[CHANCERY DIVISION]

In re INTERNATIONAL TIN COUNCIL

[No. 008153 of 1986]

Company - Winding up - International organisation - Organisation created by treaty - Headquarters of organisation in United Kingdom - Organisation insolvent - Whether jurisdiction in court to wind up international organisation - Companies Act 1985 (c. 6). ss. 665, 666(1), 671

International Law - Treaty - International organisation - Immunity from suit - Organisation insolvent - Petition for winding up - Whether organisation subject to jurisdiction of English court - International Organisations Act 1968 (c. 48), s. 1 - International Tin Council (Immunities and Privileges) Order 1972 (S.I 1972 No. 120), art. 6(1)

The I.T.C., an international organisation established by treaty in 1956, was currently constituted under the provisions of the Sixth International Tin Agreement made between a number of states including the United Kingdom. It had its headquarters and principal office in London and it had been formed for the purpose of administering and carrying out the functions of the Agreement. Its main functions were to adjust world production and consumption of tin and to prevent excessive fluctuation in the price of tin. For that purpose it maintained and operated a buffer stock, and engaged in the buying and selling of tin, the contracts being both for immediate and forward delivery, on recognised markets, including the London Metal Exchange. In 1985, in an attempt to support the world price of tin the I.T.C. ran out of money, it was unable to meet its commitments and dealings in tin on the London Metal Exchange were suspended. The I.T.C. ceased trading owing several hundred million pounds to creditors. The petitioner obtained an arbitral award against the I.T.C. in the sum of £5,300.000 and presented a petition for the I.T.C. to be wound up under Part XXI of the Companies Act 1985 on the basis that the I.T.C. was an unregistered company.

On the I.T.C.'s motion for the petition to be struck out on the ground that, under domestic law, the court had no jurisdiction and that I.T.C. had immunity from suit by virtue of Part I of Schedule 1 to the International Organisations Act 1968¹ and article 6(1) of the International Tin Council (Immunities and Privileges) Order 1972² made under the Act:-

Held, striking out the petition, that by Order in Council, the International Organisations Act 1968 applied to the I.T.C. and, although Parliament had thereby conferred on the I.T.C. legal capacity, it had not granted it the status of a body corporate for the purposes of English domestic law; that, even though the court had power to wind up a foreign non-corporate body under Part XXI of the Companies Act 1985 and the general words of

1 International Organisations Act 1968, s. 1(1)(2): see post, p. 442C-F.

2 International Tin Council (Immunities and Privileges) Order 1972, art. 6(1): see post,p. 453A-B.

sections 665 and 671 in that Part literally construed would be capable of applying to international organisations, Parliament could not be taken to have intended, by general words alone, to have conferred on the court the jurisdiction to intervene in the management of an enterprise carried on under the terms of an international treaty between independent sovereign states and subject it to our domestic law; and that, accordingly, the court had no jurisdiction to make an order for the winding up of the I.T.C. (post, pp. 443G - 444A, H - 445B, C-D, 450H - 451E, 452F- G, 456D-G).

Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, P.C. and British Airways Board v. Laker Airways Ltd. [1985] A.C. 58, H.L.(E.) applied.

Inland Revenue Commissioners v. Collco Dealings Ltd. [1962] A.C. 1, H.L.(E.) considered.

Held, further, that the Order in Council and Part I of Schedule 1 to the Act of 1968 conferred on the I.T.C. immunity from suit and legal process, which embraced all forms of adjudication and enforcement jurisdiction and clearly included the winding up process, but that even if "suit" was to be more narrowly construed and the ambit of the phrase "legal process" correspondingly expanded, the presentation and hearing of the winding up petition did not constitute the enforcement of the petitioner's arbitration award within the exception to the immunity provided by paragraph 6(1) of the Order of 1972 (post, pp. 452H, 453F-454A, 455E-H, 456E-G).

The following cases are referred to in the judgment:

Attorney-General for Canada v. Attorney-General for Ontario [1937] A.C. 326, P.C.

Bankruptcy Notice, In re A [1907] 1 K.B. 478, C.A.

Blackburn v. Attorney-General [1971] 1 W.L.R. 1037; [1971] 2 All E.R. 1380, C.A.

British Airways Board v. Laker Airways Ltd. [1984] Q.B. 142; [1983] 3 W.L.R. 544; [1983] 3 All E.R. 375, Parker J. and C.A.; [1985] A.C. 58; [1984] 3 W.L.R. 413; [1984] 3 All E.R. 39, H.L.(E.)

Company, In re A [1915] 1 Ch. 520, C.A.

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

Inland Revenue Commissioners v. Collco Dealings Ltd. [1962] A.C. 1; [1961] 2 W.L.R. 401; [1961] 1 All E.R. 762, H.L.(E.)

Lazard Brothers & Co. v. Midland Bank Ltd. [1933] A.C. 289,H.L.(E.)

Lines Bros. Ltd., In re [1983] Ch. 1; [1982] 2 W.L.R. 1010; [1982] 2 All E.R. 183, C.A.

Matheson Brothers Ltd., In re (1884) 27 Ch.D. 225

Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257, C.A.

Parlement Belge, The (1879) 4 P.D. 129

Reparation for Injuries Suffered in the Service of the United Nations [1949] I.C.J. Rep. 174, International Court of Justice

Russian and English Bank and Florance Montefiore Guedalla v. Baring Brothers & Co. Ltd. [1936] A.C. 405; [1936] 1 All E.R. 505, H.L.(E.)

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

Thomson v. Henderson's Transvaal Estates Ltd. [1908] 1 Ch. 765, C.A.

The following additional cases were cited in argument:

Adams v. Adams (Attorney-General intervening) [1971] P. 188; [1970] 3 W.L.R. 934; [1970] 3 All E.R. 572

Alcom Ltd. v. Republic of Colombia [1984] A.C. 580; [1984] 2 W.L.R. 750; [1984] 2 All E.R. 6, H.L.(E.)

Allobrogia Steamship Corporation, In re [1978] 3 All E.R. 423

Arabian Banking Corporation v. International Tin Council (unreported), 15 January 1986, Steyn J.

Arcot, Nabob of v. East India Co. (1791) 3 Bro.C.C. 291; (1793) 4 Bro.C.C. 181

Attorney-General v. De Keyser's Royal Hotel Ltd. [1920] A.C. 508, H.L.(E.)

Barton-upon-Humber and District Water Co., In re (1889) 42 Ch.D. 585

Bradford Navigation Co., In re (1870) L.R. 10 Eq. 331

Buttes Gas and Oil Co. v. Hammer (No. 3) [1982] A.C. 888; [1981] 3 W.L.R. 787; [1981] 3 All E.R. 616, H.L.(E.)

Caledonian Employees' Benevolent Society, In re, 1928 S.L.T. 412

Chapel House Colliery Co., In re (1883) 24 Ch.D. 259, C.A.

Civilian War Claimants Association Ltd. v. The King [1932] A.C. 14, H.L.(E.)

Compania Merabello San Nicholas S.A., In re [1973] Ch. 75; [1972] 3 W.L.R. 471; [1972] 3 All E.R. 448

Council of Civil Service Unions v. Minister for the Civil Service [1985] A.C. 374; [1984] 3 W.L.R. 1174; [1985] I.C.R. 14; [1984] 3 All E.R. 935, H.L.(E.)

Crigglestone Coal Co. Ltd., In re [1906] 2 Ch. 327, C.A.

East African Airways Corporation, In re (unreported), 20 June 1977, Brightman J.

Eloc Electro-Optieck and Communicatie B.V., In re [1982] Ch. 43; [1981] 3 W.L.R. 176; [1981] I.C.R. 732; [1981] 2 All E.R. 1111

Garland v. British Rail Engineering Ltd. [1983] 2 A.C. 751; [1982] 2 W.L.R. 918; [1982] I.C.R. 420; [1982] 2 All E.R. 402, E.C.J. and H.L.(E.)

General Rolling Stock Co., In re (1872) L.R. 7 Ch.App. 646

Gur Corporation v. Trust Bank of Africa Ltd. [1987] Q.B. 599; [1986] 3 W.L.R. 583; [1986] 3 All E.R. 449, Steyn J. and C.A.

Hall v. Truman, Hanbury & Co. (1885) 29 Ch.D. 307, C.A.

Harris, decd., In re [1945] Ch. 316; [1945] 1 All E.R. 702

Hibernian Merchants Ltd., In re [1958] Ch. 76; [1957] 3 W.L.R. 486; [1957] 3 All E.R. 97

Indian Government v. Taylor [1955] A.C. 491; [1955] 2 W.L.R. 303; [1955] 1 All E.R. 292, H.L.(E.)

Kinder v. Taylor (1825) 3 L.J. Ch. (O.S.) 68

Malone v. Metropolitan Police Commissioner [1979] Ch. 344; [1979] 2 W.L.R. 700; [1979] 2 All E.R. 620

Oriental Bank Corporation, In re, Ex parte Clayton and Hartas (1885) 52 L.T. 556, C.A.

Oriental Inland Steam Co., In re, Ex parte Scinde Railway Co. (1874) L.R. 9 Ch.App. 557

Parker Davies and Hughes Ltd., In re [1953] 1 W.L.R. 1349; [1953] 2 All E.R. 1158

Quazi v. Quazi [1980] A.C. 744; [1979] 3 W.L.R. 833; [1979] 3 All E.R. 897, H.L.(E.)

Reg. v. Secretary of State for Transport, Ex parte Iberian Lineas Arias de Espana (unreported), 8 July 1985, Taylor J.

Republic of Italy v. Hambros Bank Ltd. and Gregory (Custodian of Enemy Property) [1950] Ch. 314; [1950] 1 All E.R. 430

Roberts Petroleum Ltd. v. Bernard Kenny Ltd. [1983] 2 A.C. 192; [1983] 2 W.L.R. 305; [1983] 1 All E.R. 564, H.L.(E.)

Salomon v. Customs and Excise Commissioners [1967] 2 Q.B. 116; [1966] 3 W.L.R. 1223; [1966] 3 All E.R. 871, C.A.

Simpkin Marshall Ltd., In re [1959] Ch. 229; [1958] 3 W.L.R. 693; [1958] 3 All E.R. 611

Smith v. Anderson (1879) 15 Ch.D. 247, C.A.

Taylor v. Co-operative Retail Services Ltd. [1982] I.C.R. 600, C.A.

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.

Union Accident Insurance Co. Ltd., In re [1972] 1 W.L.R. 640; [1972] 1 All E.R. 1105

Walker v. Baird [1892] A.C. 491, P.C.

Walker, Ex parte, In re Haywood (1855) 6 De G.M. & G. 752

Wey and Arun Junction Canal Co., In re (1867) L.R. 4 Eq. 197

Williams and Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd. [1986] A.C. 368; [1986] 2 W.L.R. 24; [1986] 1 All E.R. 129, H.L.(E.)

Zoernsch v. Waldock [1964] 1 W.L.R. 675; [1964] 2 All E.R. 256, C.A.

MOTION

By a petition, dated 12 November 1986, presented by Amalgamated Metal Trading Ltd., the petitioner sought an order (1) that the International Tin Council (I.T.C.), whose registered office was at Adelaide House, London Bridge, London E.C.4, might be wound up by the court under the provisions of the Companies Act 1985 or (2) that such other order might be made as to the court should seem just. By a notice of motion dated 26 November 1986, the International Tin Council applied for a declaration that in the circumstances of the case the court had no jurisdiction over the applicant in respect of the subject matter of the petition, and for an order that the petition be struck out and removed from the file.

