1977

QBCA

Trendtex Trading Corp v. Central Bank of Nigeria [1977] QB 529 Court of Appeal

In 1975 the Central Bank of Nigeria issued a letter in favour of the plaintiffs, a Swiss company, for the price of cement to be sold by the plaintiffs to an English company, which had secured a contract with the Nigerian government to supply it with cement for the construction of barracks in Nigeria Under instructions from the Nigerian Government the Bank refused to honour the letter of credit, the plaintiffs brought an action in personam against the Bank in the English High Court. The Bank claimed that it could not be sued in England, on the letter of credit; because it was entitled to sovereign immunity [This case is actio in persona, compare to Phillipine 1977, both abandoned absolute immunity before the 1978 State Immunity Act] [Compare to International Tin (1990)] [Case was NOT referred to HL, but was cited there in I Congreso del Partido 1988] [State immunity can be claimed by State & Separate entity] Resolution LORD DENNING: …What is the place of International Law in our English Law? One school of thought holds to the doctrine of incorporation. It says that the rules of international law are incorporated into English law automatically and considered to be part of English law unless they are in conflict with an Act of Parliament. The other school of thought holds to the doctrine of transformation. It says that the rules of international law are not to be considered as part of English law except insofar as they have been already adopted by decisions of judges or by act of Parliament, or long established custom. The difference is vital when you are faced with a change in rules of international law…. … I now believe that the doctrine of incorporation is correct. Otherwise I do not see that our courts could ever recognise a change in the rules of international law … …When the rules of international law were changed (by the force of public opinion) so as to condemn slavery, the English courts were justified in applying the modern rules of international law…see R. v. Kent Justices, ex parte Lye…

…Seeing that the rules of international law have changed – and do change - and that the courts have given effect to the changes without any act of parliament, it follows to my mind inexorably that the rules of international law, as existing from time to time, do form part or English law… International law knows no rule of stare decisis. If this court today is satisfied that the rule of international law on a subject has changed …it can give effect to that change, and apply the change in our English law, without waiting for the House of Lord to do it…. SHAW L.J:…What is immutable is the principle of English law that the law of nations (not what was the law) must be applied in the courts of England… DENNING:… It was suggested that the original contracts for the cement were… for the building of barracks for the army. On this account it was said that the contracts of purchase were actos of a government nature - jure imperii and not of a commercial nature - jure gestionis… …If a government department goes into the market places of the world and buys boots or cement – as a commercial transaction- that government department should be subject to all the rules of the market place… …the plaintiffs here are not suing on the contracts of purchase. They are claiming on the letter of credit which is an entirely separate contract… the letter of credit was issued in London through a London Bank in the ordinary course of commercial dealings. It is completely within the territorial jurisdiction of our courts… …If we are still bound to apply the doctrine of absolute immunity, there is, even so, an important question arising upon it. The doctrine grants immunity to a foreign government or its department of state, or any body which can be regarded as an ‘alter ego or organ’ of the government …This difference in internal arrangements ought no to affect the availability of immunity in international law [see Baccus 1957] [how are we to discover whether a body is an ‘alter ego or organ’ of the government?] [ to see if the bank could be considered as `alter ego or organ´ of government]...I confess that I can think of no satisfactory test except that of looking to the functions and control of the organisation. I do not think that is should depend on the foreign law alone. I would look to all the evidence to see whether the organisation was under government control and exercised governmental functions… SHAW L.J: …I cannot find in the constitution of the Bank or in the functions it performs or the in the activities it pursues or in all those matters looked at together any compelling or indeed satisfactory basis for the conclusion that it is so related to the Government of Nigeria as to form part of it. Accordingly I would hold that the bank is not entitled to the immunity which it claims…