Wallem Shipping (Hong Kong) Ltd and Others v. The Owners of the Ship "Philippine Admiral" (Philippine Flag)
Read the full judgment text of CACV 53/1973 on BabelCite. This Court of Appeal judgment.
2. The cases most favourable to the respondent appear to me to be The Porto Alexandre (1) and The Canadian Conqueror (2) .
|
CACV000053/1973 IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 53 OF 1973 (On appeal from A.J. 103, 106 and 139/73 - 1st Appellants) (On appeal from A.J. 94, 103, 105, 106 and 139/73 - 2nd Appellants) -----------------
----------------- Coram: Full Court, Huggins, McMullin and Leonard, JJ. Date of Judgment: 26th April, 1974. ----------------- JUDGMENT ----------------- McMullin, J.: I am in substantial agreement with the judgments which have been delivered and there is nothing which I wish to add. 26th April, 1974. Representation: IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 53 OF 1973 (ON APPEAL FROM A.J. 103, 106 AND 139/73 - FIRST APPELLANTS) (ON APPEAL FROM A.J. 94, 103, 105, 106 AND 139/73 - SECOND APPELLANTS) -----------------
----------------- Coram: Full Court (Huggins, McMullin and Leonard JJ.) Date of Judgment: 26th April, 1974. ----------------- JUDGMENT ----------------- Leonard J.: I have had the advantage of reading the judgment of Huggins, J. and I agree that this appeal should be allowed. 2. The cases most favourable to the respondent appear to me to be The Porto Alexandre(1) and The Canadian Conqueror(2). 3. In both these cases immunity was granted; in the Porto Alexandre(1) it was granted notwithstanding that the vessel concerned was a trading vessel; she had been requisitioned by the Portuguese Government, she was at the service of that government and had been adjudged a lawful prize of war; she was employed under the orders of that government. On the voyage out of which the claim against her arose, the freight on her cargo was paid before shipment and belonged solely and entirely to that government. It was doubtful whether she had become the actual property of the Portuguese Government or was merely detained pending the conclusion of peace but I can find no suggestion in either the statement of facts or any of the judgments that she was not subject to the control of the government. The Court of Appeal in the Porto Alexandre found it impossible to distinguish that case from the Parliament Belge(3) also a case in which the government impleaded had reserved control of the vessel and had actual control but in which the vessel in addition to carrying ordinary freight was also carrying mails. 4. In The Canadian Conqueror(2) immunity was also granted although the vessels concerned, the property of the Republic of Cuba, were trading vessels. It was admitted that they had "been owned by various agencies controlled by the Cuban Government" and the appellant Flota Maritime had taken no part in their operations. G.T.R. Campbell & Co. had "supervised the said ships and had submitted its reports and accounts to the Government of the Republic of Cuba represented in this behalf by the Oficina de Fomento Maritime a devision of the Department of Defence". When the vessels were arrested at the instance of the appellant immunity was claimed and granted on the basis that the ships in question were to be "treated for the purpose of this appeal as 'public ships' owned by and in the possession of a foreign sovereign state" because in the words of Ritchie, J. with whom the majority concurred:
I have underlined the words "are", "are at the disposal" and "are being supervised" because they seem to mark the point of departure of that case from ours. The Amendment to The Republic Act placed before us well after the eleventh hour suggests no more than that the Philippine Admiral might become a "public ship of a sovereign state" in the sense in which Ritchie, J. uses the expression only if we grant immunity. 5. I prefer to put my judgment on the basis that both The Porto Alexandre(1) and The Canadian Conqueror(2) are distinguishable from our case on their facts than to seek to attack their reasoning. In each case the sovereign impleaded was in control of the vessel concerned. In our case it has never been suggested that the Philippine Government was in control. The test of control seems to me to be all important for a sovereign's dignity and the comity of nations do not seem to be so seriously imperilled if there is no interference with the sovereign's control. "Control" unlike "possession" does not involve any nice questions of law and is therefore not open to the objections voiced by Frankfurter, J. in The Republic of Mexico v. Hoffman when he said:
Representation: (1) (1920) P 30. (2) (1962) 34 D.L.R. 628. (3) 5 P.D. 197. IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 53 OF 1973 (On appeal from A.J. 103, 106 and 139/73) -----------------
----------------- Coram: Huggins, McMullin and Leonard, JJ. Date of Judgment: 26th April, 1974. ----------------- JUDGMENT ----------------- Huggins, J.: This is an appeal by the Plaintiffs in three Admiralty Actions against orders made by the Chief Justice setting aside the writs of summons and all subsequent proceedings on the ground that The Philippine Admiral, the vessel which is the subject matter of the actions, was the property of the Government of the Republic of the Philippines, a recognised foreign independent state. The appeals have come before this Court for hearing together pursuant to an order by consent in the court below. We have been content to hear them together, although it is questionable whether a consent order by a court of first instance can bind this Court. The issue on the appeals is whether immunity ought to have been granted. 2. For a proper understanding of the case it is necessary to recount how the vessel came to be built. In 1956 a treaty was concluded between the Republic of the Philippines of the one part and Japan of the other part whereby Japan agreed to make available a total sum of US$550 million by way of reparations for damage done to Filipino property during the Second World War. Of this sum $500 million was to be provided in the form of such capital goods or services as might be requested by the Government of the Philippine Republic and agreed between the two Governments. To carry out the detailed arrangements a Filipino mission was set up with authority inter alia to conclude contracts with Japanese nationals for the supply of goods, payment for which would then be made by the treaty were ocean-going ships. It was agreed that the products of Japan supplied under the treaty should not be re-exported from the territories of the Republic of the Philippines. 3. The utilisation of goods acquired under the provisions of this treaty was governed in the Philippines by Republic Act 1789. This Act declared the policy of the Government of the Philippines to be that anything acquired under the treaty should be utilised "in such manner as shall assure the maximum possible economic benefit to the Philippine people and in as equitable and widespread a manner as possible". In particular the policy as to capital goods was that they should be made available only to "approved Government projects ...... as well as to Filipino citizens and entities wholly owned by Filipino citizens". It was, however, expressly provided that the Government should not utilise reparations goods "for the purpose of entering into competition with private industries, where such industries have shown their capacity and readiness to serve the public fairly and adequately": on the contrary, in general preference was to be given to "private productive projects" after the first year and Government projects were to be given preference
It was further provided that shipping should be one of the industries given "top priority". Private persons seeking to share in the goods acquired under the treaty were required to make application, but in no case could the aggregate total of reparations goods and services granted be more than $1 ½ million "except when a greater amount is necessary for the realization of any project certified by the President of the Philippines after consultation with the National Economic Council to be vital to the economic development of the country". The plan was that reparations goods destined for private persons (described as "end-users") should be sold to such persons by the Philippines Government - often on favourable terms as to credit or otherwise - and that the proceeds of sale should be placed in a "Special Economic Development Fund", which was to be available to the Development Bank of the Philippines and the Philippine National Bank "for loans for economic and industrial projects as well as for construction, reconstruction, repair and/or improvement of public school buildings". In addition to the Mission in Japan there was to be a Reparations Commission (hereinafter called "the Commission") charged with administering the acquisition, utilisation and distribution of the reparations goods and services. The Commission was declared to be able to contract and to sue and be sued in the Philippine courts and it was this Commission which was to be the vendor in all contracts of sale to end-users, middle men being expressly excluded. The terms of sale to private parties might include a provision for payment of additional interest where instalments became in arrears and every such sale was required to contain both a provision requiring a performance bond and, by s.12, a provision
