Background
Concept of sovereign immunityWhat is the general approach to the concept of sovereign immunity in your state?
India has adopted a restricted concept of sovereign immunity. Pursuant to the Code of Civil Procedure of India, foreign states and their organs and instrumentalities can be sued with the prior written consent of the Indian government. However, such consent may not be required where the matter is governed by a special law (for, eg, the Carriage by Air Act 1972, Consumer Protection Act 1986) or where the legal proceedings are not in the nature of a suit, such as an industrial dispute under the Industrial Disputes Act 1947. In its 2011 judgment in Ethiopian Airlines v Ganesh Narain Saboo (Ethiopian Airlines), the Supreme Court of India reiterated the consistent view in India that the doctrine of sovereign immunity in India was not absolute, and that foreign states do not have immunity from judicial proceedings in cases involving their commercial and trading activities and contractual obligations undertaken by them in India.
Legal basisWhat is the legal basis for the doctrine of sovereign immunity in your state?
The legislative recognition of the doctrine of sovereign immunity in India can be found in the following provisions and statutes:
- section 86 of the Code of Civil Procedure 1908 (CPC), which provides that no suit may be instituted against foreign states in India, except with the prior written consent of the government; and
- the Diplomatic Relations (Vienna Convention) Act 1972, which incorporates certain specified immunities available to diplomatic missions and their members in India pursuant to the Vienna Convention on Diplomatic Relations, 1961. A few articles of the Convention, including articles 29, 30, 31, 32, 37, 38 and 39, have been given the force of law in India by extending the scope of sovereign immunity to diplomatic agents, their family, members of staff and servants.
It is noteworthy that in Mirza Ali Akbar Kasani v United Arab Republic & Anr, a five-judge bench of the Supreme Court held that section 86(1) CPC modifies the international doctrine of sovereign immunity to a certain extent, and when a suit is instituted against a foreign state with the consent of the government, it is not open for a foreign state to rely upon the doctrine of sovereign immunity under international law.
Multilateral treatiesIs your state a party to any multilateral treaties on sovereign immunity? Has the state made any reservations or declarations regarding the treaties?
On 12 January 2007, India became a signatory to the UN Convention on Jurisdictional Immunities of States and Their Property, 2004. However, it is important to emphasise that India has not proceeded to ratify this Convention and that the Convention itself is not in force yet.
Jurisdictional immunity
Domestic lawDescribe domestic law governing the scope of jurisdictional immunity.
The domestic law governing jurisdictional immunity of foreign states is prescribed in section 86(1) of the CPC. Section 86(1) provides that ‘no foreign state may be sued in any court otherwise competent to try the suit except with the consent of the central government [government] certified in writing by a Secretary to that Government’; implying thereby that there is immunity in the favour of foreign states from the jurisdiction of Indian courts, which survives unless the government consents to a suit against a foreign state. However, the proviso to section 86(1) exempts suits by tenants of immovable properties held by foreign states from the requirement of obtaining the government’s prior consent.
Further, section 86(2) provides that the government shall not consent to a suit against a foreign state unless certain conditions exist. Per section 86(2), the government may only consent to a suit against a foreign state where the foreign state:
- has instituted a suit in a court against the person desiring to sue the foreign state;
- by itself or another, trades within the local limits of the jurisdiction of the court;
- is in possession of immovable property situated within those limits and is to be sued with reference to such property or for money charged thereon; or
- has expressly or impliedly waived the privilege accorded to it.
In Veb Deautfracht Seereederei Rostock (DSR Lines) a Department of the German Democratic Republic v New Central Jute Mills Co Ltd and Ors (New Central Jute Mills), the Supreme Court observed that the object of making the government’s consent a mandatory requirement for instituting a suit against a foreign state was to ensure that parties with legitimate claims are not left without a remedy, as well as that sovereign states are not subject to frivolous and vexatious litigation in Indian courts.