The grounds of the application were (i) that the applicant was an international organisation established by a treaty concluded between sovereign states and that its status was governed by public international law and not English domestic law; (ii) that being an international organisation the applicant could not be brought to an end, altered or administered under English domestic law; (iii) that the making, amending and terminating of treaties was a Crown prerogative and it was therefore outside the jurisdiction of the English courts to purport to wind up or otherwise bring to an end a body established by international treaty; (iv) that the First International Tin Agreement, the treaty establishing the applicant, and the Sixth International Tin Agreement, the treaty under which the applicant presently existed, had not been incorporated into English law so that their terms and effect were not cognisable by the English courts; (v) that the Sixth International Tin Agreement had its own termination procedures which were matters governed by international law, and could not be displaced by English law provisions at the behest of creditors or otherwise; (vi) that winding up by the English courts would involve the United Kingdom in violation of its treaty obligations under the Fifth and Sixth International Tin Agreements;

(vii) that winding up by the English courts would involve the United Kingdom in a violation of the Headquarters Agreement made between the United Kingdom and the applicant; (viii) that on the true construction of the privileges and immunities provisions of the Headquarters Agreement and article 6 of the statutory instrument giving effect to them, the International Tin Council (Immunities and Privileges) Order 1972 (S.I. 1972 No. 120), the applicant was in any event immune from the jurisdiction of the English courts (except as expressly provided) and in particular was immune from winding up proceedings, those not constituting the enforcement of an arbitration award; and (ix) that the property and assets of the applicant including its administrative account were immune from the jurisdiction of the English courts (except as expressly provided in the Headquarters Agreement and the statutory instrument) and accordingly it was beyond the jurisdiction of the English courts to wind up the applicant.

Kleinwort Benson Ltd. was added as a respondent to the motion.

The facts are stated in the judgment.

Robert Alexander Q.C., Richard Sykes Q.C., Nicholas Chambers Q.C., Rosalyn Higgins Q.C., Peter Irvin and Leslie Kosmin for the International Tin Council, the applicant. The court has no jurisdiction to wind up the International Tin Council. The issue is non-justiciable, having regard to the fact that the I.T.C. is an international body set up by treaty between sovereign states. The court should not be involved in a decision affecting its status or function. There is a second issue on the question of immunity from process, on which two points arise, namely (i) whether a winding up petition is "legal process" and (ii) whether a winding up petition can be described as "enforcement" of an arbitration award. The I.T.C. contends that a winding up petition is "legal process," but that it would not constitute enforcement of an arbitration award. It is contended that the I.T.C. does not fall within the scope of section 665 of the Companies Act 1985. Without express words Parliament would not have intended to make an international body of that kind subject to the determination of its existence by the English courts. Any grievances which the petitioners may have do not arise on this application. The fact that the petitioners seek to impugn the decisions of member states of the I.T.C. is a clear indication that this application is an exercise on which the court should think it inappropriate to embark. The courts will not interfere in the exercise of the treaty making or treaty performing power of the Government of the United Kingdom. The courts will not determine whether any government, be it the British government or another government which has a treaty obligation with the British Government, has committed a breach of its obligations, and will not embark on a consideration of whether the British Government is entitled to withdraw from a treaty obligation by reason of a breach by others. There is a clear procedure laid down for complaints under the International Tin Agreement, and it is not for the courts of one member state unilaterally to set about determining that question, otherwise than in accordance with the Agreement.

The issue of whether there is or is not a breach is wholly irrelevant to the issues which the court has to decide. It is therefore not necessary, at this stage at least, to argue the issue of inviolability of archives. The case which is the starting point in relation to the non-interference by the courts with the making of and performance of or determination of treaties is Blackburn v. H.M. Attorney-General [1971] 1 W.L.R. 1037. [Reference was made to Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257; British Airways Board v. Laker Airways Ltd. [1984] Q.B. 142; [1985] A.C. 58; Council of Civil Service Unions v. Minister for the Civil Service [1985] A.C. 374; Reg. v. Secretary of State for Transport, Ex parte Iberian Lineas Arias de Espana (unreported), 8 July 1985, Taylor J. and Halsbury's Laws of England, 4th ed., vol. 4 (1973), para. 984.]

Any liability of the United Kingdom or of other member states of the I.T.C. to contribute towards the liabilities of the I.T.C. would arise because of the treaty obligations into which they had entered. One of the purposes of the proposed liquidation of the I.T.C. would appear to be to force the liquidator to take action under the treaty against member states. The effect of the winding up in England of a foreign body corporate is only to wind up its assets in England, but it is allowed to continue in effective existence, trading in a foreign country. But the winding up of the I.T.C., whose only headquarters are in London would be quite a different matter. [Reference was made to Buttes Gas and Oil Co. v. Hammer (No. 3) [1982] A.C. 888.]

There is an express agreement in article 23 of the Headquarters Agreement for arbitration in regard to transactions of purchase and sale entered into by the I.T.C., and there can be enforcement of an arbitration award, subject always to the inviolability of certain assets. Such a degree of enforcement would not interfere either with the unimpeded continuation of the I.T.C.'s affairs or with its status as envisaged by the treaty. But any winding up would have the effect that the United Kingdom would be in violation of its international obligations, because (a) no party may harm the treaty interests of another party by rendering full performance of the treaty impossible, or otherwise rendering it ineffective, and (b) the United Kingdom has undertaken to give proper protection to the I.T.C. [Reference was made to McNair's Law of Treaties (1961) Part IV.]

The court should seek to interpret domestic statutes in such a way as to be consistent with the United Kingdom's international obligations. An interference with property of the I.T.C. could well amount in international law to an unlawful taking of property by an organ of the state, giving rise to an international claim. It is clear that the I.T.C., which the petition seeks to have wound up, is an international organisation, established by treaty, whose status is governed by public international law. The grant to such an organisation of domestic capacity in English law pursuant to a statutory instrument, could not be intended to make justiciable in this country wider questions affecting the status, existence or performance of obligations by that organisation. As a general proposition, the domestic courts of one country cannot apply

municipal law to determine the existence of an international organisation, or interfere with its performance of its functions.

The effect of the winding up order would be that the powers of the council and of the executive chairman would cease, just as do the powers of directors of an ordinary company on a winding up under the Companies Act 1985: In re Union Accident Insurance Co. Ltd. [1972] 1 W.L.R. 640. Even if it were possible, theoretically, for the international organisation to continue, and if the members of the I.T.C. were to agree, under article 3 of the Headquarters Agreement, that there should be headquarters elsewhere than in England, the power of the council over the I.T.C.'s English assets would cease. To permit a winding up would be to negate the intention of the member states. It would also be inconsistent with the procedures for termination contained in articles 59 and 60 of the Headquarters Agreement. The operation of section 537 of the Companies Act 1985 could not be limited by, for example, directing the official receiver not to take possession of the headquarters premises, which are inviolable. The same would apply with other sections, viz. sections 638, 639, 551, 559, 561 and 563.

(i) International obligations are not justiciable; (ii) Parliament could theoretically by the use of clear language make international organisations subject to our domestic winding up procedures; (iii) but in practice it would be extremely unlikely for Parliament to do so: normally domestic legislation would conform with international obligations, and if domestic legislation were in conflict with those obligations that would not be an excuse for violation thereof; (iv) if the issue is non-justiciable or there is immunity from suit then nothing which has been done by English domestic legislation is otherwise than in conformity with international obligations; (v) if it were that the immunity provisions did not apply at all, then the I.T.C.'s argument as to non-justiciability should prevail.

The exceptions in the International Tin Council (Immunities and Privileges) Order 1972 were clearly intended to give effect to the immunity from jurisdiction and execution contained in article 8(1) of the Headquarters Agreement, "suit" and "legal process" being construed as being the same as "jurisdiction" and "execution": Garland v. British Rail Engineering Ltd. [1983] 2 A.C. 751; Salomon v. Customs and Excise Commissioners [1967] 2 Q.B. 116 and Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257. The wording "immunity from suit and legal process" reflects the wording in the International Organisations Act 1968, which is immensely wide, and intended to cover all forms of proceedings. [Reference was made to Stroud's Judicial Dictionary, 4th ed. (1974), as to the meaning of "process"; In re Harris, decd. [1945] Ch. 316; the Bankruptcy Rules 1952, rule 154(1); section 725 of the Companies Act 1985; the Companies Winding-up Rules and R.S.C., Ord. 11.] The word "process" in its ordinary meaning includes a winding up petition. "Suit" clearly includes an action. In re Simpkin Marshall Ltd. [1959] Ch. 229 is clear authority that a winding up petition is not an action. Maybe the word "suit" still bears a wider meaning than "action." "Legal process" was clearly intended to bear a wider meaning than "suit." [Reference was made to

the Bankrupt Law Consolidation Act 1849, s. 211; the International Organisations (Immunities and Privileges) Act 1950.]

A winding up petition is not the enforcement of an arbitration award: In re A Company [1915] 1 Ch. 520, followed in In re Parker Davies and Hughes Ltd. [1953] 1 W.L.R. 1349. A winding up brings into operation a statutory scheme for dealing with assets and enables a creditor to seek to recover the whole or part of his debt; it is quite separate and distinct from the enforcement of an award. If the arguments advanced as to non-justiciability are correct, then there is no need to consider the application of section 665 of the Companies Act 1985. The mere grant of the legal capacity of a body corporate would, in any event, not suffice to bring the I.T.C. within the section. The relief claimed in the notice of motion should not be granted. [Reference was made to Hall v. Truman, Hanbury & Co. (1885) 29 Ch.D. 307.]

Sir Maurice Bathurst Q. C., Anthony Grabiner Q. C., Nicolas Bratzaand David A. S. Richards for the Attorney-General.

Anthony Grabiner Q. C. The I.T.C. has suggested that this is a proper case for intervention by the Attorney-General. The Attorney-General agrees that he ought to be represented and that this is a proper case for his intervention in accordance with the principles set out in Adams v. Adams (Attorney-General intervening) [1971] P. 188. The court ought not to construe section 665 of the Companies Act 1985 so as to produce the result that the I.T.C. was an organisation susceptible to the winding up procedures of this court. As against the background of the treaty arrangements and the limited recognition given through the International Organisations Act 1968, it is inconceivable that the Companies Act 1985 or its predecessors could have produced that result in the absence of clear words which are not to be found in section 665.

As to the question which has arisen of certificates from the executive, the position is that certificates from the Secretary of State relate essentially to questions of fact, though incidental questions of law may be involved. The main examples of such certificates under the prerogative include the following: (i) the recognition of foreign sovereign states; (ii) the commencement or termination of a state of war with a foreign country or between foreign countries; (iii) the status of diplomats; (iv) the existence or extent of British jurisdiction in foreign countries and (v) on rare occasions, the status of places in foreign countries: In the past certificates were issued as to the recognition of foreign governments, but British practice on this point was changed in 1980. The Crown may also adopt other ways of putting matters before the court, either through counsel for the Attorney-General or by a letter to the parties, a course which was adopted in the Buttes Gas and Oil case [1982] A.C. 888. A certificate in the present case would not seem appropriate, though it would enable the Attorney-General to put forward the Government's view, if desired.

It is plain beyond argument that the I.T.C. is the creature of treaty arrangements concluded between sovereign states, and that it is undoubtedly an international organisation. It is important to consider what would be the consequences of a winding up order being made. It is submitted that it would destroy the treaty arrangements, at least in

relation to the contemplated operations of the I.T.C. in the United Kingdom. A court appointed liquidator would effectively replace the organisation and the administrative machinery set up by the Sixth International Tin Agreement; the functions of its chairman, vice chairman and staff would be displaced, and a conflict would result between the terms of the treaty and English company law. English court procedures would be invoked for recovering contributions from member states. In the liquidation the court would be invited to construe the liabilities of member states to the I.T.C., which would necessarily involve ruling upon the rights and duties of the sovereign states which are parties to the treaty. Such questions are simply not justiciable in the English courts. The petition and the winding up would be inconsistent with the machinery for settling disputes and complaints under articles 48 and 49 of the Agreement. Articles 59 and 60, dealing with termination procedures, would also be supplanted. At present the I.T.C. still exists and those procedures remain available.

A winding up order would constitute an interference by the court in the prerogative power of the Crown to conduct relations with other sovereign states. The prerogative power extends to the exclusive power to make alter and terminate treaties. In the field of foreign affairs the Crown acts as the representative of the nation, and enjoys the sole right to conduct foreign relations. By making a winding up order the court would be applying English company law to bring to an end in this country the existence of an international organisation, created by treaty. The creation, constitution, administration and termination of the I.T.C. are governed by laws other than those which municipal courts administer. [Reference was made to Russian and English Bank and Florance Montefiore Guedalla v. Baring Brothers & Co. Ltd. [1936] A.C. 405, 425, per Lord Atkin.] What is really being wound up is the company worldwide, the limitation in the order to assets in England is purely practical. [Reference was made to Nabob of Arcot v. East India Co. (1791) 3 Bro.C.C. 291, 303; (1793) 4 Bro.C.C. 181; Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, 86; Cook v. Sprigg [1899] A.C. 572, 578-579; Salomon v. Customs and Excise Commissioners [1967] 2 Q.B. 116, 141, 142-145; Malone v. Metropolitan Police Commissioner [1979] Ch. 344, 353-354, 378-379 and Quazi v. Quazi [1980] A.C. 744, 808.]

