[1952]	582
A.C.

[HOUSE OF LORDS.]

UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE

APPELLANTS;

AND

DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND

RESPONDENTS.

1951 Dec. 10, 11, 12, 13, 17, 18, 19.	EARL JOWITT, LORD PORTER, LORD OAKSEY, LORD
1952 Feb. 25.	RADCLIFFE and LORD TUCKER.

International law - Sovereign immunity - Property of French subject - Bar gold seized by German forces in war - Recovery by allied governments - Deposit at Bank of England for safe custody - Action by own er against bank - Possession and control of depositing governments.

The Bank of England held, as bailee for the Governments of the United States, France and the United Kingdom, 64 numbered gold bars claimed to be the property of a French company. The bars had been wrongfully seized by the German authorities during the second world war and taken to Germany. After their recovery by Allied forces they were lodged with the bank by the governments for safe custody pending their ultimate disposal. The bank sold 13 of the bars by mistake, retaining 51. The company brought an action against the bank claiming delivery of the bars, an injunction restraining the bank from parting with possession of them, and, alternatively, damages:-

Held, (1) that the action must be allowed to proceed as regarded the 13 bars, since the bank had by its own act terminated the bailment, but (2) that the action must be stayed as regarded the remaining bars since the doctrine of the immunity of a foreign sovereign applied to the case of a claim to recover property in the hands of a bailee for a foreign sovereign, and, further, there was no jurisdiction to order the bailee to pay damages for conversion, since the bailee would thereby acquire the title to the property so as to be able to set it up against the bailor, the foreign sovereign.

Decision of the Court of Appeal sub nomine Dollfus Mieg et Compagnie S.A. v. Bank of England [1950] Ch. 333 varied.

APPEAL from the Court of Appeal (Evershed M.R., Somervell and Cohen L.JJ.).

The Bank of England held, for safe custody, 64 numbered bars of gold which in 1944 had been forcibly and wrongfully removed by German troops from a French bank then holding them on behalf of Dollfus Mieg et Cie. S.A., a French company. The bars were eventually recovered in Germany and lodged with the

[1952]		583
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

Bank of England by the Governments of the United Kingdom, France and the United States for safe custody pending their ultimate disposal.

The company brought an action against the Bank of England claiming delivery of the bars, an injunction restraining the bank from parting with possession of them otherwise than as directed by the company and, alternatively, damages.

The bank applied by motion to have the writ set aside and all subsequent proceedings in the action stayed on the grounds that the bars were in the possession or control of the three governments, and that the action impleaded two foreign sovereign States which declined to submit to the jurisdiction of the court. The company moved the court for an interlocutory order to restrain the bank from parting with the bars.

On appeal from Jenkins J., who had ordered all further proceedings in the action to be stayed, there was produced before the Court of Appeal further evidence on behalf of the bank, from which it appeared that it had then been discovered that between December 30, 1948, and January 26, 1949, and after the issue of the writ in the action, 13 of the gold bars had been sold by mistake. Although the bars had been segregated pending directions from the three governments as to their disposal, it appeared that a warning notice had not been attached to the cards which constituted the record of the bullion office of the bank, and that consequently the 13 bars had been sold by an official in that office. The Court of Appeal allowed the appeal from Jenkins J., ordering the bank's motion to be discharged and giving the company leave to apply for an injunction in respect of the 51 remaining bars: Dollfus Mieg et Compagnie S.A. v. Bank of England.¹

Subsequently the bank applied to the Court of Appeal for the postponement of the drawing up of its order to enable the governments of the United States of America and the Republic of France to be joined as defendants in the action. The court declined. These governments then presented a petition to the House of Lords for leave to appeal although they were not parties to the action and, alternatively, for an order adding them as defendants. The Appellate Committee ordered the petition to stand over generally with liberty to any party to apply to restore it on the footing that the governments should apply to the court for leave to be joined as defendants. On their application Wynn-Parry J. subsequently ordered that they should be so joined: Dollfus Mieg et Compagnie S.A. v. Bank of England.²

1 [1950] Ch. 333.

2 [1951] Ch. 33.

