[HOUSE OF LORDS]
International Law - Treaty - International organisation - International Tin Council formed by treaty between sovereign states including United Kingdom - Council established to trade in and control price of tin internationally - Principal offices in London - Council unable to meet liabilities to creditors - Whether member states liable for debts incurred by council - Whether sovereign immunity afforded to foreign sovereign states and E.E.C. - Whether proceedings against council and member states justiciable before English courts
Company - Receiver - International organisation - Organisation created by treaty - Headquarters of organisation in United Kingdom - Organisation insolvent - Whether jurisdiction in court to appoint receiver by way of equitable execution over organisation's rights against member states - Supreme Court Act 1981 (c. 54), s. 37(1)
The International Tin Council ("I.T.C.") was an international organisation established by treaty in 1956 and was currently constituted by the Sixth International Tin Agreement ("I.T.A.6") made between a number of states, including the United Kingdom. Under I.T.A.6 its functions were to adjust world production and consumption of tin and to prevent excessive fluctuation in the price of tin. Although I.T.A.6 was never part of the law of England the I.T.C. had its headquarters and principal office in London pursuant to another agreement. The I.T.C. was recognised under English law by the International Tin Council (Immunities and Privileges) Order 1972. The Order endowed the I.T.C., for all relevant purposes of English law, with the legal character and status and legal capacities of a corporate body which enabled it to contract under the name I.T.C. The Order granted certain immunities to the I.T.C.
when carrying out its activities defined in I.T.A.6, including the purchase and sale of tin on the London Metal Exchange, but such immunities did not extend to the enforcement of a valid arbitration award. In 1985 the I.T.C. ran out of money trying to support the world price of tin and was unable to meet its commitments. Its dealings on the Exchange were suspended and it ceased trading owing several hundred million pounds to its creditors. The appellants M.W. claimed certain sums due under contracts made between them and the I.T.C. They obtained an arbitration award against the I.T.C. and on 3 December 1986 they issued a writ against the Department of Trade and Industry, representing the United Kingdom, claiming that each member state was jointly and severally liable in respect of any such arbitration award which remained unsatisfied. Alternatively, it was claimed that if such contracts were not direct contracts by all the members acting jointly and severally under the name I.T.C. but were to be considered as contracts made by the I.T.C. as a separate legal entity from its members, then, on the true construction of the Order of 1972, each such contract was made by that separate legal entity not only on its own behalf but also on behalf of each of the member states jointly and severally. The other appellant brokers, having obtained arbitration awards, issued on 9 July 1986 and 3 February 1987 writs against all the member states, making similar claims. In December 1986 the six banks who were owed money by the I.T.C. issued writs claiming from the member states the money lent and interest, or damages on account of money lent, breach of implied collateral contract and damages for negligence or negligent misrepresentation ("the direct actions").
On 18 March 1987 the Department of Trade and Industry issued a summons seeking an order that M.W.'s statement of claim should be struck out under R.S.C., Ord. 18, r. 19, and under the inherent jurisdiction of the court on the grounds that it disclosed no reasonable cause of action against the department; that it was frivolous and vexatious and that it was an abuse of the process of the court. The summons sought, in the alternative, an order under Ord. 12, r. 8, that the writ and the service thereof on the department and all subsequent proceedings should be set aside and/or for other appropriate relief on the ground that the facts and matters contained in the writ and in the statement of claim were not justiciable in the English courts and there was no jurisdiction in the court to determine the matters pleaded. On 29 July 1987 Millett J. struck out M.W.'s writ and statement of claim. The member states, including the department, also took out summonses to strike out in the other actions on the main grounds that the claims were not justiciable and the appellants had no cause of action.
By a notice of motion M.W. sought the appointment, under section 37 of the Supreme Court Act 1981 and R.S.C., Ord. 51, r. 1, of a receiver by way of equitable execution over the relevant assets of the I.T.C., which consisted of the right which it was said to have to be indemnified by or demand contributions from member states for its liabilities incurred to M.W. for the purpose of satisfying the amounts due to them under the judgment which they had obtained. The I.T.C. applied for the motion to be struck out on the ground, inter alia, that the court had no jurisdiction to determine the existence or otherwise
of the alleged assets over which receivership was sought, namely rights of action against the I.T.C.'s member states. Millett J. held that, while the court in principle had jurisdiction to appoint a receiver over the I.T.C.'s assets, M.W. had failed to make out an arguable case for contending that the I.T.C. had any cause of action against its members which was not derived from an international treaty and which was capable of being taken over by the receiver and entertained by the court. The Court of Appeal dismissed the appellants' appeals.
On the appellants' appeals in the direct actions and in receivership: -
Held, dismissing the appeals in the direct actions, (1) that the municipal courts were not competent to adjudicate upon or to enforce the rights arising from transactions entered into by independent sovereign states on the international law plane; that, on the domestic plane, the Crown's power to conclude treaties with other sovereign states was an exercise of the Royal Prerogative, the validity of which could not be challenged in municipal courts; but that the Royal Prerogative did not extend to altering domestic law or rights of individuals without the intervention of Parliament and a treaty was not part of English law unless and until it had been incorporated into it by legislation (post, pp. 476D, G - 477A,483C, 499F - 500D).
(2) That I.T.A.6, as a treaty between sovereign states, continued in existence the I.T.C. as an international organisation charged with certain functions and that pursuant to I.T.A.6, the I.T.C. entered into the Headquarters Agreement with the United Kingdom; that by article 16 of I.T.A.6 and article 3 of the Headquarters Agreement the I.T.C. was given legal personality; that no part of those agreements was incorporated into the United Kingdom laws but article 5 of the International Tin Council (Immunities and Privileges) Order 1972 created the I.T.C. (which otherwise had no status under the United Kingdom law) a legal person in the United Kingdom in its own right independent of its members; and that, accordingly, the I.T.C., and not its members, was the contracting party in the contracts it entered into with the appellants (post, pp. 476D, 477B-E, 478H - 479C, 483C-D,506C-E).
(3) That, given that the Order in Council of 1972 created the I.T.C. in English law as a separate legal person and given that it was that legal person which was the contracting party in the relevant contracts, a contract entered into by the I.T.C. did not involve any other entity and only the I.T.C. was liable on the contract and thus its members were under no liability (post, pp. 476D, 479D-E, G - 480B, 483C, 508C-G).
(4) That, if in English private international law the liability of a foreign corporation's members for the corporation's debts was to be determined by the law of the place of its incorporation, where a foreign corporation was established in the United Kingdom as a limited company under the Companies Acts then the corporation's relevant liabilities were those created under
English law, and there was nothing in English law which imposed liability on the members of a corporation for its debts; that there was no evidence establishing a rule of international law, before or at the time of I.T.A.6 or thereafter, imposing on sovereign states, who were members of international organisations, engaged in commercial transactions, joint and several secondary liability for the organisation's debts and that, even if such a liability existed, it could only be enforced in international law and not by the United Kingdom courts (post, pp. 476D, 480B-D, 483C, 509B-F, 511B-C, 512E-G, [2v 513B-C).
(5) That the question whether or not I.T.A.6 constituted the I.T.C. so as to act as an agent of the members as undisclosed principals raised the issue of construing I.T.A.6 which, since it was not incorporated into English law, was not justiciable by the United Kingdom courts and that even if the question were entertained by the court the answer would be that since, under the Order in Council of 1972, the I.T.C. had a separate legal personality it was not, as an independent corporation, acting as an agent of its members; (per Lord Templeman) I.T.A.6 could only be considered by the United Kingdom courts for resolving any ambiguity in the meaning and effect of the Order in Council of 1972 but there was, here, no ambiguity (post, pp. 476D, 481G-H, 483C, 515B-E).
Held further, dismissing the receivership appeal, that the appellants' rights were, at all times, governed in the United Kingdom, by the Order in Council of 1972 and that Order offered no foundation in law for proceedings against the members of the I.T.C. and that any claim of the I.T.C. against members for indemnity had ultimately to rest on I.T.A.6 and that was an issue which was not justiciable by the United Kingdom courts (post, pp. 476D, 482H - 483A, C, 522D, E).
Per curiam. Where a treaty is directly incorporated into English law its terms become subject to the interpretative jurisdiction of the court in the same way as any other Act of the legislature. Also where parties have entered into a domestic contract incorporating the terms of the treaty the court may be called upon to interpret the treaty to ascertain the parties' rights and obligations under their contract (post, pp. 476D,483C, 500D-F).
Quaere. Whether any such claim for indemnity would also be precluded by act of state non-justiciability (post, p. 522E).
Per Lord Templeman. The length of oral argument permitted in future appeals should be subject to prior limitation by the Appellate Committee (post. p. 483B-C).
Per Lord Griffiths. The obvious just solution is that the governments that contributed to the buffer stock should provide it with funds to settle its debts in the same proportion that they contributed to the buffer stock. But that end must be pursued through diplomacy and an international solution must be found to an international problem. It cannot be solved through English domestic law (post. p. 484D-E).
The following cases are referred to in their Lordships' opinions in respect of the direct actions appeals:
The following additional cases were cited in argument in the direct actions appeals:
The following cases are referred to in their Lordships' opinions in respect of the receivership appeal:
The following additional cases were cited in argument in the receivership appeal:
APPEALS from the Court of Appeal.
By a writ dated 9 July 1986 the appellants, J. H. Rayner (Mincing Lane) Ltd., claimed £16,347,825.17 and interest arising from certain
contracts for the sale of tin between the appellants and the International Tin Council ("the I.T.C.") and from an arbitration award, from the respondents, (1) the Department of Trade and Industry, (2) the Commonwealth of Australia, (3) the Kingdom of Belgium, (4) Canada, (5) the Kingdom of Denmark, (6) the Commission of the European Communities, (7) the Republic of Finland, (8) the Republic of France, (9) the Federal Republic of Germany, (10) the Hellenic Republic of Greece, (11) the Republic of India, (12) the Republic of Indonesia, (13) the Republic of Ireland, (14) the Italian Republic, (15) Japan, (16) the Grand Duchy of Luxembourg, (17) the Federation of Malaysia, (18) the Kingdom of the Netherlands, (19) the Republic of Nigeria, (20) the Kingdom of Norway, (21) the Kingdom of Sweden, (22) the Swiss Confederation, (23) the Kingdom of Thailand and (24) the Republic of Zaire.
Between 9 October 1986 and 4 February 1987 the respondents issued summonses seeking (a) to set aside the proceedings and (b) declarations that the court had no jurisdiction. The Department of Trade and Industry sought the order on the ground that the appellants' claim was not justiciable by English courts and that the appellants had no cause of action. The Commission of the European Communities claimed that it had sovereign immunity, that the appellants' claim was not justiciable and that the appellant had no good arguable case. The other respondents sought (a) orders to set aside the proceedings and (b) declarations that the court had no jurisdiction on the ground of sovereign immunity.
On 3 February 1987 the appellants, Amalgamated Metal Trading Ltd., Boustead Davis (Metal Brokers) Ltd., Gerald Metals Ltd., Gill & Duffus Ltd., Henry Bath and Son Ltd., Holco Trading Co. Ltd., issued a writ claiming against all the respondents in the Rayner action and the I.T.C. and the European Economic Community ("the E.E.C.") rather than the Commission, £105m. or thereabouts and interest or damages arising from contracts for the sale of tin, arbitration awards, margin demanded, false representations made negligently or recklessly and breach of warranty.
On 9 March 1987 the Department of Trade and Industry issued a summons for an order that the proceedings be set aside, a declaration that the court had no jurisdiction or that the points of claim be struck out on the grounds that the claim was not justiciable and the appellants had no cause of action. The I.T.C. issued a summons on 11 March for an order that the proceedings be set aside and a declaration that the court had no jurisdiction on the grounds that the claim was not justiciable and that the I.T.C. was immune from suit. The E.E.C. issued a summons on 2 April seeking to have the proceedings set aside and a declaration that the court had no jurisdiction on the grounds that the E.E.C. had sovereign immunity and that the claim was not justiciable. The other respondents issued similar summonses as in the Rayner action.
ARBUTHNOT LATHAM BANK LTD. V. COMMONWEALTH OF AUSTRALIA
AUSTRALIAN AND NEW ZEALAND BANKING GROUP LTD. V. COMMONWEALTH
OF AUSTRALIA AND OTHERS
BANQUE INDOSUEZ (A BODY CORPORATE) V. COMMONWEALTH OF AUSTRALIA
HAMBROS BANK LTD. V. COMMONWEALTH OF AUSTRALIA AND OTHERS
KLEINWORT BENSON LTD. V. COMMONWEALTH OF AUSTRALIA AND OTHERS
TSB ENGLAND & WALES PLC. V. COMMONWEALTH OF AUSTRALIA AND
On 18 December 1986 Arbuthnot Latham Bank Ltd., Australia and New Zealand Banking Group Ltd. and Kleinwort Benson Ltd. issued writs in their respective actions claiming from the respondents, as in the Rayner action above, respectively £4,463,382.17 and interest or damages on account of money lent, breach of implied collateral contract and damages for negligence or negligent misrepresentation, £2,333,023.71 and £8,473,267.51. On 30 December Banque Indosuez, Hambros Bank Ltd. and TSB England & Wales Plc. issued their writs claiming respectively £1,165,761.39, £7,113,025.79 and £5,985,175.65 and interest or damages under section 35A of the Supreme Court Act 1981, as inserted by Part I of Schedule 1 to the Administration of Justice Act 1982.
The Department of Trade and Industry took out a summons in each of the bank's actions for an order that the proceedings be set aside, a declaration that the court had no jurisdiction or that the points of claim be struck out on the grounds that the claim was not justiciable and the appellants had no cause of action. The E.E.C. issued a summons in each of the actions pursuant to R.S.C., Ord. 12, r. 8 for orders that the writ served on the E.E.C. and service thereof and all subsequent proceedings should be set aside, a declaration that the court had no jurisdiction over the E.E.C. in respect of the subject matter of the claim or the relief or remedy sought in the action and an order that the action be dismissed against the E.E.C. on the ground that it was immune from the jurisdiction of the court. The summons claimed further and in the alternative that, without prejudice to the immunity of the E.E.C., (a) the appellants' claims were not cognizable by the court, (b) the issues raised by the appellants' claims were not justiciable by the court and/or (c) there was no jurisdiction in the court to determine the matters pleaded in the points of claim. The other respondents also issued summonses on the grounds similar to those in the Rayner action.
sought to be struck out by the Department of Trade and Industry pursuant to Ord. 18, r. 19 and under the inherent jurisdiction of the court on the ground that they disclosed no reasonable cause of action and that the claim pleaded was not justiciable in the English courts. In the Multi-Brokers action Staughton J. made an order striking out the points of claim on the same grounds as in the Rayner action and adjourned the E.E.C.'s summons. The judge made similar orders in the Six Banks actions.
MACLAINE WATSON & CO. LTD. V. DEPARTMENT OF TRADE AND INDUSTRY
The appellants, Maclaine Watson & Co. Ltd., were the claimants in an arbitration reference set up in accordance with the rules and regulations of the London Metal Exchange in which the I.T.C. was the respondent. The appellants claimed that certain sums were due to them from the I.T.C. under certain contracts made between the appellants, as metal brokers and ring dealing members of the exchange, and the I.T.C. The contracts provided for arbitration in the event of a dispute. The I.T.C. defaulted in its obligation to the appellants.
On 6 November 1986 three arbitrators, Mr. A. M. R. Sylvester, Mr. G. J. Davey and Mr. L. Lubett, made an interim final award that the I.T.C. should pay to the appellants the sum of £6m. plus the costs of the award, which were taxed and settled as £7,116.25. Judgment was entered in terms of the award under section 26 of the Arbitration Act 1950 on 13 November 1986 pursuant to leave granted by Staughton J. On 3 December the appellants issued a writ against the respondents, the Department of Trade and Industry (representing the United Kingdom of Great Britain and Northern Ireland) claiming the debts due.
The department took out a summons on 18 March 1987 seeking an order that the appellants' statement of claim should be struck out under Ord. 18, r. 19 and/or under the inherent jurisdiction of the court on the ground that (i) it disclosed no reasonable cause of action against the department, (ii) it was frivolous and vexatious and (iii) it was an abuse of the process of the court and that the appellants' action against the department should be stayed or dismissed. The summons claimed in the alternative an order, under Ord. 12, r. 8, that the writ and the service thereof on the department and all subsequent proceedings should be set aside and/or for other appropriate relief on the grounds that the facts and matters contained in the writ and in the statement of claim were not justiciable in the English court and there was no jurisdiction in the court to determine the matters pleaded.
On 29 July 1987 Millett J.  B.C.L.C. 707 ordered that the appellants' statement of claim should be struck out and their action dismissed.
All the appellants appealed from the judgments of Staughton and Millett JJ. On 27 April 1988 the Court of Appeal (Kerr, Nourse and Ralph Gibson L.JJ.)  Ch. 72 dismissed the appeals and gave the parties leave to appeal.
The appellants appealed.
MACLAINE WATSON & CO. LTD. V. INTERNATIONAL TIN COUNCIL ("the
This was an appeal by Maclaine Watson & Co. Ltd. from a judgment dated 27 April 1988 of the Court of Appeal (Kerr, Nourse and Ralph Gibson L.JJ.)  Ch. 253, dismissing Maclaine Watson's appeal from the judgment dated 13 May 1987 of Millett J.  Ch. 1. By his judgment the judge dismissed Maclaine Watson's application for the appointment of a receiver by way of equitable execution over those assets of the I.T.C. comprising its right to be indemnified by contributions from its members for liabilities incurred to Maclaine Watson, for the purpose of satisfying a judgment entered in favour of Maclaine Watson on 13 November 1986 in the sum of £6,024,376.40.
By their amended points of claim Maclaine Watson claimed, inter alia, that (a) when the I.T.C. entered into transactions with the authority, approval and/or acquiescence of the member states and, arising out of such transactions, suffered an award and subsequently a judgment to which article 6(1)(c ) of the Order in Council of 1972 applied, it was entitled to make a call on each and every member state jointly and severally for payment to it of such sums as would enable it to satisfy such award and judgment and/or to recover such sums from each member state; (b) further, the I.T.C. was entitled to be indemnified by the member states jointly and severally on the ground that the I.T.C. entered into the contracts at the express or implied request of the member states and having incurred a liability was entitled by implication of law to be indemnified by the member states jointly and severally in respect of such liability; and (c) Maclaine Watson would, if necessary, contend that the trading being carried out by the buffer stock manager at all material times in 1985, was outside the scope of I.T.A.6, in that it involved the creation of a buffer stock far in excess of the 50,000 tonnes provided for in article 21 of I.T.A.6.
During the hearing before Millett J. the Attorney-General's application to intervene was granted.
The facts are set out in the opinion of Lord Oliver of Aylmerton.
Sydney Kentridge Q.C. and Jonathan Hirst for Rayners. The question is: could the defendant states come together to carry out trading at a substantial scale and raise debts and then walk away without meeting their liabilities? If that is right that can only be so under English law or under some established rule of international law which was part of English law. Failing that the states have the same liability as any other trader. The question is not: does the I.T.C. have a legal personality? The concept of legal personality is infinitely varied. The question is: has the United Kingdom conferred on the I.T.C. such a degree of legal personality as to confer on its members the privilege of raising liability and need not meet it?
It has to be examined what Parliament did when giving powers to the I.T.C. and other international organisations. Parliament has granted certain capacities to international organisations so that they could carry out their functions which they could not carry out otherwise: International Organisations Act 1968, preamble and section 1(2)(a) and (b), which
give legal capacities of a body corporate, and section 1(6), which provides that the privileges and immunities conferred by an Order in Council are not greater than conferred in agreements. Schedule 1 to the Act provides for immunity from suit and legal process.
The International Tin Council (Immunities and Privileges) Order 1972 grants capacities and immunities. It is common ground that the I.T.C. is not incorporated by Order in Council of 1972: In re International Tin Council  Ch. 419, 443, and Maclaine Watson & Co. Ltd. v. International Tin Council  Ch. 1, 16a-d. There is no question of conferring capacities of a body corporate on a body corporate.
In international law an international organisation has a degree of legal personality: In re Reparation for Injuries Suffered in the Service of the United Nations  I.C.J.R. 174, 179-180. An international organisation does not possess all the personality as a state. All international organisations do not have the same capacities: Nissan v. Attorney-General  A.C. 179, 223c. Therefore, the I.T.C. has international legal personality to some measure. It does not make it equivalent to, for example, the United Nations: see also I.T.A.6. The prima facie liability of the member states as members of an organisation trading in the market has not been displaced by any statute or any rule of private or public international law. Four basic submissions are as follows:
Submission A: In United Kingdom law the I.T.C. is an unincorporated association. It is the collective name under which its members operate. It is an unincorporated association which, by the Order in Council of 1972, has been given powers which it can exercise in the collective name in the United Kingdom for its convenience and the convenience of those who deal with it. The I.T.C. is able to sue or be sued in its own name. It can hold property in its collective name. Yet it remains unincorporated.
Submission B(i): Assuming that the Order in Council has endowed the I.T.C. in the United Kingdom with legal personality. That personality is not a corporate personality. It is not personality of a kind which renders the I.T.C. entirely separate from its members so as to screen them from liability for its debts. It is a mixed entity, i.e. an entity which does not, by its nature, exclude the concurrent or secondary direct liability of its members to the creditors of the organisation. If the Act and Order in Council intended to create a new legal entity, there is no need to infer more than an intent to create a mixed entity. Such a degree of legal personality would confer on the I.T.C. all the powers which it needs to carry out its purposes in the United Kingdom.
Submission B(ii): Under international law, which is part of United Kingdom law, the legal personality possessed by the I.T.C. is that of the mixed entity. Both the general principles of international law and the terms of I.T.A.6 lead to the conclusion that the liability of its members for its debts was not, and was not intended to be, excluded.
Submission C: If the I.T.C. is found to be an entirely separate legal personality, as if it were a United Kingdom body corporate, then in buying and selling tin to the appellant brokers it did so as the agent of the members. The members were the undisclosed principals on the contracts.
The starting point on the authorities is a strong presumption of unlimited liability. Those trading together in any form cannot exclude their liability or limit it by giving themselves a certain name. As a matter of the United Kingdom law there has to be a statutory exclusion or limitation. The Order in Council of 1972 does not do either. The limited liability was a privilege not easily granted. In the United Kingdom statute law there was nothing inherently contradictory to have corporations with unlimited liability: Lindley on the Law of Partnership 3rd ed. (1873), vol. 1, pp. 4-13, 16-17 and 388-389 and Lindley on Partnership Act 1890 (1891), pp. 7-8. Unless a statute limits the liability and a corporate status is attributed to a body it is not incorporated and its members remain liable: In re Sheffield and South Yorkshire Permanent Building Society (In Liquidation) (1889) 22 Q.B.D. 470, 474, 476; In re Sea Fire and Life Assurance Co. (Greenwood's case) (1854) 3 De G. M.& G. 459, 474-479 and In re Royal Bank of Australia (Robinson's Executor's case) (1856) 6 De G. M.& G. 572, 588. If an association is carrying on business its authority can only be limited if allowed by a statute. One way of achieving that was to incorporate the association under a statute: Salomon v. A. Salomon and Co. Ltd.  A.C. 22, per Lord Watson, at p. 38, and perLord Hershell, at p. 45. It cannot be assumed that there is necessarily a contradiction between incorporation and individual liability of the members of the association: Pollock and Maitland, The History of English Law, 2nd ed. (1923), vol. 1, pp. 486-487 and Blackstone, Commentaries on the Laws of England, pp. 472-473, 475-476. At p. 485 the dissolution of a corporation is dealt with. That shows that there are rules and regulations to dissolve corporations. They do not just fade away. The position is similar in Scotland: Erskine, Principles of the Law of Scotland, 21st ed. (1911), p. 410 and Encyclopaedia of the Laws of Scotland (1927), pp. 541-542, paras. 1191-1193. In order to see whether Parliament intended to incorporate a given association one has to see clear intention to create a corporation: Baroness Wenlock v. River Dee Co. (Note) (1883) 36 Ch.D. 675, 684, per Bowen L.J. The test to decide whether Parliament intended to create a body corporate was to see if a body needed to be incorporated. If a body is able to carry out its functions without corporation it is not to be treated as incorporated: Salford Corporation v. Lancashire County Council (1890) 25 Q.B.D. 384, per Lord Esher M.R., at p. 387, and per Lindley L.J., at p. 388; see also Mackenzie-Kennedy v. Air Council  2 K.B. 517, per Atkin L.J., at p. 529-533, esp. 534, Bankes L.J., at p. 523 and Scrutton L.J., at p. 529. However, a possession of power or capacities of a body corporate does not make an association a separate juridical entity: Krajina v. Tass Agency  2 All E.R. 274, 277-279, 284 and 285. When Parliament creates a body corporate it gives it that status by granting it a perpetual succession and common seal: for example, the Architects (Registration) Act 1931, section 3; the Building Societies Act 1874, section 9; the China Indemnity (Application) Act 1931, section 2; the Coal Industry Nationalisation Act 1946, sections 1 and 2 and the Companies Act 1985, section 13.
Historically, the International Tin Agreement (1954) ("I.T.A.1") by article 21 conferred such capacities as were necessary. That agreement
was made part of the United Kingdom law by the International Organisations (Immunities and Privileges of the International Tin Council) Order 1956 (S.I. 1956 No. 1214). That Order conferred the "legal capacities of a body corporate:" article 2, and certain exemptions, article 3. See also the Second International Tin Agreement (1960) ("I.T.A.2"), articles 22 and 23. Effect to that was given by the International Organisations (Immunities and Privileges of the International Tin Council) (Amendment) Order 1957 (S.I. 1957 No. 1365). But the Fourth International Tin Agreement (1970) ("I.T.A.4") used the words "legal personality" in article 14. It really meant that the I.T.C. was given such capacities as were necessary for it to carry out its functions and later on was granted capacities of a body corporate: see the International Tin Council (Immunities and Privileges) Order 1972 (S.I. 1972 No. 120). Thus treaties or agreements and the legislation to give effect to them have not been consistent. See also the Articles of Agreement of the International Bank for Reconstruction and Development (1945), articles II and VII. That was enacted in the United Kingdom law by the Bretton Woods Agreements Act 1945. Under that Act the Bretton Woods Agreements Order in Council 1946 (S.I. 1946 No. 36) was made. The Articles of Agreement of the International Finance Corporation took effect under the International Finance Corporation Act 1955 and the International Finance Corporation Order 1955 (S.I. 1955 No. 1954). Further, the Articles of Agreement of the International Development Association was enacted as the International Development Association Act 1960 and the International Development Association Order 1960: see also Chapter VIII, articles 41-42 of the Agreement establishing the African Development Fund (1972) enacted by the African Development Fund (Immunities and Privileges) Order 1973 (S.I. 1973 No. 958) made under section 10 of the International Organisations Act 1968.
Where by a treaty the United Kingdom undertakes to introduce domestic legislation to achieve a certain result within the country the treaty remains irrelevant unless it is made part of the law by legislation: Salomon v. Commissioners of Customs and Excise  2 Q.B. 116, 143-144, per Diplock L.J. The inference to be drawn from the Diplomatic Privilege (Extension) Act 1944 and the Diplomatic Privilege (Extension) Act 1946 is that throughout this period the United Kingdom has been prepared to give international organisations such capacities as to enable them to function here. It was not intended to give them full juridical corporate personality. The United Kingdom has not broken any treaty obligations. It has never undertaken to grant such corporate personality: see also the Articles of Agreement of the International Finance Corporation: article III, section 8 and article VI, sections 1 and 2.
Where, however, there is an ambiguity a treaty cannot resolve it and alter the position: Attorney-General for Canada v. Attorney-General for Ontario  A.C. 326, 347, per Lord Atkin. Parliament's opinion as to what the law is cannot change the law. Thus even if Parliament did believe that in various statutes since 1944 it was giving any legal personality it was wrong: Inland Revenue Commissioners v. Dowdall,
O'Mahoney & Co. Ltd.  A.C. 401, 416-417, 426, per Lord Reid and Lord Radcliffe: see also Holmes v. Bangladesh Biman Corporation  A.C. 1112, 1126, per Lord Bridge of Harwich. [Reference was made to Shearson Lehman Brothers Inc. v. Maclaine Watson & Co. Ltd. (No. 2)  1 W.L.R. 16 to state that there was no difference between "archives" and "official archives."]
On immunity, the defendants before the Court of Appeal said that up to the International Organisations Act 1968 and the Order in Council of 1972 the dominant doctrine was that states had absolute immunity. It was thus said to follow that if the states had immunity there was no point in saying that the I.T.C. was immune but not fully immune. The point was dealt with by Kerr L.J.  Ch. 72, 172-173, who doubted whether there can be arbitration against somebody who has no legal existence. But partnerships have no legal existence and yet arbitration can take place in respect of their matters. Ralph Gibson L.J. dealt with the matter at pp. 226c-227c. But to say that an organisation shall have immunity is like partnership having immunity in respect of its business. It is true that under the Order in Council of 1972 foreign member state might have immunity but the United Kingdom would not.
Cases relating to trade unions help only to show that Parliament may create or recognise bodies which may have some capacities as bodies corporate although they were not full bodies corporate. Bonsor v. Musicians' Union  A.C. 104 decided that a registered trade union is not a legal entity but it could be sued and damages could be awarded against it: Lord MacDermott, at pp. 134-135, 136, 139-140, 142-143, 145-146, Lord Keith of Avonholm, at pp. 149, 151, Lord Somervell of Harrow, at pp. 155, 157-158, and Lord Porter, at p. 131.
In Clarke & Son v. Cullen (1882) 9 Q.B.D. 355 it was decided that the plaintiff may execute a judgment against a partnership firm against a member of the firm. But where a member denies being either a member or his liability the plaintiff would be entitled to obtain a declaration of his liability before proceedings against him: Jackson v. John Litchfield & Sons (1882) 8 Q.B.D. 474, 478, per Brett L.J. Chaff and Hay Acquisition Committee v. J. A. Hemphill and Sons Proprietary Ltd. (1947) 74 C.L.R. 375 was cited as a decision to the contrary: per Latham C.J., at pp. 384-385, Williams J. 395-397, 399, as showing that members were not liable. But there were provisions in the Chaff and Hay (Acquisition) Act 1944 to the effect that its members will not be liable for its liabilities. It was thus distinguishable. [Reference was made to Maclaine Watson & Co. Ltd. v. International Tin Council (No. 2)  Ch. 286, 308.]
Club cases show that generally members are not liable: Wise v. Perpetual Trustee Co. Ltd.  A.C. 139 but Cockerell v. Aucompte (1857) 2 C.B.N.S. 440 shows that even in the case of a club a member can be held liable for the club's debts.
Turning to submission B(i), it is to be assumed that submission A is not accepted, that the Act of 1968 and the Order in Council of 1972 are to be interpreted as conferring legal personality on the international organisation and that the I.T.C. is held to be not merely the name of the association, not merely something in the nature of a partnership or association for gain but it is an entity with legal personality. The
question is: what is the nature of the legal personality and what are the consequences? If the United Kingdom has recognised an international organisation as having some personality in United Kingdom law, the nature of its personality in international law must be at least some guide to the sort of personality which Parliament wished to recognise. Even if English law, or even if the common law of England, recognises only on the one hand corporations and, on the other, unincorporated associations, Parliament may create or recognise a mixed entity. In other words, it may confer capacities on an association so as to make it a mixed entity. The Act here is a United Kingdom statute which deals with an international body. It must not be assumed that Parliament had in mind only such legal personality as is known to the English common law. One must bear in mind that the object of giving personality to the international organisation is still purely functional. It is simply to enable the I.T.C. to carry out its purposes.
