Christopher Forsyth and Nitish Upadhyaya: Crown Immunity after the End of Empire in Hong Kong and India

Nitishforsyth1Crown Immunity is a recondite branch of Public Law that seldom makes an appearance in the Law Reports but it does potentially raise grave constitutional issues. It is surely ‘fundamental to the rule of law that the Crown, like other public authorities, should bear its fair share of legal liability and be answerable for wrongs done to its subjects’(H W R Wade and C F Forsyth, Administrative Law (10th ed, OUP, 2009), 695)).  But, on the whole, those grave constitutional issues are seldom acute in the United Kingdom. This is in large measure because of the passing of the Crown Proceedings Act 1947 which puts the Crown in much the same position as that held by an ordinary employer and an ordinary litigant and the decision of the House of Lords in M v The Home Office [1994] 1 AC 377 that scotched the heresy that Ministers of the Crown shared the immunities of the Crown and so only obeyed the law as ‘a matter of grace’ but were subject to coercive remedies to secure compliance.

But this post draws attention to the fact that these grave constitutional issues do arise elsewhere. In many parts of the world Crown Immunity is part of the legacy of Empire, left behind when the British departed.   At the height of the British Empire, the Crown enjoyed sovereignty over vast swathes of the globe that were not part of the United Kingdom; in these territories, unless altered by remedial statute, there are difficulties with proceedings in the local courts against the Crown (or its successor sovereign). The Crown Proceedings Act 1947 applied only to the Crown in right of the United Kingdom, so it does not help; there has to be local legislation in the jurisdiction concerned. Many of these jurisdictions enacted remedial legislation (sometimes earlier than the UK legislation) similar to that of the Crown Proceedings Act. But not all did.

This post deals with only two jurisdictions –India and Hong Kong – in which there are difficulties over Crown Immunity. First India.  The stark truth is that there is, in India, no general legislation similar to the Crown Proceedings Act. The current Indian State enjoys the immunities of the Raj (technically the Secretary of State for India), who enjoyed the immunities of the East India Company—the entity that governed India on behalf of the Crown prior to 1858 and enjoyed Crown Immunity (often called ‘Sovereign Powers’).  It is startling to note that ‘the liability of the [Indian] Government [today] is the same as that of the East India Company before…1858’(T. S. Pradhan, ‘Immunity to sovereign functions’, National Law Institute University Bhopal, Research paper for the Constitution Commission of India (4 June 2010), p 6.

The ambit of this immunity was first outlined in P. & O. Steam Navigation Co v Secretary of State (1861) 5 Bom HCR App. 1 (P. & O. Steam Navigation) where the Court distinguished between the functions of the East India Company which were mercantile (and in respect of which the company enjoyed no immunity) and the governmental functions of the company (in respect of which it did benefit from immunity). The court held that the company (and its successor, the Secretary of State for India) was not liable for anything done in the exercise of such ‘sovereign powers’. The court defined such ‘sovereign powers’ as powers which ‘cannot be lawfully exercised except by a sovereign, or a private individual delegated by a sovereign to exercise them’. Successive judicial decisions have mistakenly taken this antiquated position as a starting point from which to analyse the liability of the Indian State for tortious acts. This has effectively left the Indian government and its agents with full immunity for such acts—a wholly unacceptable position in a modern legal system.

In the case of Kasturi Lal v State of U. P.  AIR (1965) SC 1039. (Kasturi Lal), the Supreme Court accepted and applied the distinction first adopted in P. & O. Steam Navigation—that of sovereign and non-sovereign functions. The police arrested Kasturi Lal, a partner in the appellant firm. While in custody certain gold, the property of the firm, was seized from him on suspicion that it was stolen. On his release from custody the gold was not returned to him as the Head Constable had taken it and fled to Pakistan. An action was brought by the firm against the authorities to recover the value of the lost gold but the Supreme Court held that the negligence of the officers in allowing the gold to be stolen occurred when they were carrying out duties related to the sovereign functions of the State and so the claim failed. However, it is telling that even in this case, the Supreme Court felt ‘disturbed by the thought that a citizen whose property was seized by process of law, has to be told when he seeks a remedy in a court of law on the ground that his property has not been returned to him, that he can make no claim against the State. That, we think, is not a very satisfactory position in law. The remedy to cure this position, however, lies in the hands of the Legislature’. The adoption of this distinction to determine the liability of the authorities when they exercise ‘sovereign powers’ brings a surprising whiff of the rule of the John Company to modern India—an immunity akin to, and derived from, the unreformed Crown Immunity of nineteenth century Britain has survived into twenty first century India!

