PRINCIPLES OF ABSOLUTE AND LIMITED JURISDICTIONAL IMMUNITY UNDER TURKISH LAW

01.04.2019

 

“Principles of Absolute and Limited Jurisdictional Immunity”; the concept of “absolute jurisdictional immunity” based on the principle of state sovereignty and equality which namely means par in parem non habat imperium has been substituted by “limited jurisdictional immunity” by way of taking part in commercial life of states and having relations with third parties.

The concept of “limited immunity” is based on the difference between works and actions that the states gets into as a “state”, and its activities in industrial and commercial fields.

Within this scope, according to the concept of “limited immunity” while a state absolutely benefits from jurisdictional immunity within the scope of acta jure imperii with regard to its works and actions taken depending on its “sovereignty” power, it can be limitedly exempted from jurisdictional immunity within the scope of acta jure gestionis due to the works having the characteristics of private law instead of “in the capacity of a state” or the works taken over as a commercial activity.

As it is clearly set forth in the article 49 of International Private and Procedural Law, the concept of “limited jurisdiction” is adopted. “A foreign state may not claim immunity from jurisdiction in legal disputes arising out of private law relations.”

“Exemption from Execution”; is related to protective seizures before judgment process and fulfilling a court decision at the end of judgment process against a foreign state and, if necessary, putting lien on assets.

By New York Convention, a consent is provided between the parties concerning the enforcement of arbitral awards, and how exemption from execution of states will be assessed and how arbitral awards will be enforced is determined according to the law of state. Accordingly, the fact that whether a state where awards will be enforced accepts absolute exemption from execution or limited exemption from execution has a great importance during the seizure of assets.

Under Turkish Law, the principle of  “limited exemption from execution” applies and within this scope the assets of state has to be reviewed in two groups. Accordingly, it is possible to impose a precautionary and executory seizure on the assets of state which are not used for commercial and economical purposes. In determination of whether the assets are used for sovereignty actions or commercial activity, the purpose for which the assets are allocated and the activity where these assets are used play a determining role. Within this scope, all kinds of assets belonging to a state which could be described as a “commercial commodity” can be enforced.

In the article 82 of Execution and Bankruptcy Code under Turkish Law, exemption from execution is regulated and the expression of state only involves assets belonging to the state of Turkey; therefore, this provision does not regulate the exemption from execution concerning assets belonging to foreign states.

Additionally, in terms of international law, due to the fact that the principle which is accepted by states as a general is limited exemption from execution it is seen in Supreme Court Practices that this principle is accepted.

As a matter of fact it is stated in the decision no. 2004/6469 E. 2004/13007 K. dated 24.05.2004 of Supreme Court 12th Civil Chamber that the asset belonging to the foreign state will not be subject to the exemption from execution in case it is used within the scope of sovereignty power of the state by saying exactly that;

“With reference to the enforcement proceeding with judgment initiated against the state of Turkmenistan, concerning the request of the debtor for removing seizures on the accounts of Embassy of Turkmenistan at İş Bankası Köroğlu-Ankara branch and Consulate General of Turkmenistan in Istanbul at Denizbank Yeşilköy branch, and the seizure, conservation and arrests of airplanes of the same state, the execution directorate decided upon request to accept the complaint lodged with the execution court and the decision to be revoked. In the article 82/1 of the Execution and Bankruptcy Law includes provision that the assets of state cannot be seized and this provision is regulated for the assets of state of Turkey. This provision does not involves the assets of foreign state. Under Turkish Law, there is not any legal regulation concerning exemption from compulsory execution of assets of foreign states. It is possible to initiate a compulsory execution against properties assets belonging to a foreign state and being present in the country which are not used for diplomatic and consulate purposes. For example; in case a foreign state runs a business enterprise in the territory of another state and has an assets in that territory for this purpose, it is possible to initiate a compulsory execution.”

Limited exemption from execution is a common approach in most countries.

For example; in the arbitration case which is known as Yukos Award and includes the highest compensation amount in the state-investor arbitration cases thus far, although it was decided by the French Courts the award which was rendered against the government of Russia to be enforced in France and that the shares of the company owned by Russia could not be seized by mentioning about the exemption from execution, the Appeal Court decided that it could be seized due to the debts of the state of Russia within the scope of limited exemption from execution by stating that the aforesaid company signed a private law agreements. In the aforesaid case;

“Yukos was haded down in 2014 by an UNCITRAL  Tribunal and is thus enforceable under New Yok Convention .The Russian Government has contested the validity on the award on several well-publicized grounds and has refused to pay. This has led to a flurry of enforcement actions in Belgium, France, Russia and the United States and set-aside procedures in the Netherlands the seat of the arbitration

In France, the Former Yukos majority shareholders Hulley Enterprises Ltd and Veteran Petroleum Ltd moved to seize a contractual debt owed to Roscosmos the Russian Space Agency, in partial satisfaction of the Yukos award in June 2015. The French Court of first instance held that the seizures were not legal as Roscosmos was not responsible for the debts of the Russian federation. Howver, in October 2016, the Paris Court of Apeal ruled that the award-creditors’freezing orders could remain in place pending further proceedings on the merits because Roscosmos had acted on Russia’s behalf when signing the contracts in question making the contractual debt state property.”

In the awards of Conn. Bank of Commerce v. Republic of Congo, Af Cap, Inc. V. Republic of Congo, it is decreed that there are assets being used for commercial activities and these assets are not subject to the exemption.

 The Supreme Court of France decreed on 14.11.2007 that the assets of a company owned by the Republic of Cameroon can be confiscated by the creditor and on 06.02.2007 that the assets owned by Congo can be confiscated by the creditors as well.

The conclusion to be reached within the scope of regulation and awards which we mentioned above is that in case the assets of a State having been formed in Turkey are “private law” institution, and are allocated in an attempt to “gain profit” through “commercial activities” it could be possible to resort to executory procedures against the economical enterprises in Turkey owing to the debts of the state  and executory transactions such as seizure and sale might be initiated against the assets of the state in Turkey.

 There is not any obstacle for the enforcement and the following executory procedures as per bot the reciprocal agreements of states and that Turkish legal system adopts limited immunity in terms of jurisdictional immunity and exemption from execution.

 

Att. Semra Gürçal