Section 86(6) of the CPC further stipulates that the government is obligated to provide a reasonable opportunity of being heard to a person requesting the government’s consent under section 86(1). In this context, the Supreme Court has held that the power conferred on the government to refuse consent should be carefully exercised and so long as a case fulfils the conditions specified in section 86(2), the government should normally accord the consent to sue. It has been held that the power to refuse consent must be exercised in accordance with the principles of natural justice and the order refusing the consent should disclose reasons for the refusal (see Harbhajan Singh Dhalla v. Union of India). Further, in disputes involving commercial transactions and contractual breaches by foreign states, or their undertakings, the position is that there is no immunity (see, New Central Jute Mills, Harbhajan Singh Dhalla v Union of India, Ethiopian Airlines, Qatar Airways v Shapoorji Pallonji & Co).
In addition to foreign states (including their organs, departments, instrumentalities), per section 86(4) of the CPC, the immunity under section 86 is also available to rulers, ambassadors, envoys, high commissioners of foreign states, and any such member of the staff of the foreign state, or the staff or retinue of the ambassador or envoy or the high commissioner of a foreign state, as the government may specify.
Thus, the privilege of sovereign immunity in India extends to matters relating to the performance of sovereign functions of foreign states and excludes matters pertaining to commercial or contractual transactions undertaken by foreign states and their instrumentalities in India. Further, the protection of section 86, CPC is applicable only in relation to suits proper and does not extend to legal proceedings that are not in the nature of suits or which are governed by special statutes.
State waiver of immunity or consentHow can the state, or its various organs and instrumentalities, waive immunity or consent to the exercise of jurisdiction?
As stated in question 4, a foreign state (including its instrumentalities) can waive its sovereign immunity or consent to the exercise of jurisdiction expressly or impliedly. Instances of implied waiver would include cases where the foreign state institutes a suit of its own accord or where a foreign state participates in a suit instituted against it without raising the defence of sovereign immunity for a substantial time, as was the case in Kenya Airways v Jinibai B Kheshwala. In that case, while accepting that Kenya Airways was entitled to sovereign immunity, the Bombay High Court held that its participation in the suit for about 16 years before claiming immunity amounted to a deemed waiver of the immunity.
Foreign states may also waive their immunity by entering into treaties that dilute the scope of sovereign immunity and make states and their instrumentalities amenable to the jurisdiction of foreign courts. This can be seen from the Ethiopian Airlines case wherein the Supreme Court of India found that by signing the Convention for The Unification of Certain Rules Relating to International Carriage by Air 1929 Ethiopia had expressly waived the Ethiopian Airlines’ right to immunity in matters relating to carriage by air.
In which types of transactions or proceedings do states not enjoy immunity from suit (even without the state’s consent or waiver)? How does the law of your country assess whether a transaction falls into one of these categories?
As far as statutory exceptions to sovereign immunity are concerned, the proviso to section 86(1) of the CPC provides that the government’s consent is not required in suits instituted by tenants of immovable property held by foreign states. Thus, foreign states do not enjoy sovereign immunity in tenancy disputes wherein the relevant state is the landlord as regards the tenant. Further, immunity is not available in cases involving commercial and contractual transactions.
One of the earliest instances of an Indian court refusing sovereign immunity in cases of commercial activity by a foreign state is a 1977 decision of the Bombay High Court in State of Maharashtra v Czechoslovak Airlines. The court, after recognising the global trend towards restricted immunity, held that immunity could not be claimed even though the respondent airline was a department of a sovereign state on account of the fact that the respondent airline’s objectives and activities were purely commercial in nature. This line of reasoning has been adopted consistently by courts across India including the Supreme Court’s landmark decisions in New Central Jute Mills [1993] and Ethiopian Airlines [2011]. The observations of the High Court of Gujarat in Umedmiya R Rathod and Ors v State of Gujarat [2017] serve as a recent example of an Indian court distinguishing between sovereign and non-sovereign functions for the purpose of immunity.
Sovereign immunity has also been held not to apply to cases involving tenancy disputes in immovable properties where the foreign state is the tenant (Syrian Arab Republic v AK Jajodia). Under the provisions of section 86(2)(c) CPC, the government is also empowered to grant consent to sue for such disputes.
