within the foreign State's territory.Footnote 40 In this, he was joined by Lord Mance.Footnote 41 Lord Neuberger and Lord Mance agreed that the first and second rules were rules of ‘private international law’;Footnote 42 while Lord Sumption believed they were undergirded by ‘comity’ and the ‘separation of powers’.Footnote 43 All agreed, however, that whatever the scope of the first and second rules, they were subject to a public policy exception.Footnote 44
As regards the third rule, Lord Neuberger confirmed that a principle of non-justiciability applied to acts ‘of such a nature that a municipal judge cannot or ought not rule on it’,Footnote 45 ‘defeat[ing] what would otherwise be a perfectly valid private law claim’.Footnote 46 In support, Lord Neuberger cited Shergill v Khaira,Footnote 47 where the Supreme Court had held that claims with ‘domestic footholds’ (involving ‘private legal rights’ or ‘reviewable matters of public law’)Footnote 48 may still be non-justiciable if they involve acts ‘beyond the constitutional competence assigned to the courts under our conception of the separation of powers’, like ‘certain transactions of foreign states’.Footnote 49 Beyond this, however, Lord Neuberger was more circumspect, believing it ‘unwise to be too prescriptive about [the third rule's] ambit’.Footnote 50 Yet, he did note that the rule ‘almost always … appl[ied] to actions involving more than one state’, such as ‘dealings between sovereign states’ or ‘acts of a foreign government in the conduct of foreign affairs’,Footnote 51 and it would ‘normally involve some sort of comparatively formal, relatively high level arrangement’.Footnote 52 Lord Sumption adopted a broader, more categorical conception of the third rule, which nevertheless overlapped considerably with that of Lord Neuberger: courts could not adjudicate on ‘the extraterritorial acts of foreign states in their dealings with other states or the subjects of other states’.Footnote 53 Lord Mance, by contrast, preferred a narrower ‘fact- and issue-sensitive’ third rule,Footnote 54 with some clear parameters: ‘act[s] of war or of alleged self-defence at the international level’ would be non-justiciable;Footnote 55 while breaches of ‘fundamental rights’ would not.Footnote 56 Lord Neuberger was cryptic concerning the third rule's theoretical foundations, noting only that it was ‘purely based on common law’ and ‘judicial self-restraint’.Footnote 57 Lord Mance and Lord Sumption, by contrast, rooted the third rule in the constitutional ‘separation of powers’.Footnote 58
The third rule was also subject to a public policy exception. Lord Neuberger recognised that this exception depended ‘ultimately on domestic law considerations, although generally accepted norms of international law are plainly capable of playing a decisive role’.Footnote 59 Thus, ‘a breach of jus cogens or peremptory norms would almost always fall within the public policy exception’,Footnote 60 although domestic ‘fundamental principles of public policy’ could trigger the exception too.Footnote 61 Lord Sumption broadly agreed: the exception was limited to ‘sufficiently fundamental legal policy’,Footnote 62 and in that regard ‘jus cogens norms’ could ‘generally be equated with principles of fundamental justice’.Footnote 63 As regards the exception's precise content, both agreed that breaches of fundamental human rights like those in Oppenheimer provided clear grounds for the exception's use.Footnote 64 Conversely, both also recognised that acts of aggression and annexation were ‘obvious examples’ of non-justiciable issues;Footnote 65 could such acts ever trigger the public policy exception? Lord Mance reasoned that if they could, this would remove ‘core examples of issues upon which domestic courts should refrain from adjudicating’ from the scope of foreign affairs non-justiciability.Footnote 66 Lord Sumption, recognising the ‘danger … in the exception consuming the rule’,Footnote 67 thus ‘limited [the public policy exception] to violations of international law which can be distinguished on rational grounds from the rest’,Footnote 68 such that even breaches of jus cogens norms might not always trigger it.Footnote 69 Lord Neuberger expressed roughly similar sentiments: he did not state that every breach of jus cogens would justify the exception; limited the exception's domestic law content to ‘fundamental principles of public policy’; and noted that the exception would apply less readily to the third rule than the first and second.Footnote 70 As authority, both Law Lords cited Kuwait Airways,Footnote 71 suggesting, as had the House of Lords, that when it came to acts of aggression and annexation, only a condemnation by the Security Council would trigger the public policy exception.Footnote 72 Lord Mance, by contrast, believed that these difficulties suggested that it would be wise not to recognise any exception to the third rule at all;Footnote 73 instead, the need to protect ‘fundamental rights’ was in fact a qualification of the rule itself.Footnote 74
Belhaj, as the division in the Court outlined above illustrates, is evidently not the clearest of authorities. Nevertheless, we can glean from Belhaj some relatively clear propositions:
