[1982]	888
A.C.

[HOUSE OF LORDS]

BUTTES GAS AND OIL CO. AND ANOTHER

RESPONDENTS

AND

HAMMER AND ANOTHER

APPELLANTS

BUTTES GAS AND OIL CO. AND ANOTHER

APPELLANTS

AND

HAMMER AND ANOTHER

RESPONDENTS

[CONJOINED APPEALS]

[On appeal from BUTTES GAS AND OIL CO. v. HAMMER; BUTTES GAS AND

OIL CO. v. HAMMER (No. 3)]

1981 June 22, 23, 24, 25, 29, 30; July 1, 2, 6, 7, 8, 9; Oct. 29

Lord Wilberforce, Lord Fraser of Tullybelton, Lord Russell of Killowen, Lord Keith of Kinkel and Lord Bridge of Harwich

Practice - Pleadings - Striking out - "Acts of state" - Foreign oil corporations' slander action over concessions in foreign territories granted by sovereign rulers - Particulars of defence including facts as to acts of sovereign states - Counterclaim for damages for alleged conspiracy to cheat and defraud by procuring acts of state - Whether established doctrine of English law of non-inquiry into acts of state - Whether pleaded defences and counterclaim to be struck out

Two Californian oil exploration corporations were granted oil concessions in the Persian Gulf. One was granted by the ruler of Umm al Qaiwain to corporation O ("the defendants") in November 1969 and the other to corporation B ("the

[1982]		889
A.C.	Buttes Gas v. Hammer (H.L.(E.))

plaintiffs") in December 1969 by the ruler of Sharjah. A dispute arose over a rich oil area. Litigation followed which included an action begun in the English court by the plaintiffs against the defendants and their chairman for alleged slander uttered in London about the disputed area and consequential events. The pleaded defences were justification and fair comment. The particulars of those defences included as "facts" a decree of the ruler of Sharjah said to have been issued in March 1970 but on its face dated September 1969 which extended the limits of his territorial waters, a subsequent claim to sovereignty over the disputed area by the Government of Iran; instructions to the ruler of Umm al Qaiwain by the United Kingdom political agent and intervention by Her Majesty's naval, air and military forces then operating in the relevant areas under treaty arrangements; and further intervention by the Government of Iran.

By a counterclaim the defendants claimed damages for alleged conspiracy between the plaintiffs and the ruler of Sharjah and others to cheat and defraud them and to procure Her Majesty's government and others unnamed to act unlawfully to the injury of the defendants; and they pleaded as the overt acts constituting the conspiracy the particulars of justification in their defence to the slander action.

The plaintiffs applied for an order that the court should not exercise jurisdiction in respect of specified matters said to be "acts of state" of the governments of Sharjah, Umm al Qaiwain, Iran and the United Kingdom, and alternatively asked that the pleaded particulars of justification and the counterclaim should be struck out and all proceedings stayed on the ground that they raised matters which were acts of state. Master Warren struck out the counterclaim. On appeal by both parties May J., though holding that the alleged conspiracy was not itself an act of state, struck out the substantive parts of the counterclaim, leaving intact the pleaded particulars of justification in the defence to the slander action.

On appeal by the defendants and a cross-appeal by the plaintiffs, the Court of Appeal on December 5, 1974, allowed the appeal and dismissed the cross-appeal. In February 1975 the Appeal Committee of the House of Lords refused the plaintiffs application for leave to appeal.

Apart from the above proceedings relating to the substance of the case, issues arose relating to discovery of documents. In May 1978 on the defendants' application for discovery, the plaintiffs produced a list of documents which were or had been in their possession, custody or power, but they objected to produce various categories of documents on the grounds that their production would be contrary to the legitimate interests of foreign sovereign states (described as "foreign state privilege") or alternatively were protected by legal professional privilege. They included, inter alia, legal advice to the Ruler of Sharjah; communications between him and Her Majesty's Government and between him and other sovereign states in the Gulf; communications between him or his legal advisers and Her Majesty's Government and the mediator; communications between the plaintiffs and Her Majesty's Government about drilling rights off the shores of Abu Musa; and correspondence and documents passing between the Ruler of Sharjah or the plaintiffs and the rulers of other emirates on the claims of Sharjah and Iran.

[1982]		890
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Master Warren ordered discovery of all those documents to the defendants; but on the plaintiffs' appeal, McNeill J. while rejecting the so-called "foreign state privilege" as a head unknown to English law, refused to order discovery of all but six of the listed documents on the ground of legal professional privilege, and rejected the defendants' claim that that privilege had been destroyed by the alleged fraud or waived by references to some of the documents in the plaintiffs' various pleadings.

On appeal by the defendants and a cross-appeal by the plaintiffs, the Court of Appeal, on June 20, 1980, dismissed the appeal and allowed the cross-appeal.

On November 11, 1980, an Appeal Committee of the House of Lords (i) gave leave to the defendants to appeal against the 1980 decision of the Court of Appeal; (ii) gave leave to the plaintiffs to appeal out of time against the 1974 decision of the Court of Appeal and discharged the 1975 order refusing leave to appeal; (iii) ordered that a fresh summons issued by the plaintiffs on July 11, 1980, should be dealt with on the hearing of the appeal. This fresh summons sought an order that on the plaintiffs undertaking to consent upon application by the defendants (if so advised) to a stay of the slander claim, the counterclaims of the defendants be stayed on the grounds, inter alia, that those counterclaims raised issues which were nonjusticiable by the court and/or which it was contrary to the public interest for the court to adjudicate upon:-

Held, (1) that there was a long-standing principle of English law, which was inherent in the very nature of the judicial process, that municipal courts would not adjudicate on the transactions of foreign states; that, accordingly, where such issues were raised in private litigation, the court would exercise judicial restraint and abstain from deciding the issues raised; and that, since the pleadings raised issues involving the court in reviewing transactions in which four sovereign states were concerned and being asked to find at least part of those transactions unlawful under international law, the issues raised were nonjusticiable and incapable of being entertained by the court (post, pp. 931F - 932A, 938A-E).

(2) That to allow the plaintiffs to proceed with the slander action but to deny the defendants the opportunity to justify would seem unjust, and that therefore the plaintiffs should be held to their offer contained in their summons of July 11, 1980 (post, p. 938E-F).

(3) That, accordingly, the plaintiffs' appeal against the order of the Court of Appeal of December 1974 should be allowed, and that order set aside, and that an order be made on the plaintiffs' summons of July 11, 1980, pursuant to its terms, namely, staying all proceedings on the claim, and staying the counterclaim of the first and second defendants (post, p. 938F-G).

(4) That the staying of the counterclaim necessarily involved that the pending application of the defendants for discovery and/or production of documents be similarly stayed (post, p. 938G-H).

Blad v. Bamfield (1674) 3 Swan. 604 and Duke of Brunswick v. King of Hanover (1848) 2 H.L.Cas. 1, H.L.(E.) applied.

British South Africa Co. v. Companhia de Moçambique[1893] A.C. 602, H.L.(E.); Aksionairnoye Obschestvo A. M. Luther v. James Sagor & Co. [1921] 3 K.B. 532, C.A.; Princess Paley Olga v. Weisz [1929] 1 K.B. 718, C.A. and Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd., [1979] A.C. 508, H.L.(E.) considered.

[1982]		891
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Decision of the Court of Appeal in Buttes Gas and Oil Co. v. Hammer[1975] Q.B. 557; [1975] 2 W.L.R. 425; [1975] 2 All E.R. 51 set aside and proceedings stayed.

Decision of the Court of Appeal in Buttes Gas and Oil Co. v. Hammer (No. 3) [1981] Q.B. 223; [1980] 3 W.L.R. 668; [1980] 3 All E.R. 475 varied.

The following cases are referred to in the opinion of Lord Wilberforce:

Aksionairnoye Obschestvo A. M. Luther v. James Sagor & Co. [1921] 3 K.B. 532, C.A.

Banco Nacional de Cuba v. Sabbatino (1964) 376 U.S. 398.

Blad v. Bamfield (1674) 3 Swan. 604.

British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602, H.L.(E.)

Brunswick (Duke of) v. King of Hanover (1844) 6 Beav. 1; (1848) 2 H.L.Cas. 1, H.L.(E.).

Buron v. Denman (1848) 2 Exch. 167.

Carr v. Fracis Times & Co. [1902] A.C. 176, H.L.(E.).

Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485; [1938] 1 All E.R. 719, H.L.(E.)

Cook v. Sprigg [1899] A.C. 572, P.C.

Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797, H.L.(E.).

Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811; 82 L.T. 253.

Helbert Wagg & Co. Ltd.'s Claim, In re [1956] Ch. 323; [1956] 2 W.L.R. 183; [1956] 1 All E.R. 129.

Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd. [1979] A.C. 508; [1978] 3 W.L.R. 378; [1978] 2 All E.R. 1168, H.L.(E.).

Oetjen v. Central Leather Co. (1918) 246 U.S. 297.

Paley Olga (Princess) v. Weisz [1929] 1 K.B. 718, C.A.

Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo.P.C.C. 22, P.C.

Tito v. Waddell (No. 2) [1977] Ch. 106; [1977] 2 W.L.R. 496; [1977] 3 All E.R. 129.

Underhill v. Hernandez (1893) 65 Fed. 577; (1897) 168 U.S. 250.

United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. [1952] A.C. 582; [1952] 1 All E.R. 572, H.L.(E.).

The following additional cases were cited in argument:

Arantzazu Mendi, The [1939] A.C. 256; [1939] 1 All E.R. 719, H.L.(E.).

Argentina v. Chile (1977) 52 I.L.R. 93.

Attorney-General v. Jonathan Cape Ltd. [1976] Q.B. 752; [1975] 3 W.L.R. 606; [1975] 3 All E.R. 484.

Baker v. Carr (1962) 369 U.S. 186.

Blad's Case (1673) 3 Swan. 603, P.C.

Boys v. Chaplin [1971] A.C. 356; [1969] 3 W.L.R. 322; [1969] 2 All E.R. 1085, H.L.(E.).

Bradlaugh v. Gossett (1884) 12 Q.B.D. 271, D.C.

Buck v. Attorney-General [1965] Ch. 745; [1965] 2 W.L.R. 1033; [1965] 1 All E.R. 882, C.A.

Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England[1980] A.C. 1090; [1979] 3 W.L.R. 722; [1979] 3 All E.R. 700, H.L.(E.).

[1982]		892
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Chateau-Gai Wines Ltd. and Attorney-General of Canada, In re (1970) 14 D.L.R (3d) 411.

Chung Chi Cheung v. The King [1939] A.C. 160; [1938] 4 All E.R. 786, P.C.

Church of Scientology of California v. Johnson-Smith [1972] 1 Q.B. 522; [1971] 3 W.L.R. 434; [1972] 1 All E.R. 378.

Conway v. Rimmer [1968] A.C. 910; [1968] 2 W.L.R. 998; [1968] 1 All E.R. 874, H.L.(E.).

Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch [1942] A.C. 435; [1942] 1 All E.R. 142, H.L.(Sc.).

Crompton (Alfred) Amusement Machines Ltd. v. Customs and Excise Commissioners (No. 2) [1974] A.C. 405; [1973] 3 W.L.R. 268; [1973] 2 All E.R. 1169, H.L.(E.).

Czarnikow (C.) Ltd. v. Centrala Handlu Zagranicznego Rolimpex [1979] A.C. 351; [1978] 3 W.L.R. 274; [1978] 2 All E.R. 1043, H.L.(E.).

D. v. National Society for the Prevention of Cruelty to Children [1978] A.C. 171; [1977] 2 W.L.R. 201; [1977] 1 All E.R. 589, H.L.(E.).

Duncan v. Cammell, Laird & Co. Ltd. [1942] A.C. 624; [1942] 1 All E.R. 587, H.L.(E.).

Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251; [1980] 3 W.L.R. 209; [1980] 2 All E.R. 696, H.L.(E.).

Frankfurter v. W. L. Exner Ltd. [1947] Ch. 629.

Ghosh v. D'Rozario [1963] 1 Q.B. 106; [1962] 3 W.L.R. 405; [1962] 2 All E.R. 640, C.A.

Haile Selassie v. Cable and Wireless Ltd. [1938] Ch. 839; [1938] 3 All E.R. 384, C.A.

Hellenes, King of the v. Brostrom (1923) 16 Ll.L.Rep. 167.

Hennessy v. Wright (1888) 21 Q.B.D. 509, D.C.

Industria Azucarera Nacional S.A. v. Empresa Exportadora de Azucar(unreported), February 29, 1980, Mustill J.

Island of Palmas Case (United States of America v. Netherlands) [1928] Scott's Hague Court Reports (2d) 84.

Kawasaki Kisen Kabushiki Kaisha of Kobe v. Bantham Steamship Co. Ltd. [1939] 2 K.B. 544; [1939] 1 All E.R. 819, C.A.

Lissenden v. C.A.V. Bosch Ltd. [1940] A.C. 412; [1940] 1 All E.R. 425, H.L.(E.).

Lonrho Ltd. v. Shell Petroleum Co. Ltd. [1980] 1 W.L.R. 627; [1981] 2 All E.R. 456, H.L.(E.).

Mighell v. Sultan of Johore [1894] 1 Q.B.149, C.A.

Nissan v. Attorney-General [1970] A.C. 179; [1969] 2 W.L.R. 926; [1969] 1 All E.R. 629, H.L.(E.).

Oppenheimer v. Cattermole [1976] A.C. 249; [1975] 2 W.L.R. 347; [1975] 1 All E.R. 538, H.L.(E.).

Parlement Belge, The (1880) 5 P.D. 197, C.A.

Phillips v. Eyre (1870) L.R. 6 Q.B. 1.

Pickin v. British Railways Board [1974] A.C. 765; [1974] 2 W.L.R. 208; [1974] 1 All E.R. 609, H.L.(E.).

Porter v. Freudenberg [1915] 1 K.B. 857, C.A.

Portugal v. India (1960) 31 I.L.R. 23.

Potter v. Broken Hill Pty. Co. Ltd. (1906) 3 C.L.R. 479.

Rahimtoola v. Nizam of Hyderabad [1958] A.C. 379; [1957] 3 W.L.R. 884; [1957] 3 All E.R. 441, H.L.(E.).

Reg. v. Governor of Brixton Prison, Ex parte Schtraks [1964] A.C. 556; [1962] 3 W.L.R. 1013; [1962] 3 All E.R. 529, H.L.(E.).

[1982]		893
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Reg. v. Lesley (1860) Bell C.C. 220.

Reg. v. Lewes Justices, Ex parte Secretary of State for the Home Department[1973] A.C. 388; [1972] 3 W.L.R. 279; [1972] 2 All E.R. 1057, H.L.(E).

Rights of Passage Case (Portugal v. India) (1960) 31 T.L.R. 23.

Salaman v. Secretary of State for India [1906] 1 K.B. 613, C.A.

Sankey v. Whitlam (1978) 142 C.L.R. 1.

Science Research Council v. Nassè [1980] A.C. 1028; [1979] 3 W.L.R. 762; [1979] I.C.R. 921; [1979] 3 All E.R. 673, H.L.(E.).

Singhe v. Secretary of State for India (1924) 51 L.R.Ind.App. 359.

Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529; [1977] 2 W.L.R. 356; [1977] 1 All E.R. 881, C.A.

Twycross v, Dreyfus (1877) 5 Ch.D. 605, C.A.

West Rand Central Gold Mining Co. Ltd. v. The King [1905] 2 K.B. 391.

Williams v. Suffolk Insurance Co. (1839) 38 U.S. 415.

Yarmouth v. France (1887) 19 Q.B.D. 647, C.A.

Ysmael (Juan) & Co. Inc. v. Government of Indonesia [1955] A.C. 72; [1954] 3 W.L.R. 531; [1954] 3 All E.R. 236, P.C.

APPEALS from the Court of Appeal.

The first of the consolidated appeals was an appeal by leave of the House of Lords granted on November 11, 1980, by the appellants, Buttes Gas and Oil Co., and John Boreta, from an order dated December 5, 1974, of the Court of Appeal (Lord Denning M.R., Roskill L.J. and Sir John Pennycuick). It arose out of applications by the appellants for an order that the court should not exercise jurisdiction in respect of certain matters raised in the defence and counterclaim of the respondents, Dr. Armand Hammer and Occidental Petroleum Corporation, or should strike out and stay proceedings on issues arising from those matters which were said to be "acts of state" of the Governments of Sharjah, Umm al Qaiwain ("U.A.Q."), Iran and the United Kingdom.

The applications were first heard by Master Warren who on June 11, 1973, ordered that the court should not exercise jurisdiction over what was said to be an act of state of those governments, namely the conspiracy alleged in the counterclaim. On appeal and cross-appeal to May J., he varied the master's order on July 31, 1974, by striking out the paragraphs of the counterclaim pleading the conspiracy and the damage resulting therefrom but leaving intact the counterclaim in libel and all the overt acts in pursuance of the conspiracy relied upon also as particulars of justification in the defence of Dr. Hammer and Occidental. On further appeal and cross-appeal the Court of Appeal on December 5, 1974, set aside the order of the master and May J. and ordered that the court should exercise jurisdiction in respect of the conspiracy alleged.

