Dutch Supreme Court rules that property of foreign states is presumed to be immune from attachments and execution (Dutch Supreme Court, 30 September 2016, ECLI:NL:HR:2016:2236). Prejudicial question (prejudiciële vraag) on the scope of state immunity in cases of attachments and execution regarding state property.

According to the Dutch Supreme Court, attachments cannot be levied against property of a foreign state unless it is established that the property is in use or intended for non-governmental purposes. It is up to the claimant to state and prove that attachments can be levied against the property of a foreign state. This applies to prejudgment attachments (conservatoir beslag) as well as executory attachments (executoriaal beslag). The Supreme Court applied this prejudicial ruling of 30 September in two regular appeal cases dated 14 October 2016 (ECLI:NL:HR:2016:2354 and ECLI:NL:HR:2016:2371).

Facts

The US company Morning Star International Corporation (“MSI”) issued proceedings against the Republic of Gabon (“Gabon”) for a claim worth approximately € 22.3 million. In order to secure its claim, MSI requested leave from the Amsterdam District Court to levy third party attachments against Gabon. After the Amsterdam District Court granted leave, the bailiff (deurwaarder) levied the attachments and informed the Ministry of Security and Justice in accordance with the Dutch Code of Civil Procedure (Wetboek van Rechtsvordering).

However, the Minister of Security and Justice held that the attachments were contrary to obligations under international law and ordered the attachments to be lifted. According to the Minister, the attachments were contrary to the presumption that foreign state property is immune from execution, a principle that follows from the sovereignty of states. The Minister further stated that attachments can only be levied against property of a foreign state t if it is established that the property is in use or intended for non-governmental purposes. This also applies to prejudgment attachments (conservatoir beslag) as well as executory attachments (executoriaal beslag).

In light of the dilemma of his statutory obligation to perform his official duty to levy the attachments on the one hand and the order of the Minister to lift the attachments on the other, the bailiff initiated summary proceedings between MSI, Gabon and the Dutch State.

Prejudicial questions

In these summary proceedings, the court raised prejudicial questions to the Supreme Court. Briefly summarized, these questions concern (i) the scope of state immunity in cases of execution regarding state property, (ii) the relevance of the distinction between conservatory and executory attachments, (iii) the burden of proof regarding the applicability of an exception to the principle of state immunity, and (iv) the relationship between the presumption of state immunity versus Article 6 EHRM and Dutch attachment law.

Scope of state immunity

First the Supreme Court stated that the execution of judgments is limited by exceptions recognized in international customary law (international gewoonterecht) and referred to Article 13a General Provisions Act (Wet Algemene Bepalingen). The Supreme Court explained that although there is no treaty applicable between the Netherlands and Gabon, immunity of state property from execution which is not absolute – follows from international customary law. Although this treaty did not come into force and was not ratified, the Convention on Jurisdictional Immunities of State and their Property (“UN Treaty”) can partly be considered as a codification of international customary law.

According to this Treaty an exception to state immunity applies, among other things, for executory attachments on state property that is not in use or intended for non-governmental purposes. Although under the UN Treaty this specific exception does not apply for conservatory attachments, the Supreme Court confirmed that this part the UN Treaty does not reflect international customary law. As regards state immunity, there should not be a distinction between conservatory and executory attachments. As a result, property of a foreign state is not eligible for attachments and execution unless it is established that the intended use of the property is not irreconcilable with the attachments or execution.

Burden of proof

Furthermore, the Supreme Court held that it follows from the purpose of this rule (i.e. the presumption) that the burden of proof regarding the susceptibility of attachments on state property rests with the creditor that wants to levy the attachments. It is not up to the state concerned to provide information proving that the property is not eligible for attachments. Even if the state concerned fails to appear in the proceedings, it is up to the creditor to state and show that (it is likely that) attachments can be levied on the state property concerned.

No violation of Article 6 ECHR or Dutch attachment law

Finally, the Supreme Court addressed whether the presumption of state immunity is in violation of Article 6 ECHR and is an unacceptable interference with Dutch attachment law. Both questions were answered in the negative. According to settled case law by the ECHR, granting immunity of jurisdiction and execution in accordance with international customary law does not constitute a violation of Article 6 ECHR nor does it constitute an unacceptable interference with Dutch attachment law as the exception is provided for by law (i.e. General Provisions Act) and follows from international customary law.

Application of prejudicial ruling

The Supreme Court applied this prejudicial ruling of 30 September in two regular appeal cases dated 14 October 2016 (ECLI:NL:HR:2016:2354 and ECLI:NL:HR:2016:2371).