English common law does not have special difficulty in understanding a concept of "mixed entity" which means that although there is a corporation the members remain liable. There is no contradiction between incorporation and member liability: Bonsor v. Musicians' Union  A.C. 104, per Lord Porter; Lloyd's the Law relating to Unincorporated Associations(1938), pp. 217-218. The concept of partnership in Scotland shows that that law had had no difficulty in applying the concept of "mixed entity:" Mair v. Wood, 1948 S.C. 83, 86, where Lord President, Lord Cooper, said that a partnership is a legal person distinct from individuals who compose it. But partners are liable jointly and severally. They are "guarantors or cautioners for the firm's obligations." See also Miller, The Law of Partnership in Scotland (1973), pp. 14-16. The existence of such entities have been recognised by the courts of this country: Von Hellfeld v. E. Rechnitzer  Ch. 748, 754-755, per Phillimore L.J. and Dreyfus v. Commissioners of Inland Revenue (1929) 14 T.C. 560, 565. That was so in the United States as well: Puerto Rico v. Russell & Co. (1933) 288 U.S. 476, 480, per Stone J. See also Johnson Matthey & Wallace Ltd. v. Alloush (1984) 135 N.L.J. 1012; Court of Appeal (Civil Division) Transcript No. 234 of 1984. Council Regulation (E.E.C.) No. 2137/85 of 25 July 1985 on the European Economic Interest Grouping ("E.E.I.G.") provides for groupings of businesses without mergers. It comes into force on 1 July 1989. But members of such groupings remain liable.
An international organisation has an international personality. It is capable of possessing international rights and duties and it has capacity to maintain its rights by bringing international claims. Personality is accorded to an international body under international law so as to enable that body to carry out its functions: In re Reparation for Injuries Suffered in the Service of the United Nations  I.C.J.R. 174. Westland Helicopters Ltd. v. Arab Organisation for Industrialisation (1984) 23 I.L.M. 1071 shows that when dealing with a body corporate there is no need to assume that the members are not liable. Although that case was reversed by the Swiss Federal Court (First Civil Division) (unreported) 19 July 1988, the basic principle stated there remains untouched.
The I.T.C. has no features which are found in a limited company. The Council of the I.T.C. is composed of all members: article 4 of I.T.A.6. There is no board of directors. Article 26.4 provides for the return of the share in the buffer stock to members on a winding up. That is not what a company's articles provide. Decisions of the Council are taken by simple majority and are binding: article 15.2. There is no such provision in company's articles.
Historically, it was a matter of granting traders in this country to carry on business with limited liability of its members towards third parties: Palmer's Company Law, 23rd ed. (1982), vol. 1. and Gower's Principles of Modern Company Law, 4th ed. (1979), pp. 43, 48. Under section 1(6) of the International Organisations Act 1968 question of ultra vires might arise. It might be said that the Order in Council of 1972 does what is required by the Headquarters Agreement. In order to decide that the Agreement has to be construed. One is, therefore, concerned with non-justiciability and the question of state immunity.
In the Court of Appeal Kerr and Nourse L.JJ. were both of the opinion that the doctrine of non-justiciability does not prevent the court from examining I.T.A.6 to ascertain whether under the I.T.C.'s constitution its members are liable for its debts. Ralph Gibson L.J. disagreed.
The doctrine of non-justiciability of treaties is essentially as follows: (i) an English court will not decide whether a party to a treaty is in breach of its treaty obligations; (ii) the courts will not enforce treaty obligations as between parties to a treaty; (iii) an individual may not invoke treaty rights as a source of private rights whether against another individual, the Crown or a foreign state and (iv) the court will not review the conduct of the Crown in relation to its obligations under a treaty: Buttes Gas and Oil Co. v. Hammer (No. 3)  A.C. 888.
It does not follow from these principles that the court is shut out from considering a treaty as part of the facts of the case and as necessary background material to a dispute between the parties before it. The court may examine the treaty to ascertain the true nature and meaning of the transaction between the parties to the suit or the true relationship between them or the identity of a wrongdoer. The plaintiffs do not seek to enforce engagements founded on treaties. They are seeking to enforce rights arising from contracts entered into with the I.T.C.
In Scottish law a partnership, although a legal person, is not a full corporation. A firm cannot hold in its own name heritable property. Such property can only be held in the partners' names. But a firm is capable of holding a leasehold: Bell, Principles of the Law of Scotland, 10th ed. (1899) p. 155, para. 357 and Walker, Principles of Scottish Private law, 2nd ed. (1975), vol. 1, p. 394.
The respondents accept that if submission A is right, that is to say the contract of the I.T.C. is simply the contract of the 24 member states, then the member states have entered into commercial transactions and there is no question of state immunity: see sections 1, 2(1) and 3(1)(a) and (b) of the State Immunity Act 1978. The exception in section 3(1) relates to the nature of the proceedings. If the proceedings relate to a
commercial transaction which is entered into by the state there is no immunity.
Jonathan Sumption Q.C. and Richard Field Q.C. for the Multi-Brokers. Whether the I.T.C. was the agent of the members? That is the plaintiffs' submission C. The basis of the submission is that the I.T.C. has a legal personality, although it is not necessarily a corporation, and that it acted as an agent for its members. It is not necessary to establish a contract between the members and the I.T.C. The essential feature of agency is not a contract but consent of the principal. As Lord Pearson said in Garnac Grain Co. Inc. v. H. M. F. Faure & Fairclough Ltd. (Note)  A.C. 1130, 1137, and quoted by Ralph Gibson L.J. in the Court of Appeal  Ch. 72, 251: "They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognise it themselves and even if they have professed to disclaim it . . ." The proper inference to be drawn here is that the I.T.C., through the buffer stock manager, did what its members wanted it to do. The actual authority has to be implied from I.T.A.6 although there is nothing in that agreement which expressly provides for agency. Thus it is a constitutional agency.
There are three questions to be determined (1) Is the I.T.C. an agent on the facts and the true construction of I.T.A.6? (2) Is that claim non-justiciable? (3) If the members are liable is their liability excluded by the London Metal Exchange contracts?
On the first question, under I.T.A.6 the supreme control is vested in the assembly of members known as the council: article 4. The members of the council exercising control are not agents of the I.T.C. but they, as delegates of the states are the agents of their respective states. That is a different position from a company in that the management of a company's affairs is vested in its directors and those directors (even if they may also be majority shareholders) act, in the management of the company's affairs, as the agents of the company not in their personal capacities or on behalf of the body of the shareholders. Secondly, it is a central feature of the constitution of a limited company that its purposes are its own and not those of its shareholders: Halsbury's Laws of England, 4th ed., vol. 7 (1974), p. 426, para. 612 and Gramophone and Typewriter Ltd. v. Stanley  2 K.B. 89, per Cozens-Hardy M.R., at pp. 95-97, per Fletcher Moulton L.J., at pp. 97-100, 101 and per Buckley L.J., at pp. 104-106.
Under I.T.A.6 the I.T.C. is constituted differently. Its members are foreign states: article 3. The delegates of those states form a "council:" article 4. The council is also referred to as an assembly of delegates and that assembly controls the activities of the I.T.C.: article 7. The council is not in permanent session: article 12.1. There is a chain of responsibility up to the council: article 13. There are provisions made for the operation of buffer stock: articles 28 and 49. The council may meet to give direction for operation of the buffer stock. It is not a permanent official but the body of delegates which is responsible for buffer stock operations: article 29. The ordinary meaning of "delegates" is agents with no more power than those given to them by those appointing them. Thus the delegates are not agents of the I.T.C. The correct inference is that the
I.T.C. exists as a separate entity to achieve the objects of its member states and not of itself: article 41.
In Cockerell v. Aucompte, 2 C.B.N.S. 440, the secretary of a club was held to be a mere servant of the general body of the members. Since the members gave him authority but did not furnish him with funds the contract was held to have been made by the members and the plaintiff, being a member, was held to be liable. Compare Salomon v. A. Salomon and Co. Ltd.  A.C. 22. It was held by the House of Lords that it was not possible to infer from the constitution of a limited company that the company was the agent of its shareholders, however much control those shareholders in practice exercise over its affairs. But this is because the management of a company's affairs is vested in its directors and the directors act in management of the company's affairs as the agents of the company.
On the second question, of non-justiciability, the essential point is: who are liable under English law on contracts? That has to be decided on the proper law of the contract notwithstanding that it may involve considering the relations between one party to the contract and somebody else, his principal. When one has the position of the two persons, whose relationship between themselves is governed by international law, if one of them brings the other into contact with a third party, say a tin trader, then whether those circumstances are such as to create a liability in English law is a matter which the English courts will answer purely by reference to English law: Dicey & Morris, The Conflict of Laws, 11th ed. (1987), vol. 1, pp. 1339, 1341-1342, rules 200 and 201 and Chateney v. Brazilian Submarine Telegraph Co. Ltd.  1 Q.B. 79, 82-84, perLord Esher M.R. In the instant case the proper law of the contract between the I.T.C. and brokers is English law. Where a question of relation between states or of treaty is relevant to decide the liability of a tortfeasor the courts are entitled to examine such agreements or treaties: Nissan v. Attorney-General  A.C. 179, per Lord Reid, at p. 211c-g, per Lord Morris of Borth-y-Gest, at pp. 221e-222h, per Lord Pearce, at pp. 223-224 and per Lord Wilberforce, at p. 230b-g and Zoernsch v. Waldock  1 W.L.R. 675, per Willmer L.J., at p. 682 and per Diplock L.J., at p. 690.
On the third question, all the tin contracts were made on the London Metal Exchange Contract B which is the standard tin form used when a metal exchange broker contracts with a non-member of the exchange. The form provides: "This contract is made between ourselves and yourselves as principals, we alone being liable to you for its performance." "We" means the exchange broker. "You" is the I.T.C. Both parties are liable as principals but they do not provide that they are the only persons so liable. [Reference was made to Shearson Lehman Hutton Inc. v. Maclaine Watson & Co. Ltd.  2 Lloyd's Rep. 570.]
Liability as principal exists in any event. If the agent acts for an undisclosed principal that might mean that there will be an additional liability. That will not amount to contradicting the contract: Higgins v. Senior (1841) 8 M. & W. 834, 843-844, per Parke B. That case was considered by the Privy Council in Basma v. Weekes  A.C. 441 and was regarded as good law: see also Redebiaktiebolaget Argonaut v.
Hani  2 K.B. 247, 248-250, per Rowlatt J. However, merely by saying that the agents will be bound the liability of the principal cannot be excluded: Fred Drughorn Ltd. v. Rederiaktiebolaget Transatlantic  A.C. 203, per Viscount Haldane, at pp. 206-208 and per Lord Sumner, at p. 209. In that case no decision was made about Humble v. Hunter (1848) 12 Q.B. 310 and Redebiaktiebolaget Argonaut v. Hani.
Mark Littman Q.C., Richard Aikens Q.C., Richard McCombe Q.C. and Adrian Hughes for Maclaine Watson adopted Mr. Kentridge's submissions on submissions A and B(i) emphasising the need for a purely statutory approach by treating the question as one of the construction of the International Organisations Act 1968 and the Order in Council of 1972. A summary of the points is as follows:
1. The liability or non-liability of the members for the debts of the I.T.C. depends on the true nature of the status or character of the I.T.C. under English law. 2. The nature of that status depends not only on the English common law but also on (i) English statutes and (ii) English rules of the conflict of laws. 3. Either statutes or conflict rules may require the English courts to recognise a status which produces different consequences with regard to liabilities from those which would emerge from the simple application of ordinary English common law rules, even though those consequences were arrived at by a process unknown to the English common law but known to other systems of law which are applicable. 4. Among the four rival candidates put forward for describing the status or character of the I.T.C. in English law (three for the appellants and one for the respondents) there is only one which would result in the non-liability of members and the failure of this appeal, namely, that the I.T.C. is a "body corporate in all but name" as was stated by Millett J.  B.C.L.C. 707, 717. 5. The effect of the Order in Council of 1972 can only be assessed against an appreciation of what the position of the I.T.C. would have been under English law if the Order of 1972 had not been passed. This depends on whether English law, including English rules of the conflict of laws, will require recognition of the international status of the I.T.C. at the national level otherwise than by the intervention of statute. 6. If it does, that is to say, if English law requires recognition of the international status of the I.T.C. at the national level quite independently of statute, then the international status of the I.T.C. will prevail also at the national level unless the Order in Council of 1972 otherwise provides. This is "the international approach" broadly adopted by the Court of Appeal. 7. If it does not, in other words, if there be no statute the international status arising under the international treaty which would be an unincorporated treaty would not have passed into English law, then the effect of the Order of 1972 must be assessed on the basis that, but for the Order, the I.T.C. would, at a national level, have the status of being an unincorporated association of persons engaged in trade whose members were all jointly and severally liable for its debts; a position which remained after the Order of 1972 unless and to the extent that it is changed by the Order. That would be described as "the statutory approach." 8. Both of these approaches, when pursued, lead to the same conclusion, that is to say, that neither at the international level nor
at the national level does the I.T.C. have the status of being "a corporation in all but name" and, therefore, the members are liable for the I.T.C.'s unpaid debts.
On point 1, in saying "English law" it should not be forgotten that the International Organisations Act 1968 and the Order in Council of 1972 apply to the United Kingdom as a whole and both I.T.A.6 and the Headquarters Agreement were made with the United Kingdom as a whole. Indeed it would be very strange if a decision in this House as to the legal character or status of the I.T.C. would be one thing if it arose from proceedings taken in England and another if the proceedings had started in Scotland. At least some of the respondents' arguments would lead to that result, in particular the main ground on which Kerr L.J. and Ralph Gibson L.J. rejected submission B(i), namely that the mixed entity was unknown to the common law of England. When one asks oneself, "What would be the position in England had there been no statute?" the answer would be that it would simply have been a plurality under English law. That is a plurality of members with headquarters here and trading. It would have been an unincorporated association. If one asked the same question in Scotland, it could be that the position would be like an English quasi partnership, if that is a possible expression in Scotland. While bearing these matters in mind it is convenient to start with the English law. The proposition that the liability or non-liability of members depends on this question of status is not in dispute. It was certainly generally accepted by all the judges below.
The principle in point 2 is not likely to be in dispute. As to statute both sides rely on the principle fully stated in Bonsor v. Musicians' Union  A.C. 104 that Parliament can create new types of legal entity not known to the common law such as an entity which although it (i) possessed many of the main capacities of a body corporate, (ii) had sufficient legal personality, as does a trade union, to be capable of being sued by one of its own members for breach of a contract and (iii) was capable of enjoying privileges and immunities not enjoyed by its members, was nevertheless not a separate juridical entity from its members. This supports submission A. Further, Lord Keith's observations, at pp. 150 and 152, support submission B(i) in that Parliament may have created something which was at one and the same time a separate juridical entity and also an unincorporated association of individuals, not standing separate and apart from the individuals of which it was composed.
Alternatively, as to the rules of the conflict of laws, the possibility is that the status of the I.T.C. in English law is to be determined by the application of rule 174(1) in Dicey & Morris, The Conflict of Laws, 11th ed. (1987), p. 1134, that is to say: "The capacity of a corporation to enter into any legal transaction is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question." Risdon Iron and Locomotive Works v. Furness  1 K.B. 49, 56, showed that although by the law of the State of California a remedy was given to a creditor of a company not only against the company contracting but also against the individual
shareholders in proportion to their holdings in the company that individual liability could not arise by reason merely that the person was a shareholder of the company. Such a shareholder could only be liable if he had given express authority to be made liable, because it was an essential fact of its incorporation as an English company that the liability of the members was limited. [Reference was made to Dreyfus v. Inland Revenue Commissioners (1929) 14 T.C. 560.] See also Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2)  1 A.C. 853, 972, per Lord Wilberforce and Adams v. National Bank of Greece S.A.  A.C. 255, 273, per Viscount Simonds.
With regard to point 3, Bonsor v. Musicians' Union  A.C. 104 establishes: first, that Parliament can create a mixed entity. Secondly, it is irrelevant whether such a concept is unknown to the English common law since statute can create a new creature. Thirdly, it is not a concept unknown to the law of the United Kingdom. Fourthly, if, as the Court of Appeal held, the rules of the conflict of laws are applicable here so that to understand and appreciate the nature of the legal character of the I.T.C. in English law it is necessary to refer to its status and character in international law under the treaties, then rule 174 in Dicey & Morris, The Conflict of Laws, 11th ed., p. 1134, would apply and one would look at the law of its creation and would accept that law: National Bank of Greece and Athens S.A. v. Metliss  A.C. 509, per Viscount Simonds, at pp. 521-522, 524-525, per Lord Tucker, at pp. 528-529, and per Lord Keith of Avonholm, at pp. 530-531.
On point 4, under submission A the I.T.C. is an unincorporated corporation engaged in trade. It is analogous to an English partnership. Such a partnership itself, quite apart from the statutory provisions like R.S.C., Ord. 81, which enables it to sue and be sued in its firm's name, has a kind of legal personality: Pooley v. Driver (1876) 5 Ch.D. 458. If the I.T.C. is not held to be an unincorporated association its status can be regarded as that of a "mixed legal entity." Section 4(2) of the Partnership Act 1890 characterises the Scottish partnership which is a legal person distinct from the partners of which it is composed but where members are nevertheless liable ultimately for the debts. The third form of status is that of an agency. That has been called, "Constitutional agency." That point has been argued by Mr. Sumption under submission C and his submissions are adopted. As against that, the fourth is the view put forward by the respondents. Under that view the I.T.C. has full juridical personality in the sense that it exists as a separate legal entity distinct from its members: see Millett J.  B.C.L.C. 707, 717.
The statutory approach is the correct approach. The status of the I.T.C. is to be found only in the Order in Council of 1972 made under the International Organisations Act 1968. Although I.T.A.6 and the Headquarters Agreement determine the status of the I.T.C. at international level they do not affect its position in the United Kingdom except to the extent determined by the Act of 1968 and the Order of 1972. In other words, apart from the statute, the treaties would be unincorporated treaties. The international status of the I.T.C. under international law, on this footing of being derived from an unincorporated
treaty, would have no effect in English law. Rule 174 in Dicey & Morris, The Conflict of Laws, 11th ed., does not apply to an international organisation. The Act of 1968 is an enabling Act and does not of itself effect changes in the existing law. It gives powers to the Crown to make provisions to confer on the international organisation the legal capacities of a body corporate: section 1. It is intended to apply to various international organisations of which the United Kingdom is a member together with one or more foreign powers: section 1(1). Also see section 1(6) under which privileges and immunities conferred are not greater than the agreement to which the effect is being given. Section 4 deals with an international organisation of which the United Kingdom is not a member. The same provisions apply to such organisations if they wish to set up a business within the United Kingdom. No doubt it is considered desirable in the national interest to promote the setting up of the headquarters of international organisations in this country by offering these facilities. The long title of the Act emphasises that its purpose is to facilitate the operations and to grant facilities for such organisations. The Order in Council of 1972 reflects the same position: see articles 2(1) and (2), 4, 5, 7 and 8 and the Headquarters Agreement. The manifest purpose of this legislation was to make it easier for this body to perform its function. The mischief is identified by the word "facilities" in the long title. It was that the I.T.C., the international organisations, under the existing law, required certain facilities to be given to them. [Reference was made to Godman v. Winterton (1940) 11 I.L.R. 205.] It was not the mission of the legislation to insert a corporate veil to protect the members from liability.
Alternatively, the legal nature of the I.T.C. at the national level is determined by the provisions of the specific treaties, I.T.A. 6 and the Headquarters Agreement. Rule 174 of Dicey & Morris, The Conflict of Laws, 11th ed., essentially applies in this connection. It has been accepted by the Court of Appeal that the I.T.C.'s legal character under international law is that of a mixed entity. It is legitimate to look at the treaties to establish its character. Under article 16 of I.T.A.6 the I.T.C. has a legal personality. There are capacities granted. Article 4 provides that the status, privileges and immunities of the I.T.C. in the territory of the host government shall be governed by a Headquarters Agreement between the host government and the I.T.C. That takes one to the Headquarters Agreement. Clause 3 repeats precisely the same words as article 16 of I.T.A.6. There is then a reference to capacities. There is there a clearly expressed intention that there should be transferred into the municipal law of the host country precisely the same form of legal personality that it had in international law, no more no less: see also section 1(6) of the International Organisations Act 1968.
Aikens Q.C. following. There are two particular issues to be dealt with. First, a general issue on the question of how to decide the nature or status of the I.T.C. Second, the international approach. For factual background and working of I.T.A.6 and the trading of the buffer stock manager see Shearson Lehman Hutton Inc. v. Maclaine Watson & Co. Ltd.  2 Lloyd's Rep. 570.
On the first issue, one starts with the premise that it is necessary to decide what is the status of the I.T.C. in order to decide who is liable for its contract debts. The phrase I.T.C. could mean one of the three things: (i) an association in the nature of an English partnership, (ii) an association in the nature of a civil law partnership, like a French sociétés in nom collectif, or (iii) a quasi-corporation. If the I.T.C. contracts with Maclaine Watson under each of those guises the results in terms of liability for the contract debts of the I.T.C. would be different. If it is an unincorporated association like an English partnership the results of the contract would be that all the members were, jointly and severally, liable for all the contract debts. If it is in the nature of a civil law partnership the consequence would be that the entity was primarily liable but that the members would nevertheless retain a secondary liability. If it is a quasi-corporation then the corporation itself only would be liable. The question, thus, arises: how is the nature or the status of the I.T.C. to be ascertained? If within the United Kingdom law (i.e. English and Scots law), either in statute or at common law, the organisation in question is made a corporation then that grants a particular status to that organisation under municipal law. If it has no such status then any liability on itself does not necessarily exclude the liability of its constituent parts. There is, here, nothing in the Order in Council of 1972 or elsewhere which confers on the I.T.C. the status of a corporation or that of a separate legal entity. So one has to look for inferences. There is an important difference between status and capacity. "Capacity" is nothing more than the ability to exercise rights: see Carlton Kemp Allen's article Status and Capacity (1930) 46 L.Q.R. 277, 279, 280-283 and Graveson, Status in the Common Law (1953), pp. 55-56. "Status" is a legal conception. It is a condition which is imposed as a matter of law by the authority of the state on a particular class of persons or non-natural entities: Graveson, Status in the Common Law, pp. 58-59 and Salvesen or von Lorang v. Administrator of Austrian Property  A.C. 641, 653, per Viscount Haldane. Furthermore, status gives rise to capacities but the mere grant of certain capacities will not automatically give to the grantee the particular status or nature of a particular class as recognised by the state. That applies to both natural and non-natural entities: Graveson, Status in the Common Law, p. 73. Capacity, i.e. an ability to do something, is only one incident which flows from the status or nature of something. Others include nationality, domicile and perpetual succession and the like. Accordingly, the nature or status of the I.T.C. recognised by the Order in Council of 1972 is not determined solely by article 5. The Order has not granted, expressly or impliedly, the status of a corporation to the I.T.C. Any other status can only be "non-corporate" status. There is nothing to prevent the members of the non-corporate entity to be liable for its unpaid debts. However, if it is concluded that the I.T.C. must have some non-corporate status then this must be deduced from the Order in Council of 1972 and the Act of 1968 or by reference to I.T.A.6 and international law. The latter can be called the international law approach.
On the international law approach under submission B(ii), the I.T.C. is recognised for the United Kingdom municipal law by the Order of
1972 but the nature of the I.T.C. and the liability, if any, of its members for its debts are not expressly dealt with by that Order. It is, therefore, necessary to examine the instruments which created the I.T.C., namely I.T.A.6 and the Headquarters Agreement. One can proceed by analogy with the rules of English conflict of laws. Those rules establish that (a) the status of any organisation, (b) all matter concerning its constitution and (c) the liability of its individual members for its debts or engagements is governed by the law by which the organisation was created. The I.T.C. was created under public international law. Thus, that law governs its status, its constitution and the liability of its members for its unpaid debts. I.T.A.6 is its constitution. The construction of I.T.A.6, therefore, is governed by public international law, the law of its creation. Under public international law the I.T.C. itself has "legal personality." That is its status. But on the true construction of "legal personality" under public international law the I.T.C. is to be characterised as a "mixed" entity in the sense that the members are secondarily liable for its debts. The constitution does not exclude the liability of the members. In analysing I.T.A.6, which is a treaty, the court should have regard to the established principles of public international law as to the proper construction of treaties, as codified in the Vienna Convention on the Interpretation of Treaties (1980): Fothergill v. Monarch Airlines Ltd.  A.C. 251, per Lord Diplock, at p. 282, and per Lord Scarman, at p. 290. This course is also consistent with the principle that the courts should have regard to the relevant treaty, here I.T.A.6, as part of the full content or background to the law, even if not expressly or impliedly incorporated into English law, in all circumstances when a court has to construe statutory words, or formulate legal principles in an area of the law where the Crown has accepted international obligations: Pan-American World Airways Inc. v. Department of Trade  1 Lloyd's Rep. 257, 261, per Scarman L.J. It is a general rule of public international law that treaties must be interpreted so as to exclude fraud and so as to make their operation consistent with good faith: L. Oppenheim, International Law, A Treatise, 8th ed. (1955), vol. 1, p. 950, para. 553, and pp. 951-957, para. 554. That is how I.T.A.6 ought to be approached.
That status of the I.T.C. and the liability of its members will be recognised and given effect to under the United Kingdom law because the United Kingdom law will recognise the status and the attributes given to an entity by a foreign law and by public international law. Since the status and attributes of the I.T.C. are governed by international law, once that has been ascertained, it must be recognised by the United Kingdom municipal law by virtue of the Order in Council of 1972. The English rule of law that a person cannot rely on an unincorporated treaty to create new private law rights enforceable in the municipal courts is not offended by the recognition and enforcement of the I.T.C.'s status.
For the purposes of the United Kingdom municipal law the Order in Council of 1972 recognises the I.T.C. Without that Order the I.T.C. would have no municipal law status or capacities at all. To that extent the Order puts the I.T.C. on the municipal law plane. The Order,
however, does not grant the I.T.C. any new status for the United Kingdom municipal law purposes. It simply recognises a number of matters, including that (a) it is an organisation of which Her Majesty's Government and the governments of other foreign powers are members, i.e. it is an international organisation: see the titles of the International Organisations Act 1968; (b) the activities of the I.T.C. are those undertaken pursuant to I.T.A.4 and any succeeding treaty: article 2 of the Order; (c) the Order will come into force on the same day as the Headquarters Agreement: article 1; and (d) the I.T.C. will have immunity from suit and legal process except, inter alia, in respect of the enforcement of an arbitration award made under articles 23 and 24 of the Headquarters Agreement. The fact that article 5 of the Order confers on the I.T.C. "the legal capacities of a body corporate" does not confer any new or greater status on the I.T.C. than it had already under I.T.A.6 or the Headquarters Agreement. The Order is silent on status. Therefore, it is necessary to look at I.T.A.6 and the Headquarters Agreement to determine the proper nature of the I.T.C. Such nature is then recognised by the Order in Council for the purposes of the United Kingdom municipal law: C. W. Jenks' article "The Legal Personality of International Organisations" published in The British Year Book of International Law (1945), pp. 270-274, and F.A. Mann's article, "International Corporation and National Law" published in The British Year Book of International Law 1967(1969), pp. 145, 148-150, 151, 153-156, 157-158, 160-162, 164 and 174.
The conflict of laws rules, as applied to corporations or other entities known to different systems of law, is not in doubt: Dicey & Morris, The Conflict of Laws, 11th ed., rule 174, pp. 1134, 1135. Risdon Iron and Locomotive Works v. Furness  1 K.B. 49, 56-57, 58, 59, decided that, in the absence of any contrary agreement, the law of incorporation of a company governs the liability of the members of it for debts of the company and not the law under which the company was trading. See also Johnson Matthey & Wallace Ltd. v. Alloush (1984) 135 N.L.J. 1012 and National Bank of Greece and Athens v. Metliss  A.C. 509, perLord Tucker, at p. 529, and per Lord Keith of Avonholm, at p. 531.
The I.T.C. was created under public international law. Therefore, by analogy with rule 174 in Dicey & Morris, The Conflict of Laws, 11th ed., public international law governs the I.T.C.'s status, constitution and the liability of its members. The key point is that although the I.T.C. is recognised for the United Kingdom municipal law by virtue of the Order in Council of 1972, that is merely declaratory for the United Kingdom municipal law of the position of the I.T.C. and its members under the law which created it, namely international law. The English common law recognises corporation or other legal entities created under other systems of private law as existing so that they can sue and be sued in England: Dicey & Morris, The Conflict of Laws, 11th ed., rule 171, p. 1128. All that the Order of 1972 does is to put the I.T.C. in a similar position for the United Kingdom municipal law purposes. It cannot be assumed that, under the common law, the status of the I.T.C. by virtue of the law of its creation would be automatically recognised because it could be argued that otherwise it would be an attempt to create new private law
rights for the I.T.C. by virtue of unenacted treaties, viz., I.T.A.6 and the Headquarters Agreement: see J. C. Collier's article "The Status of an International Corporation" published in "Multum Non Multa" Festschrift Für Kurt Lipstein(1980), pp. 21, 24-25, 27-28.
The liability of states for the unpaid debts of an international organisation of which they are members is as follows: (a) An international organisation means an organisation established by a treaty between states, and possibly other bodies which can be subject to international law, e.g. the European Economic Community. The organisation has legal personality, i.e. is a distinct legal entity from its members. (b) The question of whether the members of the international organisation will be liable for its debts depends on the correct construction of the treaty creating the organisation. In the case of the I.T.C. this is I.T.A.6. (c) I.T.A.6 must be construed in conformity with a rule of public international law that members of an international organisation are liable for the debts of the organisation on a secondary basis, in the absence of any clear limitation in the treaty or exclusion of liability. One reason for the rule is that, in the absence of any express limitation or exclusion of liability, creditors dealing with the organisation may or will be misled. This is especially so if any other construction could facilitate fraud or bad faith. (d) The liability of the member states is joint and several. (e) The member states have a right of contribution inter se for debts of the I.T.C. which have been met by one or more members. The amount of the contribution which can be obtained from each member will depend on the terms of the treaty. In the absence of any express provision, the contribution will be in proportion to their respective percentages of production or consumption as determined by the council of the I.T.C.
In construing I.T.A.6 as an international law document two questions have to be considered: (i) what is the nature of the "legal personality" of the I.T.C. and (ii) what is the effect of I.T.A.6 as to the liability of the members of the I.T.C. As to the first question the matter should be looked at from the point of view of civil lawyers who are familiar with the civil law partnership. It is possible that the draftsmen of I.T.A.6 had the civil law concepts of legal personality in mind because only three of the member states are common law countries. Article 16(1) of I.T.A.6 states that the I.T.C. "shall have legal personality." The article is not using the language intended to create a corporation in the sense of the English law. It is the nature of a civil law partnership where the partnership itself is a separate entity from the members. Article 4(1) of I.T.A.6, stating that the council "shall be composed of all the members" reads more naturally with article 16(1) as indicating a kind of partnership which for the present purposes is a civil law partnership: also see article 3 of the Headquarters Agreement which provides for the I.T.C. to have legal personality. Article 2 of the Headquarters Agreement states that it should be interpreted in the light of the functional objectives. That is compatible with the idea of a civil law partnership. Thus the phrase "legal personality" in I.T.A.6 is more likely to mean civil law partnership or mixed entity than a corporate entity which excludes members' liability for the corporation's debts.