(1) Under the first rule, courts are precluded from assessing the validity or legality of all foreign legislation applicable within the territory of the foreign State in question. Lord Neuberger and Lord Sumption constituted the majority here,Footnote 75 while Lord Mance limited this rule to foreign legislation involving property.Footnote 76
(2) Under the second rule, courts are precluded from assessing the validity or legality of foreign executive acts only if they involve property situated in that foreign State. Lord Neuberger and Lord Mance formed the majority here,Footnote 77 while Lord Sumption applied this Rule to all foreign executive acts.Footnote 78
(3) Under the third rule, courts should refrain from adjudicating upon certain high-level transactions between States carried out in their sovereign capacities. Lord Neuberger held that the third rule would ‘almost always’ involve sovereign acts performed in inter-State transactions, and that these transactions would ‘normally’ have to be ‘high level’ arrangements.Footnote 79 Similarly, Lord Sumption favoured a rule precluding adjudication over sovereign acts performed in the course of a State's foreign relations.Footnote 80 By contrast, Lord Mance preferred a fact-sensitive rule, uncontroversially covering only acts of war or self-defence.Footnote 81
(4) Finally, all rules are subject to a public policy exception for breaches of certain fundamental international or domestic norms. Lord Neuberger noted that breaches of jus cogens norms would ‘almost always’ trigger the exception, and breaches of domestic ‘fundamental principles of public policy’ could also do so.Footnote 82 Lord Sumption limited the exception to violations of some, but not all, jus cogens norms.Footnote 83 For both, breaches of fundamental human rights were clear grounds for the exception, while acts of aggression and annexation could only trigger the exception if condemned by the Security Council.Footnote 84 By contrast, Lord Mance believed that only the first and second rules were subject to a public policy exception; his third rule was narrow enough to avoid important fundamental norms.Footnote 85
Belhaj, therefore, contained a limited consensus on the foreign act of State doctrine's three rules and its public policy exception. Belhaj has since proved influential: it has been cited and applied in a dozen or so common law decisions since,Footnote 86 and its first and second rules have been applied with little difficulty.Footnote 87 However, on the third rule—foreign affairs non-justiciability—and its public policy exception, Belhaj has not fared as well. In Prince Muffakham Jah and Law Debenture, propositions (3) and (4) above were implicitly read down: the third rule is much attenuated, and the public policy exception significantly expanded. Parts III and IV dissect these cases, showing how foreign affairs non-justiciability has apparently been narrowed since Belhaj.
III. NON-JUSTICIABILITY: AN ELUSIVE CATEGORY OF SOVEREIGN TRANSACTIONS
Foreign affairs non-justiciability rose squarely for consideration in High Commissioner for Pakistan v Prince Muffakham Jah.Footnote 88 During 13–18 September 1948, India annexed Hyderabad in a ‘police action’ codenamed ‘Operation Polo’.Footnote 89 On 17 September, Hyderabad's sovereign (the Nizam) acquiesced in India's occupation and dissolved his Government. On 20 September, Hyderabad's erstwhile Finance Minister (Moin), transferred funds belonging to Hyderabad to the English bank account of Pakistan's High Commissioner in the UK (Rahimtoola).Footnote 90 Moin initiated the transfer on apparent authority from the Nizam;Footnote 91 while Rahimtoola accepted the funds as Pakistan's representative, on his Foreign Minister's instructions.Footnote 92 The purpose of this transfer ‘was to keep the Fund away from India – to safeguard it’, in light of ‘the Nizam VII's and Moin's views as regards India's intentions toward Hyderabad, including Operation Polo’.Footnote 93 Later, on 26 January 1950, however, the Nizam took an oath of loyalty, and was sworn in as Ruler of Hyderabad, under the Constitution of India.Footnote 94 Though the UK had initially recognised Hyderabad as a sovereign State prior to, during and after Operation Polo, it changed its position after January 1950 when it recognised Hyderabad as having acceded to the Union of India.Footnote 95
In 1954, the Nizam and Hyderabad instituted proceedings in the UK to claim the funds transferred by Moin. This claim was dismissed by the House of Lords in Rahimtoola v Nizam of Hyderabad,Footnote 96 holding that Pakistan's bare legal title entitled it to State immunity. However, half a century later in Prince Muffakham Jah, Pakistan itself brought proceedings to claim beneficial ownership of the funds under English law.Footnote 97 Pakistan argued that the court could adjudicate only upon the legal nature of the relationship between itself and the English bank—not the background through which that relationship had come into being, the 1948 transfer. This transfer, Pakistan maintained, was non-justiciable, because it was an agreement between sovereign States provoked by a third State's armed invasion.Footnote 98 In the alternative, Pakistan argued that its claim should be non-justiciable in its entirety.Footnote 99
