Caleb Edward Chan is a Research Fellow at the International Finance Corporation of the World Bank Group. He holds an LL.M. in International Legal Studies from Georgetown University Law Center (Distinction and Dean’s List)

International organisations (IOs) enjoy immunity from execution. The doctrine – commonly found in IOs’ constituent instruments and formulated in absolute or near absolute terms – protects the assets of IOs from measures of constraint (see de Brabandere, 2018), meaning that IOs cannot be ordered to make payment out of their bank accounts (or any asset) in satisfaction of a court order.

In Supreme v. Supreme Headquarters Allied Powers Europe (SHAPE) (here, para. 3.11), the Dutch Court of Appeal ‘s-Hertogenbosch (CA or Court) opined that NATO’s military headquarters (SHAPE and JFCB) have absolute immunity from execution under its constituent instrument – the Paris Protocol (see here, Art. XI §2), and the narrowly defined treaty-based exceptions to immunity were inapplicable. Nonetheless, the Court went onto pronounce that IO immunity from execution is subject to derogation under customary international law (CIL).

This blog post analyses how the CA arrived at this view. I argue that the CA’s view is misplaced because, firstly, it erroneously applied a case law that merely addressed state immunity from execution (i.e., Morning Star v Gabon); secondly, it gave effect to self-declared CIL and failed to apply lex specialis when the relevant treaty is unambiguous; and thirdly, it conflated the teleological distinctions between state immunity and IO immunity.

While the CA’s view was erroneous, it was not challenged in cassation but was instead treated as an assumed fact (see here, para.1.17 and here, para. 3.4.3). Thus, as a matter of principle, future courts grappling with this issue should unreservedly reject the CA’s approach and reinstate the position that IO immunity from execution is exclusively treaty-based and non-derogable by CIL.

Supreme v. SHAPE: The Facts

In Supreme v. SHAPE, three fuel supply companies – Supreme Site Services GmbH, Supreme Fuels GmbH & Co KG and Supreme Fuels Trading Tze (together the “Plaintiffs”) – sued NATO’s military headquarters, SHAPE and JFCB, (collectively NATO) for alleged non-payment in the amount of $217 million (Claimed Amount) under the terms of the fuel supply contracts into which NATO entered to logistically support the military operation in Afghanistan. In 2015, the plaintiffs instituted proceedings before the Limburg District Court to recover the Claimed Amount from NATO, requesting a garnishee order on the balance of an escrow account that was owned and controlled by NATO.

A preliminary relief judge initially granted leave in favour of the plaintiffs. NATO later impugned the garnishee order on the basis of its immunity from execution. The Limburg District Court held in first instance that the execution of the garnishee order would violate NATO’s immunity from execution. The plaintiffs appealed.

Immunity from Execution before the Dutch Court of Appeal

While the Court confirmed that NATO have near absolute immunity from execution under the relevant constituent instrument, it went on to pronounce that there are exceptions (the Exceptions) to immunity from execution under CIL. These are when:

• the property is specifically in use or intended for use by the IO for other than government non-commercial purposes;
• the IO has expressly agreed to the taking of enforcement measures; and
• the property has been designated or reserved for the satisfaction of the claim in question (here, para. 3.12 – 3.14).

It should be noted that ultimately the CA did not deny NATO’s immunity based on the self-declared Exceptions because it found itself unable to apply them to the facts at hand. Nonetheless, the invention of a restrictive theory was faulty for the reasons below:

1. The CA erroneously applied Morning Star

In suggesting that there were CIL exceptions to NATO’s immunity, the CA applied Morning Star v. Gabon – a case it referred to in parentheses without elaborating on the case’s relevance. Morning Star is, however, a wrong reference point because it merely dealt with state immunity from execution.

In Morning Star, the Dutch Supreme Court (SC) for the first time invented and applied the Exceptions, but only to delimit state immunity from execution. In that case, the question was whether the immunity enjoyed by the Gabonese Republic would prevent enforcement of a garnishee order levied against its assets in the Netherlands. Crucially, because there was (and still is) no existing treaty governing the immunity of state from execution, the SC conducted a CIL identification exercise and formulated the exceptions for state immunity modelling verbatim on Article 19 of the 2004 United Nations Convention on the Jurisdictional Immunity of States and Their Property (the UN Convention). While the SC’s approach – declaring a treaty not entered into force to be CIL – is in itself unconventional, the point to note is that the SC in Morning Star only developed a restrictive theory for state immunity from execution, not IO immunity from execution.