As to question (ii), I.T.A.6 contains no provisions excluding or limiting the liability of members of the I.T.C. for its unpaid debts. It is true that there are no express provisions for the payment by members to creditors of such debts. But that is a liability arising as a matter of law and such provisions are not found in partnership deeds. The financing of the buffer stock is provided for in article 22 of I.T.A.6. It is to be shared equally between producing and consuming members. The article indicates the liability of the whole of the membership towards financing generally. Note also article 26(4) which presupposes that individual members have shares in the buffer stock itself, i.e. property of the organisation. Article 24 permits borrowing of money for the purposes of the buffer stock. All members would be liable to meet any deficiencies in borrowing under that article. Article 28 shows how the buffer stock is to be operated. Article 41(1) provides for the members to use their best endeavours and co-operation to promote the attainment of the objectives of the I.T.A.6. That must include all necessary financing.
Under article 31(c) of the Vienna Convention it is necessary to consider the relevant principles of international law as an aid to the construction of I.T.A.6. The following principles are established on that point from the writings of jurists: (i) The general principles of law recognised by civilised nations are a source of international law. Thus, all relevant provisions and circumstances must be studied including any intention made known to third parties. (ii) In international law there is no positive rule that simply because an international organisation has separate legal personality that necessarily excludes liability of the member states for the unpaid debts of the organisation. (iii) The issue may turn on the capacity in which the international organisation is acting, namely jure imperii or jure gestionis. If the latter then it is more likely that the members of the organisation will remain liable for its debts unless there is an express provision in the treaty establishing the organisation making it plain that the members' liability is limited and that only the organisation itself will be liable for such debts. (iv) In the absence of express terms, international organisations with legal personality are in the nature of civil partnerships or mixed entities. That means that the members remain secondarily liable for the unpaid debts of the organisation. (v) Whether such liability can be maintained in the municipal courts must depend on how the organisation is to be treated by the relevant municipal law: see Charter of the United Nations and Statute of the International Court of Justice, 26 June 1945; Hersch Lauterpacht, Collected Papers on International Law (1970), pp. 58, 61, 68-70, 71-74, 75; H.-T. Adam, Les Organismes Internationaux Spécialisés, (1965), paras. 103, 107, 108, 109, 110, 111; Shihata's article, "Role of Law in Economic Development; The Legal Problems of International Public Ventures" in Review Egyptienne de Droit International, vol. 25 (1969), pp. 122-124; Schermers, International Institutional Law, (1980), ch. 11, p. 770, para. 1377, pp. 770-771, p. 772, paras. 1379, 1383, pp. 772, 774, para. 1386, p. 776, 1389, p. 778, para. 1392, p. 780, para. 1395, p. 782, para. 1399; Seidl-Hohenveldern, Corporation in and under International Law (1987), ch. 1, pp. 1-3, ch. 5, pp. 69, 72, 73, ch. 7, p. 90, ch. 9, pp. 100-101, ch. 10, pp. 110-112, 119-121; Seidl-Hohenveldern,
Responsibility of Member States of an International Organisation for Acts of the Organisation (1987), pp. 432, 427; Ebenroth, The Civil Liabilities of International Organisations and their Member States (1988), pp. 3-4, 5-7, 8, 9-12, 13-28; Seidl-Hohenveldern, General Course of Public International Law (1986), pp. 193-194; Prof. Dr. H. C. Gerhard Hoffman "Recourse on the Member States of International Organisations on account of their Indebtedness"; F. A. Mann's article, "International Corporation and National Law" in the British Year Book of International Law 1967. [Reference was made to Westland Helicopters Ltd. v. Arab Organisation for Industrialisation (1984) 23 I.L.M. 1070 and In re Duke of Wellington, Glentanar v. Wellington  Ch. 506.]
Stanley Burnton Q.C. and Mark Barnes for the banks. The basic point is that if the I.T.C. were an organisation created under municipal law, the fact that it is a distinct legal personality would not of itself exclude the liability of its members for the obligations it undertakes under contracts, and in particular contracts governed by English law in litigation in England. The rules of English conflict of laws require the court to refer to the constitution of the organisation. If, by that constitution, the member states are directly liable to third parties for its obligations, they will be so liable in an action on the contract. It is to be noted that the action here, is on the contract. It is not an action, in the case of a foreign partnership, to enforce the foreign partnership deed. Where a plaintiff's rights arise by virtue of and under his contract with the organisation but in order to ascertain the parties liable under the rules of English conflict of laws, it is necessary to look at the constitution of the organisation: National Bank of Greece & Athens S.A. v. Metliss  A.C. 509. The same rule must apply to international organisations. In such cases, the constitution is the constituent treaty taking effect under public international law and it is to this system of law that the court must refer to determine those questions. Article 5 of the Order in Council of 1972 does not, and should not be construed to affect, this proposition. It would be highly anomalous if the rights and liabilities of the parties to contracts with international organisations were different in the United Kingdom to their rights and liabilities elsewhere. Equally, it would be wrong to construe the United Kingdom legislation as depriving parties contracting and seeking to enforce their rights in the United Kingdom of rights they would otherwise enjoy against the members of an international organisation. The court should lean heavily against such a construction and such a result. No more needs to be read into the legislation than is already there. It is not necessary to read words into the provision conferring the legal capacities of a body corporate on the organisation. The provision should not be read as if it said: "The organisation shall have the legal capacities of a body corporate" with the addition of "and no member of that organisation shall have any liability for its debts." Some treaties provide that no member of the organisation shall have any liability for its debts. Such provisions take effect because they are expressed in the treaty, which is a sovereign act creating an organisation to bring about that end. The proper conclusion for the court to come to in a case such as the present is that unless the position is made manifest to third parties it ought to be at the risk of the
members of the organisation who have set it up, given it capital and enabled it to trade in such a way that at the end of the day, there are enormous liabilities beyond its means. Section 4(2) of the Partnership Act 1890 enacted the rule which already existed in Scotland that members of a partnership were to be treated in some respects as if they were guarantors. Section 9 imposes the substantial liability on the members of the partnership. They are jointly and severally liable: see Mair v. Wood, 1948 S.C. 83.
From the point of view of the banks there are following issues in the appeal: (1) Is the question of the members' liability to be decided, in accordance with the ordinary rules of English conflict of laws, by reference to the proper law of the organisation, i.e. international law including, in the instant case, I.T.A.6, or by reference to English law alone. That requires consideration of the defendants' arguments: (a) that the court cannot refer to international law or to I.T.A.6, because they are non-justiciable and (b) that there is no need for the court to do so because the question has in effect been answered by the Order in Council of 1972. (2) If the question is to be determined by reference to international law, how is the relevant rule of international law to be found, in the absence of any specific provision in I.T.A.6? (3) If the question is to be determined by reference to international law, what is the relevant rule, and how does it apply to this case? (4) If the matter is to be determined otherwise than by reference to international law, would the members of the I.T.C. be liable, apart from the Order in Council of 1972? (5) If so, does the Order in Council nevertheless have the effect of excluding any such liability? (6) Are the member states immune under or by virtue of article 6 of the Order in Council of 1972? (7) Are the foreign member states immune in respect of these claims? Are the claims within section 3 of the State Immunity Act 1978?
Two points arise on non-justiciability, first, whether the court is entitled to look at and construe a treaty such as I.T.A.6 at all. Secondly, whether, if the rights sought to be enforced against the member states are derived from a treaty and are based on a treaty, such rights are precluded under English law from being enforced as private law enforceable rights. It is clear that private rights or obligations can be derived from sources other than the laws of this country, notably the laws of other countries: National Bank of Greece & Athens S.A. v. Metliss  A.C. 509. In English law there is a well-established rule that the making of a treaty is an executive act but where the performance of obligations under a treaty entails alteration of existing domestic law it requires legislation: Attorney-General for Canada v. Attorney-General for Ontario  A.C. 326, 347, perLord Atkin. But in certain circumstances the Crown can affect private rights and obligations without legislation and it can do so equally well by treaty: Post Office v. Estuary Radio Ltd.  2 Q.B. 740. Furthermore, the Crown can by treaty, without legislation, constitute itself an agent or trustee. That would affect the rights of private parties: Civilian War Claimants Association Ltd. v. The King  A.C. 14, 27. Where a treaty is relevant to the issue before the court, in a proper case the court cannot be precluded from examining and construing it. The justiciable issue before the court
would be: who are the parties liable under the contracts of loans? Since non-justiciability is an exception to the normal jurisdictional function of the court, in cases of doubt, the court should lean against concluding that it cannot determine an issue brought before it on the grounds of non-justiciability in the same way that the court leans against deciding that a sovereign state is not liable by reason of state immunity: Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. (The Playa Larga and The Marble Islands)  2 Lloyd's Rep. 171.
Article 5 of the Order in Council of 1972 shows that it carefully avoids incorporating the council of the I.T.C. or providing that it shall be treated as a body corporate. Further, article 7 is not making the official archives of the council into those of a diplomatic mission. It is using the immunities which attach to the official archives of diplomatic missions as the model in order to describe those which are conferred on the I.T.C. Article 8 is adopting the same procedure in connection with relief and exemption from taxes. If reference can be made to international law and the treaty to determine such questions as the liability of member states, it is undesirable and unnecessary to read more into article 5 of the Order.
In the case of companies or associations formed under municipal law the relevant rules are found in the constituent instrument of the organisation and in the legislative framework. If the same approach is followed in relation to organisations formed under public international law the first place to look would be the constituent treaty. If I.T.A.6 had expressly dealt with the question of members' liability to creditors in the event of deficiency or otherwise, then that would determine the matter. In fact, I.T.A.6 does not deal with the matter expressly. To answer the question, therefore, the court not only can but must ascertain the rule of international law. If there is no clear rule the court should determine as to what the rule is from the material available before it and apply that rule. There is no general international convention or framework agreement covering the question. The development of international organisations is relatively recent and the legal consequences are yet to be worked out: Jenks, The Proper Law of International Organisation (1962), p. 7. But there have been a number of cases in which the rules of public international law were in doubt and where the court did not decline to deal with the issues before it and determined them by arriving, as best it could, at the rule to be applied: Duke of Brunswick v. King of Hanover (1844) 6 Beav. 1, 45-48, per Lord Langdale M.R.; (1848) 2 H.L.Cas. 1, H.L.(E.); Schooner Exchange v. M'Faddon (1812) 7 Cranch (U.S.) 116; Reg. v. Keyn (1876) 2 Ex.D. 63, 65-70, 81, 86, per Sir Robert Phillimore; In re Piracy Jure Gentium  A.C. 586, 598, and Trendtex Trading Corporation v. Central Bank of Nigeria  Q.B. 529, 552, 556: see also J. L. Brierly, The Law of Nations, 6th ed. (1963), pp. 66-68 and Lauterpacht, International Law (1970), vol. 1, p. 75. [Reference was made to Alcom Ltd. v. Republic of Colombia  A.C. 580.]
Put shortly, the question is: whether the members of an international organisation are liable or not for its debts in the absence of express provision. Where no provision is made expressly excluding liability the
members are liable, irrespective of legal personality. The sources of law on this issue are numerous text books referred to: for example, Ebenroth's article, "The Civil Liabilities of International Organisations and their Member States" (English translation) (1988) and H.-T. Adam, Les Organismes Internationaux Spécialisés (1965), and the usage made by the states of international organisations which shows an implementation of the rule: see, for example, the World Bank (1945), the International Finance Corporation, International Development Association, African Development Bank, African Development Fund, Asian Development Bank, Caribbean Development Bank and East African Development Bank. Those are financial organisations aiming to achieve their public and international objects through commercial transactions with private persons. Broadly they are, by their constitutions, given status, immunities and privileges so as to enable them to perform their functions and liability on shares is limited to the unpaid portion of the issue price of the shares. See also the European Economic Interest Grouping Regulations 1989 and the Companies Act 1985, section 740. [Reference was made to Douglas v. Phoenix Motors, 1970 S.L.T.(Sh.Ct.) 57.] Legal personality is not of itself inconsistent with liability on the part of the members. So far as international law is concerned the International Court of Justice was at pains to emphasise in In re Reparation for Injuries Suffered in the Service of the United Nations  I.C.J.R. 174 that the concept of legal personality was a variable concept. As a general rule, those who engage in transactions of an economic nature are deemed liable for the obligations which flow therefrom: Westland Helicopters Ltd. v. Arab Organisation for Industrialisation (1984) 23 I.L.M. 1070, 1083. The member states of an international organisation associate for public purposes. The costs and losses involved should, prima facie, be a charge on the public purse. Lord Pearce said of Royal Prerogative in Nissan v. Attorney-General  A.C. 179, 227, that it is a prerogative to take and to pay. It is not a prerogative simply to take. The treaties deal with limitation of liability separately from the question of legal personality. That confirms the rule of international law that they are two different matters. The treaties do not state that the organisation shall have legal personality with the result that no member shall be liable by reason of its membership for obligations of the organisation. There are striking similarities between the relevant provisions of the treaties. In particular, in the commodity agreements, for example the Sugar Commodity Agreements, the International Cocoa Agreements and the International Natural Rubber Agreements, the similarities of wording are such that it is impossible not to come to the conclusion that at least, they were derived from the same precedent as I.T.A.6. There is a significant overlap of membership. It is legitimate to infer that the omission of a limitation or exclusion clause from I.T.A.6 was deliberate. If the members had intended to exclude or limit their liability, they would have been expressed.
Article 177 provides that the European Court shall have jurisdiction to give preliminary rulings concerning "(a) the interpretation of this Treaty; (b) the validity and interpretation of acts of the institutions of the Community; (c) the interpretation of the statutes of bodies established
by an act of the council, where those statutes so provide." Then the article sets out the provisions for national courts to make references. A treaty entered into by an institution of the Community, and I.T.A.6 is such a treaty, is an act of that institution within the meaning of article 177(b); R. & V. Haegeman v. Belgian State (Case 181/73)  E.C.R. 449. If it is accepted that there is, in I.T.A.6, no clear exclusion of liability such as is required under international law then there would not be a need to refer the interpretation of the treaty to the European Court. If the decision is that there is an issue arising on the interpretation of the treaty, then it is accepted that article 177(b) applies. The interpretation given by the European Court would be binding on the parties before the court. If those parties include all the states, then all the states would be bound by that decision.
The purpose of the International Organisations Act 1968 and the Order in Council of 1972 is no more than to give the I.T.C. the facility to contract, to hold property and to sue and be sued in its own name, subject to the immunities granted by article 6 of the Order. There is no reason to suppose that that legislation intended to exempt the members of the I.T.C. from liabilities that would otherwise attach. Article 6 confers qualified immunity on the I.T.C. None of the banks, except Kleinwort Benson Ltd., has an arbitration clause in the contract. Therefore, none, except Kleinwort Benson Ltd., would be able to enforce judgment against the I.T.C. unless it waived its immunity. There are two effects of this: first, if the I.T.C. is to be treated as non-existent under English law then the immunities conferred by article 6 must have been conferred on the members who are entitled to take advantage of them in the proceedings. It is not suggested that the I.T.C. is to be ignored for all purposes. Clearly Parliament has conferred many privileges and attributes on it, as it did with trade unions without thereby exempting the members from liability. The second effect is stated to be that, if the I.T.C. is treated as having some existence under English law, then any liability on the members will be a subsidiary liability arising only secondarily and contingently in the event of the I.T.C. failing to honour its obligations. The liability of the member states involves liability on the part of the I.T.C. as a prerequisite. It is also stated that since by virtue of article 6 the I.T.C. cannot be held liable the secondary liability of the member states cannot arise. There are two confusions in the second point. First, it confuses practical and procedural questions with substantive liability. In practice, the creditors of an association or company will normally look to the joint funds before looking to the individual members. That is a convenient practice. In municipal law it is sometimes reinforced by procedural rules: for example, the French Commercial Code, article 10; Scottish rules requiring the constitution by writing or decree against the partnership of disputed debts: Neilson v. Wilson (1890) 17 R. 608 and Mair v. Wood, 1948 S.C. 83. Such rules are not enforced by English courts. The second confusion is between immunity from suit and immunity from substantive liability. Immunity under the Order in Council of 1972 is immunity from suit not from liability: Zoernsch v. Waldock  1 W.L.R. 675, 691-692. The I.T.C. remains liable to the banks. Its liability is undisputed.
If the members are liable as alleged the foreign states may be sued here by virtue of section 3(1)(a) and (b) of the State Immunity Act 1978.
Gordon Pollock Q.C., Richard Siberry Q.C. and Alan Boyle for Australia, Japan, Malaysia, Nigeria and Thailand.
Peter Leaver Q.C. for Belgium, Denmark, Greece, Ireland, Italy, Luxembourg and Zaire.
Patrick Talbot for Canada.
Peter Leaver Q.C. for Finland, Norway, Sweden and Switzerland.
Richard Jacobs for France, the German Federal Republic and the Netherlands.
Gordon Pollock Q.C. for India.
Howard Page Q.C. for Indonesia.
Gordon Pollock Q.C. This case is one of quite straightforward simplicity and involves a fairly straightforward question, namely: "What is the proper construction of the Order in Council of 1972 purely as a matter of English law? The starting point is with whom did Rayners contract? Who were the sellers of the tin in respect of which they are suing for payment? All the states are claiming in these proceedings is that (a) they were not parties to the contract sued on and (b) that there is no rule of law which imposes on the states liability of guarantors for the debts of a separate entity, namely the I.T.C.
The first proposition is that the capacities of a body corporate are the most extensive capacities which can be enjoyed by a persona ficta. The essential capacities include power to contract and to own property, to acquire and enjoy and dispose of property in its own name and in its own right so as to incur obligations and acquire rights in and for itself. It follows that it can sue and be sued. Secondly, the conferral by Parliament on an unincorporated body of such capacities must lead necessarily to the conclusion that for the purposes of English law that body is to be treated as a persona ficta. The same would be true in Scottish law. A persona ficta simply means a juridical person separate from those who compose the body. Parliament inevitably creates in the eyes of the law a separate and independent entity which, as Millett J. quite rightly put it, is a body corporate in all but name. The body is given everything which flows from the possession of corporate personality. The third proposition is that the exercise by an entity of the capacity to contract enjoyed by a body corporate results in the entity obtaining rights and incurring obligations in its own name and for its own account. Those rights and obligations are not of its members. That is the whole purpose of having a body corporate exercise the capacity. If the members wanted to incur rights and obligations jointly they would go out and enter into the obligations on their own account. The fourth proposition is that either the Order in Council of 1972 is ignored as meaningless when it talks about the capacities of a body corporate or it must necessarily lead to the conclusion that when the I.T.C. exercises the capacities of a body corporate, it does so in the way that a body corporate would, that is to say, incurring its own liabilities. That is enough to deal with the plaintiffs' submission A.
There is a full range of international organisations in respect of which Orders in Council have been made. That shows that any decision as to the construction here will apply to them all equally. In Halsbury's Laws of England, 4th ed., vol. 18 (1977), p. 822, para. 1598, international organisations with privileges and immunities and status of body corporate are listed. The list covers a whole range of organisations including the World Health Organisation, the Universal Postal Union, the United Nations and many of its subsidiary organisations and also the I.T.C. It covers jure imperii activities starting with the waging of war and going through to the preservation of peace with all activities in between, particularly those of an economic nature. Paragraph 1599 lists organisations on which "the legal capacities of a body corporate have been conferred." The point of distinction is that they are all international organisations of which the United Kingdom is a member but for various reasons there is no requirement that immunity be granted. Therefore simply the legal capacities of a body corporate are given and no privileges and no immunities are conferred. The same formula has been used by Parliament from the outset. The first organisation which had to be dealt with was the United Nations Relief and Rehabilitation Administration. It was brought into existence on the international plane by a treaty in 1943. Under the Diplomatic Privileges (Extension) Act 1944 an Order in Council was made providing for the legal capacities of a body corporate and granting immunity and privileges. There has been a wholly consistent pattern since. [Reference was made to 57 treaty organisations including the European Transport Organisation, the International Monetary Fund 1945; the North Atlantic Treaty Organisation 1951, 1974; the Inter-American Development Bank, the International Bank of Reconstruction and Development 1945; the United Nations 1946, 1947; the International Finance Corporation 1955; the Sugar Organisation; the Caribbean Development Bank; the African Development Fund; the European Molecular Biology Laboratory; the European Patent Organisation; the European Organisation for the Safety of Air Navigation and the Commonwealth Secretariat.] That study provides ample justification for saying that one sees a consistent and significant parallelism in the way in which the United Kingdom Parliament has treated those organisations, and that there is really a very powerful argument for the court to lean in favour of the view that the United Kingdom has fulfilled or wishes to fulfil its international obligations, and also for taking the view that the conferring of the legal capacities of a body corporate on an otherwise unincorporated entity gives legal personality and a personality and capacities which are the fullest known to United Kingdom law. There is a general duty, arising from the nature of treaty obligations and from customary law, to bring internal law into conformity with obligations under international law. A treaty does not have to specify that a particular provision is to be given effect to in domestic law: Brownlie, Principles of Public International Law, 3rd ed. (1979), p. 38.
C. T. Carr, The General Principles of the Law of Corporation (1905), pp. 1, 6-7, 130-131, states: "body politic known as a corporation possesses no physical being, but exists in the eye of the law." It is stated
to be a group composed of many individuals who are named corporators and yet it has a personality separate and distinct from those individuals and it has a continuous identity. "The test which distinguishes them from other groups . . . such as the partnership or the unincorporated firm, is the fact that corporations have a legal existence independent of their corporators. Contractual liability is the touchstone of associations." If the liability for contract attaches solely to the members of the group one is dealing with an unincorporated body. If one finds "that an invisible and impalpable entity, representing and consisting of the sum of the members, is bound by contracts entered into in the name of the association" one may be satisfied that one is dealing with a genuine corporation. Corporation can be sued simply means a body which has a separate existence in law from its members. In that sense, it is not common ground that Parliament did not incorporate or make of the I.T.C. a body corporate. It is, and has always been, the essential part of the states' argument on submission A that the effect of the Order in Council of 1972 was to produce just that effect, that is to say the I.T.C. is a persona ficta, separate and independent of its members. Millett J., therefore, rightly concluded that it would be indistinguishable from a corporation  B.C.L.C. 707.
On the contractual touchstone, the true and simple issue on submission A is: who contracted? If, on the plaintiffs' submission, the contracts were made solely with the members, then there is no entity at all. There is nothing on which can have been conferred the capacities of a body corporate, unless one goes on to say that those capacities were conferred simply on the individual members who did not need them because they already had them. Millett J. rightly stated, at pp. 712-713, that as to the question whether or not the I.T.C. had a sufficient existence to contract in its own name and its own account one has to see whether it had sufficient capacities. If it has capacities, personality and existence follow and status really makes no difference. The capacities of a body corporate are the very antithesis of the capacities of the members who compose the body when one is looking at the relationship between them.
It has been suggested that a partnership has some of these capacities, or a partnership can act in some way. A partnership can do nothing in its own name and for its own right and as such does not incur any right, obligations or have any powers: Lindley, An Introduction to the Study of Jurisprudence (1855), p. 99, section 101, Legal Capacity; Lindley, Law of Partnership, 3rd ed., vol. 1, p. 4. There is quite a clear distinction drawn between a partnership and a corporation: Palmer's Company Law based on a lecture delivered in the Inner Temple Hall, at the request of the Council of Legal Education (1898), pp. 37-38. Partnership property, in the case of a partnership, is not property owned by anyone other than the partners. It is owned either jointly or it may be owned by individual partners or it may be owned by one or more partners on trust. "Partnership property" is merely a convenient term to describe property dedicated to the purposes of the partnership. It is not in any way intended to imply the existence of ownership separate from the individuals who are the partnership. R.S.C., Ord. 81, dealing with suing
a firm in its name, simply regulates procedure; it cannot affect the existence of legal rights and duties.
It has been argued that the I.T.C. ought to be regarded as having limited capacities and that in various legal systems there are examples of almost anything being granted legal personality in this sense. But Dr. Mann's article, "International Corporations and National Law," in The British Year Book of International Law (1967), p. 145, states: "As regards legal personality in particular, a body is a legal person if it exists as such, distinct and separate from its founders and members, independent of all persons or institutions other than its own organs. There is . . . no justification for speaking of the extent of legal personality, of complete or partial personality. A person that exists has personality and it would be tautologous to describe it as having full personality. Less than 'full' personality is not known to the modern law." See D. P. Derham's article, "Theories of Legal Personality in Legal Personality and Political Pluralism" (1958), pp. 5-7, 10, 13-15.
Authorities demonstrate that the inter-connection between personality and capacities has been accepted by English courts. The equation for these purposes is simply this. The possession by a group or a body of capacity means that it has personality. Possession of personality will imply the possession of capacity. In other words, a test of personality is capacity. There are a certain minimum number of capacities that one may have. If an entity has the capacity to contract and to acquire and own property, it has personality. It would have personality if it had only the power to contract but one refused to allow it to own property. All that means is that one would have created a personality which had limited capacity. Further, there is a distinction between a chartered corporation and a statutory corporation. A chartered corporation has the power to do everything that a human being can do. The doctrine of vires does not apply to chartered corporations. That stems from common law. Anything that was corporated by charter was given all the powers of the human being without limitation. A statutory corporation is different. They generally have only the powers which are implicit in the purpose for which they have been created or which they have been specifically given so one has problems with vires. See National Union of General and Municipal Workers v. Gillian  K.B. 81; Bonsor v. Musicians' Union  A.C. 104; Chaff and Hay Acquisition Committee v. J. A. Hemphill and Sons Proprietary Ltd. (1947) 74 C.L.R. 375 and Williams v. Hursey (1959) 103 C.L.R. 30. A trade union could be sued in its own registered name but whether it was decided that it had a legal personality is doubtful. It was not regarded as an entity by the court: Taff Vale Railway Co. v. Amalgamated Society of Railway Servants  A.C. 426, 436, 438, 439-440, 441-444.
Submission C starts from the assumption that the I.T.C. is a full legal person. In other words, the conferral of the capacities of a body corporate has led to the creation of a personality which, to the same extent as a corporation, can contract on its own behalf. If that is so, one starts from the position that the metal contracts are contracts made on the one hand by the I.T.C. in its own name and, apparently for its own behalf and, on the other hand, by Rayners and other brokers. Thus
liability of the members in respect of those contracts can only be imposed by demonstrating the existence of an agency relationship between the members and the I.T.C. For that the plaintiffs have to go to I.T.A.6. But it is not permissible for domestic courts to construe an unincorporated treaty nor for a private litigant to found on it for the purpose of establishing or defeating a domestic cause of action. The establishment of constitutional agency, an agency created solely by the terms of I.T.A.6, offends both of those principles.
The normal method of creating the relationship of principal and agent is by contract: Bowstead on Agency, 15th ed. (1985), pp. 1-5. There are exceptional cases. Ratification is a sui generis rule. Agency of necessity and by relationship between husband and wife arise by operation of law. But effectively, the normal standard agency relationship is derived from an agreement between the agent and the principal. In the instant case one is not concerned with exceptional cases. One is only concerned with the normal situation. On the plaintiffs' case the agreement here is found only in I.T.A.6 for present purposes. They have an alternative and independent allegation of agency which has been characterised as factual agency. That depends on an allegation of the existence of certain actual facts which arose during the course of the operation of the I.T.C. But it is all governed by I.T.A.6 which is an international treaty governed purely by international law. As a matter of the rules of English conflict of laws, if it is necessary to determine whether the relationship of principal and agent exists as a result of a contract between the alleged principal and agent, the question whether that contract gives rise to that agency relationship is governed by the proper law of the contract. Here, the only contract referred to is I.T.A.6 and its proper law is plainly international law. Even if it is proper to use conflict of law principles and language in relation to treaties, the proper law is international law. No treaty is ever governed by the domestic law of an individual state. The rule of English law is that no individual derives any English law rights from a treaty or from international law and public international law is not something that can be invoked by the English conflict of laws rule. International law only imposes rights and obligations on its own subjects, namely sovereign states or international organisations. Therefore, it would never regard its own rules as giving rise to an enforceable domestic right against a subject of international law. It means that if it is intended by agreement between international subjects that a group of individuals in one particular state shall have a benefit it can only be enforced by means of action between states on the state level: Brownlie, Principles of Public International Law, 3rd ed. (1979), p. 48 and Commercial and Estates Co. of Egypt v. Board of Trade  1 K.B. 271, 295, per Atkin L.J.
The objective of the I.T.C. was not to go out in the market and buy and sell tin. Its objective, as shown by the preamble of I.T.A.6, was to maintain the price of tin in the interest of producing countries. It maintained a buffer stock and released it when the price rose: see article 14. It maintained export control. It was not a commercial organisation which had appointed an agent to carry out trade on its behalf. Its
activities were analogous to the Bank of England. Profit played no part in those activities. It was not a trader and was not trading.
Buttes Gas and Oil Co. v. Hammer (No. 3)  A.C. 888 explains the concept of non-justiciability. Lord Wilberforce put it as a long standing principle of English law, inherent in the very nature of the judicial process, that municipal courts would not adjudicate on the transactions of foreign states. Where such issues were raised in private litigation the court would exercise judicial restraint and abstain from deciding those issues. Furthermore, that case illustrates the fallacy of the suggestion in submission C, that if the issue arises merely as a background fact to some justiciable issue between private parties before the English court, then the non-justiciability issue does not arise. Although Buttes does not specifically deal with treaties, running parallel to that case are cases which deal with treaties specifically: see Blackburn v. Attorney-General  1 W.L.R. 1037; Rustomjee v. The Queen (1876) 2 Q.B.D. 69; Pan-American World Airways Inc. v. Department of Trade  1 Lloyd's Rep. 257 and British Airways Board v. Laker Airways Ltd.  Q.B. 142;  A.C. 58. There are exceptions to this general principle. There are circumstances in which English courts have looked at treaties and have interpreted them. They can be categorised as follows: (1) Where the treaty is incorporated directly by re-writing the treaty into an Act or the treaty or parts of it can be scheduled to an Act, it being provided that the schedule will have the force of law. (2) Where English legislation is enacted to give effect to, or against the background of, treaty obligations. That point was made by Scarman L.J. in Pan-American World Airways Inc. v. Department of Trade  1 Lloyd's Rep. 257. (3) Where the treaty provisions are incorporated into a domestic law contract by the will of the parties. In such circumstances the courts are no longer looking at the matter as a treaty but as part of the contract: Philippson v. Imperial Airways Ltd.  A.C. 332, 345, per Lord Atkin. (4) Where it is permissible to look at the international convention because English legislation require the courts by express or implicit instruction to look at a treaty in order to give effect to the terms of the legislation: Zoernsch v. Waldock  1 W.L.R. 675. (5) Where the Crown alters private domestic rights by the use of the prerogative in the form of a treaty. In such a case the court may look at the treaty to determine what the act of the Crown is: Post Office v. Estuary Radio Ltd.  2 Q.B. 740. It is not possible to derive, from those authorities, any general principle to the effect that it is permissible to look at and construe unincorporated treaties in any circumstances whatsoever whenever an incidental issue arises in a case to which a treaty might be relevant. Nissan v. Attorney-General  A.C. 179 was concerned with a treaty between the United Kingdom and Cyprus but neither side there argued that the treaty could be looked at. So the issue with which the instant case is concerned did not arise there for consideration. The appeal was only concerned with a preliminary issue ordered to be tried. Therefore, the case is not authority for saying that a treaty can be looked at.