Marcus Smith J first held that an issue's justiciability depended on the justiciability of other issues ‘closely intertwined’ with it;Footnote 100 since here the nature of Pakistan's title to the funds was inseparable from the nature of the 1948 transfer that gave rise to it, it was ‘all or nothing’—both issues were either justiciable or non-justiciable.Footnote 101 He thus proceeded to Pakistan's alternative argument, that both issues were non-justiciable.Footnote 102 Smith J then distilled from Lord Neuberger's judgment in Belhaj a definition of foreign affairs non-justiciability, which he believed Lord Sumption also supported: ‘dealings or disputes by or between a sovereign state or states’ which ‘involve actions by such states operating on the plane of public international law’ were non-justiciable.Footnote 103 Under this rule, Pakistan's claim was justiciable because it raised only ‘private law issues, concerning the nature of the Transfer and the manner in which the Fund is held’, and ‘no issue of public international law or state action on the plane of public international law’.Footnote 104
Smith J's reasoning primarily focused on the nature of the transaction before him, not the existence of private law rights: non-justiciability arose in ‘those cases where … there is a “foothold”, that is a claim prima facie justiciable in English courts’ but ‘an issue arises regarding the lawfulness of a state's conduct that is inherently non-justiciable’.Footnote 105 He was correct to do so: this description of foreign affairs non-justiciability resonated with Lord Neuberger's approach in Belhaj as well as the Supreme Court's in Shergill.Footnote 106 But what was the test for determining whether an act's nature renders it non-justiciable? Smith J reasoned that the Nizam, through Moin, was ‘dealing with private law obligations: he was transferring a chose in action, owed to him by … the Bank’.Footnote 107 This led to his finding that, because it only raised ‘private law issues’, Pakistan's claim was wholly justiciable.Footnote 108 However, this was a conclusion in need of a premise, since the very question before Smith J was whether the 1948 transfer was a private or a sovereign transaction. Lord Neuberger's judgment in Belhaj should have supplied that premise since it identified three features which paradigmatic non-justiciable acts shared. As has been said, for Lord Neuberger foreign affairs non-justiciability ‘almost always’ applied to (1) ‘sovereign acts’; (2) ‘involving more than one state’; within (3) a ‘comparatively formal, relatively high level arrangement’.Footnote 109 Lord Sumption, endorsing the first two of Lord Neuberger's criteria, noted that ‘a sovereign act done by a state in the course of its relations with other states’ was non-justiciable.Footnote 110
Had Smith J applied Lord Neuberger's three criteria in Prince Muffakham Jah, however, he should not have found the 1948 transfer justiciable. Criteria (2) and (3) were surely met, since the 1948 transfer was a high-level transaction between two States in their foreign relations with each other: it was between the sovereign of Hyderabad and Pakistan's High Commissioner in their respective capacities. Rahimtoola acted intentionally in his official capacity, doing so on direct instructions of Pakistan's Foreign Minister;Footnote 111 and while Moin acted only with apparent authority from the Nizam as an erstwhile Finance Minister, such authority suffices for the attribution of sovereign acts to States.Footnote 112 Thus, Smith J himself noted that the 1948 transfer was akin to other ‘dealings … at a high level’ between Hyderabad and Pakistan.Footnote 113 This was unlike Belhaj, where the inter-State transactions alleged were instances of ad hoc cooperation between officers in the foreign services of various States.Footnote 114
Critically, under criterion (1), the 1948 transfer also surely comprised a ‘sovereign act’ carried out between States, or in Lord Sumption's words, acts ‘done jure imperii, as opposed to a commercial transaction or other act[s] of a private law character’.Footnote 115 This issue had, in fact, long been decided: in Rahimtoola, Lord Denning held that Pakistan was entitled to State immunity in the restrictive sense, since the 1948 transfer was not a ‘commercial transaction’, but ‘an inter-governmental transaction’ to ‘be solved by inter-governmental negotiations’.Footnote 116 Although Lord Denning was ahead of his time in endorsing restrictive State immunity in Rahimtoola,Footnote 117 his application of the relevant test was correct. The nature of the 1948 transfer itself, being an agreement to safeguard funds indefinitely with no apparent commercial or financial character, is at least ambiguous. In such situations, the transfer's purpose becomes relevant in determining its nature,Footnote 118 and a transfer of property from one State to another to safeguard it from a third State's armed invasion is surely a sovereign or governmental purpose. Moreover, the securing of public funds from aggressors was not the indirect or downstream outcome of the 1948 transfer, but rather its entire purpose. By virtue of its singular purpose, then, the 1948 transfer was an act jure imperii between Hyderabad and Pakistan.
The 1948 transfer should thus have been non-justiciable under Belhaj's third rule, as formulated by Lord Neuberger and Lord Sumption—it was a high-level inter-State transaction, not a private law agreement. Two reasons were given by Smith J to avoid this conclusion, but both are irrelevant under Lord Neuberger's conception of foreign affairs non-justiciability.
