Standard Chartered Bank v. International Tin Council and Others

The Standard Chartered Bank stipulated a lend contract with the International Tin Council (ITC), an international organization established in 1956 and headquartered in London. The Bank filed a legal complaint against the ITC before the High Court Queen’s Bench Division of the United Kingdom.

While the ITC invoked its immunity from national jurisdiction, the applicant argued that the lend contract provided for an implicit waiver of the ITC’s immunity from legal process. In particular, Article 7 of the contract “Governing law and jurisdiction” provided that the lend agreement “shall be governed by and interpreted in accordance with English law” and submitted to the non-exclusive jurisdiction of the UK High Court of Justice. Therefore, the Court was called to determine whether the choice of forum clause, contained in the contract, amounted to an implicit waiver of the ITC’s immunity.

The Court firstly observed that the Headquarter Agreement concluded in 1972 between the ITC and the United Kingdom provides that the ITC shall have legal personality and the capacity to contract and confers on it immunity from national legal process. Specifically, pursuant to Article 8, the ITC “shall have immunity from jurisdiction and execution except: a) to the extent that the Council shall have expressly waived its immunity in a particular case; b) in respect of civil actions by a third party for damages arising from an accident cause by a motor vehicle belonging to or operating on behalf of the Council or in respect of a motor traffic offense; c) in respect of enforcement of the arbitration awards made under either Article 23 or Article 24 of the Agreement.

Under domestic law, the immunity of the respondent organization from legal process is recognized by the ITC Immunity Order of 1972, adopted in accordance with the 1968 International Organizations Act. As underlined by the Court, the Order provisions substantively reproduce the text of the Headquarter Agreement. As it argued, the Headquarter Agreement and the Order clearly provide that the waiver of the ITC’s immunity must be formulated in express terms and in regard to particular case. Relying on a textual interpretation of such provisions, the ITC objected that the clause of the contract cannot be interpreted as determining a waiver of the ITC’s immunity. Such interpretation of the text of the agreement would be supported by the formulation of other similar agreements stipulated by other organization located in the UK, such as the International Oil Pollution Compensation Fund. In addition, the ITC argued that a sovereign entity “a sovereign could effectively waive his immunity not by agreeing in advance to submit to English jurisdiction, but only by an actual submission to the jurisdiction in the face of the court“. On the other hand, the ITC claimed that arbitration was the exclusive mechanism of resolution of contract disputes between the ITC and private parties, as provided by the Headquarters Agreement.

The Court rejected the argument advanced by the ITC and held that the latter had waived its jurisdictional immunity in relation to disputes arising from the contract stipulated with the applicant. The Court underlined that the Headquarter Agreement merely provides that the ITC should include an arbitration clause in a contract with a person resident in the United Kingdom or a body incorporated or having its principal place of business in the United Kingdom. In the instant case, the contract concluded with the applicant did not contain such a clause. Instead, it clearly established the competence of the UK High Court of Justice for any legal claim concerning the contract. According to the Court, Article 7 of the contract must be read as an implicit waiver of the ITC immunity for any disputes that could arise from the execution of the contract.

The Court also stressed that the ITC is not as sovereign entities and, as a consequence, it cannot rely on any argument based on an analogy between States and international organizations. As it underlined, the doctrine of sovereign immunity is based on the principle of “equality” between sovereign States. In particular, the Court affirmed that “the ITC could scarcely be seen as enjoying perfect equality with the United Kingdom or the same absolute independence. (…), international organizations such as the ITC have never been recognized at common law as entitled to sovereign status. They are accordingly entitled to no sovereign or diplomatic immunity in this country save where such immunity is granted by legislative instrument, and then only to the extent of such grant. In the present case the ITC enjoyed such immunity as was granted by section 6(1) of the 1972 Order, no more and no less”.

The Court also underlined that its conclusion finds support in the settled practice of other nations, affirming that it is generally accepted that a waiver of immunity can be express in any form.