SWFs and State immunity: Overcoming the contradiction

The contribution surveys SWF immunity from foreign jurisdiction from three perspectives. As a starting point, it is determined to what extent sovereign wealth funds fall under the subjective scope of rules on sovereign immunity. The definition of ‘foreign State’ is therefore investigated in order to define in which circumstances SWFs meet it. Next, the issue of their immunity from adjudication is ascertained. In this regard, the main point is whether SWFs’ investments are to be understood as actions engaged in within the exercise of sovereign authority, or as mere commercial activities, over which immunity from judgment on the merits is removed. Within this framework, the classical juxtaposition between the ‘nature test’ and the ‘purpose test’ is considered. As it may not be excluded that courts render judgments against SWFs, the rules on immunity from pre-judgment and post-judgment measures of constraint are considered so as to identify the property against which jurisdictional rulings may be enforced for the full satisfaction of the legitimate expectations of judgment creditors. The enquiry mainly focuses on the 2004 UN and the 1972 Council of Europe Conventions on sovereign immunity, by virtue of their impact on the design of national statutes as well as on judgments by national and international courts and tribunals. The practice under the 1976 US Foreign Sovereign Immunities Act and the 1978 UK State Immunity Act is also taken into account. Indeed, the United States and the United Kingdom are among the most important world financial centres where investments by SWFs may take place and, at the same time, their national courts have already passed plenty of judgments concerning some of the matters here considered. The practice of other States is also given appropriate consideration, insofar as it evidences the emergence or the existence of customary rules on sovereign immunities.