[1952]		584
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

On November 3, 1950, the governments moved Romer J. for a stay of all further proceedings in the action, or alternatively of all such further proceedings as related to the remaining 51 bars. He dismissed the application and the Court of Appeal affirmed his decision. The governments appealed to the House of Lords.

The facts are fully set out in the opinion of Earl Jowitt.

Sir Hartley Shawcross K.C. and Denys Buckley for the appellant governments. The decision of Jenkins J. was right for the reasons given in his judgment. The real point of the case is the capacity in which the bank was holding the bars. The foreign governments were in de facto possession of the bars. They were also, according to their main contention, in control througt the bank holding as bailee. Once that relationship is established the case is unarguable by the respondent company. There was a segregation of the bars and, whatever carelessness there may have been, the intention and the contractual obligation of the bank to the governments was to segregate them and keep them safe. The actual loss of control by a bailor of some of the chattels entrusted to him by reason of some accident, mistake or breach of duty does not cause him to lose control of any of the others, and the disposal of the 13 bars by an employee of the bank, through the neglect of the precautionary methods, in breach of his duty to the bank and the bank's duty to the governments, did not affect the control of the governments of the remaining bars. It is agreed that the case should be dealt with as though the writ had been issued after the disposal of the 13 bars.

In general the appellants adopt the view of the present case expressed in the article on Sovereign Immunity and Possession signed A. L. G., (1950) 66 Law Quarterly Review 459. The general principles applicable are laid down in the authorities and in particular by Lord Atkin in Compania Naviera Vascongado v. The Cristina.³ That case puts it beyond doubt that an attempt to interfere by legal action with a sovereign's right to the user, direction or control of a chattel, although falling short of actual possession, infringes his immunity. See also The Parlement Belge.⁴ The cases dealing with questions where there is something in the nature of a trust fund in which a foreign sovereign is interested are not relevant here. For the purposes of this case the appellants are prepared to accept that the property in the bars remains in the respondent company.

3 [1938] A.C. 485.

4 (1880) 5 P.D. 197, 214-5, 218-9.

[1952]		585
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

The appellants rest on five points:

(1) Notional constructive possession is enough to attract the doctrine of sovereign immunity. The sovereign is entitled to a stay of proceedings against himself or a third party in relation to objects which he has in his constructive or notional possession. (This is not the point on which the appellants rely most strongly.) There is nothing startling in this application of a rule of international law. English law has never developed any distinct theory of possession, but civilians would not have any difficulty touching the matter, whether as locatio or as depositum. The governments did not lose possession of the bars by depositing them, and that is the vital point: see 66 Law Quarterly Review, p. 463; Smith v. Milles,⁵ per Ashhurst J.; Nicolls v. Bastard,⁶ per Parke B.; The Amazone⁷; The Broadmayne⁸; The Arantzazu Mendi⁹; The Crimdon¹⁰ and Ancona v. Rogers.¹¹

(2) In any event, control falling short of possession of the thing controlled is sufficient to entitle the foreign sovereign to rely on the doctrine of sovereign immunity: see The Cristina,¹²per Lord Atkin. What is enough to constitute control for this purpose is a question of fact. "Control" is not a term of art. One must consider what is the thing over which control is exercised. A dangerous dog can only be controlled by shutting it up. Cattle can be under control though at large in a field. A horse may be under the control of a person who has put it out at livery, for use when he needs it. A bailee such as the bank in the present case has no right to deny the title of the person from whom he has received the thing bailed and is obliged to carry out the bailor's orders as to its disposition. In the case of gold bars it is of no significance as regards control how they are kept so long as they are kept safe and can be realized or used as security. In regard to these last mentioned matters control is significant and in this respect they were under the control of the governments. There is a distinction between control and possession and it is significant that control here consists in being able to tell those in possession what to do with the property.

(3) This action constitutes an indirect impleading of the sovereign governments within the meaning of the doctrine which protects them against the use of such procedure. The foreign sovereign must not be put into the dilemma that, though the

5 (1786) 1 Term Rep. 475.

6 (1835) 2 C.M. & R. 659, 660.

7 [1939] P. 322, 325-6.

8 [1916] P. 64.

