Banque Commerciale Arabe SA case

CourtFederal Tribunal (Switzerland)
Switzerland, Federal Tribunal.
Banque Commerciale Arabe SA Case

Sovereign immunity Foreign States and their property Proceedings instituted by foreign State Order for costs against foreign State Attachment of assets of foreign State Whether foreign State entitled to immunity from execution Whether foreign State acting iure gestionis Distinction between patrimonial assets of a State and those devoted to performance of governmental activity Method to be used in notifying documents to foreign State The law of Switzerland

Summary: The facts:Algeria brought proceedings for recovery of funds of the Algerian National Liberation Front (FLN) held by the Banque Commerciale Arabe in Geneva. The claim was rejected by the Federal Tribunal and costs were awarded against Algeria. At the request of the bank a notice to pay addressed to Algeria was issued by the Swiss authorities and the bank later obtained an attachment order on assets (share certificates) to which Algeria claimed to be entitled. The bank was unable to obtain either confirmation of the order or payment because notification of the documents could not be effected. The Algerian Embassy in Switzerland refused to accept the documents and the Swiss authorities refused to transmit them through the Swiss Embassy in Algiers. The bank brought a public law appeal (recours de droit public) against the decision of the Swiss authorities before the Federal Tribunal.

Held:The appeal was allowed to the extent that the Federal Tribunal allowed notification of the notice to pay and the attachment order to be effected by publication in the appropriate official journals.

(1) Where a foreign State had brought proceedings in Switzerland as the holder of private rights (iure gestionis) it could be subjected in that country to measures taken to secure execution where judgment had been given against it (ground 1).

(2) Such execution could be levied on the assets of a foreign State provided they were patrimonial assets forming part of the private disposable wealth of the State (share certificates in this case) and not assets devoted to the performance of governmental activities (ground 1).

(3) Where notification abroad was required and there was no agreement regarding the method of transmission of the relevant documents between the authorities of the sending State and the receiving State, the documents were normally to go through diplomatic or consular channels. A refusal by the Swiss Federal authorities to use these channels was not open to challenge in the courts (ground 2a).

(4) Direct notification to a foreign country by post of a notice to pay constituted an act of public authority on foreign territory which could not be performed without the consent of the foreign State concerned (ground 2b).

The following is the text of the judgment of the Court:

A. (a) On 10 July 1967 the Popular Democratic Republic of Algeria brought an action against the Banque Commerciale Arabe SA and the president of its board of management, Zouhair Mardam Bey, both domiciled in...

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