State Immunity from Execution: In Search of a Remedy

When proceedings are brought against one state within another, the former enjoyslimited state immunity (both from jurisdiction and from execution), which isordinarily unavailable in matters of commerce. However, a private party does notcurrently have an effective remedy against a foreign state for four main reasons: (i)even if immunity from jurisdiction is not available, immunity from executionalmost always is (in broad terms the former depends on whether the subject-matterof the dispute is commercial, the latter on whether the object upon which executionis sought to be levied is for commercial purposes); (ii) the sole “commercial” assetsthat one state is likely to have within the jurisdiction of another are funds held inits embassy’s bank accounts; (iii) these funds are likely to be of mixed nature (oneaccount containing both “commercial” and “sovereign” funds); and (iv) the privateparty has no realistic and effective means of proving ex ante the nature of suchfunds, and the defendant state cannot be made to furnish such proof. This oftenresults in the impossibility of execution of a judgment which a private party mightobtain.This article offers two ways to by-pass this problem and give a private party aremedy: (i) the less realistic possibility of an international instrument to resolve thesatisfaction of such judgments through transferring SDRs; and (ii) showing that itis possible to use a “tainted money” approach to determine ex post facto thepurpose of the funds held in an embassy bank account, and to levy execution onlyupon the “commercial” part of such funds. It is further argued that the lattersolution requires no modification of the current law of state immunity, in no waycontravenes the law of state immunity or international law in general, and can beused in practice immediately.