Firebird Global Master Fund II Ltd v Republic of Nauru

• Jurisdiction: Australia Federal only
• Judge: French CJ,Kiefel J.,Gageler J.,Nettle,Gordon JJ
• Judgment Date: 02 December 2015
• Neutral Citation: [2015] HCA 43
• Court: High Court
• Docket Number: S29/2015
• Date: 02 December 2015

[2015] HCA 43

HIGH COURT OF AUSTRALIA

French CJ, Kiefel, Gageler, Nettle and Gordon JJ

S29/2015

Firebird Global Master Fund II Ltd

Appellant

and

Republic of Nauru & Anor

Respondents

Representation

T G R Parker SC with J A C Potts for the appellant (instructed by Clayton Utz Lawyers)

R A Dick SC with D J Barnett and N D Oreb for the first respondent (instructed by Ashurst Australia)

Submitting appearance for the second respondent

Intervener

J T Gleeson SC, Solicitor-General of the Commonwealth with N J Owens for the Attorney-General of the Commonwealth, intervening (instructed by Australian Government Solicitor)

Foreign Judgments Act 1991 (Cth), ss 6, 7, 17.

Foreign States Immunities Act 1985 (Cth), ss 9, 11(1), 11(3), 27(1), 30, 32(1), 32(3), 38, 41, Pt III.

Uniform Civil Procedure Rules 2005 (NSW), Pt 53.

Firebird Global Master Fund II Ltd v Republic of Nauru

Public international law — Foreign State immunity — Immunity from jurisdiction — Proceedings for registration of a foreign judgment — Where appellant obtained judgment in Tokyo District Court against first respondent as guarantor of certain bonds — Where appellant obtained order from Supreme Court of New South Wales that the foreign judgment be registered under Foreign Judgments Act 1991 (Cth) — Whether first respondent entitled to foreign State immunity from jurisdiction under s 9 of Foreign States Immunities Act 1985 (Cth) — Whether exception in s 11(1) of Foreign States Immunities Act for proceedings concerning ‘commercial transactions’ applies.

Public international law — Foreign State immunity — Immunity from execution — Where appellant obtained garnishee order against Australian bank where first respondent held bank accounts — Whether first respondent entitled to foreign State immunity from execution under s 30 of Foreign States Immunities Act — Whether property ‘in use’ or ‘set aside’ — Whether exception in s 32(1) of Foreign States Immunities Act for ‘commercial property’ applies.

Statutory interpretation — Implied repeal — Where Foreign States Immunities Act provides for foreign State immunity from jurisdiction in certain proceedings and Foreign Judgments Act requires a foreign judgment be registered on satisfaction of applicable criteria — Whether the operations of the two statutes are inconsistent such that the earlier statute is impliedly repealed to the extent of inconsistency.

Procedure — Service — Registration of foreign judgments — Where judgment debtor in registration proceedings is a foreign State — Whether Pt III of Foreign States Immunities Act requires service of summons prior to registration order being made under Foreign Judgments Act.

Words and phrases — ‘commercial property’, ‘commercial purposes’, ‘commercial transactions’, ‘concerns’, ‘in use’, ‘proceeding’, ‘restrictive doctrine’, ‘set aside’.

ORDER

• 1. Vary paragraph (1)(ii) of the order of the Court of Appeal of the Supreme Court of New South Wales made on 23 October 2014 by deleting the order that the summons filed on 9 May 2012 be dismissed and, in lieu thereof, order that order 1 of the orders of Young AJA made on 3 October 2014 be set aside insofar as it orders that the registration of the foreign judgment be set aside.

• 2. Appeal otherwise dismissed.

• 3. The parties are to file written submissions as to costs on or before 9 December 2015.

1 French CJ and Kiefel J. The appellant, Firebird Global Master Fund II Ltd (‘Firebird’), is the holder of bonds which were issued by the Republic of Nauru Finance Corporation (known as ‘RONFIN’), a statutory corporation established under the Republic of Nauru Finance Corporation Act 1972 (Nauru). RONFIN is no longer in existence 1. Firebird obtained judgment in the Tokyo District Court in the sum of ¥1,300 million together with interest and costs 2 against the first respondent, the Republic of Nauru (‘Nauru’), as guarantor for the bonds (‘the foreign judgment’).

2 Firebird subsequently obtained an order from the Supreme Court of New South Wales that the foreign judgment be registered under Pt 2 of the Foreign Judgments Act 1991 (Cth) (‘the Foreign Judgments Act’). The summons for the order for registration was not served on Nauru. The order for registration stated the period within which Nauru could apply to have the registration of the foreign judgment set aside. Further orders were subsequently made granting leave to serve the notice of registration outside Australia and on the Secretary for Justice of the Republic of Nauru.