Generally, the first assessment as to whether a particular transaction or dispute falls outside the purview of immunity is done by the government when a person intending to sue a foreign state approaches it seeking its consent. The government, while making its assessment, is expected to holistically consider the facts and circumstances of the case and proceed in accordance with the principles of natural justice by affording the applicant a reasonable opportunity to be heard before refusing the consent, as provided for in section 86(6) of the CPC, and by providing its reasons for the refusal, if any. The decision cannot be arbitrary or on whimsical grounds. In Rita Solomon v The State of Italy (Rita Solomon), a May 2019 judgment, the High Court of Delhi has read into section 86(6) the requirement to give an opportunity of hearing even to the foreign state before consent to sue is granted by the government. This judgment also holds that the consent order should also refer to the grounds as provided in section 86(2) of the CPC, on which the consent is based. The grant or refusal of the consent to sue by the government is also subject to judicial review by courts. This is the second level of assessment where the decision of the government may be overruled and the matter remanded to the government for fresh consideration. As a general rule, Indian courts carry out a case-specific analysis to determine whether a given transaction, claim or dispute is of sovereign or non-sovereign nature for the purpose of deciding whether a foreign state can claim immunity from a court’s jurisdiction in India.
Further, foreign states do not enjoy immunity in proceedings that are not suits or which, whether suits or not, are governed by special statutes. For illustration, immunity has been held not to apply to suits under the Carriage by Air Act 1972, and to proceedings such as industrial disputes, admiralty actions in rem, consumer disputes, court proceedings relating to arbitrations, derivative actions for protection of minority rights under the company law, etc.
If one of the exceptions to sovereign immunity set out above applies, is there any related principle that could prevent a court having jurisdiction over the state?
Since the exceptions to sovereign immunity in India are essentially premised on non-sovereign acts and functions of foreign states, and largely on the commercial contractual nature of transactions, once a court is found to have jurisdiction on account of application of one of the exceptions it is unlikely that any other principal or doctrine would interfere with the exercise of such jurisdiction. In Union of India v Bilash Chand Jain and Ors, the Calcutta High Court observed that if on examination of any transaction it appears that the state acted in the matters in question as a sovereign, then courts would not exercise jurisdiction. However, the court proceeded to also observe that it would be difficult to establish this in cases involving ordinary commercial matters. Further, if the contract in question confers exclusive jurisdiction on some foreign court, then, subject to other facts and circumstances, Indian courts may refuse to entertain the dispute in view of such conferment. It may be noted that there is no precedent in Indian law where after a case has been held to fall under an exception to sovereign immunity, the court has been prevented from assuming jurisdiction due to any other doctrine or principle.
Proceedings against a state enterpriseTo what extent do proceedings against a state enterprise or similar entity affect the immunity enjoyed by the state? Is there precedent for piercing the corporate veil to subject the state itself to those proceedings?
Under Indian law, a state enterprise or a similar entity discharging public functions is treated on the same footing as the state insofar as its amenability to court’s jurisdiction is concerned. There are a number of precedents where corporate veil has been pierced in India to ascertain whether a given entity is equivalent to state, by virtue of the ownership and control of the state on such entity or the nature of functions discharged by it. However, such exercise has been directed towards determination of the fact whether the given entity would be entitled to immunity (Kenya Airlines case, New Central Jute Mills case) and there is no precedent for piercing the corporate veil to subject a foreign state to the proceedings.
StandingWhat is the nexus the plaintiff needs to have standing to bring a claim against a state?
Indian law invariably requires plaintiffs to establish their locus standi in the proceedings initiated by them. To bring a claim against a state, the plaintiff would at the very least need to show that a cause of action has arisen in its favour and against the state. Cause of action means the bundle of facts that a plaintiff needs to prove to succeed in its claim and would include the fact of its dealings with the state in relation to which any loss or injury has been caused to it, or any right or title vesting in it flowing from the state, in respect of which the claim is made. Additionally, as specified in the previous answers, in the case of a suit, the plaintiff will have to establish the fulfilment of requirements in section 86 of CPC alongside meeting the jurisdictional requirements of the court.