(We shall see that at least one contract entered into by the Commission did not comply with these requirements). The Commission had power also to make "rules and regulations to be followed in administering the procurement, distribution and utilization of reparations" and was required to "conduct field examinations and evaluate actual utilization of reparations goods and services obtained". 4. It would appear that the Liberation Steamship Company Incorporated (hereinafter called "the Company"), which in the first instance entered appearances in each of the three actions as owners of The Philippine Admiral, made a successful application to the Reparations Commission for the grant of an ocean-going ship, for on a date in 1959 the Reparations Mission in Japan entered into a contract on behalf of the Government of the Republic of the Philippines with the Toyo Trading Company Limited for the construction of such a vessel costing $3,434,288.89 and that contract declared that "the vessel subject matter of this contract is being procured under the Reparations Agreement for the Liberation Steamship Company of Manila, Philippines". The contract itself was recited to be "for the supply of the products of Japan and the services of the Japanese people in accordance with the Reparations Agreement between the Republic of the Philippines and Japan". Payment in accordance with terms set out in an "Annex" to the contract was to be made by the Government of the Philippines to the ship builder and was to be effected by the Fuji Bank Limited "upon due authorization by the Philippine Reparations Committee by means of an authorization to pay". Presumably it had been further agreed between the Governments of the Philippines and of Japan that all or part of the reparations would be paid for by the provision of a credit with the Fuji Bank Limited. Also annexed to the contract was a "Schedule of Instalment Payments", which provided for a first instalment of 10% of the price and ten "equal" yearly instalments thereafter, but which then proceeded to set our particulars of the yearly instalments which showed them not to be equal. 5. There was a "Contract of Conditional Purchase and Sale of Reparations Goods" between the Reparations Committee and the Liberation Steamship Company Incorporated in respect of the vessel ordered from the Toyo Trading Company Limited. The vessel was then denominated The Dagohoy but she was later renamed The Philippine Admiral. The contract was concluded in 1960 but the writing incorporating its terms was, it would seem, never signed by the Reparations Commission. However, it is common ground that a binding contract in the terms of the writing came into existence. In short the Company agreed to pay by instalments the price which the Reparations Committee had undertaken to pay to the ship builder and the Commission did "conditionally cede, transfer and convey unto the [Company] the utilization of the vessel above-described" subject to the terms and conditions thereafter set out. The contract was declared to be "subject to the provisions of R[epublic] A[ct] 1789 as amended". It was expressly stated that the Commission "retains title to and ownership of the above-described" vessel until the same is fully paid for". The Company was to take delivery of the ship in Japan and put the necessary officers and crew aboard before delivery "in order to operate and utilize the same in accordance with Philippine laws". The contract not only included a provision for payment of additional interest upon default in payment of the agreed instalments but also required the Company to maintain a performance bond in a sum equivalent to 10% of the price "for as long as the [Company] has interest in said vessel" to ensure compliance with "each and every, all and singular, its obligations under this contract". Finally the Company agreed to examination of its records by the Commission "until the [Company] has fully paid its obligations to the [Commission]". There were annexed to the contract "terms and conditions" which were obviously in common form for inclusion in all contracts of this nature entered into by the Commission. They were in part repetitive of the main text of the contract. Thus we find it stated that the title to and ownership of the reparations goods forming the subject matter of the contract should remain in the Commission until they had been fully paid for, but it was added that "upon the full paymen of the purchase price ...... this conditional deed of sale shall become absolute, subject only to the limitations established by the Republic Act No. 1789 with respect to inspection, transfer and utilization of said reparations goods". The Company agreed "to utilize the reparations goods for the purpose of which (sic) they are intended within a period of 24 months after complete delivery therein, and to continue utilizing such capital goods as long as the same are serviceable after having started operation", an annual fine being provided for, in addition to confiscation and forfeiture, in case of breach of this covenant. Para. 3 of the form was a condition generally conforming with the first part of the provisions of para. 2 of s.12 of the Act save that it limited the prohibition against disposition of the goods to a period of five years from the date of acquisition. However, para.6, which, from its wording and from the absence of any other comparable term in the contract, would appear to have been intended to comply with the latter part of para.2 of s.12, referred to "any subsequent change in ownership or control of the goods" whereas the section obviously intended to prevent any subsequent change in ownership or control of "groups, associations or corporations which are recipient of such goods". The insertion of the words "of the goods" in the contract was clearly per incuriam. However, since the contract was expressed to be subject to the provisions of the Act it would probably be construed both without those words and without the five-year limitation written into para. 3. A difficulty which may be of greater importance to the present case arises from an apparent inconsistency between paras. 11 and 13 of the form. Para. 11 provides that if the Company defaults in any way
Para. 13, however, refers to a possibility that "the [Commission] cancels or rescinds this contract in accordance with s.11" despite the fact that s.11 refers to an "automatic" rescission rather than to cancellation or rescission by the Commission. Para. 12 also uses the words "should the [Commission] rescind for any of the reasons stated in the preceding paragraph", thus suggesting that rescission is not automatic but dependent upon a decision of the Commission. This is material because the Commission alleges that the Company is in default and claims to have been entitled to possession at all material times. However, as we shall see, its decision to rescind came at a comparatively late stage in these proceedings. 6. There is a dispute between the Commission and the Company whether this original contract is still in force. It has been alleged by the Company that various events have had the effect of varying the original contract. First it says that between 1960 and 1963 there was a consensual variation of some of the terms. The Company has no copy of the new terms and the Commission denies that any such variation took place. There was a fire in some of the Commission's offices in 1968 and the Company suggests that the new agreement which it executed was destroyed in that fire. The relevance of the matter to the present case is that the variation is alleged to have related to the terms of payment and might affect the question whether the Company is in default. However, in the event I think it will not be necessary to do more than merely record the existence of this dispute. 7. In 1963 the Company instituted proceedings against the Commission in the Philippines, those proceedings arising out of the chartering of the vessel by the Company to an Indian corporation. The Commission had alleged that by entering into this charterparty the Company was in breach of the Conditional Contract of Purchase and Sale and that the Philippine Government had taken diplomatic steps to prevent its fulfilment. Neither the petition nor the subsequent pleadings identified with precision the contract on which the parties relied and to this extent the pleadings were ambiguous. The Company contended that the charterparty was a Baltime Charterparty which did not contravene the terms of its contract with the Commission, and the Company sought an injunction and other reliefs. The Commission counterclaimed for delivery of the vessel and liquidated damages for default in payment of the first instalment of the price under the Contract of Conditional Sale and Purchase. The merits of the action and counterclaim were never decided because a compromise was reached. On 15th February 1964 a consent order was made, the material part of which was
It is, perhaps, not surprising that there was dissension as to the effect of this order. A motion for clarification resulted in a further order dated 7th March 1964 in the following terms:
Unfortunately the dissension is not confined to the dates of payment. The Company has contended that the 30,000.00 per month, being "in amortization of the vessel" and "in satisfaction of the counterclaim", replaced entirely its liability under the Contract of Conditional Purchase and Sale. This would involve an extension of the period of credit to approximately twenty years. The Commission maintains that the monthly instalments of thirty thousand pesos related only to the outstanding first instalment and that the Company's liability to pay the ten yearly instalments was unaffected. Even if the Company's contention be correct there is evidence that the Company is seriously in default, so once again it is not necessary to enlarge upon the dispute. 8. The vessel was operated by the Company in the course of its business until some time in 1972. On 21st December of that year she was chartered by the Telfair Shipping Corporation (hereinafter called "Telfair"), the Plaintiffs in Folio No.106 of 1973. It appears from the Defence that at that time the vessel was under repair in Hong Kong, that when the repairs were completed the ship-yard's account remained unpaid and that there was a dispute between the Company and Telfair as to which of them was liable. Telfair's claim was in rem for damages for breach of the charterparty. The other actions (Folio No. 103 of 1973 and Folio No. 139 of 1973) are actions in rem in respect of necessary disbursements on behalf of the vessel during her stay in Hong Kong. The first of these actions was started on 23rd May 1973. In each case, the Company, as "owners" of the vessel, entered an appearance. The vessel was arrested at the instance of Telfair on 4th June 1973 and on 12th July 1973 upon the application of the Chief Bailiff of the Supreme Court an order was made to preserve the vessel. On 8th October 1973, on the application of the Registrar, Pickering, J. made an order for appraisement and sale. 9. At this point the Commission appears to have become anxious that its interests were in danger. On 10th October 1973 it passed a resolution in the following terms:
On 29th October 1973 solicitors acting for the Government of the Republic of the Philippines filed notice of motion in the Telfair action (Folio No.106) to apply for an order "that writ of summons, the order for appraisement and sale dated 8th 8th October 1973 and all subsequent proceedings herein be set aside". It would seem, although the relevant papers are not before this Court, that on or about the same date (29th October) applications were filed by the same solicitors in four other actions (including Folio No.103 and Folio No.139 with which we are concerned) asking that the writs of summons and all subsequent proceedings be set aside. In the mean time, on 3rd November 1973, upon the complaint of the Commission in Action No.92402 in the Court of First Instance of Manila a writ of preliminary prohibitory injunction was issued against the Company to the effect that
On the same day an order was made in that action for the seizure of the vessel if and when she reached Philippine territorial jurisdiction. As a result of the injunction the Company proceeded to amend its appearances in the three actions in Hong Kong to show that it claimed to be "a beneficial owner" of the vessel. 10. On the very last day of the hearing of the appeal further evidence was adduced but I will summarise that later in this judgment. 11. The hearing of the application by the Philippine Government in the Telfair action (Folio No.106) was delayed, but on 14th December 1973 all the other applications were decided by the Chief Justice in a single judgment in favour of the Applicant. When the Telfair action came before him three days later he made a similar order and, we are told, indicated that he did so for the reasons he had given in the earlier judgment. 12. Before turning to consider this judgment I should mention that the Company gave notice of motion on appeal against it as an interested party. However, before the hearing the Company's solicitors applied for its appeal to be dismissed and we are given to understand that this course was taken for fear that the prosecution of the appeal might be held by the Philippine court to be a breach of the injunction dated 3rd November 1973. 13. The learned Chief Justice was satisfied on the affidavits that the Applicant was an independent sovereign state recognised by Her Majesty's Imperial Government. He further found that the Commission was the registered owner of The Philippine Admiral and said it was not in dispute that the Commission was an organ of the Government of the Philippines. He said it was admitted by the Company that on the day before the resolution of the Commission to repossess the vessel the Company was indebted to the Commission in a sum of over five million pesos. Such an admission was, in truth, contained in a letter dated 11th October. However, when the judge said that by that date the whole of the purchase price should have been paid, that was open to question, for this was one of the matters in dispute between the Company and the Commission. It was, of course, a matter upon which the courts of this Colony would not adjudge, for the Government's claim was not obviously without foundation. Again, the learned Chief Justice thought it could not be disputed that the Commission had at the material time a right to possess the vessel, but, if it be relevant, this is disputed. He appears to have-taken the view that the Company was clearly in default and, if I understand him aright, that the Commission's right to immediate possession stemmed from the Resolution of 10th October 1973. He therefore must have been of opinion that "the material time" was not some date prior to 10th October. He held that no special rules applied to ships and that the vessel was not being used "for public purposes" but that it was enough to sustain the claim to immunity that the Applicant was the registered owner and had an immediate right to possession at the date of the application to set aside. 14. On the appeal a question was raised by counsel for the Respondent as to the locus standi of counsel for the Applicant, doubt being expressed whether a claim to immunity (at least one not brought before the court by Her Majesty's Attorney General) ought not to be supported by evidence from an accredited representative of the sovereign stating that he has proper instructions to make such a claim. We were told that Mr. Rodolfo Lamayo Diaz, who swore an affidavit in support of the application, was in fact the senior consular officer of the Philippines in the Colony at the time of the application and upon Mr. Litton's giving an assurance that he was duly instructed to appear and make the present claim on behalf of the Government of the Republic of the Philippines and not merely on behalf of the Commission the matter was not pursued. I say no more about it. 15. I shall deal with the case under the following headings: (1) Are there any special rules applicable to ships? (2) What interest (if any) must be shown to support a claim to immunity? (3) What interest has the Government shown? (4) Is it necessary, where the claim is made in an action in rem, to show that the vessel is destined for public use? (5) Is the vessel destined for public use? (6) Has there been a waiver of immunity? Although I have separated these questions for the sake of clarity, they inevitably overlap to some extent. (1) Are there any special rules applicable to ships? 16. The learned Chief Justice inferred that the law of immunity in so far as it relates to actions involving ships does not differ from that relating to actions involving other forms of property. Mr. Litton supports this view and he cites from the speech of Earl Jowitt in United States of America and Republic of France v. Dollfus Mieg et Cie. and Bank of England (1):
Mr. Evans does not suggest that there is any difference arising directly from the nature of the property between the principles applicable in the case of a ship and those applicable in the case of other goods, but he says there may be a difference arising from the fact that in English law ships are the only class of personal property which can be the subject of an action in rem. However, he concedes that it is no longer open to him to contend that an action in rem against a vessel does not (either indirectly or, more probably having regard to the judgment in The Cristina(2), directly) implead her owners, but his case is that the courts have never laid down that immunity is absolute in the sense that it must be granted wherever an independent sovereign is shown to have been impleaded. He goes further and submits that there is overwhelming authority to the contrary. He relies in particular on the advice of the Privy Council in Sultan of Johore v. Abubakar Tunku Aris Bendahar(3):