The first reason was that, to resolve Pakistan's claim, it was ‘unnecessary for [the court] to decide whether Operation Polo was lawful in international law or not’.Footnote 119 His understanding, then, was that foreign affairs non-justiciability applied only to issues which required courts to assess the validity or legality of sovereign acts under public international law. However, this reasoning conflates Belhaj's third rule with its first and second rules; while the application of the first and second rules are contingent on arguments that sovereign acts are invalid or illegal, the third rule is not. Smith J's reasoning here thus cannot be squared with Lord Neuberger's explicit holding in Belhaj that the third rule prevents the interpretation of treaties not incorporated into domestic law.Footnote 120 Treaty interpretation does not require a court to pronounce on the validity or legality of sovereign acts under public international law, and yet Lord Neuberger called it an ‘obvious example’ of non-justiciability.Footnote 121
Importantly, as his citation of the relevant paragraphs in Shergill make clear,Footnote 122 Lord Neuberger considered treaty interpretation issues non-justiciable because of a court's limited constitutional competence, not that it was non-justiciable for the lack of a domestic foothold;Footnote 123 treaty interpretation non-justiciability arises despite the existence of private law rights like those being asserted by Pakistan. Indeed, this was the very form of non-justiciability which should have arisen in Prince Muffakham Jah: under Lord Neuberger's three criteria in Belhaj, Smith J's task of constructing the 1948 transfer was not to interpret a private law agreement between Moin and Rahimtoola, but to interpret a treaty or inter-State agreement between Hyderabad and Pakistan.
The second reason given by Smith J, however, sheds light on a deeper concern underlying his conclusion. Pakistan's argument on non-justiciability had to be rejected because it suggested that ‘the ordinary private law consequences of a sovereign state's actions do not attach in the proceedings that follow a waiver of sovereign immunity’.Footnote 124 This concern rests on apparently weighty considerations of private justice—it seems intuitively wrong for Pakistan to bring a claim yet object to its background facts being adjudicated, and downright silly for Pakistan to do so but then object to adjudication in toto. However, this concern misapprehends foreign affairs non-justiciability as understood from Buttes Gas to Belhaj, which focuses not on the identity of the parties before the court, or even the official functions those parties once discharged, but instead focuses entirely on the nature of the transaction at issue regardless of the parties to it.Footnote 125 Moreover, these private justice concerns can have weight only if we ignore the theoretical justification for non-justiciability espoused in Belhaj, which was to prevent the adjudication of claims which were beyond the court's constitutional competence, since that justification remains relevant even when a foreign State consents to jurisdiction.Footnote 126 Prince Muffakham Jah, therefore, rests on a conception of foreign affairs non-justiciability at odds with Lord Neuberger's in Belhaj; and the private justice concerns that supported it can only be given weight by disregarding Belhaj.
IV. PUBLIC POLICY: A RULE-SWALLOWING EXCEPTION
The public policy exception to foreign affairs non-justiciability came to the fore in Ukraine v Law Debenture Trust Corpn.Footnote 127 An English trust company had entered into a trust deed with Ukraine, and the trust was comprised wholly of interest-bearing Eurobond notes subscribed to by Russia. The trust deed, governed by English law with English courts having exclusive jurisdiction, empowered Russia to direct the trust company to enforce Ukraine's obligations to them. When Ukraine defaulted on several of its interest payments, Russia directed proceedings to be brought for breach of contract. In defence, Ukraine pleaded duress under English law, arising from ‘massive, unlawful and illegitimate economic and political pressure’ exerted by Russia to compel Ukraine to accept financial support from it in the form of, inter alia, the Eurobond notes.Footnote 128 The particulars of this duress included Russia's annexation of Crimea and alleged support for Ukrainian separatists. The trust company counterargued that Ukraine's defence had no real prospect of succeeding as it required an investigation into the lawfulness of Russia's sovereign acts, which was caught by foreign affairs non-justiciability. Ukraine responded that Russia's alleged acts fell within the public policy exception, because ‘the threat of use of force by one state against another’ was ‘in violation of a general norm of international law with the status of ius cogens’,Footnote 129 and so its plea of duress was justiciable.