Nexus of forum courtWhat is the nexus the forum court requires to exercise jurisdiction over a state if the property or conduct that forms the subject of the claim is outside the forum state’s territory?
While such an examination will be fact extensive and the courts will exercise their prudence in examining whether the scope of their jurisdiction permits their adjudication, generally, Indian courts do not have extraterritorial jurisdiction.
Interim or injunctive reliefWhen a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what interim or injunctive relief is available?
There is no specific carveout for interim or injunctive relief being granted in cases where a state is party and the provisions on interim relief under the general civil law apply.
The grant of interim relief merits specific evaluation of prima facie cases of the parties by courts. Interim relief can be in the form of injunction orders, directive orders, interim stay orders, etc. Courts adjudicate applications for interim relief of injunction by conducting a review of the following factors:
- whether there is a prima facie case in favour of the party seeking interim relief;
- if irreparable injury is likely to be caused to the applicant if the interim relief is not granted; and,
- if the balance of convenience lies in favour of the party requesting for the interim relief.
Once the dispute is subject to an Indian court’s jurisdiction and if the court grants interim relief then the parties to the proceeding are bound to comply with it.
Final reliefWhen a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what type of final relief is available?
Final relief is granted by Indian courts on the basis of the facts and merits of a case. The final relief can be in the nature of specific performance, damages, permanent injunctions, recovery of monies, eviction from immovable property, etc.
Service of processIdentify the court or other entity that must be served with process before any proceeding against a state may be issued.
Indian law does not identify a specific court that must be served with process before proceedings against a state or its organs and instrumentalities are initiated. However, as stated in previous answers, the government’s prior written consent is required before instituting a suit against a state under section 86 of CPC. Furthermore, section 8 of The Diplomatic Relations (Vienna Convention) Act, 1972 prohibits entry of public servants and agents of the government or any public authority from entering the premises of a diplomatic mission for the purpose of serving legal process without the consent of the head of the mission. Such consent may be obtained through the Ministry of External Affairs.
How is process served on a state?
Process may be served on a state through its diplomatic mission with the prior consent of the head of the mission obtained through Ministry of External Affairs.
Judgment in absence of state participationUnder what conditions will a judgment be made against a state that does not participate in proceedings?
When a state has been made party to a case and fails to appear for the proceedings before the court despite the evidence of service of process on it, the court may pass an ex parte judgment based on the material on record and merits of the plaintiff’s case. There is at least one precedent of an ex parte decree having been passed against a state enterprise in India. An ex parte decree for recovery of monies was passed by the High Court of Delhi against Aeroflot, the state-owned airline of the erstwhile Soviet Union. However, the said decree was subsequently set aside during the execution proceedings as the court found that the suit was incompetent owing to the lack of government’s consent as required under section 86, CPC (Deepak Wadhwa v Aeroflot).
Enforcement immunity
Domestic lawDescribe domestic law governing the scope of enforcement immunity.
While there is no exhaustive Indian legislation pertaining to enforcement immunity, section 86(3) of the CPC provides that no decree shall be executed against the property of any foreign state, except with the consent of the government. The requirement of such consent is over and above the requirement of the consent to sue. Subject to the receipt of the government’s consent, a decree may be executed against a state.
Additionally, section 86(5) of CPC specifies that the following persons shall not be arrested under any provision of the CPC, namely: (i) any ruler of a foreign state; (ii) any ambassador or envoy of a foreign state; (iii) any High Commissioner of a Commonwealth country; or (iv) any such member of the staff of the foreign state or the staff or retinue of the Ruler, ambassador or envoy of a foreign state or of the High Commissioner of a Commonwealth country, as the government may, by general or special order specify in this behalf.
Application of civil procedure codesWhen enforcing against a state, would debt collection statutes and the enforcement sections of civil procedure codes or similar codes also apply?
