Shunning Conventional Wisdom – Italian Courts and State Immunity in Employment Disputes

Written by and

Introduction 

On State immunity in civil proceedings, Italian courts have been pathbreakers, for better or worse. The Italian Supreme Court, in the 50s, developed the restrictive theory of State immunity, now accepted as custom (Ronzitti, Venturini). More recently, Italian courts have poked holes in immunity for international crimes in civil proceedings (Ferrini v Germany, 5044/2004). The follow-ups include the ICJ judgment against Italy (Germany v Italy, 2012), the Italian Constitutional Court’s decision against its implementation (Constitutional Court, 238/2014, more here), and several enforcement proceedings against Germany, giving headaches to German and Italian authorities alike (Tanzi, Weiler).

Less spectacularly, Italian judges are eroding State immunity in employment disputes, by undercutting the UN Convention on Jurisdictional Immunity of States and their Property (except, perhaps, on the application of Article 11(2)(f), as Rossi, p. 38 explains).

Here, we discuss six symptoms of Italian courts’ diffident approach to immunity as codified in the Convention. To wit: (a) reading Convention’s provisions contrary to their ordinary meaning; (b) interpreting other treaties’ provisions contrary to the Convention; (c) overruling previous Convention-compliant decisions; (d) limiting the Convention’s scope of application, contrary to Italy’s intentions; (e) questioning the Convention’s international legal status; and (f) disregarding Article 18 VCLT, despite Italy’s ratification of the Convention. Some symptoms are not novel (a, b, f); others have emerged recently, including in the last months (d, e).

The Italian courts’ lip service to the UN Convention

Until about ten years ago, Italian courts applied criteria developed in case law to assess State immunity claims in employment disputes. The UN Convention (which had existed as Draft Articles since 1991) was rarely referenced.

In 2014, however, the Supreme Court indicated that Article 11 of the UN Convention governs employment disputes. The Convention was not in force then (and still is not), but this conclusion aligned with the ECtHR’s indication in 2011 that “since the principles set out by Article (11) of the UN Convention of 2004 are part of customary international law, they are binding upon Italy …” (Guadagnino v Italy and France, 2011, para 70). Article 11’s application to employment disputes qua customary law became commonplace (Supreme Court 13980/2017, 11129/2020).

However, the practice is much less Convention-friendly than the Supreme Court’s statement suggests.

a) Reading Convention’s provisions contrary to their ordinary meaning

Article 11(2) of the Convention lists various exceptions to the rule that States are not immune in employment proceedings. They are alternative, not cumulative: any is enough to warrant immunity, and no other requirement is necessary (Foakes, O’Keefe, p. 198). For example, it suffices that an employee “has been recruited to perform particular functions in the exercise of governmental authority” (Article 11(2)(a)); or that “the subject-matter of the proceeding is the recruitment, renewal of employment or reinstatement of an individual” (Article 11(2)(c)).

However, Italian courts claim to:

“have jurisdiction not only when the employee performs an activity that is merely ancillary to the institutional functions of the State; but also when, despite the fact that the employee may perform tasks strictly connected to those institutional functions, the decision sought from the judge … is not able to interfere with the autonomy and sovereign powers of the foreign State …” (Supreme Court 4882/2017; 34474/2019; 18661/2019).  

Accordingly, even when employees perform sovereign functions as envisaged by Article 11(2)(a), States are immune only if there is, in addition, interference with the State’s sovereign powers or autonomy, caused either by the remedy sought (e.g., reinstatement) or by the claim’s assessment, having regard as a whole to the cause of action and the facts alleged (Pavoni, p. 217). In setting additional requirements, this approach contradicts Article 11(2)(a), for which the encroachment on sovereign State rights occurs in and of itself when foreign judges scrutinise employment relationships involving iure imperii elements.

Article 11(2)(c) has fared better. Mostly, Italian courts have upheld State immunity in reinstatement claims, without inventing additional requirements. However, in October 2021, the Supreme Court indicated that the reinstatement claim of a local employee could not interfere with the employer State’s sovereignty, since he did not discharge governmental functions (Supreme Court, 29556/21). While the case was decided on other grounds, this obiter would imply that immunity is not granted automatically against reinstatement claims, but only when the employee also fits the description of Article 11(2)(a). This approach defeats the rationale of Article 11(2)(c), for which, when the remedy sought is reinstatement, an impermissible interference with the foreign State’s sovereignty exists ipso facto.

b) Interpreting provisions of other treaties contrary to the Convention

Several disputes concern locally recruited employees of military bases operated in Italy by NATO allied countries. The 1951 NATO SOFA provides that “the conditions of employment and work, in particular wages, supplementary payments and conditions for the protection of workers, shall be those laid down by the legislation of the receiving State” (Article IX(4)). Most Italian courts interpret this provision as a special immunity regime, or an immunity waiver, arguing that “application of Italian law implies Italian jurisdiction” (Supreme Court 8858/1996, 16248/2011). Based on this interpretation, foreign States never enjoy immunity in claims brought by employees to whom Article IX(4) applies, not even when they seek reinstatement (Supreme Court 29556/2021).