Ukraine's argument, however, flatly contradicted Buttes Gas, the ‘principal modern landmark in this area of the law’Footnote 130 which Lord Neuberger and Lord Sumption both affirmed in Belhaj.Footnote 131 Just as in Law Debenture, in Buttes Gas both parties relied on English private law claims and defencesFootnote 132 (defamation, justification and unlawful means conspiracy), the resolution of which necessarily implicated preliminary questions of territorial sovereignty governed by public international law. Moreover, as in Law Debenture in Buttes Gas it was the initial plaintiff, Buttes, which argued that the proceedings should be considered non-justiciable, in whole if necessary.Footnote 133
Since in that case non-justiciability won out and no public policy exception was even considered, Buttes Gas stands for the proposition that issues involving the use of force, such as aggression or annexation, are generally non-justiciable. As has been said,Footnote 134 subsequent cases continued to endorse Buttes Gas even as they developed the public policy exception to non-justiciability. Kuwait Airways established that aggressions and annexations, while prima facie non-justiciable, may trigger the public policy exception but only if condemned by the Security Council. Likewise, in Belhaj, Lord Neuberger and Lord Sumption, citing Oppenheimer and Kuwait Airways in support, focused on breaches of jus cogens norms such as breaches of fundamental human rights and acts of aggression or annexation condemned by the Security Council. This was precisely because acts of aggression and annexation were typically ‘obvious examples’ of non-justiciable issues,Footnote 135 and because a broader exception encompassing all such acts, even those not condemned by the Security Council, would ‘consum[e] the rule’ in Buttes Gas.Footnote 136
In Law Debenture, however, the court was faced with precisely such an act: Ukraine's defence alleged acts of ‘aggression and armed conflict’ initiated by Russia on Crimea, which Russia itself had blocked the Security Council from condemning. At first instance,Footnote 137 Blair J found Ukraine's defence non-justiciable, noting that the issues involving ‘aggression and armed conflict’ raised by Ukraine's defence were ‘paradigm cases’ for the third rule.Footnote 138 He also disagreed with Ukraine's arguments on the public policy exception, on the grounds that, on the facts, ‘the violations [of public international law] are disputed’ and ‘it is of some weight that there is no UNSC resolution’.Footnote 139
The Court of Appeal, however, unanimously overturned Blair J's decision. Capitalising on the fact that Lord Neuberger's judgment in Belhaj technically left the public policy exception open-ended,Footnote 140 the Court invoked the exception by taking into account and balancing six separate factors. An analysis of the Court's reasoning, however, reveals that the factors it considered departed significantly from those in Belhaj and Kuwait Airways, drastically widening the public policy exception and thus eroding the core of foreign affairs non-justiciability.
The first category of reasons given by the Court involve the fact and nature of the breaches of public international law alleged by Ukraine, which contradict Belhaj. The Court noted that domestic public policy recognised a ‘strong international public policy’ that jus cogens norms should be ‘respected and given effect’.Footnote 141 Since Ukraine had a prima facie case that Russia threatened to use armed force against it, this weighed in favour of the exception operating.Footnote 142 Though Lord Neuberger had not said that such breaches of jus cogens could trigger the exception, the Court thought it ‘significant that [he] did not confine his reasoning to the particular norms relevant in that case, but stated the position more widely by reference to the category of ius cogens itself’.Footnote 143 This reasoning, however, forgets that Lord Neuberger, agreeing with Lord Sumption, did not state that all breaches of jus cogens norms would trigger the exception.Footnote 144 It also neglects the context of Lord Neuberger's reasoning, in particular his endorsement of Buttes Gas, which precludes acts of aggression and annexation not condemned by the Security Council from triggering the exception.Footnote 145 The Court also noted that there was nothing ‘unmanageable in the legal standards’ applicable to breaches of jus cogens norms, since they were standards of public international law.Footnote 146 However, it is unclear how this can be squared with Buttes Gas, where the very same issue was said to lack ‘judicial and manageable standards’.Footnote 147
A second category of reasons arose from the Court's concern to be reactive to domestic and foreign State interests. These reasons also contradict Belhaj. The Court noted that concerns of ‘constitutional competence’ did not preclude justiciability, since the UK government had publicly condemned Russia's acts.Footnote 148 Neither did ‘comity’, because the interests of Russia and Ukraine cancelled out each other.Footnote 149 However, while it used the labels ‘constitutional competence’ and ‘comity’, the Court was evidently considering and weighing domestic and foreign State interests here and concluded that those interests weighed in favour of adjudication. And crucially, none of the Law Lords in Belhaj would have found a dispute justiciable on those grounds. Lord Sumption objected to ad hoc deference to domestic or foreign governmental interests: a court must apply ‘its own standards’ to determine a dispute's justiciability, since ‘[t]he foreign act of state doctrine has never been directed to the avoidance of embarrassment, either to foreign states or to the United Kingdom government in its dealings with them’.Footnote 150 While Lord Neuberger and Lord Mance adopted less categorical approaches to non-justiciability, and saw embarrassment to the UK government as ‘a relevant factor’,Footnote 151 this could only be a factor weighing against justiciability—neither contemplated the possibility that domestic or foreign State interests could lean in favour of justiciability if the third rule otherwise applied.
Finally, the third category of reasons given by the Court evinced a desire to give effect to private law rights, through private international law's ordinary rules of jurisdiction and choice of law. The Court noted first that Russia, through the trust company, ‘has chosen to submit to the jurisdiction of the English court’. This appealed to ‘[t]he strong willingness of English courts to apply rule of law standards to do substantive justice between parties to a contract governed by English law’,Footnote 152 and so leaned in favour of the public policy exception operating. Second, adjudicating over the dispute would do ‘justice … between Russia and Ukraine in a private law dispute’,Footnote 153 which also leaned in favour of the exception. This was because Russia (through the trust company) had chosen to bring this claim in English courts, rather than before the International Court of Justice as Ukraine desired, so English courts were the only available fora in which the legal questions surrounding Ukraine's defence could be resolved.Footnote 154 These two reasons both evince the Court's inclination to give effect to domestic English law rights. However, they are hard to square with Lord Neuberger and Lord Sumption's holding that only breaches of domestic ‘fundamental principles of public policy’ could trigger the public policy exception.Footnote 155 Though the private law rights which the Court sought to protect here were undoubtedly of commercial importance, they scarcely qualify as norms of fundamental domestic public policy on par with those at stake, for example, in Oppenheimer.