The Court of Appeal refused Buttes and Mr. Boreta leave to appeal as did the Appeal Committee on February 27, 1975. However, on November 11, 1980, the House of Lords granted to Dr. Hammer and Occidental leave to appeal against a subsequent decision of the Court of Appeal on June 20, 1980, refusing to order production of certain documents in Buttes's possession, custody or control ("the discovery appeal"). The Appeal Committee on that occasion also granted the further petitions for leave to appeal by Buttes and Mr. Boreta on the issues about "acts of state," indicating

[1982]		894
A.C.	Buttes Gas v. Hammer (H.L.(E.))

that it was convenient to do so because questions concerning justiciability and "judicial restraint" arose in any event on the discovery appeal.

Accordingly the issues on the first appeal were whether various of the matters alleged in the defence and/or the counterclaim were such that the court should now decide not to exercise jurisdiction in respect thereof and/or should now strike out those allegations on the grounds that they require such adjudication upon "acts of state" and that they were not, or should not be, justiciable.

The second appeal was an appeal by the appellants, Occidental Petroleum Corporation, and Dr. Armand Hammer, chairman and chief executive of Occidental, from an interlocutory order dated June 20, 1980, of the Court of Appeal (Lord Denning M.R., Donaldson and Brightman L.JJ.) dismissing an appeal from an order dated July 31, 1979, of McNeill J. and allowing a cross-appeal from the same order by the respondents, Buttes and Mr. Boreta, president and chief executive of Buttes.

The respondent, Buttes, was plaintiff in the action for damages for slander against Occidental and Dr. Hammer. Occidental counterclaimed against Buttes for damages for conspiring to defraud, and against Buttes and Mr. Boreta for damages for libel.

The issue in this appeal was whether certain documents and classes of documents which had been disclosed by Buttes were privileged from production either by reason of legal professional privilege, or because they consisted of confidential communications with, and documents or copy documents obtained in confidence from, a foreign sovereign, namely the Ruler of Sharjah, whose successor, in his capacity as ruler of a friendly foreign state, objected to the documents being produced in these proceedings.

The matter came before Master Warren in February 1977, on two summonses issued by Occidental and Dr. Hammer seeking production of certain documents which were referred to in Buttes's reply and defence to counterclaim. The hearing was adjourned at the request of the Treasury Solicitor. The Permanent Under-Secretary of State at the Foreign and Commonwealth Office subsequently wrote that his department knew of "no overriding considerations of the national interest which would warrant intervention by the Crown" in the proceedings. Her Majesty's Government had not sought to intervene in the proceedings, hence there was no claim for privilege of the kind formerly known as "Crown Privilege."

Master Warren rejected Buttes's claims for privilege, holding that legal professional privilege was not made out on the material before him, and that no other kind of privilege known to English law attached to the documents and classes of documents with which the appeal was concerned.

McNeill J. allowed an appeal by Buttes in July 1979. He held that the majority of the documents and classes of documents were protected by legal professional privilege. He rejected the claim for what was called for convenience in argument before him "foreign state privilege."

Occidental appealed to the Court of Appeal in May 1980 against the judge's ruling on legal professional privilege, Buttes cross-appealed on the foreign sovereignty issue. In the meantime, a further letter from the

[1982]		895
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Foreign and Commonwealth Office reiterated its previous view that the Crown should not intervene but indicated its recognition of a principle that "confidential communications between states should, in the public interest, not be adduced in evidence without the consent of the states concerned."

The Court of Appeal dismissed Occidental's appeal regarding legal professional privilege. It allowed Buttes's cross-appeal on the foreign sovereignty issues.

The facts in respect of both appeals are set out in the opinion of Lord Wilberforce.

Maurice Bathurst Q.C., Anthony Evans Q.C., R. Y. Jennings Q.C. and John Previte for Buttes and Mr. Boreta. The court should decline jurisdiction in these proceedings in respect of the counterclaims, which require the court to adjudicate upon: (a) the territorial issues between Sharjah, U.A.Q. and Iran; (b) the allegations that the Ruler of Sharjah backdated the territorial waters decree dated September 10, 1969, and that this was unlawful; and (c) other acts of state, being acts of Her Majesty's Government and armed forces, and of the Ruler of Sharjah and of the government of Iran.

Reliance is placed on the following propositions: (1) the English courts will decline to try actions which require them to decide or pronounce either directly or indirectly upon rights of immovable property situated abroad: British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602 and Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd.[1979] A.C. 508. (2) The English courts will decline to try actions concerning properties in the ownership, possession and control of a foreign sovereign state or in which a state claims an interest: Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485. It is not disputed that in the present case there is no commercial activity between foreign states which gives rise to any exception to this rule. (3) The English courts will decline to try actions which require the courts to interpret the precise nature of obligations or transactions arising between sovereign states: Cook v. Sprigg [1899] A.C. 572. (4) The English courts will decline to try actions which require questioning the validity or effectiveness of foreign legislation. (5) The English courts will decline to inquire into the validity of, or the motives for, acts of friendly foreign states in the exercise of their international relations. (6) The English courts will decline to inquire into the legality of acts of Her Majesty's Government or its officers committed outside the United Kingdom and not related to British subjects.

The preliminary issue in this appeal concerns the territorial sovereignty over Abu Musa. It is fundamental to Occidental's case. If Abu Musa belonged to Iran then Occidental had no cause of action for the English courts would not entertain it. Further, if Abu Musa be privately owned, then again, the English courts would not entertain it for it would mean the reopening of a compromise entered into by foreign sovereign states.

As to (1), the Hesperides case [1979] A.C. 508 affirmed and extended the decision in the Moçambique case [1893] A.C. 602: see in particular Lord Halsbury's adoption (p. 631) of a statement of Vattel. As to (2), property of a sovereign is also entitled to the status of immunity: the

[1982]		896
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Cristina case [1938] A.C. 485, 490, per Lord Atkin and also Juan Ysmael & Co. Inc. v. Government of Indonesia [1955] A.C. 72, 89-90, per Earl Jowitt. The Hesperides principle is a fortiori to be applied in a case of the present kind. As to (3), for the general principle, see Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo.P.C.C. 22, 35, 36, 86 and also Cook v. Sprigg[1899] A.C. 572 and West Rand Central Gold Mining Co. Ltd. v. The King [1905] 2 K.B. 391, 408, 409, per Lord Alverstone C.J.

The above cases illustrate the attitude of English courts toward the property of foreign sovereigns or the rights that they have granted or the transactions into which they have entered. On justiciability: see Buck v. Attorney-General [1965] Ch. 745, 769, 770, per Diplock L.J. It is the subject matter of the present proceedings which makes it non-justiciable in the English courts.

Occidental by its pleadings both by way of defence and counterclaim asserts that the area of its concession extended to the disputed area. Accordingly, Occidental have asked the English courts to decide that the U.A.Q. concession area included the disputed area. But Sharjah and Iran disputed any right of U.A.Q. to continental shelf rights in the area.

If Iran was sovereign of Abu Musa neither Sharjah nor U.A.Q. had any powers to grant rights within 12 miles of Abu Musa because Iran since 1969 has had a 12-mile limit of territorial waters. On the other hand, if Sharjah was sovereign of Abu Musa the disputed area is the property of Sharjah. The continental shelf of Sharjah's island extended at least 12 miles from the coast of Abu Musa. This is so whatever be the width of Sharjah's sea. Sharjah established for quite other reasons a territorial sea of 12 miles prior to the grant of the concessions. Faced with these conflicting sovereign claims no English court should try Occidental's case because to do so would require it to decide: (a) which state was sovereign of Abu Musa and then (b) which state had sovereign rights in the sea bed and sub-soil nine miles from Abu Musa.

Occidental's submissions to the Court of Appeal in 1974 that it did not challenge the validity of Sharjah's sea decree dated September 10, 1969, are entirely beside the point, and so is its current suggestion in its printed case that the decree was only valid in the Ruler of Sharjah's own law. Occidental's claim that the Emirates lacked international capacity is wrong and contrary to the only Foreign Office certificate in this case. Moreover, Occidental's claim that the views and attitudes expressed in 1969-1970 by foreign service officials of Her Majesty's Government are conclusive, decisive and binding on the court is wrong. The views and attitudes of Her Majesty's Government in 1969 and 1970 are irrelevant. If any of its views or attitudes are relevant they are those which support the memorandum of understanding of 1971 recognising that there is no settlement of the substantive issue over Abu Musa but only a temporary compromise - a recognition of Sharjah's and Iran's 12-mile territorial sea.

A municipal court cannot adjudicate upon Occidental's submission in its printed case that the unilateral declarations of 1964 formed a treaty between Sharjah and U.A.Q. and that such a treaty, if so found to exist, had a particular meaning and effect which the parties had alleged to have made.

[1982]		897
A.C.	Buttes Gas v. Hammer (H.L.(E.))

Evans Q.C. following on the issue of acts of state. This issue raises the question of the extent to which English courts should assume the functions of an international tribunal. The territorial issue permeates all three aspects of the case, namely, the claim for damages for slander, the counterclaim for damages for conspiracy and the counterclaim for damages for libel.

The essence of the conspiracy counterclaim is that Occidental contended that it was deprived of its right to the disputed area. The present case raises a novel feature, namely, conflicting acts of state. The English court is being asked to resolve those acts of state. The advent of Iran brings in a third foreign state and the historical role of Her Majesty's Government a fourth sovereign state involved in the litigation. It is not sufficient in this case for the courts to recognise these acts, for the issues raised by the pleadings require the court to inquire into the reasons for these acts and determine in some cases whether they were lawful. It is an essential part of the conspiracy claim here that there has been unlawful conduct.

The House is invited to consider this issue on the supposition that the allegation contained in the pleadings was correct, namely, that the decree of the Ruler of Sharjah was fraudulent, forged and backdated. On this supposition should the courts intervene: see the observations of Roskill L.J. [1975] Q.B. 557, 576F. Certainly the court should not inquire into whether the decree was backdated. There is no case in the books exactly comparable to the present save the two United States cases concerning this litigation. But there are two English cases which cover this particular question: Aksionairnoye Obschestvo A.M. Luther v. James Sagor & Co. [1921] 3 K.B. 532, 543, and Princess Paley Olga v. Weisz [1929] 1 K.B. 718. In the latter case it was held that where an act is an act of state, the English courts will not inquire into its validity under municipal law.

This raises the issue of whether there are any territorial limitations to the above rule and whether the rule there referred to is distinct from the rule in conflict of laws relating to where a plaintiff seeks to sue in the English courts in respect of a tort committed abroad. This rule adumbrated in Phillips v. Eyre (1870) L.R. 6 Q.B. 1 and affirmed in Boys v. Chaplin [1971] A.C. 356 is that the plaintiff cannot obtain relief here unless the wrong would have been actionable if committed in England and would not have been justifiable under the law of the country where it was committed. The respondents contend that any cases relating to acts of foreign rulers in their own countries are not an exception to the rule in Phillips v. Eyre: see Roskill L.J. [1975] Q.B. 557, 580E-G. If this contention of the respondents' be right, it is surprising that no mention is made of it by the Court of Appeal in Luther v. Sagor [1921] 3 K.B. 532 since it is such a fundamental point of principle. Indeed, in the latter case Scrutton L.J. draws a distinction between the acts of foreign rulers and the rule in Phillips v. Eyre, L.R. 6 Q.B. 1. In Princess Paley Olga v. Weisz[1929] 1 K.B. 718, the Court of Appeal was certainly dealing with the rule applicable to sovereigns and not with the rule in Phillips v. Eyre. They are distinct rules.

The underlying principle to the rule in Luther v. Sagor [1921] 3 K.B. 532 is that the English court will recognise and respect both the sovereign status of a foreign ruler and also his right to exercise sovereign powers

[1982]		898
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within his own territory. The appellants desire to emphasise the double aspect of the rule.

That sovereign status is the effective aspect of the rule where the court is concerned with a foreign decree is supported by the two old English cases of Blad's Case (1673) 3 Swan. 603, and Blad v. Bamfield (1674) 3 Swan. 604. Lord Nottingham L.C.'s observations may aptly be applied here: whatever may have been the position in 1974, the matter is as plain now as it ever will be and it is now time to put an end to these proceedings.

The decision of this House in Duke of Brunswick v. King of Hanover(1848) 2 H.L.Cas. 1 is the basis of the act of state doctrine to be found in the American cases. Thus Underhill v. Hernandez (1893) 65 Fed. 577, 579, 583, refers to the Duke of Brunswick case, 2 H.L.Cas. 1. See also the decision in the Supreme Court: (1897) 168 U.S. 250. It is to be noted that the rule adumbrated in Underhill's case is made without any reference to the United States' constitution. [Reference was made to Potter v. Broken Hill Pty. Co. Ltd. (1906) 3 C.L.R. 479.]

There are five comparable categories of case which stem from the above principle: (1) the doctrine of sovereign immunity itself: Dicey & Morris, The Conflict of Laws, 10th ed. (1980), vol. 1, rule 18, p. 156. This is now governed by the State Immunity Act 1978. The Parlement Belge (1880) 5 P.D. 197 sets out in full the international law rule. (2) As to this rule, the immunity extends to cases where the sovereign is indirectly pleaded: see Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485, 490, 491. The basis of the rule in such cases is plain. The same approach is evidenced in cases where it is not the sovereign but an agent who is involved: see Twycross v. Dreyfus (1877) 5 Ch.D. 605, 618. This is given by Scrutton L.J. as the basis of his decision in Luther v. Sagor [1921] 3 K.B. 532, 555. There is an exception to the rule in relation to immovable property. This is the converse of the rule in British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602. Further, sovereign immunity depends on the status of the sovereign and not on any territorial consideration: Chung Chi Cheung v. The King [1939] A.C. 160, 167 and Buck v. Attorney-General [1965] Ch. 745, 773, perDiplock L.J. See also Carr v. Fracis Times & Co. [1902] A.C. 176. (3) Disputes concerning the title to real property: see British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602 and Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd. [1979] A.C. 508. The speeches in the Moçambique case show plainly that the basis of the decision was not any lack of effectiveness of the English courts. The reason for the rule is comity. (4) The line of cases which includes Cook v. Sprigg [1899] A.C. 572. The courts will not adjudicate on issues arising between states: see, for example, Singhe v. Secretary of State for India (1924) 51 L.R.Ind.App. 359. (5) British act of state cases: see Nissan v. Attorney-General [1970] A.C. 179. In the present case, the matters which were alleged to be acts of state were plainly acts of state, that is, the granting of the concession and the making of the decrees. They come within Lord Pearson's examples in Nissan v. Attorney-General [1970] A.C. 179, 237F - 240G, of obvious acts of state and insofar as they were acts of the British government abroad, the decision in Nissan is directly applicable. See also the judgment of Fletcher Moulton L.J. in

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Salaman v. Secretary of State for India [1906] 1 K.B. 613, 644, for its approach to the consideration of the question of acts of state.

Once a party has proved that a document before the court is an Act of Parliament, be it a public or private Act, the courts cannot go behind it: Pickin v. British Railways Board [1974] A.C. 765, 782E. Similarly, once it has been established that a foreign decree has been duly promulgated, the courts cannot go behind it to inquire, for example, if it was the product of fraud or collusion. If an issue in a case is non-justiciable, the courts will not adjudicate upon it in any circumstances.

To summarise the above contentions: (a) the court will identify the issues in the case. (b) The court will decide the extent of its own jurisdiction. (c) It will decide the status of the foreign sovereign. (d) It will decide whether the foreign sovereign is "impleaded" directly or indirectly. (e) It will decide what is and what is not an act of state. (f) As regards legislation, it will decide whether an act of state is in a proper form. (g) It will decide objectively whether any of the exceptions to the rule of non-inquiry apply. (h) It will decide the procedural consequences of the action when the rule of non-inquiry does apply. But the court will not decide an issue which indirectly impleads a foreign sovereign in his absence and without his consent. Indirect impleading may arise where his agent as such or where his property is at risk or where the validity of his acts of state are put in issue. What amounts to indirect impleading may not be capable of comprehensive definition: this is a matter for the courts.

The two decrees in question here are plainly acts of state. The court cannot decide on the allegation that there was backdating without going behind them.

The court cannot decide whether Buttes or Occidental are entitled to drill for oil without deciding the validity of the respective concessions, meaning their effectiveness in the disputed area. The Ruler of Sharjah is indirectly impleaded by the allegations. The court is asked to decide the effectiveness of these agreements in the absence of the ruler. The court's decision would benefit one ruler and adversely affect the other concerned.

As to the decree of the Ruler of Sharjah dated September 10, 1969, can it be said that the ruler can stand aside and allow it to be said that it was fraudulent and unlawful? If it is conceded that the decree was valid under the law of Sharjah, then there is an unanswerable defence to the conspiracy claim under Phillips v. Eyre, L.R. 6 Q.B. 1. The only act alleged against Buttes and the Ruler of Sharjah which can in any way be said to be unlawful is the backdating of the decree. Unless that allegation is inquired into and Occidental succeed, the claim for conspiracy must fail for want of an unlawful element.

No territorial limitation to the rule in Luther v. Sagor [1921] 3 K.B. 532 is relevant. (i) In Luther v. Sagor the act of state was an exercise of the power to legislate. In accordance with principle such powers exist primarily within the territorial boundaries of the state in question. (ii) In one sense, the acts of state were effective extra-territorially even in Luther v. Sagor and Princess Paley Olga v. Weisz [1929] 1 K.B. 718. The title inferred by the Soviet government could not be impleaded even when the goods remained outside the Soviet Union. What was relevant was that it was in the sovereign power of the Soviet government to exercise control over them.