As to the question of confidential documents, the Attorney-General's position is that they fall into a class of documents which makes them subject to public interest immunity; the documents exhibited to Mr. Green's affidavit are irrelevant to the issues which the court has to decide. The right to raise a claim to such immunity is reserved.

Andrew Morritt Q.C., Elihu Lauterpacht Q.C., Sir Ian Sinclair Q.C., Patrick Howell and Richard Plender for the petitioner, Amalgamated Metal Trading Ltd. After two days of argument, with copious references to sovereign states, prerogative of the Crown, justiciability, public policy and foreign relations, it is easy to lose sight of what this case is actually about. It is about a defaulting debtor, who, after speculating in commodities leaves a trail of unsatisfied creditors behind him. Never before has such an organisation so misbehaved; the unpaid debts run

into several hundred million pounds sterling, and the organisation seeks to avoid any examination of the conduct of its affairs. It apparently seeks to continue with other activities without paying its creditors. The affairs of the I.T.C. are a public scandal, the like of which has not been seen since the South Sea Bubble. The petitioner has an arbitration award of £5.3 million. Others are in the same position. No current proposals are being made for payment. If there is no jurisdiction to deal with a defaulting debtor, such as the I.T.C., it is a sad reflection on the state of English law.

There are only three questions for the court to determine; (1) Is a winding up a "legal process" within the meaning of article 6 of the Order in Council? (2) If so, is it enforcement of an arbitration award within the meaning of article 6(1)(c)? (3) If it is not "legal process," or if it is, if it is also enforcement, is the I.T.C. an "association" within section 665 of the Companies Act 1985? If the I.T.C. is not immune under the Order in Council, and if it is an association within section 665, there is no dispute that it has assets in the United Kingdom and that it is hopelessly insolvent.

As to state immunity, if each sovereign member state had done individually what they did collectively through the I.T.C. they would not be immune. The position at common law can be seen by referring to Alcom Ltd. v. Republic of Colombia [1984] A.C. 580. The current position is to be found in the State Immunity Act 1978. From these, it is clear that commodity contracts entered into by member states individually would not have enjoyed sovereign immunity. It is equally clear that, if under English law, the member states are under an obligation to indemnify the I.T.C. in respect of its commercial liabilities, it is likewise not immune because of the provisions of section 3(3)(b) or (c) of the State Immunity Act 1978. If the I.T.C. was an agent of the member states the petitioner could sue directly. Or if the member states cannot be sued directly, then they have no immunity from a claim by the liquidator. It is clear that sovereign states, as such, enjoy no immunity. [Reference was made to the Buttes Gas and Oil case [1982] A.C. 888, 931-937.] What Lord Wilberforce said in that case was not related at all to commercial transactions of states.

The I.T.C. exists at what might be called two different levels, that of international law by virtue of various treaties, and that of domestic law by virtue of the Order in Council, whereby it is an organisation which has the legal capacities of a body corporate. While the court may look at the treaties as a necessary background to understanding the case, the status of the I.T.C. under English law arises under the Order in Council, which is a matter of English domestic law and one for the court to resolve. Where there is ambiguity, reference may be had to the treaty obligations, but there is no ambiguity as to the status of the I.T.C., under English law.

Treaties do not have effect under English municipal law, unless enacted directly or indirectly by the mechanism of the Queen in Parliament. The court gives effect to English law, not to public international law; see Attorney-General for Canada v. Attorney-General for Ontario [1937] A.C. 326, 348. Performance of a treaty within this

country is not a matter of the Royal prerogative, but a question of how Parliament has legislated. The court's function is to give effect to English legislation whether or not it is in breach of treaty obligations: see Inland Revenue Commissioners v. Collco Dealings Ltd. [1962] A.C. 1, 18. It is unsatisfactory that the court should be asked to deal with this issue on a striking out motion, without hearing the petition on its merits. It is a bare question of jurisdiction. It is only on that footing that it could be right not to hear the evidence. The only immunity given by the Order in Council is in respect of archives and premises, not in relation to trading assets at all. The only immunities applicable are those granted by the Order in Council. It is a constitutional heresy to suggest that an assumption of jurisdiction by the court would be an interference with the prerogative. For instance, if the United Kingdom having undertaken, by treaty, to assist state A if invaded by state B, contracts with X Ltd. to fly troops to state A, but X Ltd. was incorporated abroad but had its principal place of business and head office in the United Kingdom and Z, a creditor, petitioned to wind it up, a winding up order might well prevent or impede the Crown in performing its treaty obligations, but that is no ground for saying that the court had no jurisdiction to make the order if X Ltd. was admittedly insolvent. [Reference was made to The Parlement Belge (1879) 4 P.D. 129, 148, 154; 5 P.D. 197.] The question of breach of treaty obligations is not relevant. One cannot use a treaty to provide immunity that one does not possess under the domestic law. It is now accepted by the I.T.C. that there may or may not have been a breach of treaty obligations, which may or may not have given the United Kingdom the right to withdraw or suspend. It is not valid, factually, to suggest that a winding up order must effectively give rise to a breach of treaty obligations. A liquidator could be given instructions not to touch the archives or the I.T.C.'s premises, those being inviolable.

Somebody with an arbitration award for £100 million who issued a writ of fi.fa. or a garnishee order would be able to take away all the I.T.C.'s non-immune assets in exactly the same way as a liquidator could under a statutory scheme. Both on the question of jurisdiction (with which the court is at present solely concerned) and on the question of discretion (if the court should come to it), the fact that a winding up order might cripple the activities, either commercial or statistical, of the I.T.C. is legally and factually irrelevant. A debt for which no arbitration award, had been or could be obtained, and where there was no waiver, would not be enforceable in England, and could therefore not be a provable debt in a liquidation. So a liquidation would not open the door to a lot of claims that could not otherwise be raised. Public policy does not require the court to give effect to the terms of a treaty which is not incorporated into English law. It would be heresy to do so.

Owing to the terms of section 1(6)(a) of the International Organisations Act 1968 the immunities under the Order in Council cannot be wider than those in the Headquarters Agreement. If the Order went further it would be ultra vires. The Order need not go as far as the Headquarters Agreement.

It is manifest, on the principles established in In re Compania Merabello San Nicholas S.A. [1973] Ch. 75, 86, 90 et seq., that there are assets and creditors of the I.T.C. in this country so as to found jurisdiction on those principles, and that jurisdiction is not dependent on the merits or otherwise of any claim to be made by the I.T.C. against its members. [Reference was made to In re Allobrogia Steamship Corporation [1978] 3 All E.R. 423 and In re Eloc Electro-Optieck and Communicatie B.V. [1982] Ch. 43.] A winding up would not enure for the benefit of those with unenforceable debts: Indian Government v. Taylor [1955] A.C. 491 and In re General Rolling Stock Co. (1872) L.R. 7 Ch.App. 646.

Although in legal theory an English winding up covers assets wherever they may be in the world (In re Oriental Steam Co., Ex parte Scinde Railway Co. (1874) L.R. 9 Ch.App. 557), it is no objection to jurisdiction that certain assets may be unavailable to a liquidator because outside the jurisdiction of the court or inviolable.

The I.T.C. has been recognised by Parliament as an association; whether it be described as a body corporate or as a partnership does not matter. The effect of the Order in Council is to say that the I.T.C. shall have a legal personality, and shall be an association for the purposes of the Companies Act 1985, save insofar as the Order grants it immunity. Where there is an international element, all difficulties arising from a winding up can be dealt with by directions given by the court. The fact that an organisation was a statutory body which was to last for an indefinite period and the fact that its major asset could not be realised without the sanction of Parliament was held not to be an impediment to a winding up in In re Bradford Navigation Co. (1870) L.R. 10 Eq. 331: see also In re Barton-upon-Humber and District Water Co. (1889) 42 Ch.D. 585.

Terms can readily be imposed on a liquidator, particularly where problems arise with companies having some foreign connection: see In re Matheson Brothers Ltd. (1884) 27 Ch.D. 225, 228. The mandatory provisions of some sections of the Companies Acts, can be overridden sometimes as a matter of practicality; by directions given to the liquidator. [Reference was made to In re Hibernian Merchants Ltd. [1958] Ch. 76.]

Provisions in the constitution of a body providing for dissolution in certain events do not exclude the jurisdiction of the court to wind the body up in other events: see Kinder v. Taylor (1825) 3 L.J.Ch. (O.S.) 68; In re Oriental Bank Corporation, Ex parte Clayton and Hartas (1885) 52 L.T. 556 and In re Wey and Arun Junction Canal Co. (1867) L.R. 4 Eq. 197. [Reference was made to In re Chapel House Colliery Co. Ltd. (1883) 24 Ch.D. 259; In re Crigglestone Coal Co. Ltd. [1906] 2 Ch. 327 and In re Lines Bros. Ltd. [1983] Ch. 1.]

Turning to the meaning of "legal process," it has been conceded that a winding up petition is not a "suit." For the purposes of the Order in Council the legal process is of an enforcement nature rather than of an adjudicative nature: see per Lord Diplock in Alcom Ltd. v. Republic of Colombia [1984] A.C. 580. [Reference was made to Ex parte Walker, In re Haywood (1855) 6 De G. M. & G. 752.] Steyn J. in Arabian

Banking Corporation v. International Tin Council (unreported), 15 January 1986, says that "immunity from suit and immunity from execution are wholly different notions. . . . in practice." "Immunity from suit" is used interchangeably with the phrase "immunity from jurisdiction" in the same way as "immunity from legal process" is used interchangeably with "immunity from execution." "Legal process," which is conventionally regarded as enforcement process, would, on that hypothesis, obviously include proceedings for winding up. A winding up is the enforcement of the arbitration award liability. [Reference was made to the notes to R.S.C., Ord. 45, pp. 650, 651 in The Supreme Court Practice. ] As a matter of ordinary colloquial English, the presentation of a winding up petition is regarded as included in the "enforcement of a judgment." This is so even though a petition is designed to include all admitted or proved debts of the company. If it can be described as enforcement, then the exemption goes. It would be useless for a creditor with a debt, but with no arbitration award to try to enforce it by a petition to wind up. There is no reason, in the context of the Order in Council to confine "enforcement" by reference to legal forms of execution by writ of fi.fa. or garnishee, a construction which the words of the order simply do not bear. [Reference was made to In re Lines Bros. Ltd. [1983] Ch. 1.] If in practice the only method of "enforcement" with any reality of getting any money is a petition to wind up, why should it be excluded? Had a restricted meaning of enforcement been intended the Parliamentary draftsmen could easily have so provided. [Reference was made to In re A Company [1915] 1 Ch. 520, 529.] That case was based on a totally different statutory purpose and statutory context. "Enforcement" is not a term of art.

Turning to section 665 of the Companies Act 1985, it is no part of the petitioners contentions that the I.T.C. is in fact a body corporate; it is quite sufficient that it is an association. English municipal law recognises it as an organisation with the legal capacities of a body corporate. An organisation established pursuant to an international treaty was ordered to be wound up in In re East African Airways Corporation (unreported), 20 June 1977, Brightman J.

Elihu Lauterpacht Q.C. following. The Crown has exercised the prerogative power by making the relevant treaties concerned, and continues to exercise the power by its participation in the arrangements established by those treaties. The winding up, if it takes place, does not involve any interference with any of these prerogative powers. The treaty is neither being altered or terminated. The court is only being asked to act in accordance with the position prescribed by statute, namely the Order in Council of 1972, made pursuant to the International Organisations Act of 1968. [Reference was made to Attorney-General v. De Keyser's Royal Hotel Ltd. [1920] A.C. 508, 526.] One looks to the statutory instrument, not to any assertion of prerogative. It is true that the I.T.C. is an international organisation which exists at the level of international law, on the basis of a treaty, but it also has at least one domestic law reflection, namely the statutory instrument of 1972, which embodies in English law those features of the I.T.C. which bring it into direct contact with activity in England. It is true that, on the international

plane, the creation, constitution, administration and termination of the I.T.C. are governed by laws other than those which municipal courts administer, to use Mr. Grabiner's words, but that is untrue on the domestic plane. The basis for the existence of the I.T.C. in the United Kingdom is the Order of 1972, which covers its organisation and grants immunities, with certain exceptions. Whatever is done on the domestic plane is a matter for regulation by the domestic law. The domestic law can take account of the treaty to the extent that reference to the treaty is incorporated into the Order, as in article 2 of the Order. That would show what the I.T.C.'s official activities are. But domestic law does not touch the I.T.C.'s international situation, nor does that situation touch its domestic activities as recognised by the Order of 1972.