The applicability of the CPC has been demonstrated in the previous answers. Section 86(3) is the relevant provision for initiating enforcement and execution of a decree against a foreign state and mandates the requirement of obtaining prior written approval of the government. Once the consent is granted, the provisions in the CPC for execution of decrees apply subject to the provisions of section 86(5) of the CPC and the immunity available to foreign states in respect of some of their properties.
There is no precedent adjudicating upon the application of Indian debt collection statute (ie, the Recovery of Debts and Bankruptcy Act 1993 (DRT Act)) to execution of a decree obtained against a foreign state. In Ethiopian Airlines, the Supreme Court held that since the Consumer Protection Act 1986 (CPA) did not provide for specific application of section 86, CPC to proceedings before consumer forums, section 86 was not applicable to such proceedings. This ruling was delivered in light of section 13(4) of the CPA, which incorporates certain specific CPC provisions into the CPA. Since the DRT Act also contains a provision similar to section 13(4) of the CPA, that is, section 22, which incorporates, inter alia, the same provisions of the CPC into the DRT Act, but not section 86, it can be said that in view of the ruling in Ethiopian Airlines, section 86, CPC would not apply to proceedings under the DRT Act. This would mean that enforcement proceedings on the basis of a decree obtained against a foreign state can be brought under the DRT Act.
Consent for further enforcement proceedingsDoes a prior submission to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?
Pursuant to section 86(3) of the CPC, the government’s permission would be required for execution against the property of a state. Hence, a prior submission to the jurisdiction of a court does not constitute consent for further enforcement against the property of the state.
Property or assets subject to enforcement or executionDescribe the property or assets that would typically be subject to enforcement or execution.
India is a party to the Vienna Convention on Diplomatic Relations 1961 and has given effect to the same by enacting The Diplomatic Relations (Vienna Convention) Act 1972. Pursuant to this Act, the properties and assets specified thereunder are immune from enforcement or execution. These properties and assets include the premises of the diplomatic mission, including the furnishings and other property thereon, the means of transport of the mission and the private residence of a diplomatic agent, including the furnishings and other property thereon.
The Calcutta High Court in Union of India & Ors v Bilash Chand Jain & Ors (Bilash Chand) has held that any checks over and above the restrictions specified in the Vienna Convention Act are not necessary for executing decrees against foreign states. Moreover, the court held that an execution applicant need not specify the property being sought to be acted against in execution proceedings while applying for the government’s consent to the execution proceedings. While this judgment was subsequently set aside by the Supreme Court, the point before the Supreme Court was whether the High Court could have directed the government to grant the consent for execution proceedings. The Supreme Court set aside the High Court’s direction issued to the government to grant the consent and remanded the matter to the government to reconsider the request for grant of the consent.
Assets covered by enforcement immunityDescribe the assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations adopted by the courts.
See question 19.
Explain whether the property or bank accounts of a central bank or other monetary authority would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes.
While India is a signatory to the UN Convention on Jurisdictional Immunities of States and Their Property, 2004, which specifically excludes properties of central banks or other monetary authority of a state from being considered as being in use or intended for use for commercial purposes, this Convention is not yet in force.
Test for enforcementExplain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted.
To the best of our understanding, there is no such test developed by domestic jurisprudence.
Service of arbitration award or judgmentHow is a state served with process or otherwise notified before an arbitration award or judgment against it (or its organs and instrumentalities) may be enforced?
A state may be notified of the impending enforcement proceedings for a decree or award when the decree holder approaches the government for consent. Pursuant to the judgment of the High Court of Delhi in the Rita Solomon case, the foreign state is to be given a hearing before the consent to sue under section 86(1) is granted by the government. The same position should apply to the grant of consent for execution under section 86(3). The procedure for service of process shall be the same as stated in question 14.
History of enforcement proceedingsIs there a history of enforcement proceedings against states in your jurisdiction? What part of these proceedings is based on arbitral awards?
There are very few reported cases involving enforcement proceedings against foreign states in India. A prominent reason for this may be that execution proceedings are usually carried out before district courts, whose decisions are not reported. Additionally, there are no official statistics as to how many arbitral awards obtained against foreign states have been enforced in India.
