The principle of Restrictive Sovereign Immunity holds that foreign states enjoy immunity, which is limited to the State's public or official acts. This immunity is not extended to states' acting in private or commercial capacities, whereby such states are required by International Law to submit and abide by the second State's jurisdiction. In the period extending to approximately 200 years ago, foreign sovereign immunity has continued to receive increasing attention both in academia and in the practice of law. It was not until the twentieth century that the legal community considered this perception as lacking mutual respect, equality, and dignity. (Finke, 2010). The rise in awareness regarding the international rights of human beings has spurred debates about the appropriateness of absolute foreign sovereign immunity. All nations of the world were previously granted an "exception" from other states' judicial statements.
In the case-study, Peach Power is an electric company found in the Federation of Peach and is owned by the State. The company entered into a contract with a Brazilian firm, X Corp, which it grossly breached. The London Court of Arbitration, handling the case, ordered Peach Power to pay X Corp damages. In this case, the court should grant immunity to Peach Power since it must have operated in the interest of the State and, thus, the general public in entering into the contract. The decision to grant X Corp an arbitral reward should therefore be reversed following the plea for immunity made by Peach Power. Peach Power did not violate an act made out of private choice but rather, which affects the State's populace.
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The court, taking into account that the State's company is immune from such adjudication, will reconsider making claims and pronounce a judgment that goes against it. In cases that involve immune parties, the court is usually deterred from considering any judgment passed in a foreign state or even any arbitral awards declared against them (Dodge, 2020). Generally, there are two approaches used to execute state immunity: the restrictive theory and the absolute theory. Absolute sovereign immunity was initially the only used approach until the establishment of the restrictive doctrine, which sharply contrasts between actions that are commercial from those that are sovereign. More and more nations have acknowledged this later approach, shunning away from the previous model, which did not offer any law exceptions. However, a few jurisdictions, including China and Hong Kong, still practice it ("State Immunity: an Overview", 2019).
It should be noted that even though state immunity is a subset of international law, "the law of the forum" guides its application. For example, in the United Kingdom, the State Immunity Act of 1978 directs the execution of state immunity law. The first section of the act states, "The U.K. courts have no jurisdiction to adjudicate disputes against other states unless one of the exceptions described in the Act applies" (Urquhurt & LLP, 2020). The policy of crown immunity is widely embraced here.
Even with the broad adoption of the restrictive approach, state immunity has continually been a confusing part of the international law, with the range of recognizable exceptions differing from one State to another ("State Immunity: an Overview", 2019). State commercial activities or assets may not be clearly defined, thus creating problems regarding the claim for immunity.
Conclusively, the Department of States of the United States of America came up with the restrictive doctrine of sovereign immunity as a general policy issue. Public acts determine whether a sovereign can be accorded immunity, whereas commercial or private acts do not.
References
Dodge, W. (2020). Jurisdiction, State Immunity, and Judgments in the Restatement (Fourth) of U.S. Foreign Relations Law. SSRN Electronic Journal , 19 (1). https://doi.org/10.2139/ssrn.3547660
Finke, J. (2010). Sovereign Immunity: Rule, Comity, or Something Else? European Journal of International Law , 21 (4), 853-881. https://doi.org/10.1093/ejil/chq068
State Immunity: an Overview . Ashurst.com. (, 2019). Retrieved 22 September 2020, from https://www.ashurst.com/en/news-and-insights/legal-updates/state-immunity--an-overview/ .
Urquhurt, Q., & LLP, S. (2020). Sovereign Immunity in the United Kingdom | Lexology . Lexology.com. Retrieved 22 September 2020, from https://www.lexology.com/library/detail.aspx?g=e98d861b-418e-4ad3-9dd4-1be851fb7f37 .
