The Taming Function of Private International Law

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Dr Uglješa Grušić has published a new book, Torts in UK Foreign Relations, that provides a comprehensive account of private international law aspects of tortious claims arising out of the external exercise of British executive authority. It is an outstanding book – nuanced, learned and also a pleasure to read.

The book tackles thorny issues related to jurisdiction, choice of law and recognition and enforcement of foreign judgments. One of its most important contributions is its analysis of the Act of State doctrine (both Foreign Act of State “FAOS” and Crown Act of State), parsing decades of case law, the jumble of rules, and the shifting rationales.

In this post, I will consider whether private international law can help us to understand the nature of the FAOS. There have been a number of judicial complaints over the years about the confusing and elusive nature of the doctrine. Justice Abella of the Canadian Supreme Court called it “the unwieldly collection of principles, limitations and exceptions that have been given the name ‘act of state’ in English law” (Nevsun Resources v Araya [2020] 1 SCR 166, [29]). It is messy, a bit wild. Can private international law play a taming function?

As Rishi Gulati has argued in his excellent book Access to Justice and International Organisations (Cambridge University Press 2022), private international law “has a great potential to play a coordinating role between distinct legal orders and help appropriately allocate regulatory authority” (p. 168).

Annelise Riles has explained that private IL accepts “regulatory pluralism”. Its aim is not to “define one set of rules that apply for all”, but “to define under what circumstances a particular dispute or problem shall be subject to one regulatory authority or another” (A Riles, ‘Managing Regulatory Arbitrage: A Conflict of Laws Approach’ (2014) 47 Cornell International Law Journal 63, 89).

Alex Mills notes that private IL is also engaged with normative question of “how that ordering of regulatory authority should be achieved” (A Mills, The Confluence of Public and Private International Law: Justice, Pluralism and Subsidiarity in the International Constitutional Ordering of Private Law (Cambridge University Press 2009), 22-23).

In this post, I will:

  1. Outline the FAOS doctrine.
  2. Consider how we can tame the doctrine by reference to its rationale.
  3. Consider how we can tame the doctrine by reference to the type of rule.
  4. Share thoughts on a site of potential wildness – the public policy exception.

What is the FAOS doctrine?

As Dr Grusic traces in his book, there have been evolutions over the centuries. In England, we have settled with a framework based on Lord Neuberger’s four rules in Belhaj v Straw ([2017] UKSC 3, [121]-[124]):

(1) Rule 1 is that the courts of this country will recognise and not question the effect of a foreign state’s legislation in relation to any acts which take place or take effect within the territory of that state;

(2) Rule 2 is that courts will recognise, and will not question, the effect of an act of a foreign state’s executive in relation to any acts which take place or take effect within the territory of that state;

(3) Rule 3 is an issue will be inappropriate for the courts to resolve because it involves a challenge to the lawfulness of the act of a foreign state which is of such a nature that a domestic judge cannot or ought not to rule on it. Examples include making war and peace, treaty negotiation and the annexation territory;

(4) A possible fourth rule is that the courts will not investigate acts of a foreign state where it would embarrass our government: but this doctrine only arises as a result of a communication from the Foreign Office”.

Taming FAOS by reference to its rationale

At its simplest, the rationale for the FAOS doctrine is “sovereignty” (Lord Neuberger in Belhaj, para 135). This sounds like the realm of public international law, and Lord Neuberger cites Brownlie’s Principles of Public International Law as authority. But we know that sovereignty has domestic manifestations. Lord Neuberger’s definition of sovereignty would also be familiar to private international lawyers: “the legal competence which a state enjoys in respect of its territory”.

Lord Sumption in Belhaj [225] went a bit further in his analysis, citing two main considerations underlying the doctrine. First, he cited comity. “Like any other organ of the United Kingdom, the courts must respect the sovereignty and autonomy of other States”. This is a concept known to both public and private international law. Dr Grusic notes “a revival of comity” in private international law (Book, p. 153).

Second, Lord Sumption referred to the constitutional separation of powers, which assigns the conduct of foreign affairs to the executive. This is a concept of great importance to the Crown Act of State doctrine – which is also covered in Dr Grusic’s book. 

Lord Lloyd Jones in Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela ([2021] UKSC 57) (Venezuela Gold) points to a dual rationale “the respect due to the sovereignty and independence of foreign states” and the intent “to promote comity in inter-state relations” (at [135]).