On the following page of the report it is pointed out that the majority of the House of Lords in The Cristina had reserved the case of a sovereign's ship engaged in ordinary commerce. While disavowing the alleged absolute and universal rule to the effect that, once the circumstance of a foreign sovereign being impleaded against his will can be established, a proceeding necessarily becomes defective by virtue of that circumstance alone, the Board emphasised that this did nothing to throw doubt on the existence of the general principle. We are therefore concerned to decide whether the present case falls within an exception to the general principle. It must be conceded that the certainty of a rule against impleading a sovereign in any circumstances would have much to commend it and this has led some to question the desirability of allowing any exceptions: see, for example, O'Connell's International Law (2nd ed.) Vol. 2, 845. Moreover, to permit a sovereign to be impleaded "directly" as the owner of a ship in an action in rem might well be regarded as an equally serious affront to his dignity as to permit an action against him in his own name for the very same debt, although, of course, an action in rem does not involve any suggestion of extra-territorial jurisdiction. It may well be that one should not seek a logical basis for allowing an exception to the general principle or be deterred by the resulting introduction of a complication which could be avoided by adopting an absolute and universal rule, because international practice is probably no more logical or free from quirks than is the behaviour of individuals. Where a convenient way can be found of doing justice to an individual without what could reasonably be regarded by a foreign sovereign as a provocative act the law of nations is likely to take that way, and the Common Law will follow. In The Charkieh(4) Sir Robert Phillimore said at p.93:
I do not think that the learned judge was suggesting the existence of any significant distinction between the institution of proceedings and the continuance of those proceedings to judgment. However, it must be borne in mind that much of what he said in that case, including this passage, was obiter. Nevertheless it is interesting to note from p.91 of his judgment that this eminent judge thought an action in rem might be free from the objections fatal to other modes of procedure where immunity was claimed and he cited cases which tended to support the view that property of all kinds might in some circumstances be proceeded against without infringing the principles upon which sovereign or diplomatic immunity was based. The existence of a material distinction between actions in rem and actions in personam can also be argued from the well-known passage in the speech of Lord Atkin in The Cristina(2):
That passage has frequently been cited with approval (see, for example, 1958 A.C. 394) although Lord Radcliffe and Lord Tucker in the Dollfus Mieg Case both warned against treating it as though it were a statutory definition of the principles of immunity. If an action in rem against a ship impleads a sovereign then, as Lord Atkin himself points out, such an action falls within both his propositions and not merely within the second, yet it is only in relation to the second that the judge himself mentions the possibility of an exception where the action concerns property used only for commercial purposes. He appears to assert his own opinion that there is no such exception and yet later in his judgment he emphasises that the case before him was "not one of control for public purposes but of actual possession for public purposes". Clearly his mind was there being addressed principally to the distinction between mere control and "actual possession", but he still seems to have attached some significance to the fact that the ship was destined for public purposes. The other members of the House, with the exception of Lord Wright, were at least doubtful whether the principle of immunity depended solely upon the sovereign's being impleaded, although all five of the judges inclined to the view that a ship-owning sovereign was impleaded by an action in rem against his ship. Just as at one time the only property of a sovereign which was likely to wander into the territorial jurisdiction of a foreign power was his warships, until the advent of aeroplanes and container-lorries ships remained the only property of a sovereign which was likely to go into foreign parts even when sovereign states began to enter into trade. So it was almost inevitable that the first cases to come before the courts should involve ships, but later it became necessary to consider to what extent the rules laid down in the ship cases were applicable to other forms of property. As Mr. Evans said, the principles of immunity have been laid down for the most part in cases relating to ships not because ships are subject to special rules but because it was possible to institute proceedings against ships: in later cases the courts have merely applied to other classes of property within the territorial jurisdiction of the British courts what were in fact principles of general application. To that extent I think the learned Chief Justice was right when he came to the conclusion that ships were not subject to special rules. (2) What interest (if any) must the Government show to obtain immunity? 17. First it must be said that nothing has to be proved: all that is required is that the interest should be shown not to be illusory: Juan Ysmael & Co. Inc. v. Government of the Republic of Indonesia(5). 18. In the Dollfus Mieg(1) case Lord Radcliffe said at p.617:
He was there concerned with a case where the company was the owner of 64 gold bars. They were wrongfully seized by the German authorities during the Second World War. They were recovered by the Allied Forces and lodged by them in the Bank of England for safe custody. The company, as lawful owners, sued the bank. Thereafter the bank by mistake sold 13 of the gold bars. The bank moved to have the writ set aside and all subsequent proceedings in the action stayed on the ground that the bars were in the possession or control of the Allied Governments, and subsequently the Governments of the United States of America and of France were joined as defendants. As regards the 13 bars which had been sold and were no longer available for return to the Allied Governments the action was allowed to proceed, but as regards the remainder it was held that the doctrine of sovereign immunity applied. Lord Jowitt, L.C. was of the opinion that the Governments had a right to possession as bailors at will and that that sufficed. He said at p.605:
And at p.606 he said:
The other members of the House gave judgments to the same effect. It must, however, be remembered - as was emphasised in the judgments - that this was an action in personam for trover or detinue: no question of public use of the subject matter arose. 19. The learned Chief Justice in the court below took the view that no assistance could be obtained from considering cases in other jurisdictions because of differences between the law in those countries and the law in Hong Kong. With respect to him I think it would be unwise to dismiss them as summarily as that: if they do no more they may at least give some indication of the practice of the nations as understood by the countries in which the cases were decided and the differences of approach may not always be material. 20. For my part I have found The Republic of Mexico v. Hoffman(6) of great assistance in the present case. The facts were stated by Stone, C.J. at p.734:
The decision of the learned judge appears at p.736 where he said:
In The Navemar(7) the Supreme Court of the United States of America had held that a decree of attachment issued by a foreign government appropriating a vessel to its use did not have the effect of transferring possession of the vessel to the government and that unless the decree was accompanied by some act of physical dominion, or by some recognition on the part of the ship's officers that they were controlling the vessel and crew in behalf of their government, or there was proof that the vessel was in fact employed in the service of the government, the decree did not exempt the vessel from the jurisdiction of the Admiralty Court. In all the English cases cited to us where immunity has been granted there was at least a right to possession or control accompanied by some such act or recognition, as in The Gagara(8) and The Jupiter(9). Although I appreciate that there may be a greater indignity involved in failing to prevent a sovereign's being ousted from possession of a ship than in declining to acknowledge his right to obtain possession, this seems to me a slight distinction upon which to base so important a difference in practice. Be that as it may, I think I have reached a point where my headings overlap. The Dollfus Mieg case establishes that in an action in personam it is enough to show an arguable claim to immunity based upon either ownership or a right to possession, but when one has an action in rem against a ship the question I am now considering becomes inextricably bound up with the issue whether the vessel is "in the public service": in the present case it has been argued that because The Philippine Admiral passed into the possession of the Company she could not be in the public service of the Government. No case has been cited where immunity has been granted without the claimant's having established a prima facie right to possession or control and it seems to me to matter not whether that right is regarded as part of the interest claimed in the vessel or as a necessary element of "public use" of the vessel: the essential point is that there must be such