What Is Sovereign Immunity? Why You Usually Cannot Sue a State

The phrase covers two different rules that are often confused. Foreign state immunity is a principle of international law and holds that the courts of one country will not exercise jurisdiction over another country, resting historically on the equality of states and the idea that an equal has no authority over an equal. Domestic sovereign immunity is a rule of a country's own law protecting its own government from being sued in its own courts, and in common law systems it descends from the position that the Crown could do no wrong, meaning originally that the king's courts had no power over the king rather than that the king was infallible. The two have moved in the same direction over the last century, from near-absolute protection to a defined set of exceptions, but they rest on different foundations and are limited by different instruments.

Until the early twentieth century the foreign version was close to absolute: a state could not be sued at all, whatever it had been doing. That position became untenable as governments entered commerce directly, since a state trading corporation that bought grain and refused to pay could not be pursued while a private buyer could, which put every counterparty at risk. The response was the restrictive doctrine, which distinguishes acts performed in the exercise of sovereign authority from acts any private party could perform:

• •Sovereign acts, which retain immunity, include legislating, expelling a foreign national, operating armed forces and granting or refusing a licence
• •Commercial acts, which do not, include buying and selling goods, borrowing money, chartering a ship and running a business
• •The test applied is usually the nature of the act rather than its purpose, so buying boots for an army is commercial even though the purpose is military
• •Most systems also lift immunity for employment disputes with locally hired staff, for injury or damage caused within the forum state, and for disputes about property located there
• •A state may waive immunity, and routinely does so in loan agreements and commercial contracts, which is why sovereign bond documents contain lengthy waiver clauses

The rules are set out in national statutes rather than left to judges in most places. The United States passed the Foreign Sovereign Immunities Act in 1976 and the United Kingdom the State Immunity Act in 1978, and similar legislation exists across the common law world; European states have generally arrived at the same position through case law and a 1972 convention. A United Nations convention adopted in 2004 codifies the restrictive approach but has still not received enough ratifications to enter into force, so the detailed rules vary. The variation matters, since a claimant with a judgment against a state has to find a jurisdiction willing to hear the claim and then, separately, assets that can be seized. That second step has its own immunity, usually stricter than the first, protecting diplomatic property, central bank reserves and military assets even where the underlying judgment is valid, which is why holders of defaulted sovereign debt have spent years chasing ships, aircraft and bank accounts around the world with limited success.

The hardest cases arise where a state is accused not of failing to pay for grain but of torture or crimes against humanity, and the current answer is unsatisfying to many people. The International Court of Justice held in 2012, in a case brought by Germany against Italy over compensation claims by wartime forced labourers, that immunity is procedural and applies regardless of how serious the alleged conduct was, so Italian courts could not hear the claims. The European Court of Human Rights reached a similar conclusion in earlier cases involving allegations of torture. The reasoning is that immunity determines which court may hear a case rather than whether the conduct was lawful, and that no settled exception for grave violations has yet emerged in state practice. Some countries have legislated narrow exceptions of their own, most visibly the American provisions allowing suits against designated state sponsors of terrorism, which other states regard as a breach of international law. Individual officials are treated differently from the state itself, and a former head of state has no immunity from prosecution abroad for international crimes, the principle established in the Pinochet litigation in the House of Lords in 1999.

The domestic version has eroded further. The United Kingdom largely abolished it for civil claims with the Crown Proceedings Act in 1947, allowing the government to be sued in contract and tort much as a private defendant would be, with carve-outs that included the armed forces until 1987. The United States did the equivalent through the Federal Tort Claims Act in 1946, which permits claims for negligence by federal employees while preserving immunity for discretionary policy decisions, a distinction that generates continuous litigation about which is which. Judicial review, the mechanism by which the lawfulness of a government decision is challenged, was never blocked by the doctrine and has grown enormously. What survives in most systems is immunity for legislative acts, for genuine policy choices as opposed to their negligent implementation, and for judges acting judicially, on the reasoning that a decision-maker who can be sued for deciding will decide badly.

Two separate rules are involved: an international principle that one state's courts will not exercise jurisdiction over another, and a domestic rule protecting a government from suit in its own courts. Both have shifted from near-absolute to restrictive, so that commercial acts, local employment disputes and injuries caused in the forum state are actionable while sovereign acts are not, and states routinely waive immunity in contracts. Enforcing a judgment faces a second and stricter immunity over assets, and courts have so far declined to create an exception for grave human rights violations.