Pt Garuda Indonesia Ltd v Accc

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: French CJ,Gummow,Hayne,Crennan JJ
• Judgment Date: 07 September 2012
• Neutral Citation: 2012-0907 HCA B,[2012] HCA 33
• Docket Number: S343/2011
• Date: 07 September 2012

P.T. Garuda Indonesia Ltd

Appellant

and

Australian Competition & Consumer Commission

Respondent

[2012] HCA 33

French CJ, Gummow, Hayne, Heydon And Crennan JJ

S343/2011

HIGH COURT OF AUSTRALIA

P.T. Garuda Indonesia Ltd v Australian Competition & Consumer Commission

Public international law — Foreign State immunity — Sections 11(1) and 22 of Foreign States Immunities Act 1985 (Cth) (‘Act’) together provide that a separate entity of a foreign State is not immune from jurisdiction in a proceeding that concerns a ‘commercial transaction’ — Respondent commenced proceedings against appellant for conduct allegedly contrary to Pt IV of Trade Practices Act 1974 (Cth) — Whether appellant immune under Act from exercise of jurisdiction — Whether civil penalty proceeding concerns a ‘commercial transaction’.

Words and phrases — ‘commercial transaction’, ‘conferral of jurisdiction’, ‘jurisdiction’, ‘sovereign immunity’.

Constitution, s 51(xxix).

Foreign States Immunities Act 1985 (Cth), ss 3(1), 9, 10, 11, 22, 38, 40.

Judiciary Act 1903 (Cth), s 39B.

Trade Practices Act 1974 (Cth), Pt IV.

Representation

J T Gleeson SC with C H Withers for the appellant (instructed by Norton White)

S J Gageler SC, Solicitor-General of the Commonwealth with T M Howe QC and D J Roche for the respondent (instructed by Australian Government Solicitor)

1 French CJ, Gummow, Hayne And Crennan JJ. The appellant (‘Garuda’) argued this appeal on the uncontested footing that it is a ‘foreign corporation’ within the meaning of s 51(xx) of the Constitution. The controversy turns on its character as an emanation of the Republic of Indonesia.

2 Ninety five point five per cent of the issued shares in Garuda are owned directly by the Republic of Indonesia, the minority shareholding is held by government controlled corporations associated with Indonesian airports, and at the relevant times four of the five members of its Board of Commissioners were senior officials of the Indonesian government. That state of affairs is said to attract Pt II of the Foreign States Immunities Act 1985 (Cth) (‘the Act’) and thereby to render Garuda ‘immune’ from the exercise of jurisdiction of the Federal Court of Australia in a proceeding for contravention of Pt IV of the Trade Practices Act 1974 (Cth) (‘the TPA’) 1 instituted against it in 2009 by the respondent (‘the ACCC’).

3 A judge of the Federal Court (Jacobson J) dismissed a motion by Garuda that the proceeding be stayed or dismissed 2. The Full Court (Lander, Greenwood and Rares JJ) granted Garuda leave to appeal but dismissed the appeal 3.

4 For the reasons which follow the appeal by Garuda to this Court should be dismissed.

The common law

5 In the Restatement Third of the Foreign Relations Law of the United States, adopted in 1986 4, it is said with reference to the rule of absolute immunity and the development of a more restrictive view of immunity:

‘Until the twentieth century, sovereign immunity from the jurisdiction of foreign courts seemed to have no exceptions. However, as governments increasingly engaged in state-trading and various commercial activities, it was urged that the immunity of states engaged in such activities was not required by international law, and that it was undesirable: immunity deprived private parties that dealt with a state of their judicial remedies, and gave states an unfair advantage in competition with private commercial enterprise.’

6 To this it may be added that in Playa Larga (Owners of cargo lately laden on board) v I Congreso del Partido (Owners)5 Lord Wilberforce observed that the ‘restrictive theory’ had developed from the willingness of states to enter into commercial and other private law transactions and added:

‘It appears to have two main foundations: (a) It is necessary in the interest of justice to individuals having such transactions with states to allow them to bring such transactions before the courts. (b) To require a state to answer a claim based upon such transactions does not involve a challenge to or inquiry into any act of sovereignty or governmental act of that state. It is, in accepted phrases, neither a threat to the dignity of that state, nor any interference with its sovereign functions.’