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(iii) In the present case the Ruler of Iran exercised a different power - the power to declare the limits of his territory. There is no such territorial limitation to the exercise of this power and to say that there is is a circular argument. It leads into the territorial issue which is non-justiciable in any event and it leads to the need to decide between conflicting acts of state. The cases on accession of territory would be subject to exactly the same comment. (iv) It is unnecessary to decide here what other sovereign powers are valid and effective outside the territory. Obvious examples are public ships and armed forces of a foreign sovereign which are subject to the ruler even outside their home territory.

On the issue of the counterclaim the appellants adopt the judgment of May J.

The claim for the injunction in Buttes' slander claim was satisfied pending trial by the defendants undertaking not to repeat the defamatory statements. The defences of justification and fair comment must fail if the court has no jurisdiction to inquire into the territorial issues, or into the alleged backdating of the Ruler of Sharjah's decree and other acts of state. Some potential injustice is inevitable where any privilege or immunity is involved. It is established law that where there is an issue where the absolute privilege of the British government is involved, the English court will not allow that issue to be maintained.

This result is not unique. Parliamentary privilege prevents the court from inquiring into the validity of or impuning anything said or done in Parliament: Pickin v. British Railways Board [1974] A.C. 765; Church of Scientology of California v. Johnson-Smith [1972] 1 Q.B. 522 and Hennessy v. Wright (1888) 21 Q.B.D. 509 are examples of this principle. Thus a plaintiff cannot base an allegation of express malice on, or invite the court to draw an inference of express malice from, words spoken by a member of Parliament in the House of Commons. Further, Parliamentary privilege has the consequence that a defendant in defamation proceedings cannot rely on anything said or done in Parliament to substantiate a plea of justification, when that plea has the effect of impugning matters which have taken place within Parliament.

In conclusion, the House is invited (a) to identify the issues in the appeal; (b) to hold whether those issues are justiciable, and (c) to determine the procedural consequences of any such holding.

Mark Littman Q.C., Elihu Lauterpacht Q.C., Murray Rosen and A. J. Kolodziej for Occidental. As to justiciability, the question here is whether the courts will try the issue at all. The British act of state doctrine only arises where the act is not done under legal right. All the foreign acts of state cases are explicable save one. It is conceded that in Princess Paley Olga v. Weisz [1929] 1 K.B. 718 the third ground of decision was that the matter involved a foreign act of state which raised a complete defence to the proceedings.

On the issue of justiciability, in relation to these proceedings, it is necessary to be clear whether one is considering the whole action or a defence to the action. It might indeed be possible for a court to strike out the defence and counterclaim leaving only the action for slander. This would be an injustice and indeed to take such a course in the present case would be bizarre for the counterclaim here is in respect of a libel. Thus,

[1982]		901
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theoretically, in the circumstances of the present case both parties could receive damages for defamation and, therefore, it would be wrong to allow one of them alone to raise the question of a privilege of this kind. The respondents concede that any privilege raised by way of defence may lead to hardship. When, however, the court is considering, in effect, a new branch or an extension of an existing privilege, the above consideration should be taken into account.

Acts of state are an area of the law where the courts should take special heed of the warnings of applying general maxims: see Yarmouth v. France(1887) 19 Q.B.D. 647, 653, per Lord Esher M.R. and Lissenden v. C.A.V. Bosch Ltd. [1940] A.C. 412, 435, per Lord Wright.

The maxim that is prayed in aid in the present case is: the courts of this country will not sit in judgment on the acts of a foreign sovereign. The cases raise the question, what is meant by "sitting in judgment"? Certainly the respondents asked the courts to sit in judgment on the acts of Buttes. But the Ruler of Sharjah is not a party to these proceedings and therefore the words "sitting in judgment" must bear a wider connotation, for example, "the court will not give a judgment which would entail criticism or might embarrass a foreign sovereign." The authorities do not support such a proposition and, indeed, the following cases run counter to the appellants' contention: Frankfurter v. W. L. Exner Ltd. [1947] Ch. 629; In re Helbert Wagg & Co. Ltd.'s Claim [1956] Ch. 323, 351, per Upjohn J. and Oppenheimer v. Cattermole [1976] A.C. 249, 276E, 277G-H, per Lord Cross of Chelsea. Further, the courts will inquire into whether a law is discriminatory: C. Czarnikow Ltd. v. Centrala Handlu Zagranicznego Rolimpex [1979] A.C. 351, 363G-364D and United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. [1952] A.C. 582, 601.

It is said by Buttes (i) that the boundary dispute is not justiciable and (ii) that any acts of state referable to the facts of the present case are not justiciable. It is the boundary dispute issue that is highlighted in the judgment of the Court of Appeal [1975] Q.B. 557 in 1974. The distinction between the boundary dispute and the act of state issue is interestingly brought out by the decision in the United States Court of Appeal in the second appeal. That court adopted, in effect, the brief of the United States government.

As to the justiciability of the territorial dispute or boundary dispute, this is not a case of a sovereign extending its waters into the high seas but of impinging on the continental shelf rights of another foreign sovereign, U.A.Q. The concession granted to Occidental was given on the footing of the rights of U.A.Q. over the continental shelf. It is said that a central issue in the case concerns the ownership of Abu Musa; whether it belongs to Sharjah or Iran. But that this is not in issue is shown on an examination of the pleadings, namely, the defence and counterclaim and the amended reply and defence to the counterclaim. See also paragraph 16 of the appellants' printed case and paragraph 6 (2) of the respondents' printed case. This branch of the argument will be approached, however, on the assumption that the territorial-boundary question is one which it is necessary for the court to consider in determining the issues. It is the respondents' contention that if at or before the trial of these proceedings a further certificate was given by the Foreign Office in relation to the disputed area certifying

[1982]		902
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that it was within the territorial waters of Sharjah or that it was plainly within the jurisdiction of U.A.Q. such a certificate would be conclusive of the matter. See the British Digest of International Law, vol. 7, Pt. VII (1965), p. 186.

As to the recognition of foreign governments, it will appear that the courts will have to infer from the dealings of Her Majesty's Government whether the alleged government is recognised by Her Majesty's Government: British Digest of International Law, vol. 7, Pt. VII, p. 195. See also In re Chateau-Gai Wines Ltd. and Attorney-General of Canada (1970) 14 D.L.R. (3d) 411 and Oppenheim's International Law, 8th ed. (1955), vol. 1, pp. 765, 766. The rule that parties are not permitted to adduce evidence contrary to information contained in a certificate from the Foreign Office is established by Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811; 82 L.T. 253 and Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797. In the Duff case, attention is drawn in particular to the opinion of Lord Sumner on the question of boundaries. Viscount Finlay took a different view but the difference is not material in the present case because this concerns justiciability. Lord Sumner's opinion is very helpful in that he looks upon the certificate from the Foreign Office as only one way, albeit the best method, of authentification.

Reg. v. Governor of Brixton Prison, Ex parte Schtraks [1964] A.C. 556 is illustrative of how the question may arise in any type of proceeding, there it was extradition, which is of a highly political nature, but the court nevertheless was prepared to consider it. If questions relating to boundaries between foreign sovereign states are non-justiciable, this would be a very serious matter for they arise in relation to extradition cases, divorce cases and criminal cases. Williams v. Suffolk Insurance Co. (1839) 38 U.S. 415 is an interesting example of how a territorial question can arise in relation to a contract of insurance. In the present case at the material time there are letters which amount to statements by Her Majesty's Government that the disputed area was within the concession area of U.A.Q. The materials from 1892 amount, even within Lord Sumner's opinion, of tacit approval by Her Majesty's Government. This issue is a justiciable issue. Contrast the American cases. In the second American case it was held that a boundary claim was an essential dispute. That was in relation to a claim in rem. It was there held that judicial restraint should be exercised. That was because the United States government had intervened by letter stating that it would be embarrassing to the United States government if the matter were heard. This is due to the American doctrine of separation of powers. But this concept is unknown in English law.

As to the appellants' six propositions (1) the rule in British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602, was recently analysed in Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd.[1979] A.C. 508 where it was stated that the rule was correctly set out in Dicey & Morris, The Conflict of Laws, 9th ed. (1973), in rule 79 (10th ed. rule 77). It was said in the Hesperides case, that although the rule has been criticised, it has been established too long and received certain international approval and, therefore, any change in it is for Parliament. The respondents could not contend that the present case falls within the Hesperides rule itself. The origin of the rule in Moçambique arose historically in relation to local actions

[1982]		903
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in England. That has no application here. For the basis of the rule, see the Hesperides case [1979] A.C. 508, 543 et seq., per Lord Fraser of Tullybelton. See also per Lord Wilberforce, pp. 533 et seq., 536C. There is no reason, therefore, for extending that rule to a new field, namely, that of a separate foreign jurisdiction. It has been made plain in a line of cases that the rule does not apply where the question of title only arises incidentally: see, for example, Tito v. Waddell (No. 2) [1977] Ch. 106, 262F et seq., 271F et seq., 310A-F.

As to (2) this has no application here. There is no question of impleading a foreign sovereign. He is not a party to the proceedings. Nor is he indirectly impleaded for there is no attempt in these proceedings to take property either from him or his agent. As to the limitation of the rule in relation to the indirect impleading of a foreign sovereign: see Haile Selassie v. Cable and Wireless Ltd.[1938] Ch. 839 and United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. [1952] A.C. 582.

As to (3), the cases referred to here deal with an entirely different subject matter. All deal with acts of state of the English Crown. They are concerned with the question: (a) whether the act of the Crown out of the United Kingdom can be made the subject of a cause of action against the Crown or a servant of the Crown. (b) The question of State's annexation. That is, whether where there has been an annexation of that kind,whether the obligations of the previous sovereign where territory has been annexed is binding on the Crown. Neither of these questions arise in the present case. That this is the true basis of this line of cases is shown by the way they were treated by this House in Nissan v. Attorney-General [1970] A.C. 179, 210C et seq., per Lord Reid, 216B-G per Lord Morris of Borth-y-Gest, 230G et seq., 234B-G, per Lord Wilberforce.

It was said that municipal courts will not look at or construe parallel instruments between rulers. As a general principle it is not correct that the courts will not construe an international agreement that has not been made part of the law of England or a foreign treaty: see Porter v. Freudenberg [1915] 1 K.B. 857, 865, 866, 874. If the respondents are right on this question, why do the United States courts come to a different conclusion? The reason is because under the United States doctrine of judicial restraint they hold that a matter which raises a political question is reserved to the executive under the doctrine of separation of powers. But that doctrine has no application in English law. As regards the court not intervening for fear of embarrassing the executive, see Kawasaki Kisen Kabushiki Kaisha of Kobe v. Bantham Steamship Co. Ltd. [1939] 2 K.B. 544, 552, per Sir Wilfrid Greene M.R.

As to the act of state issue, the appellants adopted Phillips v. Eyre, L.R. 6 Q.B. 1, and sought to deduce therefrom a general principle that governs the present case. It was necessary for them so to do because none of the sibling doctrines connected with Phillips v. Eyre suffice. These separate doctrines have been established and defined over the last 150 years. In the early years, there appear general statements on the nature of sovereignty but over the last 100 these general observations have been delineated and defined into separate doctrines. This is particularly so in the area of conflict of laws. The cases referred to by the appellants are all explicable in relation to one or other of those principles. It is now sought to merge

[1982]		904
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these principles into one general principle and enlarge its scope so as to deter the courts from trying issues such as those in the present case. The House is reminded of what was said in the Duke of Brunswick v. King of Hanover (1844) 6 Beav. 1, 51, 53.

In considering whether there is some more general rule relating to princes, it should be considered against the background of the general rule of comity. If the appellants' rule were adopted it would be a very great extension of English law and a retrograde step. On the relationship between English law and the law of the United States on this matter, it is not disputed that when Luther v. Sagor [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718 were decided, the Court of Appeal was influenced by United States decisions. This resulted in Princess Paley Olga v. Weisz in the Court of Appeal adding a third ground to the two grounds given by the trial judge for holding that the issue was not triable and that the United States courts drew this inference from the intrinsic nature of sovereignty. But it is an oversimplification to state that English law and the law of the United States are the same on this matter, for subsequently, the United States courts held that this third ground of decision in Princess Paley Olga did not represent the law of the United States: see Banco Nacional de Cuba v. Sabbatino(1964) 376 U.S. 398.

It is a general rule of English conflict of laws that the English courts apply the laws of foreign states as they are subject to questions of English public policy. The respondents will seek to show that the cases relied on by the appellants for the doctrine of acts of state for which they contend are explicable on the well-established rules of English conflict of laws. Thus Phillips v. Eyre, L.R. 6 Q.B. 1, establishes that a plaintiff cannot found an action for tort in England if the act complained of was lawful in the country where it was committed. That is the true explanation of Blad's Case, 3 Swan. 603, on which the appellants place strong reliance. Carr v. Fracis Times & Co. [1902] A.C. 176 is another application of the ordinary principles of conflict of laws although there it is conceded there are references to acts of state. Luther v. Sagor[1921] 3 K.B. 532 is similarly explicable. The mere fact that the law of a foreign country is confiscatory is not sufficient to enable an English court to refuse it recognition. Buck v. Attorney-General [1965] Ch. 745 also falls within the ordinary rules of English conflict of laws.

As to the sibling principles on which the appellants rely, these centre around that of sovereign immunity. On this question see the tacit observations of Lord Atkin in Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485; Rahimtoola v. Nizam of Hyderabad[1958] A.C. 379 and Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529. In the Court of Appeal in the present case [1975] Q.B. 557, 573D, Lord Denning M.R. said that there was no claim to sovereign immunity and, therefore, that doctrine had no application here. The ambit of the English doctrine conferring the defence of domestic act of state to an act, otherwise tortious or criminal, committed abroad by a servant of the Crown against a foreign subject or his property, if that act, committed in the conduct of its foreign relations, is authorised or subsequently ratified by the Crown, is not clearly defined

[1982]		905
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by the authorities and is one of the most obscure branches of English constitutional law: Nissan v. Attorney-General [1970] A.C. 179. The courts, rather than the executive, decide what is an English act of state by looking at all the facts including "intention." This doctrine is wholly distinct from, and there is no basis for its extension or application by analogy in respect of, foreign acts of state. It does not apply to the present case because, inter alia, none of the parties were servants of the Crown nor had the acts complained of been adopted by the Crown, and the Trucial States were at the relevant time under the subjection and protection of the Crown. The Hesperides doctrine [1979] A.C. 508 comes within a quite different branch of the law and should not be extended to questions of jurisdiction or disputes between states or acts of state. The third ground of the decision in Princess Paley Olga v. Weisz [1929] 1 K.B. 718 was considered by Mustill J. in Industria Azucarera Nacional S.A. v. Empresa Exportadora de Azucar (unreported), February 29, 1980, but the judge held that the act of state doctrine there propounded was inapplicable to the case before him.

Lord Langdale M.R. decided Duke of Brunswick v. King of Hanover, 6 Beav. 1, 57, on the grounds of sovereign immunity and declined to decide the issue of act of state which was raised (p. 34). It is important to remember that it was a suit brought against a foreign monarch in this country. The question of act of state also arose in relation to the question of sovereign immunity. It is vital to remember this point when considering the judgment of the House of Lords, 2 H.L.Cas. 1. When the matter came before the House, the House held that they did not deal with it on a presumption for on a perusal of the bill and the acts complained of it was dealt with as a question of sovereign immunity. All the observations are made in the context of the sovereign being brought to account. If the case goes beyond the issue of sovereign immunity, then what was being stated is that the validity of the decrees in question could not be determined in an English court: see 2 H.L.Cas. 1, 21, 22. In other words, it is akin to what was stated as the third ground in Princess Paley Olga v. Weisz [1929] 1 K.B. 718.

As to whether an English court can determine the vires of foreign legislation, see Dicey & Morris, The Conflict of Laws, 10th ed., vol. 2, p. 1212. But see also: King of the Hellenes v. Brostrom (1923) 16 Ll.L.Rep. 167, 193, per Rowlatt J.

As to the appellants' general proposition relating to acts of state, it is pertinent to inquire whether it needs to be so widely formulated. On this question reliance is placed on Banco Nacional de Cuba v. Sabbatino,376 U.S. 398, 418-420, which shows that notwithstanding what had been stated in earlier United States cases the doctrine is not impelled by any inherent principle of sovereignty, nor is it impelled by international law. It establishes that the Supreme Court was not approving of a foreign act of state doctrine. See also resolution II of the 50th Conference of the International Law Association, Brussels, 1962.

If there is this doctrine in English law it should be limited to executive acts and should not be applied when either the acts are done outside the territory or when, although done inside the territory, purport to be extraterritorial in their nature. In the present case, of the acts relied on in

[1982]		906
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the defamation defence some were committed inside Sharjah but are related and intended to take effect outside Sharjah. The doctrine should not be given so wide an extent as to cover matters of the above kind. Thus in Luther v. Sagor [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, related to acts done by the sovereign within his own territory. See also the judgment of Mustill J. in the Industria Azucarera case (unreported) and Reg. v. Lesley (1860) Bell C.C. 220, 228, 234, 235.

Those English cases in which our courts refuse to impugn the acts of a foreign sovereign can all be explained on the grounds that where under the ordinary English rules of conflict of laws a foreign law is applicable to resolve the issues before them, the English courts will generally give effect to the acts of the foreign sovereign concerned insofar as they comprise that foreign law. Beyond this rule, no sacrosanctity attaches, or should attach, to the acts of a foreign sovereign.