9 [1939] A.C. 256.

10 (1918) 35 T.L.R. 81.

11 (1876) 1 Ex.D. 285, 289, 292.

12 [1938] A.C. 485.

[1952]		586
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

proceedings are not in name against him, he must either intervene in support of one of the parties or suffer the loss of or prejudice to his interest in the subject-matter. He is indirectly impleaded if the proceedings relate to property which is owned by him or of which he is in possession or of which he has a right to immediate possession as against the custodian at the time or which is under his control: see The Parlement Belge¹³ and The Jupiter.¹⁴Haile Selassie v. Cable and Wireless Ld.¹⁵ appears to be against the appellants but is distinguishable as being a very different case. There is a distinction between debt and detinue. It could not be said there that there was property in the hands of anyone who was in any sense an agent. Twycross v. Dreyfus¹⁶ is very like the present case. For all practical purposes the present action forces the governments in question to come in and protect the bank acting on their behalf.

(4) Current reciprocity on the part of the government claiming immunity is not an ingredient in the validity of such a claim since the doctrine has itself been accepted as part of the law of nations and has been received into English law. There is no authority in English law for suggesting that it is necessary for a sovereign State to show that it grants corresponding immunity in its own courts.

(5) Although 13 of the bars have been sold and melted down, that is not a reason why the action should go on in respect of them, since it would be just as prejudicial to the foreign sovereign that the action should go on in respect of them as in respect of the other bars. If the action were against third parties into whose hands the bars had fallen the position would be quite different since quoad Dollfus Mieg et Cie. a disposal of them or a refusal to deliver them up would be a conversion. Till the moment they were disposed of the possession of the bank was the possession of the governments. That possession and control lasts till they are actually parted with. The removal of the 13 bars has no bearing on the position of those which remain. The bailee is estopped from questioning the title of his bailor: see Biddle v. Bond.¹⁷ This action puts the appellants in the dilemma that they must either intervene or lose their interest.

Denys Buckley following. The disposal of the 13 bars raises a question of fact (viz., what is the contractual relationship between the governments and the bank?) and a question of law

13 5 P.D. 197.

14 [1924] P. 236, 242, 244-5.

15 [1938] Ch. 839, 845.

16 (1877) 5 Ch. D. 605, 609.

17 (1865) 6 B. & S. 225.

[1952]		587
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

(viz., does the doctrine of sovereign immunity come into play at all?) It is suggested that, irrespective of the contractual relationship, the governments have not control of the bars, but that is fallacious, for the matter must depend on the contractual relationship. It does not make any difference whether or not the bank carried out its obligations faithfully or whether the governments in fact exercised the control which they had. The bars were to be held separately and the segregation was in operation. If the governments had heard that the bank did not mean to carry out its obligations they could have called it to account. The fact that they did not know of the disposal of the 13 bars has nothing to do with the degree of control which they exercised; that depends on the contract. At all material times they had complete dominion over the bars and the right to tell the bank what to do with them. For all practical purposes they had complete dominion over the situation. They had more control over the bars than a charterer has over a ship. Immediately after the 13 bars were disposed of the governments had an action for conversion and could have recovered their full value by way of damages. The appellants are not contending for an extension of the doctrine of sovereign immunity but for an application of it to the facts. If the effect of the company's action would be to deprive the governments of their right to damages against the bank the action should be stayed. It amounts to an indirect impleading of a foreign sovereign since the governments must either intervene or risk losing their rights against the bank.

Cross K.C. and J. R. C. Lee for the Bank of England. The bank supports this appeal. The question arises whether on the correspondence the original "fine ounce" contract was altered to a "specific bar" contract. If the former contract governed the matter the governments would have no right of control over any of the bars and the bank has done nothing wrong, but if the latter governed the matter the bars were under the control of the governments. If an employer's goods are in the hands of his butler they are not the less under his control because the butler is indifferent in the performance of his duties and the goods are about to be lost or stolen.

As to the 13 bars the bank wishes to preserve all its rights in case the action goes on and the governments fail to help to defend it or the action is lost and the bank must pay damages to the company. The bank asks the House to say nothing which would prevent the bank from subsequently relying on such a judgment obtained against it, since, if it has to pay damages, the

[1952]		588
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

effect of that will be to transfer the title in the bars from the company to the bank.