The concept of non-justiciability is used to describe a variety of situations in which the court refrains from exercising jurisdiction on certain specific grounds, e.g. act of state, in the sense that the Crown has committed a wrong against an alien outside British territory, and the courts regard that as not being a justiciable matter. Similarly where the Crown has taken property from an alien outside British territory. In Civilian War Claimants Association Ltd. v. The King [1932] A.C. 14 the civilian war claimants were claiming rights under the Treaty of Versailles, to which they were not parties; the relevant part of that treaty had not been incorporated into English law, and the court could not apply the treaty, and thus the matter was, in effect, not justiciable. The same was true in Republic of Italy v. Hambros Bank Ltd. and Gregory (Custodian of Enemy Property) [1950] Ch. 314. Another category of non-justiciability, is where the court is asked to give judgment on an issue involving a territorial dispute between two foreign governments. Here there is no question of raising directly a question of international law. The case does not involve examining the relationship inter se under international law of the members of the I.T.C. The basis on which the member states should contribute part of their funds to meet the indebtedness of the I.T.C. is a matter to be governed, not by international law directly, but by the law of England. International law does not arise at this stage. It is perfectly possible to identify a course which would not involve the liquidator in making a claim under the treaty as such. The court would not be asked to interpret or apply the treaty as creative of rights between the liquidator and the members. The I.T.C. is to be treated as an unregistered association, with no memorandum or articles of association; there is no need to look at its constituent instrument for the purpose of establishing the liability of its members, in the winding up, because it is a winding up under the English law.

The question at issue is not that of winding up the organisation, the international person of the I.T.C., but of winding up only the United Kingdom manifestation of that organisation, and that manifestation is to be found solely in the Order of 1972. It is the I.T.C. as an entity having the legal status and capacities of a body corporate in the United Kingdom, and not the I.T.C. in its international character, which is the subject of these winding up proceedings. One should regard the I.T.C. as a double barrelled shot-gun, with one barrel of international personality, and another of United Kingdom legal personality. It is only

the latter with which the court is here concerned. In that barrel the Crown has no special prerogative; it is concerned only with performance within the international framework.

The argument that any proceedings by the liquidator against the member states would be non-justiciable is not pertinent to consideration of the appointment of the liquidator. The general statement on non-justiciability in the Buttes Gas and Oil case is too wide. In any case the Sixth International Tin Agreement comes to an end on 1 July 1987 and thereafter nothing done by the courts can impede the exercise by the Crown of its prerogative.

Matters involving state policy are constantly the subject of commercial contracts, but that does not make such contracts non-justiciable. There has been a very substantial erosion of the formerly privileged position of the state in the courts. This is evidenced by the Crown Proceedings Act 1947. Insistence on "high policy" or "the sacrosanctity of Acts of State" is becoming increasingly obsolete. The English court is bound to act, even if it would involve the Government in a breach of treaty. The statute always overrides.

The courts may concern themselves with matters of state, as is shown by the Government's new policy on recognition. [Reference was made to Gur Corporation v. Trust Bank of Africa Ltd. [1987] Q.B. 599.] Prior to 1980 the existence of a foreign state or government was determined conclusively by a certificate from the Foreign and Commonwealth Office. There is thus no fundamental inhibition upon courts looking at affairs of state. An inclination to avoid embarrassment cannot be the basis for denying justice to the subject. [Reference was made to Dr. Mann's Foreign Affairs in English Courts. ]

An extraordinary proposition was advanced for the applicant, that "it could be argued that the effect of interference with the property of the I.T.C. could well be an unlawful taking of property in international law by an organ of the state, giving rise to an international claim." This is precisely the image which the petitioners might employ to describe their own situation. The petitioners had lost millions of pounds with which the I.T.C. chose to gamble. When it lost it was disinclined to pay for its losses! The continuing intervention of the Government aimed at preventing recovery of the property is precisely the action of an organ of the state, which could give rise, in due course, to a claim against Her Majesty's Government for that very thing - namely a taking of property. There is nothing in the European Convention on Human Rights or in the principles of international law which would authorise the deprivation of the property of a subject in the manner in which the petitioners have been deprived of their property. People who acted in good faith with an organisation created by governments find themselves literally despoiled of their property.

Inviolability of premises means that the premises may not be entered by public authorities of the host state without the consent of the organisation and that the host state is under an obligation to protect the premises from unauthorised entry by private persons. There is no necessary inconsistency between the nature of inviolability and the concept of a winding up. The petitioners' case is either that the

liquidator would be the agent of the I.T.C. so that when he entered the premises he would not be violating them, or alternatively that the liquidator did not need to enter the premises, and could conduct his operation in relation to the principal prospective assets without getting involved in problems of inviolability. The court is not at present called upon to consider whether the court could direct the liquidator, as agent of the I.T.C., to waive inviolability if an application were made by a creditor who had no arbitration award to rely on. There will be a major question in due course as to whether the I.T.C.'s immunity survives beyond July 1987. The immunities would survive the winding up order, creditors without an arbitration award being unable to prove in the liquidation. The immunities granted should be narrowly construed.

Stanley Burnton Q.C., Michael Crystal Q.C., Mark Barnes, Richard Sheldon and David Lloyd Jones, for Kleinwort Benson Ltd.

Michael Crystal Q. C. To succeed on this motion the I.T.C. has to demonstrate to the court's satisfaction that the petition is so obviously unsustainable that it does not even merit a hearing. It must be shown that it is plain and obvious (i) that the I.T.C. is not an unregistered company within the meaning of section 665 of the Companies Act 1985; (ii) that a winding up petition falls within the concept of legal process in article 6(1) of the statutory instrument of 1972 and (iii) that if it does so fall within the meaning of article 6(1), it does not fall within the concept of legal process for the enforcement of the arbitration award, within the meaning of article 6(1)(c) of the said statutory instrument. Those are the only three issues that arise on this motion.

There is authority for the proposition that if, as the court suggests, the matter is really a preliminary question of law, then it should be set down as a preliminary issue, and not dealt with on a hearing to strike out: see Williams and Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd. [1986] A.C. 368.

The petition is on the file, is prima facie in regular form and contains all the necessary averments. The I.T.C. has to pass the threshold test of showing that the case for striking out is plain and obvious, in order to preclude the petitioner from a hearing on the merits, and the court has to go into the question of whether or not the I.T.C. is an unregistered company under section 665. If the court holds that the I.T.C. does come within section 665, then the onus falls upon the I.T.C. of showing that its construction of the terms of the statutory instrument according immunity is correct. There must be plain and clear words to deprive the court of prima facie jurisdiction. The court should look closely at the immunity, given the premise that the I.T.C. is not a registered company within the meaning of section 665. It is not clear that the court would be entitled to consider how it might exercise its discretion on the hearing of a winding up petition or how it might give directions to the liquidator, as an aid to construing the immunity, because if one proceeds beyond the bare point of law stage, then all parties interested would have the opportunity to appear, and not merely creditors and contributories. In In re Bradford Navigation Co., L.R. 10 Eq. 331 the inhabitants of Bradford were allowed to present arguments, although they were not creditors. Here persons claiming to be creditors, and the member states

could have their voices heard. The process of striking out will effectively deprive the court from hearing the views of many who on any view have an interest in whether or not the I.T.C. should be wound up. If a winding up order were made, the court would at a very early stage be involved in the conduct of the winding up, and would have to rule on who could appear at meetings of creditors, for example, and have a right to vote. There are both banking and broking creditors, who do not have an arbitration award. But that is a problem that should not concern the court at this stage and it would not be a legitimate aid to interpretation of the immunity.

At the time of presentation of the petition, in considering whether it falls within article 6(1)(c) of the statutory instrument, it should be regarded as the enforcement of an award. It is a fallacy to assume that because on the making of a winding up order, a new regime commences, that it cannot be regarded as the enforcement of an award. It matters not that the enforcement of the award may not be the only effect of the making of the winding up order. On the question of statutory construction of the order, the court should not look into what may happen to other creditors. It was clearly intended by article 23 of the Headquarters Agreement that all contracts entered into by the I.T.C. should contain an arbitration award, so it is not surprising that the immunity is confined so as to exclude those without an arbitration award. Difficult questions as to whether other debts should be paid pari passu does not arise at this stage.

The whole of Part XX of the Companies Act 1985 and section 674 is discretionary in its application to unregistered companies. Inviolable premises and inviolable archives may be no more than another illustration, in this peculiar context, of "trust funds," i.e. property not subject to the statutory scheme of winding up at all. That matter would be determined on a summons in the course of the winding up, to which the Attorney-General would be a party. If such assets are outside the scheme, no question of waiver of immunity can arise. Section 674 would override section 537. The liquidator would apply to court as to whether he had any capacity to waive any immunity. It does not follow at all that the liquidator would have the same rights or powers as the executive of the I.T.C. Section 520 gives the court a very wide discretion on hearing the petition to "adjourn ... conditionally or unconditionally, or make an interim order, or any other order that it thinks fit." It would be wrong to consider at this stage problems that may or may not arise at a later stage. [Reference was made to Russian and English Bank and Florance Montefiore Guedalla v. Baring Brothers & Co. Ltd. [1936] A.C. 405.] Another safeguard is to be found in section 540(4) which empowers the liquidator to seek directions on any particular matter, arising in the winding up. [Reference was made to section 522 and to Roberts Petroleum Ltd. v. Bernard Kenny Ltd. [1983] 2 A.C. 192.] Once an arbitration award has been obtained, everything else that follows should be regarded as enforcement. Sections 597 and 598 must be read together. If the problems arising in a winding up are not irrelevant, they are the clearest possible justification for allowing the petition to proceed to a hearing. The problems ought not to be telescoped into one. The

authorities seem to show that the winding up route is a collective enforcement. To conclude, what the I.T.C. and Her Majesty's Government invite the court to do comes down to this; that the court should regard the I.T.C. as falling effectively outside the laws of this country, including the Companies Act 1985, i.e. to put it in the position of a modern day Alsatia, a recognised sanctuary for a hopelessly insolvent debtor. That would be a deeply unattractive position for the courts of this country to recognise. A winding up order is intended to stop a race between creditors, and ensure pari passu distribution, amongst those entitled to share in the assets, i.e. the court should dismiss the motion.

Stanley Burnton Q. C. following. The Parlement Belge, 4 P.D. 129, is regarded as the locus classicus of the constitutional position. If Parliament desires a treaty which requires for its execution and application in the United Kingdom a change in or addition to the law administered in the courts it expressly so provides: see for example section 53 of the Patents Act 1977. That section would of course require the court to take cognisance of and interpret the treaty, even though not expressly incorporated by legislation. In Walker v. Baird [1892] A.C. 491 it was queried whether the Crown had the power of compelling its subjects to obey the provisions of "a treaty made either for the purpose of putting an end to war or to preserve peace, or, whether interference with private rights can be authorised otherwise than by the legislature." [Reference was also made to Malone v. Metropolitan Police Commissioner [1979] Ch. 344 and Taylor v. Co-operative Retail Services Ltd. [1982] I.C.R. 600.] If there is no immunity granted by the statutory instrument, and if the I.T.C. falls within section 665 of the Companies Act 1985, then it is no answer to point to the provisions of any treaty. What the court has to decide are issues on the construction of an English statute and statutory instrument. Questions of justiciability can only arise if there is a controversy between the parties which the court is precluded from deciding by virtue of the principles enunciated in Buttes Gas and Oil Co. v. Hammer (No. 3) [1982] A.C. 888. [Reference was made to Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529.] The I.T.C. is not incorporated, but it is given the legal capacities of a body corporate, one of which may well be the capacity to be wound up. The court does not have to decide whether the members of the I.T.C. shall cease to engage in the activities carried out by the I.T.C.; what the court is doing is taking the available asset of the I.T.C. for distribution of a winding up, in payment of its liabilities. That process is envisaged in the exceptions to the immunity given. The I.T.C. ceased trading over a year ago; it is not the court which is precluding it from carrying on its activities. The court is not precluded from taking cognisance or interpreting a treaty as such. [Reference was made to Zoernsch v. Waldock [1964] 1 W.L.R. 675.]