When the English conflict rule set out above applies, the court will require the foreign law to be proved as a fact and will consider whether it covers the issues before it. It will then give effect to the recognised act without questioning its validity provided that: (a) the act is committed within the foreign sovereign's proper territorial jurisdiction; (b) to give effect to that act would not be contrary to the public policy of the English forum, and (c) that act is not in breach of international law: In re Helbert Wagg & Co. Ltd's Claim [1956] Ch. 323, 352. The above exceptions are equally applicable to other formulations of the English law as to foreign acts of state.

Although the English court will not otherwise entertain a challenge to the validity of a foreign act of state as annunciated above, this does not mean that it will not exercise jurisdiction in cases when such acts, expressly legislative or otherwise, are part of the factual matrix of the dispute rather than the applicable means of resolving it. On the contrary, it may be necessary to take cognizance of an exercise of foreign sovereign power, and the court can always look into ancillary matters which do not turn on the validity of foreign governmental conduct. C. Czarnikow Ltd. v. Centrala Handlu Zagranicznego Rolimpex [1979] A.C. 351, 363G shows that it is not correct to state that the English court will never go behind a foreign law. [Reference was also made to Oppenheimer v. Cattermole [1976] A.C. 249, 276H et seq.]

In the present case, the respondents alleged that there is a conspiracy to injure - a conspiracy to cheat and defraud Occidental. In the circumstances, the respondents are entitled to proceed with their counterclaim for conspiracy since, inter alia, (i) under international law and the law of U.A.Q. Occidental had vested rights; (ii) in the eyes of Her Majesty's Government, Sharjah had no competency in international law to do what it had done without the approval of Her Majesty's Government; (iii) it is contrary to the public policy of the forum to allow deception and fraud to prevail. [Reference was also made to Mann, Studies in International Law (1973), pp. 420 et seq.]

Lauterpacht Q.C. following. The features of international law in the present case are conclusively determined by the views of the Foreign

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Office letters. It is only if those letters are rejected that international law becomes applicable to the present case.

As to the territorial issue. International law comprises two branches: treaty and custom. Customary international law is the wider spreading branch. It should be able to cover all problems. The treaty branch of international law is akin to statute law in English law. It follows that a breach of a treaty is a breach of international law. Treaties are hierarchically superior, that is, they override customary international law. See article 38 of the International Court of Justice. Where there is a treaty, it must be applied in place of customs, even if customary international law subsequently changes.

Customary international law may be general or particular. The distinction is between general international law which is applicable to all states and particular international law which applies only to certain states or places: Rights of Passage Case (Portugal v. India) (1960) 31 I.L.R. 23, 52. Treaties may take various forms including the form of parallel instruments. This point is referable in particular to the 1964 agreement between the two rulers. As a matter of form, there is nothing defective in a treaty being in two instruments: see article 2 of the Vienna Convention on the Law of Treaties 1969.

In an evolving international situation, the legality of conduct must be tested by reference to the state of the law at the date of the conflict and not what it might have been at some subsequent date: see Island of Palmas Case (United States of America v. Netherlands) [1928] Scott's Hague Court Reports (2d) 84, 100. The legality of the decree of the Ruler of Sharjah must be tested by the law as it stood in September 1969 or March 1970. Subsequent changes cannot be made to operate retrospectively. Before 1971 Sharjah had no right to extend its territorial waters from three to 12 miles because before that date it was a British Protectorate.

The substantive law of the sea is applicable in the area. Before the Second World War there was no concept of a continental shelf. In 1958 the width of the territorial waters was three miles. Then two states, namely, Iran and Saudi Arabia, declared a width of 12 miles. Whatever be the customary international law, the 1964 agreement determines the rights between Sharjah and U.A.Q. This agreement relates to the seabed.

The rightness or wrongness of the conduct of the Ruler of Sharjah is immediately relevant to the act of state doctrine. The island of Abu Musa does not generate a continental shelf up to the 12-mile watermark or the medial line. In international law, there is no absolute rule as to what continental shelf an island possesses. It depends on the topographical context of the island in question. Fothergill v. Monarch Airlines Ltd. [1981] A.C. 251 establishes that a court is entitled to look at the preliminary work leading up to the making of a document; therefore, the court is entitled to look at the views of Her Majesty's Government which led up to the making of the 1964 treaty. There are three maps which cumulatively support the respondents' argument.

Occidental had an acquired right and even if the Ruler of Sharjah had a right to extend his territorial waters to 12 miles and even if he was entitled to make the decree of September 1969, it was not published

[1982]		908
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until April 1970 and, therefore, the Ruler of U.A.Q. and Occidental were entitled to assume that the position was as it had been hitherto. Occidental had an acquired right at the date of the publication of the decree. This right was one which the Ruler of Sharjah should have recognised when the area in question fell under Sharjah's sovereignty.

As to the legal policy of adopting foreign acts of state, see Digest of United States Practice in International Law, 1975, p. 372, which shows the rescission of the American adoption of the acts of state doctrine. See especially pp. 373, 374. Further, public international law is part of the law of England and it can never be the duty of an English court to give effect to a foreign law which offends against international law. The obligation to apply public international law overrides the ordinary rules of private international law: see "Recognition of Foreign Laws by Municipal Courts" by Alexander P. Fachiri in The British Year Book of International Law, vol. 12 (1931), p. 103.

Colin Ross-Munro Q.C., Murray Rosen and David Lloyd Jones for Dr. Hammer. The arguments put forward for Occidental are adopted.

It is proposed to concentrate on the issue of justification as a defence to a libel claim. If the appellants' principle of law be correct, not only will it cause very great injustice, but it will have grave effects in other branches of the law. The following examples illustrate the breadth of the appellants' proposition: (i) the absolute ruler of an East African state is assisted by an aide-de-camp. The ruler issues a decree that all white persons are to leave the country within one month and the aide-de-camp is to carry out that decree. The true motive of the decree is to seize the property of those affected and to divide the spoils between the ruler and his aide-de-camp. "The Times" publishes a true account of the facts. The aide-de camp sues "The Times" for libel and "The Times" pleads justification. The aide-de-camp takes out a summons stating that the plea cannot be heard since it impleads a foreign ruler. (ii) In 1934 the Nazi government in Germany issued a decree setting up concentration camps. The B.B.C. make a film which shows in terms that the motive in setting up the camps was to eliminate the Nazi opposition and the Jews. The film describes the commandant of one of these camps as in substance a murderer. The commandant sues for defamation in this country. The B.B.C. are entitled to prove that what they alleged in their film was true. (iii) A government in a far eastern country decides to commit genocide on its political opponents. It therefore passes a law that any person who does not belong to the government's political party is to be eliminated. The chief of the army staff of that government takes a leading part in the elimination and an English newspaper prints the truth. On bringing an action, the newspaper pleads justification and fair comment. (iv) The absolute ruler of a foreign state has the leader of the opposition party imprisoned and convicted of murder. The ruler desires to obtain a confession from his opponent before he is executed and promises one of his officers that if he obtains the confession the ruler will promote him. In his zeal to obtain a confession he kicks his victim to death. There is a cover up and the dead man is hanged. An English newspaper publishes the truth and the officer sues for libel. The newspaper pleads justification and fair comment. (v) A ruler issues a

[1982]		909
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decree that all his political opponents must return from exile within one month or they will be executed. One of his political opponents is in England and stays in England after the stated period. The ruler agrees with his chief of police that the latter will go to England to search out the opponent and have him executed in England. The police chief comes to England and hires a gunman but before tracking down their victim, both the chief of police and the gunman are arrested by the English police. On the police chief are found the decree and other incriminating documents and he makes a voluntary confession. At the trial of the police chief for attempted murder, the Crown seeks to call as a witness the police officer who found the decree and the incriminating documents and the Crown seeks also to prove the confession. The defence puts forward the plea that to allow this would be to incriminate a foreign ruler. (vi) In England, H. sues W. for divorce for adultery and a foreign sovereign is cited as co-respondent. The foreign ruler pleads sovereign immunity. W. makes a confession but later decides to defend the suit and he then applies to strike out the petition because it is indirectly impleading a foreign sovereign in his absence and without his consent.

In relation to examples (i) to (iv) it is submitted that an English court would and should allow the defence of justification and fair comment and that in relation to (v) the court would allow the prosecution to adduce evidence of the decree, the documents and the confession. In respect of (vi), the court would allow the evidence to be given as evidence against the wife.

The reason why the respondents rebut the appellants' proposition is that where in an action for defamation, the defence is justification and/or fair comment, the mere fact that the court has ancillary to the main investigation "incidentally" to inquire into a ruler's act of state, this does not preclude it from so doing and that the court will not strike out a defence of truth because its inquiry might embarrass a foreign ruler. On "incidentally" reliance is placed on Bradlaugh v. Gossett (1884) 12 Q.B.D. 271, 274. To take an example based on Pickin v. British Railways Board [1974] A.C. 765, if a plaintiff alleged that the defendants had bribed a member of Parliament to promote a private bill, the plaintiff would not be entitled to query the validity of the bill or the proceedings of the House of Commons, but he could lead evidence that the member of Parliament had, outside the House, received a bribe. In British South Africa Co. v. Companhia de Moçambique [1893] A.C. 602. 626, the language of Lord Herschell L.C. is comparable to that of Lord Coleridge C.J. in Bradlaugh v. Gossett, 12 Q.B.D. 271. The contrast is between, founded on, and incidental to. Reliance is also placed on the statutory example of section 4 (1) (b) of the Fugitive Offenders Act 1967 insofar as when this Act was passed it was never suggested that this constituted an exception to some English foreign act of state doctrine.

If the act complained of is founded on an act of state, then the English court can do nothing, but if it is merely incidental thereto, then the matter is justiciable. Thus, for example, a foreign ruler and his chief of police in England conspire to murder some person. Both are arrested and charged with conspiracy to murder. The ruler could plead

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sovereign immunity but it would be a good charge against the chief of police.

It is to be observed that up to the present time, no English court has struck out a plea of justification in circumstances such as the present. In the present case both May J. and all members of the Court of Appeal have refused to strike out the plea of justification. What Dr. Hammer did was to impute improper methods to Buttes and that Buttes and the Ruler of Sharjah had agreed upon the backdating of the decree and this was done so as to cause the greatest inconvenience to Occidental. Dr. Hammer will seek to prove what is set out in [1975] Q.B. 557, 569G-571C. If this is proved, then it amounts to a complete defence to the libel proceedings. The appellants rely on the Church of Scientology of California v. Johnson-Smith [1972] 1 Q.B. 522 but that does not afford a helpful analogy. It is based on Parliamentary privilege and, in particular, the House of Commons must have complete control over its members. Since the Bill of Rights, freedom of speech has been enshrined in the constitution. Further, it is to be observed that the injustice alleged in that case is limited to the fact that the plaintiffs could not plead malice.

Mark Littman Q.C. on the discovery appeal. This appeal concerns an application by the appellants, Dr. Armand Hammer and Occidental, for discovery of certain documents admittedly in the possession, custody or power of the respondents, Buttes Gas and Oil Co. and John Boreta, and admittedly relevant to matters in issue. In their opposition to the application for discovery, although they indicated that they themselves wished to disclose many of the documents (being copy documents lawfully obtained from the Ruler of Sharjah), Buttes and Mr. Boreta objected to produce them on the grounds: (i) of an alleged doctrine of foreign state privilege and (ii) of legal professional privilege.

The application was heard originally by Master Warren who rejected both grounds and ordered production. On appeal, McNeill J. likewise rejected the claim for foreign state privilege but upheld the claim for legal professional privilege as respects many of the documents. On a further appeal, the Court of Appeal unanimously rejected the plea of foreign state privilege and made no conclusive determination on the issue of legal professional privilege. However, the Court of Appeal refused production of the documents on grounds not argued by Buttes and Mr. Boreta either in the court below or in their cross notice of appeal and respondents' notice, but raised by members of the Court of Appeal themselves. Donaldson L.J. and Brightman L.J. refused production on the ground that the court should recognise a new category of United Kingdom public interest immunity relating to copies of confidential documents of a foreign sovereign which are in the possession of a third party and that the present documents should be regarded as attracting that immunity, notwithstanding that the Foreign and Commonwealth Office has refused to intervene in support of such a claim on the grounds that it knew of no overriding considerations of national interest why it should do so. Lord Denning M.R. rejected this ground, but nevertheless refused production primarily on the ground that the court's powers with respect to discovery were discretionary, that the court was entitled in a proper

[1982]		911
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case to exercise "judicial restraint," and that the present application constituted a "new case" in which restraint should be exercised in as much as it would be contrary to the comity of nations to order discovery without the consent of the foreign sovereign concerned because of the political sensitivity of the matters involved.

Accordingly, the main issues in this appeal are: (1) whether there should be recognised a new class of public interest immunity, as found by the majority of the Court of Appeal and, if so, whether in this case, the balance of the public interest was against production; and (2) whether there should be recognised, as found by Lord Denning M.R., a doctrine of "judicial restraint" and whether the circumstances in this action constituted a case to which it should be applied.

This appeal proceeds on certain assumptions: (i) since the documents are relevant and are admittedly in the custody and control of Buttes, Occidental are entitled to them. There is a strong public interest that discovery should be ordered. (ii) The issues on the pleadings are justiciable. (iii) There is no separate head of foreign state privilege. This issue was rejected by Master Warren and McNeill J. and it was abandoned in the Court of Appeal. (iv) There is no legal professional privilege in relation to the documents in question. (v) Delay is not a factor in the present case. (vi) The English court is a suitable forum for determination of the present issues.

For the history of the proceedings relating to discovery: see [1981] Q.B. 223, 228A-230C. Occidental concede that when the documents were in the hands of the Ruler of Sharjah, they were confidential initially and also that when Buttes were given copies of these documents by the ruler, they received them in confidence in the sense that they were handed over for a particular purpose. But it is not conceded that they remained confidential nor that the affidavits show how these documents would injure the interests of the Ruler of Sharjah. Further, it is not conceded that there is a high degree of current sensitivity, in the light of the fact that these documents have now passed into history. The trial of this case without production of these documents would be one of great difficulty and peculiarity.

The general approach of Lord Denning M.R. is wrong: see the judgment of Brightman L.J. [1981] Q.B. 223, 262D - 263H, adopting the approach of Lord Hailsham of St. Marylebone in D. v. National Society for the Prevention of Cruelty to Children [1978] A.C. 171, 224-226. Lord Denning M.R.'s approach amounts to holding that the court is free to consider the circumstances in each particular case. True, discovery is discretionary but it has been said that a litigant has a right to discovery. The Master of the Rolls was also influenced by his view on justiciability [1981] Q.B. 223, 242D. On the hypothesis that the matters are justiciable it is quite illogical to hold that, although the case can be heard by the courts, nevertheless discovery should be limited. Lord Denning M.R. was also influenced by the view of the legal adviser to the State Department. But that view is not part of English law. He was also influenced by the political sensitivity of the issues involved [1981] Q.B. 223, 242D. In considering the undesirability in the public interest of these documents being disclosed, Lord Denning M.R. has not paid sufficient weight to the views of the Crown. Further, his opinion

[1982]		912
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that the documents should not be disclosed on the grounds of judicial restraint because the Ruler of Sharjah has not permitted their disclosure is inconsistent with his views on foreign state privilege: see [1981] Q.B. 223, 247E, 247F-G. Finally, even if the matter be approached in this way, its applicability to these documents is doubtful: see [1981] Q.B. 223, 263D - 266B, per Brightman L.J.

Public interest immunity constituted the majority's judgment in the Court of Appeal. It is concerned with the class of documents and not with their contents. With regard to the general principles of law applicable: (a) discovery is the ordinary right of a litigant: Conway v. Rimmer [1968] A.C. 910, 955C, per Lord Morris of Borth-y-Gest. (b) Discovery is also a matter of the public interest from the point of view of the administration of justice: Conway v. Rimmer [1968] A.C. 910, 959F, per Lord Morris of Borth-y-Gest; D. v. National Society for the Prevention of Cruelty to Children [1978] A.C. 171, 223D, 225D, per Lord Hailsham of St. Marylebone, 231C, per Lord Simon of Glaisdale and Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] A.C. 1090, 1134, per Lord Keith of Kinkel. (c) This places a heavy burden on anyone who states that there is another facet of public interest which overrides the above public interest: see D. v. National Society for the Prevention of Cruelty to Children[1978] A.C. 171, 223D, per Lord Hailsham of St. Marylebone; 246D, per Lord Edmund-Davies. What must be shown is that non-disclosure of the documents must be necessary for the proper administration of the public service: Conway v. Rimmer [1968] A.C. 910, 940, 952G, perLord Reid. (d) A class claim requires even more careful analysis and perusal: Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] A.C. 1090, 1117C. (e) With regard to the views of ministers where it is likely that they know the field better than the court, the court will be slow to upset their views: Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] A.C. 1090, 1112E-H, per Lord Wilberforce who at p. 1117G adopts the approach of Bridge L.J. in the Court of Appeal [1979] 1 W.L.R. 473, 491G - 492E. See also Conway v. Rimmer [1968] A.C. 910, 952, per Lord Reid, 955G, per Lord Morris of Borth-y-Gest. But Occidental contend that where the minister has declined to give a certificate, that is of equal importance to the case where he has granted one. (f) Confidentiality alone does not suffice, there must be another factor: Conway v. Rimmer [1968] A.C. 910, 957C; Alfred Crompton Amusement Machines Ltd. v. Customs and Excise Commissioners (No. 2) [1974] A.C. 405, 429B; D. v. National Society for the Prevention of Cruelty to Children [1978] A.C. 171, 218A. (g) Where either there is a content or a class claim, various conflicting interests have to be weighed in the balance. (h) But there is no general discretion to refuse discovery solely on the ground of public interest. (i) Embarrassment to the executive is not in itself a ground for granting public interest immunity: D. v. National Society for the Prevention of Cruelty to Children [1978] A.C. 171, 243C, per Lord Edmund-Davies. (j) It is emphasised that the refusal of the Crown to give a certificate after being given an opportunity so to do is of equal significance as in the case where they grant a certificate. This proposition is implicit in the earlier cases and it is explicit in the Australian case of Sankey v. Whitlam (1978) 142 C.L.R. 1, 44, 45. That case is cited under three heads: (i) the significance to be

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attached by the courts to the fact that the Crown in an area where it is particularly concerned has not thought fit to grant a certificate. This should carry great weight. (ii) Where the material in question has passed into history: 142 C.L.R. 1, 96-98; (iii) where the material, although highly confidential, has been published: 142 C.L.R. 1, 64, 65.