  1. He emphasises that the FAOS doctrine prevents “an objectionable interference with the internal affairs” of another State [169].
  2. That is a concept familiar to public international law: Article 2(7) UN Charter.
  3. But the concept also finds a home in private international law: the process of recognising and giving effect to judgments does not necessarily involve any investigation into/adjudication upon the internal affairs of that state (Lloyd Jones, [169].

Dr Grusic puts forward a nuanced analysis of the rationale for doctrine, combining separation of powers with effective and efficient dispute resolution; sovereignty and independence of foreign states; and comity (Book, p. 12). He explains that Rules 1 and 2 may also be seen “as furthering the goal of international uniformity within the choice-of-law process”.

Taming FAOS by reference to the type of rule

I now turn to taming FAOS by reference to the type of rule.

FAOS is not a rule of international law like state immunity. Lord Lloyd Jones in Venezuela Gold [121] observed that FAOS proceeds from the same premise as immunity – “mutual respect for the equality of sovereign states” – but “it is wholly a creation of the common law. It is not required by international law”.

Lord Justice Rix in Yukos Capital SARL v OJSC Rosneft Oil Company ([2012] EWCA Civ 855), [66] explained “it is a form of immunity ratione materiae … founded on analogous concepts of international law, both public and private, and of the comity of nations”.

Dr Grusic explains it neatly: Jurisdictional immunities apply when a foreign state is impleaded in English judicial proceedings, whereas the FAOS doctrine may apply when an English court is asked to adjudicate on the lawfulness/validity of a foreign sovereign act, even if the State is not impleaded (Book, p. 71).

Is FAOS an (unconventional) rule of private international law? Justice Perram of the Australian Federal Court in Habib v Commonwealth of Australia [2010] FCAFC 12 noted that “the doctrine is a super choice of law rule requiring the lex fori to apply foreign law as the lex causae where it otherwise would not do so under its own private international law rules” [38]. Dr Grusic agrees. He says that Rules 1 and 2 are “best regarded as ‘super choice of law rules’ that come into play when foreign law applies and prevent the court from hearing and deciding certain issues under the foreign applicable law” (Book, p. 72). On the other hand, Dr Grusic sees Rule 3 as “analogous to the forum non conveniens doctrine” (Book, p, 72). This is a point I will come back to shortly.

There is a third option: is FAOS some other kind of rule? Lord Lloyd Jones in Venezuela Gold [135] described it as “an exclusionary rule, limiting the power of the courts to decide certain issues as to the legality or validity of the conduct of foreign states within their proper jurisdiction. It operates not by reference to law but by reference to the sovereign character of the conduct which forms the subject matter of the proceedings.” He also called it “a rule of domestic law” (at [181].

Two decades earlier, Lord Nicholls in R v Bow Street Magistrates court, ex parte Pinochet (No 1) ([2000] 1 AC 61) explained the doctrine with more scepticism as “a common law principle of uncertain application which prevents the [forum] court from examining the legality of certain acts performed in the exercise of sovereign authority within a foreign country or, occasionally, outside it”.

Mark Tushingham, who was counsel in Venezuela Gold, has argued that Rules 1 and 2 are not choice of law rules, but they may be seen as “conflicts rules which limit the power/competence of a domestic court to decide certain issues.”

As you can see, FAOS is an elusive beast. Although I should choose an Anglo-American animal, I am drawn to describe it by reference to an Australian creature. It transcends conventional categories and causes mystification – like the platypus: a mammal that lays eggs, has a duck bill, the fur of an otter, shoots venom from its legs, and glows in UV light.

Dr Grusic puts forward an intriguing argument on Rule 3 of the FAOS doctrine. He urges the reconceptualization of Rule 3 based on the doctrine of forum non conveniens. This requires the court to identify the appropriate forum for the case, taking into account the interests of the parties and the ends of justice (Book, p. 111).

I think there is great value in this idea, with three caveats.

First, are we trying improve an uncertain doctrine with another uncertain doctrine? Justice Scalia complained of forum non conveniens as follows: “The discretionary nature of the doctrine, combined with the multifariousness of the factors relevant to its application … make uniformity and predictability of outcome almost impossible” (American Dredging Co. v Miller, 510 U.S. 443, 455 (1994)). The uncertainty leads to lengthy and costly proceedings. Lord Briggs in Vedanta Resources PLC v Lungowe and ors ([2019] UKSC 20, [14]) spoke of the UK Supreme Court “beating its head against a brick wall” in trying to make litigants comply with the requirements of proportionality in forum appeals.