Alexander Q. C. in reply. There is a measure of agreement, first as to the restrictive theory of sovereign immunity, which makes it possible for actions to be taken against sovereign states in respect of their ordinary commercial activities. That is the effect of the State Immunity Act 1978. It is also agreed that the I.T.C. exists at the level of international law,

being given legal personality by article 16 of the Sixth International Tin Agreement, and that it functions at domestic level by virtue of the statutory instrument. But the Crown does not agree that that instrument creates an I.T.C. separate from the international legal personality conferred on it by treaty. All that the statutory instrument does is to confer the legal capacities of a body corporate on the already existing international law personality wider. It is not a "double barrelled shot-gun." The court should refer to the Headquarters Agreement in order to ensure that the statutory instrument is construed in conformity with our international law obligations wider. It is agreed that a treaty does not take effect in English law without legislation. Only if words are unclear is it right that they should be construed in such a way as to give effect to our international obligations. If the word "association" does include an international association then one cannot rely on the treaty to gainsay that meaning, because to do so would be seeking to rely on a treaty whose provisions were not incorporated into English law. But if that is uncertain then the court should not interfere with the performance of treaty obligations. Without very clear words Parliament would not have intended the courts to interfere. [Reference was made to Inland Revenue Commissioners v. Collco Dealings Ltd. [1962] A.C. 1; The Parlement Belge, 4 P.D. 129 and Alcom Ltd. v. Republic of Colombia [1984] A.C. 580.] In order to determine whether the I.T.C. is an association the court has to look to the Sixth International Tin Agreement, and the Headquarters Agreement. The predominant purpose in seeking a winding up order is to enforce obligations against member states. It would prevent the I.T.C. and its chairman and executive from operating in this country, which would conflict with treaty obligations. [Reference was made to United Nations Juridical Year Book for 1980, vol. 3 and Jenks' Proper Law of International Organisations, vol. 4.] If a body such as the I.T.C. is included within the meaning of "association" then the legislature has created an exceptional situation in which the courts will interfere with the performance of treaty obligations. Mere general words used are not sufficient to bring that about. An association might reasonably be described as a body of persons created by the domestic law of the United Kingdom or of some foreign country, having a constitution and attributes similar to that of a company or partnership and so constituted as to carry on a business activity: see Smith v. Anderson (1879) 15 Ch.D. 247, 273, 277, 282 and In re Caledonian Employees' Benevolent Society, 1928 S.L.T. 412. A winding up order is something fundamentally different from the enforcement of an arbitration award. It would enure for the benefit of someone who was knocked down by a person employed by the I.T.C. or in respect of someone in respect of whom the I.T.C. had expressly waived immunity. [Reference was made to In re A Bankruptcy Notice [1907] 1 K.B. 478.]

Grabiner Q. C. in further reply. It is not suggested and has never been suggested that an immunity conferred alone by an unincorporated treaty has application in domestic law, or that unincorporated treaty arrangements can be valid so as to abrogate or curtail rights conferred by statute or by the common law. The Parlement Belge 4 P.D. 129, is thus irrelevant to the present case. It is submitted that (i) A treaty can

and should be looked at as an aid to construction of an Act of Parliament or Order in Council designed to give effect to it. (ii) The court should seek and find clear words in legislation before it reaches the conclusion that Parliament intended to reduce or impede the exercise of the prerogative in the conduct of international relations. (iii) The winding up of the I.T.C. would interfere with the Crown's conduct of foreign relations by its continued participation in the arrangements contained in the Sixth International Tin Agreement and the Headquarters Agreement. (iv) There are no clear words in section 665 of the Companies Act 1985 to suggest that the winding up jurisdiction of the court is applicable to an international organisation, such as the I.T.C. There are equally no clear words on article 6 of the Order in Council of 1972 to suggest that the immunities conferred on the I.T.C. do not extend to the making of an order winding up such an organisation.

22 January 1987.MILLETT J.read the following judgment. The International Tin Council ("the I.T.C.") is an international organisation established by treaty concluded between a number of independent sovereign states, of which the United Kingdom is one, and having its headquarters and principal office in London. Thirty-two nations, including the United Kingdom, together with the European Economic Community are members. The I.T.C. was formed for the purpose of administering the treaty and carrying out the functions prescribed by the treaty. Its main functions were to provide for adjustment between world production and consumption of tin and to alleviate serious difficulties arising from surplus or shortage of tin, whether anticipated or real, and to prevent excessive fluctuations in the price of tin and in export earnings from tin. To these ends, it maintained and operated a buffer stock of tin and engaged in the buying and selling of tin by entering into sale and purchase contracts, both for immediate and forward delivery, on recognised markets including the London Metal Exchange. In 1985, in a vain attempt to support the world price of tin, the I.T.C. ran out of money and collapsed. In October 1985 the I.T.C. announced that it was unable to meet its commitments. Dealings in tin on the London Metal Exchange were suspended and the I.T.C. ceased to trade in tin.

The failure of the I.T.C. to meet its obligations has left a host of unsatisfied creditors with debts totalling several hundred million pounds arising from the I.T.C.'s commercial activities in the United Kingdom. No proposals have been made for payment. Among the many creditors is the petitioner, Amalgamated Metal Trading Ltd., which claims to be owed £5,300,000. It has obtained an arbitration award in its favour for that sum and applied to the I.T.C. for payment, but the award remains unsatisfied.

In November 1986 the petitioner presented a petition for the I.T.C. to be compulsorily wound up by the court under Part XXI of the Companies Act 1985. The petition alleges that the I.T.C. is an unregistered company within the meaning of section 665 of that Act and is, accordingly, liable to be wound up by the court; that it is insolvent

and unable to pay its debts; that unpaid creditors or claimants have already obtained or sought to obtain for themselves the benefit of assets belonging to the I.T.C. in satisfaction of their individual claims; and that in the circumstances it is just and equitable that the I.T.C. should be wound up and that an orderly realisation and distribution of such assets as may be available for its creditors should be conducted by a liquidator appointed by the court. The petition also alleges that in a winding up there will be available to the creditors the right to enforce against Her Majesty's Government in the United Kingdom and the other member states their liability to contribute to the debts and liabilities of the I.T.C. pursuant to section 671 of the Companies Act 1985 and otherwise.

The I.T.C. promptly responded by serving a notice of motion to strike out the petition on a number of grounds, which can be collected under one or other of two alternative heads: (1) that as an international organisation established by treaty between independent sovereign states the I.T.C. is not subject to the winding up jurisdiction of the court under the Companies Act 1985; or alternatively (2) that by virtue of the provisions of the International Tin Council (Immunities and Privileges) Order 1972 (5.1. 1972 No. 120) ("the Order of 1972") the I.T.C. is immune from such jurisdiction. That motion is now before me.

Shortly before the hearing of the motion, I gave leave to Kleinwort Benson Plc., a loan creditor which claims to be owed over £7 million but has not yet obtained an arbitration award in its favour (though it appears to be in a position to do so) and which wishes to support the petition and participate in the winding up, to be added as a respondent to the motion and oppose it. At the hearing of the motion, I also gave leave to the Attorney-General to be joined as a further respondent on certain terms as to costs. The Attorney-General has appeared and argued in support of the motion.

Many international organisations have their headquarters in London, and others have assets in this country, though none has ever previously become insolvent. Whether such an organisation can be compulsorily wound up by the English court is, therefore, a question of some importance. It calls for a consideration of some basic principles of both public and private international law, as well as English constitutional and company law.

The I.T.C.

The I.T.C. was originally established by the First International Tin Agreement on 1 July 1956 and is now constituted under the provisions of the Sixth International Tin Agreement ("the Agreement") which came into force on 1 July 1982. The Agreement is an international treaty concluded between the Government of the United Kingdom, the governments of 22 other member states, and the European Economic Community. A further nine states are members as parties to the Fifth International Tin Agreement but not to the Sixth Agreement. The headquarters of the I.T.C. were established in London under the terms of a Headquarters Agreement made on 9 February 1972 between the Government of the United Kingdom and the I.T.C. The relevant provisions of the two treaties can be summarised as follows.

(1) The Sixth International Tin Agreement

Article 1 of the Agreement sets out the objectives of the I.T.C. Article 2 contains definitions and provides, inter alia, that members shall be liable to the I.T.C. up to the amount of certain financial obligations entered into by them.

Article 3 provides that the I.T.C. established by the previous International Tin Agreements shall continue in being for the purpose of administering the Agreement, with the membership, powers and functions provided for in the Agreement; that the seat of the I.T.C. shall be in the territory of a member; and that subject thereto the seat of the I.T.C. shall be in London unless the I.T.C. by a prescribed majority decides otherwise.

Article 4 provides that the I.T.C. shall be composed of all the members.

Article 7 provides that the I.T.C. shall have such powers, including a power to borrow and perform such functions as may be necessary for the administration and operation of the Agreement.

Article 11 provides for the appointment of an independent executive chairman. Article 13 provides that the executive chairman is to be responsible to the I.T.C. for the administration and operation of the Agreement in accordance with the decisions of the I.T.C.; and that in the performance of their duties neither the executive chairman nor members of the staff are to seek or receive instructions from any government or power or authority other than the I.T.C. or a person acting on behalf of the I.T.C. under the terms of the Agreement. They must refrain from any action which might reflect on their position as international officials responsible only to the I.T.C. Each member state also undertakes to respect the exclusively international character of the responsibilities of the executive chairman and the members of the staff and not to seek to influence them in the discharge of their responsibilities.

Article 16 provides that the I.T.C. shall have legal personality and, in particular, the capacity to contract, acquire and dispose of movable and immovable property and institute legal proceedings. It requires the I.T.C. to be accorded all necessary exemption from taxation and currency exchange facilities to enable it to discharge its functions and provides for the status, privileges and immunities of the I.T.C. in the territory of the host government to be governed by a Headquarters Agreement between the host government and the I.T.C.

Article 41 contains undertakings by the members during the currency of the Agreement to use their best endeavours and to co-operate to promote the attainment of its objectives and to accept as binding all decisions of the I.T.C.

Article 48 requires any complaint that a member has committed a breach of the Agreement for which a remedy is not provided elsewhere in the Agreement to be referred at the request of the member making the complaint to the I.T.C. for decision and provides that except where otherwise provided in the Agreement no member shall be found to have committed a breach of the Agreement unless a resolution to that effect is passed by the members. Article 49 requires any dispute concerning

the interpretation or application of the Agreement which is not settled by negotiation to be referred to the I.T.C. for decision.

Article 57 provides for amendment of the Agreement. Article 58 provides for withdrawal by a member from the Agreement.

Article 59 provides for the duration of the Agreement, which is to be five years from the date of its entry into force unless extended by resolution of the prescribed majority. Article 60 provides for the procedure on termination of the Agreement. It requires the liabilities of the I.T.C. to be met in full and assumes the continued solvency of the I.T.C.

(2) The Headquarters Agreement

Article 2 of the Headquarters Agreement provides that it is to be interpreted in the light of the primary objective of enabling the I.T.C. at its headquarters in the United Kingdom fully and efficiently to discharge its responsibilities and fulfil its purposes and functions.

Article 3, which is in the same terms as article 16(1) of the Agreement, provides that the I.T.C. is to have legal personality and, in particular, the capacity to contract and to acquire and dispose of movable and immovable property and to institute legal proceedings.

Article 4 provides that the archives of the I.T.C., which are widely defined, are to be inviolable.

Article 5 provides for the inviolability of the premises of the I.T.C. and imposes a special duty on the government of the United Kingdom to take all appropriate steps to protect the premises of the I.T.C. against intrusion. No official of the government of the United Kingdom or person exercising any public authority is to enter the premises of the I.T.C. except with the consent of the executive chairman. Article 8 confers on the I.T.C. the immunities which give rise to the second question on the present motion.