Whether Article IX(4) is a special immunity regime has an impact on the application of the UN Convention. Article 11 thereof applies “unless otherwise agreed between the States concerned”; Article 26 states that the Convention is without prejudice to “existing international agreements which relate to matters dealt with in the present Convention”. In our view, Article IX(4) – construed pursuant to the VCLT – does not regulate immunity and, therefore, is clearly not a special immunity regime. Unlike other SOFA provisions (e.g., Article VII), it does not mention “immunity” or “jurisdiction” and is better understood as a clause on the applicable substantive law. The NATO SOFA travaux even indicate that the sending State could interpret the host State’s labour laws flexibly, confirming that Article IX(4) cannot be a special regime, let alone one derogating from State immunity.

Reading Article IX(4) as a waiver contradicts its interpretation by domestic courts in other jurisdictions (Canada Supreme Court, Case 21641, 1992). More importantly for present purposes, the ‘waiver argument’ flies in the face of Articles 7(1) and 7(2) of the UN Convention, providing respectively that consent to the exercise of jurisdiction must be express and that, furthermore, “agreement by a State for the application of the law of another State shall not be interpreted as consent to the exercise of jurisdiction”.

c) Overruling previous Convention-compliant decisions

Strikingly, decisions adopted after Italy ratified the Convention have overruled previous ones that were more aligned with the rules endorsed therein.

For example, until the Supreme Court’s judgment in case 2329/1989, Italian courts upheld immunity on the sole finding that “the employee is involved in an activity by which the State pursues its institutional goals” (Supreme Court 3803/1974, 3007/1977, 3063/1979, 4005/1982). This test corresponds broadly to Article 11(2)(a)’s one, which Italian courts now distort with the additional “interference” requirement.

On Article IX(4) of the NATO SOFA, previous decisions correctly found that “the purpose of Article IX(4) is to require that the foreign State regulates the work relationship [of Article IX(4) employees], from the substantive perspective, in conformity with the way the Host State regulates the work relationship of its employees … without implications on the jurisdictional perspective (Court of Appeal of Naples, 1959). Similarly, it was acknowledged that:

“it cannot be held that this [Article IX(4)] is a waiver of immunity from the jurisdiction of the forum State. … any waiver should have been express, either in general or by means of unequivocal conduct. Indeed, since this would be such an important limitation of a State’s sovereignty, it is unconceivable that this should not be formulated expressly, or by some unequivocal conduct” (Tribunal of Naples, Francischiello v USA, 1959).

These early pronouncements clearly aligned with the rules codified in Articles 7(1) and 7(2) of the Convention, now widely disregarded.

d) Limiting the Convention’s scope, contrary to Italy’s intentions

The Convention governs disputes brought by employees of any foreign State’s organ, including military bases. Article 11 concerns proceedings relating “to a contract of employment between the State and an individual”. Article 2(1)(b)(i) defines State as “the State and its various organs of government”. Armed forces are certainly an “organ of government”. The Commentary to the 1991 Draft Articles indicated that “State organs … comprise … the armed forces” (Commentary, p. 15).

Yet, in case 29556/2021, the Supreme Court questioned this truism. It referred for the first time to Italy’s interpretative Declaration to the UN Convention, recording the understanding that:

“the Convention does not apply to the activities of armed forces and their personnel, whether carried out during an armed conflict as defined by international humanitarian law, or undertaken in the exercise of their official duties”.

Indeed, it was debated during the Convention’s drafting whether it should apply to armed forces’ activities (Foakes, O’Keefe, p. 21), but the Court’s ‘wholesale carveout’ misses the point of that debate. The question, now resolved in the negative by Article 26, was whether the Convention would affect privileges and immunities of armed forces stationed in a Host State under a SOFA (Sucharitkul, p. 212). The Chairman of the Drafting Committee spoke more specifically of whether the Convention covered “military activities”, as accurately reflected in the Swedish and Norwegian Declarations. The Italian Declaration, on its part, was occasioned by the need to fine-tune the territorial tort exception of Article 12, displacing immunity in tort proceedings relating to acts causing injury to individuals or property in the forum State. Indeed, the ICJ in Germany v Italy held this exception inapplicable to acts of “the armed forces and associated organs of another State in the context of an armed conflict” (Germany v Italy, para 69).