Public databasesAre there any public databases through which assets held by states may be identified?
There are no known public databases through which assets held by states may be identified in India.
Court competencyWould a court in your state be competent to assist with or otherwise intervene to help identify assets held by states in the territory?
Subject to the enforcement proceedings against a foreign state being allowed to be initiated, where the decree is for payment of money and it remains unsatisfied for a period of 30 days, the court may require the foreign state to file an affidavit giving the particulars of its assets, which may help in identifying the assets held by the state in India.
Immunity of international organisations
Specific provisionsDoes the state’s law make specific provision for immunity of international organisations?
India is a signatory to the Convention on the Privileges and Immunities of the United Nations, 1946 and has given effect to the privileges and immunities granted thereunder via the United Nations (Privileges and Immunities) Act 1947 (UN Privileges Act). Pursuant to section 3 of this Act, the government may extend the privileges and immunities granted under the Act to other international organisations as well. Some of the international organisations to which the privileges and immunities have been extended include International Solar Alliance, Afro Asian Rural Reconstruction Organization, Asian and the Pacific Centre for Transfer of Technology, etc.
Domestic legal personalityDoes the state consider international organisations headquartered or operating in its territory as enjoying domestic legal personality and could such organisations be subjected to proceedings before a court or arbitral tribunal?
India recognises the juridical personality of international organisations headquartered or operating in its territory. By virtue of section 2 of the Schedule to the UN Privileges Act, international organisations covered thereunder, and their property and assets, enjoy immunity from every form of legal process except in cases when the immunity has been explicitly waived. Thus, such international organisations cannot be subjected to proceedings before a court unless they expressly waive immunity. For example, in a recent case before the High Court of Delhi the United Nations was arraigned in a writ petition, along with the Union of India, by an employee for declaring as null and void the enquiry process and disciplinary proceedings initiated against him and his consequent suspension of service without pay. The court held that the immunity available to the United Nations is all comprehensive and all applicability of national laws to it is subject to the waiver of immunity (Sanjaya Bahel v Union of India & Anr).
Enforcement immunityWould international organisations in the state enjoy enforcement immunity? Are there any cases where debtors sought to enforce against a state by attaching or executing assets held by international organisations?
In India, the international organisations covered under the UN Privileges Act enjoy absolute immunity against enforcement. Section 2 of the Schedule to the UN Privileges Act clearly states that any waiver of immunity shall not extend to execution proceedings. Although there is no case so far where enforcement against a state was sought by attaching or executing assets held by international organisations (such a situation may not arise at all as Indian law treats international organisations and states as different species of juristic persons), it may be noted that Indian courts have upheld the privileges and immunities vested in international organisations (PS.Ochani v World Health Organization and Ors, Sanjaya Bahel v Union of India).
Updates & Trends
Recent developmentsAre there any other current developments or emerging trends that should be noted?
Key developments of the past year30 Are there any emerging trends or hot topics in your jurisdiction?There have been a few cases recently where the Indian courts have assessed jurisdictional immunity of the states in the context of performance of non-sovereign functions. It is noteworthy that while under section 86(6) of CPC, the government is required to give a reasonable opportunity to be heard to the person making a request for consent for filing a suit against a foreign state, in the Rita Solomon case, the High Court of Delhi held that the government is also required to provide an opportunity of hearing to the foreign state before deciding the application seeking the consent. Additionally, while the statutory intendment and existing position was that in cases where the government denied the consent for filing a suit against a foreign state, it was required to give a reasoned order, in Rita Solomon the court held that even in the cases where the government chooses to grant the consent for filing a suit against a foreign state, it is required to specify the condition out of the four conditions specified in section 86(2) of the CPC that forms the basis for the decision.
Further, in a recent decision (Sanjaya Bahel v Union of India), the High Court of Delhi has also upheld the absolute immunity available to international organisations in India. In this case, the court held that the immunity vested in an international organisation is all comprehensive and the application of national laws is subject to the waiver of the immunity by the international organisation.