The decision in Kasturi Lal is gradually being pushed aside, in favour of rulings which hold the State to account for tortious acts. Crown Immunity is no longer applicable to public law cases lodged through writ petitions under Articles 32 and 226 of the Indian Constitution.   Further, a tort claim where inalienable constitutional rights, such at the right to life (guaranteed by Article 21) have been violated, the State cannot use immunity as a defence.  Judges have become ever more critical of the use of Crown Immunity to defend claims, with the most straightforward argument being that ‘the law has marched ahead like a Pegasus but the Government attitude continues to be conservative and it tries to defend its action or the tortious action of its officers by raising the plea of immunity for sovereign acts or acts of State, which must fail’ (State of Andhra Pradesh v Challa Ramkrishna Reddy  AIR 2000 SC 2083).

In Hong Kong, on the other hand, a Crown Proceedings Ordinance Cap 300 of 1957 was enacted  (and remains in force) to govern the liability of the Crown (in the form of the government of the colony) and, after the 1997 resumption of sovereignty, the government of the Special Administrative Region of Hong Kong. Section 3 of the Ordinance titled ‘Right to sue the Crown’ entitled a plaintiff to bring proceedings against and indeed such claims have continue under the Crown Proceedings Ordinance against the Hong Kong Government since the resumption of sovereignty.

But the Crown Proceedings Ordinance dealt only with the immunity of the Crown in Hong Kong. It left untouched the immunity of the Crown as far as the government of the UK was concerned. A suit in Hong Kong against the Crown in respect of a matter for which the UK government had responsibility could thus still be met by a plea of immunity. This did not matter much – in part because, in Hong Kong, relief against the Hong Kong Government was of much greater importance than relief against the Crown in right of the UK.  And in any event there was always the option, at least theoretically, of suing in the UK and taking advantage of the UK Crown Proceedings Act.

But what was the position after the resumption of sovereignty? Stone J had to address this question in Intraline Resources Sdn Bhd v The Owners of the Ship or Vessel ‘Hua Tian Long’  [2010] HKCFI 361; HCAJ000059/2008 (Hua Tian Long).

In Hua Tian Long the claimant alleged that the defendant owner of a floating derrick crane-barge, Guangdong Salvage Bureau, had failed to make the platform available as agreed under a Memorandum of Agreement.  The claimant was thus unable to complete various projects for which it had required usage of the crane-barge and therefore claimed damages.  The defendant, however, invoked the principle of Crown Immunity, claiming that it was part of the Ministry of Communications of the Chinese Government. Responding to the pleadings, Stone J held that ‘the short point is that in my view “crown immunity” in its true sense never was removed by the Crown Proceedings Ordinance,….. it continued to exist at common law unaffected by the Crown Proceedings Ordinance until the handover to the new sovereign power, [the People’s Republic of China], which in turn must enjoy the like crown immunity hitherto accorded to the British Crown…If the foregoing be correct, as I consider that it is, effectively that is the end of the doctrinal element of the “immunity debate”. In my view “crown immunity” subsists and thus now can be invoked as a matter of Hong Kong law’.  Furthermore, Stone J went one ‘ the Chinese Government is the metaphorical ‘Crown’ of the People’s Republic of China’.

Thus while Indian judges are moving to restrict the ambit of Crown Immunity, it appears Stone J has resurrected, or at least in view of his judgment, re-confirmed the broad scope of Crown Immunity in Hong Kong law.