Italy’s statement has nothing to do with employment disputes originating in military bases, including since these disputes do not concern “activities of the armed forces”. Furthermore, the Declaration expands (rather than curtails) immunity, as it limits the application of an exception thereto.

e) Questioning the Convention’s international legal status

In June 2021, after declaring so for almost eight years, the Supreme Court suddenly questioned whether Article 11 Convention actually codifies custom. It stayed proceedings revolving on the issue (Supreme Court, 16085/2021) and referred the question to the Massimario (its research unit).

Whether this move is a prelude to a U-turn is unclear. The Massimario has not answered yet, and, after referring the question, the Supreme Court seems to have reverted to its old ways, as if it has never stopped believing in the Convention’s customary status, both in general (Supreme Court 25045/2021) and specifically on Article 11 (Supreme Court 29556/2021).  

Asking whether Article 11 corresponds to custom is legitimate (Pavoni, Rossi). However, the answer’s implications must not be overstated. Mostly, even those wondering whether Article 11 at large reflects custom acknowledge that its core does, certainly including Article 11(2)(a) (Garnett, p. 796); this clause reflects custom because, as noted by the UK Supreme Court it “directly import[s] the classic distinction between acts jure imperii and acts jure gestionis” and “codifies customary international law so far as it applies the restrictive doctrine to contracts of employment” (Janah v Libya; Benkharbouche v Sudan, 2017, para 26).

The sudden fastidiousness about the Convention’s relation to custom, therefore, has little chance of resulting in a vindication of the Italian courts’ construction of Article 11(2)(a).

f) Disregarding Article 18 of the Vienna Convention on the Law of Treaties

Italian courts should refrain from decisions plainly undermining the goals of the UN Convention, not just because it reflects custom. Under Article 18 of the VCLT, pending a treaty’s entry into force, States that have expressed the intention to be bound must “refrain from acts which would defeat [its] object and purpose”. In this regard, the 2013 Report associated to the Bill presented to the Italian Parliament for the ratification of the Convention explained that: “pending the entry into force of the Convention, there is a duty for the State party to act in good faith, namely not to act in a manner that contradicts or contrasts with the discipline set out in the text of the Convention”.

Technically, the equation between the Article 18 duty and full compliance might be an overstatement. However, it suggests that disregarding the manner immunity is regulated in a treaty exclusively devoted to immunity is a blow to the treaty’s raison d’être.

Looking abroad, UK courts routinely apply Article 11 noting that, although the Convention is not in force, “by reason of Article 18 of the Vienna Convention on the Law of Treaties of 1969, the UK should act consistently with it and not defeat its objects or purposes” (Buttet v Ambassade de France, 2019, para 108). The Article 18 duty binds Italian courts even more since, unlike the UK, Italy has not just signed but also ratified the Convention.

Moreover, and quite apart from the elusive and uncertain contours of the Article 18 preliminary duty (Palchetti), the parliamentary Report illustrates Italy’s willingness to embrace the Convention fully, and stands in contrast with its courts’ diffidence of recent years. It is puzzling that a party that has ratified the Convention by a full parliamentary process should – through its courts’ actions – disengage with the Convention, rolling back on its compliance rather than increase it, or at least maintain the status quo.

Conclusions

State immunity pursues important goals, by limiting important rights. The Italian courts acknowledge that the UN Convention contains a wise and apt formula to balance between them: “Article 11 operates this balancing … and must be observed” (Supreme Court 13980/2017). Yet, Italian decisions increasingly belie these professions of allegiance, and reveal a patchwork of un-Conventional outcomes. Perhaps, it is time for Italian courts to better practice what they preach.

Print Friendly, PDF & Email

Categories

Leave a Comment

Your comment will be revised by the site if needed.

Comments

Riccardo Pavoni says

December 28, 2021

Dear Colleagues,
actually the preacher here has been the Strasbourg Court with its wholesale recognition of the customary status of the UN Convention on State Immunity (UNCSI) since its Cudak, Guadagnino etc decisions. Italian courts have unfortunately acted as the parrot of the Strasbourg Court.
You say that it is legitimate to question the customary status of Art. 11 UNCSI (thanks, though I always thought that that excercise was part of our core business as international lawyers). You say we should however not overstate the answer to that question, because at the end of the day at least the "iure imperii functions" test in Art 11(2)(a) does reflect custom. OK, well noted (although not crystal clear by looking at state practice). But this is entirely different from saying that the whole of Art 11 is custom, as the Strasbourg Court does. If the latter were true, it is impossible not to overstate that that position would imply a regression in the protection of the rights of employees of foreign States as emerged in the jurisprudence of many countries, including Italy (see in Art 11 the nationality clause, the mysterious "any other persons enjoying diplomatic immunity" etc). In my view, there is nothing wise in Art 11 in that respect, only a curtailment of employees' rights for the sake of a conventional compromise between the negotiating States.
Rossi has made that abundantly clear in this brand new, excellent monograph:
https://www.bloomsbury.com/us/international-law-immunities-and-employment-claims-9781509952977