As to the relevance of a trend for more open government: see Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] A.C. 1090, 1134E, per Lord Keith of Kinkel, 1144F, per Lord Scarman.

In conclusion, the new class will not be recognised unless it is really necessary because (a) once a class is established, it will remove from scrutiny all the contents of that class and (b) a claim for immunity of a class is often nebulous in its nature: Burmah Oil Co. Ltd. v. Governor and Company of the Bank of England [1980] A.C. 1090, 1132E, per Lord Keith of Kinkel.

It is not necessary in the present case to admit a new class because there is a sensible alternative. The documents in question can be sent to the Foreign and Commonwealth Office and it can be decided on a contents basis whether they ought to be disclosed. There is no general principle relating to documents between foreign states: they are to be dealt with on an ad hoc basis. As to the attitude of the Foreign and Commonwealth Office, Occidental know of no case where the Crown, having seen the documents in question and intimated that they do not intend to intervene, the courts have taken a different course. To accede to Buttes' request is inconsistent with the rejection by all the courts hitherto of the foreign state privilege doctrine.

If there is a comity principle in relation to the question, "do as you would be done by," then one comes back to the court assessing the various public interests. In particular here, the damage likely to be done to the foreign sovereign. It would give him a right of veto one greater than that of the Crown which only has protection in relation to certain classes of documents. Even if contrary to the above submissions the documents in question fall into a new class of privileged documents, it is submitted that in the circumstances the public interest in disclosure is greater than that of non-disclosure in the circumstances. Reliance is placed on the letter from the Foreign and Commonwealth Office and also on Sankey v. Whitlam, 142 C.L.R. 1. Further, these matters have passed into history and are stale. In large measure they have been published by being handled in the public domain or deployed by Buttes in their own pleadings, especially in their reply. The heavy burden of proof resting on those who contend that these documents should not be disclosed has not been discharged. In conclusion, article 24 of the Vienna Convention on Diplomatic Relations 1961 has no possible application to the present case. That refers to archives and the documents of a diplomatic mission. Lonrho Ltd. v. Shell Petroleum Co. Ltd. [1980] 1 W.L.R. 627 is distinguishable for in that case the Crown came in and entered objection to disclosure.

Evans Q.C. in reply on the jurisdiction appeal. The essence of the present case can be put thus: which of two states has the right to grant an oil concession in part of the Arabian Gulf? It is not a case in which only one sovereign is involved but it is a dispute between two rival concessionaires. If there was only one sovereign involved, there would be no territorial dispute. Nor is this a case where a decree has been accepted as to its terms.

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Here Occidental must show that it was not made on September 10, 1969. But this is a case where the court is concerned with sovereign acts and not solely with commercial transactions.

The question arises: did Occidental acquire an alleged vested right to explore for oil within 12 miles of Abu Musa from the Ruler of U.A.Q. in November 1969? The answer to this question depends on whether the Ruler of U.A.Q. had exclusive sovereign rights up to three miles of the seabed of Abu Musa. By virtue of the Continental Shelf Convention 1958, article 1, if Occidental's allegation is right, then in 1964, the Ruler of Sharjah gave up all continental shelf rights to Abu Musa.

If Occidental did have a vested right, then how and why were they deprived of that right? "How" is clear: it is a catalogue of acts of state. To the question "why?" Occidental allege a conspiracy between the Ruler of Sharjah and Buttes. The allegation of fraud or unlawful conduct is at the heart not only of the conspiracy counterclaim but also of the defence of justification to the slander action. All the states concerned acted out of self-interest and these acts cannot be investigated without inquiring into the motives for those acts. The House is reminded of the observations of Viscount Simon L.C. in Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch [1942] A.C. 435, 445 of the danger of the court being led into a quagmire of mixed motives.

It was said that the appellants are seeking to extend the decision in Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd. [1979] A.C. 508 to cover the present case. This is not so. Given the rule in the Hesperides, this is an a fortiori case and within the rule. Reliance is placed on the speech of Lord Wilberforce in Hesperides [1979] A.C. 508, 537, with whom Lord Salmon and Lord Keith of Kinkel agreed. If the rule is based on sovereignty, then a dispute concerning sovereignty must be within it. Occidental asserts a vested right to drill for oil. That may involve a decision on whether there is any property to drill in the area in question. This plainly would come under the rule in the Hesperides. In Tito v. Waddell (No. 2) [1977] Ch. 106, Sir Robert Megarry V.-C. specifically stated that there were no rival claims. The rule in the Hesperides applies to all three aspects of the territorial issue here.

As to United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. [1952] A.C. 582, the bailment limb of the argument had gone and therefore the sovereignty issue had disappeared. On the question whether the property cases have any direct application, there is nothing more that affects the oil revenues of an Arab ruler than a property dispute relating to a concession.

An analysis of Cook v. Sprigg [1899] A.C. 572 shows that it did relate to a question of annexation. It is one of a line of cases that support the proposition that the laws of sovereign states override municipal laws.

As to the role of the Foreign and Commonwealth Office in this matter, the respondents do not face up to the question what is to happen when what is in issue depends on a question of law. It is not the function of the Foreign and Commonwealth Office to determine questions of law, as here, where there is a dispute concerning property rights. Certificates issued by the Foreign and Commonwealth Office are limited to questions of fact. If the issue was one of law, then there is no scope for a certificate determining

[1982]		915
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such question of law. In those circumstances, the court is left with the rule in the Hesperides case [1979] A.C. 508. The issue may depend on recognition, in which case the certificate of the Foreign and Commonwealth Office is conclusive: Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797 and Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811. The issue may be one of fact in which case the court takes judicial notice, or if necessary, the court seeks information from the Foreign and Commonwealth Office. Such a statement is not conclusive for the answer may be that the facts are unclear; for example, because of the present war between Iraq and Iran, the boundary between the two countries may be uncertain. Where the issue is one of law, however, it is emphasised that a certificate is inappropriate and the issue is non-justiciable in a municipal court. Where the facts are clear, however, a certificate is conclusive: see Mighell v. Sultan of Johore [1894] 17 Q.B. 149, 158, per Lord Esher M.R., and the observations of Lord Atkin in The Arantzazu Mendi [1939] A.C. 256, 264, where his Lordship said that he did not accept the opinion implied in the speech of Lord Sumner in Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797 that recourse to the Secretary of State was only one way a court could ascertain the fact of sovereignty.

As to act of state, there is a direct line of cases which establishes that there is such a rule. The first case is Blad's Case, 3 Swan. 603. Duke of Brunswick v. King of Hanover, 2 H.L.Cas. 1 shows that it was then limited to sovereign acts committed abroad. It was then extended to cover all acts committed by a sovereign, even those committed in their private capacity: Mighell v. Sultan of Johore [1894] 1 Q.B. 149. For a recent example of a limitation on the doctrine of sovereign immunity: see Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529.

The act of state rule was incorporated into the law of the United States by Underhill v. Hernandez, 168 U.S. 250 where it was stated to be founded on Duke of Brunswick v. King of Hanover, 2 H.L.Cas. 1. It was also recognised by the High Court of Australia in Potter v. Broken Hill Pty. Co. Ltd., 3 C.L.R. 479. It was expressly adopted into English law by the Court of Appeal in the reserved judgment in Luther v. Sagor [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718 and was resoundingly confirmed by the Supreme Court of the United States in Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398. Further it was recognised in Buck v. Attorney-General [1965] Ch. 745 and by Mustill J. in Industria Azucarera Nacional S.A. v. Empresa Exportadora de Azucar. Dr. Mann in "The Sacrosanctity of the Foreign Act of State," 14 International and Comparative Law Quarterly, p. 985 welcomed the decision in Buck v. Attorney-General. As to the expression "cannot sit in judgment on" to be found in some of the cases, it was decided by Duke of Brunswick v. King of Hanover, 2 H.L.Cas. 1 that it means, "cannot adjudicate on": see also Salaman v. Secretary of State for India [1906] 1 K.B. 613. Further, the courts will not inquire into the motives of foreign acts of state: C. Czarnikow Ltd. v. Centrala Handlu Zagranicznego Rolimpex [1979] A.C. 351, 364C.

Is the rule an application of Phillips v. Eyre, L.R. 6 Q.B. 1? As regards executive acts within the territory, this comes within the third ground of the decision in Princess Paley Olga v. Weisz [1929] 1 K.B. 718. Phillips v. Eyre was not referred to in Luther v. Sagor [1921] 3 K.B. 532 and it is

[1982]		916
A.C.	Buttes Gas v. Hammer (H.L.(E.))

plain that the Court of Appeal consider that it was establishing a separate rule. The true basis of the English court recognising the validity of a foreign law promulgated within the territory of a foreign sovereign is that it is the true expression of the will of the sovereign within his territory. That is a question of fact. [Reference was made to King of Hellenes v. Brostram, 16 Ll.L.Rep. 167, 192.]

As to whether there is a territorial limit to the rule in Luther v. Sagor[1921] 3 K.B. 532, the true test is that laid down in the Duke of Brunswick case, 2 H.L.Cas. 1. The distinction is between recognising the territorial sovereignty of a foreign sovereign and recognising the sovereign powers of a foreign sovereign outside his territory: Reg. v. Lesley, Bell C.C. 220. The correct test is laid down by Lord Cross of Chelsea in Oppenheimer v. Cattermole [1976] A.C. 249, 277D. The basic distinction for the purposes of recognition is that recognition de facto only extends to territory over which the sovereign has power in fact but recognition de jure entails recognition of the sovereign outside the territory: Haile Selassie v. Cable and Wireless Ltd. [1938] Ch. 839.

As to the relationship of conflicting acts of state, there is no example in the English courts, and in the United States, only the two proceedings of Buttes v. Occidental.

The two exceptions to the act of state rule referred to by Occidental prove the rule. (i) The public policy exception relating to thoroughly immoral acts. Luther v. Sagor [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718 show how limited this exception is. (ii) Acts contrary to international law. The proper test and full scope of this exception is that laid down by Lord Cross of Chelsea in Oppenheimer v. Cattermole [1976] A.C. 249.

As to acts of Her Majesty's Government: see Nissan v. Attorney-General[1970] A.C. 179, 207B, 213E, per Lord Reid, 232B, per Lord Wilberforce.

The acts of state issue and the conspiracy issue are non-justiciable. As to the conspiracy issue, this is covered by the Hesperides case [1979] A.C. 508, 535H, 541G.

As to the slander claim, generally any example which raises an issue of a foreign sovereign's act outside the United Kingdom is covered by the decision in Cook v. Sprigg [1899] A.C. 572. The examples should be judged against the following tests: (a) does the plea allege that the act of state was invalid or inefficacious? (b) Does the plea refer to a sovereign act? (c) Does the inquiry go further than the persons involved in it? (d) Does any British public policy exception apply? (e) Does the example introduce a conflict with United Kingdom territorial jurisdiction?

To analyse shortly the examples: example one does not include an allegation that the decree in question was invalid. The gravamen of the libel is that you the aide-de-camp are the kind of person who would lend himself to the conduct alleged. Example two, the gravamen of the libel is that you are a person who would kick someone to death. This does not bring in issue the validity of the decree. Example three is on the fringe of the public policy question raised in Luther v. Sagor [1921] 3 K.B. 532. Example five involves at once English territorial jurisdiction. Example six is manifestly not a sovereign act.

[1982]		917
A.C.	Buttes Gas v. Hammer (H.L.(E.))

In conclusion, Bradlaugh v. Gossett, 12 Q.B.D. 271, does not impinge at all on the rule against non-inquiry; it relates purely to proceedings to the House of Commons.

Jennings Q.C. following on matters of public international law. The endeavour will be to identify certain issues of international law which seem to be inextricably bound up with the way Occidental puts its case. The theme to be examined is the element of unlawfulness which is a necessary part of Occidental's case. Insofar as the court is dealing with Occidental's rights in the matter, international law has no law of property and, therefore, Occidental's rights must originate in the law of U.A.Q. Occidental is then faced with translating that law into international law.

Where is this element of unlawfulness in international law to be found? (1) The treaty argument. This is a question of interpretation. [Reference was made to the Vienna Convention on the Law of Treaties, 1961, articles 31 (1), (3) (b), 32]. Islands are in the same position as mainlands in generating a continental shelf. But every island is in principle entitled to a continental shelf in addition to a territorial sea. In what circumstances can an island not have a continental shelf or only a small one? This can arise where there is an international boundary between two states. An island might have less than a three-mile territorial sea. [Reference was made to article 6 of the Continental Shelf Convention (1958)]. In principle, an island does and should have a continental shelf, but in certain circumstances, it would be bereft of a continental shelf. Let it be assumed that the 1964 declaration was a treaty in international law. The first feature of a notion of a treaty in international law is that it has identifiable parties like those to a contract made under municipal law. Presumably in the present case, they are Sharjah and U.A.Q. But not every breach of a treaty is a breach of international law. There are such matters as waiver, the making of a new treaty, and a ratification of a change of the terms of a treaty. This issue raises the fundamental question, would it be right for a domestic court to hold that there has been breach of a treaty when the parties to the treaty have made no claim of a breach and in fact where they had made a new arrangement?

(2) The alleged unlawfulness of the Sharjah decree. It is conceded that the decree is lawful under the law of Sharjah; therefore, Occidental must show that it is unlawful in international law. But Sharjah did nothing which was unlawful in international law. What did Sharjah do which was unlawful in international law in extending the limit to 12 miles? Further, the alleged backdating of the decree is not contrary to any rule of international law.

(3) Occidental on the issue of vested rights would have to prove that it did indeed have vested rights in the area and that Sharjah somehow took over that area but subject to Occidental's vested rights. But a successor cannot be in a worse position than its predecessors and it is doubtful whether Occidental could have had any recourse against U.A.Q. and, therefore, Sharjah cannot be in a worse position.

Bathurst Q.C. responding in the discovery appeal. Issues over discovery come down to a matter of discretion. The discretion is to

[1982]		918
A.C.	Buttes Gas v. Hammer (H.L.(E.))

be exercised according to established rules. Public interest immunity is an established rule and it is for the court to decide the question of public interest: R.S.C., Ord. 24, r. 8, 11, 15. Since 1977, Buttes have stated that they desired to produce these documents but that the Ruler of Sharjah objected. Buttes make this claim on behalf of the Ruler of Sharjah since he cannot make it himself. It is pertinent to observe that it is vital for Buttes' financial interests that they continue to have good relationships with the Ruler of Sharjah.

It is the present Ruler of Sharjah who makes this request concerning his documents. It was said that the documents have passed into history. But the Public Records Act 1967 prescribes a period of 30 years before documents are made available to the public and this includes Foreign Office documents. In the circumstances, it cannot be said that these documents have passed into history.

It is common ground that the categories of public interest are not closed: D. v. National Society for the Prevention of Cruelty to Children[1978] A.C. 171, 226A-B, per Lord Hailsham of St. Marylebone; 236F, per Lord Simon of Glaisdale. It is also common ground that the court may raise the issue of public interest immunity even though the parties do not: Reg. v. Lewes Justices, Ex parte Secretary of State for the Home Department [1973] A.C. 388, 406E, per Lord Pearson; Duncan v. Cammell, Laird & Co. Ltd. [1942] A.C. 624, 641-642, per Viscount Simon L.C.

Insofar as the national interest of the United Kingdom is concerned, foreign relations are already an established category of public interest: Science Research Council v. Nassè [1980] A.C. 1028, 1087G, per Lord Scarman; Nissan v. Attorney-General [1970] A.C. 179, 235E, per Lord Wilberforce. Further, it is common ground that in the present case the public interest here lies in the field of foreign relations.

If the Sharjah documents sought to be produced were originals, then as the property of the Ruler of Sharjah, he could intervene in these proceedings without waiving his immunity. He could then claim for himself and his documents immunity from jurisdiction of the English courts. [Reference was made to the State Immunity Act 1978.]

There is a considerable difference between the Crown as an executive power before the English court and a foreign sovereign, for the Crown is generally subject to the jurisdiction of the English courts whilst a foreign sovereign is generally immune. It was suggested that the documents of a foreign state should be governed by a certificate in the same manner as in relation to documents of Her Majesty's Government. Surely this is a recipe for diplomatic disaster. Article 24 of the Vienna Convention on Diplomatic Relations of 1961 which is re-produced in Schedule 1 to the Diplomatic Privileges Act 1964 provides that the archives of a diplomatic mission "shall be inviolable at any time and wherever they may be"; and there is a parallel provision for consular archives: see Ghosh v. D'Rozario [1963] 1 Q.B. 106. It would be extraordinary if the archives of a diplomatic or consular mission were more generously treated than the documents of the sovereign himself.