Articles 16 to 19 confer extensive privileges and immunities on the executive chairman, staff, experts and representatives of the I.T.C. Article 21 provides that these privileges and immunities are accorded for the purpose of ensuring in all circumstances the unimpeded functioning of the I.T.C. and the complete independence of the persons to whom they are accorded. The immunity of the executive chairman may be waived by the I.T.C.; that of the staff, experts and representatives by the executive chairman, but only if it is possible to do so without prejudicing the interests of the I.T.C.

Article 23 requires any formal contract entered into by the I.T.C. with a person resident in the United Kingdom or a body incorporated or having its principal place of business in the United Kingdom to include an arbitration clause. Article 24 provides for the submission of certain other disputes to an international arbitration tribunal.

Article 28 provides that any dispute between the government of the United Kingdom and the I.T.C. concerning the interpretation or application of the Headquarters Agreement or any question affecting the relations between the government and the I.T.C. which is not settled by negotiation or by some other agreed method is to be referred to a special panel of arbitrators.

Article 29 provides that the Headquarters Agreement may be terminated by agreement between the government of the United Kingdom and the I.T.C. Otherwise, it is to terminate only in the event of the headquarters of the I.T.C. being moved from the territory of the United Kingdom, when it is to terminate on the expiry of the period reasonably required for the transfer and disposal of the I.T.C.'s property in the United Kingdom.

Those are the relevant terms of the treaties. The relevant statutory provisions of English domestic law are to be found in the International Organisations Act 1968 and the Order of 1972.

(1) The Act of 1968

Section 1 of the Act of 1968 applies, by subsection (1), to

"any organisation declared by Order in Council to be an organisation of which - (a) the United Kingdom, or Her Majesty's Government in the United Kingdom, and (b) one or more foreign sovereign powers, or the government or governments of one or more such powers, are members."

Section 1(2) authorises Her Majesty, by Order in Council made under the subsection, to specify an organisation to which the section applies and to make provision for the organisation so specified. The provisions which may be made include conferring on the organisation the legal capacities (but not, it should be observed, the legal status) of a body corporate; according to it, to such extent as may be specified in the Order, the privileges and immunities set out in Part I of Schedule 1 to the Act; and according to its representatives, officers, staff and experts the privileges and immunities set out in other parts of that Schedule. These include the like inviolability of official archives and premises as are accorded to the official archives and premises of a diplomatic mission. Section 1(6) requires any Order in Council to be so framed as to secure that the privileges and immunities conferred by the Order are not greater in extent than those required by the relevant treaty to be conferred.

(2) The Order of 1972

The Order of 1972 specifies the I.T.C. as an organisation of which Her Majesty's Government in the United Kingdom and the governments of foreign sovereign powers are members. Article 5 provides that the I.T.C. shall have the legal capacities of a body corporate. Article 6 confers the immunities which give rise to the second question on the present motion: I shall set it out in full hereafter. Other provisions of the Order of 1972 accord to the I.T.C. the like inviolability of official archives and premises as are accorded to the archives and premises of a diplomatic mission and confer appropriate privileges and immunities on the executive chairman, staff, experts and representatives of the I.T.C.

Thus the I.T.C. is an international body corporate created by treaty. It has legal personality in international law. The power of sovereign states acting in sufficient numbers in conformity with international law to bring into being an organisation possessing objective international

personality, and not merely personality recognised by them alone, together with the capacity to bring international claims, has been recognised by the International Court of Justice: see Reparation for Injuries Suffered in the Service of the United Nations [1949] I.C.J. Rep. 174. As the International Court of Justice there pointed out, at p. 179, to say that an international organisation is an international person

"is not the same thing as saying that it is a state, which it certainly is not, or that its legal personality and rights and duties are the same as those of a state. Still less is it the same thing as saying that it is a 'super-state', whatever that expression may mean. It does not even imply that all its rights and duties must be upon the international plane, any more than all the rights and duties of a state must be upon that plane. What it does mean is that it is a subject of international law and capable of possessing international rights and duties, and that it has capacity to maintain its rights by bringing international claims."

The making of a treaty is an act of the executive, not of the legislature, and it is therefore a fundamental principle of our constitution that the terms of a treaty do not, by virtue of the treaty alone, have the force of law in the United Kingdom. This does not mean that they are to be disregarded. Our courts take notice of the acts of the executive, and the terms of a treaty entered into by the United Kingdom may fall to be considered by them, either because Parliament has expressly or impliedly required them to be considered - as, for example, for the purposes of section 1(6) of the Act of 1968 - or to enable domestic legislation to be construed wherever possible in conformity with rather than in breach of pre-existing international obligations undertaken by the United Kingdom. But it does mean that the terms of a treaty cannot effect any alteration in our domestic law, or deprive the subject of existing legal rights, unless and until enacted into domestic law by or under the authority of Parliament. When so enacted, the court gives effect to the English legislation, not to the terms of the treaty. For authoritative statements of these well-recognised principles, reference can be made to Attorney-General for Canada v. Attorney-General for Ontario [1937] A.C. 326, 347-348; Blackburn v. Attorney-General [1971] 1 W.L.R. 1037, 1039, 1041 and Pan-American World Airways Inc. v. Department of Trade [1976] 1 Lloyd's Rep. 257, 261.

Accordingly, the status, capacities and immunities of the I.T.C. in English domestic law are governed by the Act of 1968 and the Order of 1972 and not by the treaties. Its existence is recognised by the Order of 1972, which has granted it the legal capacities of a body corporate, but it is not incorporated thereby, and it is not a statutory body. It is not incorporated in the United Kingdom or anywhere else. It is neither an English nor a foreign corporation, but the creation of treaty. Significantly, Parliament has not granted it the status, but only the legal capacities, of a body corporate and has not provided, as it could easily have done, that it should be deemed to be a company or that it should be capable of being wound up under the Companies Acts: see, for example, section

8 of the Building Societies Act 1894 (57 & 58 Vict. c. 47) and section 55 of the Industrial and Provident Societies Act 1965.

The first question is whether such a body is amenable to the winding up jurisdiction of the English court.

Jurisdiction

Part XXI of the Companies Act 1985 consists of sections 665 to 674. Section 665 provides:

"For the purposes of this Part, the expression 'unregistered company' includes ... any partnership (whether limited or not), any association and any company, with the following exceptions..."

The exceptions are not material. Section 666 provides inter alia:

"(1) Subject to the provisions of this Part, any unregistered company may be wound up under this Act; and all the provisions of this Act about winding up apply to an unregistered company, with the exceptions and additions mentioned in the following subsections.... (5) The circumstances in which an unregistered company may be wound up are as follows - (a) if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs; (b) if the company is unable to pay its debts; (c) if the court is of opinion that it is just and equitable that the company should be wound up."

Other provisions of Part XXI of the Act which should be mentioned are as follows. Section 671:

"(1) In the event of an unregistered company being wound up, every person is deemed a contributory who is liable to pay or contribute to the payment of any debt or liability of the company, or to pay or contribute to the payment of any sum for the adjustment of the rights of members amongst themselves, or to pay or contribute to the payment of the costs and expenses of winding up the company. (2) Every contributory is liable to contribute to the company's assets all sums due from him in respect of such liability as is mentioned above."

Section 674:

"(1) The provisions of this Part with respect to unregistered companies are in addition to and not in restriction of any provisions in Part XX with respect to winding up companies by the court; and the court or liquidator may exercise any powers or do any act in the case of unregistered companies which might be exercised or done by it or by him in winding up companies formed and registered under this Act."

Section 665 is quite general in its terms. It is well established that it includes companies incorporated abroad, even though these are not referred to expressly: see, for example, In re Matheson Brothers Ltd. (1884) 27 Ch.D. 225. An international organisation, however, is not to be equated with a foreign corporation as a body incorporated under

some legal system other than our own. The status of a foreign corporation is a matter of private international law, and is governed by the law of the country of incorporation:

"...[it] depends on territorial enactments of the country of incorporation according to which either the existence or the non-existence of the corporation is recognised by the law of other countries": Lazard Brothers & Co. v. Midland Bank Ltd. [1933] A.C. 289, 302 per Lord Wright.

An international organisation, by contrast, is created not by the territorial enactment of any single state, but by international treaty; it is not, or not normally, made the subject of any territorial system of law; and its recognition by the courts of a member state is a matter, not of that state's private international law, but of its constitutional law.

If the I.T.C.'s corporate status is not recognised by our domestic law, however, this is of no consequence for present purposes, for section 665 is not confined to bodies corporate. It applies to "countless cases of partnerships, associations and companies which are merely names for groups of individuals, and which are not companies at all": Russian and English Bank and Florance Montefiore Guedalla v. Baring Brothers & Co. Ltd. [1936] A.C. 405, 432, per Lord Russell of Killowen. It is plainly capable of applying to an association, whether incorporated or not, which like the I.T.C. has been recognised by our own domestic legislation and accorded thereby the legal capacities of a body corporate, notwithstanding that it was created by treaty and that its members are not individuals but sovereign states. Whether it does so, however, is another matter. That depends on the presumed intention of Parliament in enacting section 665, for the fact that an organisation has been recognised by our domestic legislation and granted the legal capacities of a body corporate is not by itself sufficient to make it subject to the winding up jurisdiction.

In order to ascertain the presumed intention of Parliament, it is necessary to begin by considering the effect of a winding up order. A convenient summary of the effect of such an order may be found in McPherson, The Law of Company Liquidation, 2nd ed. (1980), p. 4:

"Liquidation in either form effects an alteration in the status of the company. It does not destroy its corporate identity or powers, but it does place the company and those who control its affairs under certain disabilities. Generally speaking, it terminates the power of the company to carry on business except for the limited purpose of winding up its affairs; it puts an end to its capacity to dispose of assets, and it restricts the rights of creditors to take legal proceedings and to enforce their ordinary remedies against the company or its property. Liquidation also results in a transfer of power to manage the affairs of the company from the directors and members to the liquidator and the creditors ..."

The statement that a winding up - even a voluntary winding up - effects an alteration in the status of the company derives from an often-quoted dictum of Buckley L.J. in Thomson v. Henderson's Transvaal Estates Ltd. [1908] 1 Ch. 765, 778. In my judgment it is amply justified.

The making of a winding up order divests the company of the beneficial ownership of its assets, which cease to be applicable for its own benefit. It brings into operation a statutory scheme for dealing with the assets for the benefit of the creditors and members. The custody and control of all the property of the company and the power to manage its affairs are taken from the persons entrusted with them by the company's constitution and entrusted instead to a liquidator, whose powers are limited to carrying on the company's activities for the purpose of winding up its affairs, and who acts under the ultimate direction of the court.

Any disposition of the property of the company and any alteration in the status of the company's members made after the presentation of the petition are void unless the court otherwise orders. Antecedent transactions of the company made before the presentation of the petition are liable to be set aside. All proceedings against the company are automatically stayed, as is the power of the creditors to enforce their remedies against the company. In performing his duties in a compulsory winding up, the liquidator acts as an officer of the court. One of his duties is to take into his custody or under his control all the property and choses in action to which the company is or appears to be entitled: section 537. It was submitted that in the case of an unregistered company this is made a matter for the discretion of the liquidator by virtue of section 674. I disagree. Section 537 is mandatory; it imposes a statutory duty. Section 674, which applies to every kind of unregistered company, English and foreign, corporate and unincorporated, does not give the liquidator a discretion whether or not to perform his duties; it is there to ensure that the liquidator has the necessary power to enable him to perform them.

The assets must be applied in satisfaction of the company's liabilities, and if there is a surplus it must be distributed among the members according to their respective rights under the company's constitution. If there is a deficiency, calls may be made upon the members according to their respective obligations under the company's constitution. Upon completion of the winding up, the company is dissolved. As Lord Atkin pointed out in Russian and English Bank and Florance Montefiore Guedalla v. Baring Brothers & Co. Ltd. [1936] A.C. 405, 426, it is the company which is wound up, not the affairs of the company. The language of the Act testifies to this: see, for example, sections 517, 519, 666(1), 674(1), and contrast this with sections 539(2)(h) and 568.

