Theories of State Immunity explain the extent to which a State can claim immunity from the jurisdiction of foreign courts. Two principal theories have developed: the Absolute Theory, which grants broad immunity to foreign States, and the Restrictive Theory, which distinguishes between sovereign acts and commercial activities.

Absolute Theory of State Immunity

The Absolute Theory provides that a sovereign State is generally immune from the jurisdiction of the courts of another State, regardless of the nature of the activity involved.

The underlying principle is:

Sovereign State → No jurisdiction of foreign courts

The theory is closely connected with the principle of sovereign equality.

Basis of Absolute Immunity

The theory rests on the idea that one sovereign State should not exercise authority over another sovereign State.

The principle is traditionally expressed through:

Par in parem non habet imperium

Meaning:

An equal has no authority over an equal.

A foreign State should therefore not ordinarily be subjected to the judicial authority of another State.

Scope of Absolute Immunity

Under the absolute theory, immunity generally applies regardless of whether the State’s conduct is:

• governmental;
• sovereign;
• commercial;
• contractual;
• private in character.

Thus, the theory does not make a significant distinction between the nature of the State’s activity.

Example

Suppose:

State A enters into a commercial contract with a company in State B

↓

State A fails to perform the contract

↓

Company sues State A in State B

Under the absolute theory, State A could generally claim immunity merely because it is a sovereign State.

Advantages

The Absolute Theory:

• strongly protects State sovereignty;
• promotes equality between States;
• prevents foreign courts from interfering with governmental activities;
• provides a clear and relatively simple rule;
• protects States from politically motivated litigation.

Criticism

The theory became increasingly difficult to maintain as States began participating extensively in international commerce.

States increasingly:

• purchased goods;
• operated businesses;
• entered commercial contracts;
• borrowed money;
• engaged in banking;
• participated in international trade.

It was considered unfair in many circumstances to allow a State to engage in ordinary commercial activity while completely avoiding the jurisdiction of foreign courts.

This led to the development of the Restrictive Theory.

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Restrictive Theory of State Immunity

The Restrictive Theory limits State immunity by distinguishing between the State’s sovereign acts and its commercial or private acts.

The basic principle is:

Sovereign acts → Immunity

Commercial acts → Generally no immunity

The theory therefore provides a balance between State sovereignty and commercial accountability.

Acta Jure Imperii

Under the restrictive theory, acts performed in the exercise of sovereign authority are known as acta jure imperii.

Examples may include:

• military activities;
• diplomatic activities;
• legislation;
• taxation;
• national defence;
• governmental administration;
• exercise of public authority.

A foreign State will generally retain immunity in relation to such acts.

Acta Jure Gestionis

Commercial or private-law activities are known as acta jure gestionis.

Examples may include:

• commercial contracts;
• purchase and sale of goods;
• business transactions;
• commercial services;
• certain banking transactions.

A State may not be entitled to immunity when acting in this commercial capacity.

Example of Restrictive Immunity

Suppose:

State A purchases machinery from a company in State B

↓

State A fails to pay

↓

Company brings proceedings in State B

If the transaction is regarded as commercial, State A may not be able to claim immunity under the restrictive theory.

However, if State A’s conduct involved a genuinely sovereign governmental act, immunity may still apply.

Nature vs Purpose of the Act

A major issue under restrictive immunity is determining whether an activity is sovereign or commercial.

Courts may consider:

• nature of the transaction;
• purpose of the transaction;
• character of the rights and obligations involved;
• applicable domestic law;
• relevant treaty provisions.

Many modern approaches place significant emphasis on the nature of the act rather than simply the State’s stated purpose.

For example, a State may claim that a purchase was made for a governmental purpose, but if the transaction itself is an ordinary commercial transaction, a court may treat it as acta jure gestionis.