Second, forum non conveniens is concerned with finding the appropriate forum, which is usually a foreign domestic court. But Rule 3 of FAOS is concerned with separation of powers – not between different courts but between the judiciary and the executive – this is its “normative underpinning” in the words of Lord Sales, writing extra-judicially (‘Act of State and the Separation of Powers’ (2006) 11 Judicial Review 94, para 4)

Third, Rule 3 is not discretionary (a court will lack subject matter jurisdiction due to the scope of its competence) but forum non conveniens is an exercise of discretion as part of the court’s power to regulate its own procedure. The court clearly has jurisdiction but chooses not to exercise it.

This brings me to a related point: the treatment of judicial acts in the FAOS doctrine. English law is that “[j]udicial acts will not be regarded as acts of state” for the purposes of the doctrine: Lord Lloyd-Jones in Venezuela Gold at [136(3)], citing Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804; Yukos at paras 73-91.

Lord Lloyd Jones in Venezuela Gold [158] explained that the willingness of the English court to look at foreign judicial acts “does not reflect any hierarchical inferiority of judicial acts but rather reflects a shared understanding of how courts should behave under the rule of law”.

In some ways, this is informed by public international law: it draws on international standards of independence, impartiality and competence and due process in treaties such as the ICCPR and the case law of international bodies.

But it also relates to private international law: if foreign judicial acts fell within FAOS, this would create a “significant conflict” with “the doctrines governing the recognition and enforcement of foreign judgments” (Lord Lloyd Jones, Venezuela Gold [160] citing the US Restatement of the Law Fourth). According to Lord Lloyd Jones: “the status of a foreign judgment is left to be determined in accordance with domestic rules on the recognition and enforcement of foreign judgments” [161].

The untamed domain: public policy

The FAOS doctrine is subject to a public policy exception: it “will not apply to foreign acts of state which are in breach of clearly established rules of international law, or are contrary to English principles of public policy, as well as where there is a grave infringement of human rights”: Lord Lloyd-Jones in Venezuela Gold at [136(2)].

“The established rules of IL” is vague – are these peremptory norms? Erga omnes norms? Rules in widely ratified treaties? Why are “grave infringements of human rights” treated separately?

And what are “English principles of public policy”. In Venezuela Gold, the ‘one voice’ principle is cited as an example.

In the recent judgment in Crane Bank Ltd v DFCU Bank Ltd [2023] EWCA Civ 886, the Court of Appeal held that the public policy exception is “inherently uncertain and potentially changing” [46]. International law has a role to play but it ultimately a matter of domestic law, though not constrained by constitutional requirements. The Court recognised a public policy exception based on combatting corruption, suggesting it may be limited to where the corruption is “of a particularly egregious nature” or a “central or important feature” of the alleged illegality.

I wonder what role can private international law play in taming the public policy exception?

Conclusion

The power of private international law to tame is taken to an extreme where the doctrine is rendered extinct. This has happened in Canada.

The Canadian Supreme Court held in the Nevsun case that the doctrine has played no role in Canadian law, is not part of Canadian common law. And this was because of private international law. Canadian courts determine questions dealing with the enforcement of foreign laws “according to ordinary private international law principles which generally call for deference, but allow for judicial discretion to decline to enforce foreign laws where such laws are contrary to public policy, including respect for public international law.”

With respect, this seems too blunt. I do think that FAOS doctrine still has a role to play in mediating between legal orders, drawing on both public and private international law. Dr Grusic’s work is there to guide us. He traces the case law, drawing out both the public and private international law aspects, and identifies the principles of private international law (such as forum non conveniens) that can help illuminate the boundaries and shape the future development of this common law doctrine.

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Comments

Jonathan Brosseau says

January 11, 2024

Fascinating piece!

One point: perhaps the distinction between State immunity and FAOS is not as sharp? See UNCSI art 6(2) where SI applies even though the State is not a disputing party, when its "property, rights, interests or activities" are affected.

Another: perhaps PrIL has (or could have had) a greater role to play on the SI doctrine, ie a "taming" function?

I look forward to reading the book!