Where there is a domestic law contract made between two domestic entities then, prima facie, the rights of the parties to that contract and
any other party, if there is an agency, are to be decided on and derived from domestic law. If any additional rights are given or any rights are taken away and if an unincorporated treaty is brought into consideration, then such a treaty is affecting rights and is altering domestic law. That principle covers the case where the rights of particular parties in a particular situation will be different if the treaty is or is not taken into account: Attorney-General for Canada v. Attorney-General for Ontario  A.C. 326. Here, there is no relationship or contract or agreement of agency which is cognizable by English law, by which not only agreements made in England, and pursuant to English law, are included but also those which arise under a foreign domestic system. If one looks no further than English law then submission C must fail in limine because the alleged agency simply cannot be made out. If that approach is based on the treaty then it also fails in limine because if the treaty is excluded there is nothing left which can give rise to constitutional agency. [Reference was made to Flemyng v. Hector (1836) 2 M. & W. 172.]
If that argument is accepted then one looks no further. The justiciability issue is one which ought to arise and be considered first because it is a hurdle over which the plaintiffs have to pass before they can get to the stage of actually looking at I.T.A.6. If the argument is not accepted then one passes to look at I.T.A.6 for determining whether or not one can derive the relevant agency. It is impossible to construe I.T.A.6 so as to conclude that the I.T.C. was automatically acting as agent for each and every member whenever it exercised its capacities to contract. So there is a presumption there is no agency. So in the absence of clear and express statement I.T.A.6 would not be construed to imply an agency: Salomon v. A. Salomon and Co. Ltd.  A.C. 22, per Lord Halsbury L.C., at pp. 30-31, 32-34; per Lord Herschell, at pp. 42-44; perLord Macnaghten, at pp. 53-54 and per Lord Davey, at pp. 55-56. That case, in terms of the development of English law, stands as the great case in which it was laid down that the simple jurisprudential consequence of giving to a corporate body a personality of its own is that on incorporation certain consequences flow, one of which is that the incorporated body does not act as agent for the controlling shareholders. [Reference was made to Conservators of the River Tone v. Ash (1829) 10 B. & C. 349.]
In this connection two short points are made in respect of I.T.A.6. First, one is concerned with the relationship of each member vis-a-vis the I.T.C. "The members" are not simply one person. I.T.A.6 is not an agreement which is simply brought into existence to provide a mechanism whereby the members can harmonise their individual activities. It is to bring into being an organisation which can act against the interests of individual members or groups of members from time to time. The members, by joining it, give up their freedom of action and agree to be bound by the I.T.C.'s decisions. For these purposes the I.T.C. is composed of the council and there has to be a certain majority. The delegates attending the meetings are states themselves. The presence of delegates is as though the country itself were sitting there, meeting and voting. As a result of vote decisions become decisions of the body which
can be enforced on individual members, including those who voted against it. Secondly, the I.T.C. has a number of executives. The chairman has to be of complete independence, as do all the rest of the officers of the organisation. The officers are only answerable to the council. They cannot reveal information to any of the members: see article 13, paras. 7 and 8 and article 7(f) and (g) and article 19. Articles 27, 28 and 29 read together impose duties and grant powers to the buffer stock manager. That executive is under an obligation by virtue of the constitution to exercise those powers as his rights unless and until the decision making organ of the I.T.C. decides otherwise. The decision making organs are like the board of directors of a company. Article 12 deals with meetings of the council and article 13 with the duties of the executive chairman. Those are not indications of an agency.
However, assuming that there was an agency relationship here, the question is whether or not the liability of the undisclosed principal can be excluded by the contract which is made. It is common ground that there is a rule of English agency law to the effect that the liability of the undisclosed principal, on a contract made by the undisclosed agent, can be excluded: Bowstead on Agency, 15th ed. (1985), pp. 320-321 and Humble v. Hunter (1848) 12 Q.B. 310. It is a matter of construction in any particular case whether or not it was the intention of the two visible parties to the contract that those two visible named parties should be treated as the principals. The London Metal Exchange Form B, in the instant case, has been produced by businessmen. It is, therefore, to be construed as a commercial document. It has been for use in a principal to principal market. [Reference was made to Shearson Lehman Hutton Inc. v. Maclaine Watson & Co. Ltd.  2 Lloyd's Rep. 570.]
In connection with submission B(i), it is very important to bear in mind the difference between primary and secondary liability. The plaintiffs' constant refrain was that unless it was held to be the case that the I.T.C. was a kind of mixed entity, there would have been an unintended exclusion of the members' liability. But if there was a mixed entity a new form of liability on the members would be imposed. The members are not excluded from liability. The moment there is a separate entity which contracts, ex hypothesi, the members do not. They never incur a direct liability, a primary liability, and, therefore, there is no exclusion of anything. The only relevant English law principle with regard to direct and secondary liability is that those who incur obligations are bound to discharge them. It is a fundamental principle of every legal system that has ever been. One is concerned with the identity of the party who has incurred the obligation. In its early history English law only knew two forms of legal entities: the individual and the body corporate. If an individual contracted, he was liable. If a number of individuals associated themselves together for the purpose of making profits, then the question arose, if one contracted pursuant to the joint enterprise, on whose behalf did he contract? By the 18th century equity had established that the legal position was that where there was such an association, each member was clothed with unlimited authority on behalf of each other member to contract or incur obligations on his behalf. That was partnership. See Lindley on the Law of Partnership, 3rd ed.,
vol. 1, bk. II, pp. 248, 252, 388. That work does not give credence to the plaintiffs' approach that one can have something that looks as though it might be a partnership and therefore ought to have the same rules, but is not a partnership. In other words, if there is an association not formed with the purpose of gain but, nevertheless, it undertakes some degree of trading activity, in some way there is something which falls within the same category. See also Gower's Principles of Modern Company Law, 4th ed. (1979), pp. 3-4, 265.
There are other organisations, such as corporations, which evolved in the usual historical way, out of medieval origins, and bit by bit the medieval lawyers grappled with what the consequences were of creating a persona ficta. Bit by bit, the courts recognised what the inevitable logical consequences were. No one ever sat down and declared what the result would be of creating a corporation. By the 15th century lawyers had worked out the logical consequences of incorporation. The reason why the members of a persona ficta, or a body corporate of any type, are not liable is simply because the body corporate is a separate personality. Their non-liability flows from that unless there is a positive rule to the contrary. Liability has to be imposed. It is not a question of excluding liability which would otherwise be there. It demonstrates that as far as English law was concerned, the concept of members of a corporation not being liable for its debts was not because the corporation was some particular form of persona ficta, but simply that it was a persona ficta. The non-liability simply flows from the fact of separate personality. See Holdsworth, A History of English Law, 5th ed., (1942), vol. III, pp. 469-487. Gower's Principles of Modern Company Law, 4th ed., pp. 97-104, deals with corporation in modern times in exactly the same way, that is to say, the fundamental attribute of corporate personality, from which all the other consequences flow, is that the corporation is a legal entity distinct from its members and that "perpetual succession" is simply a consequence of the artificial personality. See also Halsbury's Laws of England, 4th ed., vol. 9 (1974), p. 716, para. 1201 and Elve v. Boyton  1 Ch. 501, 507, per Lindley L.J.
Certain developments took place in the 18th and 19th centuries. At the beginning there were partnerships and corporations. Because charters were difficult to get, corporations were difficult to obtain. The Crown was jealous of incorporating. There had been the outgrowth of joint stock companies from the original small partnerships. But in joint stock companies there used to be very large numbers of people all of whom were personally liable for the acts of the managers and there were difficulties of suing and being sued. What should be done about that was a matter of economic and social policy. There were endless commissions, Parliamentary inquiries, articles and debates. It was a matter of passionate interest to a lot of people during the early part of the 19th century whether or not the situation should be altered. But none of that was a matter of legal reasoning or legal principle or legal policy. It was a matter of social and economic policy. Various experiments and half-way houses were tried. The Joint Stock Companies Act 1844 (7 & 8 Vict. c. 110) was one: see sections 25 and 66. That Act was amended by the Limited Liability Act 1855 (18 & 19 Vict. c. 133) which limited the
liability of members of certain joint stock companies: see sections 7 and 8. The effect of that Act was that instead of the creditors having to claim from the company and the liquidator they had their direct right of action against shareholders for the unpaid portion of their shares. Seven years later, by the Companies Act 1862 (25 & 26 Vict. c. 89) that particular methodology was done away with and the modern method came in whereby the contributions of shareholders are entirely to the company. Both In re Sheffield and South Yorkshire Permanent Building Society (In Liquidation), 22 Q.B.D. 470, 473, 476, 480 and In re Sea Fire and Life Assurance Co., Greenwood's Case, 3 De G. M. & G. 459, support the defendants.
The other way the plaintiffs put submission B(i) is that if two or more individuals are members of a corporate body, a persona ficta, which enters into a contract for the purpose of trade, those members incur a secondary guarantee liability which renders them liable for the body's unpaid contractual debts. In other words, the existence of a separate legal personality is not inconsistent with a secondary liability of the members. Scottish law and the civil law provide many examples. Parliament must be taken to have intended that the I.T.C., and indeed it would follow that all other international organisations, fitted into this type of body which is characterised as a mixed entity. But Horn, Kotz and Leser in Ownership, Liability and Legal Personality from German Private and Commercial Law: An Introduction(1982), p. 241, state that the distinctive feature of a company as compared with a partnership is that it has legal personality. The partnership is not a persona in law. The partners are the proprietors of the enterprise, the joint co-owners of the assets. They are jointly and severally liable for the debts incurred by the partnership. The liability of the limited partner is limited to the unpaid amount of his partnership contribution. That work is not just dealing with German lawyers but with continental lawyers generally. The natural consequence of juristic personality, not some particular form of corporation, is limited liability. But there can be created a hybrid. The Kommandit Gesellschaft Auf Aktien is given as an example of that. But that is not the equivalent of a French société en nom collectif. It is in fact the equivalent of a limited partnership in which there are a number of sleeping or limited partners whose liability is limited to their shares, and the managers who actually run it are subject to an unlimited liability. It is given legal liability so that the limited partners are simply treated as shareholders in a corporate body and the managers are treated as though they were ordinary partners. It is only in the French and the French family of systems that partnerships are given legal personality, namely the société en nom collectif. In the German system partnerships do not have legal personality. In the Tutonic systems, therefore, there is no equivalent of "mixed entities." Therefore, bearing in mind that the legal world is divided into three main families: Anglo-American common law system, the French system and the Tutonic system, the only system where a mixed entity is found is the French system. It is, in fact, more of an exception rather than the rule: J. Heenen, Encyclopaedia of Comparative Law, vol. 13, Ch. 1 Business and Private Organisations, pp. 3, 8, 16, 75-76, 93, 127, 140.
Turning to submission B(ii), it has been established by Reg. v. Keyn, 2 Ex.D. 63, that an English court determined what international law was by proof that it had received the assent of nations. It was not merely people writing about what it should be, but that it could be demonstrated that it had actually been assented to. Lord Coleridge C.J. stated, at p. 153: "there is no common law-giver to sovereign states; and no tribunal has the power to bind them by decrees or coerce them if they transgress. The law of nations is that collection of usages which civilised states have agreed to observe in their dealings with one another." See also Sir Robert Phillimore, at pp. 68, 81-82; Amphlett J.A., at p. 122; Brett J.A., at p. 131; Kelly C.B., at p. 151 and Cockburn C.J., at pp. 202-203. See also West Rand Central Gold Mining Co. Ltd. v. The King  2 K.B. 391, 401, 406-408, per Lord Alverstone C.J.
However, here by the Order in Council of 1972 Parliament provided that for English law purposes this international organisation was to be a legal entity with the capacities of a body corporate. Parliament thereby created the persona ficta. It did not want to use the phrase "corporation." Before the Order in Council there was nothing, from the English law point of view, but an association whose existence that law did not recognise. There is nothing to suggest that an English court would recognise international personality granted purely by an unincorporated treaty. After the Order came into effect there came into existence the I.T.C. with legal personality. Thus the courts were intended to look at the Order in Council and no further.
[Lord Griffiths. If there is a treaty which states in express and clear terms that the members shall be liable for the debts of the organisation, why should not effect be given to that? Is international law to be regarded as a form of super law which overrides and which comes down and adds to English law?]
First, if effect is given to the stipulation for liability in the treaty the treaty would be treated as self-executing. In other words, a treaty would have direct effect for the purposes of domestic law without passing through any intervening legislative stage. But if a treaty purports to regulate rights and obligations or to grant rights or impose obligations which are to have effect on the domestic plane then, as a matter of classical analysis, that gives rise to an obligation on a state party to the treaty an obligation to bring its internal law into compliance with the promises that have been made in the treaty.
Secondly, the manner in which an individual state gives internal effect to its international promises undertaken in a treaty is entirely a matter for the individual state's own constitutional law. Some constitutions provide for self-execution: see, for example, article 25 of the constitution of the Federal Republic of Germany, which makes provision for the automatic incorporation of treaties into German law. In Italy treaties are self-executing as well. However, treaties are not self-executing under English law. The English theory is that the conduct of foreign relations lies within the Crown prerogative. The conduct of foreign relations includes the power to make treaties, to enter into inter-state contracts. But that power of the Crown does not extend to the ability to alter internal domestic law, in particular anything which concerns the grant of
rights or the imposition of obligations enforceable in the domestic courts, without the concurrence and consent of Parliament: see In re International Tin Council  Ch. 419, 443, per Millett J. Parliament can refuse deliberately or fail by accident to give effect to an obligation undertaken by the United Kingdom in a treaty. It is not open to the courts to substitute themselves for Parliament and to go directly to a treaty to give effect to an international obligation which, on the true construction of the legislation, Parliament has not given effect to.
If treaties were self-executing they would become directly applicable. The European Convention on Human Rights, for example, would be directly applicable within the United Kingdom with far-reaching effects. But it is not, being a treaty, justiciable in England: Malone v. Metropolitan Police Commissioner  Ch. 344, 351-354, 378-379, per Sir Robert Megarry V.-C.
International law is not a form of super law. It is simply another system of law which regulates the relations between states. Its fuller title is "the law of nations." It is that body of rules which regulates a particular area of conduct between particular entities, originally only sovereign states, and now expanded by decisions on the international plane to include international organisations which are treated as being subjects of international law. That is its scope and no more. Individuals are not the subjects of international law and thus cannot derive rights from the rules of that law unless such rules have been transformed by some means into domestic law: Reg. v. Secretary of State for the Home Department, Ex parte Thakrar  Q.B. 684, 701-702, per Lord Denning M.R.; Commercial and Estates Co. of Egypt v. Board of Trade  1 K.B. 271, per Bankes L.J., at pp. 281-284 and Atkin L.J., at pp. 293-297; Cook v. Sprigg  A.C. 572, 578-579, and Salaman v. Secretary of State in Council of India  1 K.B. 613, 625.
In relation to submission B(ii), assuming that international law should be looked at, is there a rule of international law? There are no decisions of any internationally recognised tribunals, such as the International Court of Justice, which give guidance on this. The plaintiffs have placed the greatest degree of reliance on the views of a number of writers. But many of the writers lack analysis as to the type of liability about which they are writing at any particular moment. Many of them fail to draw any distinction between the various analytical possibilities. They simply talk about the liability of members of an organisation without in any way considering how that liability is to come about and what its legal basis is. That makes it very difficult for the plaintiffs to assert the existence of a rule. Each writer who thinks that there should be a liability, does not exactly help unless he gives a particular technique by which he chooses to enforce it against a defendant in a domestic forum. Another problem is the question of the exclusion of the liability. The circumstances in which there is an exclusion are not clear. There is nothing as a matter of general principle of any system of law which entitles one system to say that that one is obviously right as opposed to the other. It is all a matter of political choice and of procedure. Different writers adopt different solutions depending on what appeals to them personally. See Dr. Mann's article "International Corporations and
National Law," in The British Year Book of International Law 1967 (1969), pp. 152-155. At the end of the day there is little which cannot simply be characterised as simply asserting the result which Dr. Mann wishes. J. C. Collier's article, "The Status of an International Corporation," "Maltum Non Multa," Festschrift Für Kurt Lipstein is not relevant to the present case. There is no reference to the general principles of law in international law in H.-T. Adams' article, "The Specialised International Organisations: A Contribution to the General Theory of Public International Establishments" (Paris, 1965) (Les Organismes Internationaux Spécialisés (1965)), paras. 107, 109, 110. See also Shihata's article "Role of Law in Economic Development" in The Legal Problems of International Public Ventures(1969), pp. 122, 123, 125, 127; Schermers, International Institutional Law (1980), para. 1395, p. 780. Seidl-Hohenveldern, Corporations in and under International Law does not suggest that there are certain international law rules in existence and that they can be brought in domestic law. [Reference was made to The Charkieh (1873) L.R. 4 Ad. & Ecc. 59.] Seidl-Hohenveldern in "Responsibility of Member States of an International Organisation for acts of that Organisation from International Law at the Time of its Codification (Essay in honour of Roberto Ago)," (Milan, 1987), vol. 3, pp. 424, 426, 428, does not take the matter any further. See also the article "Problems of State Responsibility in International Economic Law from General Course of Public International Law," (1986), pp. 193-197; Ebenroth, Civil Liability for International Organisations and their Member States, (English translation), pp. 3, 5-6, 13; Dr. Hoffmann, "Recourse on the Member States of International Organisations on account of the Indebtedness" in Neue Juristische Wochenschrift (March 1988). Westland Helicopters Ltd. v. Arab Organisation for Industrialisation (1984) 23 I.L.M. 1070 shows that there was no supposed rule of international law on which the arbitrator relied. That case went to appeal (unreported) 19 July 1988, Swiss Federal Court (First Civil Division) but it made no difference to the point relevant here. See also Maclaine Watson & Co. Ltd. v. Council of the European Communities (Opinion) (Case 241/87) (unreported), 1 June 1989. In D. P. O'Connell on International Law, 2nd ed. (1970), vol. 1, pp. 8, 96-97, 99, the approach is similar to the approach of the defendants here and leads to the conclusion that the question here is that of the true construction of the Order in Council of 1972. See also The International and Comparative Law Quarterly, vol. 18 (1969), J. W. Bridge, The United Nations and English Law, pp. 689, 698, 702-706, 711; Dr. Mann's article "The Legal Personality of International Law: an Essay on the Law of International Organisation" in International Law, Collected Papers of Hersch Lauterpacht (1970), vol. 1, pp. 61-64, 68-71, 74-75 and Oppenheim, International Law - A Treatise, 8th ed., pp. 953-954. In Trendtex Trading Corporation v. Central Bank of Nigeria  Q.B. 529 there was a vast quantity of material which was available to the Court of Appeal to demonstrate the assent of states to what was held by the court in that case to be the new doctrine of international law of restrictive immunity: see pp. 555, 562, 575-576. Therefore, there is a contrast between that and the instant case.
The position on the treaties is that there is an analysis of the treaties which was referred to in the Court of Appeal judgments, the purpose of which was to deal with the question as to whether or not legal personality was given and that there was an impressive parallelism between what appeared in international treaties setting up organisations of which this country was a member and the way in which subsequent legislation always used the legal capacities of a body corporate. It was from that that Kerr L.J. drew the conclusion that Parliament must be taken to have intended to have given legal personality within English law to these organisations by means of the phrase "capacities of a body corporate." The other purpose for which the treaties were looked at was Mr. Burnton's argument that there were a number of treaties which expressly stated that the members would not incur liability, that implied the existence of a rule that if that was not in, there was liability.
However, there are some treaties, notably, the International Bank for Reconstruction and Development, where there is a share capital. There are subscriptions on the shares, operations and activities and then limitations or exclusions of liability and liability on shares is expressed to be limited to the unpaid portion of the issue price. There is, undoubtedly, a limitation which is concerned entirely with obligations of members to the organisation. But it says nothing about liability to outsiders.
The International Finance Corporation also has a share capital and subscriptions and the like. There is then a different formula: "No member shall be liable by reason of membership for obligations of the corporation." The European Investment Bank has subscription and share capital and "The member states shall be liable only up to the amount of their share of the capital subscribed and not paid up." That is consistent with liability of the members to the organisation. Those terms are consistent with the belief that there is no clear rule and therefore it is wise to put something in to avoid arguments, and that there was no liability but it was sensible, as a matter of prudence, to set it out as declaratory of the position. From these treaties nothing can be deduced as regards the existence of any rule of international law regarding direct liability, primary or secondary, to outsiders.
In relation to the construction of I.T.A.6, on any fair reading of its terms the implication is plainly that as regards the funding of the buffer stock the members' obligations are limited to the contributions which they have to make expressly: see article 2 which defines "buffer stock" and "Government guarantees and undertakings." The power to borrow is circumscribed and defined precisely. See also article 7. Part II starts with article 17 and goes through the budget. All of that implies that the obligations of the members to contribute are limited to the specific powers in relation both to the administrative budget and the buffer stock budget. Article 30 provides that if the manager has not got enough money he is authorised to sell tin stock to get it. It is not intended that he should go out and pledge the credit of the members. Article 41 states the general obligations of the members. There is no mention anywhere of a general obligation to contribute at all. Article 60 deals with winding up. In article 60(2)(b) there is an express provision which allows the council to make a supplementary call on members for the purposes of
meeting any outstanding liabilities on the administrative account. There is nothing which matches that in relation to the buffer stock account. The intention clearly is that the I.T.C., which is going to operate as an independent and separate body from each of the members, is provided with sufficient means to carry on the buffer stock operations and that is provided by a large amount of tin against which the buffer stock manager can borrow if need be. The funds at his disposal are the money he has in the buffer stock account and what he can raise on the tin. His borrowing powers are limited to what he can borrow on the security of the tin or against government guarantees or undertakings. Thus, he is given an amount of capital and there is nothing which indicates that the members are liable to contribute beyond that.
The background to the State Immunity Act 1978 is that over the last 50 years it had become apparent that states were stepping outside their traditional role of acting jure imperii and becoming involved in ordinary commercial transactions. For example, in Eastern Europe there were a large number of state trading organisations whose sole function was to carry on economic activities for the benefit of the state. There was, therefore, a growing feeling in the international community that absolute immunity was being abused. That led to a shift away from absolute immunity: see, for example, Trendtex Trading Corporation v. Central Bank of Nigeria  Q.B. 529. What underlay that shift was that it was not right that a state could descend into the arena and by its own acts enter into domestic relationships and yet retain an immunity from the consequences thereof. Therefore, what underlay the idea of a restrictive approach to immunity was that the state, by its own acts, had waived its immunity. Against that background section 3 of the Act of 1978 is to be read to look for something that the state itself has done whereby it has entered into domestic legal relations within a context which makes it wrong that it should retain an immunity.
The Act provides a blanket immunity under section 1 subject to bits taken out of it by way of exceptions. Under section 2 a state is treated as having submitted to the jurisdiction under certain circumstances. Section 3 deals with commercial transactions and contracts to be performed in the United Kingdom. There are two issues under that section. First, a state only lost its immunity if it was demonstrated that it had entered into a commercial transaction within section 3(1)(a) and that the proceedings related to that commercial transaction. It is true that the contracts here are commercial transactions but the issue which had to be decided is had each state entered into the tin contracts. Secondly, whether the contract is to be performed wholly or partially within the United Kingdom. If a state entered into a contract which required the state to perform its obligations here then, whether it was a commercial transaction or not, the state could be sued because the state would have descended on any view to the domestic level and entered into a contract in which it promised to perform obligations here: section 3(1)(b). [Reference was made to Forth Tugs Ltd. v. Wilmington Trust Co., 1987 S.L.T. 153.] None of the transactions in the instant case falls within that section.
Section 3(2) provides that the section "does not apply if the parties to the dispute are states or have otherwise agreed in writing . . ." If the defendants are wrong on submission A, then there was no body called the I.T.C. and each of the metal contracts was made between each state and the broker. Those contracts agreed otherwise in writing because they contained arbitration clauses. In other words, if the parties to a commercial transaction have put in an arbitration clause, they have inevitably agreed otherwise in writing that the state is not waiving its immunity to the adjudicative jurisdiction of the courts. Being hauled before the courts and sued is the absolute antithesis of arbitration. That produces no hardship because section 9 allows for the enforcement of an arbitration award. Therefore, as far as Rayners are concerned they cannot rely on section 3. They are confined to obtaining an award against each of the states and then enforcing that award. They do not have awards against the states. Starting an arbitration against the I.T.C. and serving the buffer stock manager is not the way of starting an arbitration against the individual states who are said to be true principals. If the plaintiffs are right on submission A and they do not have awards against the states they have to get awards against the states. They cannot ask the court to give them judgment as an alternative because then they are simply by-passing the arbitration procedure.
Anthony Grabiner Q.C., Nicolas Bratza Q.C. and David Richards for the Department of Trade and Industry. In a nutshell the points are as follows: First, despite the length of this hearing, the real issues before the court are capable of being dealt with quite shortly. In fact this is a simple case and an unarguable one in law so far as the plaintiffs are concerned. Secondly, for the purpose of complying with their international treaty obligations, successive United Kingdom Governments have used the machinery which is to be found in the International Organisations Act 1968 and its predecessors. This legislation contains a complete code for dealing with international organisations on the domestic law plane. Thirdly, since about 1944, and the best and clearest of the earliest examples is the Diplomatic Privileges (Extension) Act 1946 which dealt with the United Nations, the United Kingdom Government has been regularly obliged to confer on numerous organisations legal personality as a matter of domestic law. Without domesticising the organisation or in any way detracting from its status as a subject of international relations, the United Kingdom Government has, through the Order in Council procedure, regularly conferred on such organisations the capacities of a body corporate. The enabling legislation did not say, as it could have said, "The organisation shall enjoy domestically whatever capacities it enjoys by virtue of international law." Nor did it say, "The organisation shall have the capacities of a Scottish partnership or the equivalent of that form of legal association in France or Jordan" or anywhere else. If it had been intended as a matter of domestic law that the members of the I.T.C. should be liable for its debts, this could easily have been provided for just as it was, for example, in the Joint Stock Companies Act 1844 by the express statutory provision declaring that the members of the company should be liable. Fourthly, the choice of a body corporate as the model for the status of the organisation as a
matter of domestic law leads inexorably to certain obvious conclusions both as a matter of English law or Scots law.
That leads to the conclusions: (i) the effect of the Order in Council is that the I.T.C. is a separate legal person as a matter of English or United Kingdom domestic law, (ii) it can own property and (iii) it is the subject of rights and duties in law in every sense. It follows that submission A is bound to fail. Once that conclusion is arrived at then, as a matter of legal analysis, logic and common sense, submission B fails also. In respect of submission B(i) it is unarguable to suggest that when an organisation endowed with the capacities of a body corporate contracts it can, without more, engage the liability of its members on a secondary or guarantee basis. It is impossible to derive such an argument from the Order in Council of 1972. As to submission B(ii), even if it was possible to identify the rules of international law for which the plaintiffs contend, the attempted resort to it is flatly inconsistent with the true construction of the Order in Council of 1972. In the absence of any clear indication in the domestic legislation international law is wholly irrelevant to the instant case.
In relation to submission C, reliance is placed on the doctrine of non-justiciability. Even apart from that doctrine, a casual perusal of I.T.A.6 will defeat the suggestion that I.T.A.6 evidences the intention of the member states that the I.T.C. should be appointed as their agent so as to pledge their credit in its daily dealings. No such common intention can be derived from I.T.A.6, either as a matter of pure construction or from its matrix. Furthermore, in Salomon v. A. Salomon & Co. Ltd.  2 Ch. 323, Vaughan Williams J., the Court of Appeal and also the House of Lords  A.C. 22 decided that a company does not act as an agent of its shareholders.
There are treaties which have incorporated within them terms dealing with the express obligation on the part of the member states to make a contribution in order to wipe out a deficit which the particular organisation may then have been sustaining: see, for example, the European Launcher Development Organisation. Article 25 is headed "Dissolution" and appears to provide that as between the member states, inter se, there is an obligation upon them that they each respectively undertake to the other members of the organisation an obligation to share any deficit that there may be among or between themselves. That must be a purely international law relationship, wholly outside the purview of any domestic court. It is enforceable only by the members of the particular organisation. There are five other organisations which have either precisely the same or very similar provisions in them, namely, the European Space Research Organisation, the European Molecular Biology Laboratory, the European Centre for Medium Range Weather Forecasts, the European Space Agency and the European Organisation for the Exploitation of Meteorological Satellites. Fothergill v. Monarch Airlines Ltd.  A.C. 251 decided that there should be a cautious use of the work leading up to an international convention and it is only in very limited circumstances indeed that recourse would be had to travaux préparatoires.
On the question of reference to the European Court, in an appropriate case the court can make an order under article 177 of the E.E.C. Treaty of its own motion. The position here is that nobody is asking for a reference. R. & V. Haegeman v. Belgian State (Case 181/73)  E.C.R. 449 was concerned with the treaty of association between the E.E.C. and Greece which had become an associate member of the Community. It was essentially concerned with one of the fundamental treaties of the Community and was not concerned with a multi-lateral treaty. The key function of the European Court and the article 177 procedure is to ensure, so far as possible, uniformity of interpretation of Community law throughout the European Community and the court is concerned with the interpretation of Community law: C.I.L.F.I.T. Srl v. Ministry of Health (Case 283/81)  E.C.R. 3415. In the instant case Community law is irrelevant. Final judgment can be pronounced without necessarily determining questions of Community law. If any question of Community law does arise it is a simple point and the answer is so plain and simple that it can be determined without a reference to the European Court. In so far as the question of English constitutional law arises the European Court has nothing to do with it. It is well established that the European Court will not receive questions of purely national law: Adlerblum v. Caisse Nationale d'Assurance Vieillesse des Travailleurs Salaries (Case 93/75)  E.C.R. 2147. In relation to submissions A and B(i), the questions are of English domestic law as to the true construction of the Order in Council of 1972 and can be dealt with exclusively by reference to English domestic law. As to submission B(ii), if it is decided that international law and the treaty are irrelevant, then these would be exclusively matters of English or United Kingdom national law. If, on the other hand, it is decided that international law and the treaty should be taken into account and international law is examined but the alleged "rule" of international law is found to be non-existent on a reference to the European Court that court will have to go through the same process. Reference was made to Salford Corporation v. County Council of Lancashire (1890) 25 Q.B.D. 384. The place where a possible reference to the European Court is most likely to arise is in relation to submission C. In essence that submission is that if I.T.A.6 is construed and is treated as Community law for these purposes, an appointment by the member states of the I.T.C. as their agent is to be found from it. However, that argument is wholly unsustainable. No agency relationship can be found in I.T.A.6. No court in the Community would find such a relationship nor would the European Court. In any event these questions would arise only if the non-justiciability argument is also rejected. For examples of litigation involving article 177 of the E.E.C. Treaty see Reg. v. Secretary of State for Social Services, Ex parte Wellcome Foundation Ltd.  1 W.L.R. 635, 643, and Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd.  2 A.C. 88, 153.
Bernard Eder and John Lockey for the E.E.C. adopted the submissions of Mr. Pollock and Mr. Grabiner. So far as the E.E.C. and its nature and its involvement in I.T.A.6 is concerned there is really no dispute. The E.E.C. has its own separate legal personality: article 210 of
the E.E.C. Treaty and see also article 211. Those provisions are incorporated and given the force of law in English law: section 2 of the European Communities Act 1972. In the European Community terminology this is a mixed agreement and is an agreement where the Community becomes a party to an international treaty alongside its own member states and non-member states. That action has been taken pursuant to the Community's commercial policy by virtue of article 113 of the E.E.C. Treaty. The reason for the Community becoming a party to the treaty here is complex and is essentially political. In substance where a treaty concerns the Community's commercial policy as a whole, it is important for the Community to be a member alongside its member states to ensure that with regard to the treaty there is a common policy. Article 56 of I.T.A.6 shows how the E.E.C. is treated for voting purposes. But none of that matters here.