3 There was some delay in effecting service in Nauru. After the time within which Nauru was permitted to file an application to set the registration of the foreign judgment aside had expired, Firebird obtained a garnishee order against the Australian bank in which the accounts of Nauru were kept. Nauru filed motions seeking to set aside the registration of the foreign judgment and the garnishee order. The question whether Nauru could apply to set aside the registration order notwithstanding that the time for doing so had passed no longer remains in issue.

4 Principal amongst the issues raised by Nauru on those motions was its entitlement under the Foreign States Immunities Act 1985 (Cth) (‘the Immunities Act’) to foreign State immunity from the jurisdiction of Australian courts and from execution against its property. Those issues and the others raised on this appeal involve the interaction of the Immunities Act with the Foreign Judgments Act.

The Immunities Act

5 Prior to the passing of the Immunities Act, the entitlement of foreign States to immunity from the jurisdiction of the courts of Australia was governed by the common law. In 1984 3 a report was prepared by the Australian Law Reform Commission (‘the ALRC’) following the reference to it of the subject of the law in Australia of foreign State immunity 4. At the commencement of the summary of its report 5, the ALRC observed there had been a progressive reduction in the scope of foreign State immunity in other jurisdictions. It recommended that the Commonwealth legislate on the subject, as other countries had done. The Immunities Act was based upon draft legislation prepared by the ALRC. It is now the sole basis for foreign State immunity in Australian courts 6.

6 The ALRC explained 7 that the central argument behind the shift away from the absolute immunity of a foreign State from the jurisdiction of local courts was that when a foreign State acts in a ‘commercial’ matter within the ordinary jurisdiction of local courts, it should be subject to that jurisdiction 8. The ALRC recommended an exception to the general immunity of a foreign State in relation to ‘commercial transactions’ and that the term should be defined objectively 9.

7 Section 9, which appears in Pt II (‘Immunity from jurisdiction’) of the Immunities Act, provides for the general immunity:

‘Except as provided by or under this Act, a foreign State is immune from the jurisdiction of the courts of Australia in a proceeding.’

8 Section 11 concerns ‘commercial transactions’. Sub-section (1) of s 11 provides:

‘A foreign State is not immune in a proceeding in so far as the proceeding concerns a commercial transaction.’

9 ‘Commercial transaction’ is defined by sub-s (3) of s 11:

‘In this section, commercial transaction means a commercial, trading, business, professional or industrial or like transaction into which the foreign State has entered or a like activity in which the State has engaged and, without limiting the generality of the foregoing, includes:

• (a) a contract for the supply of goods or services;

• (b) an agreement for a loan or some other transaction for or in respect of the provision of finance; and

• (c) a guarantee or indemnity in respect of a financial obligation; but does not include a contract of employment or a bill of exchange.’

10 The ALRC also recommended 10 that proceedings concerning certain other matters be the subject of exceptions to the general immunity from the jurisdiction of Australian courts. Included amongst these are proceedings concerning contracts of employment (s 12); personal injury and damage to property (s 13); intellectual property (s 15); membership of bodies corporate (s 16) and taxes (s 20). The proceedings the subject of these exceptions are also expressly required to have a territorial nexus with Australia. An exception from immunity in the case of the exercise by Australian courts of a supervisory jurisdiction over arbitrations and the enforcement of arbitral awards is also dealt with separately (s 17).

11 It might be thought that the argument supporting a restrictive immunity of the foreign State from jurisdiction should also apply to support a restrictive immunity from execution against its property. The ALRC, however, pointed out that, although the English courts appear to have treated the two immunities as

subject to the same common law principles, most jurisdictions distinguish between them 11.

12 Separate provision is made for immunity from execution for the property of a foreign State in Pt IV (‘Enforcement’) of the Immunities Act. Section 30 provides:

‘Except as provided by this Part, the property of a foreign State is not subject to any process or order (whether interim or final) of the courts of Australia for the satisfaction or enforcement of a judgment, order or arbitration award or, in Admiralty proceedings, for the arrest, detention or sale of the property.’

13 Section 32 provides:

‘(1) Subject to the operation of any submission that is effective by reason of section 10, section 30 does not apply in relation to commercial property.

…

(3) For the purposes of this section:

• (a) commercial property is property, other than diplomatic property or military property, that is in use by the foreign State concerned substantially for commercial purposes; and

• (b) property...