The upshot of Law Debenture seems to be that acts of aggression or annexation, even if not condemned by Security Council Resolutions, may still trigger the public policy exception if the balance of State interests and private law values at stake justifies it. This departs from the unbroken consensus from Buttes Gas to Belhaj, that the exception could only be invoked for breaches of fundamental international or domestic norms, which acts of aggression and annexation not condemned by the Security Council are not. The Court of Appeal's holding was evidently based, at least in part, on its inclination to favour private rights—adjudicating on Ukraine's defence would uphold ‘substantive justice’ in a ‘private law dispute’.Footnote 156 More specifically, to the Court, since ‘Russia chose to submit any claim by Law Debenture to the jurisdiction of the English court’, it had ‘taken the risk with its eyes open that the court would apply the English law of duress as a substantive matter’—‘as a matter of basic justice’, Russia could not ‘have this contract claim vindicated in an English court without that court proceeding to scrutinise the defence of duress which is arguably available to Ukraine’.Footnote 157 Intuitively, this logic is appealing: Russia, having apparently forced Ukraine into an English law agreement subject to the jurisdiction of English courts, should be held to its bargain by being compelled to subject the entirety of its dispute, including Ukraine's defence, to English courts under English law. Nevertheless, the result of the Court's decision is stark: the public policy exception now drastically reduces the scope of foreign affairs non-justiciability, even in its paradigm cases involving acts of aggression and annexation.
V. THE SHAKY CONSTITUTIONAL FOUNDATIONS OF FOREIGN AFFAIRS NON-JUSTICIABILITY
Prince Muffakham Jah and Law Debenture have chipped away at Belhaj's definition of foreign affairs justiciability: the former decision narrowed the category of non-justiciable inter-State transactions caught by foreign affairs non-justiciability, while the latter broadened the scope of the public policy exception. In both, courts did this explicitly to prevent the obstruction of ordinary (English) private law claims: Prince Muffakham Jah preserved the ‘ordinary private law consequences of a sovereign state's actions’;Footnote 158 and Law Debenture sought to uphold ‘substantive justice’ in a ‘private law dispute’.Footnote 159
Are these decisions justified in effectively departing from Belhaj, to give effect to private law rights? They are somewhat troubling from a formal perspective, since Belhaj was binding authority. But from an external perspective, one can hardly fault Smith J in Prince Muffakham Jah and the Court of Appeal in Law Debenture for pivoting toward the ordinary rules of private law and private international law. Enforcing a rule of law without sound theoretical justifications is never an attractive option—and despite the Supreme Court's best efforts, Belhaj's attempt to define the theoretical foundations of foreign affairs non-justiciability leaves much to be desired.
Foreign affairs non-justiciability is typically justified on two alternative theoretical bases: public international law and domestic constitutional law.Footnote 160 Public international law, however, evidently does not support this rule of non-justiciability; as Lord Neuberger and Lord Sumption recognised in Belhaj, non-justiciability is a common law rule with ‘no international law basis’.Footnote 161 Domestic constitutional law, on the other hand, just might: many commentators have noted since that Belhaj excavated ‘constitutional underpinnings’ for foreign affairs non-justiciability.Footnote 162 Yet, Belhaj did so only in the broad and unhelpful sense of calling non-justiciability a constitutional rule without adequately explaining why this was so—as Eirik Bjorge and Cameron Miles note, the Court merely defined the rule ‘in terms broadly redolent of the separation of powers’, and so did little ‘beyond identifying the constitutional space in which [it] is said to operate’.Footnote 163 Lord Neuberger's judgment was thoroughly unhelpful in this regard: he noted that foreign affairs non-justiciability was based on ‘judicial restraint’ and the ‘common law’,Footnote 164 but that merely describes the rule without saying anything meaningful about its theoretical foundations. Lord Sumption and Lord Mance, by contrast, explicitly cited the constitutional separation of powers as the basis of non-justiciability. However, a close examination of their reasoning shows not only that they adopted two different understandings of the separation of powers, but also that neither understanding can support foreign affairs non-justiciability on its own—both can only do so if courts make certain non-self-evident assumptions about the nature of inter-State transactions.Footnote 165