Comparison Between Absolute and Restrictive Theories

Absolute Theory Restrictive Theory Broad State immunity Limited State immunity No major distinction between activities Distinguishes sovereign and commercial activities Sovereign and commercial acts generally protected Sovereign acts protected Commercial acts may also receive immunity Commercial acts may fall outside immunity Strong emphasis on sovereignty Balances sovereignty and accountability Historically dominant Modern approach in many jurisdictions

Development from Absolute to Restrictive Immunity

The development can broadly be understood as:

Absolute Immunity

↓

Expansion of State commercial activities

↓

Problems with immunity in commercial transactions

↓

Restrictive Immunity

The transition was driven largely by the increasing participation of States in international trade and commerce.

State Trading and Commercial Activities

The restrictive theory became particularly important as States began operating in ways similar to private commercial entities.

For example, a State might:

• establish a state-owned enterprise;
• enter international supply contracts;
• purchase commodities;
• obtain commercial financing;
• lease property;
• operate shipping or transportation services.

If immunity applied to every such transaction, private parties could face significant difficulties obtaining legal remedies.

Immunity from Jurisdiction

Both theories primarily concern immunity from the jurisdiction of foreign courts.

Under the absolute theory:

Foreign State → broad immunity

Under the restrictive theory:

Foreign State → immunity for sovereign acts, but exceptions for commercial acts

Immunity from Enforcement

The restrictive theory should not be understood as automatically eliminating immunity from enforcement.

This distinction is important.

A State may lose immunity from jurisdiction in relation to a commercial transaction while its property may still be protected from:

• attachment;
• seizure;
• execution;
• confiscation.

Thus:

Loss of immunity from jurisdiction does not necessarily mean loss of immunity from enforcement.

Waiver of Immunity

Under both approaches, a State may in appropriate circumstances waive immunity.

A State may expressly consent to:

• jurisdiction of a foreign court;
• arbitration;
• a particular dispute-resolution mechanism.

However, a waiver concerning jurisdiction does not necessarily constitute a waiver of immunity from enforcement.

State Immunity and Arbitration

States frequently agree to arbitration in international commercial contracts.

Under the restrictive approach, agreement to arbitration may limit a State’s ability to claim immunity from the arbitral process or related court proceedings.

However, enforcement of an arbitral award against State property raises a separate question.

State Immunity and Employment

Employment disputes involving foreign States can be difficult to classify.

For example:

Foreign embassy → employee brings employment claim

The availability of immunity may depend on:

• the employee’s functions;
• diplomatic responsibilities;
• nature of the dispute;
• applicable law.

A person performing sovereign or diplomatic functions may receive greater protection than an ordinary employee.

State Immunity and Human Rights Claims

A difficult issue arises where a foreign State is accused of serious violations of human rights or International Humanitarian Law.

A claimant may argue that the gravity of the alleged violation should remove State immunity.

However, immunity from foreign domestic jurisdiction and the underlying legality of State conduct are distinct questions.

Jurisdictional Immunities of the State Case

The leading modern ICJ case is:

Jurisdictional Immunities of the State (Germany v. Italy; Greece intervening), 2012

Germany argued that Italy had violated Germany’s State immunity by allowing Italian courts to hear claims concerning German conduct during the Second World War.

Italy argued, among other things, that Germany should not receive immunity because the proceedings concerned serious violations of International Humanitarian Law.

The ICJ upheld Germany’s entitlement to immunity in the circumstances of the case.

Importance of the Case

The case demonstrates that:

Serious violation of International Law ≠ Automatic removal of State immunity

The Court treated the question of State immunity as a distinct procedural issue.

The decision is important for understanding the continuing role of State immunity in modern International Law.

International Instruments

The restrictive approach is reflected in important international and domestic legal developments.

One significant instrument is the:

United Nations Convention on Jurisdictional Immunities of States and Their Property, 2004

It provides a framework dealing with:

• State immunity;
• commercial transactions;
• employment;
• contracts;
• property;
• enforcement measures.

The Convention reflects the modern restrictive approach, although its applicability depends on the relevant legal circumstances.

Absolute vs Restrictive: Key Differences

Basis

Absolute Theory:
State sovereignty provides broad immunity.

Restrictive Theory:
Sovereignty protects governmental acts but does not necessarily protect commercial activities.