Although a winding up in the country of incorporation will normally be given extra-territorial effect, a winding up elsewhere has only local operation. In the case of a foreign company, therefore, the fact that other countries, in accordance with their own rules of private international law, may not recognise our winding up order or the title of a liquidator appointed by our courts, necessarily imposes practical limitations on the consequences of the order. But in theory the effect of the order is world-wide. The statutory trusts which it brings into operation are imposed on all the company's assets wherever situate, within and beyond the jurisdiction. Where the company is simultaneously being wound up in the country of its incorporation, the English court will naturally seek

to avoid unnecessary conflict, and so far as possible to ensure that the English winding up is conducted as ancillary to the principal liquidation. In a proper case, it may authorise the liquidator to refrain from seeking to recover assets situate beyond the jurisdiction, thereby protecting him from any complaint that he has been derelict in his duty. But the statutory trusts extend to such assets, and so does the statutory obligation to collect and realise them and to deal with their proceeds in accordance with the statutory scheme.

It is obvious that the making of a winding up order against the I.T.C. would be inconsistent with the continued operation of the treaties in accordance with their terms and would compel the government of the United Kingdom either to be in breach of its treaty obligations or to seek to withdraw from the Agreement. Attempts were made to avoid this result, or at least to minimise it, even at the expense of conceding that a winding up order against the I.T.C. would have a more limited effect than usual. It was submitted, for example, that the court had power, and would be bound, to give effect to the inviolability of the archives and premises of the I.T.C. guaranteed not only by the treaties but by the Order of 1972, by giving appropriate directions to the liquidator and thereby excluding such assets from the liquidation. I agree. If the Order of 1972 stood alone, it may well be that the inviolability of the archives and premises would not survive the winding up, for the taking of possession by the liquidator, as the agent of the I.T.C. and the person entitled by virtue of the winding up order to manage its properties affairs, would not infringe it. But the Order of 1972 does not stand alone; it falls to be construed in the light of the treaties. And in this context I have no doubt that it means that the premises of the I.T.C. are not to be entered by, and its archives are not to be taken into the custody of, the public authorities of the host state without the consent of the persons entrusted with the management of its affairs by the terms of the Agreement.

Again, it is inconceivable that the court would, or could, make a winding up order against a solvent international organisation at the suit of one of the member states under section 665(5)(c) on the ground that the conduct of other member states made it just and equitable that their association together should be brought to an end. Such questions are not justiciable by domestic courts. They must be solved by diplomacy, not domestic litigation. But it is doubtful whether the court would entertain a petition by a contributory to wind up an ordinary foreign company, and when account is taken of the great variety of organisations, English and foreign, which are within section 665, it does not make nonsense of the statutory provisions to suppose that there are some which may be wound up on one ground but not on another.

Similarly, in my judgment, there can be no question of enforcing contributions from member states under section 671(2). Their obligations depend on the provisions of the organisation's constitution - that is to say, the treaty which creates it and which constitutes the contract between the members under which the liability arises. To enforce such obligations would require the court to interpret and enforce the treaty, but it is well established that the court has no jurisdiction to do so: see

British Airways Board v. Laker Airways Ltd. [1984] Q.B. 142, 192 and [1985] A.C. 58, 85-86, per Lord Diplock. This does not mean, as was somewhat flippantly suggested to me, that the court may read a treaty but may not understand it. It means that the interpretation and enforcement of a treaty between two or more states are not matters on which the decision of the courts of one party is binding on the other or others. A fortiori, it may be added, a decision of the courts of a country which is not a party to the treaty is not binding on those countries which are. The assumption of jurisdiction by the court would transgress the general and basic principle of law stated by Lord Kingsdown in Secretary of State in Council of India v. Kamachee Boye Sahaba (1859) 13 Moo. P.C.C. 22, 75:

"The transactions of independent states between each other are governed by other laws than those which municipal courts administer: such courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make."

The first part of that sentence was repeated by Lord Halsbury L.C. in Cook v. Sprigg [1899] A.C. 572, 578, where he added that, if there was a bargain between two sovereign powers, that was only a bargain which could be enforced by sovereign against sovereign in the ordinary course of diplomatic pressure. As will be seen, this objection is not met by arguing that the court would be enforcing a statutory liability arising under section 671(2) and not a treaty obligation, or - which comes to the same thing - that section 671(2) confers a jurisdiction to enforce treaty obligations. Again, however, it does not make nonsense of the statutory provisions to suppose that there may be some bodies within section 665 which are capable of being wound up under section 666 but which are outside section 671.

The facts that, if the jurisdiction exists, it can be exercised on only one of the grounds available and that some at least - and perhaps the most valuable - of the assets must be excluded from any order made, are of only peripheral significance and cannot be decisive. Of far greater importance is the fact that a winding up order would put an end to the continued existence and operation of the I.T.C. as provided by the treaties. All the powers of the I.T.C. over its assets, other than its archives and premises, would cease, at least in the United Kingdom. The organisational and administrative machinery provided by the Agreement would be displaced. The powers of the I.T.C. and its executive chairman, which include the administration of the Agreement, would become vested in the liquidator. The I.T.C. could no longer carry out any of its functions, at least in the United Kingdom, the place where the Agreement requires it to carry on its activities. It would be compelled, by the decision of the court of a single member state, to remove its headquarters from the United Kingdom, a matter which under the terms of the Agreement is for the members by a prescribed majority to decide. In my judgment, the conclusion is inescapable that the making of a winding up order would be inconsistent with the Agreement and would interfere with the continued activities of the I.T.C., its continued presence in the United Kingdom, its administration

of the Agreement, and whatever arrangements the member states may make to deal with the unforeseen situation which has arisen and to contribute to or make good the shortfall.

The petitioner's answer to all this was to say that it was irrelevant. Reliance was placed on the principle to which I have already referred that a treaty cannot of itself effect any alteration in our domestic law, or deprive the subject of his existing legal rights, unless and until it has been enacted into domestic law by legislation. The corollary of this principle is that the court will give effect to rights which are recognised by English domestic law without regard to the consequences of doing so in international law. It will not withhold relief to which the subject is entitled merely because the result of granting it would put the government of the United Kingdom in breach of its treaty obligations. This was clearly established in the famous case of The Parlement Belge (1879) 4 P.D. 129. By a treaty concluded between the United Kingdom and Belgium, arrangements were made for mail packets to run between Dover and Ostend. The vessels themselves were the property of the Belgian state. One of the articles of the treaty provided that they were to be considered and treated in Dover and other British ports as vessels of war and that they should not be liable to seizure. One of the vessels was in collision with a steam tug. The owners of the steam tug sought the arrest of the vessel. On the footing, later held to be incorrect, that the vessel, being engaged in a commercial activity, was not entitled by the common law to immunity from arrest, Phillimore J. ordered the warrant to issue. This was plainly inconsistent with the treaty and put the government of the United Kingdom in breach of the express terms of the treaty. But the contention that this deprived the court of the jurisdiction which it would otherwise possess was rejected, at p. 154, as

"a use of the treaty-making prerogative of the Crown which I believe to be without precedent, and in principle contrary to the law of the constitution."

But this principle, which is not, of course, challenged by the I.T.C., has no bearing on the issue in the present case. There is no question of the Agreement depriving the court of an existing jurisdiction to wind up the I.T.C. On the contrary, the I.T.C. itself, the collective enterprise of the members which it was formed to carry on, and the petitioner's claim to have it wound up, exist only by virtue of the Agreement. Without the treaty, there would be nothing to wind up.

In fact, the petitioner's contentions pre-suppose that the necessary jurisdiction has been conferred by section 665. While, however, the Crown cannot, by the process of diplomacy and without the authority of Parliament, grant a foreigner immunity from action at the suit of a subject who has suffered injury at his hands, it by no means follows that the general words of a statute must be construed so as to authorise the court to assume a jurisdiction to manage, regulate and wind up the affairs of a body whose very existence is the creation of that process.

It was urged on behalf of the petitioner that the words of section 665 are plain and unambiguous, that the word "association" is apt to describe the I.T.C., and that if a statute is unambiguous effect must be

given to it even if it is contrary to international law. For these propositions great reliance was placed on the decision of the House of Lords in Inland Revenue Commissioners v. Collco Dealings Ltd. [1962] A.C. 1. But it is one thing to give effect to plain and unambiguous language in a statute. It is quite another to insist that general words must invariably be given their fullest meaning and applied to every object which falls within their literal scope, regardless of the probable intentions of Parliament. Far from supporting the petitioner's case, Inland Revenue Commissioners v. Collco Dealings Ltd. undermines it. It was a case in which a taxpayer sought to escape the clear language of a tax-avoidance provision in a Finance Act by claiming that it was contrary to the terms of a double-taxation agreement, even though both parties to that agreement had stipulated that it might at any moment be brought to an end by the legislature of either country. The taxpayer's arguments were rejected. But the principle that general words in a statute may in a proper case be given a more limited meaning than they are capable of bearing was recognised by almost all their Lordships. Thus Viscount Simonds, at p. 19:

"...I know of no case in which at the same time the words of a statute were unambiguously clear and it was sought to vary them upon grounds which could not be justified by broad considerations of justice or expediency, nor could be supposed to commend themselves to that sovereign power whose citizens relied on them."

Lord Morton of Henryton, at p. 21:

"in the cases where wide words have been given a narrower meaning there has always been some reason to think that the legislature could not have intended the wide words to have their full effect."

Lord Reid, at p. 22:

"I am not satisfied that it would be wrong in any circumstances to attach a limited meaning to the words of section 4(2) of the Act of 1955. In some of the authorities cited to your Lordships words, to my mind equally unambiguous, have been so limited, and if the result of holding that these words cannot be given a limited meaning were that Parliament must be held to have created a jurisdiction wider than anything consistent with the broad principles of international law, I would at least hesitate."

Lord Radcliffe, at p. 23:

"It is no doubt true that statutory words apparently unlimited in scope may be given a restricted field of application if there is an admissible ground for importing such a restriction: and the consideration that, if not construed in some limited sense, they would amount to a breach of international law is well recognised as such a ground. ... The principle depends wholly on the supposition of a particular intention in the legislature ..."

Both sections 665 and 671 are enacted in general terms. Literally construed, they are both capable of applying to international organisations,

including international organisations of which the United Kingdom is a member. But it is obvious that section 671 at least does not do so. Parliament cannot be taken to have intended to confer, by general words alone, the jurisdiction to interpret the terms of an international treaty and to enforce the obligations arising thereunder between independent sovereign states, a jurisdiction at once unprecedented and incompatible with basic principles of English law.

The remaining question, therefore, is whether Parliament should be taken to have intended, by the general words of section 665, to confer on the court jurisdiction to wind up an international organisation established by treaty between sovereign states, including an organisation of which the United Kingdom is itself a member. When the nature and effect of a winding up order are considered, I have no doubt that the answer here also must be in the negative. An affirmative answer to that question would impute to Parliament an intention to confer, by general words only, a jurisdiction incompatible with our constitutional practice and with established principles of international law, and which would be incapable of exercise, in the case of an organisation of which the United Kingdom was a member, without putting the government of the United Kingdom in breach of its treaty obligations. The exercise of the jurisdiction would constitute an interference by the court with the ability of the executive, albeit in a limited sphere, to conduct its relations with foreign states, a function which under our constitution is reserved to the Royal Prerogative, and with the ability of other sovereign states to conduct their relations with each other. It would alter the status of the organisation charged with the function of administering the provisions of an international treaty and would be incompatible with the independence and international character of the organisation.

In The Proper Law of International Organizations (1962), pp. 3, 8-9, the late Dr. C. Wilfred Jenks wrote:

"If a body has the character of an international body corporate the law governing its corporate life must necessarily be international in character; it cannot be the territorial law of the headquarters of the body corporate or any other municipal legal system as such without destroying its international character. The law governing its corporate life will naturally cover such matters as the membership of the body, its competence, the composition and mutual relations of its various organs, their procedure, the rights and obligations of the body and its members in relation to each other, financial matters, the procedure of constitutional amendment, the rules governing the dissolution or winding up of the body, and the disposal of its assets in such a contingency ...