 It seems that Stone J was not referred to the decision of the High Court of Calcutta in P. & O. Steam Navigation and its distinction between the mercantile and governmental functions of the East India Company. In that case, Sir Barnes Peacock CJ confirmed that ‘there is a great and clear distinction between acts done in the exercise of what are usually termed sovereign powers and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers delegated to them’. In the context of Hua Tian Long, had Stone J used the reasoning of the Calcutta High Court, he may well have decided that the actions of the Guangdong Salvage Bureau were those that could be carried on by private individuals and held Crown Immunity to be inapplicable in the circumstances. This is surely how the essentially commercial dispute should have been resolved as, even if the Chinese Government is entitled in law to Crown Immunity, there is indeed a distinction between the exercise of sovereign powers on one hand, and acts which may be carried on by private individuals on the other. Instead, and most remarkably, the decision has allowed the commercial activities of the Chinese Government, nominally still communist, to avail itself of the privileges of the imperial Crown!  This is of particular importance in Hong Kong where the Chinese government has many commercial interests not all of which are publically known and which may only become known when (as in Hua Tian Long) Crown Immunity is claimed in litigation.

How is the law to be developed so that the successor sovereigns to the British Crown bear their fair share of legal liability? With the Indian Parliament unwilling to act, it has fallen to the judges in the lower courts to distinguish the decision in Kasturi Lal in order to reach a just decision for the claimants in cases where the State is clearly at fault and should be liable. Presented with the right case, it is to be hoped that the Indian Supreme Court will overrule Kasturi Lal.

Further east, the wider consequences of the decision in Hua Tian Long remain to be seen.  The P. & O. Navigation case long ago confirmed the distinction between mercantile and governmental acts of the State and would have provided Stone J with the perfect precedent to take a similar course. However, it appears that the spectre of Crown Immunity has once again reappeared and the utilisation of this doctrine may have worrying consequences for parties in commercial disputes with governmental bodies linked to the Chinese Government. Hua Tian Long is, of course, a first instance decision and it may be hoped that the Hong Kong Court of Appeal or Court of Final Appeal may take a different view and at least adopt the P. & O. Steam Navigation distinction.

But there is a difficulty with this: the conceptual confusion between sovereign immunity and Crown Immunity. There is of course a clear distinction between these two concepts: Sovereign or State Immunity is based on the principles of comity and equality between sovereign states and is a doctrine of public international law that governs inter-state relationships. It is relevant in determining the extent to which a foreign sovereign state is answerable to the local courts.  Crown Immunity on the other hand applies internally within a state and stems from the inequality between the ruling sovereign and the ruled.  Crown Immunity is about the extent to which the local or domestic sovereign is answerable to the local courts.   There is no reason why if the law of sovereign immunity is absolute, i.e. rejects the distinction between mercantile and governmental acts, that the law of Crown Immunity should reject the same distinction.

But the Hong Kong Court of Final Appeal has recently held in a controversial decision (Democratic Republic of Congo v FG Hemisphere Associates LLC Nos, 5, 6, & 7 of 2010 ) that foreign States enjoy absolute immunity from enforcement and jurisdiction in Hong Kong even in commercial disputes is thus a decision on Sovereign or State Immunity. Although China is the domestic sovereign, will the Court of Final Appeal be bold enough to hold that a different doctrine applies to it? Until it does so China will enjoy in the courts of Hong Kong the immunities of the Imperial British Crown!

Christopher Forsyth is Professor of Public Law and Private International Law at the University of Cambridge.

Nitish Upadhyaya is a law graduate from Robinson College, Cambridge currently working in Hong Kong.

This post is based upon ‘The Spectre of Crown Immunity after the End of Empire in Hong Kong and India” (2013) 21 Asia Pacific Law Review 77 by Christopher Forsyth and Nitish Upadhyaya.

Suggested citation: C. Forsyth and N. Upadhyaya, ‘Crown Immunity after the End of Empire in Hong Kong and India’ U.K. Const. L. Blog (2nd November 2013) (available at http://ukconstitutionallaw.org).

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