Sir Andrew Clark K.C. and Richard Wilberforce for the respondent company. If this was a debtor and creditor relationship on the basis of a "fine ounce" contract no question of sovereign immunity can arise. But if the contract as to the 64 bars created a special contract of bailment it becomes necessary to consider in detail the effect in law of such a bailment and whether it would result in possession or control remaining in the bailors. If so, the question arises whether it was such possession or control as to found a claim for sovereign immunity. The question of fact must be decided on the evidence and depends really on the construction of certain letters. The court may look at the subsequent conduct of the parties to see how they themselves construed it.

Before 1940 the bank would accept gold deposited by its customers and would keep it separate, but since then it has not been the practice of the bank to keep it separate. Once it was weighed and assayed it was pooled and thereafter the customer had no right to any specific gold; he could only demand the number of fine ounces of gold comprised in his deposit. Although the contract was still called a "gold set aside" contract, no gold was in fact set aside. In this matter, in the contract between the bank and the Treasury acting on behalf of the three governments, the bank was acting as an independent contractor and not as the servant or agent of the Treasury or of any of the governments, and the measure of its liability was the "fine gold" contract and nothing more. The correspondence does not show a variation of the contract or, if it does, the variation imposed an obligation not to hold the bars indefinitely but only to hold them temporarily. The letter from the bank to the Tripartite Commission dated October 25, 1948, meant: "We have in fact but without obligation held the bars separate but the obligation of separation ceased once we had them assayed." The evidence, as the respondents submit, establishes that the relationship between the bank and the governments in regard to all the bars was not that of bailee and bailor of the specific bars but was that of debtor and creditor to the extent of the particular quantity of gold deposited; consequently the bars were at no material time in the possession or control of the three governments or any of them. It is conceded that if the contract had been one of bailment the fact that some of the bars were wrongfully sold could not affect the contract as regards the remaining bars. Alternatively

[1952]		589
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

the Treasury was the customer and the Tripartite Commission only had power to draw on the account through certain specified persons nominated by the Treasury.

It is not usual to stay an action in limine when there is a dispute of fact. The appellants have to discharge a very heavy onus. In any event, there is a perfectly good action against the bank. It is properly constituted and can proceed without the three governments or any of them being made parties. They need not be impleaded, directly or indirectly, and the company should not be affected by the terms of any contract between the bank and third parties. The immunity granted is for the benefit of foreign sovereigns and not of those who contract with them.

On the assumption that there was a bailment the questions arise: (1) Did the three governments as joint bailors retain (a) possession of the bars and (b) control of them? If the answer is "No" the matter ends and the appeal must be dismissed. (2) If, however, there was some element of possession or control in the three governments, would judgment for the plaintiff company in this action so interfere with that possession or control as to prevent the court's entertaining the suit because of the sovereign immunity of the United States and French Governments? It must be noted that if joint possession in the true sense is established as residing in the three governments, each one of them has possession, but if all that remained in them was control then two of the governments alone have not got control. To call an immediate right to possession "constructive possession" confuses the issue. Constructive possession, properly speaking, exists in relation to the deeds in a box of which one has been given the key. There are also the similar cases of being given the key of a house or of a safe deposit. All that constructive possession can mean in this case is the right to resume possession by determining the bailment. That is vested in all three governments and not in two alone; so all must act together.

When a foreign sovereign State is claiming immunity, it will be allowed if it is shown that immunity has been allowed in the English courts in similar circumstances and that a principle has been laid down which covers the case, but when it is sought to extend the principle of immunity, the courts will look at the general practice among civilized nations to see whether the extension should be made. The modern tendency is to restrict rather than extend sovereign immunity. Immunity will only be granted where the nation claiming it grants reciprocal immunity to others,

[1952]		590
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

and here there is no evidence that the appellants would grant immunity in such a case as this.