Looking at I.T.A.6 the question arises whether or not the Community contributes at all to the buffer stock. Both as a matter construction of the treaty and as a matter of practice the Community does not contribute to the buffer stock. If, therefore, the plaintiffs are right, especially on their submission C, the result would be astonishing in that the Community would be liable to contribute 100 per cent. on the basis that the objective intention of the parties was that the Community would be 100 per cent. a party and liable on that for those contracts.
The argument concerning the separate immunity of the E.E.C. is of tremendous importance to the Community and as far as English constitutional law is concerned. It concerns the external competence of the Community when it is acting externally pursuant to its own sovereign rights alongside its own member states and other states. If the plaintiffs' submission A is correct no question of separate immunity would arise. The effect of the submission is that there were direct contracts between each of the plaintiffs and each of the member of the I.T.C. including the E.E.C. The question of immunity might arise in the context of submissions B and C, if those submissions are correct depending on how they are held to be correct. If the immunity argument were to arise then article 177 would have to be considered. The first way to consider it is on the basis that the court is concerned specifically with the consequences of the act of the Community in becoming a party to an international treaty, and its effect in terms of acting on the international plane and whether the E.E.C. can ever be made liable before the courts of one of its own members and whether any of the courts of a member state have jurisdiction to determine that question. Article 5 of the Order in Council of 1972 supports immunity. The court will have to go into that question as well.
It is premature at this stage to decide whether or not this matter ought to be referred to the European Court. It would depend on whether a conclusion has been arrived at. It is recognised that on certain hypotheses it may be that a reference is inevitable. For instance, if submissions B and C are upheld.
At this stage, before a decision is arrived at and has been seen by the E.E.C., it is not proposed to argue the immunity point because it is
not certain whether arguing it is necessary. All the plaintiffs agree with that course.
Burnton Q.C. in reply cited Porter v. Freudenberg  1 K.B. 857 and Fenton Textile Association Ltd. v. Krassin (1922) 38 T.L.R. 259. The rule of international law for which the banks contend is: (a) member states of an international organisation are, subject to (b) below, directly liable to third parties on contracts entered into by the organisation: their liability is joint and several; (b) such liability may be excluded by the constituent treaty of the organisation by an express exclusion of such liability or by an express limitation of liability inconsistent with direct liability to third parties. Member states have rights of contribution inter se. The distribution of liability between states is a question of international law to be determined by the express or implied provisions of the treaty and does not fall for decision in these appeals.
Littman Q.C. in reply cited President of India v. Lips Maritime Corporation  A.C. 395; Worthing Rugby Football Club Trustees v. Inland Revenue Commissioners  1 W.L.R. 409, 411-416, 417-419;  1 W.L.R. 1057, 1061-1063 and Davis & Son v. Morris (1883) 10 Q.B.D. 436.
Aikens Q.C. did not address their Lordships but submitted a written reply.
Mark Littman Q.C., Richard McCombe Q.C. and Adrian Hughes for Maclaine Watson in the receivership appeal. This appeal is prosecuted only on the hypothesis that the direct action appeals fail. If they succeed, then this appeal may be treated as abandoned. For the purpose of this appeal it is assumed that the I.T.C. will have been found to be a distinct juridical entity from its members and that there is no direct right on the part of the creditors to have recourse against the members. Nevertheless the I.T.C., as a distinct legal personality, would have a right of indemnity from the members. Therefore, a receiver should be appointed so that he may, in the name of the I.T.C., make demands on all its members. Those demands may or may not be met voluntarily. If necessary the receiver should be in a position to bring proceedings.
One of the issues here is whether the I.T.C. has any cause of action against its members arising out of the facts as alleged in affidavit evidence and pleadings. The second issue is whether that cause of action is justiciable in English courts. At this stage, the second issue is the live issue because the Court of Appeal assumed, on the facts, that the I.T.C. would have causes of action.
The receiver, if appointed, would not have to bring his proceedings in English courts only. He could bring the proceedings in any court in the world. If he managed to get in some money he would keep it for Maclaine Watson to the extent of their debt. It would be open to any of
the other creditors to apply to the court and the court has power to impose any conditions, even to arrange for an ordinary distribution. The appointment of a receiver by way of equitable execution is made where legal execution is not available and where the creditor is seeking to satisfy his debt out of the assets of the debtor on which he can lay his hands. He can put in the bailiffs under a writ of fi. fa. or he goes for a garnishee. The court can impose a condition for fair distribution. Section 37 of the Supreme Court Act 1981 gives power to the court to appoint a receiver and the procedure is regulated by R.S.C., Ords. 30 and 51. Where as debtor has a seriously arguable claim against a third party and the debtor is unable or unwilling to pursue that claim the court would normally appoint a receiver: Bourne v. Colodense Ltd.  I.C.R. 291. Even the plea of justifiability could be raised in any proceedings brought by the receiver against the members. So the appointment of a receiver itself would not be a final decision on that point.
In these circumstances the I.T.C. has a right in English law to claim from its members the funds required to meet the award and judgment which it is willing to enforce. That right is not a right which arises under I.T.A.6 but it arises by virtue of a very firmly established principle that if a person requires another to do something and, as a result of that, that other incurs a liability the law implies an obligation to indemnity against that liability: Sheffield Corporation v. Barclay  A.C. 392. That case has been considered in Yeung Kai Yung v. Hong Kong and Shanghai Banking Corporation  A.C. 787 and applied in Naviera Mogor S.A. v. Société Metallurgique de Normandie  1 Lloyd's Rep. 412. Where there is a contract of indemnity that contract, by its nature, is one by which one party agrees to make good a loss suffered by the other: Halsbury's Laws of England, 4th ed., vol. 20 (1978), pp. 164, 173, paras. 305, 307, 315. Further, the principle on which contract of indemnity applies is not confined to cases of principal and agent or employer and employee: Dugdale v. Lovering (1875) L.R. 10 C.P. 196. Part of the general principle is that the court is entitled to look at the general circumstances of the case and that it applies without any necessity for a pre-existing agreement containing an express or implied indemnity. Thus, English law is applicable here because the facts create in English law an obligation by the members to indemnify the I.T.C. The real question is whether or not that is a justiciable claim.
The matter, here, is justiciable because the I.T.C. has no claim against the members under I.T.A.6 and cannot have a claim against them under that treaty since, although I.T.A.6 is a constitutional document which created the I.T.C., it is not a contract between the I.T.C. and its members. The I.T.C. is not a party to the contract. The position is comparable to companies which are created by memoranda and articles of association but, apart from section 4 of the Companies Act 1985, are not parties to the instrument creating them: Hickman v. Kent or Romney Marsh Sheepbreeders' Association  1 Ch. 881. The actual claim to an indemnity is one implied by law on the facts and does not depend on I.T.A.6. But such claims are not beyond the cognisance of municipal courts merely because their origin is connected more or less directly with an act state: Salaman v. Secretary of State in
Council of India  1 K.B. 613. The fact that the treaty is in the background or that the I.T.C. would not exist but for the treaty and the Order in Council of 1972 refers to the treaty, does not mean that the receiver qua I.T.C. would be debarred from presenting a claim which did not depend on the treaty, especially as he could not present one which did depend on the treaty.
If a decision on the claim to indemnity would in some way involve the court in considering I.T.A.6 that would not make it non-justiciable because the right of indemnity arises from commercial transactions and such transactions are justiciable. They do not fall within Lord Wilberforce's test on non-justiciability in Buttes Gas and Oil Co. v. Hammer (No. 3)  A.C. 888, 933, 936-937, 938. See also Alfred Dunhill of London Inc. v. Republic of Cuba (1976) 425 U.S. 682. The Dunhill case was considered in Trendtex Trading Corporation v. Central Bank of Nigeria  Q.B. 529, 555-557; I Congreso del Partido  1 A.C. 244, 266, 267 and Empresa Exportadora de Azucar v. Industria Azucarera Nacional S.A. (The Playa Larga and The Marble Islands)  2 Lloyd's Rep. 171, 194-195.
In Buttes Gas and Oil Co. v. Hammer (No. 3)  A.C. 888 Lord Wilberforce referred to some old cases but those cases involved, without exception, political issues. There have been no commercial cases where the doctrine has been applied: Blad v. Bamfield (1674) 3 Swan. 604; Duke of Brunswick v. King of Hanover (1844), 6 Beav. 1; (1848) 2 H.L. Cas. 1; Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22; Rustomjee v. The Queen (1876) 2 Q.B.D. 69 and Cook v. Sprigg  A.C. 572. Even though those cases must be taken to support the existence of the doctrine there is nothing in them to compel the view that they should be applied to commercial transactions. [Reference was made to Maclaine Watson & Co. Ltd. v. International Tin Council (No. 3) (unreported), 9 June 1988, Millett J.] The implied indemnity here was a commercial transaction because of its close connections with the contracts of purchase and because it is an indemnity which could have been given by a non-sovereign body.
There is no doubt that the transactions, here, were commercial transactions within the meaning of section 3 of the State Immunity Act 1978. It is relevant to consider the Act to show what Parliament has regarded as commercial transactions, not only in themselves and in relation to financial indemnities, but more specifically, how it has treated proceedings inside an international organisation. The general scheme of the Act is that a state is immune: section 1, but that there are certain exceptions. Section 3 provides an exception from immunity where proceedings are relating to "(a) a commercial transaction . . . or (b) an obligation . . . which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom." Here, the transactions are commercial transactions as defined by section 3(3). There is a specific reference to international organisations in section 8. Under section 8(1) a state is not immune in respect of proceedings "relating to its membership of a body corporate, an unincorporated body or a partnership which (a) has members other than states; and (b) is incorporated or constituted under the law of the
United Kingdom . . ." or its principal place of business is in the United Kingdom. Section 14 excludes the United Kingdom from immunities.
McCombe Q.C. following. The I.T.C., having asked, metaphorically speaking, Parliament to provide by statutory instruments that it should have the capacities of a body corporate, cannot, having had that privilege and having had that creation, then retreat onto Mount Olympus and ask the court to say that it is simply a creature of international law. By the Order in Council of 1972 it has been given the capacities of a body corporate which it cannot "don and doff" at its whim. In other words, the I.T.C. cannot ask the court to read the Order in Council as though it said that the I.T.C. has the legal capacities of a body corporate save for the capacity to sue its members. In the I.T.C.'s printed case, after stating the well known principle that treaties do not of themselves create legislation which can be treated as though it were part of English law, it is stated that the treaty itself cannot be relied on as a source of private rights or obligations. However, it is important to bear in mind, as a gloss on that, that it does not mean that acts done because there is a treaty, or in the context of a treaty, cannot give rise to private rights at all: Nissan v. Attorney-General  A.C. 179, 217C-D, per Lord Morris of Borth-y-Gest. That passage paraphrased to the circumstances of the instant case would read: "The instructions of the states to the buffer stock manager of the I.T.C., which are in review in the present case, though they would not have taken place had there been no I.T.A.6, are far removed from the category of transactions which by reason of being part of, or in performance of, an agreement between states, are withdrawn from the jurisdiction of the municipal courts."
Lord Alexander of Weedon Q.C. and Peter Irvin for the I.T.C. The argument that is put is that because the I.T.C. incurred liabilities in English law, there is an arguable right of the I.T.C. in English law to claim an indemnity against all its members. If that basis of consideration was relevant, it has not been challenged at any stage. The case might be arguable and would have to be considered in the claim by the receiver. But that basis of consideration is irrelevant because the relationship between the I.T.C. and its members is governed by I.T.A.6, which is a treaty. It is trite law that the liability to indemnify depends on the proper law and the nature of the agreement that governs the relationship between the person claiming the indemnity and the person against whom it is claimed: Dicey & Morris, The Conflict of Laws, 11th ed. (1987), rules 200 and 201. The rights against the members of the I.T.C. are governed by such contract as exists between the I.T.C. and its members or are governed by the constitutional relationship between the I.T.C. and its members. [Reference was made to Salomon v. A. Salomon and Co. Ltd.  A.C. 22.]
It is an established principle of English law that the terms of a treaty do not, by virtue of the treaty alone, have the force of law in the United Kingdom. They cannot effect any alteration in English domestic law or diminish existing rights or confer new or additional rights unless and until enacted into domestic law by or under the authority of Parliament. When a treaty is so enacted, the courts give effect to the legislation and
not to the terms of the treaty: Attorney-General for Canada v. Attorney-General for Ontario  A.C. 326, 347-348; Blackburn v. Attorney-General  1 W.L.R. 1037, 1039, 1041; Pan-America-World Airways Inc. v. Department of Trade  1 Lloyd's Rep. 257, 261, and In re International Tin Council  Ch. 419, 443. It is common ground that the terms of I.T.A.6 are not incorporated into English law by legislation. Therefore, it cannot itself be relied on as a source of private rights: Attorney-General for Canada v. Attorney-General for Ontario. English courts cannot even interpret the terms of the treaty: British Airways Board v. Laker Airways Ltd.  A.C. 58, 85-86.
Any obligations which the members may have to the I.T.C. to make contributions to its resources or to indemnify it in respect of claims by third parties depend exclusively on the provisions of its constitution, i.e. the treaty, namely I.T.A.6. It is the treaty by which the I.T.C. has continued in being and which constitutes the agreement between its members. To enforce such obligations, which is what a receiver would be appointed and directed by the court to do, would require the court to interpret and enforce the provisions of I.T.A.6. The assumption of such jurisdiction by the court would transgress the general and basic principle of law stated by Lord Kingsdown in Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, 75. See also Cook v. Sprigg  A.C. 572, 478; British Airways Board v. Laker Airways Ltd. and In re International Tin Council. The fact that the I.T.C. is not itself an independent state makes no difference. It is a subject of international law, being an international body corporate created by treaty and having legal personality in international law. The legal relations between it and its constituent members exist exclusively on the international law plane and are governed exclusively by I.T.A.6. If one member attempted to sue another in English courts to enforce the obligations assumed by the other by its signature of I.T.A.6, the court would inevitably decline jurisdiction. The position would be no different if the I.T.C. were to seek, whether directly or through a receiver, to sue one or more of its members to enforce those obligations.
Anthony Grabiner Q.C., Nicolas Bratza Q.C. and David Richards for the Attorney-General. The Attorney-General applied to intervene in the instant proceedings under the principles laid down in Adams v. Adams (Attorney-General intervening)  P. 188, 197. The concern of the Attorney-General was that the proceedings were likely to affect the prerogative of the Crown in the conduct of foreign relations. The particular concern which prompted the intervention was the effect on the international relations of the United Kingdom. If an officer of the court of the United Kingdom, that is to say, a receiver appointed by the court, were to be interposed between the I.T.C. and its members for the purpose of making and pursuing claims in the name of the I.T.C. against the members, that would amount to supplanting the arrangements concluded between the member states and contained in the international treaty. The Attorney-General was allowed to intervene on terms that effectively he bore his own costs. The role played by the Attorney-General in the courts below was minimal. The position here is identical. The appeal concerns issues of principle only. At this stage the sufficiency
of the evidence adduced by Maclaine Watson in support of an application to appoint a receiver is not being investigated nor is the question of the exercise of discretion to appoint or not to appoint a receiver to be gone into. If Maclaine Watson's appeal is successful then the matter will go back to the judge at first instance to determine the question whether or not a receiver should be appointed and all the arguments on discretion and related matters can be deployed there. If, however, the appeal is dismissed then that would be the end of the matter. Technically, the Attorney-General would adopt the arguments put forward for the I.T.C. and is concerned not to trespass into the detail of the dispute between the I.T.C. and Maclaine Watson but to confine himself to the public interest issues that arise and provide justification, or the basis, for the intervention.
Littman Q.C. replied.
Their Lordships took time for consideration.
26 October. LORD KEITH OF KINKEL. My Lords, I have had the opportunity of considering in draft the speeches prepared by my noble and learned friends, Lord Templeman and Lord Oliver of Aylmerton. I am in entire agreement with the reasoning there set out and there is nothing which I can usefully add. I would accordingly dismiss all these appeals.
LORD BRANDON OF OAKBROOK. My Lords, for the reasons given in the speeches of my noble and learned friends, Lord Templeman and Lord Oliver of Aylmerton I would dismiss all these appeals.
LORD TEMPLEMAN. My Lords, these appeals raise a short question of construction of the plain words of a statutory instrument. The trial judges (Staughton J. and Millett J.) and the Court of Appeal (Kerr, Nourse and Ralph Gibson L.JJ.) rightly decided this question in favour of the respondents. Losing the construction argument, the appellants put forward alternative submissions which are unsustainable. Those submissions, if accepted, would involve a breach of the British constitution and an invasion by the judiciary of the functions of the Government and of Parliament. The Government may negotiate, conclude, construe, observe, breach, repudiate or terminate a treaty. Parliament may alter the laws of the United Kingdom. The courts must enforce those laws; judges have no power to grant specific performance of a treaty or to award damages against a sovereign state for breach of a treaty or to invent laws or misconstrue legislation in order to enforce a treaty.
A treaty is a contract between the governments of two or more sovereign states. International law regulates the relations between sovereign states and determines the validity, the interpretation and the enforcement of treaties. A treaty to which Her Majesty's Government is a party does not alter the laws of the United Kingdom. A treaty may be incorporated into and alter the laws of the United Kingdom by means of legislation. Except to the extent that a treaty becomes
incorporated into the laws of the United Kingdom by statute, the courts of the United Kingdom have no power to enforce treaty rights and obligations at the behest of a sovereign government or at the behest of a private individual.
The Sixth International Tin Agreement ("I.T.A.6") was a treaty between the United Kingdom Government, 22 other sovereign states and the European Economic Community ("the member states"). I.T.A.6 continued in existence the International Tin Council ("the I.T.C.") as an international organisation charged with regulating the worldwide production and marketing of tin in the interests of producers and consumers. By article 16 of I.T.A.6, the member states agreed that:
"1. The council shall have legal personality. It shall in particular have the capacity to contract, to acquire and dispose of moveable and immoveable property and to institute legal proceedings."
Pursuant to the provisions of I.T.A.6, an Headquarters Agreement was entered into between the I.T.C. and the United Kingdom in order to define "the status, privileges and immunities of the council" in the United Kingdom. Article 3 of the Headquarters Agreement provided that:
"The council shall have legal personality. It shall in particular have the capacity to contract and to acquire and dispose of movable and immovable property and to institute legal proceedings."
No part of I.T.A.6 or the Headquarters Agreement was incorporated into the laws of the United Kingdom but the International Tin Council (Immunities and Privileges) Order 1972 (S.I. 1972 No. 120) made under the International Organisations Act 1968 provided in article 5 that: "The council shall have the legal capacities of a body corporate."
The I.T.C. entered into contracts with each of the appellants. The appellants claim, and it is not disputed, that the I.T.C. became liable to pay and in breach of contract has not paid to the appellants sums amounting in the aggregate to millions of pounds. In these proceedings the appellants seek to recover the debts owed to them by the I.T.C. from the member states.
The four alternative arguments adduced by the appellants in favour of the view that the member states are responsible for the debts of the I.T.C. were described throughout these appeals as submissions A, B(1), B(2) and C.
Submission A relies on the fact that the Order of 1972 did not incorporate the I.T.C. but only conferred on the I.T.C. the legal capacities of a body corporate. Therefore, it is said, under the laws of the United Kingdom the I.T.C. has no separate existence as a legal entity apart from its members; the contracts concluded in the name of the I.T.C. were contracts by the member states.
Submission A reduces the Order of 1972 to impotence. The appellants argue that the Order of 1972 was only intended to facilitate the carrying on in the United Kingdom of the activities of 23 sovereign states and the E.E.C. under the collective name of "the International Tin Council." Legislation is not necessary to enable trading to take
place under a collective name. The appellants suggested that the Order of 1972 was intended to enable the member states to hold land in the United Kingdom in the name of a nominee. Legislation is not necessary for that purpose either. The appellants then suggested that the Order of 1972 was necessary to relieve the member states from a duty to register the collective name of the I.T.C. and from complying with the other provisions of the Registration of Business Names Act 1916. This trivial suggestion was confounded when, at a late stage in the hearing, the Act of 1916 (now repealed) was examined and found not to apply to an international organisation established by sovereign states. The Order of 1972 did not confer on 23 sovereign states and the E.E.C. the rights to trade under a name and to hold land in the name of the I.T.C. The Order of 1972 conferred on the I.T.C. the legal capacities of a body corporate. The appellants submitted that if Parliament had intended to do more than endow 23 sovereign states and the E.E.C. trading in this country with a collective name, then Parliament would have created the I.T.C. a body corporate. But the Government of the United Kingdom had by treaty concurred in the establishment of the I.T.C. as an international organisation. Consistently with the treaty, the United Kingdom could not convert the I.T.C. into an United Kingdomorganisation. In order to clothe the I.T.C. in the United Kingdom with legal personality in accordance with the treaty, Parliament conferred on the I.T.C. the legal capacities of a body corporate. The courts of the United Kingdom became bound by the Order of 1972 to treat the activities of the I.T.C. as if those activities had been carried out by the I.T.C. as a body incorporated under the laws of the United Kingdom. The Order of 1972 is inconsistent with any intention on the part of Parliament to oblige or allow the courts of the United Kingdom to consider the nature of an international organisation. The Order of 1972 is inconsistent with any intention on the part of Parliament that creditors and courts should regard the I.T.C. as a partnership between 23 sovereign states and the E.E.C. trading in the United Kingdom like any private partnership. The Order of 1972 is inconsistent with any intention on the part of Parliament that contracts made by the I.T.C. with metal brokers, bankers, staff, landlords, suppliers of goods and services and others, shall be treated by those creditors or by the courts of the United Kingdom as contracts entered into by 23 sovereign states and the E.E.C. The Order of 1972 conferred on the I.T.C. the legal capacities of a body corporate. Those capacities include the power to contract. The I.T.C. entered into contracts with the appellants.
The appellants submitted that if there had been no Order of 1972, the courts would have been compelled to deal with the I.T.C. as though it were a collective name for an unincorporated association. But the rights of the creditors of the I.T.C. and the powers of the courts of the United Kingdom must depend on the effect of the Order of 1972 and that Order cannot be construed as if it did not exist. An international organisation might have been treated by the courts of the United Kingdom as an unincorporated association if the Order of 1972 had not been passed. But the Order of 1972 was passed. When the I.T.C. exercised the capacities of a body corporate, the effect of that exercise
was the same as the effect of the exercise of those capacities by a body corporate. The I.T.C. cannot exercise the capacities of a body corporate and at the same time be treated as if it were an unincorporated association. The Order of 1972 brought into being an entity which must be recognised by the courts of the United Kingdom as a legal personality distinct in law from its membership and capable of entering into contracts as principal. None of the authorities cited by the appellants were of any assistance in construing the effect of the grant by Parliament of the legal capacities of a body corporate to an international organisation pursuant to a treaty obligation to confer legal personality on that organisation. In my opinion the effect is plain; the I.T.C. is a separate legal personality distinct from its members.
The second argument of the appellants, which is known as submission B(1), accepts that the I.T.C. enjoys a separate legal existence apart from its constituent members but contends that a contract by the I.T.C. involves a concurrent direct or guarantee liability on the members jointly and severally. This liability is said to flow from a general principle of law, that traders operating under a collective name incur a liability to third parties which can only be excluded by incorporation; the I.T.C. has not been formally incorporated and therefore, it is said, the member states are liable concurrently. No authority was cited which supported the alleged general principle. On the contrary, there is ample authority for the general proposition that in England no one is liable on a contract except the parties thereto. The only parties to the contracts between the appellants and the I.T.C. were the appellants and the I.T.C. Members of a body corporate are not liable for the debts of a body corporate because the members are not parties to the corporation's contracts. The member states are not liable for the debts of the I.T.C. because the members were not parties to the contracts of the I.T.C. It was said on behalf of the appellants that under the laws of Scotland, Germany, France, Puerto Rico and Jordan and elsewhere, recognition is accorded to "mixed entities," a description of associations which are legal entities but whose engagements, notwithstanding the separate legal personality of the associations involve some form of liability of the members. Authorities were produced which demonstrate that by custom or by legislation the members of some corporations in some countries are not free from personal liability. But no such custom exists in the United Kingdom as a general rule and section 4 of the Partnership Act 1890 which preserves for a Scottish partnership some of the benefits of incorporation and some of the attributes of an unincorporated association, does not prove the existence of any general custom in any part of the United Kingdom that members of a corporation or of a body analogous to corporations shall be liable for the debts of the corporation. Parliament, of course, may provide that members of a corporation shall bear liability for or shall be bound to contribute directly or indirectly to payment of the debts of the corporation to a limited or to an unlimited extent in accordance with express statutory provisions. The history of the Companies Acts illustrates the power of Parliament, if it pleases, to impose some liability on shareholders as a condition of the grant of incorporation. Parliament could have imposed some liability for the
debts of the I.T.C. on the member states. But Parliament passed the Order of 1972 which imposed no such liability. The Order of 1972 conferred on the I.T.C. the capacities of a body corporate. Those capacities included the power to enter into contracts. In the absence of express parliamentary provision a contract entered into by the I.T.C. does not involve any liability on any person who was not a party to the contract.
The third argument described as submission B(2) is that a rule of international law imposes on sovereign states, members of an international organisation, joint and several liability for the default of the organisation in the payment of its debts unless the treaty which establishes the international organisation clearly disclaims any liability on the part of the members. No plausible evidence was produced of the existence of such a rule of international law before or at the time of I.T.A.6 in 1982 or thereafter. The appellants submitted that this House was bound to accept or reject such a rule of international law and should not shrink from inventing such a law and from publishing a precedent which might persuade other states to accept such law.
My Lords, if there existed a rule of international law which implied in a treaty or imposed on sovereign states which enter into a treaty an obligation (in default of a clear disclaimer in the treaty) to discharge the debts of an international organisation established by that treaty, the rule of international law could only be enforced under international law. Treaty rights and obligations conferred or imposed by agreement or by international law cannot be enforced by the courts of the United Kingdom. The appellants concede that the alleged rule of international law must imply and include a right of contribution whereby if one member state discharged the debts of the I.T.C., the other member states would be bound to share the burden. The appellants acknowledge that such right of contribution could only be enforced under international law and could not be made the subject of an order by the courts of the United Kingdom. This acknowledgement is inconsistent with the appellants' submission B(2). An international law or a domestic law which imposed and enforced joint and several liability on 23 sovereign states without imposing and enforcing contribution between those states would be devoid of logic and justice. If the present appeal succeeded the only effective remedy of the appellants in this country would be against the United Kingdom. This remedy would be fully effective so that in practice every creditor of the I.T.C. would claim to be paid, and would be paid, by the United Kingdom the full amount and any interest payable to the creditor by the I.T.C. The United Kingdom Government would then be embroiled, as a result of a decision of this House, in negotiations and possibly disagreements with other member states in order to obtain contribution. The causes of the failure of the I.T.C. and liability for its debts are disputed. Some states might continue to deny the existence of any obligation, legal or moral, municipal or international, to pay the debts of the I.T.C. or to contribute to such payment. Some states might be willing to contribute rateably with every other state, each bearing one-twentythird. A state which under I.T.A.6 was only liable to contribute one per cent. of the capital of the I.T.C. might, on
the other hand, only be prepared to contribute one per cent. to the payment of the debts. The producing states which suffered more from the collapse of the I.T.C. than the consuming states might not be willing to contribute as much as the consuming states. Some member states might protest that I.T.A.6 shows an intention that member states should only be liable to contribute to the activities of the I.T.C. a buffer stock of metal and cash intended to be worth £500m. and lost as a result of the fall in tin prices on the metal exchanges which the I.T.C. strove to avoid and which resulted in the collapse of the I.T.C.
The courts of the United Kingdom have no power to enforce at the behest of any sovereign state or at the behest of any individual citizen of any sovereign state rights granted by treaty or obligations imposed in respect of a treaty by international law. It was argued that the courts of the United Kingdom will construe and enforce rights and obligations resulting from an agreement to which a foreign law applies in accordance with the provisions of that foreign law. For example, an English creditor of a Puerto-Rican corporation could sue and recover in the courts of the United Kingdom against the members of the corporation if, by the law of Puerto Rico, the members were liable to pay the debts of the corporation. By analogy, it was submitted, an English creditor of an international organisation should be able to sue in the courts of the United Kingdom the members of the international organisation if by international law the members are liable to pay the debts of the organisation. But there is no analogy between private international law which enables the courts of the United Kingdom to resolve differences between different laws of different states, and a rule of public international law which imposes obligations on treaty states. Public international law cannot alter the meaning and effect of United Kingdom legislation. If the suggested rule of public international law existed and imposed on a state any obligation towards the creditors of the I.T.C., then the Order of 1972 would be in breach of international law because the Order failed to confer rights on creditors against member states. It is impossible to construe the Order of 1972 as imposing any liability on the member states. The courts of the United Kingdom only have power to enforce rights and obligations which are made enforceable by the Order.
The fourth argument, described as submission C, asserts that by I.T.A.6 the I.T.C. was only authorised to contract as agent for the member states. Even if this assertion were correct, I.T.A.6 could only be considered by the courts of the United Kingdom for the purpose of resolving any ambiguity in the meaning and effect of the Order of 1972. There is no ambiguity. The Order of 1972 authorised the I.T.C. to contract as principal because the Order of 1972 conferred on the I.T.C. the legal capacities of a body corporate without limitation. The treaty, I.T.A.6, has not been incorporated into the laws of the United Kingdom and the provisions of I.T.A.6 cannot be employed for the purpose of altering or contradicting the provisions of the Order of 1972.
Finally, one of the appellants appealed against the refusal of the courts below to appoint a receiver. The appellant is a judgment creditor of the I.T.C. and seeks the appointment of a receiver by way of
equitable execution. The receiver is intended to receive and enforce a chose in action belonging to the I.T.C. The chose in action is an alleged right vested in the I.T.C. to be indemnified by the member states against the debts payable by the I.T.C. and incurred as a result of carrying out the instructions of the member states contained in I.T.A.6. My Lords, in English law the members of a corporation are not liable to indemnify the corporation against debts incurred by the corporation. The Order of 1972 made no provision for the member states to indemnify the I.T.C. No doubt the debts of the I.T.C. were incurred in exercise of powers which by I.T.A.6 the member states agreed between themselves should be exercisable and which they instructed the I.T.C. to exercise. However, powers contained in I.T.A.6 are treaty powers and any indemnity obligation expressly or impliedly imposed on the member states by virtue of I.T.A.6 is a treaty obligation which cannot be enforced by the courts of the United Kingdom by the appointment of a receiver or otherwise because the obligation is not to be found in the Order of 1972.
Your Lordships were urged to discern or invent and apply some rule of municipal law or international law which would render the member states liable to discharge the debts of the I.T.C. because, so it was said, the member states have behaved badly. These proceedings cannot however be decided by criticism of the conduct of the member states for establishing the I.T.C., or by attaching blame to the member states for the failure of the I.T.C. to prevent the recurring glut and scarcity of tin metal or by condemning the management of the I.T.C. by the member states or by attributing to the operations of the metal exchanges the fall in tin prices which bankrupted the I.T.C., inflicted a loss of the buffer stock which should have been worth up to £500m. on the member states and caused poverty and unemployment to the producing states. The courts possess neither the evidence nor the authority to pronounce judgment on these matters. International diplomacy and national policy will decide whether the debts of the I.T.C., an international organisation established by treaty, shall be discharged by the member states and, if so, in what manner the burden should be shared. English judges cannot meddle with unincorporated treaties. The result of these appeals follows inexorably from the fact that the appellants contracted with the I.T.C. which by the Order of 1972 had been clothed with the legal capacities of a body corporate. In Salomon v. A. Salomon and Co. Ltd.  A.C. 22, Lord Halsbury L.C. pointed out, at p. 30:
"once the company is legally incorporated it must be treated like any other independent person with its rights and liabilities appropriate to itself, and that the motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are."