When ratifying the UNCSI, Italy should have rather followed the advice of various prominent international lawyers (eg, Ronzitti), which recommended a reservation to Art. 11.
Failing that, there is now a great deal of confusion in the pertinent Italian case law, as your post makes clear. Therefore, I think the initiative of asking the advice of the research unit of the Supreme Court (ie, the Massimario Office) on the many outstanding questions in this area is very welcome (amongst many other issues, there are also EU law implications in this area which that advice should clarify, see CJEU, Mahamdia).
It is not a question here of reneging on the ratification of UNCSI by Italy. Reliance on Art 18 VCLT constitutes a very fragile argument, at best. You overlook a portion of that provision: a State is obliged not to defeat the object and purpose of a treaty that it has ratified, pending the entry into force of that treaty AND "provided that such entry into force is not unduly delayed". There is no definition of "undue delay" for the purposes of that provision. However, I have the impression that that threshold has been crossed in the case of the UNCSI (not in force 18 years after its adoption; only 22 ratifications, last one by Equatorial Guinea back in 2018, etc).

Pierfrancesco Rossi says

December 29, 2021

Dear Paolo and Filippo (if I may),

Thank you for your timely contribution on this important segment of the law of state immunity. I agree that the decisions of the Italian Court of Cassation on this subject tend to be poorly reasoned and sometimes to misapply the UNCSI. The most striking example concerns Article 11(2)(f) (granting immunity if ‘the employer State and the employee have otherwise agreed in writing’ subject to public policy limitations), which has been construed as preventing foreign states from waiving their immunity through contractual submissions to the jurisdiction of the Italian courts (eg De la Grana Gonzales, 18 April 2014) in direct breach of Article 7(1)(b) UNCSI.

To me however the main question, which your post largely eschews, is whether the application of the UNCSI by the Italian courts is legally sound in the first place. The answer to this question is most likely to be no. Since the UNCSI is not yet in force, the Cassazione only applies Article 11 because it believes it to codify customary law in its entirety, and this for no other reason than because the Strasbourg Court has so argued (see eg Cudak v Lithuania). Neither court has ever analyzed state practice and opinio juris. The correspondence between Article 11 and customary law has been affirmed mainly on the grounds that the ILC would have meant that provision to be codificatory (Cudak, paras 66-67) but the ILC never actually said such a thing. Article 11 was one of the most hotly debated provisions of the whole UNCSI. When one gives even a cursory look at state practice, it is inevitable to conclude that several of the immunity grounds listed in Article 11 do not codify customary law (in this sense see also the UK Supreme Court’s 2017 judgment in Benkharbouche).

If Article 11 grants, as I believe, an immunity broader than required by custom, there’s no shame in ‘un-conventional outcomes’ if these reflect custom better than the UNCSI. In other words, I am afraid that adherence to Article 11 is not a good yardstick in itself for measuring the quality of the Italian case law. The real issue is compliance with customary international law. De la Grana, which I mentioned above, is a bad decision not because it breached Article 7 per se but because Article 7(1)(b) codifies a customary rule on waivers. Conversely, for reasons that I have detailed elsewhere, I believe it is far from certain that Article 11(2)(a) reflects customary international law. So I would be less harsh at least with the decisions you criticize in section a) of your post.

Paolo Busco, Filippo Fontanelli says

December 29, 2021

Dear Riccardo and Pier,

Thanks for the comments, we were afraid the post would fall flat in the festive week – not so!

Your comments are all insightful. Whether Article 11 as a whole corresponds to custom, we dare not discuss in our post. You both doubt it, ECtHR and other courts believe it does. We only point out that the Italian courts also say so – but act as if they didn’t. This is a simpler matter of flagging bad decisions: they state a premise (application of Article 11), then do the opposite.

We do think and say, though, that at least Article 11.2(a) is custom (in good company: UK Supreme Court, Garnett, etc). Mostly to show that the “interference” criterion used by Italian courts in addition to “functions of the employee” is improper, irrespective of the general status of Article 11 as a whole.

But there’s more to our post than Article 11! See the points on Article 7, Article IX(4) SOFA, the Declaration, etc. These matters also evince an ‘unconventional approach’. The general situation is hopeless, but not serious...

We all agree, though, that Pier’s book is great and all readers should buy it, and on this uncontested view we wish you a great 2022!

Ciao,

Paolo and Filippo