1. Can I challenge the actions of a state which unilaterally
exits the Eurozone?
It is unlikely that a state's decision unilaterally to exit
the Eurozone could be challenged in any domestic courts because,
even in those jurisdictions that permit foreign states to be sued
before their courts, a decision to exit the Eurozone or to change
its currency would be considered to be the exercise by that state
of a sovereign act. Even in countries which permit exceptions to
state immunity, these are not matters about which a state may
generally be sued.
2. What is sovereign immunity?
Sovereign immunity, also known as state immunity, is a legal
doctrine by which the courts of one state cannot exercise
jurisdiction over another state (including for this purpose its
state-owned enterprises), either to adjudicate a dispute involving
that state or to enforce a judgment order or award against that
3. When might issues of state immunity be relevant?
State immunity issues could be relevant if:
your contractual counterpart is a state or a state-owned
enterprise, and has defaulted or is likely to default on its
obligations to you (and you need to consider enforcement issues);
if you have a judgment order or arbitration award against the
assets of a state or state-owned enterprise.
4. What might the impact of state immunity be?
The nature of the impact of the doctrine will depend on the
precise circumstances in each case.
The precise scope of state immunity is determined by the law of
the forum - the location of any proceedings - not the law of the
In some states, the immunity is absolute. In other jurisdictions
immunity is restricted, which means that the immunity is absolute
save for specific exceptions. Common exceptions include advance
waivers of immunity by the state of immunity from jurisdiction and
enforcement and that a state may be sued in respect of commercial
transactions and any judgment enforced against property in use for
There are different rules relating to immunity from adjudication
of disputes and immunity from enforcement. It may be possible to
sue a state and obtain judgment (adjudication) but not be able to
enforce that judgment (enforcement).
Although sovereign debt contracts commonly contain waivers of
immunity from suit any such waiver will not extend to enforcement
unless the waiver clearly states so. Even if there is no blanket
bar on enforcement, assets held for non-commercial purposes or
assets which are ring fenced from enforcement may still be
protected by the immunity.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
For a more detailed explanation of some of these issues and an
example of the pitfalls in this complex area, view our
Sovereign Immunity client knowledge page.
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The case illustrates the practical operation of "sound contracting principles", to be included in a procurement policy.
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