interest (whether proprietary, possessory or other) that the claimant can fairly claim also the exercise of dominion over the vessel. Mr. Litton has contended that where a proprietary interest is shown immunity must be granted, for, he says, it is only in respect of Lord Atkin's second proposition in The Cristina(2) that "there has been some difference in the practice of nations as to possible limitations". As I see it the real difference has been in defining "public use" and it is in that connection that I shall consider in detail the necessity for the claimant to have the right of control. It was not submitted on behalf of the Government that the mere fact that the ship was acquired under a reparations treaty, rather than by purchase in the normal course, endowed her with a peculiar national status and that by reason of that status any exercise of jurisdiction over her by the courts of this Colony would constitute a special affront to the dignity of the State, although mention was made of the importance the Japanese Government might attach to the sale of a vessel provided by them under the reparations treaty and Mr. Litton said that the treaty was the foundation of his contention that the ship was used for public purposes. I do not think that what might be termed an "emotional interest" could of itself be sufficient basis for the grant of immunity. (3) What interest has the Government shown? 21. As there was some discussion whether the Commission had even bare ownership of the vessel I should state briefly why I believe that matter is not open to doubt. The extracts I have cited from the Contract of Conditional Purchase and Sale show that all that was being ceded to the Company by the Commission was "the utilization" of the vessel and that the Commission retained title to, and ownership of, the vessel until she was fully paid for. Whether or not the Company is in default in its payments, as has been alleged by the Commission, it is not suggested that the ship has been fully paid for. We are told that the Company contends it has acquired full ownership as a result of the order in the 1963/64 proceedings in the Philippines. Whatever may have been intended by that order in so far as the future payments were concerned I see no reason to believe that the original contract was to be superseded in its entirety and, in particular, that the Company was to become owner before the vessel had been fully paid for. It is pointed out that a Certificate of Inspection issued by the Philippine Coast Guard and a Certificate of Stability issued by the Bureau of Customs (both authorities being organs of the Government) named the Company as owner of this vessel. Various explanations can be suggested for this and I do not think it is of the least consequence. Much more important is the fact that a Certificate of Registration, a Certificate of Ownership, and a Certificate of Change of Name all state that the Commission is the owner, although even these are not documents of title. 22. What was the material date for deciding if the Government had any other interest? It was, I think, suggested that because this was an application to set aside the writs and not an application for a stay of proceedings no date subsequent to the issue of the writs could be material. I confess that I have been unable to see that anything turns upon the precise nature of the relief sought. This is not a case where application is made to strike out because of some defect in the writs themselves: the writs were valid and if the Government had seen fit to submit to the jurisdiction the case could have proceeded to judgment. It seems to me that this must be so because, whatever may be the extent and nature of extra-territorial jurisdiction, within territorial limits there must (as Marshall, C.J. said in The Schooner Exchange v. M'Faddon(10)) be full and absolute jurisdiction based upon sovereign power, although states may in practice decline to exercise their sovereign power within their territorial limits out of respect for a foreign sovereign. 23. It is stressed on behalf of the Government that the action is, until final judgment, a continuing proceeding and that, as it can be stayed or struck out at any time before judgment, application to stay of set aside can be made at any time before judgment. So, Mr. Litton says, the Court should have regard to the situation existing at the date of the application to the Court. He relies upon Ghosh v. D'Rozario(11), where it was held that diplomatic immunity could be claimed in an action although at the time it was instituted no immunity could have been claimed. I do not think the Respondents were able to distinguish the principle there applied and I am content to accept it as being correct and applicable. 24. It is submitted that by virtue of the Commission's Resolution dated 10th October 1973 the Government on that date acquired an immediate right to possession. As I understand Mr. Litton it is not his contention that the contract with the Company was automatically terminated under Clause 11 but rather that, when the Commission resolved to rescind, it was not obliged to serve any formal notice before the rescission became effective. Under the contract the Commission had the right to receive the instalments, the right to possess the vessel if the instalments were not paid and the right to enforce the covenant against disposal of the vessel otherwise than to Philippine citizens. The Resolution of 10th October was, of course, passed upon the basis of a default by the Company and it has been suggested by the Respondents that in fact the Company was not in default. In my view we are not required to decide whether there was or was not a default provided that the allegation is not manifestly without foundation. I agree with Mr. Litton that the letter dated 11th October 1973 addressed by the Company to the Commission is prima facie evidence that the Company owed 5,300,000 on that date and is, even on the Respondents' interpretation of the order in the 1963/64 proceedings, evidence that there is a present debt outstanding. That is not to say that the Respondents are bound by any admission of the Company, but in the absence of evidence to the contrary I think it might well be enough to justify a finding of default. It is certainly enough to establish that the Government's allegation of default is not illusory. That being so the claim that it has a right to possession is not illusory. The fact that the Company has wice appealed against the injunctions granted by the courts of the Philippines, which suggests that the Company still disputes the right of the Government to repossess the vessel, seems to me immaterial. 25. I think there is no further proprietary interest which the Government can reasonably claim to have. At the time of her arrest the vessel was clearly in the possession of the Company and the Company has been asked to deliver up possession to the Commission: see the Commission's letter of 15th October 1973. There is no suggestion that the Government has sent a crew to re-take possession in Hong Kong. (4) Is it necessary, where the claim is made in an action in rem, to show that the vessel is destined for public use? 26. Here I think it is desirable to consider first what is the basis upon which sovereign immunity is granted. 27. In The Charkieh(4) Sir Robert Phillimore said:
I do not think that has been criticised as being otherwise than a correct statement of the law, although a later passage at p.97 which suggests the possibility of an exception to the general rule of sovereign immunity in all actions concerning land was left by the Privy Council in Sultan of Johore v. Abubakar Tunku Aris Bendahar(3) for later consideration should occasion arise. On the contrary in Rahimtoola v. Nizam of Hyderabad(12) Lord Reid said:
If that be correct then I respectfully doubt whether any advantage is to be gained by seeking to narrow the ground to one of incompatibility between the exercise of jurisdiction over a sovereign with "his real dignity - that is to say, with his absolute independence of every superior authority" (per Brett, L.J. in The Parlement Belge(13)): such incompatibility is no doubt one of the elements of public policy and comity upon which the principle is founded, but the speech of Lord Denning in Rahimtoola's Case and the judgment of Frankfurter, J. in Republic of Mexico v. Hoffman(6) indicate how uncertain a foundation the concept of "dignity" may be. I doubt whether we would be assisted in ascertaining the broad considerations of public policy, international law and comity to which we are enjoined to have regard by limiting ourselves to the adoption of any one of the various theories which have been advanced in an attempt to rationalise the immunity which has been granted (see O'Connell on International Law at p.842 et seq.) In so far as immunity depends upon considerations of international law and in so far as international law depends in its turn upon the practice of nations we must enquire what has been the practice of nations. In so far as immunity depends upon public policy it may be the Queen's courts should not consider themselves bound to limit immunity to cases where other states have decided that public policy dictates that immunity should be granted: reciprocity has been rejected as the sole criterion: see the Dollfus Mieg(1) case. Public policy is as unruly a horse as it was in 1824 and it is perhaps not surprising that in some jurisdictions (e.g. in the United States of America) the courts openly accept directions from the Executive as to what is the public policy of the state in relation to questions of immunity: see Republic of Mexico v. Hoffman(6). This is a course which never seems to have been adopted in the British courts, which have been content in each case to decide, with such guidance as could be gleaned from previous cases, whether or not it was politic to grant immunity. The guidance has not always pointed clearly in one direction and I confess to having approached a decision in this case with great hesitation. 