The English courts will not allow immunity in any cases not covered by Compania Naviera Vascongado v. The Cristina,¹⁸ in which Lord Atkin laid down the correct principles: (1) A foreign sovereign cannot be cited to appear before an English court. No action can be allowed to proceed if, directly or indirectly, a foreign sovereign is cited as a party to it or if it is an action in which a foreign sovereign is a necessary party (see Twycross v. Dreyfus¹⁹or if the matter is not properly constituted without him. The question of citing a foreign sovereign indirectly can only arise in the case of a writ in rem. Thus, in an action against a ship the owners are directly cited but other persons having an interest in the ship are indirectly cited. This is what is meant by saying that the doctrine of foreign immunity applies where the foreign sovereign is in the dilemma of either losing his interest or coming before the courts to defend the action. (2) The English courts will not entertain any action which, if successful, would involve making an order which would interfere with the possession or control of a foreign sovereign either of his own property to which he has a legal title or of property of which he had de facto possession or control, whether rightful or wrongful, since that is a matter into which the court will not inquire. Where a foreign sovereign is not directly impleaded he must prove to the satisfaction of the court either that he has a legal title to the property liable to be seized under any order which might be made or that he has possession and control of it in his own person or through his servants. Impleading him means bringing him before the courts and indirect impleading means putting him in a position in which he must either appear or allow an order to be made which will be binding on him. The mere statement that the property is his is not enough, though how much he must establish is not settled. A foreign sovereign might seize goods in England without any legal right and bail them to a private person within the jurisdiction. In such a case the action against the bailee would not be stayed. In The Cristina²⁰ the word "control," as used by Lord Atkin, applied to ships, but is irrelevant in the case of chattels on land since one cannot control the latter unless they are in one's possession. Lord Atkin did not use the word "possession" in a loose sense. See also per Lord Wright.²¹

18 [1938] A.C. 485.

19 5 Ch.D. 605.

20 [1938] A.C. 485, 490.

21 Ibid. 504, 509.

[1952]		591
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

The courts will not by their process seize the property of a foreign sovereign (whether or not he is a party to the proceedings) or property of which he is in possession or control.

It is the duty of a bailee to defend his bailor's goods; so here the foreign governments have someone whose duty it is to defend their title and, therefore, the case can be heard without their intervention. Another course open to the bailee here would have been to obtain the authority of the French company to side with it and let the bailors sue for recovery of the bars. A bailee can also interplead.

It is said that the court cannot adjudicate on the title of a foreign sovereign. But it will do so in an action which is properly constituted without making him a party, if judgment in the action will not bind him in his absence: see Haile Selassie v. Cable and Wireless Ld.²²

On the assumption that there was a bailment it is necessary to consider fully Lord Atkin's two propositions in The Cristina.²³It should be noted that an action in rem always offends against both if it offends against either. As to Lord Atkin's first proposition, see Mighell v. Sultan of Johore²⁴; as to his second, see Vavasseur v. Krupp.²⁵ The present case, if it falls under either proposition, falls under the second, for there is no direct impleading. It is to be noted that Lord Atkin uses the simple word "implead," not adding the words "direct" or "indirect." What was called "indirectly impleading" in The Parlement Belge²⁶ was regarded by him as direct impleading. What is called "indirect impleading" can have no application at all to an action in personam, since a sovereign cannot be compelled by such an action, to which he is not a party, to abandon his property, whereas in an action in rem judgment is binding against him and against all the world. The explanation of The Parlement Belge,²⁶ which is the whole origin of the conception of indirect impleading, is in Haile Selassie v. Cable and Wireless Ld.²⁷

Since the present action does not implead a foreign sovereign, directly or indirectly, the only question which can arise is whether, if the bars are in the possession or control of the foreign governments, the result of the action would be to seize or detain them. This is the question which arises on the observations in The Cristina,²⁸ and to go beyond them would be to extend the law.

22 [1938] Ch. 839.

23 [1938] A.C. 485, 490.

24 [1894] 1 Q.B. 149.

25 (1878) 9 Ch.D. 351.

26 5 P.D. 197, 217.

27 [1938] Ch. 839, 845.

28 [1938] A.C. 485, 490.

