The law in France regarding waivers of foreign state (or sovereign) immunity from execution of judicial judgments (based largely on consideration of international law principles) has recently undergone significant developments. Previously, French case law had required a foreign state's waiver of immunity from execution to be both express and specific to consider valid the attachment of foreign state property allocated to public services (including bank accounts used for the functioning of both diplomatic missions and delegations to international organizations). In 2015, the French Court of Cassation relaxed the criteria it had previously required for giving effect to waivers of sovereign immunity in such situations, thus facilitating the ability of judgment creditors to attach foreign state property in France.Footnote ¹ Its decision in the Commisimpex v. Republic of Congo case appeared to put an end to that requirement by abandoning the criterion of a “specific” waiver on the ground that “customary international law does not require a waiver of immunity from execution other than express.” In December 2016, however, the French government enacted new legislation reinstating the need for a specific waiver of immunity for the attachment of the property as well as bank accounts of foreign embassies and diplomatic missions and additionally requiring a court order authorizing the attachment or seizure.Footnote ² As a result, France has now embraced a distinctly more protective approach to the immunity of foreign state assets from attachment and execution of judicial judgments.

The case before the Court of Cassation was one of many arising from disputes between the Republic of Congo and a Congolese company, Commissions Import Export SA (Commisimpex). In the 1980s, Commisimpex had entered into contracts with the Republic of Congo to perform public works and supply materials. In 1992, the parties signed an agreement for the repayment over ten years of certain debts owed to Commisimpex under the contracts. Article 10 of that agreement provided that any disputes arising from or relating to the agreement would be resolved by final and binding arbitration under the Rules of the International Chamber of Commerce (ICC). In 1993, the Republic of Congo issued a series of commitment letters that contained a definitive and irrevocable waiver of immunity from legal proceedings (including efforts to execute arbitral awards) and a commitment to submit all disputes to ICC arbitration in Paris, France.

The attempts to settle disputes under the contract did not succeed and Commisimpex accordingly initiated arbitration at the ICC's International Court of Arbitration. It eventually prevailed, receiving a substantial award rendered in December 2000 against the Republic of Congo. The Republic sought to have the award set aside, but its request for annulment was rejected by the Paris Court of Appeal in 2002. Commisimpex then proceeded to attach several bank accounts held at the Société Générale in Paris (the Bank) in the name of the Republic of Congo's embassy in Paris and its permanent delegation to the United Nations Educational, Scientific and Cultural Organization (UNESCO), for a total of €167,652,461.

The Republic of Congo contested the validity of the attachments, arguing that its 1993 commitment letters had provided for a general but not specific waiver of its immunity from jurisdiction and execution. For its part, Commisimpex sought to compel the Bank to produce the relevant account agreements and to disclose the names and positions of the persons authorized to use those accounts. The French courts initially ordered the Bank to produce the account agreements,Footnote ³ but later reversed that ruling on the grounds of bank secrecy.Footnote ⁴

In November 2012, the Versailles Court of Appeal upheld the judgment dissolving the attachments.Footnote ⁵ The court first declared that according to customary international law, diplomatic missions of foreign states benefit, for the functioning of the accredited state's representation and the needs of its sovereign mission, from an autonomous immunity from execution which can only be “waived in an express and specific way” (para. 11). Because the 1993 letters of commitment contained only a general (but not specific) waiver, the court stated that the test was not satisfied. The court also held that international immunities can take priority over the principles of “equality of arms” and the right to enforcement of judicial decisions. Finally, the court rejected Commisimpex's argument that it had a “right to evidence,” since it had not demonstrated that the requested exhibits were indispensable for the exercise of its rights to enforce the judgment in question. In reaching this decision, the Court of Appeal relied on the then-applicable decisional law, since France had no relevant statute regarding immunity from execution.

In May 2015, the Court of Cassation overruled the Court of Appeal and, in setting its decision aside, radically changed the applicable criteria under domestic law for determining the validity of waivers of sovereign immunity from execution. It stated that, “by virtue of rules of customary international law on State immunity from execution, . . . customary international law does not require a waiver of immunity from execution other than express” (paras. 2, 4). The Court of Cassation did not rule on the other arguments. In particular, it left unanswered the question whether immunity from execution may amount to a disproportionate interference in the fundamental right to enforce judgments. It also failed to resolve the issue relating to the burden of proof with respect to the true nature (commercial vs. sovereign) of funds in the bank accounts of the diplomatic mission and delegation, since the question was not relevant to the solution of the case. In reaching this conclusion, the Court of Cassation clearly facilitated the attachment of foreign state property in France, including bank accounts used for the official functions of diplomatic missions.

