Summary:

I.

Throughout the Argentinean financial crisis, the Republic of Argentina made considerable use of the instrument of bonds. Such bonds were also issued on the German capital market and were subscribed to by German underwriters. These bonds are subject to German law. In the conditions for the bonds, the Republic of Argentina had formulated a general waiver of immunity covering (contentious) court proceedings and subsequent compulsory enforcement.

After a creditor had brought about a judgment of the Frankfurt am Main Regional Court sentencing the Republic of Argentina to pay 766,937.82 euros, the Berlin-Mitte Local Court ordered the attachment of the accounts of the Argentinean Embassy held at Deutsche Bank. In response to a reminder (Erinnerung) filed by the Republic of Argentina, the Local Court temporarily suspended the compulsory enforcement and, in accordance with Article 100.2 of the Basic Law, submitted to the Federal Constitutional Court the following question: Is there a general rule of international law under which a blanket waiver of immunity as such can also remove immunity for assets which the sending state uses to maintain the functions of its diplomatic mission in the receiving state.

II.

The Second Senate of the Federal Constitutional Court reached the conclusion that the existence of such general rule of international law cannot be ascertained. According to the Court, it emerges from state practice and from international law literature that a general waiver of immunity set out in bond conditions issued by a foreign state may rescind the general immunity of states in contentious proceedings and compulsory enforcement proceedings. Under international law, this, however, does not also establish consent in execution in relation to assets that are used to maintain the operation of the diplomatic mission of the sending state. According to the Court, under the Vienna Convention on Diplomatic Relations and supplementary customary international law, this is a consequence of the high level of protection of diplomatic interests that applies in legal relations under public international law.

The order is based on the following key considerations:

1. With regard to issues related to the immunity of states in contentious proceedings and compulsory enforcement proceedings before German courts and to execution in relation to assets used for diplomatic purposes, a distinction must be made between the general immunity of states, on the one hand, and the specific diplomatic immunity of the mission of a foreign state, on the other. State immunity and diplomatic immunity are separate institutions under international law, and each is subject to its own rules. The special, broad protection of the diplomatic mission in the receiving state is a matter highlighted as crucially important in state practice because of the vital role it plays for the diplomatic relations between states.

2. States may generally waive their general immunity in contentious proceedings and compulsory enforcement proceedings. In terms of compulsory enforcement, state practice largely distinguishes between assets of a state which is used for commercial purposes, and assets which are used for sovereign purposes. In consequence, assets located in the executing state which are not used for sovereign purposes are generally subject to compulsory enforcement; notably, such compulsory enforcement does not require consent or a waiver of immunity from the debtor state. However, compulsory enforcement in relation to assets located in the executing state or used for sovereign purposes of a foreign state is, by contrast, not permissible without the consent of the state in question. It is recognised, however, that the state may waive immunity also with regard to assets used for sovereign purposes.

3. It emerges from the separation of general state immunity and diplomatic immunity under international law that the possibility of and requirements for a waiver of diplomatic immunity are not covered by the rules relating to general state immunity. The special status of assets intended to maintain the operation of a diplomatic mission in the receiving state - a status which is derived from the law on diplomatic relations - provides special protection. International customary law rules out measures of provisional attachment or compulsory enforcement with regard to objects which are used for purposes of the diplomatic representation of a foreign state used in carrying out its official functions insofar as the implementation of diplomatic tasks could thus be impaired. It follows from the principle that the receiving state shall refrain from all activities capable of impairing the function of the diplomatic mission that a foreign state may object in terms of the inviolability of the mission to execution in relation to objects or assets used in the operation of its diplomatic mission.

Despite the high level of protection enjoyed by objects and assets used for diplomatic purposes, however, a waiver of special diplomatic immunity is also possible, in principle. The sending state may waive the privilege of protection by the receiving state, and, in doing so, also facilitate execution in relation to assets it uses for diplomatic purposes.

4. Furthermore, according to national court rulings handed down by, for example, German, UK, US, French and Swedish courts, state practice does not indicate (to a degree permitting the assumption the general application of such a rule) that blanket waivers which specifically mention neither diplomatic protection nor the assets falling thereunder, could set aside this special protection either. Furthermore, rules on diplomatic relations, the work of the United Nations’ International Law Commission, or the international law literature which can be used as an additional indication of the existence of customary law, neither suggest that there is a general rule under international law in accordance with which a blanket waiver of immunity would be suited to rescind the diplomatic immunity of embassy accounts.