To Lord Sumption, foreign affairs non-justiciability rested in part on ‘the constitutional separation of powers, which assigns the conduct of foreign affairs to the executive’.Footnote 166 This was a categorical understanding of the separation of powers, which distributes ‘legislative’, ‘executive’ and ‘judicial’ functions absolutely and exclusively between different organs of State,Footnote 167 which explains why Lord Sumption articulated foreign affairs non-justiciability as a categorical rule. However, it is doubtful that a categorical understanding of the separation of powers could support a rule of non-justiciability which can be set aside on substantive public policy grounds. Instead, one might reason, as Côté J did in the Supreme Court of Canada's decision in Nevsun Resources Ltd v Araya on this issue, that ‘[t]he public importance and fundamental nature of the values at stake cannot render justiciable that which is otherwise not within the judiciary's bailiwick’.Footnote 168 Moreover, a categorical understanding of the separation of powers by itself cannot explain why courts should ever refrain from adjudicating upon issues involving inter-State transactions. Few matters are categorically ‘legislative’, ‘executive’ or ‘judicial’ in nature:Footnote 169 the respective exclusive competences of the executive and judiciary probably cannot be described in greater detail than by saying that the former deals with ‘policy’, while the latter deals with ‘law’. The viability of basing non-justiciability on this understanding of the separation of powers is thus contingent upon characterising issues involving inter-State transactions as exclusively ‘policy’ or ‘legal’ in nature.Footnote 170 Neither choice is logically sustainable: it is trite that international disputes have both political and legal elements, and that an issue arising in such disputes does not have less of one element because it has more of the other.Footnote 171 Thus, basing foreign affairs non-justiciability on a categorical understanding of the separation of powers requires courts to make the non-self-evident assumption that issues involving inter-State transactions are ‘policy’ questions for the executive, and not ‘legal’ questions for the judiciary.
To Lord Mance, on the other hand, foreign affairs non-justiciability was defined by the relative ‘institutional or constitutional competence[s]’ of the executive and the judiciary.Footnote 172 Accepting that foreign relations issues have both political and legal elements, Lord Mance thus noted that foreign affairs non-justiciability would involve complex ‘fact- and issue-sensitive’ enquiries, balancing the executive's expertise and institutional advantages in conducting foreign affairs with those of the judiciary in protecting individual rights.Footnote 173
However, an institutional understanding of the separation of powers also cannot by itself support a conclusion that certain issues involving inter-State transactions should be non-justiciable. For a start, it may be contradictory to acknowledge that inter-State transactions have both political and legal elements and yet insist that courts should sometimes be categorically excluded from addressing such issues. Instead, an institutional understanding of the separation of powers—under which any given branch of government may discharge any of the functions of law making, enforcement and application when it is most well-equipped to do so in the circumstancesFootnote 174—might be said to demand inter-institutional comity and cooperation, rather than the mutually exclusive zones of competence envisioned by non-justiciability.Footnote 175
Moreover, one also cannot support non-justiciability with an institutional understanding of the separation of powers without relying on a questionable assumption about the nature of issues arising from inter-State transactions—just that this time, the choice is not between ‘political’ and ‘legal’ issues, but between ‘public law’ and ‘private law’ issues. After all, in public law, institutional competence considerations may weigh in favour of deference because courts consider themselves secondary decision-makers on these issues;Footnote 176 but in private law, the judiciary is generally assumed to be institutionally competent to deal with issues involving private law rights on their merits.Footnote 177
Institutional competence concerns can only tell us the amount of deference to be accorded to the executive on a particular issue if first we identify that issue's nature;Footnote 178 but it is unclear whether issues involving inter-State transactions are ‘public law’ issues by virtue of their potential ramifications on international and foreign relations, or ‘private law’ issues because they are elements of or incidental questions to civil claims. Thus, institutional competence concerns can only support deference to the executive on issues involving inter-State transactions if courts first make the non-self-evident assumption that such issues, even in civil disputes, are necessarily public law issues.
Belhaj's account of the theoretical basis of foreign affairs non-justiciability leaves much to be desired; although Lord Sumption and Lord Mance both cited the constitutional separation of powers as the basis of non-justiciability, they left the link between the two highly ambiguous. One thus fears that Belhaj's attempt to reorient foreign affairs non-justiciability toward domestic constitutional law may not have brought us any closer to sound theoretical answers.
In this regard, there is perhaps something to be learnt from the US’ experience with the American ‘act of state’ doctrine, which inspired Lord Wilberforce's decision in Buttes Gas.Footnote 179 Since Banco Nacional de Cuba v Sabbatino,Footnote 180 American courts and commentators have struggled to define precisely what in the US Constitution demands that doctrine's existence,Footnote 181 which has led to difficulties in its application.Footnote 182 Unless English courts wish to embark on a similar theoretical wild goose chase, it may be wise to simply abandon the search for the elusive constitutional foundations of foreign affairs non-justiciability now, and admit that we still do not quite know why the rule exists. From this perspective, then, Prince Muffakham Jah and Law Debenture can hardly be faulted—it is difficult to adhere to the strict letter of Belhaj, when theoretical justifications for doing so are weak, and when strong private justice concerns pull in the opposite direction.