The decision has been considered by some as representing important progress in protecting the rights of creditors of foreign states. However, for foreign governments as well as the French government (which had reason to fear that it would be subject to similar rules in foreign courts), the decision proved to be controversial. Accordingly, the government introduced proposed legislation containing specific provisions on “conservatory or enforcement measures” targeting foreign states property in France. The result was the adoption of new provisions in the French Civil Enforcement Proceedings Code entitled “Transparency, Fight Against Corruption and the Modernization of Economic Life,” that went into force on December 10, 2016 (Sapin 2 Law).

From now on, conservatory or enforcement measures can only be implemented against foreign state property by prior judicial authorization awarded in a non-adversarial procedure,Footnote ⁶ and only if:

With specific reference to the third category above, the law provides that certain categories of property are, by definition, “in use or intended for use by the State for non-commercial public service purposes.” These include:

More precisely with regard to the Commisimpex dispute, the new statute also provides that:

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The 2015 Court of Cassation ruling was the result of a long evolution of judicial interpretation that culminated in a more liberal approach toward permitting private parties to attach foreign state property in order to give effect to judicial decisions or arbitral awards against the state in question. Despite some references in earlier court decisions to the existence of absolute immunity of foreign states funds held by third parties (such as banks), it was nonetheless clear by the early 1980s that a foreign state's immunity from execution could be discarded in exceptional circumstances: either when the property seized was “used for an economic or commercial activity from which the legal claim derives,” or alternatively, when the state in question had agreed to waive its immunity from execution.Footnote ¹⁰

As the so-called “restrictive approach” to sovereign immunity gained prominence, the question increasingly became what specific conduct constitutes an “economic” or “commercial” activity for this purpose. As a result, cases based on waivers of immunity from execution, especially regarding property used for a public purpose, were relatively rare and solutions were unsettled. In France, the absence of a statute, coupled with the varying approaches adopted in relevant treaties and conventions,Footnote ¹¹ left domestic judges to decide the specific conditions of a foreign state's waiver to its immunity from execution in the context of particular cases.

At first, waivers by foreign states of immunity from execution were narrowly interpreted. The general rule was that a state could “validly renounce [its immunity], expressly or implicitly, in a special and non-equivocal manner.”Footnote ¹² On occasion, the question whether a renunciation was valid created procedural issues: in one case, a judge granted the exequatur of an arbitral award condemning the Republic of Congo, but decided to submit any enforcement measure to the specific authorization of an enforcement judge; that decision was ultimately overruled by the Court of Appeal because the judge had exceeded his power in so ruling.Footnote ¹³

However, the attachment of property belonging to embassies, including their bank accounts, limits the functioning of the foreign state's representation and is liable to trigger diplomatic tensions between that state and the forum state. It may also give rise to threats of retaliation. Indeed, for that very reason, the French public attorney is authorized by law to intervene in an enforcement proceeding or to initiate a challenge on his own motion to protect French public order.Footnote ¹⁴ In that respect, he can urge judges to lift any measures that could violate France's international engagements, including under the rule of international comity requiring states not to impede the functioning of a foreign state's public activities or otherwise undermine the mutual respect states grant each other.

In this regard, the 1961 Vienna Convention on Diplomatic RelationsFootnote ¹⁵ has been the basis of the argument that any attachment of property belonging to an embassy or a permanent representation, including bank accounts, should satisfy a higher (more restrictive) standard to validate a waiver by a foreign state to its immunity from execution.Footnote ¹⁶ A number of contradictory rulings were rendered by French courts on this matter, to which the decision of March 2015 seemed to put an end.

The question whether a waiver must be specific in order to permit the attachment of property belonging to a diplomatic mission was referred to the Court of Cassation for the first time in 2011 in a case where NML Capital Ltd. (a vulture fund) had provisionally attached bank accounts opened by Argentina's embassy in Paris and its permanent delegation to UNESCO.Footnote ¹⁷ In that case, the Court of Cassation upheld the Court of Appeal's decision lifting the attachments on the ground that

In that instance, Argentina had not specifically waived its immunity from execution. The Court of Cassation justified the existence of this autonomous immunity from execution on the basis of principles of customary international law rather than on the Vienna Convention.

In 2013, the Court of Cassation in three additional decisions in the NML v. Argentina case rendered on the same day, held that “according to customary international law, as reflected by the December 2, 2004 UN Convention on the Jurisdictional Immunities of States and Their Properties,” attachment of property used or intended to be used for public (official) purposes is only possible with a waiver in writing, express and specific, “that expressly mentions specific property or categories of property for which the waiver is consented.”Footnote ¹⁹ The consistency of this position with the 2004 UN Convention wording is however debatableFootnote ²⁰ as it does not mention the requirement of a specific waiver, but only the need for protection of specific property and categories of property.

In reaction to this last criticism, the Court of Cassation held in 2015 that “customary international law does not require a waiver of immunity from execution other than express,” and thereby abandoned the requirement of a specific waiver, whichever meaning was given to this specific condition. As a result, the attachment of bank accounts opened in the name of the Republic of Congo embassy and permanent delegation to UNESCO could be upheld. Moreover, the general wording used by the court seemed to set the same test for any waiver of any type of immunity from execution, without dissociating autonomous regimes to attach specific categories of property or property used for some non-commercial purposes, except for specific conditions set by law (for instance for central banks) or an international convention. This state of the law did not last long and was reversed by the Sapin 2 Law.

