Iraq v Dumez

JurisdictionBélgica
CourtCivil Tribunal (Belgium)
Belgium, Civil Court of Brussels (Attachments).

(Goldenberg J)

Iraq
and
Dumez

International organizations United Nations Security Council Powers to maintain international peace and security Security Council Resolutions Whether capable of having direct effect in municipal law Resolution No. 687 (1991) Imposition of levy on Iraqi petroleum exports to compensate victims of Gulf War Whether depriving Iraq of general immunity from execution

State immunity Jurisdictional immunity Commercial activity Agreement with private company for construction of buildings Enforcement of foreign judgment relating to agreement Whether foreign State entitled to jurisdictional immunity

State immunity Attachment and execution Scope of immunity Enforcement of exequatur for foreign judgment Whether foreign State entitled to invoke immunity from execution to oppose application for enforcement Whether Belgian courts required to examine whether conditions for service complied with in proceedings before French courts

State immunity Attachment and execution Bank accounts Funds allegedly allocated for diplomatic functions Criteria for determining whether funds immune from attachment Whether courts of forum entitled to question statements made by sending State concerning allocation of funds

Diplomatic relations Immunity Property Embassy bank account Whether enjoying automatic immunity from execution Funds allegedly allocated for diplomatic functions Burden of proof Whether courts of receiving State entitled to verify nature of funds deposited by embassy Vienna Convention on Diplomatic Relations, 1961

Economics, trade and finance State contracts Liability for debts Enforcement of judgment against foreign State The law of Belgium

Summary: The facts:In July 1990 Dumez, a French company, obtained a judgment from an Iraqi court for payment of a debt owed under a building contract performed for the Iraqi Defence Ministry. In August 1990 Iraq invaded Kuwait and enacted Law No. 57 which prohibited the Iraqi courts from exercising jurisdiction over any proceedings against the Iraqi State and thereby prevented Dumez from enforcing its debt in Iraq. Dumez then brought an action before the Tribunal de grande instance of Nanterre and, in a judgment of 9 October 1991, was awarded the sum of US $22 million. On the basis of this judgment Dumez obtained conservatory attachment orders over funds held in bank accounts of the Iraqi State in Paris (in 1992) and in Brussels (in 1993). Iraq appealed against both the attachments and the judgment of the French court on the merits. Iraq argued that the attachment granted by the Belgian court should be vacated as it violated its entitlement to jurisdictional immunity and immunity from execution, and because the proceedings in the French courts had not been properly served on the State of Iraq.

Held:The application was rejected. Iraq was not entitled to either jurisdictional immunity or immunity from execution in relation to the proceedings.

(1) The competent French court had found that in the transaction at issue, the Iraqi State had acted as an ordinary private person, the contract contained an arbitration clause and the proceedings before it had been properly instituted. Res judicata attached to that decision, which was not in conflict with either public policy or the rules of Belgian public law: Furthermore, the rights of the defence had been respected. Accordingly, in the present state of the proceedings, Iraq could not invoke jurisdictional immunity (p. 288).

(2) It was argued that, on the date of the attachment at issue, Iraq had been deprived of its prerogatives as a sovereign State, including its immunity from execution, as a result of numerous United Nations Security Council Resolutions imposing various sanctions against it, in particular Resolution No. 687 which imposed a levy on its petroleum exports. In principle Security Council Resolutions had direct effect and those in question without doubt amputated the sovereignty of Iraq by effectively organizing a vast distraint on its assets. But that order was intended to raise funds exclusively for the benefit of the victims of the Gulf War and Resolution No. 687 itself stated that it was without prejudice to debts and obligations arising prior to 2 August 1990, which was the case here (pp. 28990).

(3) Under both Belgian and international law, States were not entitled to absolute immunity from execution and such immunity only applied to certain assets. It was necessary to determine whether the funds subjected to attachment in the hands of a third party had been allocated in whole or in part for sovereign activities. In this case, Iraq's contention that the funds were exclusively allocated for the requirements of its diplomatic mission could not he accepted since the amount of the funds was clearly far larger than necessary simply to cover the expenses of the small Iraqi diplomatic representation in Belgium. Neither could the contention that the funds were intended to acquire an embassy building be accepted, in the absence of any evidence to substantiate that claim (pp. 2901).

(4) The Vienna Convention on Diplomatic Relations granted various privileges to the sending State, in so far as they were exclusively necessary for the purposes of its mission. Several provisions of the Convention required...

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