28. There is no reported case in which immunity has been granted in an action in rem solely upon ownership or upon any other proprietary interest of a sovereign. Mr. Litton relies upon The Jupiter(9) where the Union of Soviet Socialist Republics intervened on the ground that the ship was owned by the State under a decree of nationalization. However, it appeared from the evidence that the master of the vessel was also holding the vessel for the Russian Government so that the claim was not founded upon bare ownership. The judgment proceeded upon the basis that the Government was claiming a right or interest in the ship and should not be called upon to show that it had good cause for so claiming, but it was expressly stated by counsel for the appellants that they wished to keep open the question "that not being destined for the public use a state-owned vessel is not entitled to exemption from arrest": they felt precluded from arguing the point in the Court of Appeal by the decisions in The Parlement Belge(13) and The Porto Alexandre(14). The case can, therefore, be no authority upon that or any similar point. 29. In The Parlement Belge(13) Sir Robert Phillimore said at first instance:
However, the Court of Appeal held that the vessel was not "a mere trading ship" but was destined for public use. Nevertheless in The Cristina(2) Lord Maugham said that he could see
30. In The Porto Alexandre(14) the vessel was "engaged ... as an ordinary trading vessel carrying goods for private individuals". This decision is, perhaps, the one which most closely approaches the present case. There the evidence appears to have shown that the vessel was requisitioned by the Portuguese Government for the service of the State and that she was employed under the orders of the Government. She was arrested in respect of salvage services rendered by three tugs. At the time of those services she was on a voyage on which she was carrying a cargo of cork shavings under a bill of lading from which it appeared that the goods were shipped by and consigned to a trading company. Freight had been paid to the Government. The court declined to distinguish The Parlement Belge(13) and held itself bound by the decision in that case. The judgment has been much criticised on the ground that there was a distinction to which effect should have been given and in The Cristina(2) two members of the House of Lords reserved their opinions on the question raised in The Porto Alexandre(14), while Lord Maugham was clearly satisfied that the decision in that case was wrong. Lord Wright referred to increasing awareness of the importance to the State of trading vessels and to the uncompromising expression by the Supreme Court of the United States of America in Berizzi Brothers Company v. The Pesaro(15) of the view that:
Lord Wright went on:
Later he spoke of the International Convention for the Unification of Certain Rules concerning the Immunity of State-owned Ships, of 10th April 1926, which has never been ratified by Great Britain, although she was one of the signatories. One of the arguments on behalf of the Government in the present case is that if we were to decline to grant immunity we would in effect be applying the Convention and doing something which Parliament has declined to do. I do not think that this argument is sound: all we would be doing would be to state what we believe to be the Common law of England as applicable in Hong Kong. Lord Wright thought that legislation was necessary to exclude trading vessels from the principles of immunity: Lord Maugham apparently thought it was not and that it was open to the courts to stem what he admitted to be the recent current of authority in the English courts as regards state-owned trading ships - indeed, that it was high time they should do so. Another 36 years have passed and I believe his view of the need for reconsideration is still shared "by many judges and by nearly all persons engaged in maritime pursuits". On the other hand the force of Lord Wright's argument has been considerably weakened by he disapproval of The Pesaro(15) which was expressed in The Republic of Mexico v. Hoffman(6). 31. Mr. Evans's submission is that the present case can be distinguished from The Parlement Belge(13) even further than can The Porto Alexandre(14) and that it is not strictly necessary for us to decide whether we would follow The Porto Alexandre, but if we conclude that the wider distinction does not exist he asks us not to follow that case. Scrutton, L.J. said at p.37:
Whatever Mr. Dunlop's admission may have been the report shows that he had relied upon the dictum of Marshall, C.J. in the American case of U.S. Bank v. Planters' Bank(16) that
In The Porto Alexandre Bankes, L.J. thought there was "very little difference between the material facts in The Parlement Belge and in the present case", but e added at p.34:
That demonstrates that he did not think the element of public use was material. Scrutton, L.J. at p.38 cites a passage from Hall's International Law and he, too, seems to have thought that any property owned by a sovereign state was a subject matter for immunity regardless of the use to which it was put. Warrington, L.J. on the other hand, thought the evidence was sufficient to show that the ship was destined to public use. It is on the majority view that the alleged distinction arises: if the view of Warrington, L.J. had prevailed The Porto Alexandre(14) would have fallen to be discussed only under my next heading, where I shall have to consider the meaning of the words "in the public service". 32. In Swiss Israel Trade Bank v. The Government of Salta(17) Mackenna, J. made an exhaustive and penetrating analysis of The Parlement Belge(13) and concluded at p.502:
The ratio decidendi of The Charkieh(4) was, of course, that the Khedive of Egypt was not a sovereign prince, but Mackenna, J. clearly intended to confine himself to the position which would have obtained had the Khedive been found to be a sovereign prince and not to have waived his privilege. 33. It was held by the Supreme Court of Canada in Flota Maritima Browning de Cuba S.A. v. The Canadian Conqueror(18) that where a vessel is owned and operated by a sovereign state then in the absence of evidence as to the use to which the ship will be put she should be regarded as a public ship, entitled to immunity, though equipped as a trading ship. That, I think, means no more than that there is a rebuttable presumption that a vessel which is owned by, and at the disposal of, a sovereign state is in the public serviced and not in service "for ordinary trading purposes". The court expressly left open the case of property of a foreign sovereign state "only used for commercial purposes". 34. I now come back to The Republic of Mexico v. Hoffman(6). Like The Parlement Belge(13), it was based upon The Exchange(10). In that case, said Brett, L.J. in The Parlement Belge at p.208,
We have seen that in The Republic of Mexico v. Hoffman Stone, C.J. thought immunity could not be claimed in an action in rem against a ship unless there was a threat to oust the possession of the claimant government. Frankfurter, J., with whom Black, J. joined, remarked at p.737:
He referred to The Pesaro and compared the speech of Lord Maugham in The Cristina. He then continued at p.738:
Even bearing in mind the relationship between the Courts and the Executive in the United States of America with regard to this question of sovereign immunity, that gives very weighty support to the view of Lord Maugham. On the view taken by the judges the fact that the Mexican Government was entitled to 50% of the net profits of the ship's trading was immaterial. 35. I do not think any of the other cases assists me in reaching a conclusion. I will, however, refer briefly to passages in some of the leading textbooks which have been cited to us. Dr. Cheshire in his Private International Law (8th ed.) 103 appears to accept that The Porto Alexandre correctly states the English doctrine, and he continues:
Dr. O'Connell in Volume 2 of his International Law (2nd ed.) at p. 855 refers to "the Tate Letter", in which the State Department of the United States of America in 1952 reviewed the practice in the matter of immunity in other countries and concluded that apart from England and Russia all the nations were tending towards the restrictive rule of distinguishing acta gestionis from acta imperii. At p.869 he says:
The Canadian case to which he refers in a footnote has since been affirmed on appeal to the Supreme Court and has already been cited in this judgment. 36. On the bases both of international practice and of the balance of persuasive authority in the dicta in the English cases I have come to the conclusion that immunity should not be granted in respect of vessels not destined for public use. We are not bound to hold that immunity should be granted. (5) Is the vessel destined for public use? 37. Mr. Litton has submitted that it is sufficient in the present case that the use to which the vessel has been and will be put has been treated by the Government as use for a public purpose: we ought not to question a view which is at least arguable: Juan Ysmail & Co. Inc. v. The Government of The Republic of Indonesia(5). At the same time he relies upon the presumption which he says arises from the ownership and right to possession of the Government (The Canadian Conqueror(18)) and, as we have seen, upon the simple fact that the vessel was acquired under a reparations treaty. Mr. Evans replies in effect that on the Government's own evidence any suggestion that the vessel is used for public purposes is illusory and involves an extension of the meaning of the words "public use". Indeed he points out that although the affidavits have asserted what is the national policy they have nowhere in so many words said that the vessel is destined for use for public purposes but have rather stated the facts upon which such a claim is now made and that it has been left to the Court to decide whether the claim is illusory or not. It certainly seems to me that the foundation of the claim is sufficiently doubtful to oblige us to examine it more closely. 38. Mr. Evans has submitted that where a vessel is operated by a private owner she is not used by a Government at all and therefore is not used in the public service. This argument assumes that a private ship-owner cannot operate his vessel in the public service. We have already seen that there is no reported case where immunity has been granted in respect of a vessel over which the foreign government did not have at least some measure of control, and by "control" is meant immediate control, not merely the sort of general direction that was exercised by the Director of Naval Transports of the Provisional Government of Northern Russia in The Annette(19). It was held in The Broadmayne(20) and The Cristina(2) that it is sufficient if the government has requisitioned the vessel and she is then held for the government. On the other hand in The Navemar(7) the lack of control was held to be fatal to the claim to immunity. Mr. Litton, of course, argued that immunity arises here because, whether or not the Government was in control, it had an immediate right to possession and, in any event, had a proprietary interest so that these are proceedings which "amount in one way or the other to a suit against the sovereign" (1952 A.C. 616). As I see it the operator must be either the government itself or an agent acting on behalf of the government before immunity can be successfully claimed. It may be that an altruistic ship-owner who volunteered to use his vessel to carry passengers or goods for his sovereign would be using her for the public benefit, but would it necessarily follow that she was used in the public service? In the present case the Government's contention is that the Company has not acted through altruism but through legal necessity in doing what it has, and that although what it has done was primarily done for selfish reasons nevertheless the trading of the vessel was for the public benefit and, therefore, in the public service. I cannot accept that every use which is for the public benefit is necessarily public use for that involves at least some degree of public control, even if it be no more than an acknowledgment by a ship's officers that they hold her on behalf of a requisitioning government. In my view it would be an unwarranted extension of the concept of public use to include in it every operation which resulted in public benefit. The passage which I have cited from The Pesaro(15), which suggests that "the maintenance and advancement of the economic welfare of a people in time of peace" is a public purpose, must share the disapproval which the judgment as a whole suffered in The Republic of Mexico v. Hoffman(6). On one view the operation of a merchant ship by a government department in ordinary trading would amount to use in the public service by virtue of the sovereign control exercised over her. On another view the words "public use" must be given a more restricted interpretation, which, it is said, is more consonant with the whole doctrine of sovereign immunity. It is upon this point that the validity of the approach of the majority in The Porto Alexandre(14) hangs. Cases like The Quillwark(21) are distinguishable in that the Department of the Government of the United States of America which operated the vessel was established in part for the purpose of creating, encouraging and developing a naval auxiliary and naval reserve. Companie Mercantile Argentina v. United States Shipping Board(22) was not only such a case: it was also an action in personam. If it be necessary I tend to favour the restricted interpretation, remembering that the principles of immunity are enshrined in the Common Law and not in the words of a statute. 39. I prepose first to consider the facts as they were presented before the judge in the Court below before going on to refer to the evidence adduced in this Court and to consider whether and, if so, to what extent this additional evidence affects the matter before us. 40. At the date of the intervention by the Government the vessel was lying at a mooring in Hong Kong in custodia legis and had been so lying for several months. It is submitted on behalf of the Appellants that in deciding the purpose for which a vessel is being used one must in a case like this have regard not only to the present use but also to the past and intended uses. As to the past they point out that the ship has from the time she was delivered by her builders been manned and operated by the Company for their own account: the Contract of Conditional Purchase and Sale contemplated that the only direct financial benefit to the Government would be the receipt of the instalment payments, which the Company was liable to pay whether the operation of the vessel resulted in a profit or a loss: there was no term that the instalments should be paid out of profits. Apart from that there has been only a somewhat nebulous benefit to the economy of the country which the trading of any Philippine vessel would bring. As to the future it is said that the Government, even if it regained possession of the vessel, would under the provisions of Republic Act 1789 be under an obligation to dispose of her to another private end-user: if for some reason the private sector were not given preference and the Government decided that the vessel should be operated for its own account she remains what she always has been, a trading vessel, and there is no evidence to justify the conclusion that there is now going to be a change of use. The Government emphasises the status of the vessel as a reparations good under the treaty with Japan, the restriction upon disposal to other than Philippine nationals, its residual right to possession in the event of default (a right which it has sought to exercise) and the general economic benefit to which I have already referred. Above all it relies upon the right to use the vessel for "approved Government projects" if for any reason it is unable to sell the vessel to another end-user in accordance with its duty to give priority to private production projects, but that right is, of course, always subject to the limitations in Republic Act 1789 which I have mentioned. 41. The vessel is a trading vessel and has been used as such for many years. It seems to me that something more was required to justify the claim to immunity than a mere possibility that she might hereafter be used for public purposes. As Mr. Evans has pointed out, the Government has never thought fit to assert that the ship will be so used. Although she was repossessed for the protection of the Government's interests, the overwhelming balance of probability is that she will be used for trading. The case is similar to one where a sovereign state purchased a trading vessel expressly for the purpose of selling her at a profit. The sale of the vessel would not be "use" as that word is normally understood - the Act itself distinguishes between disposition and utilization - and there is no authority which would require this Court to hold that a vessel owned by a sovereign state which was trading in ships would be immune to arrest any more than would one owned by a sovereign state trading with ships. 42. I would hold that the evidence originally filed did not support the conclusion that the vessel was destined for public use. That means that on the evidence before the learned judge I would allow the appeal and set aside the order made in the Court below. 43. The additional evidence which has now been adduced consists mainly of a copy of Presidential Decree No. 332, dated 9th November 1973, which was admitted by consent. By that Decree changes were made in Republic Act No. 1789 and, while no blame attaches to counsel who have appeared before us, I cannot but express pained surprise that Mr. Felicisimo Ocampo, a duly qualified lawyer and member of the Philippine Bar, a Commissioner of the Commission and a former member of the Philippine Judiciary and of the Congress of the Philippines, should on 30th November 1973 have sworn an affidavit exhibiting a copy of the Act without indicating that the Act had been substantially amended three weeks earlier. That those from whom Mr. Litton's professional clients have received their instructions and who now contend that the amendments are material to the present case have allowed the learned Chief Justice and this Court to proceed in ignorance of them does them no credit. 44. The Presidential Decree recites, inter alia, that