VI. CONCLUSION: A PRINCIPLE OF PRIVATE INTERNATIONAL LAW?
Prince Muffakham Jah and Law Debenture have narrowed foreign affairs non-justiciability. They have apparently done so to protect private law rights, under private international law's ordinary rules of jurisdiction and choice of law. And, at least from a theoretical perspective, these decisions are hard to fault, given that the ostensible constitutional foundations of foreign affairs non-justiciability excavated in Belhaj remain highly elusive.
In these circumstances, we appear to have come full circle to the conclusion FA Mann reached nearly 80 years ago, ‘that it is private international law which provides the solution’ here.Footnote 183 In other words, issues arising in civil disputes involving inter-State transactions should be dealt with within the framework of private international law, so that private rights can be given due recognition in international disputes. Indeed, despite its flawed constitutional defence of non-justiciability, Belhaj itself ultimately adhered to this vision of private international law's reach: the plaintiffs’ claims against the UK government could proceed to trial under private tort laws. Prince Muffakham Jah and Law Debenture, then, merely built on the instinct implicit in Belhaj: it is private international law, not public international law or domestic constitutional law, which supplies the answers to difficult issues arising in civil proceedings involving transactions between sovereign States.
But finally, we must ask: how should private international law treat these issues? Prince Muffakham Jah and Law Debenture leave us with a somewhat unsatisfying conclusion: issues involving inter-State transactions should be tried on their merits because there is no clear reason why they should not be. Does this mean that Buttes Gas was incorrect, not just in its reasoning but in its outcome? Or are there still good reasons for judicial restraint on such issues, even within private international law? It is suggested that that there are indeed reasons why domestic courts should abstain from adjudicating on certain inter-State transactions, deriving from the inherent limits of private international law's processes. Commentators have suggested that Belhaj's first and second rules may be justified, not on the basis of a need to respect foreign sovereignty, but on grounds that domestic courts are ill-equipped to assess the (constitutional) validity or (administrative) legality of foreign legislative or executive acts through the choice of law process.Footnote 184 One can make a similar argument for Belhaj's third rule—foreign affairs non-justiciability—on the basis of the principled limits imposed by private international law on a court's international jurisdiction.
The argument is as follows: private international law may require courts to abstain from adjudicating over certain disputes involving inter-State transactions, not because they lack jurisdiction over such dispute, but because it would be unwise and impractical to exercise it.Footnote 185 In particular, the values underlying doctrines like forum non conveniens, which seek to ensure ‘the efficient conduct of litigation in an appropriate forum’Footnote 186 given ‘the practicalities of litigation’ in a given dispute,Footnote 187 may justify judicial restraint in certain disputes involving inter-State transactions. After all, it may be inconvenient or impractical for domestic courts to adjudicate upon such transactions, because they involve covert facts and witnesses who are foreign government officials, which likely cannot be disclosed or subpoenaed without the relevant foreign State's consent; and because they may be governed by a law (foreign or international) which the court is unfamiliar with.
The difficulties courts may face here are well illustrated by the Court of Appeal's interlocutory decisions in Buttes Gas: although Lord Denning initially insisted that there was nothing objectionable in principle about Buttes and Occidental's claims based on inter-State transactions,Footnote 188 his enthusiasm disappeared when parties applied for the discovery of documents relevant to the territorial dispute, the disclosure of which would be ‘contrary to the comity of nations’.Footnote 189 These difficulties were also apparent throughout Prince Muffakham Jah, where Smith J found himself inundated by evidential issues arising from a covert decades-old transaction; and will likely arise if Law Debenture goes to trial, given the obvious challenges involved in uncovering the facts surrounding Russia's annexation of Crimea.
A clearly more appropriate forum for such disputes involving inter-State transactions, therefore, may be the court of the relevant foreign State or even an international tribunal. In these circumstances, the forum's courts should generally stay proceedings, subject only to concerns of substantial justice. In particular, courts may consider that legal or practical unavailability of a private or public law remedy in the alternative forum justifies adjudicating over a prima facie non-justiciable issue—and indeed, these reasons lay at the heart of the invocation of the public policy exception in Belhaj Footnote 190 and Law Debenture.Footnote 191
Thus, though the courts in Prince Muffakham Jah and Law Debenture were right to be concerned with upholding private rights in the disputes before them, it is questionable whether that alone should have justified their lack of judicial restraint. Instead, private international law, which values efficiency in litigation, may itself require a court to abstain from adjudication on disputes involving certain inter-State transactions, because that court is not the most appropriate forum. One might argue that such an approach effectively reproduces foreign affairs non-justiciability on different theoretical foundations, and this would be entirely accurate. But where the law is uncertain, a sound theoretical foundation becomes crucially important: a version of foreign affairs non-justiciability and its public policy exception founded on these principles and values of private international law may lead to clearer and more defensible conclusions on its precise scope and content. And for a rule that, even after Belhaj, still continues to be plagued by tremendous uncertainty, clarity and precision are much-needed virtues.