The reason why papers in relation to the mediation should not be disclosed are: (i) the mediation was an attempt at reaching a settlement

[1982]		919
A.C.	Buttes Gas v. Hammer (H.L.(E.))

between the Rulers in question and also between the parties to the present litigation; (ii) the information was forwarded by the ruler to the mediator in confidence and was received as such. The present claim to privilege is akin to the class claim in Lonrho Ltd. v. Shell Petroleum Co. Ltd. [1980] 1 W.L.R. 627, 638. It was the expectation of the Ruler of Sharjah that his documents should be kept confidential. If Occidental succeed on this issue there would be a grave danger that, in the future, mediations would be at risk if foreign sovereigns came to think that as a result of this case their confidential documents could subsequently become available for the purposes of a trial in an English court. Attention is drawn to the Protection of Trading Interests Act 1980, section 2 (1) (a), (b), (4). The application of judicial restraint here is only an exercise of the discretion writ large in a case of discovery of this character.

In conclusion, the court should recognise in the present case that it is in the public interest of the United Kingdom that the contents of a confidential document addressed to, or emanating from, sovereign states or covering the interests of sovereign states arising in connection with an international territorial dispute between sovereign states should not be made the subject of an order for production where the states concerned for reasons of state refused consent to such disclosure. As regards the exercise of discretion, there is a special reason for not ordering production of such documents in a case where the court is asked to re-open and review an international territorial dispute which has been resolved for the time being by agreement between the states concerned. The above propositions do not conflict with the statement of the Foreign and Commonwealth Office that no British national interest is involved and they are in accord with the view of public interest to which the Foreign and Commonwealth Office presubscribes.

Littman Q.C. in reply on the discovery appeal. As to the. mediation documents, they were taken into account by the Foreign and Commonwealth Office in deciding where the public interest lay. Lonrho's case [1980] 1 W.L.R. 627 is distinguishable. As to the 30 years' rule, see Attorney-General v. Jonathan Cape Ltd. [1976] Q.B. 752, 767, 770F. Ghosh v. D'Rozario [1963] 1 Q.B. 106, was a question of diplomatic immunity and has no relevance to the present proceedings.

Their Lordships took time for consideration.

October 29.LORD WILBERFORCE. My Lords, this action and counterclaim arise from the discovery of oil in a "location" (hereafter referred to as "the location") in the sea bed of the Arabian Gulf. This lies about nine miles from an island called Abu Musa. This island is about 40 miles distant from the southern shore. On that southern shore are two neighbouring Arab Emirates, Sharjah and Umm al Qaiwain (U.A.Q.). The island of Abu Musa is, and at material times was, recognised by both Emirates and by Her Majesty's Government in the United Kingdom to belong to Sharjah. As the result of various events occurring in 1969-73 Buttes Gas and Oil Co. ("Buttes") emerged as concessionaire entitled to exploit the location, to the exclusion of Occidental Petroleum Corporation

[1982]		920
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

("Occidental"): out of this situation, which was unwelcome to Occidental, the present litigation arose. Both companies are incorporated in California, United States of America. (References hereafter to Occidental include reference where appropriate to its local subsidiary in the Gulf, and include, if necessary or relevant, Dr. Armand Hammer, its chairman and coappellant/respondent.)

It is necessary to describe the history of the litigation. It was triggered by a press conference given in London on October 5, 1970, by Dr. Hammer. At this conference he accused Buttes (inter alia) of using improper methods and colluding with the then Ruler of Sharjah to backdate a decree by the ruler extending the territorial waters of Sharjah, in respect of Abu Musa, from three miles from the coast of the island to 12 miles so as to obtain for themselves the benefit of the oil-bearing deposit at the location which he claimed was discovered by and belonging to Occidental.

On October 18, 1970, Buttes issued a writ against Occidental and Dr. Hammer claiming damages for slander, and obtained leave to serve it out of the jurisdiction under R.S.C., Ord. 11. On July 21, 1971, the Court of Appeal ("first decision") dismissed an application by the defendants to have this order set aside. Leave to appeal to the House of Lords was refused both by the Court of Appeal and by this House.

On April 7, 1972, the defendants delivered their defence and counterclaim. The defence contained a full and elaborate justification of the slander, alleging the backdating of the decree of the Ruler of Sharjah at the request or on the advice of Buttes and setting out a whole sequence of events which, it was said, resulted in operating limits, excluding the location, being imposed on Occidental.

The counterclaim repeated the factual allegations in the defence and then alleged that, in or about December 1969 and onwards, the plaintiffs, the then Ruler of Sharjah and others whom Occidental could not then particularise:

"wrongfully and fraudulently conspired ... to cheat and defraud [Occidental], and further or alternatively to cause and procure Her Majesty's Government and others to act unlawfully to the injury of [Occidental]."

A number of overt acts (as pleaded in the defence) were alleged as a result of which Occidental and its local subsidiary or associate were "permanently deprived of their rights" to exploit the location. They claimed damages amounting to more than U.S.$4,000,000.

The counterclaim also alleged that Mr. John Boreta, president of Buttes (joined as defendant to the counterclaim), had libelled Occidental on July 14, 1970, in a report to the shareholders of Buttes in which he said that certain United States proceedings brought by Occidental against Buttes were, in the opinion of Buttes's attorneys, "wholly without merit."

On July 7, 1972, a summons was issued by Buttes seeking an order that the court should not exercise jurisdiction in respect of certain specified acts being acts of state of the Governments of Sharjah, U.A.Q., Iran and the United Kingdom: alternatively, that certain specified parts of the defence and counterclaim should be struck out or all proceedings stayed

[1982]		921
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

as to any issue arising therefrom on the ground that they raised matters which are acts of state. A further summons, dated November 16, 1972, requested that service of the counterclaim on Mr. Boreta should be set aside. After proceedings before Master Warren and, on appeal, May J. (who acceded in part to Buttes's application) the summonses came before the Court of Appeal.

The decision ("second decision") of the Court of Appeal [1975] Q.B. 557, was given on December 5, 1974. The court refused to strike out the conspiracy counterclaim or parts of the plea of justification, or the libel counterclaim. Lord Denning M.R. based his decision in the main upon his conclusion that the scope of "act of state" was ill-defined in English law but that it did not extend as widely as in the United States where the courts had refused to entertain an action by Occidental against Buttes in respect of the same issues as those raised in these proceedings. Roskill L.J. held that the power to strike out should be used sparingly and only in a clear case: the present action was not such a case since it involved difficult questions of general importance and the grounds of defence or causes of action were far from obviously bad and unarguable.

Against this decision, Buttes and Mr. Boreta sought leave to appeal to this House, but their application was refused by an Appeal Committee on February 27, 1975.

After the second decision of the Court of Appeal a number of further pleadings have been exchanged. On May 2, 1975, Buttes served a reply to the defence, and Buttes and Mr. Boreta a defence to the counterclaim of Occidental. These pleadings referred to a number of specific documents. While other documents may be material (and indeed are requested to be produced on discovery), those now available enable the issues raised by the action and counterclaim to be analysed far more clearly than was possible in 1975. At various dates further and better particulars of the defence and counterclaim of Occidental have been requested and delivered. A rejoinder has been delivered on January 19, 1979, and an amended reply and defence and counterclaim on May 8, 1980. Moreover, since the second decision there have been important decisions in the United States of America on similar issues.

Apart from these proceedings on the substance of the case, issues have arisen as regards discovery of documents. On April 11, 1976, Occidental applied for an order for inspection of 23 documents referred to in Buttes's reply and defence to counterclaim; Buttes declined to allow inspection of a number of these documents. Occidental persisted in its application for inspection of these and other documents, and after production had, on January 8, 1979, been ordered by Master Warren, McNeill J. in chambers partly allowed Buttes's appeal, holding that most of the documents were privileged Both sides thereupon appealed to the Court of Appeal. On June 20, 1980, the Court of Appeal ("third decision") [1981] Q.B. 223, dismissed the appeal of Occidental and allowed that of Buttes, and refused leave to appeal to this House. The grounds given by the Court of Appeal were (i) by Lord Denning M.R., that the court's powers as to discovery were discretionary, that the case was one for the exercise of judicial restraint since it would be contrary to the comity of nations to order

[1982]		922
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

discovery without the consent of the foreign sovereign concerned - in casu the Ruler of Sharjah; (ii) by Donaldson and Brightman L.JJ. that the courts should recognise a category of United Kingdom public interest immunity relating to copies of confidential documents of a foreign sovereign (the Ruler of Sharjah) in the possession of a third party (Buttes).

These judgments clearly gave rise to novel and important questions. Moreover it was said by Occidental to be illogical and unfair in that, while the counterclaim was, by the second decision, permitted to go on, the result of the third decision was to deny to Occidental the means necessary for its prosecution.

On November 11, 1980, an Appeal Committee of this House (i) gave leave to Occidental to appeal against the third decision (1980) of the Court of Appeal; (ii) gave leave to Buttes and Mr. Boreta to appeal out of time against the second decision (1974) of the Court of Appeal and discharged the previous order (1975) refusing leave to appeal; (iii) ordered that a fresh summons issued by Buttes and Mr. Boreta on July 11, 1980, should be dealt with on the hearing of the appeal. This fresh summons sought an order that on Buttes undertaking to consent upon application by Occidental and Dr. Hammer (if so advised) to a stay of the slander claim, the counterclaims of Occidental and Dr. Hammer be stayed on the grounds (inter alia) that the said counterclaims raised issues which are non-justiciable by the court and/or which it is contrary to the public interest for the court to adjudicate upon.

This narrative has been necessary to show two things, first, that this House is now in a position to adjudicate upon the entirety of the issues raised by the parties at the various stages between 1971 and 1980 and secondly, that since the last substantive decision of the Court of Appeal (the second decision of 1974) the issues have been more clearly defined, and crystallised. This House is now in as good a position as any court is likely to be to form an opinion as to the justiciability of the claims of either side, and the decision has to be made whether the proceedings should be allowed to continue to trial with appropriate discovery or should be terminated by stay or striking out.

Only two final preliminary observations. First, though at times some of the arguments addressed seemed to lose sight of this, we are not now trying the merits of the cases or any part of them. We must deal with the applications upon the basis of facts alleged in the pleadings and of such documents as have emerged - resisting, in the latter case, the temptation to try to interpret the documents (many of which are not governed by English law) beyond the parties' allegations. Secondly, it is convenient, and was agreed by the parties, to consider first the general issue of justiciability, decision upon which may make the discovery issues unnecessary to consider. However, the fact that if the action is allowed to proceed, discovery of certain classes of documents may have to be given, may have implications for the prior question, whether the action should be allowed to proceed. To that extent argument heard upon the discovery issue (other than that of legal professional privilege) has been enlightening.

I shall now attempt a summarised account of the relevant facts.

I have already mentioned that we are here concerned with the territories

[1982]		923
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

of three states, the Emirates of Sharjah and U.A.Q., and the State of Iran. Sharjah and U.A.Q. are neighbours lying on the south side of the Arabian Gulf: they were, at the relevant times, sovereign states in separate treaty relations with the United Kingdom which was responsible for their foreign relations. At all material times Sharjah has claimed title to Abu Musa, and this has been recognised by Her Majesty's Government and by U.A.Q. Since the 19th century the island has been claimed by Iran.

The waters of the Arabian Gulf are less than 200 metres in depth, and so potentially have continental shelf status of some coastal state or states. It is obvious that there may be conflicting claims, and that the position of median or other boundary lines may be a matter of controversy. The Gulf contains a number of islands. Although islands are mentioned in Article I of the 1958 Geneva Convention on the Continental Shelf there is no universal rule as to when, and for what distance, islands can generate a continental shelf for themselves. Further, there are differences as regards the width of territorial waters. Many of the adjoining states, including Iran, claim a width of 12 miles, but three miles was the distance recognised by the United Kingdom and claimed, until the events in question, by Sharjah, as also by other states in treaty relations with the United Kingdom.

Following the Truman Proclamation of September 28, 1945, proclamations were made in 1949 by the Rulers of Sharjah and U.A.Q., in identical form, that the seabed and subsoil contiguous to the territorial waters of Sharjah/U.A.Q. and extending seaward to boundaries to be determined more precisely, as occasion arises, on equitable principles, by each ruler after consultation with the neighbouring states, appertain to the land of Sharjah/U.A.Q. and are subject to its exclusive jurisdiction and control. These proclamations were approved by His Majesty's Government. It is apparent that, while in principle staking the Emirates' claims to continental-shelf rights, they left a number of vital questions to be settled by agreement or adjudication on equitable or other appropriate principles.

In 1964 the Rulers of Sharjah and of U.A.Q., again with the approval of Her Majesty's Government, issued "parallel instruments." They were in slightly different form, that of Sharjah taking into account the existence of another small territory - Ajman - which lies partly within the territory of Sharjah. Each was, however, headed, in the English version, "Seabed boundary - agreement by the Ruler of (Sharjah or U.A.Q.)," and continued:

"I agree that the sea-bed boundary between" [Sharjah and U.A.Q.] [U.A.Q. and Sharjah] "shall be a line starting from a point on the coast near the site of the dead well Mirdar bu Salaf and going out to sea on a bearing of 312 degrees."

It is said to be disputable whether the word "sea-bed" is a correct translation from the Arabic; apart from this, it does not appear how far out to sea the lateral line referred to is intended to go, or what, if any, frontal boundary is contemplated. No map was attached to either declaration, but, later, various maps were produced. One Admiralty chart in H.M. Foreign and Commonwealth Office showed the lateral boundary line skirting Abu Musa at a distance of three nautical miles.

[1982]		924
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

In 1968 Her Majesty's Government announced its intention to terminate its special treaty relationship with the Emirates and to withdraw British forces from the area within three years.

In 1969 the rulers of Sharjah and U.A.Q. invited bids for oil concessions in their offshore seabed. On November 10 Occidental obtained from the ruler of U.A.Q., with the approval of the Foreign and Commonwealth Office, an exclusive concession to explore and exploit the territorial and offshore waters of U.A.Q. and the seabed and subsoil underlying such waters. It is said by Occidental that the concession area was outlined on an attached map based upon the above-mentioned Admiralty chart and shown as including the disputed location, where oil deposits were later discovered some nine miles from Abu Musa, but Buttes contends that no such map was shown to Buttes or the Ruler of Sharjah at the time and was never agreed by them. It made no allowance for any continental shelf round Abu Musa. On December 29, 1969, Buttes obtained from the Ruler of Sharjah the exclusive right to explore and exploit

"the territorial waters of the main land of Sharjah ... all islands within the jurisdiction of the Ruler and the territorial waters of the said islands and all the area of the sea bed and subsoil lying beneath the waters of the Arabian Gulf contiguous to the said territorial waters over which the Ruler exercises jurisdiction and control."

No map was, it appears, attached to the grant.

Buttes contends that this grant included the location by virtue of a decree of the Ruler of Sharjah dated September 10, 1969, whereby he declared the territorial sea of his Emirate as of a width of 12 nautical miles from the baselines around its coasts and islands, and also by virtue of Sharjah's rights over the continental shelf.

Occidental alleges that the decree was in fact made in March or April 1970, that it was back-dated to September 1969, and that this was unlawful and fraudulent. This allegation is central both to the defence of justification of the slander, and to Occidental's counterclaim for conspiracy.

This being the situation between Sharjah and U.A.Q., both Iran and Her Majesty's Government became involved. Iran had already in 1959 claimed a 12-mile belt of territorial waters for its mainland and islands, and at various dates, 1949-66, issued continental shelf proclamations which in terms extended-to islands owned by it in the Arabian Gulf. In May 1970 Iran reiterated her claim to Abu Musa and demanded that no exploration or other activities take place in the disputed area.

In May 1970 Her Majesty's Government intervened. It recommended to the Ruler of U.A.Q. that he should not permit operations of any kind by Occidental in the area claimed by the Ruler of Sharjah for a period of three months. It was indicated that Her Majesty's Government hoped for a "third party settlement." Occidental, however, sent a drilling platform towards the location, but this was turned back by H.M.S. Yarntonof the Royal Navy. After what is described as a show of force by Her Majesty's Government, the Ruler of U.A.Q. on June 2, 1970, ordered Occidental not to operate within 12 miles from Abu Musa.

There followed proposals for arbitration and an attempt at mediation, but these came to nothing. In November 1971, shortly before the intended

[1982]		925
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

British withdrawal from the Arabian Gulf, an understanding was reached between Sharjah and Iran whereby: (a) Neither Iran nor Sharjah ceded its claim to sovereignty over Abu Musa; (b) Iranian troops were permitted to occupy a part of Abu Musa; (c) All parties accepted the existence of a 12-mile territorial sea round Abu Musa, with Buttes as the concessionaire for the area on the terms of its agreement with Sharjah; (d) The revenues resulting from such exploitation were to be shared between Sharjah and Iran, and it appears that Sharjah, in turn, agreed to share its royalties with U.A.Q. This understanding appears to have been approved by Her Majesty's Government.

In January 1972 the Ruler of Sharjah was assassinated, an event which, it is suggested, was connected with his participation in the 1971 understanding.

Later, in June 1973, Occidental's concession was terminated by the Ruler of U.A.Q. acting under a clause in the concession agreement.

It is obvious that even these skeleton facts, and many more may be or become relevant, raise far-reaching issues. Before reaching a conclusion whether these admit of adjudication by an English court, I shall summarise the legal arguments.