Since Salomon's case, traders and creditors have known that they do business with a corporation at their peril if they do not require guarantees from members of the corporation or adequate security. At all times the rights of the appellants, who do not lack legal advice, have been governed in the United Kingdom by the Order of 1972 which
offers no foundation in law for proceedings against the member states. These appeals must be dismissed.
For the conduct of these appeals, there were locked in battle 24 counsel supported by batteries of solicitors and legal experts, armed with copies of 200 authorities and 14 volumes of extracts, British and foreign, from legislation, books and articles. Ten counsel addressed the Appellate Committee for 26 days. This vast amount of written and oral material tended to obscure three fundamental principles - that the capacities of a body corporate include the capacity to contract, that no one is liable on a contract save the parties to the contract and that treaty rights and obligations are not enforceable in the courts of the United Kingdom unless incorporated into law by statute. In my opinion the length of oral argument permitted in future appeals should be subject to prior limitation by the Appellate Committee.
LORD GRIFFITHS. My Lords, I have had the advantage of reading the speeches of Lord Templeman and Lord Oliver of Aylmerton. I agree that for the reasons they give the appellants can obtain no redress through English law and that these appeals must be dismissed. I reach this conclusion with regret because in my view the appellants have suffered a grave injustice which Parliament never envisaged at the time legislation was first enacted to enable international organisations to operate under English law.
If during the passage of the Diplomatic Privileges (Extension) Bill through Parliament the Minister of State had been asked by a member what would happen if an international organisation refused to honour a contract on the ground that it had no money I believe that the answer would have been that such a state of affairs would be unthinkable because the governments that had set up the organisation would provide the funds necessary to honour its obligations. We do not, as yet, have resort to the parliamentary history of an enactment as an aid to statutory interpretation and I quote the following passage from the Minister of State on the second reading of the Diplomatic Privileges (Extension) Bill not for that purpose but to support my views of the answer that the Minister of State would have given to such a question:
"Hon. Members were very fearful less an organisation such as U.N.R.R.A., or any international organisation, would enter into a contract and repudiate that contract and then the contractor, who in this case would be a British subject, would have no redress in the courts, and therefore no redress at all. I would like to assure the House that that is simply not the case, and that it is inconceivable that things should work out in that way.
"I have tried to explain that immunity from legal process is essential to organisations of this kind but I would like to add that the Government fully recognise that there are classes of cases where it is necessary to provide for the settlement of legal disputes between private citizens in this country and organisations which are operating here, and that an organisation obviously must have the power to conclude contracts. The Attorney-General told the House on Second Reading that he had satisfactory assurances from
U.N.R.R.A. as regards cases of this kind. U.N.R.R.A. will insert in all its contracts - we have that promise - arbitration clauses which have been approved by the Law Officers of the Crown. If a dispute arises out of one of these contracts, U.N.R.R.A. will arbitrate in accordance with those clauses, and if, as sometimes happens, it is desired to have recourse to the courts for the determination of points of law, or other similar matters, U.N.R.R.A. will not prevent such recourse to the courts by relying on its general immunity from suit. If, at the end of the legal process or arbitration, if there is one, U.N.R.R.A. is found liable to pay, U.N.R.R.A. will comply with the award. It is our intention, if we make an Order in Council to cover any other international organisation that may be set up, to obtain from it exactly those assurances, and I have not the faintest doubt that those assurances will be given purely as a matter of course. Of course, it is possible to argue that even with those assurances an organisation might break its word, but in that case I can assure the House that His Majesty's Government would not be without resources to deal with the situation which would arise, and the House really need have no qualms at all on that point:" Hansard, 13 October 1944, columns 2090-2091.
I can only hope that the assurance given on behalf of the Government in 1944 still holds true because it seems to me that the obvious just solution is that the governments that contributed to the buffer stock should provide it with funds to settle its debts in the same proportion that they contributed to the buffer stock. But this end must be pursued through diplomacy and an international solution must be found to an international problem; it can not be solved through English domestic law.
LORD OLIVER OF AYLMERTON. My Lords, these appeals arise from the failure of the International Tin Council ("the I.T.C.") in 1985 to meet the substantial obligations which it had incurred during that year in dealings on the London Metal Exchange conducted with a view to supporting the world price of tin. The circumstances in which the claims of the individual appellants arose differ in certain material respects, but the principal question raised by all the appeals is the same, that is to say, can the members of the I.T.C. be held responsible in law for the debts which the I.T.C. has incurred? Although, therefore, it will be necessary to indicate in relation to each of the appeals how the matter comes before your Lordships' House, it will be convenient, first, to say something about the history and constitution of the I.T.C. since these are fundamental to the question which requires to be answered.
History and constitution of the I.T.C.
The I.T.C. is one of a number of international organisations established by treaties entered into after the Second World War in an endeavour to regulate the market in relation to particular commodities. It has been the subject of a series of treaties commencing with the First International Tin Agreement (I.T.A.1) which was signed on 1 March
1954 and came into operation on 1 July 1956. Although your Lordships are concerned primarily with the Sixth International Tin Agreement (I.T.A.6) it is not irrelevant to consider some of the terms of the earlier treaties in particular in relation to the borrowing powers conferred on the I.T.C. I.T.A.1 was entered into for a period of five years from its entry into force and was effected for the broad purposes of avoiding the difficulties likely to arise from maladjustments between supply of and demand for tin, of stabilising tin prices, of ensuring adequate supplies at reasonable prices and generally of promoting the economic production of tin. Article IV established an International Tin Council and provided for its seat to be in London. Participating countries were divided into producing countries and consuming countries according to their election at the time of ratification, acceptance or accession and each contracting government was to be represented on the council by a delegate. Provision was made for an equality of voting power between delegates of the consuming countries and those of the producing countries, the votes being distributed in agreed proportions. Article IV.21. provided:
"The council shall have in each participating country, to the extent consistent with its law, such legal capacity as may be necessary for the discharge of its function under this agreement."
Initial finance was to be provided in the same way as is provided in the I.T.A.6, to whose provisions it will be necessary to refer in some detail. It is only necessary, at this stage, to note the broad framework of the financial provisions. Although the individual participating members were made responsible for the expenses of their own delegates to the council, the administration and office expenses of the council, including the remuneration of the various officers and staff appointed for the purposes of the agreement, were to be a collective responsibility and were to be brought into a separate account ("the administration account") which was to be fed by contributions from the participating governments as determined annually by the council in proportion to the votes held by them respectively.
The critical part of the agreement, for present purposes, is to be found in articles VIII and IX which contained the essential machinery for fulfilling the objects of the agreement by the establishment and operation of a buffer stock of tin which was to be made the subject matter of a separate account, was to be under the control of a manager and was to be financed by fixed contributions in cash or in tin by the producing countries, although provision was also made for voluntary contributions by any participating country. Broadly the manager's function was to employ the buffer stock as the machinery for stabilising tin prices by buying or selling in accordance with a formula devised by reference to the price of cash tin on the London Metal Exchange, for which initial floor and ceiling prices were set by article VI of the agreement, such prices to be reviewable from time to time by the council during the currency of the agreement. A notable feature of these provisions is that although the buffer stock manager was expressly authorised to buy or sell forward, the agreement conferred no power to borrow either upon him or upon the council. The council was
empowered to authorise the manager, if his funds proved inadequate to meet operational expenses, to sell tin out of the stock in order to meet current operational expenditure, but the possibility that the fixed contributions to the buffer stock provided for in the agreement might not be adequate and that the buffer stock account might go into deficit does not appear to have been contemplated. Indeed, the provisions for the liquidation of the buffer stock on the termination of the agreement were framed on the basis that there would always be a surplus of value in cash or in tin, so that any outstanding obligations could, if necessary, be met out of sales from stock.
I.T.A.2 was concluded on 1 September 1960, was to endure for a further five years and came into force on 1 July 1961. It followed broadly the same pattern as I.T.A.1. There was, however, one significant difference. Article VIII, which established the buffer stock, contained a provision conferring on the council the power to borrow in the following terms:
"6(a) The council may borrow for the purposes of the buffer stock and upon the security of tin warrants held by the buffer stock such sum or sums as it deems necessary, provided that the maximum amount of such borrowing and the terms and conditions thereof shall have been approved by a majority of the votes cast by consuming countries and all the votes cast by producing countries and further provided that no obligation shall be incurred by any consuming country in respect of such borrowing. (b) The council may by a two-thirds distributed majority make any other arrangements as it thinks fit for borrowing for the purposes of the buffer stock, provided that no obligation shall be laid upon any participating country under this sub-paragraph without the consent of that country."
The "two-thirds distributed majority" referred to was defined in this, as in all other agreements, as a two-thirds majority of the votes cast by the producing and consuming countries respectively counted separately. Once again, the provisions for the liquidation of the buffer stock on termination of the agreement were framed on the basis that any cash required to meet outstanding obligations would be met by sales of tin from stock and that there would be a surplus value for distribution to the contributing countries. I.T.A.3, which came into force on 1 July 1966, followed the same pattern save that, instead of establishing a new I.T.C. as had been done by I.T.A.2, it provided for the continuation in being of the existing I.T.C., a feature which was thereafter reproduced in each successive agreement. It is unnecessary to refer to any of the provisions of this agreement or of I.T.A.4 or I.T.A.5 , which followed a similar pattern, save to note that I.T.A.4 contained a new provision relating to the seat of the council. This was contained in article 14 and was in the following terms:
"(d) The member in whose territory the headquarters of the council is situated (hereinafter referred to as the host member) shall, as soon as possible after the entry into force of the agreement, conclude with the council an agreement to be approved by the
council relating to the status, privileges and immunities of the council, of its executive chairman, its staff and experts and of representatives of members while in the territory of the host member for the purpose of exercising their functions."
Pursuant to this provision a Headquarters Agreement was entered into between the United Kingdom and the I.T.C. on 9 February 1972, to the terms of which it will be necessary to refer in a little more detail.
Sixth International Tin Agreement
The operative agreement with which your Lordships are concerned is I.T.A.6 which was signed in New York in 1981 and 1982 following the United Nations Tin Conference of 1980. As will appear, one of the questions much debated before your Lordships is that of the extent to which (if at all) it is open to your Lordships to take account of the terms of this treaty in considering the rights and obligations of the parties to this litigation, but, on any analysis, it forms part of the essential background to these appeals and it will be convenient at the outset to refer to its material provisions. It is not, I think, necessary for present purposes to refer to the preamble or to article 1 which sets out in extenso the objectives of the treaty, which simply reflect in rather more detail those set out in the previous agreements. Article 2 contains a number of definitions of which, at this point, it is necessary to note only that a "member," is defined as a country whose government has ratified, accepted, approved or acceded to the treaty or as an organisation meeting the requirements of article 56. That article, in terms, applies the term "government" to include, inter alia, the European Economic Community. Article 3 continues the I.T.C. established under the previous I.T.A.s and provides that, unless otherwise determined by the council by a two-thirds distributed majority, the seat of the council should be in London. Article 4 provides that the council shall be composed of all the members and that each member shall be represented in the council by one delegate. Article 5 provides for the categorisation of members as producing or consuming members. The powers and functions and procedures of the council are contained in articles 7 and 8 which, so far as material, provide as follows:
"The council: (a) shall have such powers and perform such functions as may be necessary for the administration . . . of this agreement; (b) shall have the power to borrow for the purposes of the administrative account established under article 17, or of the buffer stock account in accordance with article 24; (c ) shall receive from the executive chairman, whenever it so requests, such information with regard to the holdings and operations of the buffer stock as it considers necessary to fulfil its functions under this agreement; . . . (e) shall establish buffer stock operational rules which shall include, inter alia, financial measures to be applied to members which fail to meet their obligations under article 22; (f) shall publish after the end of each financial year a report on its activities for that year; (g) shall publish after the end of each quarter, but not earlier than
three months after the end of that quarter, unless the council decides otherwise, a statement showing the tonnage of tin metal held in the buffer stock at the end of that quarter; . . .
"The council: (a) shall establish its own rules of procedure; . . . (c ) may at any time: (i) by a two-thirds distributed majority, delegate to any of the subsidiary bodies referred to in article 9 any power which the council may exercise by a simple distributed majority, other than those relating to: - assessment and apportionment of contributions under articles 20 and 22 respectively; - floor and ceiling prices under articles 27 and 31; . . ."
Article 9 provides for the continuation of various subsidiary bodies established under the previous treaties, the composition and terms of reference of which are determined by the council. These include a Buffer Finance Committee. Articles 11 and 12 provide for the appointment of an executive chairman and two vice-chairmen, for the holding of four sessions of the council annually and for the calling of additional meetings. Article 13 provides for the administration and operation of the agreement by the executive chairman and is, so far as material in the following terms:
"1. The executive chairman appointed under article 11 shall be responsible to the council for the administration and operation of this agreement in accordance with the decisions of the council. . . . 3. The council shall appoint a buffer stock manager (hereinafter referred to as the manager) and a secretary of the council (hereinafter referred to as the secretary) and shall determine the terms and conditions of service of those two officers. 4. The council shall give instructions to the executive chairman as to the manner in which the manager is to carry out his responsibilities laid down in this agreement. . . . 7. In the performance of their duties, neither the executive chairman nor the members of the staff shall seek or receive instructions from any government or person or authority other than the council or a person acting on behalf of the council under the terms of this agreement. They shall refrain from any action which might reflect on their position as international officials responsible only to the council. Each member undertakes to respect the exclusively international character of the responsibilities of the executive chairman and the members of the staff and not to seek to influence them in the discharge of their responsibilities. 8. No information concerning the administration or operation of this agreement shall be revealed by the executive chairman, the manager, the secretary or other staff of the council, except as may be authorised by the council or as is necessary for the proper discharge of their duties under this agreement."
Voting at sessions of the council is regulated by article 14 which provides for producing members and consuming members respectively to have 1,000 votes, such votes to be distributed between them in proportion to
percentages of production and consumption specified in tables established by the council. The status, privileges and immunities of the I.T.C. are regulated by article 16 which requires to be set out in full and is in the following terms:
"Privileges and Immunities
"1. The council shall have legal personality. It shall in particular have the capacity to contract, to acquire and dispose of movable and immovable property and to institute legal proceedings. 2. The council shall have in the territory of each member, to the extent consistent with its law, such exemption from taxation on the assets, income and other property of the council, as may be necessary for the discharge of its functions under this agreement. 3. The council shall be accorded in the territory of each member such currency exchange facilities as may be necessary for the discharge of its functions under this agreement. . . . 4. The status, privileges and immunities of the council in the territory of the host government shall be governed by a Headquarters Agreement between the host government and the council."
Part II of the treaty contains provisions dealing with accounts, currency of payments and audit. As in the previous treaties a clear distinction is drawn between the administration account and the buffer stock account.
Article 17 provides:
"1(a) There shall be kept two accounts - the administrative account and the buffer stock account - for the administration and operation of this agreement. (b) The administrative expenses of the council, including the remuneration of the executive chairman, the manager, the secretary and the staff, shall be entered into the administrative account. (c ) Any expenditure which is solely attributable to buffer stock transactions or operations, including expenses for borrowing arrangements, storage, commission and insurance, shall be entered into the buffer stock account by the manager. (d) The liability of the buffer stock account for any other type of expenditure shall be decided by the executive chairman."
So far as the administrative account is concerned, article 20 provides for the approval by the council of a budget for administration expenses, the assessment by the council of the members' contributions and a sanction of deprivation of rights on any member which fails to provide its assessed contribution. The critical provisions, however, in the context of these appeals are those related to the establishment, financing and operation of the buffer stock. These differ to some extent from the provisions of the previous agreements, in particular by departing from the previous principle of compulsory contributions only from producing members. They are contained in articles 21 to 30 and are, for relevant purposes, as follows:
"In order to achieve the objectives of this agreement there shall be established, inter alia, a buffer stock consisting of a normal stock of 30,000 tonnes of tin metal to be financed from government contributions, and an additional stock of 20,000 tonnes of tin metal to be financed from borrowing, using as security stock warrants and, if necessary, government guarantees/government undertakings."
The reference in this article to "government guarantees/government undertakings" is significant in the light of the appellants' submissions. This expression is defined in article 2 of the treaty as follows:
"'Government guarantees/government undertakings' means the financial obligations to the council which are committed by members as security for financing the additional buffer stock in accordance with article 21. They may, when relevant, be provided by the appropriate agencies of the members concerned. Members shall be liable to the council up to the amount of their guarantees/undertakings; . . ."
"1. The financing of the normal buffer stock shall at all times be shared equally between producing and consuming members. Such financing may, where relevant, be provided by the appropriate agencies of the members concerned. 2. An initial contribution amounting to the cash equivalent of 10,000 tonnes of tin metal shall be due on entry into force of this agreement. Subsequent contributions amounting to the cash equivalent of the remaining 20,000 tonnes of tin metal shall become due on such date or dates as the council may determine. 3. The contributions referred to in paragraph 2 of this article shall be apportioned by the council among members in accordance with their respective percentages of production or consumption as set out in the tables established or revised by the council in accordance with paragraph 3 or paragraph 4 of article 14 which are in effect at the time of the apportionment of contributions. 4. The amounts of the contributions referred to in paragraph 2 of this article shall be determined on the basis of the floor price in effect at the date when the contributions are called. 5. The initial contribution of a member due in accordance with paragraph 2 of this article may, with the consent of that member, be made by transfer from the buffer stock account held under [I.T.A.5]. 6. If at any time the council holds cash assets in the buffer stock account the total amount of which exceeds the cash equivalent of 10,000 tonnes of tin metal at the prevailing floor price, the council may authorise refunds out of such excess to members in proportion to the contributions they have made under this article. At the request of a member the refund to which it is entitled may be retained in the buffer stock account. . . ."
"1. If a member does not fulfil its obligations to contribute to the
buffer stock account by the date such contribution becomes due, it shall be considered to be in arrears. A member in arrears for 60 days or more shall not count as a member for the purpose of a decision by the council under paragraph 2 of this article." (Paragraph 2 contains provisions for suspending the voting rights of a member who is in arrears). "3. The council may call for coverage of arrears by other members on a voluntary basis."
"1. The council may borrow for the purposes of the buffer stock and upon the security of tin warrants held by the buffer stock such sum or sums as it deems necessary. The terms and conditions of any such borrowings shall be approved by the council. 2. The council may, by a two-thirds distributed majority, make any other arrangements it sees fit in order to supplement its resources. 3. All charges connected with these borrowings and arrangements shall be assigned to the buffer stock account."
Article 27 provides for the fixing of floor and ceiling prices in the same way as in the previous treaty and article 28 regulates the way in which the buffer stock is to be operated. The manager is to be responsible to the executive chairman and the article goes on to provide for what he is to do in the event of the market price of tin reaching the ceiling price or falling below the floor price. Since the insolvency of the I.T.C. resulted from operations undertaken to support the price of tin after it had fallen below the floor price, paragraphs 3(e) and 5 of article 28 should be set out in full:
"3. If the market price of tin . . . (e) is equal to or less than the floor price, the manager shall, unless instructed by the council to operate otherwise, if he has funds at his disposal and subject to articles 29 and 31, offer to buy tin on recognised markets at the market price until the market price of tin is above the floor price or the funds at his disposal are exhausted. . . . 5. The manager may engage in forward transactions under paragraph 3 of this article only if these will be completed before the termination date of this agreement or before some other date after the termination of this agreement as determined by the council."
Articles 29 and 31 referred to in article 28(3)(e) confer on the council power to restrict or suspend forward transactions or operations of the buffer stock generally. Again, one finds in article 30, the assumption that any shortage in liquid cash in the buffer stock account will be capable of being met out of the proceeds of the sale of tin held to the account. That article provides:
"2. Notwithstanding the provisions of articles 28 and 29, the council may authorise the manager, if his funds are inadequate to meet his operational expenses, to sell sufficient quantities of tin at the current price to meet expenses."
Article 32 enables the council in certain circumstances to control the export of tin. These provisions do not need to be referred to in any detail, but article 32(4) is of some significance. It provides:
"It shall also be the duty of the council to adjust supply to demand so as to maintain the price of tin metal between the floor and ceiling prices. The council shall also aim to maintain available in the buffer stock tin metal and cash adequate to rectify discrepancies between supply and demand which may arise."
Finally, in relation to the fasciculus of articles dealing with the buffer stock there should be noted the provisions of article 26 relating to the liquidation of the buffer stock account. So far as material, these are:
"1. On the termination of this agreement, all buffer stock operations under article 28, article 29, article 30 or article 31 shall cease. The manager shall thereafter make no further purchase of tin and may sell tin only as authorised by paragraph 2, paragraph 3 or paragraph 8 of this article. 2. Unless the council substitutes other arrangements for those contained in this article, the manager shall, in connection with the liquidation of the buffer stock, take the steps set out in paragraphs 3, 4, 5, 6, 7, 8 and 11 of this article. 3. As soon as possible after the termination of this agreement, the manager shall set aside from the balance remaining in the buffer stock account a sum which, in his estimation, is sufficient to repay any borrowings which may be outstanding under article 24, and to meet the total expenses of liquidation of the buffer stock in accordance with the provisions of this article. Should the balance remaining in the buffer stock account be inadequate for these purposes, the manager shall sell sufficient tin over such period and in such quantities as the council may decide in order to provide the additional sum required. 4. Subject to and in accordance with the terms of this agreement, the share of each member in the buffer stock shall be refunded to that member."
The steps set out in paragraphs 5, 6, 7, 8 and 11 relate to the ascertainment of the value of the stock and of the members' contributions and a distribution according to whether that value exceeds or is less than the members' contributions. It contains no provisions regulating the position which might arise should obligations to third parties exceed the value of the buffer stock.
The only other articles of the treaty to which reference needs to be made are article 41 (which deals with the general obligations of members) and article 60 (which deals with the procedure on termination). Paragraphs 1 and 2 of article 41 provide:
"1. Members shall during the currency of this agreement use their best endeavours and co-operate to promote the attainment of its objectives. 2. Members shall accept as binding all decisions of the council under this agreement."
Article 60 is of some relevance inasmuch as, in contradistinction to the provisions relating to the buffer stock account, it both contemplates and provides for the possibility that there may be outstanding obligations on the administrative account which cannot be met out of funds in the account. So far as relevant it provides as follows:
"1. The council shall remain in being for as long as may be necessary for the carrying out of paragraph 2 of this article, for the supervision of the liquidation of the buffer stock and any stocks held in accordance with article 39 and for the supervision of the due performance of conditions imposed under this Agreement by the council or under the Fifth Agreement; the council shall have such of the powers and functions conferred on it by this Agreement as may be necessary for the purpose. 2. On termination of this agreement: (a) The buffer stock shall be liquidated in accordance with the provisions of article 26; (b) The council shall assess the obligations into which it has entered in respect of its staff and shall, if necessary, take steps to ensure that, by means of a supplementary estimate to the administrative account raised in accordance with article 20, sufficient funds are made available to meet such obligations; (c ) After all liabilities incurred by the council, other than those relating to the buffer stock account, have been met, the remaining assets shall be disposed of in the manner laid down in this article; . . ."
As has already been mentioned, a Headquarters Agreement was executed by the United Kingdom pursuant to I.T.A.4. It continued in force for the purposes of I.T.A.5 and 6. Its purpose was recited as being that of defining "the status, privileges and immunities of the council." Article 2 provides:
"This agreement shall be interpreted in the light of the primary objective of enabling the council at its headquarters in the United Kingdom fully and efficiently to discharge its responsibilities and fulfil its purposes and functions."
Article 3 is entitled "Legal Personality" and provides:
"The council shall have legal personality. It shall in particular have the capacity to contract and to acquire and dispose of movable and immovable property and to institute legal proceedings."
Articles 4 and 5 provide for the inviolability of the council's archives and premises. Article 8 provides for its immunity from jurisdiction and is, so far as material, in the following terms:
"(1) The council shall have immunity from jurisdiction and execution except: (a) to the extent that the council shall have expressly waived such immunity in a particular case; . . . (c ) in respect of an enforcement of an arbitration award made under either article 23 or article 24. (2) The council's property and assets wherever situated shall be immune from any form of requisition, confiscation, expropriation, sequestration or acquisition. They shall also be immune from any form of administrative or provisional judicial constraint . . ."
The agreement goes on to provide for exemption from duties and taxes and for the privileges and immunities of officials and staff and the only
other articles which require mention in the context of these appeals are articles 23 and 24. Article 24 provides for submission to arbitration of disputes arising from non-contractual responsibilities and article 23 is in the following terms:
"Where the council enters into contracts (other than contracts concluded in accordance with staff regulations) with a person resident in the United Kingdom or a body incorporated or having its principal place of business in the United Kingdom and embodies the terms of the contract in a formal instrument, that instrument shall include an arbitration clause whereby any disputes arising out of the interpretation or execution of the contract may at the request of either party be submitted to private arbitration."
United Kingdom legislation
The establishment, towards the end of the Second World War and thereafter, of substantial numbers of international organisations to which the United Kingdom became a party and which were invested in international law with legal personality distinct from that of the constituent members necessitated the enactment of domestic legislation to regulate the immunities, privileges and capacities of such bodies. The Diplomatic Privileges (Extension) Act 1944 made provision for immunities and privileges scheduled to the Act and section 1(1) applied its provisions
"to any organisation declared by Order in Council to be an organisation of which His Majesty's Government in the United Kingdom and the government of one or more foreign sovereign powers are members."
Section 1(2)(a) empowered His Majesty, by Order in Council, to provide that any such organisation
"shall, to such extent as may be specified in the Order, have the immunities and privileges set out in Part I of the Schedule to this Act, and shall also have the legal capacities of a body corporate."
An amending Act in 1946 (the Diplomatic Privileges (Extension) Act 1946) conferred the same powers in relation to the United Nations. The power to confer immunities and privileges by Order in Council was somewhat curtailed by the Diplomatic Privileges (Extension) Act 1950 and the legislation was then consolidated in the International Organisations (Immunities and Privileges) Act 1950. This reproduced in substance the provisions of section 1(1) and (2)(a) of the Act of 1944 and was the Act in force at the date of I.T.A.1. The provision in that agreement that the council should have in every participating country "such legal capacity as may be necessary for the discharge of its functions under this agreement" was met by an Order in Council (the International Organisations (Immunities and Privileges of the International Tin Council) Order 1956 (S.I. 1956 No. 1214)) which provided that the council "shall also have the legal capacities of a body corporate." In 1968, the Act of 1950 was repealed and replaced by the International Organisations Act 1968, the long title of which described it as "An Act to make new provision . . . as to privileges, immunities
and facilities to be accorded in respect of certain international organisations . . ." Section 1(1) applied the Act, as in the previous legislation, to any organisation declared by Order in Council to be an organisation of which the United Kingdom, or Her Majesty's Government in the United Kingdom and one or more foreign sovereign powers or the government or governments of one or more such powers, are members. Section 1(2) provides:
"Subject to subsection (6) of this section, Her Majesty may by Order in Council made under this subsection specify an organisation to which this section applies and make any one or more of the following provisions in respect of the organisation so specified (in the following provisions of this section referred to as 'the organisation'), that is to say - (a) confer on the organisation the legal capacities of a body corporate; (b) provide that the organisation shall, to such extent as may be specified in the Order, have the privileges and immunities set out in Part I of Schedule I to this Act; . . ."
Subsection (6) imposes a limitation on the grant of privileges and immunities of no relevance in the context of these appeals. Section 3 empowers Her Majesty by Order in Council to make, in relation to the Commission of the European Communities, any such provision as could have been made under section 1(2) as if the Commission were an organisation to which that section applies. Section 10 provides that no recommendation shall be made to Her Majesty in Council to make an Order under the Act other than an Order under section 6 (which is irrelevant to the present appeals) unless a draft Order has been laid before Parliament and approved by a resolution of each House.
I.T.A.4, in contradistinction to its predecessors, provided in terms, in article 14, that the I.T.C. was to have legal personality and legal capacity in the same terms as article 16 of I.T.A.6. This provision and the provisions of the Headquarters Agreement were given effect to by the International Tin Council (Immunities and Privileges) Order 1972 (S.I. 1972 No. 120) made under the Act of 1968 which provided, in article 5, in the same terms as the previous Order in Council, simply that "The council shall have the legal capacities of a body corporate." Article 6(1) reflected the provisions of the Headquarters Agreement by providing that the council should have immunity from suit and legal process except:
"(a) to the extent that the council shall have expressly waived such immunity in a particular case; . . . (c ) in respect of the enforcement of an arbitration award made under article 23 or article 24 of the Headquarters Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the International Tin Council."
This Order continues to regulate the capacities, privileges and immunities of the I.T.C. under I.T.A.6.
The only other legislative provision which it is convenient to refer to at this stage is the State Immunity Act 1978, which confirms the common
law rule that a sovereign state is immune from the jurisdiction of the courts of the United Kingdom but establishes a number of important exceptions. For present purposes the relevant exception is that contained in section 3(1) which provides:
"A state is not immune as respects proceedings relating to - (a) a commercial transaction entered into by the state; or (b) an obligation of the state which by virtue of a contract (whether a commercial transaction or not) falls to be performed wholly or partly in the United Kingdom."
Section 9(1) provides:
"Where a state has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the state is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration."
So much for the conventional and legislative background and I turn to the history of the litigation giving rise to these appeals.
On 24 October 1985, when the I.T.C. announced that it was unable to meet its obligations, it had incurred debts running into many millions of pounds. Some arose out of contracts entered into with ring-dealing members of the London Metal Exchange ("the brokers") for the purchase or sale of tin, others out of loans made to the I.T.C. by various banks to enable it to conduct buffer stock operations. On 9 July 1986, one of the brokers, J. H. Rayner (Mincing Lane) Ltd., having obtained an arbitration award against the I.T.C. which remained unsatisfied, commenced proceedings in the Commercial Court for recovery of the amount of the award (some £16m.) against the Department of Trade and Industry (representing the United Kingdom) and the 23 other members of the I.T.C., including the Commission of the European Economic Community, representing the Community (the "E.E.C.").
On 12 December 1986, other brokers, Maclaine Watson, issued parallel proceedings in the Chancery Division against the Department of Trade and Industry alone ("the D.T.I."), representing the United Kingdom, claiming a sum of some £6m. awarded to them against the I.T.C. and for which they had obtained leave to enter judgment. On 9 December 1986, in the action against the I.T.C. on the award, they moved for the appointment of a receiver by way of equitable execution.
Also in December 1986, Arbuthnot Latham Bank Ltd. and five other banking organisations which had lent money to the I.T.C., each commenced separate proceedings ("the Six Banks actions") in the Commercial Court against the 24 members of I.T.A.6, claiming repayment of the sums due to them respectively from the I.T.C. These actions differed from the Rayner action in an important respect. Contrary to the provisions of article 23 of the Headquarters Agreement, none of the loan contracts, with one exception, contained an arbitration clause, so that the claim had to be based on a direct liability which was not capable of being pursued against the I.T.C. itself. The one
exception was the agreement with Kleinwort Benson, whose loan contract did contain an arbitration clause but in respect of which no arbitration proceedings had been prosecuted.