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A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

The test is seizing and detaining, not prejudicially affecting. Further, possession is not a bar to the action, although it may be a bar to relief in the action if that relief would amount to seizing or detaining the property. The trust cases are not really in a separate category because the foreign sovereign would only be bound if he were made a party: see Westlake on Private International Law, 7th ed., p. 267, s. 190, p. 275, s. 193, Gladstone v. Mursurus Bey²⁹ and Larivière v. Morgan.³⁰

Light is thrown on the present problem by the United States cases. They are precedents on international law which is based on the generally accepted policy of civilized nations; they are evidence of what that is. They should be given special weight because they are derived from the common law: see The Davis³¹; Long v. The Tampico³² and Compania Espanola de Navigacion Maritima S.A. v. The Navemar.³³

On the point of possession and control the law is as follows: (1) Possession is exclusive and individual and cannot exist in two persons at the same time. (2) In the case of a bailment possession is in the bailee because transfer of possession is an essential ingredient in bailment. (3) No element of possession can remain in the bailor; a fortiori he does not retain custody. (4) Control of a chattel cannot exist apart from possession or custody; control is an element in possession. (5) A bailor cannot have control, since he has neither possession nor custody; all he has is a bare right against the bailee only to terminate the bailment and thereby regain control. (6) Delivery of control to the bailee is just an essential element in the delivery of possession. (7) If there were neither possession nor control in the bailee there would be no bailment but the bank would be the mere servant or agent of the three governments. (8) The bailor's right to sue in trespass is not founded on possession, which he has not got, but on ownership, which he has. (9) This action is not one in which judgment would necessarily result in seizure and detention of the bailed goods. (10) Actions for detinue and conversion, being personal actions, are correctly brought against the person in actual possession (e.g., a bailee); a bailee can always be sued by a third party and the bailor's title can be tried in the action without any necessity of joining the bailor. (11) Judgment for the plaintiffs in the present case for damages only would not even affect the bailor's right to possession as against the bailee because the bailee

29 (1862) 1 H. & M. 495, 500.

30 (1872) L.R. 7 Ch. 550, 559.

31 (1869) 10 Wallace 15.

32 (1883) 16 Fed.Rep. 491, 501.

33 (1938) 303 U.S. 68.

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A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

is not estopped from denying his bailor's title if he elects to challenge it relying on the title of a third party and with that party's authority.

Even if the bars, or any of them, were held by the bank as bailees for the three governments, neither in fact nor in law were they in the possession or under the control of those governments or any of them. At all material times they were in the possession and under the control of the bank.

Ancona v. Rogers,³⁴ relied on by the appellants, is distinguishable. It turned on the words of the Bills of Sale Act, 1854, and the relevant expression was "apparent possession," which is different from actual possession. The judgment was not concerned with possession as opposed to property, and the rule in the dicta relied on applies only where the bailor has the property and the bailee has possession. In such a case the bailor can sue by virtue of his right of property, but only the bailee can sue for possession. If it was intended to suggest that the goods were actually in possession of the bailor, the dicta, which were obiter, were wrong. In any event, they are not binding on the House of Lords.

In The Amazone,³⁵ also relied on by the appellants, the key to the decision was that the applicant was the registered owner of the yacht and the claim was in rem, and an order would have had to be made against him to remove his name from the register. That case does not help either party in the present action.

[They also referred to Pollock and Wright on Possession, pp. 20, 27, 131, 145, 163, 166; Halsbury's Laws of England, 2nd ed., Vol. I, p. 724, para. 1196; p. 773, para. 1265; p. 774, para. 1267; Lincoln Wagon and Engine Co. v. Mumford³⁶; The Winkfield³⁷; Wilson v. Anderton³⁸; Wetherman v. London and Liverpool Bank of Commerce Ld.³⁹; Rogers, Sons & Co. v. Lambert & Co.⁴⁰ and The Crimdon.⁴¹]

To sum up the argument: (1) This was not a contract of bailment. (2) If it was, then (a) no possession or control remained in the bailors; (b) even if some element of possession or control remained in them, it was not the sort of possession or control referred to by Lord Atkin in The Cristina,⁴² and (c) even if possession or control remained in them, then, if the claim for

34 1 Ex.D. 285.

35 [1939] P. 322.