Thus, when the CA applied Morning Star, it in essence created a restrictive theory for IO immunity by reference to principles developed in the context of restrictive state immunity. Notably, the Exceptions are worded exactly in the same way as Article 19 of the UN Convention, only with the references to “States” replaced by “IOs”.

This is an erroneous application of Morning Star because the case merely decided on state immunity from execution, not IO immunity from execution.

2.     CA applied self-declared CIL in place of lex specialis treaty law

The CA made an outright declaration that the Exceptions to IO immunity are founded on CIL  and did not follow the ‘rulebook’ approach recommended by the International Law Commission (ILS) (see here p.119) to ascertain this position (which would have involved examining state practice and opinio juris). The sole reference to Morning Star suggests that the Court based its view entirely on a misapplication of Morning Star (see argument 1 above).

In any case, even if the Exceptions represent the current state of CIL, the CA should not have relied on it to derogate NATO’s immunity because the treaty position is unambiguous. As a matter of principle, CIL as general law should not repeal specific law (lex specialis) such as treaty when the two sources are in conflict with one another (unless the specific law in question is a jus cogens violation in which case the treaty is void). In this case, the Paris Protocol provides clearly that NATO enjoys near absolute immunity from execution. The language leaves no room for CIL to apply in a manner consistent with the treaty provision. In any event, the Dutch Constitution (here, Art. 94) stipulates that treaties (provided that they are self-executing) have priority over inconsistent domestic laws within the Dutch legal system. Thus, the Court should have simply applied the treaty; the inquiry into CIL was unnecessary.

• Development of IO immunity should not be linked to that of state immunity

By linking the development of IO immunity to state immunity, the Court conflated the teleological distinctions between the two. For IOs, immunity is a means to an end to ensure that they can discharge their functions independently and free of unwarranted state interference (see e.g., de Brabandere, 2018). This conceptual foundation is acutely different to the raison d’être of state immunity, which is historically extended on the basis of reciprocity and customs.

Additionally, IOs – as service agencies – are no power equal to states. For this reason, the ILC has previously recommended (here p.136) that IOs (referring particularly to the United Nations) be accorded with higher and more extensive protection than states, including absolute or near absolute immunity from execution. This was at the time seen necessary for IOs to perform their functions – a position still enshrined in many IOs’ constituent instruments to-date.  

Indeed, public perception surrounding immunity has changed since the ILC studied the issue (e.g., the perceived lack of accountability see Blokker, 2014). Yet, States’ commitment to preserving the immunity of IOs has not faltered. On at least two occasions, the Dutch government actively blocked the enforcement of court judgments rendered against IOs in order to preserve their immunity from execution (see here and here). 

What’s more, it needs to be recognised that IO immunity is less amenable to ‘judicial law-making’ than state immunity. This is due to the fact that IO immunity is mostly governed by treaties, in which case States ought to be the primary driver for deciding when and if the scope of immunity should be amended as per the relevant treaty amendment procedures. Treaty amendment is the preferred way to engender a restrictive theory for IOs (if at all), because the process necessitates robust discussions amongst State delegates about whether derogation ought to be pursued and if so, how may it be formulated to be consistent with the functionalist foundation of IO immunity. For this reason, the CA’s invention prejudged the outcome of these important conversations and effected substantive change to a treaty without adequate processes. 

Concluding Remarks

This blog post highlighted the way in which the CA interpreted the immunity of NATO’s military headquarters in Supreme v. SHAPE. It argued that the Court’s reasoning – which introduced a restrictive theory for IO immunity from execution by reference to restrictive state immunity – was founded on faulty premises. Despite its flaws, the CA’s approach was not challenged in cassation and was referred to as an assumed fact.

In practice, the Court’s invention is unlikely to change how the Netherlands implements its treaty obligations vis-à-vis IOs given the existing power to block any measure that infringes upon immunity (see Art 3a of the Bailiffs Act). Nonetheless, as a matter of principle, future courts should reject the erroneous reasoning and reinstate the position that IO immunity from execution is exclusively treaty-based and non-derogable by CIL. It is only through such a rejection that we can ensure that the wrong approach will not be sanctioned as state practice or influence the development of CIL going forward.

None of the views and opinions represented in this article are necessarily representative of the official views and opinions of Jus Cogens, or any institutes the author may be affiliated with.