"In the case of an international body corporate, as in that of a foreign corporation of municipal law, the personal law of the corporation must be considered together with the territorial law when we pass from the sphere of the law governing its corporate life to that of the law governing its operations within a particular jurisdiction. There is, however, a significant distinction between the two cases. In the case of foreign corporations the personal law yields to the territorial law in respect of such operations. The extent

to which a foreign corporation is subject to the territorial law is determined primarily by the territorial law ... each state determines how far its own public policy requires it to exercise authority over the operations of foreign corporations within its jurisdiction. It may well be considered an essential element in the concept of an international body corporate that the extent to which its operations within the jurisdiction of a particular state are subject to the law of that state is limited by the obligations accepted by the state in recognising it as an international body corporate. ... In [such] event the personal law of the international body corporate, so far from yielding to the territorial law, will by virtue of its character as an international obligation of the state concerned, determine the extent of the operation of the territorial law."

In my judgment, the position can be considered broadly. An international organisation like the I.T.C., whether incorporated or not, is merely the means by which a collective enterprise of the member states is carried on, and through which their relations with each other in a particular sphere of common interest are regulated. Any attempt by one of the member states to assume responsibility for the administration and winding up of the organisation would be inconsistent with the arrangements made by them as to the manner in which the enterprise is to be carried on and their relations with each other in that sphere regulated. Sovereign states are free, if they wish, to carry on a collective enterprise through the medium of an ordinary commercial company incorporated in the territory of one of their number. But if they choose instead to carry it on through the medium of an international organisation, no one member state, by executive, legislative or judicial action, can assume the management of the enterprise and subject it to its own domestic law. For if one could, then all could; and the independence and international character of the organisation would be fragmented and destroyed. And if a member state has no such right, then a fortiori a non-member state has none. In my judgment, to impute to Parliament an intention, by general words only, to confer on the court a jurisdiction contrary to these principles and without precedent, is unacceptable.

In my judgment, therefore, the court has no jurisdiction to wind up the I.T.C. This makes it unnecessary to consider the question of immunity, for there is no need for immunity from a jurisdiction which does not exist. But the question has been fully argued, and it is right that I should deal with it.

Immunity

Article 8(1) of the Headquarters Agreement provides that the I.T.C. "shall have immunity from jurisdiction and execution" with certain exceptions which have been reproduced in the Order of 1972. Paragraph 1 of Part I of Schedule 1 to the Act of 1968 authorises the grant of "immunity from suit and legal process." Article 6(1) of the Order of 1972 is in the following terms:

"(1) The [I.T.C.] shall have immunity from suit and legal process except: (a) to the extent that the [I.T.C.] shall have expressly waived such immunity in a particular case; (b) in respect of a civil action by a third party for damage arising from an accident caused by a motor vehicle belonging to or operated on behalf of the [I.T.C.], or in respect of a motor traffic offence involving such a vehicle; and (c) in respect of the enforcement of an arbitration award made under article 23 or article 24 of [the Headquarters Agreement]."

It has not been suggested that these exceptions are narrower, and the immunity correspondingly wider, than are required by the Headquarters Agreement, so that the Order of 1972 is ultra vires.

It was submitted on behalf of the petitioner that the word "suit" in the Order of 1972 corresponds with, but is less extensive than, "jurisdiction" in the Headquarters Agreement, and that the phrase, "legal process," in the one corresponds with "execution" in the other. By the process of construing the latter phrase in conformity with the treaty obligation and the former inconsistently with it, it was contended that the winding up process is outside the immunity granted by the Order of 1972. It is not "suit," it was said, which is a word not normally used in English legal writings to describe a winding up petition, and it is not "execution." If there is any ambiguity, it was submitted, it should be resolved in favour of jurisdiction, on the ground that clear words are necessary in order to deprive the court of jurisdiction.

If there were an ambiguity, I would for my part resolve it in favour of immunity, on the grounds (1) that any ambiguity in an enactment passed in fulfilment of an obligation undertaken by treaty is to be resolved if possible so as to bring the enactment into conformity with the treaty obligation; and (2) that the phrase, "suit and legal process," in the Order of 1972 derives from and must mean the same as the corresponding phrase in the enabling Act, and there it must have been intended to bear a wide meaning in order to enable the as yet unknown requirements of future treaties to be met. The protection for the subject lies not in a narrow construction of the phrase, "suit and legal process," in the Order of 1972 but in the terms of section 1(6) of the Act of 1968.

But in my judgment there is no ambiguity. The phrase, "suit and legal process," in the Order of 1972 corresponds with the phrase, "jurisdiction and execution," in the Headquarters Agreement, embraces all forms of adjudicative and enforcement jurisdiction, and clearly includes the winding up process. The phrase in each case is a composite one, but the dividing line between the two component elements is not necessarily the same in each case; though in the present context I take the view that it is, "suit" extending to all forms of the adjudicative, and "legal process" to all forms of the enforcement, jurisdiction. But if, contrary to my view, the word "suit" is to be narrowly construed, then the ambit of the phrase, "legal process," which is apt to describe all the steps in any legal proceedings from the issue of the originating process to the levying of execution, must be correspondingly expanded.

The question, therefore, is whether a petition for the winding up of the I.T.C. on the ground that it is insolvent and presented by a creditor with the benefit of an arbitration award in its favour is a proceeding "in respect of the enforcement of an arbitration award."

Great reliance was placed on behalf of the petitioner on the description of the winding up process by Brightman L.J. in In re Lines Bros. Ltd. [1983] Ch. 1, 20:

"The liquidation of an insolvent company is a process of collective enforcement of debts for the benefit of the general body of creditors. Although it is not a process of execution, because it is not for the benefit of a particular creditor, it is nevertheless akin to execution because its purpose is to enforce, on a pari passu basis, the payment of the admitted or proved debts of the company. When, therefore, a company goes into liquidation a process is initiated which, for all creditors, is similar to the process which is initiated, for one creditor, by execution."

It is to be observed that Brightman L.J. was careful to refer to enforcing the payment of the debts, not to enforcing a judgment or award. In the ordinary case a winding up petition is a means of recovering a debt, not of enforcing a judgment or award, which merely establishes the existence of the debt and is not a procedural requirement: see In re A Company [1915] 1 Ch. 520, 528, per Phillimore L.J. It was sought to get over this difficulty as well as the further difficulty that, by presenting a winding up petition, the creditor does not seek to recover for himself alone but for the benefit of all the creditors, by relying on the I.T.C.'s immunity. In the present case, it was submitted, the existence of an arbitration award was a procedural requirement. Without such an award in its favour, a creditor could neither present nor support a petition, nor prove for the debt in the winding up. Accordingly, whatever might be the position in other cases, a petition to wind up the I.T.C. presented by a creditor with an arbitration award in its favour could enure for the benefit only of other creditors with similar awards in their favour; and this made it a process for the collective enforcement of arbitration awards.

The argument is ingenious but not persuasive. In the first place, the Order of 1972 refers to "the enforcement of an arbitration award" (in the singular), not to the collective enforcement of arbitration awards (in the plural); and where the phrase is derived from an international treaty to which the Interpretation Act 1978 does not apply I doubt that the singular includes the plural. In the second place, the creditor with the benefit of an arbitration award is not the only creditor who can bring himself within the exceptions in the Order of 1972. There are two others: the creditor in respect of whose debt the I.T.C. has waived its immunity; and the creditor with a claim for damages arising from an accident caused by a motor vehicle. Either class of creditor could support the present petition and prove in the winding up. How, then, is it possible with any kind of accuracy to describe the petition, even of the present petitioner, as a process for "the enforcement of an arbitration award?" On the contrary, the petitioner's arguments lead only to the

conclusion that it is a process for the collective enforcement of all such debts as are provable in the liquidation, which if true is true of any winding up petition and is not what article 6(1)(c) of the Order of 1972 says. In any event, I doubt that, in considering the nature or character of a winding up petition, it is right to take account of more than the nature of the petitioner's debt and the grounds on which the order is sought, and in particular I doubt that it is right to take account of the extent of any immunity or other defence the debtor may have. The question is whether a winding up petition presented by a creditor with the benefit of an arbitration award and alleging insolvency is the enforcement of an arbitration award. The answer cannot depend on the extent of the debtor's immunity, and whether there is only one or more than one exception to it. In my view, the fact that, unusually, the present petitioner has to prove an arbitration award, not to establish his locus standi to present the petition but to meet an anticipated defence of immunity, is irrelevant, because it does not alter the essential character of the winding up process.

In the context of sovereign, diplomatic and other immunity, a crucial distinction is made between the adjudicative and enforcement jurisdictions. Waiver of immunity from the one does not waive immunity from the other, even in respect of the same claim. In the case of the I.T.C., there is no waiver of or exception to its immunity from the adjudicative jurisdiction of the court in respect of claims arising from its commercial activities. Instead, such claims are required to be referred to arbitration. Article 6(1)(c) of the Order of 1972 is concerned exclusively with the enforcement of any award resulting from such arbitration. In respect of its commercial activities, therefore, the I.T.C. enjoys complete immunity from the court's adjudicative jurisdiction, and has only a limited exposure to its enforcement jurisdiction.

I am not satisfied that, in this context, the presentation and hearing of a winding up petition, as distinct from the proof of debt in the winding up, are properly to be classified as falling within the enforcement jurisdiction at all. It is fallacious to suppose that, because the petitioner is not seeking to establish his debt, the court is exercising its enforcement jurisdiction. Even if the petitioner has previously resorted to litigation to establish his debt, the presentation of a petition marks the commencement of an entirely new lis. The issue at the hearing is not whether the petitioning and other creditors, some of whom will not yet have established their claims, should be paid, but whether the company is insolvent and, if so, whether it should be wound up or allowed to try to trade out of its difficulties. There is much to be said for the view that, in deciding whether or not the company should be wound up, the court is engaged in a new process of adjudication, separate and different from any that may previously have been involved in establishing the petitioning creditor's debt.

But it is not necessary to decide this, for in my judgment the winding up process is plainly not a method of enforcing a judgment or arbitration award, and there is nothing in the language of Brightman L.J. in In re Lines Bros. Ltd. [1983] Ch. 1, which in any case is descriptive and not intended to be by way of classification, to suggest the contrary. Far from

enabling any judgment or award to be enforced, the making of a winding up order prevents it. The great object of insolvency law, whether individual or corporate, is to protect the debtor from harassment by the creditors, and the assets from piecemeal realisation and unequal distribution as the creditors scramble for them. Whether the petition is presented by a creditor or by the debtor, its purpose is to obtain an order which will preclude the creditors from enforcing any judgments or awards which they may have obtained, and substitute the right to participate in a pari passu distribution out of an insufficient fund in full satisfaction of their claims. That is not the enforcement of their judgments or awards, but the opposite.

In any case, whatever else it may be, the presentation of a winding up petition is not simply a means of enforcing a judgment or award; as Fletcher Moulton L.J. said of an application for a bankruptcy notice in In re A Bankruptcy Notice [1907] 1 K.B. 478, 482: "[It] is not a method of enforcing a judgment. It is the commencement of proceedings of far wider effect." No one, asked to waive his organisation's immunity from the enforcement of an adverse judgment or arbitration award, would think for a moment that it was being invited to submit to being compulsorily wound up. It was submitted that to come within article 6(1)(c) of the Order of 1972 it is sufficient if the proceedings include the enforcement of an arbitration award; they need not be confined to that. I disagree. The submission makes nonsense of the paragraph and cannot be accepted.

Conclusion

I conclude that section 665 of the Companies Act 1985 confers no jurisdiction to make a compulsory winding up order against the I.T.C., and that in any case article 6(1) of the Order of 1972 makes the I.T.C. immune from such jurisdiction.

The failure of an international organisation to meet its obligations is without precedent. The possibility was obviously not foreseen when the treaties which established or continued the I.T.C. were concluded. The responsible course now would be for the member states, by diplomatic means, to negotiate suitable arrangements to meet the shortfall. Failing this, there is much to be said for the view that an unprecedented situation calls for an unprecedented solution. But under our constitution it is for Parliament to decide whether the United Kingdom, as the host state, should intervene and, contrary to the terms of the treaties and without the consent of the other member states, claim the right to subject the affairs of an insolvent international organisation to its own domestic jurisdiction and wind it up. All I decide is that by the general words of existing legislation Parliament has not already demonstrated any such intention.

I accede to the motion and strike out the petition.

Solicitors: Cameron Markby; Treasury Solicitor; Allen & Overy; Slaughter & May.

T. C. C. B.