1. Can I challenge the actions of a state which unilaterally exits the Eurozone?

It is unlikely that a state’s decision unilaterally to exit the Eurozone could be challenged in any domestic courts because, even in those jurisdictions that permit foreign states to be sued before their courts, a decision to exit the Eurozone or to change its currency would be considered to be the exercise by that state of a sovereign act. Even in countries which permit exceptions to state immunity, these are not matters about which a state may generally be sued.

2. What is sovereign immunity? 

Sovereign immunity, also known as state immunity, is a legal doctrine by which the courts of one state cannot exercise jurisdiction over another state (including for this purpose its state-owned enterprises), either to adjudicate a dispute involving that state or to enforce a judgment order or award against that state.

3. When might issues of state immunity be relevant? 

State immunity issues could be relevant if:

  • your contractual counterpart is a state or a state-owned enterprise, and has defaulted or is likely to default on its obligations to you (and you need to consider enforcement issues); or
  • if you have a judgment order or arbitration award against the assets of a state or state-owned enterprise.

4. What might the impact of state immunity be? 

The nature of the impact of the doctrine will depend on the precise circumstances in each case.

The precise scope of state immunity is determined by the law of the forum - the location of any proceedings - not the law of the contract.

In some states, the immunity is absolute. In other jurisdictions immunity is restricted, which means that the immunity is absolute save for specific exceptions. Common exceptions include advance waivers of immunity by the state of immunity from jurisdiction and enforcement and that a state may be sued in respect of commercial transactions and any judgment enforced against property in use for commercial purposes.

There are different rules relating to immunity from adjudication of disputes and immunity from enforcement. It may be possible to sue a state and obtain judgment (adjudication) but not be able to enforce that judgment (enforcement).

Although sovereign debt contracts commonly contain waivers of immunity from suit any such waiver will not extend to enforcement unless the waiver clearly states so. Even if there is no blanket bar on enforcement, assets held for non-commercial purposes or assets which are ring fenced from enforcement may still be protected by the immunity.