France Adopts Legislation Strengthening Immunity from Execution of Foreign States
Kelley Drye Client Advisory
To some extent on the blueprint of the 2015 Belgian law, the French Parliament has given final approval, on 8 November 2016, to a piece of legislation aimed at enhancing the legal protection offered to the property of foreign States. This development takes place in the wake of several attempts over the past few years – some of these attempts being attributable to vulture funds (see for example here and here) – to seize assets belonging to foreign States, including bank accounts of their diplomatic missions operating in France.
Article 59 of the law inserts new provisions in the Code des procédures civiles d’exécution, which can be summarized as follows:
- Measures of constraint can be taken against the property of a foreign State only on the basis of a prior authorization by the judge;
- Such an authorization can be granted by the judge only if one of the conditions hereafter is fulfilled (the law largely reflects, in this respect, Articles 18, 19 and 21 of the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property, ratified by France but not yet in force):
- The foreign State has expressly consented to the taking of such a measure;
- The foreign State has allocated or earmarked the property for the satisfaction of the claim which is the object of the proceeding;
- The property is specifically in use or intended for use by the foreign State for commercial, non-government purposes, and the property has a connection with the entity against which the proceeding was directed. However, this third condition can be invoked only for post-judgment or post-arbitral award measures of constraint. Moreover, some categories of assets are considered as specifically in use or intended for use for government, non-commercial purposes: inter alia, property, including any bank account, which is used or intended for use in the performance of the functions of the diplomatic mission of the foreign State or its consular posts, special missions, missions to international organizations or delegations to organs of international organizations or to international conferences.
- An express and ‘special’ waiver by the foreign State is required for measures of constraint against property, including any bank account, which is used or intended for use in the performance of the functions of the diplomatic mission of the foreign State or its consular posts, special missions or missions to international organizations. To that extent, the law overrules the recent findings of the French Court of Cassation, which in a 13 May 2015 judgment considered that customary international law does not require that a waiver of State immunity from execution be anything else than express – thereby rejecting the requirement of a ‘special’ waiver.
Article 60 of the law further lays down a special regime of protection of the property of foreign States against vulture funds. Under this regime, measures of constraint cannot be authorized by the judge unless very restrictive conditions are met.
On 8 December 2016, the French Constitutional Council has held that Articles 59 and 60 of the new legislation are consistent with the Constitution, including the right to respect for private property as well as the right to obtain the execution of court decisions (as assessed in the light of the 1789 Declaration).