In the meantime, on 12 November 1986, a broking concern, Amalgamated Metal Trading Ltd., which had obtained an arbitration award in a sum of some £5m., petitioned to wind up the I.T.C. as an unregistered company. That petition was struck out by Millett J. on 22 January 1987 and on 3 February 1987 the petitioner and eight other brokers commenced an action ("the Multi-Brokers' action") in the Commercial Court directly against the 24 members of the I.T.C. and the I.T.C. itself basing themselves, as in the Rayner action, on arbitration awards.
The defendants in the Rayner action issued a summons under R.S.C., Ord. 12, r. 8 to set aside service and, so far as the D.T.I. is concerned, also under Ord. 18, r. 19 to strike out the points of claim. A date for the hearing having been fixed before Staughton J., application was made for similar summonses to be issued in the Six Banks action and the Multi-Brokers actions to be heard before Staughton J. at the same time. That application was acceded to but only on the footing that the issues to be dealt with were confined to those raised on the summonses in the Rayner action. An application to amend in order to widen those issues by raising also factual issues raised in the Six Banks and Multi-Brokers actions was granted by Staughton J. but his further decision to permit the scope of the issues to be addressed at the hearing to be widened by including those raised in the amendments was subsequently reversed by the Court of Appeal.
On 24 June 1987, Staughton J. set aside service on the member states of the I.T.C. and on the E.E.C. and struck out certain paragraphs of the points of claim as against the D.T.I. as disclosing no reasonable cause of action. Allegations not struck out related to claims in tort and to claims based upon an assertion that certain contracts had been entered into by the I.T.C. as agent for some or all of the member states with their express authority. The hearing before Staughton J. was not concerned with these allegations, which were made the subject matter of separate applications and they do not figure in the present appeals. Leave to appeal was granted to all the plaintiffs.
A summons to strike out was likewise issued in the Maclaine Watson action before Millett J. On 29 July 1987, Millett J. made an order striking out the statement of claim and dismissing the action with costs. Prior to this, on 13 May 1987, he had dismissed the application for the appointment of a receiver against the I.T.C. on the ground of non-justiciability.
Appeals against the judgment of Staughton J. and against Millett J.'s judgments in the Maclaine Watson action, in the receivership application and in the winding up petition, were heard together and dismissed by the Court of Appeal on 27 April 1988. From those dismissals (save for that in relation to the winding up petition, against which there is no further appeal) the appellants now appeal to this House.
Before addressing in detail the arguments advanced by the appellants, it is, I think, convenient to set out in outline the three principal submissions upon which the appellants' cases rest.
The primary submission is that, so far as English law is concerned, the I.T.C. is simply a collective trading name under which the members found it convenient to trade. It has no separate existence as a legal entity apart from its members and the buffer stock manager was, therefore, simply acting as the agent of the members who are thus jointly and severally liable for the obligations entered into in the name of the I.T.C. At the hearing before your Lordships, this has been referred to, for the sake of convenience, by the same description as that by which it was referred to in the Court of Appeal, that is to say, "submission A."
Should that submission be rejected, the appellants fall back on an alternative submission (submission B) that, even accepting that the I.T.C. enjoys a separate legal existence apart from its constituent members, its legal personality is such as to involve a concurrent secondary direct or guarantee liability on the members, jointly and severally, in respect of all the engagements of the I.T.C. This is supported in two ways, conveniently referred to as submission B(1) and submission B(2).
Submission B(1) looks entirely to English law and is itself put in two different ways. First, it is said that persons who band together as an organisation and trade in England in a collective name incur a direct joint and several liability to third parties which can be excluded only by incorporation. The Order in Council of 1972 confers legal capacities but it does not actually incorporate the I.T.C., even though it is accepted for the purposes of the submission that it confers legal personality. Accordingly, the argument runs, nothing has occurred to displace the basic starting position that the members of the organisation remain liable on the organisation's engagements, either primarily or secondarily. Secondly, and in any event, it is said that English law recognises as a jurisprudential possibility the existence of what Kerr L.J. in the Court of Appeal called, "mixed entities" (that is to say, entities whose engagements, notwithstanding their separate legal personality, involve a concurrent secondary liability of the members). It is then submitted that there can be deduced from the circumstances in which the Order in Council was made and from its terms a parliamentary intention that the Order should create a mixed entity of this type.
Submission B(2) which, although adopted by the other appellants, was advanced primarily on behalf of the banks, seeks to arrive at the same result by a different route. What is said that there is an established and recognised general principle of international law that when there is established by treaty an international organisation which has a separate legal persona in international law and which is contemplated as entering into engagements with third parties, then, in the absence of an express and clear provision in the treaty exonerating the member states from liability or limiting their liability, they are and remain, jointly and severally liable in international law by way of guarantee for the organisation's obligations to third parties. English private international
law, it is said, recognises that where a persona ficta constituted abroad enters into engagements subject to English law, an English court will attach to those engagements the same incidents as are attached thereto by the law of the place in which that persona is constituted. Thus, by analogy, the court will attach to the domestic engagements of an international organisation constituted by treaty the same incidents as are attached thereto in international law. It follows that since I.T.A.6, which constitutes the I.T.C., contains no limitation of liability of the member states, those states are secondarily liable in English law for the obligations of the I.T.C.
Submission C is alternative to and independent of submissions A and B and it proceeds on the postulate that the I.T.C. is a separate legal persona which is solely liable on contracts into which it enters unless it can be demonstrated that it also contracted on behalf of its members as undisclosed principals. The appellants contend that the constitution of the I.T.C. is such that there can be deduced from its terms a general authority in the I.T.C. to contract as agent for its members and each of them in the conduct of buffer stock operations.
It will be necessary to consider each of these submissions in a little detail, but before embarking upon this there is the preliminary question, which to some extent affects all three submissions, of how far (if at all) it is open to your Lordships to take into account the terms of I.T.A.6 and the Headquarters Agreement in determining the rights of the parties. The question of justiciability is not only relevant to submissions A and B(1) but lies at the very threshold of submissions B(2) and C and of the appeal in the receivership application. It is, therefore, convenient, I think, that some consideration should be given to it as this stage.
The principle of non-justiciability
There is, as indeed there can be, little contest between the parties as to the general principles upon which that which has been referred to as the doctrine of non-justiciability rests, though they approach it in rather different ways. The contest lies not so much as to the principle as to the area of its operation.
It is axiomatic that municipal courts have not and cannot have the competence to adjudicate upon or to enforce the rights arising out of transactions entered into by independent sovereign states between themselves on the plane of international law. That was firmly established by this House in Cook v. Sprigg  A.C. 572, 578, and was succinctly and convincingly expressed in the opinion of the Privy Council delivered by Lord Kingsdown in Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, 75:
"The transactions of independent states between each other are governed by other laws than those which municipal courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make."
On the domestic plane, the power of the Crown to conclude treaties with other sovereign states is an exercise of the Royal Prerogative, the validity of which cannot be challenged in municipal law: see Blackburn v. Attorney-General  1 W.L.R. 1037. The Sovereign acts
"throughout the making of the treaty and in relation to each and every of its stipulations in her sovereign character, and by her own inherent authority; and, as in making the treaty, so in performing the treaty, she is beyond the control of municipal law, and her acts are not to be examined in her own courts:" Rustomjee v. The Queen (1876) 2 Q.B.D. 69, 74, per Lord Coleridge C.J.
That is the first of the underlying principles. The second is that, as a matter of the constitutional law of the United Kingdom, the Royal Prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights upon individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self-executing. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation. So far as individuals are concerned, it is res inter alios acta from which they cannot derive rights and by which they cannot be deprived of rights or subjected to obligations; and it is outside the purview of the court not only because it is made in the conduct of foreign relations, which are a prerogative of the Crown, but also because, as a source of rights and obligations, it is irrelevant.
These propositions do not, however, involve as a corollary that the court must never look at or construe a treaty. Where, for instance, a treaty is directly incorporated into English law by Act of the legislature, its terms become subject to the interpretative jurisdiction of the court in the same way as any other Act of the legislature. Fothergill v. Monarch Airlines Ltd.  A.C. 251 is a recent example. Again, it is well established that where a statute is enacted in order to give effect to the United Kingdom's obligations under a treaty, the terms of the treaty may have to be considered and, if necessary, construed in order to resolve any ambiguity or obscurity as to the meaning or scope of the statute. Clearly, also, where parties have entered into a domestic contract in which they have chosen to incorporate the terms of the treaty, the court may be called upon to interpret the treaty for the purposes of ascertaining the rights and obligations of the parties under their contract: see, for instance, Philippson v. Imperial Airways Ltd.  A.C. 332.
Further cases in which the court may not only be empowered but required to adjudicate upon the meaning or scope of the terms of an international treaty arise where domestic legislation, although not incorporating the treaty, nevertheless requires, either expressly or by necessary implication, resort to be had to its terms for the purpose of construing the legislation (as in Zoernsch v. Waldock  1 W.L.R. 675) or the very rare case in which the exercise of the Royal Prerogative directly effects an extension or contraction of the jurisdiction without the constitutional need for internal legislation, as in Post Office v. Estuary Radio Ltd.  2 Q.B. 740.
It must be borne in mind, furthermore, that the conclusion of an international treaty and its terms are as much matters of fact as any other fact. That a treaty may be referred to where it is necessary to do
so as part of the factual background against which a particular issue arises may seem a statement of the obvious. But it is, I think, necessary to stress that the purpose for which such reference can legitimately be made is purely an evidential one. Which states have become parties to a treaty and when and what the terms of the treaty are are questions of fact. The legal results which flow from it in international law, whether between the parties inter se or between the parties or any of them and outsiders are not and they are not justiciable by municipal courts.
How this very limited competence of the court to take cognisance of and to construe treaty obligations entered into by the United Kingdom is to be applied in the context of the issues raised by these appeals is perhaps best dealt with as each separate issue falls to be considered. But generally and by way of introduction it can be said that there are two fundamental questions which require to be answered. These are:
(1) On the true construction of the Order in Council of 1972 is the I.T.C. as a matter of English domestic law invested with a separate personality distinct from its constituent members?
(2) If it is, to what extent (if at all) does liability, whether primary or secondary, for the I.T.C.'s obligations attached to its constituent members?
In relation to the first question, the sole issue is the correct construction of the Order in Council and the principle of non-justiciability becomes relevant only in relation to the extent to which it is either necessary or convenient to refer to I.T.A.6 and the Headquarters Agreement as aids to construction. In relation to the second, the competence of your Lordships to consider and construe the treaties lies at the very threshold of the bank's case under submission B and of submission C.
This has already been stated in outline. More specifically it reduces to four propositions, viz.:
(1) Persons who join together in trade in the United Kingdom are, prima facie, jointly and severally liable for the debts which they incur and they cannot exclude this liability by agreement between themselves. (2) States engaging in collective trading are no different from other traders. (3) Their prima facie liability can be displaced only by incorporation (either by statute or by charter), by express statutory provision or by demonstrating the creation of an association under foreign law having a status which excludes liability of the membership. (4) The Order in Council does not incorporate the I.T.C. but merely confers capacities and immunities.
Thus the contention is advanced that I.T.C. is no more than a trading name under which the member states trade in their own right so that they incur direct and primary liability for the debts and obligations incurred in the name of the I.T.C.
It is common ground that the status of the I.T.C. in the United Kingdom depends upon the true construction and the effect of the Order in Council of 1972 and it is also common ground that that Order did not create the I.T.C. as a corporation in the technical sense of that term. The contest is as to whether it nevertheless created what, for want of a
compendious expression, may be described as a persona ficta having a legal personality apart from its members.
Article 5 of the Order of 1972 provides in terms that the I.T.C. "shall have the legal capacities of a body corporate" and, speaking for myself and without resort to any extraneous aids, I find difficulty in seeing what possible purpose Parliament could be thought to be serving by conferring in terms the widest capacities available to any artificial legal persona if there was to be no single legal persona capable of exercising them. I am, therefore, in agreement with my noble and learned friend, Lord Templeman, that purely as a matter of construction of the Order standing alone, submission A must be rejected.
But if there is any equivocation or obscurity in the terms of the Order, it is, as it seems to me, entirely dispelled when reference is made, as indeed the Order in Council invites if it does not compel, to the terms of I.T.A.6 and the Headquarters Agreement. The Order in Council was brought into being to give effect to the United Kingdom's treaty obligations and whatever else may be unclear in relation to the application of the principle of non-justiciability of an international treaty, it is entirely clear and it is not disputed that it may be referred to to explain any obscurity in domestic legislation intended to implement the treaty obligations: see Salomon v. Commissions of Customs and Excise  2 Q.B. 116. The status of the I.T.C. in international law is clearly established by article 16(1) of I.T.A.6 (reproducing the substance of the earlier corresponding provision in article 14 of I.T.A.4) which provides: "The council shall have legal personality" and goes on in article 16(4) to provide that (inter alia) the status of the I.T.C. in the territory of the host government shall be governed by a Headquarters Agreement between that government and the council. These provisions were given effect to in the Headquarters Agreement article 3 of which reproduced article 16(1) of I.T.A.6. It is relevant to note that in this article that which is to have legal personality is also to have "in particular" the capacity to contract, to acquire and dispose of movable and immovable property and to institute legal proceedings, which are thus described merely as facets of legal personality. Such was the obligation assumed by Her Majesty's Government and it was to give effect to this obligation that the Order in Council was made. To construe it so as to produce the effect that no legal personality was conferred has the result that the United Kingdom is and has ever since 1972 been in breach of its treaty obligations. That, of course, is not an impossible conclusion if the court is compulsively driven to reach it, but it is not one which should be embraced with any enthusiasm if a contrary construction is open.
Your Lordships have been presented with a lengthy and ingenious series of arguments in support of the appellants' central and primary submission that all that the legislature was seeking to do by the Order in Council was to provide a convenient framework within which the member states could trade in partnership under the collective name of the I.T.C. I hope that I may be forgiven if I rehearse them only in summary form, for with deference to the labour and research which went into their formulation and the earnestness and ability with which they were pursued, I was, for myself, left in the end in no doubt at all that both Millett J. and Staughton
J. at first instance, and all three members of the Court of Appeal, were entirely correct in concluding that the effect of the grant of the legal capacities of a body corporate was that, in United Kingdom law, the I.T.C., though not formally incorporated, was invested with a legal personality distinct from its members, with the consequence that, when it entered into engagements, it and not the membership was the contracting party.
The appellants' primary argument is based on article 2 of the Headquarters Agreement which, it is said, indicates the exclusive purpose of the Order in Council. This, it will be recalled, designates the "primary objective" of the agreement as that of "enabling the council . . . fully and efficiently to discharge its responsibilities and fulfil its purposes and functions." For this purpose, it is argued, it was no doubt necessary to provide a convenient method of, for instance, engaging in legal proceedings, but this could conveniently be done by conferring on the unincorporated members in association certain capacities so as to enable them to function in the name of the I.T.C. It was not necessary to invest the I.T.C. with a separate legal persona. But there are a number of difficulties in the way of the suggestion that article 5 did no more than confer capacities on the members. In the first place, the members were sovereign states recognised in English law and having already capacities as such, so that an Order in Council which conferred on them capacities (for instance, to contract, to hold property or to engage in litigation) served no useful purpose. That objection is not answered by saying that it conferred capacities to act in a collective name. That simply does not fit with the wording of article 5, which does not purport to confer a capacity on member states to act in a collective name, but confers capacities directly on the recognised international organisation itself. More importantly, such a construction necessarily involves the conclusion that, in making the Order in Council, Parliament was intending to produce a result which did not accord with its treaty obligations to confer legal personality on the organisation as such. It is no answer to this to say that "legal personality" in the Headquarters Agreement means legal personality in international law (which had already been conferred by article 14 of I.T.A.4) for the purpose of the Headquarters Agreement was to regulate the status of the I.T.C. in the territory of the host state, that is, as a matter of the domestic law of that state. Nor is it an answer to say - as is the fact - that the earlier Orders in Council made under the Act of 1950 to give effect to I.T.A.1, 2 and 3, used precisely the same formula even though there was no express requirement in those agreements that the I.T.C. should have legal personality and no requirement of a Headquarters Agreement. The formula was, it was argued, a familiar one, sanctioned by a series of statutes prior to 1968 and nothing can be deduced from its use to give effect to this particular treaty. That the formula is one which is sanctioned by the relevant statutes for use, as it were, "off the shelf" in appropriate cases, is indisputable, but the significance lies in the fact that it is one which has been devised and used over a number of years, without amendment to the statutory provisions, to provide not only for those cases where treaties do not provide in terms for particular international organisations to enjoy legal personality but also for a substantial number of treaties that do so provide. The legislative history
is admirably set out in the judgments of Kerr and Ralph Gibson L.JJ. in the Court of Appeal, and I do not propose to take time by repeating it. Perhaps, however, in ascertaining Parliament's intention in devising this formula, the most significant feature is that, although initially the Act of 1944 was passed at a time when there were no relevant treaties in which the United Kingdom came under an express obligation to confer legal personality, when it came to amend the Act in order to provide for the privileges and immunities in domestic law of the United Nations (the Convention governing which provided in terms that the United Nations should possess "juridical personality"), Parliament used exactly the same formula. It is quite clear from this that Parliament regarded the formula as sufficient to enable the Crown to confer legal personality on international organisations.
Then, it is said, that in according this effect to the Order in Council, the courts below and Millett J. in particular, have confused status with capacity. Your Lordships' attention was directed to a number of jurisprudential works in which the distinction is drawn and explained. Speaking again entirely for myself, it was not for lack of interest that I did not find this discursus helpful. It was unhelpful not because the distinction does not exist as a matter of jurisprudential theory and analysis. Clearly it does. A minor has status but he lacks certain capacities. It was unhelpful simply because it did not meet the point which was being made by the respondents that the undoubted existence of capacities may lead and, in some circumstances, must lead to a necessary inference of the status of the person upon whom they are conferred. Whether that is expressed, as Millett J. expressed it, by saying that the status is the sum total of the capacities or that the status may be deduced from the capacities, is really a question of purely academic interest and does not affect the ultimate result.
In this context, reliance was placed by the appellants upon the passages in the speech of Lord MacDermott in Bonsor v. Musicians' Union  A.C. 104, a case in which this House, by a majority, concluded that a trade union did not, by virtue of the Trades Unions Act 1871, constitute a legal entity apart from its members despite being invested by the legislature with some of the characteristics of the legal person. But, as was pointed out by Millett J. in his judgment in the Maclaine Watson action, the powers and capacities conferred on a trade union by the Act of 1871 were extremely limited and, for my part, I do not think that any useful lesson can be learned from Bonsor's case in the context of a case where the legislature has conferred upon a body the fullest possible legal capacities, including the capacity to contract in its own right as a principal and the capacity to hold a legal estate in land. A mere trading name cannot hold a legal estate. Yet the holding of a legal estate in land is undoubtedly one of the capacities of a body corporate and for my part I think that the status of a legal personality, separate from the members, is a necessary corollary of the unlimited capacities which are conferred by the Order.
"A body which, as distinct from the natural persons composing it, can have rights and be subject to duties and can own property must be regarded as having a legal personality, whether it is or is not called a corporation:" Chaff and Hay Acquisition Committee v. J. A. Hemphill
But, it is asked forensically, if Parliament intended to confer a legal personality on international organisations, why did it refrain from conferring on the Crown the power to invoke the well-established method of incorporation? Reliance is placed upon the judgment of Atkin L.J. in Mackenzie-Kennedy v. Air Council  2 K.B. 517, where the Court of Appeal declined to infer incorporation from the powers and capacities conferred by statute on the Air Council. Atkin L.J. observed, at p. 534:
"If it had been intended to incorporate the Air Council one would have expected the well known precedents to be followed with express words of incorporation, and express definition of the purposes for which the department was incorporated."
For my part, I cannot find any useful parallel between this case and the present. To begin with, Atkin L.J.'s conclusion was expressed as a provisional view only, reached without the benefit of full argument and in the context of the purely domestic body in respect of which there was no discernible policy reason why, if it wished to confer legal personality, Parliament should not have adopted the formula of expressing corporation which it had already adopted in the case of other departments of state to which Atkin L.J. referred. Here, by contrast, there was not only what Kerr L.J., in the course of his judgment ( Ch. 72, 169e) referred to as a "consistent parallelism" between treaties creating international organisations on the one hand and the consequential domestic statutes and Orders in Council on the other. But there were also, as he remarked, good reasons why Parliament should not have thought it right to resort to the expedient of creating a domestic corporation as opposed merely to the conferment of separate legal personality. These organisations are organisations of sovereign states and one can readily understand a reluctance to submit the internal workings of such a body to the domestic jurisdiction of one of the member states and to subject the body to a domestic winding up jurisdiction.
All other considerations apart, the entire framework of the Order in Council, read as a whole, militates against the conclusion that the I.T.C. was to be regarded in law simply as an association of the member states having no separate legal existence. The difficulties in the way of such a conclusion become particularly apparent when reference is made to article 6 and consideration is given to the results if the appellants are correct in their contentions. Article 4 contains the declaration (rendered necessary by section 1(1) of the Act of 1968) that the I.T.C. is an organisation "of which Her Majesty's Government in the United Kingdom and the governments of foreign sovereign powers are members," so that right from the outset a distinction is made between the organisation and its members. Article 5 confers the capacities of a body corporate on "the council," not on the members, while article 6 likewise confers immunity from suit and legal process not on the members but on the council. If the immunity is to be waived it is to be waived by the council not by the members. This is to be contrasted with article 14 which deals with the immunity of representatives of "the member countries of the council and of inter-governmental organisations participating in the International Tin Agreement" and provides
for the immunity to be waived by "the member country or by the inter-government organisation whom they represent." That apart, article 6 has to be looked at in the context of the law as it stood when the Order in Council was made. The modification to the doctrine of sovereign immunity contained in the Act of 1978 had not yet been introduced, so that the member states enjoyed at that time complete immunity from legal process. Thus, if the appellants are right, the effect of article 6(1), qualifying (in sub-paragraph (c )) the immunity in respect of an arbitration award, was to diminish the sovereign immunity of member states in relation to contracts made by them in the name of the I.T.C. whilst, at the same time, it conferred on the United Kingdom an immunity in relation to such contracts which, having regard to the provisions of the Crown Proceedings Act 1947, it did not previously enjoy. That Parliament could have intended to bring about such consequences without any express words and without any apparent necessity to do so transcends the bounds of credibility.
For all these reasons, I conclude that the effect of the Order in Council was to create the I.T.C. (which, as an international legal persona, had no status under the laws of the United Kingdom) a legal person in its own right, independent of its members. In engaging in the contracts on which the claims of the brokers and the banks are based, it was the contracting party. Its members were not. It was to the I.T.C. and not to its members that credit was extended and it is elementary that the only persons liable and entitled under a contract, in the absence of trust or agency, are the parties to the contract. The decision of this House in Salomon v. A. Salomon and Co. Ltd.  A.C. 22 is as much the law today as it was in 1896. I am left in no doubt, therefore, that submission A was rightly rejected in the courts below and that if a contractual claim against the member states is to be established, it has to be found either by postulating a concurrent primary or secondary liability either arising by independent contract (or possibly as a matter of law) or through the doctrine of agency.
The appellant's submissions under this head accept that the Order in Council created the I.T.C. as an independent legal persona but go on to assert that the legal persona is one which, as a matter of law, is of such a nature that, in entering into engagements, it imposes liability, whether primary or secondary, on its constituent members or, alternatively, does not exclude such liability. Taking the latter of these alternatives first, the argument starts from the same initial proposition as submission A, namely, that persons (including states) engaging in activities in the nature of trade in the United Kingdom in association are liable jointly and severally for the debts incurred in the name of the association. Granted, it is said, that the I.T.C. was invested with legal personality, it was not a legal personality of a type, such as a company incorporated under the Companies Acts, which excludes the liability of the constituent members. The object of conferring personality was merely to enable the I.T.C. to carry out its functions and it was unnecessary for this purpose to exclude the liability attaching to the member states in engaging in business transactions in association. Accordingly, it is argued, the mere creation of a legal personality without incorporation does not displace the prima facie liability which arises from
the engagement of member states collectively in transactions in the nature of trade.
This argument, as Mr. Pollock has pointed out, falls down at two points. In the first place, the proposition from which it starts, that an activity in the nature of trade engaged in in the name of an unincorporated association results in the joint and several liability of all the members of the association, is not only unsupported by authority but is demonstrably inaccurate as a general proposition. That, of course, may be the result if a partnership is established but the result then flows from the equitable rule that each partner is the agent for the other partners in matters within the scope of the partnership business. But, secondly and more importantly, it fails because it assumes what it seeks to demonstrate, namely that there is an existing state of liability and that the only question to be answered is whether that is affected by the creation of the legal personality brought into being by the Order in Council. That is simply not the case. The I.T.C. as a matter of English law owes its existence to the Order in Council. That is what created the I.T.C. in domestic law and it was the I.T.C. which entered into the relevant contracts. It is simply a matter of identifying the contracting party and it is idle to inquire what the position would have been if the member states had chosen to engage in activities as an unincorporated association and otherwise than through the I.T.C. They did not do so or, to be more accurate, it is certainly not demonstrated that they ever did at any time material to these appeals.
It is argued, however, that there is no necessary reason why, in law, there should not be created a legal entity one of the incidents of which is that there is imposed on its members a secondary liability for its obligations. Such bodies exist in the law of the United Kingdom and the example is cited of the Scottish partnership which, both at common law and by statute (the Partnership Act 1890, section 4(2)), enjoys a legal personality as a firm, apart from the partners, who nevertheless remain jointly and severally liable for the firm's debts. Such bodies did, indeed, once exist in English law for section 25 of the Joint Stock Companies Act 1844 expressly provided for the corporators to be liable for the company's debts. There is no reason, therefore, why, if it chose to do so, Parliament should not create such a "mixed entity."
That, of course, is irrefutable, but the question is, did it do so by article 5 of the Order in Council? Various grounds are advanced for suggesting that it did. First, it is said that the Act of 1968 is a United Kingdom statute and positing that section 1 of the Act was intended to enable the Crown to confer legal personality, it should not be assumed that Parliament necessarily had in mind a legal personality analogous to that of an English body corporate. There is, it is said, a presumption against an interpretation which would confer on the members an immunity from liability of the legal entity without safeguards for the creditors. Thus, it is argued, the likelihood is that Parliament, in enacting section 1 of the Act of 1968, had in mind the creation of an entity analogous to a Scottish partnership, since the object of the section was purely the functional one of enabling international organisations to function in the United Kingdom. An alternative route to the same result is suggested by reference to the presumed intention of the member states in entering into I.T.A.6. The
concept of a legal entity accompanied by a secondary liability in the natural persons who compose it is one which is well known in continental systems of law - for instance, the société en nom collectif in the law of France. In providing in I.T.A.6 that the I.T.C. should have legal personality, it is, so it is said, "probable" that the members were contemplating a legal personality of this type. In entering into the Headquarters Agreement the parties contemplated the creation of a legal personality of the same type as that contemplated in I.T.A.6 and, since the Order in Council was made to give effect to the Headquarters Agreement, there must be attributed to Parliament the intention to provide for that type of personality.
My Lords, neither of these arguments appears to me to be in the least tenable. Once given the existence of the I.T.C. as a separate legal person and given that it is that legal person which was the contracting party in the transactions upon which the appellants claim - the postulate from which these submissions start - there is no room for any further inquiry as to what type of legal person the contracting party is. The persons who can enforce contracts and the persons against whom they can be enforced in English law are the parties to the contract and in identifying the parties to the contract there are no gradations of legal personality. The I.T.C. as the contracting party is the only person liable on the contract, unless there can be found some positive provision in the law imposing liability on somebody else. The presumption upon which the appellants rely against an interpretation which does not provide for liability of the members is entirely unsupported by authority. Indeed, the very analogy relied upon in support of the submission - that is to say, section 25 of the Act of 1844 - in fact demonstrates the fallacy of it. As a legal personality the joint stock company created under the Act was the sole contracting party in the engagements into which it entered and it was necessary for the legislature to impose liability on the corporators by express statutory provision. By the Order in Council, Parliament conferred on the I.T.C. the capacities of a body corporate, not the capacities of a Scottish partnership. One searches in vain for anything in the Order which would even suggest the imposition of liability for the I.T.C.'s engagements on the member states and, speaking for myself, I find it fanciful that such want can be supplied by reference to the "probabilities" of the members' intentions in entering into I.T.A.6 and the United Kingdom's intentions in entering into the Headquarters Agreement. Quite apart from the fact that the argument involves directly founding individual rights in domestic law upon the intentions of sovereign states in entering into the treaty and so infringes the principle of non-justiciability, the appellants were unable to point to any provision of I.T.A.6 or of the Headquarters Agreement which remotely suggested any such intention and, indeed, there are numerous indications pointing to an entirely opposite conclusion.
Submission B(1) has met with universal rejection both at first instance and in the Court of Appeal. I would likewise reject it.
Submission B(2), which is the primary submission of Mr. Burnton on behalf of the banks but which was adopted and expounded also as a secondary submission by Mr. Aikens for Maclaine Watson, seeks to arrive
at the same result but by the route of public international law. The starting point is the principle established in English private international law that the liability of members of a foreign corporate body for the debts of the corporation is to be determined by the law of place of incorporation. The principle is encapsulated in rule 174 of Dicey & Morris, The Conflict of Laws, 11th ed. (1987), vol. 2, p. 1134:
"(1) The capacity of a corporation to enter into any legal transaction is governed both by the constitution of the corporation and by the law of the country which governs the transaction in question. (2) All matters concerning the constitution of a corporation are governed by the law of the place of incorporation."
The "matters concerning the constitution of a corporation" extend, according to the comment which follows (p. 1136), to an "an individual member's liability for the debts or engagements of the corporation."
The next step in the argument is the submission that the Order in Council of 1972, by articles 4 and 5, did no more than recognise the existing international entity known as the I.T.C. and confer upon it the capacities and domestic status of a legal persona. It does not purport to define the attributes of the personality thus conferred and for those one has to look, in accordance with rule 174 already referred to, to the law of the I.T.C.'s creation, i.e. international law. That, it is submitted, is a legitimate and, indeed, a necessary exercise for a municipal court to undertake and an examination of the provisions of I.T.A.6, when considered in the light of international law, demonstrates that the I.T.C. is a body so constituted as to involve a direct liability of its members (either concurrent or secondary) for the I.T.C.'s debts to third parties.
These submissions were rejected by Kerr L.J. and Ralph Gibson L.J. in the Court of Appeal, albeit on different grounds, but were accepted by Nourse L.J. who would have held the respondents liable in the Maclaine Watson, Rayner and Multi-Brokers' actions. They have been exhaustively and attractively put by Mr. Burnton and Mr. Aikens and appeared to me initially to offer not only the only possible but also a sustainable route to the appellants' goal. In the end, however, I have been persuaded that, however attractive, they do not bear close examination and cannot succeed.
The authorities cited in Dicey & Morris, The Conflict of Laws, for the starting proposition on which the argument is founded are, as Kerr L.J. remarked, somewhat exiguous but the proposition is, I think, a logical one and can be accepted. At any rate, for present purposes, it can be assumed to be correct. The first difficulty, however, is in applying it to a case where the body concerned is not one which owes its existence to a foreign system of law but one which is created by the United Kingdom legislation. No doubt, for instance, a Jordanian company whose constitution provides for the personal liability of its general partners will, by its contracts in England, engage the liability of those persons if it chooses to trade here: see Johnson Matthey & Wallace Ltd. v. Alloush (1984) 135 N.L.J. 1012. But the same result would not, of course, follow if, instead of trading here as a Jordanian company it established a limited company under the Companies Acts and traded through the medium of that company. There
is then no room for looking at the constitution of the foreign entity and one is concerned only with the liabilities incurred by the entity which is created under English law.