and states the purpose of the amendment to be
Section 2 of the Act is then amended to read as follows:
(We have no evidence as to "the broad program, criteria and priorities established by the National Economic and Development Authority".) There are then set out in amended paragraphs the conditions which are to apply. The paragraph giving priority to the private sector has been repealed. Provision is also made for dealing with "delinquent private end-users" and, in particular, s.12 is amended by the addition of a new paragraph:
45. We are also told for the first time that there have been appeals against the prohibitory injunction granted by the Court of First Instance of Manila on 3rd November 1973 and that upon those appeals the Company has contended that the injunction should be discharged by reason of a period of grace allowed by the new Presidential Decree to delinquent end-users. Apparently the Solicitor-General for the Philippines successfully opposed that contention in the Supreme Court of Manila on the ground that the Decree did not apply because The Philippine Admiral had been repossessed before the Decree was made, but the Court of Appeal has not yet delivered judgment. There would seem to be much force in that argument and, as it was adopted by the Supreme Court of Manila, I do not think we can do otherwise than accept that for the time being it accords with the law of the Philippines by which the rights of the Government and the Company are governed as between each other. Does the Decree nevertheless govern in part the rights of the Commission to reparations goods which it had resolved to repossess before the Decree was made? Although the provisions of s.12(a-2) apply only to goods repossessed under the terms of that paragraph, the general amendments to s.2 would operate upon goods repossessed under the earlier legislation. On the evidence before us the position would therefore seem to be that it is still open to the Government to sell The Philippine Admiral to another private end-user but that "approved Government projects" now rank equally with private end-users as possible recipients, all applicants under the Act taking precedence, everything else being equal, according to the order of their applications. We have no evidence whether the term "approved Government projects" has been defined by the National Economic and Development Authority and I must therefore assume that a Government department might apply for the vessel for use in ordinary trade. 46. In The Canadian Conqueror(18) Ritchie, J. expressed his view of the law in these words:
If that be correct the possibility, however remote, that the vessel will in the event be used for public purposes in the traditional sense would be enough to require us to grant the immunity sought even though it cannot be said that the Commission "has supervised" the vessel and she is not yet in the control of the Government, since under the Presidential Decree she would be liable to seizure by the Armed Forces of the Philippines even upon the high seas. But in the Canadian case no reference was made to Juan Ysmail Co. Inc. v. The Indonesian Government(5) where it was held that the claimant had satisfied a requirement that it should "produce evidence to satisfy the court that its claim is not merely illusory, nor founded on a little manifestly defective". The illusion in that case related to the claimant's title and not to the use to which a ship was destined, but if there is a burden to adduce evidence as to the one I do not see that it can be wrong in principle to hold that there is a burden to adduce evidence as to the other. The Board said at p.90:
That seems to me to require a claimant to adduce evidence to show not merely that a "right" to immunity might arise but that it would exist if the evidence adduced were true. Such a view is both sensible and practical and yet does not in any way require the claimant to submit to the adjudication of the court upon the truth of his assertions. As Sir Robert Phillimore said in The Charkieh(4):
Even now the evidence before this Court does not establish that The Philippine Admiral is destined for the public service and I would therefore hold that the appeal should be allowed. (6) Has there been a waiver of immunity? 47. In view of the conclusion which I have reached upon the earlier questions this final question does not arise, but as the case may well go further I ought to express my opinion upon it. 48. It has been urged on behalf of the Appellants that the application by the Government of the Philippines, although in form one to set aside the writs and all subsequent proceedings, was prompted not so much by the fact that objection was taken to the institution of the actions as to the fact that objection was taken to the order for appraisement and sale. In my view the motives of the Government are not material and this Court should not be tempted into an enquiry into them. However, the delay in making the application is one of the factors relied upon as indicating a waiver of immunity. 49. As I understand it the factors relied upon as evidence of waiver are these. The Government has permitted the Company for thirteen years to operate the vessel as though it was the owner despite the fact that the Government had full knowledge that the Company was holding itself out as owner. Indeed, other organs of the Government have in fact issued necessary ship's papers in which the Company is named as the owner. Indeed, other organs of the Government have in fact issued necessary ship's papers in which the Company is named as the owners, i.e. a Certificate of Stability dated 2nd June 1964 by the Bureau of Customs and a Certificate of Inspection dated 11th November 1971 by the Philippine Coast Guard. Further, as we have just seen, it is said that the Government did not intervene in the actions as promptly as it might have done: the resolution of 10th October 1973 shows that the Commission had knowledge of the proceedings some time before that date, which was itself two days before the date of the intervention. 50. There is no doubt that a foreign sovereign can waive his immunity and submit to the jurisdiction: Sultan of Johore v. Abubakar Tunku Aris Bendahar(3). However, it seems clear that this doctrine is "confined within very narrow limits" (Dicey & Morris's Conflict of Laws (9th ed.) 140). Dr. Cheshire says in his Private International Law (8th ed.) 107:
I think that is supported by dicta in Baccus S.R.L. v. Servicio Nacional del Trigo(23). It is not, in my view, enough that the sovereign remains passive: He must have taken some active step which is inconsistent with immunity in the very proceedings in which immunity is in issue. It follows that a sovereign's conduct prior to the institution of the proceedings cannot amount to a submission to jurisdiction: Mighell v. Sultan of Johore(24) Accordingly I regard use for trading purposes as relevant to the conditions for the existence of immunity rather than to the question whether immunity has been waived, although it may be that the concept of waiver can be regarded as part of the foundation for the exclusion of trading vessels from immunity, as the language of Sir Robert Phillimore in The Charkieh might suggest. I find no evidence in the present case which would have justified an inference that the Government of the Philippines had submitted to the jurisdiction of the courts in Hong Kong. 51. I wish to add only this, that nothing which I have said should be taken to decide whether The Philippine Admiral may now be sold without regard to the restrictions imposed upon the Company by its contract with the Philippine Government. 26th April, 1974. Representation: (1) 1952 A.C. 582, 604. (2) 1938 A.C. 458. (3) 1952 A.C. 318, 343. (2) 1938 A.C. 490 (4) (1873) L.R. 4 Adm. & Ecc. 59 (1) 1952 A.C. 582, 617. (5) 1955 A.C. 72. (6) (1945) 89 L. ed. 729. (7) (1938) 82 L. ed. 669 (8) 1919 P. 95 (9) 1924 p. 236. (2) 1938 A.C. 485, 490. (10) (1812) 3 L. ed. 114 (11) 1962 3 W.L.R. 405. (4) (1873) L.R. 4 Adm. & Eco. 59, 88. (3) 1952 A.C. 318 (6) (1945) 89 L. ed. 729, 738 (12) (1958) A.C. 379, 404 (13) (1880) 5 P.D. 197, 207. (1) 1952 A.C. 528, 613 (6) (1945) 89 L. ed. 729, 733 (13) (1880) 4 P.D. 147. (14) 1920 P. 30 (2) 1938 A.C. 458, 520. (15) (1925) 70 L. ed. 1088. (13) (1880) 4 P.D. 347; 5 P.D. 197 (16) (1824) 9 Whea ...(illegible) . 904, 907 (6 L. ed.) (17) (1972) 1 Lloyd's Rep. 497. (18) (1962) 34 D.L.R. (2d.) 628. (18) (1962) 34 D.L.R. (2d.) 634 (2) 1938 A.C. 485 (19) 1919 P. 105 (20) 1916 P. 64. (21) 1922 S.L.T. 68 (22) (1924) 131 L.T. 388. (4) (1873) L.R. 4 Adm. & Ecc. 59, 98 (23) 1956 1 Q.B. 438 (24) 1894 1 Q.B. 149. |