In support of their contention that the proceedings necessarily involved non-justiciable issues, the appellants, Buttes and Mr. Boreta, relied upon a number of distinct arguments.

First, they contended that the English courts will not try an action which would require them to pronounce, directly or indirectly, on rights in immovable property situated abroad. They appealed to the decisions of this House in British South Africa Co. v. Companhia de Moçambique[1893] A.C. 602 and Hesperides Hotels Ltd. v. Aegean Turkish Holidays Ltd. [1979] A.C. 508.

Secondly, they invoked the doctrine of sovereign immunity, in so far as this excludes actions concerning property which is in the ownership, possession or control of a foreign sovereign state, or in which a foreign state claims an interest: Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485 and United States of America and Republic of France v. Dollfus Mieg et Cie S.A. [1952] A.C. 582.

Thirdly, they argued that the English courts will not entertain actions either (a) requiring the interpretation of, or the ascertainment of the precise nature of obligations arising under, transactions between foreign sovereign states: Cook v. Sprigg [1899] A.C. 572; or (b) questioning the validity or effectiveness of foreign legislation; or (c) examining the validity of or motives for, acts of foreign sovereign states in their international relations; or (d) challenging the legality of acts of Her Majesty's Government outside the United Kingdom and not relating to British subjects.

In answer to these, the contentions of Occidental can be summarised as follows. 1. There is no absolute rule forbidding English courts from entertaining questions relating to foreign land. Such questions have, in fact, been considered: see Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811; more fully reported in 82 L.T. 253 and Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797. Such questions may be, and are, decided by English courts where decision upon them is incidental to

[1982]		926
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

other questions, such as domicile, or is collateral to the main question - Tito v. Waddell (No. 2) [1977] Ch. 106, 262, 271. In the present case a decision upon the title to "the location": (a) is not necessary in the conspiracy claim; Occidental in fact do not dispute the validity of the decree of 1969 under the law of Sharjah; (b) is rendered unnecessary or is precluded by the attitude taken by Her Majesty's Government; (c) alternatively can be decided upon evidence. 2. There is no absolute or general rule forbidding English courts from "sitting in judgment" upon or "inquiring into" the validity or nature of a foreign law. In particular the courts may do so when either that law is not confined in operation to the territory of the enacting state, or is contrary to public policy, or to international law. 3. There is in English law no general doctrine of "act of state" which can be applied to the facts of the present case. Nor is there any rule of judicial restraint such as is found in some United States cases. 4. The doctrine of sovereign immunity has no application.

These respective arguments cover a wide area but I think that in the end they leave for decision a limited number of, admittedly difficult, points.

The doctrine of sovereign immunity does not in my opinion apply since there is no attack, direct or indirect, upon any property of any of the relevant sovereigns, nor are any of them impleaded directly or indirectly.

I will deal first with the "territorial argument" and the contention that we are here concerned with a non-justiciable dispute as to the title to foreign land. As to this I am prepared to accept much of the respondents' argument. I would agree, in the first place, that this is not just a question arising between private individuals as to the title to, or possession of, foreign land so as to come directly within the rule laid down in the Moçambique [1893] A.C. 602 and Hesperides [1979] A.C. 508 cases: we do not have once more to examine that much criticised rule. The present case is more nearly within the category of boundary disputes between states. As to these it would be too broad a proposition to say that the mere emergence in an action here of a dispute as to the boundaries of states is sufficient to preclude the jurisdiction of the court. The main authorities cited by the respondents' counsel - Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811; 82 L.T. 253 and Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797 - though as I read them depending essentially upon recognition, are at least instances where the court has without difficulty decided questions depending upon the ascertainment of boundaries, and I would agree that there may be other cases where a question relating to foreign land, even to the title to foreign land, may either be capable of determination as a matter of fact (see per Lord Sumner in the Duff Development case, at p. 827 whom I do not understand as arguing for justiciability in all cases), or may arise incidentally or collaterally to some other question, and may be decided. I need only quote Lord Herschell L.C.'s words in the Moçambique case [1893] A.C. 602, 626: "It is quite true that in the exercise of the undoubted jurisdiction of the courts it may become necessary incidentally to investigate and determine the title to foreign lands; ..." words applied by Sir Robert Megarry V.-C. in the great case of the Banaban Islands, Tito v. Waddell

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

(No. 2) [1977] Ch. 106, 262, 263, ("incidentally" or "as a collateral incident").

But here the question of title to the location does not arise incidentally or collaterally: it is at the heart of the case. It is essential to Occidental's claim (both in its counterclaim and in its defence of justification) to establish that before the intervention of Buttes and Sharjah it had a right with some degree of legal validity over the seabed at the location - i.e. nine miles from Abu Musa (see the words in its counterclaim, quoted above, "permanently deprived of their rights" to exploit the location). Occidental does not contend, it is true, that the action of Sharjah in extending its territorial waters so as to include the location was unlawful under Sharjah law: and in so far as this is so, the dispute avoids the area of municipal law, or of conflict of (private) law. But that very fact makes it, not more, but less justiciable by a municipal court - either, as Mr. Bathurst Q.C. argued as an a fortiori case to, or as an extension of, Hesperides[1979] A.C. 508, or, as I would rather see it, as an issue in a different, and international dimension. This cannot be decided simply as an issue of fact upon evidence: it calls, on the contrary, for adjudication upon the validity, meaning and effect of transactions of sovereign states. While, therefore, I agree with the respondents that the Moçambique rule is not of itself decisive of this case, we have still to consider whether a wider principle of judicial abstention has to be applied. I reserve this point for discussion later.

At this point it is convenient to deal with the argument of Mr. Littman Q.C. mentioned above under 1 (b): this is special to this case. The contention was that what might otherwise have been a non-justiciable question (as concerning transactions between states) became justiciable through the actions of Her Majesty's Government. It, so Mr. Littman claimed, had set its seal of approval on all the relevant dispositions by Sharjah and by U.A.Q. up to 1971, So that there would be no evidential difficulty, or potential breach of comity, or possibility of embarrassing the United Kingdom in its foreign relations if the court were to pass upon them.

In order to appraise this argument, which I found the most formidable of Mr. Littman's submissions, it is necessary to state some additional facts.

1. On March 29, 1973, in response to an inquiry from the Chambers of Master Warren, made in the course of this action, the Foreign and Commonwealth Office supplied a certificate signed by the Foreign Secretary. I must set out the most relevant portions.

"Between September 9, 1969, and December 1, 1971, Her Majesty's Government recognised the State of Sharjah as an independent sovereign State in special treaty relations with the United Kingdom. By virtue of the special treaty relations, Her Majesty's Government were generally responsible for the conduct of the international relations of Sharjah and for its defence. ... Between September 9, 1969, and December 1, 1971, Her Majesty's Government recognised His Highness Shaikh Khalid bin Muhammed al Qasimi as the sovereign Ruler of the State of Sharjah. Thereafter, between December 2 and 30, 1971, His Highness continued to be the sovereign Ruler of the

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

State of Sharjah as a member Emirate of the United Arab Emirates. Her Majesty's Government did not during any part of the period between September 9, 1969, and December 30, 1971, exercise or claim any rights of sovereignty over or in relation to the affairs of Sharjah. However, as indicated in the answer to question 1, Her Majesty's Government had, until December 1, 1971, general responsibility for the conduct of the international relations of Sharjah. During the period between September 9, 1969, and December 30, 1971, Her Majesty the Queen also had jurisdiction within the State of Sharjah, including the territorial waters thereof and all other areas over which the ruler had jurisdiction, over certain persons and matters, the extent and exercise of which were regulated by the Foreign Jurisdiction Acts 1890 and 1913, by the Trucial States Orders 1959 to 1969 made under those Acts, and by Queen's Regulations made under those Orders."

On this it was found by May J., in my view correctly, that at the relevant time Sharjah was an independent sovereign state and the ruler the sovereign ruler of that state. On the other hand, Her Majesty's Government had and retained until 1971 control over Sharjah's foreign relations.

There is no certificate with regard to U.A.Q. or its ruler, but I think we must assume that, if one had been applied for, a certificate to a similar effect would have been given.

The later actions of Her Majesty's Government must be viewed in the light of this certificate. There were a number of interventions, including, as I have mentioned, the approval of the concessions to Buttes and to Occidental. In February 1970 an informal note was given by a Foreign Office official to Buttes stating that "the seaward boundaries of all the offshore areas have never been defined, in the absence of an agreed median line." At various dates, the Foreign and Commonwealth Office prepared maps and provided them, and information about them, to one or other of the parties but I need not, and in the interest of brevity, ought not to describe them since the whole attitude of Her Majesty's Government is set out most fully and clearly in two letters. The first is a letter to Occidental's solicitors of May 8, 1970. In it the Foreign and Commonwealth Office referred to "unilateral action on the part of Sharjah," to "problems raised by an extension of the breadth of Sharjah's territorial waters," to "a claim by Sharjah to jurisdiction over the same area" [viz. "the location"]. It is clear from this letter that Her Majesty's Government did not authorise, or approve, the extension, by decree, of Sharjah's territorial waters to 12 miles from Abu Musa.

The letter explains the position of Her Majesty's Government vis-à-vis the 1969 (?1970) decree at considerable length. It is clear that Her Majesty's Government did not approve of the extension, considered that there were international law questions as to its validity, and expressed its own opinion that there was an agreed sea (sic) boundary based on a three-mile limit of territorial waters around Abu Musa. There was, it states, a whole series of problems in relation to other states in the area, which had to be faced before it was safe to regard the territorial waters of Sharjah as having been effectively extended.

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

"At the same time," it was said, "it must be recognised that a claim exists, made on the basis of legal advice, to part of the area of seabed which has been regarded as under the jurisdiction of the Ruler of Umm al Qaiwain. Whatever may be the merits of this claim, the fact that it has been made must be faced and ... a means for resolving the problems which it raises must be found. ... We do not ourselves wish to propose any particular means of resolving the problem but we remain fully prepared to assist in any way we can."

This paragraph may be read as referring not or not only to an extension of territorial waters but to a continental shelf in respect of Abu Musa.

The second letter was written on May 16, 1970, to the Ruler of Sharjah by Her Majesty's political agent at Dubai. This letter explained that the concession agreement with Buttes, and the agreement between U.A.Q. and Occidental, proceeded and were approved by Her Majesty's Government on the basis that the breadth of the territorial waters of Sharjah was three miles. I quote the next paragraph:

"Having said this, I must at once go on to say that the extent of a state's territorial waters is to be determined in accordance with international law and a state may treat as its territorial waters those waters adjacent to its shores which international law permits it to treat as territorial waters. It is not necessary for a state to make a declaration claiming its territorial waters or stating the breadth of those waters. But, if it chooses to do so, a state may declare the extent of its territorial waters. Many states (including the United Kingdom, the United States and the Persian Gulf States in special treaty relations with the United Kingdom) have territorial waters of three miles. Many states (including most of the other states in the Persian Gulf, that is the states other than those in special treaty relations with the United Kingdom) claim territorial waters of 12 miles."

It continued by pointing out that there was another aspect of the problem:

"As a matter of international law, it is not right for a state simply to extend its territorial waters regardless of the consequences on its neighbours. If there are agreements or settled legal situations with its neighbours, or if vested rights have been acquired in the area, account must be taken of these agreements, situations and rights. In the case of Sharjah, for example, there is a particular problem arising in relation to Umm al Qaiwain, where there is an agreed sea boundary of 1964 between Sharjah and Umm al Qaiwain and where a Concession Agreement was concluded by the Ruler of Umm al Qaiwain and approved by Her Majesty's Government on the basis of that sea boundary. It is not right simply to ignore the existence of the sea boundary and the Concession Area of Occidental of Umm al Qaiwain. But there is a whole series of further problems stemming from an extension of Sharjah's territorial waters. There are potential problems with Ras al Khaimah (the Tunbs), Ajman, Dubai and Abu Dhabi (in connection with Sir Abu Nu'Air). All these problems would have to

[1982]		930
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

be faced and sorted out before it would be safe to regard the territorial waters of Sharjah as having been effectively extended."

It concluded by expressing hope of a solution by agreement, and, as stated above, attempts were made to dispose of the matter by mediation.

These letters show beyond any doubt that Her Majesty's Government regarded the issues between Sharjah and U.A.Q. and between their respective concessionaires, as issues of international law, and involving difficult problems as to the width of territorial waters, and by implication of the continental shelf, in the light, not merely of geographical considerations, but of existing arrangements between Sharjah and U.A.Q., and of the interests of other states, amongst which Iran must have been in mind. Even if they can be read as expressing, or implying, an acceptance by Her Majesty's Government of a three-mile width of territorial waters, they do not, and in view of the claims of Iran could not, involve any recognition. or non-recognition, of continental shelf rights in respect of Abu Musa, or of Sharjah or of U.A.Q. On these questions, Her Majesty's Government was willing, up to a point, to express its own opinion, but it regarded the matter as one to be solved by diplomacy, or "third-party settlement." Ultimately, as we know, it was solved temporarily at least, after the use of force, by agreement.

These considerations make it impossible to accept Mr. Littman's contention. The issues as to the extent and nature of Occidental's rights cannot either be said to have been solved in advance for the courts by Her Majesty's Government through its attitude to the various relevant transactions, nor be said to be capable of being solved by a request to Her Majesty's Government for an executive certificate or statement. Her Majesty's Government regarded the whole matter as lying in the international sphere, subject at most to such influence as Her Majesty's Government could bring to bear, but not susceptible of decision by Her Majesty's Government. The issues are, as Her Majesty's Government saw them, international issues, and it is in that character that their justiciability by a municipal court must be considered. I take up this question, with others, at the end of this opinion.

I pass now to the second branch of the argument which is described broadly, as the "act of state" argument. As to this the submissions of the respondents have brought some much needed clarification to a generally confused topic. Not the least of its difficulty has lain in the indiscriminating use of "act of state" to cover situations which are quite distinct, and different in law.

In the first place we can segregate that version of "act of state" which concerns action by an officer of the Crown taken outside this country against foreigners otherwise than under colour of legal right: the classic example of this is provided by Buron v. Denman (1848) 2 Exch. 167. The action taken by officers of Her Majesty's Government, by means of H.M.S. Yarnton, and in bringing pressure to bear upon the Ruler of U.A.Q., might fall into this category. They are not directly attacked in these proceedings, but it is part of Occidental's case that they were unlawful. However, the question whether these actions can be described as "acts of state" within

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

this doctrine does not lie at the heart of the dispute and I do not propose to pursue it.

A second version of "act of state" consists of those cases which are concerned with the applicability of foreign municipal legislation within its own territory, and with the examinability of such legislation - often, but not invariably, arising in cases of confiscation of property. Mr. Littman gave us a valuable analysis of such cases as Carr v. Fracis Times & Co.[1902] A.C. 176; Aksionairnoye Obschestvo A. M. Luther v. James Sagor & Co. [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, suggesting that these are cases within the area of the conflict of laws, concerned essentially with the choice of the proper law to be applied.

Two points were taken as regards the applicability of this line of authority. First, it was said that foreign legislation can be called in question where it is seen to be contrary to international law or to public policy; the decree of 1969/70 was so contrary. Secondly, it was contended that foreign legislation is only recognised territorially - i.e. within the limits of the authority of the state concerned.

In my opinion these arguments do not help the respondents. As to the first it is true, as I have pointed out, that the attack on Sharjah's decree of 1969/70 is not upon its validity under the law of Sharjah, but upon its efficacy in international law. But this brings it at once into the area of international dispute. It is one thing to assert that effect will not be given to a foreign municipal law or executive act if it is contrary to public policy, or to international law (cf. In re Helbert Wagg & Co. Ltd's Claim [1956] Ch. 323) and quite another to claim that the courts may examine the validity, under international law, or some doctrine of public policy, of an act or acts operating in the area of transactions between states.

The second argument seems to me to be no more valid. To attack the decree of 1969/70 extending Sharjah's territorial waters, i.e. its territory, upon the ground that the decree is extra-territorial seems to me to be circular or at least question begging.

However, though I reject these particular arguments relied on by way of exception to the rule derived from the authorities mentioned above, I do not regard the case against justiciability of the instant disputes as validated by the rule itself. If it is to be made good it must be upon some wider principle.

So I think that the essential question is whether, apart from such particular rules as I have discussed, viz. those established by (a) the Mocambique [1893] A.C. 602 and Hesperides [1979] A.C. 508 cases and by (b) Luther's case [1921] 3 K.B; 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, there exists in English law a more general principle that the courts will not adjudicate upon the transactions of foreign sovereign states. Though I would prefer to avoid argument on terminology, it seems desirable to consider this principle, if existing, not as a variety of "act of state" but one for judicial restraint or abstention. The respondents' argument was that although there may have been traces of such a general principle, it has now been crystallised into particular rules (such as those I have mentioned) within one of which the appellants must bring the case - or fail. The Nile, once separated into a multi-channel delta, cannot be reconstituted.

[1982]		932
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

In my opinion there is, and for long has been, such a general principle, starting in English law, adopted and generalised in the law of the United States of America which is effective and compelling in English courts. This principle is not one of discretion, but is inherent in the very nature of the judicial process.

The first trace of it is in the 17th century in Blad v. Bamfield (1674) 3 Swan. 604, 607. The record of the decision from Lord Nottingham's manuscript contains this passage:

"... the plaintiff hath proved letters patent from the King of Denmark for the sole trade of Iceland; a seizure by virtue of that patent: a sentence upon that seizure; a confirmation of that sentence by the Chancellor of Denmark; an execution of that sentence after confirmation; and a payment of two-thirds to the King of Denmark after that execution. Now, after all this, to send it to a trial at law, where either the court must pretend to judge of the validity of the king's letters patent in Denmark, or of the exposition and meaning of the articles of peace; or that a common jury should try whether the English have a right to trade in Iceland, is monstrous and absurd."

