Spain v Company X SA

CourtFederal Tribunal (Switzerland)
Switzerland, Federal Tribunal.
Kingdom of Spain
Company X SA

State immunity Jurisdictional immunity Building contract Alteration work to buildings owned by foreign State Whether foreign State entitled to jurisdictional immunity Whether conclusion of contract for such work a sovereign or commercial activity

State immunity Attachment and execution Criteria for determining which assets immune from execution Assets designated for sovereign tasks Buildings operated by Institute of Emigration of foreign State Use of buildings as cultural, educational and social centre for foreign workers Whether such use relates to the exercise of sovereign powers Whether such buildings immune from execution The law of Switzerland

Summary: The facts:In 1981 the Swiss authorities granted permission to the Spanish State for the acquisition of two buildings in Berne to be put at the disposal of the Spanish Institute of Emigration to enable that body to establish an educational and cultural centre. The Institute was an institution under public law, with its own legal personality, responsible to the Spanish Minister for Labour Relations. A dispute arose concerning payment for alterations to the buildings in question and in 1985 X, a Swiss company, obtained an attachment order over the two buildings to cover its debt. The order was served on the Spanish State through diplomatic channels. Spain lodged a public law appeal before the Federal Tribunal asking for the order to be quashed on the basis that it enjoyed immunity.

Held:The appeal was allowed and the order was quashed.

(1) A foreign State was entitled to jurisdictional immunity or immunity from execution where the dispute related to activities derived from the exercise of its sovereign powers and not where it acted as the holder of private rights. Where a debt arose, as here, from alteration work to buildings owned by a foreign State, it unquestionably had its source in a commercial contract or agency governed by jus gestionis and unrelated to the exercise of sovereign powers so that there could be no general entitlement to immunity from proceedings to enforce such a debt.

(2) But international law also accepted an immunity covering specific objects. Immunity from execution extended, regardless of the nature of the dispute, to assets which a foreign State possessed in Switzerland and which it had designated for its diplomatic service or other tasks incumbent upon it in the exercise of its sovereign powers. The decisive question here was therefore whether or not the buildings subjected to attachment were allocated for tasks arising from the exercise of sovereign powers.

(3) This case was on the borderline. On the one hand the operation of a centre for cultural, educational and social activities did not constitute an activity directly related to the exercise of sovereign powers in the narrow sense of that term. On the other hand the operation of such a centre could not be regarded as a purely economic activity such as those which were normally categorized as acts performed jure gestionis. The public nature of the activities, comparable to activities related to the exercise of sovereign powers, appeared to be preponderant. The protection of the interests of the nationals of the sending State was a typical consular function and it appeared to be perfectly natural to include in this notion the provision of a social and cultural framework for foreign workers. Switzerland itself had an interest in enabling the national State of foreign workers who did not speak one of the Swiss national languages to put facilities such as those at issue at the disposal of those workers. The buildings at issue were therefore to be regarded as having been allocated for tasks related to the exercise of sovereign powers and not subject to attachment.

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

On 23 May 1985 the President of the Fourth Tribunal of Berne made an attachment order against the Spanish State in the amount of 1,042,715.30 Swiss francs. The property subjected to attachment consisted of [various] buildings in Berne By a Notice to Pay issued on 13 June 1985 the attachment order was rendered enforceable up to the amount of the attachment plus costs. The attachment order and the Notice to Pay were served on the Spanish State through diplomatic channels on 5 September 1985.

On 25 October 1985 the Kingdom of Spain, acting through a Swiss attorney, lodged a public law appeal pursuant to Article 84(c) and (d) of the Federal Law on the Organization of the Judiciary (OJ) requesting that:

From the grounds of the judgment

3.a) There is no international treaty between Switzerland and Spain which governs the immunity accorded by each State to the other in respect of forced execution or the immunity of their public law corporations. It is true that the appellant refers to the European Convention...

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