Commercial Transactions

Absolute:
Generally immune.

Restrictive:
Generally capable of falling within an exception.

Sovereign Acts

Absolute:
Immune.

Restrictive:
Immune.

Private Parties

Absolute:
May have limited remedies against foreign States.

Restrictive:
Greater possibility of bringing proceedings concerning commercial transactions.

Modern Position

Absolute:
Historically important but no longer the dominant approach in many legal systems.

Restrictive:
Widely reflected in modern State practice and legislation.

Common Confusions

Does restrictive immunity mean States have no immunity?

No. States generally retain immunity for sovereign acts.

What is the main difference between the two theories?

The Absolute Theory generally protects the State regardless of the nature of its activity, while the Restrictive Theory distinguishes sovereign acts from commercial acts.

What are acta jure imperii?

Sovereign or governmental acts.

What are acta jure gestionis?

Commercial or private-law acts.

Does a commercial act automatically remove all immunity?

Not necessarily. The applicable domestic law, treaty and circumstances must be considered.

Does losing jurisdictional immunity mean State property can automatically be seized?

No. Immunity from jurisdiction and immunity from enforcement are separate.

Is restrictive immunity the modern approach?

It is widely reflected in modern State practice and legislation, although the precise rules vary between jurisdictions.

Can a State waive immunity?

Yes, subject to applicable legal rules.

Topic at a Glance

Feature Absolute Theory Restrictive Theory General approach Broad immunity Limited immunity Sovereign acts Immune Immune Commercial acts Generally immune May not be immune Main basis Sovereignty Sovereignty + commercial accountability Acta jure imperii Protected Protected Acta jure gestionis Protected Generally outside immunity Private parties Limited remedies Greater remedies Enforcement immunity Separate question Separate question Modern relevance Historical Widely adopted modern approach

Quick Revision

• Absolute Theory provides broad immunity to foreign States.
• It is based strongly on sovereign equality.
• Under it, both sovereign and commercial activities may generally receive immunity.
• Restrictive Theory distinguishes between:
  • acta jure imperii → sovereign acts;
  • acta jure gestionis → commercial acts.
• Sovereign acts generally remain immune.
• Commercial activities may fall outside immunity.
• Restrictive immunity developed because States increasingly participated in international commerce.
• The restrictive theory attempts to balance:
  • State sovereignty; and
  • accountability in commercial transactions.
• Immunity from jurisdiction is distinct from immunity from enforcement.
• A waiver of jurisdictional immunity does not necessarily waive enforcement immunity.
• Jurisdictional Immunities of the State (Germany v. Italy), 2012 is a leading ICJ authority.
• The UN Convention on Jurisdictional Immunities of States and Their Property, 2004 reflects the modern restrictive approach.
• The key distinction is:

Absolute Theory → broad immunity for State acts.
Restrictive Theory → immunity for sovereign acts, but generally not for commercial acts.

Conclusion

The Absolute and Restrictive Theories of State Immunity represent two stages in the development of the law governing foreign State immunity. The Absolute Theory was based on the broad proposition that one sovereign State should not be subjected to the jurisdiction of another sovereign State. It therefore generally protected a State regardless of whether its conduct was governmental or commercial. With the increasing participation of States in international commerce, however, absolute immunity became increasingly difficult to justify in disputes arising from ordinary commercial transactions. The Restrictive Theory consequently developed, distinguishing between acta jure imperii, which remain protected as sovereign acts, and acta jure gestionis, which are commercial activities and may fall outside immunity. Modern State practice largely reflects this restrictive approach, although the exact exceptions differ between legal systems. The Jurisdictional Immunities of the State (Germany v. Italy), 2012 case confirms the continuing importance of State immunity while demonstrating that serious allegations against a State do not automatically eliminate its immunity before foreign domestic courts. Ultimately, the restrictive theory seeks to maintain the principle of sovereign equality while ensuring that States cannot always invoke sovereignty to avoid responsibility arising from their ordinary commercial activities.