Lord Nottingham records that "I thought fit to put an end to [the case]" and he decreed that the plaintiff should have a perpetual injunction to stay the defendant's suit at law - a decision clearly on justiciability, and not merely on defence.

More clearly as a recognition of a general principle is Duke of Brunswick v. King of Hanover (1844) 6 Beav. 1; (1848) 2 H.L.Cas. 1: a case in this House which is still authoritative and which has influenced the law both here and overseas. There are two elements in the case, not always clearly separated, that of sovereign immunity ratione personae, and that of immunity from jurisdiction ratione materiae: it is the second that is relevant. I find the principle clearly stated that the courts in England will not adjudicate upon acts done abroad by virtue of sovereign authority. Thus Lord Cottenham L.C. states the question, quite apart from any personal immunity, as being whether the courts of this country can "sit in judgment" upon the act of a sovereign, effected by virtue of his sovereign authority abroad. His decision is conveyed in the words, at p. 21:

"It is true, the bill states that the instrument was contrary to the laws of Hanover and Brunswick, but, notwithstanding that it is so stated, still if it is a sovereign act, then, whether it be according to law or not according to law, we cannot inquire into it."

and he continues by distinguishing cases of private rights (cf. Luther v. Sagor [1921] 3 K.B. 532). He then said, at pp. 21-22:

"If it were a private transaction ... then the law upon which the rights of individuals may depend, might have been a matter of fact to be inquired into ... But ... if it be a matter of sovereign authority, we cannot try the fact whether it be right or wrong."

Lord Campbell is still more definite. The question he says, at p. 27, is as to the validity of an act of sovereignty," and he expresses the view, at

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

p. 26, that even if the Duke of Cambridge (i.e. not the sovereign) had been sued, "it would equally have been a matter of state."

It is justly said of this case, and of their Lordships' observations, that they are directed to the question whether a sovereign can be brought to account in this country in respect of sovereign acts, and that such general phrases as "sitting in judgment on," "inquiring into" or "entertaining questions" must be read in their context. I agree that these phrases are not to be used without circumspection: the nature of the judgment, or inquiry or entertainment must be carefully analysed. It is also to be noted that the acts in question were performed within the territory of the sovereign concerned, reliance is placed on this in some passages; an argument on this I have already dealt with. These qualifications accepted, the case is nevertheless support, no doubt by reference to the issue in dispute, for a principle of non-justiciability by the English courts of a certain class of sovereign acts.

The discussion now shifts to the United States. The Duke of Brunswick case, 2 H.L.Cas. 1, was followed in Underhill v. Hernandez (1893) 65 Fed. 577. In the Supreme Court (1897) 168 U.S. 250, Fuller C.J. used the much-quoted words, at p. 252:

"Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory. Redress of grievances by reason of such acts must be obtained through the means open to be availed of by sovereign powers as between themselves."

Again it is a just observation that the words "sit in judgment" must be related primarily to the issue under discussion, viz., whether a remedy could be obtained in the United States for an alleged wrong committed by a foreign government in its own territory. But a principle is nevertheless stated.

A few years later Lord Halsbury L.C. uttered the well-known sentence "It is a well-established principle of law that the transactions of independent states between each other are governed by other laws than those which municipal courts administer": Cook v. Sprigg [1899] A.C. 572, 578, a case in which lines of argument similar to those in the present case can be found. An earlier recognition, in an appropriate circumstance, of non-justiciability, had been given by Lord Kingsdown in Secretary of State in Council of India v. Kamachee Boye Sahaba(1859) 13 Moo.P.C.C. 22, 86. These authorities carry the doctrine of non-justiciability into a wider area of transactions in the international field.

Fuller C.J.'s principle was taken up and again applied by the Supreme Court in Oetjen v. Central Leather Co. (1918) 246 U.S. 297, 304 and applied to a case involving the title to property brought within the custody of a United States court:

"To permit the validity of the acts of one sovereign state to be reexamined and perhaps condemned by the courts of another would very certainly 'imperil the amicable relations between governments and vex the peace of nations.'"

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

It is worth noting that this case and that of Underhill, 168 U.S. 250, were referred to in the judgments in Luther's case [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, Scrutton L.J. in the latter stating that English law on the point was the same as American law.

Upon the much commented case of Banco Nacional de Cuba v. Sabbatino(1964) 376 U.S. 398 no extended discussion is here appropriate or necessary. The case was one of "act of state" in the normal meaning, viz. action taken by a foreign sovereign state within its own territory. It affirms the doctrine of Underhill, 168 U.S. 250 and Oetjen,246 U.S. 297. It states (and for this was relied on by the respondents) that international law does not require application of the doctrine of "act of state." Granted this, and granted also, as the respondents argue, that United States' courts have moved towards a "flexible" use of the doctrine on a case to case basis, there is room for a principle, in suitable cases, of judicial restraint or abstention. Let us see where this has led, in the United States, in relation to the very same situation as that before us. Their courts have given two important decisions.

In 1970 Occidental brought two suits in California on allegations closely similar to allegations made in this action: that the Ruler of Sharjah had been induced by Buttes to backdate the decree enlarging the territorial sea to 12 miles to September 1969, that Buttes had induced and procured illegal acts by the United Kingdom and by the Ruler of Sharjah that Buttes had induced Iran to make a claim to "the location." These were claimed to be common law torts as well as violations of the Sherman Act [Anti-Trust Act 1890].

The United States District Court (District Judge Pregerson, March 17, 1971) granted Buttes's motion to dismiss the Federal suit. It found that the essence of Occidental's case was to prove a conspiracy, and that characterisation of the case as a boundary dispute clouded the issue. However, it found that Occidental:

"... necessarily ask this court to 'sit in judgment' upon the sovereign acts pleaded, whether or not the countries involved are considered co-conspirators. That is, to establish their claim as pleaded plaintiffs must prove, inter alia, that Sharjah issued a fraudulent territorial waters decree, and that Iran laid claim to the island of Abu Musa at the behest of the defendants. Plaintiffs say they stand ready to prove the former allegation by use of 'internal documents.' But such inquiries by this court into the authenticity and motivation of the acts of foreign sovereigns would be the very sources of diplomatic friction and complication that the act of state doctrine aims to avert."

It concluded that Buttes's motion to dismiss should be granted for failure to state a claim upon which relief may be granted. This judgment was affirmed by the Ninth Circuit Court of Appeals (June 23, 1972).

In 1974 Occidental brought numerous actions directed towards cargoes of oil shipped from the location, based on similar allegations.

The United States District Court in Louisiana (Chief Judge Hunter, July 8, 1975) granted Buttes's motion for summary judgment against Occidental. The court gave attention to the boundary aspects of the dispute,

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A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

which it considered were "intricately interwoven with the 'act of state' doctrine." I quote two passages from the judgment:

"The entire fabric of [Occidental's] complaint is woven out of attacks on the validity of, or questioning the reasons for, the acts of Sharjah, Iran and Umm [U.A.Q.], with respect to the precise rights which [Occidental] asserts. It traces a series of wrongs of foreign states to reveal why the lease agreement cancellation by Umm was invalid and why neither Sharjah nor Iran had a right to honor the lease contract (concession) by Buttes and its joint venturers."

It listed 10 "acts of state" as appearing in Occidental's claim and continued:

"Practical considerations underlying a specific situation must be precisely examined to avoid conclusions making for eventual confusion and conflict. The instant case presents one of those problems for the rational solution of which it becomes necessary to take soundings. The case before us is this: Sharjah and Iran recognise the Buttes's concession. Umm cancelled the Occidental concession, but participates in the rentals received from Buttes. In light of this history and what we perceive to be the purpose of Hickenlooper [the Hickenlooper amendment of October 2, 1964, which restricted application of the act of state doctrine], I just cannot bring myself to believe that Congress intended to permit United States courts to tell these three foreign countries: 'You are wrong and we are right as to the ownership of your offshore waters.'"

On appeal by Occidental to the Fifth Circuit Court of Appeals the United States filed an amicus curiae brief (May 1978) to which was attached a letter from the Legal Adviser to the Department of State to the Attorney General. I quote some passages, without apology for their length, because of their obvious pertinence and rationality:

"It is our understanding that the disposition of this case would require a determination of the disputed boundary between Umm al Qaiwain on the one hand and Sharjah and Iran on the other at the time Umm al Qaiwain granted the concession in issue to Occidental. It is our view that it would be contrary to the foreign relations interests of the United States if our domestic courts were to adjudicate boundary controversies between third countries and in particular that controversy involved here.

"The extent of territorial sovereignty is a highly sensitive issue to foreign governments. Territorial disputes are generally considered of national significance and politically delicate. Even arrangements for the peaceful settlement of territorial differences are often a matter of continued sensitivity.

"These conditions are applicable to the question of Umm al Qaiwain's sovereignty over the continental shelf surrounding Abu Musa at the time of the concession to Occidental and to the subsequent arrangements worked out among the affected states. For these reasons, the Department of State considers that it would be potentially

[1982]		936
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

harmful to the conduct of our foreign relations were a United States court to rule on the territorial issue involved in this case.

"We believe that the political sensitivity of territorial issues, the need for unquestionable U.S. neutrality and the harm to our foreign relations which may otherwise ensue, as well as the evidentiary and jurisprudential difficulties for a U.S. court to determine such issues, are compelling grounds for judicial abstention.

"We do not believe that this judicial self-restraint should turn on such analytical questions as whether the so-called Act of State doctrine which is traditionally limited to governmental actions within the territory of the respective state can apply to an exercise of disputed territorial jurisdiction. It rather follows from the general notion that national courts should not assume the function of arbiters of territorial conflicts between third powers even in the context of a dispute between private parties. As a result, we are of the view that the court should be encouraged to refrain from settling the extent of Umm al Qaiwain's sovereign rights in the continental shelf between its coast and Abu Musa at the time of its grant of the concession to Occidental."

The Court of Appeals dismissed Occidental's appeal (August 9, 1978) and held:

"The issue of sovereignty is political not only for its impact on the executive branch, but also because judicial or manageable standards are lacking for its determination. To decide the ownership of the concession area it would be necessary to decide (1) the sovereignty of Abu Musa, (2) the proper territorial water limit and (3) the proper allocation of continental shelf. A judicial resolution of the dispute over Abu Musa between Iran and Sharjah is clearly impossible."

Occidental applied to the Supreme Court of the United States for certiorari and extensive briefs were filed, including again an elaborate amicus brief for the United States. On June 11, 1979, the Supreme Court denied the petition.

The constitutional position and the relationship between the executive and the judiciary in the United States is neither identical with our own nor in itself constant. Moreover, the passages which I have cited lay emphasis upon the "foreign relations" aspect of the matter which appeared important to the United States at the time. These matters I have no wish to overlook or minimise. I appreciate also Mr. Littman's argument that no indication has been given that Her Majesty's Government would be embarrassed by the court entering upon these issues. But, the ultimate question what issues are capable, and what are incapable, of judicial determination must be answered in closely similar terms in whatever country they arise, depending, as they must, upon an appreciation of the nature and limits of the judicial function. This has clearly received the consideration of the United States courts. When the judicial approach to an identical problem between the same parties has been spelt out with such articulation in a country, one not only so closely akin to ours in legal approach, the fabric of whose legal doctrine in this area is so closely

[1982]		937
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

interwoven with ours, but that to which all the parties before us belong, spelt out moreover in convincing language and reasoning, we should be unwise not to take the benefit of it.

The proceedings, if they are to go on, inevitably would involve determination of the following issues, and here I pick up the strands left over in the preceding discussion:

(1) Whether Occidental acquired in 1969 a vested right to explore the seabed at the location within 12 miles from the coast of Abu Musa. This involves consideration of the questions: (a) which state had sovereignty over Abu Musa, (b) what was the width of the territorial waters of Abu Musa, (c) what was the boundary of the continental shelf between (i) Sharjah and U.A.Q., (ii) Abu Musa and U.A.Q., (iii) Iran and both Emirates.

These questions in turn involve consideration of the meaning and effect of the parallel declarations of 1964. Did they amount to an inter-state agreement; are they to be interpreted in the light of maps and how are the maps to be interpreted; was the agreement (if any) superseded or modified by later conduct; was it really the intention of the Ruler of Sharjah at that time to give up any continental shelf in respect of Abu Musa; how is any bilateral agreement between Sharjah and U.A.Q. to be fitted in with the claims of other states to the continental shelf in the Arabian Gulf, and how any dispute as to the continental shelf can be decided in the absence of Iran which has asserted claims to the relevant part of the continental shelf? Even if question 1 (b) is justiciable (in view of the attitude of Her Majesty's Government or otherwise), insuperable difficulties arise as regards question 1 (c).

(2) If Occidental did acquire any vested rights as above, how and why was it deprived of those rights? Directly, it was deprived of them by actions of sovereign states, viz. Sharjah, Iran, Her Majesty's Government and U.A.Q. Consideration of these involves examination of a series of inter-state transactions from 1969-73. If Occidental is to succeed in either its counterclaim for conspiracy, or in the slander action, it is necessary to show that these actions were brought about by Buttes, more exactly by a fraudulent conspiracy between Buttes and Sharjah. This certainly involves an examination of the motives (exclusive or dominant?) for the action of Sharjah in making and, if proved, backdating the decree of 1969/70. It involves establishing that the actions at least of Sharjah, and it appears also of Iran and of Her Majesty's Government, were at some point unlawful. "Unlawful" in this context cannot mean unlawful under any municipal law (I remind that Occidental does not contend that the Sharjah decree was unlawful under the law of Sharjah), but under international law. As Mr. Lauterpacht Q.C. put it, it involves deciding whether the Sharjah decree was inefficacious, at least for a time, in international law. If, in the absence of unlawful means, it is alleged that the action taken by Sharjah and the co-conspirators was predominantly to injure Occidental (I am not convinced that Occidental makes this case but I will assume it), this involves an inquiry into the motives of the then Ruler of Sharjah in making the decree, and a suggestion that he invited Iran to enter into an arrangement about Abu Musa predominantly in order to injure Occidental.

[1982]		938
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Wilberforce

It would not be difficult to elaborate on these considerations, or to perceive other important inter-state issues and/or issues of international law which would face the court. They have only to be stated to compel the conclusion that these are not issues upon which a municipal court can pass. Leaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have been drawn to the attention of the court by the executive) there are - to follow the Fifth Circuit Court of Appeals - no judicial or manageable standards by which to judge these issues, or to adopt another phrase (from a passage not quoted), the court would be in a judicial no-man's land: the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part of these were "unlawful" under international law. I would just add, in answer to one of the respondents' arguments, that it is not to be assumed that these matters have now passed into history, so that they now can be examined with safe detachment.

It remains to consider the practical effect of the above conclusions.

There is no doubt that, as found by May J. in his judgment of July 31, 1974, the counterclaim in conspiracy is "really the kernel of this litigation." For the reasons I have given, this counterclaim cannot succeed without bringing to trial non-justiciable issues. The court cannot entertain it.

As regards the libel counterclaim, the innuendo pleaded,i that Occidental had attempted to seize part of or to interfere with Buttes's oil concession granted by Sharjah knowing that it had no right to do so, involves consideration of the same issues as arise in relation to the rest of the counterclaim and for the same reason cannot be entertained.

The plea of justification made by Occidental in the slander action raises the same issues as the conspiracy counterclaim and is for the same reason not capable of being entertained by the court. In these circumstances a problem might arise if Buttes were to insist upon the action proceeding: to allow it to proceed but deny Occidental the opportunity to justify would seem unjust, although Buttes suggests that there are precedents for such a situation being accepted by the court. However, in the event, Buttes has, in its summons of July 11, 1980, offered to submit to a stay on the claim, if the counterclaims are stayed: Buttes should be held to this offer.

I suggest that Buttes's appeal against the order of the Court of Appeal, dated December 31, 1974, be allowed, that that order be set aside and that an order be made on Buttes's summons of July 11, 1980, that upon Buttes by its counsel consenting to all proceedings on the claim herein being stayed, the counterclaim of the first and second defendants, Armand Hammer and Occidental Petroleum Corporation, be stayed.

The stay of the counterclaim would necessarily involve that the pending application of the defendants for discovery and/or production of documents be similarly stayed.

LORD FRASER OF TULLYBELTON. My Lords, I have had the privilege of reading in draft the speech of my noble and learned friend, Lord

[1982]		939
A.C.	Buttes Gas v. Hammer (H.L.(E.))	Lord Fraser of Tullybelton

Wilberforce, and I agree with it. For the reasons given by him I would dispose of the appeal in the way that he has suggested.

LORD RUSSELL OF KILLOWEN. My Lords, I also have had the advantage of reading in draft the illuminating speech of my noble and learned friend, Lord Wilberforce. I agree with his reasons and conclusions.

LORD KEITH OF KINKEL. My Lords, I have had the benefit of reading in draft the speech of my noble and learned friend, Lord Wilberforce, and agree entirely with his reasoning and conclusions. I would accordingly dispose of the appeal in the manner which he has proposed.

LORD BRIDGE OF HARWICH. My Lords, I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Wilberforce. I entirely agree with it and with the order he proposes.

Orders accordingly.

Solicitors: Coward Chance; Herbert Smith & Co.

J. A. G.