That is the initial difficulty. Let it be assumed, for the moment, that the international entity known as the I.T.C. is, by the treaty, one for the engagements of which the member states become liable in international law, that entity is not the entity which entered into the contract relevant to these appeals. Those contracts were effected by the separate persona ficta which was created by the Order in Council. The appellants seek to overcome this difficulty by the submission that all that the Order in Council does is to recognise an entity which has already been created on the plane of international law by I.T.A.6 and to confer on it the capacities of a corporation. That, it is said, tells us nothing about the nature of the body and the liability of its members. For that one has to go back to the instrument of creation of the I.T.C. in international law and, when one does, one finds that the constitution of the I.T.C. as an international body is such as to engage the liability of the member states. Accordingly, that constitutional consequence is imported into English law by the principle of private international law enshrined in rule 174 of Dicey & Morris, The Conflict of Laws.
Speaking for myself, I have not felt able to accept even the initial step of this submission. Whilst it is, of course, not inaccurate to describe article 4 of the Order as one which "recognises" the I.T.C. as an international organisation, such "recognition" is of no consequence in domestic law unless and until it is accompanied by the creation of a legal persona. Without the Order in Council the I.T.C. had no legal existence in the law of the United Kingdom and no significance save as the name of an international body created by a treaty between sovereign states which was not justiciable by municipal courts. What brought it into being in English law was the Order in Council and it is the Order in Council, a purely domestic measure, in which the constitution of the legal persona is to be found and in which there has to be sought the liability of the members which the appellants seek to establish, for that is the act of the I.T.C.'s creation in the United Kingdom.
But even if this can be surmounted, there is, in my judgment, an even more compelling reason why the submission cannot succeed. Whether it is said that Parliament, in creating the legal persona of the I.T.C. by the Order in Council intended to create, on the domestic plane, a legal persona of the same type and having the same attributes in all respects as the legal persona created in international law, or whether it is said, as the appellants argue, that Parliament, in conferring capacities on a domestic legal persona, merely recognised and received into English law the international persona brought into existence by the treaty made between sovereign states, the result is the same, namely, that the rights and liabilities arising as a matter of English law in and against the member states are founded, created and regulated in and can be ascertained only by reference to I.T.A.6.
It is at this point that the members of the Court of Appeal diverged, Kerr L.J. and Nourse L.J. taking the view that justice and good sense
dictated a reference to the treaty and that the principle of non-justiciability must give way, Ralph Gibson L.J. holding (as Staughton J. had held in the court below) that such a reference was a direct infringement of the principle and was impermissible. For my part, I am persuaded that Ralph Gibson L.J. and Staughton J. were correct.
As previously mentioned, the consequence in English law of the creation of an artificial person, separate from the members who compose it, is that that artificial person alone is answerable for the debts which it incurs in its own name and for its own benefit. Agency apart, there is nothing in English law which imposes liability on the members. If the member states and the Crown in right of the United Kingdom are to be made liable on the engagements into which the I.T.C. has entered, that liability arises solely from the provisions of I.T.A.6 as it falls to be construed in international law, so that the English private law rights and obligations of the creditors and the member states will be directly altered and new rights and obligations not otherwise existing created by the provisions of an international treaty which have never been incorporated into English law.
Both Kerr L.J. and Nourse L.J. felt able to contemplate the derivation of rights and the imposition of obligations in this way because of internal references in the Order in Council, although they relied upon different provisions. Nourse L.J. discerned in article 4, which recites simply that the I.T.C. is an international organisation, a mandatory requirement to consider the nature of the I.T.C. in international law and thus, in effect, the incorporation of I.T.A.6 into English law. Kerr L.J., by contrast, deduced from the express references of the I.T.A. in articles 2 and 14 (which refer respectively to the "official activities . . . undertaken pursuant to" I.T.A.4 and to membership of inter-governmental organisations under article 50 of that agreement) and from the express references to the Headquarters Agreement in articles 1 and 6(c ) that this was an unprecedented hybrid situation between an unincorporated treaty and an expressly incorporated treaty which justified a departure from the principle of non-justiciability. For my part, I have not felt able to accept either approach. Article 4 imposes no necessary or mandatory requirement to jettison the general rule of non-justiciability of an unincorporated treaty and to consider the nature of the I.T.C. in international law. It is merely the formal declaration rendered necessary by section 1(1) of the Act of 1968 as the condition precedent to the making of the provisions envisaged in section 1(2) and it entails no more than a recognition that there is an international organisation, created by treaty, of which the United Kingdom is a member. As regards the references to the treaty provisions, these are made for the very limited purposes of defining the official activities of the I.T.C. and the inter-governmental organisations whose representatives are qualified for the immunities conferred by the Order. It cannot be deduced from this that Parliament was opening the door for the reception into English law of all the terms of the treaty and the creation, sub silentio, of rights and duties not grounded upon domestic law but created solely by the treaty provisions.
It is argued, however, that if one supposes, for example, that I.T.A.6 contained an express declaration that the member states agreed to underwrite all the liabilities of the I.T.C., it would be absurd that no cognisance of such a provision should be taken by a domestic court. For my part, I do not think so and, indeed, this is an excellent example of the operation of the non-justiciability principle. If the treaty contained such a provision and Parliament had not seen fit to incorporate it into municipal law by appropriate legislation, it would not be for the courts to supply what Parliament had omitted and thus to confer on the Crown a power to alter the law without the intervention of the legislature. The remedy, if there be one, lies in international law, not in the domestic courts.
It is said that it is illogical to permit reference to the terms of the treaty in order to resolve an ambiguity in domestic legislation passed to give effect to it but to deny it for the purpose of ascertaining the nature in international law of the body to which the legislation relates. I do not in fact think that there is any ambiguity in the legislation but, in any event, there is a world of difference between seeking to construe what the legislature has said and seeking to supply provisions of which the legislation contains not the slightest hint on the basis of a preconceived notion that such rights "ought" to be there.
A third avenue of approach to the appellants' objective is the suggestion that international law is "part of English law:" see Triquet v. Bath (1764) 3 Burr. 1478, per Lord Mansfield C.J.; Trendtex Trading Corporation v. Central Bank of Nigeria  Q.B. 529, 554, per Lord Denning M.R. It is contended that there is a rule of international law that where sovereign states by treaty bring into being an international organisation which is intended to engage in commercial transactions, the member states are liable, secondarily, for the organisation's debts to third parties (whether states or individuals) unless (a) the treaty expressly excludes such liability and (b) the exclusion is brought to the notice of third parties. Now assuming that such a rule could be established, I can see that it might be said that it forms part of English law and that reference to the treaty would not be precluded by the non-justiciability rule inasmuch as such reference would be solely for the purpose of seeing whether it contained an express exclusion of liability and thus of determining whether the rule - on this hypothesis now part of domestic law - applies. Such an argument cannot run, nor indeed has it, I think, been advanced in precisely these terms. If such a rule exists, it is at highest a rule of construction, and however the matter is looked at, the question of liability or no liability stems from an unincorporated treaty which, without legislation, can neither create nor destroy rights under domestic law.
I accordingly concur in the reasoning of Ralph Gibson L.J. and would hold that submission B(2) falls at the first hurdle. But even if this were wrong, I am clearly of opinion that the majority of the Court of Appeal were right to reject it for the other reasons which they gave.
First and foremost, the "authorities" to which your Lordships were referred, which consisted in the main of an immense body of writings of distinguished international jurists, totally failed to establish any generally
accepted rule of the nature contended for. Such writings as tended to support the supposed rule were in publications taking place since the affairs of the I.T.C. came before the courts in 1986 and express simply the views of particular jurists about what rule of international law ought to be accepted. They were, in any event, unclear as to whether the liability suggested was primary or secondary, whether it was joint or several, and whether it was to be contributed to equally or in some other proportions. It was indeed submitted that it was not only open to your Lordships but was your Lordships' duty to decide these points as, indeed, Nourse L.J. had opined in the Court of Appeal. For my part, I cannot accept this. A rule of international law becomes a rule - whether accepted into domestic law or not - only when it is certain and is accepted generally by the body of civilised nations; and it is for those who assert the rule to demonstrate it, if necessary before the International Court of Justice. It is certainly not for a domestic tribunal in effect to legislate a rule into existence for the purposes of domestic law and on the basis of material that is wholly indeterminate.
In an endeavour to establish acceptance of the supposed rule, attention was drawn to some 16 treaties establishing international organisations which contained provisions expressly excluding liability on the part of the members, but there was a very large number of similar treaties which did not and the Court of Appeal found it impossible to make any useful deduction from them. So do I.
Equally - although for the reasons given I do not think that the question arises - I have been unable to accept the suggestion that there can be found in the terms of the treaty itself indications of an intention that the member states should assume liability for the I.T.C. debts. Indeed, such indications as there are seem to me to point in the contrary direction and to indicate that any liability assumed was merely to the I.T.C. itself and existed only to the extent prescribed. In relation to the buffer stock, the assumption is throughout that any commitments will be met out of cash or sales of tin (see particularly article 26) whilst articles 60 and 21 (read in conjunction with the definition of "government guarantees/government undertakings" in article 2) are concerned with defining and limiting the obligations of the member states to the I.T.C. itself. For all these reasons, I am left in no doubt that submission B(2) must be rejected.
This submission, which was ably advanced by Mr. Sumption on behalf of the Multi-Brokers, relies upon the provisions of I.T.A.6 as establishing that, as a matter of the constitution of the I.T.C., it acted and was so constructed as to act as the agent of the member states as undisclosed principals. This has been referred to as "constitutional agency" and it does not rely upon the proof of any facts as to an authority expressly conferred by the members upon the buffer stock manager. There are allegations in the proceedings of such an express authority but they are not the subject matter of the striking out applications from which these appeals arise and your Lordships are not concerned with them. The distinction is, however, important because it
has, I think, a bearing on the application of the non-justiciability principle which constitutes the first hurdle that Mr. Sumption has to surmount. As has already been mentioned, the existence and terms of the treaty are matters of fact and I can well understand that if there be a contest as to whether A, B and C have expressly authorised D to act as their agent, the fact that, in a contract to which D was not a party, A, B and C had agreed that they would so employ him might well be powerful evidence in support of an allegation that that is precisely what they did. What is said - and as I read their judgments both Kerr L.J. and Ralph Gibson L.J. were prepared to entertain the submission on this basis - is that the existence of an authority constituting the legal relationship of principal and agent is a matter of fact. If such a relationship exists, then it gives rise to certain justiciable consequences in domestic law and it is therefore permissible, without infringing the principle of non-justiciability, to have regard to the terms of I.T.A.6 in order to see whether, as a matter of fact, the legal relationship existed. In the end, the answer to the question does not, in my opinion, matter so far as concerns the result of these appeals, because I am left in no doubt at all that the agency submission fails on other grounds which are fully dealt with in the judgments under appeal. I have, however, found myself unable, with deference, to concur in the reasoning of the Court of Appeal in relation to this issue. The justiciable issue of the consequences in domestic law of the creation of the relationship of agency between the member states and the I.T.C. arises and arises only if there is first determined as a matter of law what are the rights between the member states and the I.T.C. The mere fact that the respondents are members of the I.T.C. and that the I.T.C. has entered into engagements creates of itself no rights against the members in creditors of the I.T.C. The rights of creditors against the members, if any, depend solely on the creation between the members and the I.T.C. of the rights and duties which, in domestic law, are created by the authority which, as a matter of law, is conferred on the I.T.C. Now whether one says that the rights and duties arising from that relationship arise from a contract stricto sensu between principal and agent or whether one treats them as arising by implication of law from the fact of an authority conferred, the effect, if the submission is accepted, is that, as a matter of domestic law, a person who is not a party to a domestic contract is subjected to the liabilities arising out of it. The obligations thus imposed and the rights thus created in the other party to the contract are created by a document or act in the law which is relied upon as creating the authority - in this case I.T.A.6. It is that which defines the scope of the authority conferred and it is that which alters the legal position in domestic law of the alleged principal and agent. However one approaches the problem, the obligations sought to be imposed on the respondents by this argument stem from the treaty and have no separate existence in domestic law without it. Again, Mr. Pollock was presented with the logical consequence, which Kerr L.J. in particular felt unable to accept, that even if the treaty between the member states had said in terms that they agreed to the organisation which they were creating acting as their agent, a domestic tribunal
would be precluded by the non-justiciability principle from taking cognisance of it as the source of the obligation asserted. Mr. Pollock accepted this consequence and, in my judgment, he was right to accept it, however startling it may at first appear. One has only to envisage a dispute, possibly between the member states and the I.T.C. or possibly between the member states inter se, as to the scope and consequence of the authority so agreed to be granted. This must necessarily be a question of the effect of the treaty on the plane of international law and a domestic court has not the competence so to adjudicate upon the rights of sovereign states. That, of course, is not this case. The submission here is that when the provisions of I.T.A.6 are examined, it can be seen that the provision for the constitution and management of the I.T.C. and the way it is envisaged that it will conduct its operations have the effect of constituting it the agent for the members. Thus your Lordships are invited directly to embark upon the exercise of interpreting the terms of the treaty and ascertaining, on the basis of that determination, the rights of the members in international law and the consequences in municipal law of the rights so determined. I see no escape from Mr. Pollock's submission that this directly infringes the principle of non-justiciability. For my part, therefore, like Staughton J., I would reject submission C on the short and simple ground that it raises an issue which is not justiciable by an English court.
Even were it open to your Lordships to entertain the submission, however, I find myself entirely persuaded by the reasoning of the Court of Appeal in rejecting it on the merits. Once given the creation of a separate legal personality by the Order in Council, there appears to me to be no escape from the principle established by this House in Salomon v. A. Salomon and Co. Ltd.  A.C. 22, where the suggestion that Salomon and Co. Ltd. carried on business as agent for the corporators was firmly and decisively rejected. Mr. Sumption has sought to distinguish the case on the ground that the I.T.C. was brought into existence to carry out the purposes of its members and not for its own purposes and that it is "composed" of its members and operates under their immediate direction. An analysis was made of the provisions of articles 4 to 8, article 13 and articles 21 and 28 of I.T.A.6 in order to support the suggestion that, unlike a board of directors, the council owes no duties to the I.T.C. but acts entirely for its own benefit. From this it was argued that the I.T.C., as a body, was simply the agent of the members. It is, perhaps, enough for me to say that, speaking for myself, I can find no relevant distinction here between the governance of a limited company and the governance of the I.T.C. That they are differently constituted is irrelevant. As Kerr L.J.  Ch. 72, 189, pointed out in the course of his judgment, whether a corporation acts directly on the instructions of its members, who constitute the directorate, or indirectly because of the members' control in general meeting, makes no difference in principle. The existence of a board of directors in Salomon's case played no part in the decision. An examination of the constitution of the I.T.C., even if permissible, does not support the suggestion of "constitutional agency."
So far as the brokers' actions are concerned, the claim fails in any event on the further ground, accepted by Staughton J. and upheld by the Court of Appeal, that the terms of the standard form B contract of the London Metal Exchange, which governs the transactions sued upon, preclude any suggestion of agency. These terms unambiguously specified that the contract is between "ourselves and yourselves as principals" and the words which follow - "we alone being liable to you for its performance" - cannot reasonably be construed as importing that the words "as principals" refer only to the "ourselves" (the brokers) and not also to the "yourselves" (the I.T.C.). Mr. Sumption's further submission that "as principals" does not mean "as sole principals" was described by Kerr L.J. as commercially implausible. With that I agree.
It follows from what I have said that submission C must suffer the same fate as submissions A and B and I would accordingly dismiss these appeals. I would add only this. The rejection of the underlying submissions which form the whole basis of the appellants' case makes it unnecessary to consider the respondents' further objections - and in particular the question of immunity which the respondents raised in the courts below and which were necessarily dealt with by the Court of Appeal. In particular, that court heard and rejected arguments on behalf of the E.E.C. that it was, in any event, entitled to immunity in the same way as a sovereign state. Your Lordships found it unnecessary to trouble Mr. Eder, who appeared for the E.E.C., at the stage of the appeals in which the main arguments were presented, but reserved to him liberty to address his submissions at a later stage should your Lordships' decision on the principal points render such a course necessary. In the event, it has not proved necessary but it should, I think, be stressed, in fairness to Mr. Eder's clients, that they desired to submit (as their printed case states) that the Court of Appeal, in rejecting the claim to immunity, had misunderstood the argument upon which that claim was based. Their Lordships have not heard the argument and have not therefore had the occasion to form or express any view as to correctness or otherwise of the Court of Appeal's decision. It should also be mentioned that Mr. Eder would, had he been heard, have wished to submit that the issue of the E.E.C.'s immunity is one which might require to be referred, pursuant to article 177 of the E.E.C. Treaty, to the European Court of Justice. In the event, that does not arise.
The receivership appeal
I turn finally to the appeal of Maclaine Watson against the dismissal in the proceedings against the I.T.C. of their application for the appointment of a receiver. The basis of this claim is that the I.T.C. is possessed of an asset in the form of a right to be indemnified by the respondents in the direct action appeals against the liabilities incurred by the I.T.C. buffer stock manager in the name of the I.T.C. and that a receiver by way of equitable execution ought to be appointed for the purpose of pursuing that claim in the name of the I.T.C. Your Lordships are not concerned on this appeal with the question whether, assuming that the appellants can demonstrate a justiciable cause of
action against the members of the I.T.C., a receiver by way of equitable execution ought, as a matter of the court's discretion, to be appointed. Your Lordships are concerned only with the question - or rather the two questions - upon which the claim foundered in the courts below, namely, (i) does the I.T.C. have any cause of action against the member states arising out of the transactions of the buffer stock manager, and (ii) if so, is it a cause of action which is justiciable by an English court?
Millett J. held that there was no arguable cause of action in the I.T.C. against its members which did not involve a reliance upon I.T.A.6 and accordingly he dismissed the application on the ground of non-justiciability. In the Court of Appeal, a number of issues argued before Millett J., which had been defined in points of claim prior to the hearing before him, had dropped away and the appeal was argued, as it has been argued before your Lordships, on the basis of amended points of claim to which it may be convenient to refer at this stage.
After setting out the establishment of the I.T.C. and the history of the proceedings leading to the entry of judgment against the I.T.C., the nub of the case is pleaded in paragraphs 21 to 24. Paragraph 21, which rests upon the absence of juridical personality in the I.T.C., is now no longer material and I can confine myself to paragraphs 22 to 24 which are in the following terms:
"22. Further or alternatively, the I.T.C. is entitled to be indemnified by the member states jointly and severally upon the ground that the I.T.C. entered into the contracts at the express or implied request of the member states and having incurred a liability is entitled by implication of law to be indemnified by the said member states jointly and severally in respect of such liability.
"23. Further or alternatively, the plaintiffs will if necessary contend that the trading being carried out by the buffer stock manager of the I.T.C. (the 'B.S.M.') at all material times in 1985, of which the contracts form part, although carried out with the full knowledge, authority and at the request of the member states, was outside the scope of the Sixth International Tin Agreement 1981 ('I.T.A.6'), in that it involved the creation of a buffer stock far in excess of the 50,000 tonnes provided for in article 21 of I.T.A.6.
"24. In support of the contentions in paragraphs 21, 22 and 23 above the plaintiffs will rely inter alia on the matters pleaded in the particulars in the schedule hereto."
The particulars are of some importance. They plead that the I.T.C. entered into contracts through its officers, who were, by the articles of the I.T.C. there enumerated, authorised to manage the I.T.C.'s buffer stock under the supervision of the executive chairman who, in turn, was responsible to the council; that the council was composed of the members and decisions taken by simple distributed majority. Paragraph 4 is important and is in the following terms (with emphasis supplied):
"Further, the members acting in council did in fact know and approve of, and authorise the actions of the I.T.C. officers including the making of contracts for the purchase of tin in particular the contracts referred to in paragraph 3 above (referred to in these
particulars as 'the Maclaine Watson contracts'). Further or alternatively, the same were adopted, ratified and acquiesced in by the members in council. The best particulars the plaintiffs can give prior to discovery or discovery in proceedings brought by the receiver are as follows . . ."
There then follow lengthy particulars in 16 sub-paragraphs directed to establishing that the I.T.C.'s financial position was known to the members through reports rendered pursuant to Buffer Stock Operational Rules made pursuant to I.T.A.6 and that they were aware of and allowed a continuation of trading despite warnings that a continuation of trading was a gamble which would lead to disaster. Sub-paragraph (xvi) and paragraph 5 are in the following terms:
"(xvi) Nonetheless the members acting through the council ordered and/or allowed the I.T.C. officers to continue to trade in tin until 24 October 1985.
"5. The court will be invited to infer from the above facts that the member states expressly or impliedly authorised and/or requested the I.T.C. officers to enter transactions including the Maclaine Watson contracts on their behalf."
I have stressed the way in which the case is pleaded because these allegations (which must, for present purposes, be assumed to be true) demonstrate that throughout the members are not alleged to have acted individually but are alleged to have acted only as and through the council of the I.T.C.
Basing themselves on these pleadings, the appellants argue that there is a general principle of English law (to be found in the submissions of Mr. Cave in Dugdale v. Lovering (1875) L.R. 10 C.P. 196, 197, and approved by this House in Sheffield Corporation v. Barclay  A.C. 392) that
"when an act is done by one person at the request of another, which act is not in itself manifestly tortious to the knowledge of the person doing it, and such act turns out to be injurious to the rights of a third party, the person doing it is entitled to an indemnity from him who requested that it should be done."
That right, it is argued, may arise without the necessity for any pre-existing agreement between the parties and is a right governed by English law which is justiciable in an English court.
This contention was met by Lord Alexander on behalf of the respondent, in two ways. Speaking for myself, I confess to more than a few reservations with regard to the question of whether a principle enunciated in the context of a request by A to B to carry out an act which turns out to be tortious or otherwise wrongful and so subjects B to a liability in damages can be applied to the case of a body which enters into a contract for its own purposes at the instance of its directorate. Directors of limited companies would be both astonished and alarmed to learn of such a hitherto unsuspected peril which they might have thought to have been successfully laid to rest years ago by Salomon v. A. Salomon and Co. Ltd.  A.C. 22. But your
Lordships need not take up time on this, for, as I understand it, Lord Alexander is content to concede that, given the facts pleaded, there might at least be an arguable case for the establishment of such a liability. He takes his stand on the two different facets of non-justiciability. Adopting the reasoning of Ralph Gibson L.J. he argues, that, supposing that such a liability can theoretically exist, the pleadings demonstrate that everything that was done was done in purported pursuance of the provisions of I.T.A.6 by sovereign foreign states in circumstances in which it could not possibly be contended with any colour of conviction that their transactions were to be submitted to the jurisdiction of the municipal courts of this country.
He adopts and accepts - although he submits that it is strictly unnecessary to decide the point - the primary ground relied upon by Ralph Gibson L.J. for rejecting the appellants' claim, which may be described as the act of state limb of the principle of non-justiciability and which may be summarised simply by saying that issues arising from such transactions between sovereign states are not issues upon which a municipal court is capable of passing. It is neither competent nor equipped to do so. To quote from the speech of Lord Wilberforce in Buttes Gas and Oil Co. v. Hammer (No. 3)  A.C. 888, 938:
"Leaving aside all possibility of embarrassment in our foreign relations . . . there are . . . no judicial or manageable standards by which to judge these issues, or to adopt another phrase . . . the court would be in a judicial no-man's land . . ."
The creation and regulation by a number of sovereign states of an international organisation for their common political and economic purposes was an act jure imperii and an adjudication of the rights and obligations between themselves and that organisation or, inter se, can be undertaken only on the plane of international law. The transactions here concerned - the participation and concurrence in the proceedings of the council authorising or countenancing the acts of the buffer stock manager - were transactions of sovereign states with and within the international organisation which they have created and are not to be subjected to the processes of our courts in order to determine what liabilities arising out of them attached to the members in favour of the I.T.C. In the Court of Appeal both Kerr and Nourse L.JJ. entertained reservations upon the question whether, in relation to a claim based upon agreements concluded by sovereign states in a commercial context, it was right to decline to adjudicate upon such a claim on the ground of what was conveniently described by Kerr L.J. as "act of state non-justiciability." But both Lords Justices were at one with Ralph Gibson L.J. in rejecting the appellants' application on the same ground as that relied upon by Millett J. at first instance, that is to say, that I.T.A.6 is an unincorporated treaty and there is simply no way in which the case can be put for a claim by the I.T.C. against its members for an indemnity or contribution which does not, in the ultimate analysis, involve a reliance upon and the interpretation of its provision, so that the claim is equally incapable of adjudication under this limb of the principle of non-justiciability. If this is right, then it really matters very
little, save on a purely academic level, whether the appellants' claim is equally incapable of adjudication in a municipal court by virtue of act of state non-justiciability and it is unnecessary for your Lordships to resolve or reconcile the views of the members of the Court of Appeal on this aspect of the case.
Since the ground expressed by Millett J. for his decision represents Lord Alexander's primary submission, it will be convenient to examine this first. The general principle of indemnity expounded in Dugdale v. Lovering, L.R. 10 C.P. 196, is advanced by the appellants as the route by which they can avoid reliance upon the provisions of I.T.A.6 and thus escape the difficulty created by the principle of non-justiciability. In essence, this submission is that in exercising the capacities conferred upon it by the Order in Council the I.T.C. becomes subject to municipal principles of common law and equity and that those principles govern the right of the I.T.C. against its members. If, it is argued, English municipal law confers, as the automatic result of an English law transaction, a right of indemnity against the persons (be they states or individuals) at whose instance the transaction was undertaken, it matters not what private or public agreement there may be between the latter and the person effecting the transaction, the right attaches as an incident of English municipal law and involves no necessary resort to the terms of that agreement. To say, the appellants argue, that acts are done because of a treaty is not the same as saying that they are done under a treaty, so that the mere existence of the treaty as a background or even a motivating factor in the transaction provides no reason why a claim by the actor against the instigator of the act should be regarded as resting on the treaty and so be non-justiciable. It was expressed thus by Mr. McCombe in the course of an able and helpful argument:
"The instructions of the state to the buffer stock manager of the I.T.C., which are in review in the present case, though they would not have taken place had there been no I.T.A.6, are far removed from the category of transactions which by reason of being part of, or in performance of, an agreement between states, are withdrawn from the jurisdiction of the municipal courts."
I feel two difficulties about accepting this argument in the context of the present appeal. In the first place, it ignores what I apprehend to be the basis for the general principle relied upon, which is implied contract and nothing but implied contract. Secondly, it ignores the pleaded case upon the basis of which your Lordships are invited to find an arguable claim.
It is quite clear from the authorities which have been drawn to your Lordships' attention as establishing or supporting the general principle of indemnity upon which the appellants rely that indemnity is not the automatic consequence of a request to do an act. Such a right of indemnity arises only where the circumstances justify the implication of a contract to indemnify. The necessity for the implication of a contractual obligation to indemnify is stated in Dugdale v. Lovering, L.R. 10 C.P. 196, itself, by this House in Sheffield Corporation v. Barclay  A.C. 392, and in subsequent cases in which the principle
has been applied: see Yeung Kai Yung v. Hong Kong and Shanghai Banking Corporation  A.C. 787; Naviera Mogor S.A. v. Société Metallurgique de Normandie ("Nogar Marin")  1 Lloyd's Rep. 412. Now it is elementary that where the relationship between the parties is regulated by express agreement, there is no room for implication save for some term necessary for giving business efficacy to their agreement. Thus, whilst it may be that in the absence of some governing document regulating the terms upon which a particular transaction or series of transactions is undertaken, the law will, according to the circumstances, imply an obligation in one party to indemnify another, where there is such a governing document there simply is no room for that implication. Whichever way one looks at it, the existence of the governing document in the form of I.T.A.6 has to be faced and is indeed faced in the pleading on which the appellants rely. Whence, then, do the appellants derive the implied contract upon which they necessarily have to rely to support their case?
I have already drawn attention to the points of claim and to the particulars and I stress again that these are particulars of the acts of the members "acting in council" and that the constitutional basis for the members to act in council and for the officers of the I.T.C. to act under the supervision of the council is set out in paragraphs 1 to 3 of the pleading. So that one is thrown back immediately to I.T.A.6 and the request of the member states which forms the foundation of the claim in paragraph 5 is one which, throughout, is to be inferred from that which was done or omitted by the council of the I.T.C. acting under its constitutional document, I.T.A.6. There is here no room for any implication and if an obligation to indemnify is to be found, it is to be found only in or after consulting the terms of I.T.A.6. That involves the municipal court immediately in interpreting I.T.A.6 in order to see whether it contains provision for such an indemnity or whether, within its terms, there is room for one to be implied. The ascertainment and enforcement of such an indemnity is not a justiciable issue.
It is, of course, true that the I.T.C., although the creation of the treaty on an international level, is not itself a party to the treaty, but that cannot, in my judgment, make any difference in principle. I do not feel that I can express it better than it was expressed by Millett J.  Ch. 1 in the course of his judgment, at p. 23:
"Mr. Littman submitted that the I.T.C.'s rights of indemnity or contribution from its members cannot derive from the Agreement because the I.T.C. is not a party to the treaty, and because in fact no such rights can be found in it. The Agreement is, of course, not only the agreement between the members which established the I.T.C., but also the I.T.C.'s constitutional instrument. Whether it creates rights between the members only, or whether it creates rights also between the I.T.C. and the members, and if so whether its express provisions need to be augmented by further implied terms, are questions upon which, as a judge of the national courts of one of the member states only, I have no authority to pronounce. But let it be assumed that, for whatever reason, no right of indemnity or contribution, express or implied, is given to the I.T.C.
by the treaty. What follows? What follows is not that the right must derive from some other source, but that there is no such right."
It is argued that, if one postulates first of all a claim based on a request to the buffer stock manager and the implication of a purely domestic contract to indemnify arising from that request, I.T.A.6 is brought into the issue only by way of defence. The respondents cannot, it is said, have it both ways. If I.T.A.6 cannot be referred to for the purpose of supporting the direct actions, it equally cannot be referred to by way of defence by the I.T.C. Accordingly, it is said, it is the I.T.C. which is seeking to rely upon the treaty as a defence to a justiciable claim in domestic law. A non-justiciable defence is no defence. This argument has a certain attraction, but it is specious because it misunderstands the respondents' submission. I.T.A.6 is not relied upon as a defence. This is a striking out application and it is for the appellants to establish an arguable case. The case which they seek to establish is one which requires an implied contract in pleaded circumstances in which the express terms of I.T.A.6 are themselves relied upon as part of the essential background giving rise to the very implications sought to be made. Within the confines of the pleaded case, the implication cannot be made in vacuo and as if I.T.A.6's constitutional provisions did not exist. If an implication is to be made at all, it has to be made within the framework of I.T.A.6 and it is the terms of I.T.A.6 which have to be referred to and construed in order to found the implied contract upon which the claim rests.
I agree with Millett J. and with the Court of Appeal that, however the matter is approached, any claim of the I.T.C. against the member states for indemnity must ultimately rest upon I.T.A.6. This is an issue which is not justiciable by your Lordships and it is therefore unnecessary to decide whether, in any event, any such claim would also be precluded by act of state non-justiciability. I would accordingly dismiss this appeal also.
Solicitors: Clyde & Co.; Allen & Overy; Elborne Mitchell; Slaughter and May; Clifford Chance; Treasury Solicitor; Travers Smith Braithwaite; Boodle Hatfield; Nabarro Nathanson; Lovell White Durrant; Stocken & Lambert; Macfarlanes; Clifford Chance.
Solicitors in the receivership appeal: Elborne Mitchell; Cameron Markby; Treasury Solicitor.