Universal Oil Trade Inc. v Islamic Republic of Iran

CourtFederal Tribunal (Switzerland)
Switzerland, Federal Tribunal (Second Civil Chamber).
Universal Oil Trade Inc.
Islamic Republic of Iran

Sovereign immunity Foreign States As plaintiff Application by foreign State for attachment of assets Whether foreign State prevented from bringing action by reason of its jurisdictional immunity Waiver Whether initiation of proceedings constitutes waiver of immunity from related counterclaims The law of Switzerland

Summary: The facts:Iran applied for and obtained from a Swiss Court an order for the attachment of assets of the Universal Oil Trade Company held in Geneva by Cofimed, a finance company. Universal Oil brought a public law appeal (recours de droit public) before the Federal Tribunal seeking the annulment of the attachment order on the ground that it constituted arbitrary treatment contrary to Article 4 of the Swiss Constitution,1 since Iran was not entitled to bring an action before the Swiss Courts by reason of its immunity.

Held:The appeal was dismissed.

Where a State initiated proceedings of its own volition before a Court of another State it submitted itself to the principle of the territoriality of that State by the very fact of having recourse to its jurisdiction. It thereby refrained from asserting its own sovereignty against the public power of the State to whose jurisdiction it had recourse, implicitly renouncing its immunity. This applied in particular when a foreign State appeared as a claimant before the local courts. It thereby submitted itself ipso facto to counterlcaims related to the principal claim and was henceforth not entitled to raise a plea of jurisdictional immunity against them.

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

On 12 May 1981 the President of the Third Chamber of the Tribunal of First Instance of Geneva made an order in favour of the Islamic Republic of Iran for the attachment of

for a claim of 106,538,736 francs, with interest at 5% from 19 February 1981, being the equivalent of US$53,269,388. The order was based on Article 271 (4) of the Federal Law on proceedings in debt and bankruptcy (LP).

Universal Oil Trade Inc lodged a public law appeal against this order requesting its annulment on the grounds that it constituted arbitrary treatment. The Federal Tribunal dismissed the appeal to the extent that it was admissible.

Extract from the grounds of the judgment

[2. The Tribunal considered and rejected various grounds on which the respondent alleged that the public law appeal...

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