The scheme of the Act

7 The Act was preceded in 1984 by a comprehensive Report 6 (‘the Report’) by The Law Reform Commission (‘the LRC’) 7. In Ch 2 of the Report, the LRC traced the development of common law doctrine from the rule of absolute immunity to a more restrictive view of immunity. The Report followed the enactment of legislation in the United States and the United Kingdom and preceded that in Canada, to which reference will be made below. The Outline contained in the Explanatory Notes for the proposed legislation, which is contained in Appendix A to the Report, identified the purpose of the proposed Australian legislation as being to reflect the more restrictive view of the common law immunity which had been taken in other countries and adopted in legislation.

8 Part II of the Act (ss 9–22) is headed ‘Immunity from jurisdiction’. These provisions do not affect any immunity or privilege conferred by or under other federal laws including the Consular Privileges and Immunities Act 1972 (Cth), the Defence (Visiting Forces) Act 1963 (Cth), and the Diplomatic Privileges and Immunities Act 1967 (Cth). This is the effect of s 6 of the Act. However, the general provision in s 9 is exhaustive of the common law and indicates that statute provides the sole basis for foreign state immunity in Australian courts 8. This is an important consideration for Garuda in this litigation. It is only by bringing itself within the operation of the Act that Garuda can establish a claim to immunity.

9 Section provides:

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

10 What is ‘a foreign State’ within the meaning of s 9 and by what means is it to be identified? The term ‘foreign State’ is defined in s 3(1) so as to identify ‘an independent sovereign state’ and ‘a separate territory (whether or not it is self-governing) that is not part of an independent sovereign state’. Section 40 gives effect to what has been called ‘the one voice principle’ respecting foreign State recognition 9. A certificate under s 40 by the responsible Minister that a specified country is, or was on a specified day, ‘a foreign State’, or that a specified territory is or is not, or was or was not, part of a foreign State, is admissible as evidence of the facts and matters stated in it; moreover, the certificate is conclusive of those facts and matters.

11 The conferral of immunity by s 9 is expressly subject to other provisions made by the Act. The critical provision is s 11(1):

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

The phrase ‘in so far as’ indicates that, as to part, the proceeding may not concern a commercial transaction. The present appeal, however, has been argued on an ‘all or nothing’ basis.

12 At common law, a question would be presented whether Garuda could be identified with Indonesia as a ‘foreign State’ for the purposes of s 11(1) 10. However, by force of the specific provision made by s 22, s 11(1) applies to ‘a separate entity of a foreign State’. The term ‘separate entity’ is relevantly defined in s 3(1) as a body corporate, not established under Australian law, which is an agency or instrumentality of a foreign State but is not a department or organ of the executive government thereof. No provision is made by s 40 for the issue by the Minister of a certificate respecting status as a ‘separate entity’.

13 A claim to ‘immunity’ from ‘jurisdiction’ will be a matter ‘arising under’ a federal law, within the meaning of s 76(ii) of the Constitution, and thus attract the exercise of federal jurisdiction. The subject matter of Pt II of the Act itself relates to the conduct of foreign relations and so to ‘external affairs’ within the meaning of s 51(xxix) of the Constitution. There appears to be no dispute respecting these basic propositions.

‘Immunity’ from ‘jurisdiction’

14 However, something more should be said immediately concerning the term ‘jurisdiction’, to identify that from which Garuda claims ‘immunity’ under the Act. ‘Jurisdiction’ is a generic term used in a variety of senses, some of which relate to matters of geography, some to persons and procedures, and others to constitutional and judicial structures and powers such as those sourced in Ch III of the Constitution.

15 It was said in the joint reasons in Lipohar v The Queen11 that:

‘“Jurisdiction” may be used (i) to describe the amenability of a defendant to the court's writ and the geographical reach of that writ, or (ii) rather differently, to identify the subject matter of those actions entertained by a particular court, or, finally (iii) to locate a particular territorial or “law area” 12 or “law district” 13.’

16 Thus, a court may be seised of jurisdiction in the sense of the subject matter of a particular proceeding, whether it be an action in contract or tort at common law or, as here, for contravention of a statutory norm of conduct, or it be an appellate process of a particular kind, such as that identified in s 73 of the Constitution. Because, as Katz J pointed out in Khatri v Price14, any Australian court is a court of limited jurisdiction in this sense, it has been said that the court must be satisfied that its jurisdiction has been properly invoked. So, in Cockle v Isaksen15 this Court entertained argument by an intervener challenging the competency of an appeal in circumstances where both parties accepted that the appeal was competent.

17 However, in s 9 and elsewhere in the Act the...