The Sapin 2 Law adoption seems to have been prompted by two events: first, the prospect of enforcing the Yukos awards against Russia's property in France; and second, the adoption by Russia on November 3, 2015 of a new law on state immunity that abandons the absolute doctrine of immunity and fixes a reciprocity condition for the attachment of foreign state property in Russia.Footnote ²¹ Accordingly, at the initiative of the French Ministry of Foreign Affairs, new legislation on foreign state immunity from execution was integrated into the Sapin 2 legislative project in order to overrule the Commisimpex v. Republic of Congo ruling. Belgium had already followed a similar path by adopting a new law which restricts foreign state property attachments.Footnote ²²

Article 59 of the Sapin 2 Law codifies Articles 18, 19, and 21 of the 2004 UN Convention on the Jurisdictional Immunities of States and Their Properties, at least to some extent. It specifies that property (including bank accounts) used or intended for use in the performance of the official functions of diplomatic missions or consular posts (among others) is presumed to be used or intended for use of public and non-commercial purposes and that, in general, only an express waiver is necessary.Footnote ²³ However, it departed from the 2004 UN Convention wording and content by providing, first, that property (including bank accounts) that is used or intended for use in the performance of diplomatic or consular functions is not subject to attachment absent “an express and specific waiver by the state.”Footnote ²⁴ Second, in all cases, attachment of property belonging to a foreign state will require a court authorization awarded in a non-adversarial procedure prior the seizure of any type (commercial or sovereign) of that foreign state property.Footnote ²⁵

This reversion toward a more protective approach to the immunity of state property restates questions that the 2015 Commisimpex v. Republic of Congo ruling had discarded or left unanswered. The first relates to the form such a waiver should take. According to the 2013 NML v. Argentina rulings, a waiver had to expressly mention specific property or categories of property with respect to which the waiver is granted. This solution was overruled in 2015, again raising uncertainty on what constitutes a specific waiver in the context of new Article L. 111-1-3 of the French Civil Enforcement Proceedings Code. It seems that the French legislation was intended (at least in part) to codify the 2011 case law.Footnote ²⁶ However, in its 2011 NML v. Argentina decision, the Court of Cassation did not indicate what could constitute a specific waiver. This question should soon be at the heart of private parties’ preoccupations in the negotiation of contracts with states and should give rise to judicial controversy in the future.

Concerns that a grant of immunity might interfere (unduly and disproportionately) with the right to a fair trial (as protected by Article 6 §1 of the European Convention on Human Rights and Fundamental Freedoms) have of course been raised in many of the previous cases on the issue of attachment and enforcement against state assets. In one of the 2013 NML v. Argentina decisions, for example, the Court of Cassation justified its position on the ground that the European Convention must be interpreted in a way compatible with other rules of international law, such as those concerning state immunities. Consequently, the limitation on the right to a fair trial could be justified to the extent that it does not exceed international rules generally recognized on state immunities. NML contested this decision before the European Court in Strasbourg, but the claim was declared inadmissible on the ground that the dispute could still be brought in front of the relevant domestic administrative judge.Footnote ²⁷ The issue seems likely to come up again in another proceeding.

Another likely issue relates to the possibility that a private party seeking to enforce a judgment might be able to overcome the presumption that funds in an embassy's bank accounts were in fact used for public purposes. Embassy bank accounts may of course be “mixed,” that is, partly used for diplomatic functions and partly for economic or commercial activities. The presumption in favor of a diplomatic use of embassies bank accounts has long existed under French law and has now been codified by the Sapin 2 Law. It has, however, been considered problematic, especially in the context of mixed bank accounts,Footnote ²⁸ as investigations could frequently be required to determine the proportion of embassy funds used or intended for use for either activities as well as infringe the foreign state conduct of diplomacy. A 1979 decision by a first instance judge adopted a balanced approach by deciding to lift the attachment of foreign embassy bank accounts because the effects were too detrimental for the state, but at the same time to appoint a commission composed of an expert and two former magistrates to investigate the proper allocation of the funds and the proportion of each.Footnote ²⁹ One limitation of this approach, however, is that by the time the results of the investigation are known, the funds could have already been used if they had not been frozen. Further, bank secrecy as applied in France will likely limit the leverage of private parties on that question, as illustrated in the Commisimpex case in front of the Versailles Court of Appeal. Interestingly, the topic was not raised during the debates over the proposed Sapin 2 Law, when there would have been an opportunity to tackle this specific difficulty.

Despite the new statute, it is likely that the specific issue of state immunity from execution in the context of bank accounts used for public missions will continue to generate controversy in France.