36 (1879) 41 L.T. 655.

37 [1902] P. 42.

38 (1830) 1 B. & Ad. 450.

39 (1914) 31 T.L.R. 20.

40 [1891] 1 Q.B. 318.

41 35 T.L.R. 81, 82.

42 [1938] A.C. 485, 490.

[1952]		594
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

delivery up is abandoned (as the plaintiff company is willing to abandon it), judgment for the plaintiff company would not involve seizure or detention of the bars within Lord Atkin's proposition, and so the action must proceed in respect of the claim for damages for conversion. (3) In any event, the action can go on as regards the 13 bars because once they were sold any element of control or possession in the governments disappeared.

Richard Wilberforce following. The question of control is not material if it is held that there was not a bailment or if in the proceeding it is not sought to recover property in the possession or control of the foreign governments. Lord Atkin's observations in The Cristina⁴² were made in relation to a ship. To apply them to chattels generally is not a mere gloss on his words but amounts to transferring them to another field where they have no place. That case applies only to an action in rem, and in other cases retention in the hands of the possessor himself is necessary to bring them within its principles. The Cristina⁴³ was a case of requisition, which is not a term of art but usually denotes a temporary possession or control rather than a confiscation: see McNair on The Legal Effects of War, 3rd ed., p. 435n. As to the position of state-owned ships, see per Lord Wright.⁴⁴ The immunity of ships in the ownership or possession of foreign governments is based on the fundamental characteristic that they are used for public purposes: see The Crimdon⁴⁵ and The Broadmayne.⁴⁶ The courts disallow process in regard to requisitioned ships and it is in the light of this situation that "control" is spoken of in The Cristina.⁴⁷ This conception is not capable of being transplanted on to land and applied to chattels, though a permissible extension of the principle would be to apply it to aircraft.

In a case such as the present it is not a sufficient test to say that the property is in the hands of a person who has no right to deny the title of him from whom he received it and who has to carry out his orders. That does not coincide with what was in the minds of the Lords who decided The Cristina,⁴⁸ for the question of title did not arise there. But in a case like the present you create difficulties if you eliminate the conception of title. There may be many persons who have to carry out the orders of a foreign sovereign with regard to property, to whom it would be strange to apply the doctrine of sovereign immunity.

43 [1938] A.C. 485.

44 Ibid. 512-3.

45 35 T.L.R. 81, 82.

46 [1916] P. 64, 77.

47 [1938] A.C. 485, 492, 502.

48 [1938] A.C. 485.

[1952]		595
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

On the appellants' argument it would apply to a purely contractual right arising out of a contract for the manufacture and delivery of shells by order of a foreign sovereign. Yet it could not apply there, for example, if the manufacturer went bankrupt and his creditors claimed his assets. Other examples might be found in the case of a company controlled by a foreign government; there again the doctrine would not apply. Yet if the principle rested on an unconditional obligation to carry out the orders of a foreign sovereign it would be hard to find any bounds to its application.

Both in civil and criminal matters the courts are accustomed to dealing with elaborate cases of possession: see, for example, The Jupiter (No. 3).⁴⁹ To deal with this case on the basis of possession is not strange or artificial. Possession is transferred when an object is given to a bailee to hold on bailment: see Pollock and Wright on Possession, pp. 58, 131. The article in the Law Quarterly Review cited on behalf of the appellants did not take account of that. The possession by the bank is distinct from possession by the governments.

Sir Hartley Shawcross K.C. in reply. The case for the appellants rests mainly on control. But on the question of impleading a foreign sovereign one may find an indirect impleading in respect of property of which the sovereign has neither possession nor control at the time of the suit: see The Cristina.⁵⁰ Indirect impleading covers any case where the sovereign is a necessary or proper party to the action and is put in the dilemma that he must either intervene (if need be by leave of the court) or risk some prejudice to his interest in the subject-matter of the suit. In the present case the appellants would have been proper parties and but for the doctrine of sovereign immunity would in the normal course have been brought in by interpleader. It would be strange if the parties most interested in the subject-matter were not proper parties to the action. But their interest is sufficient: see Dollfus Mieg et Compagnie S.A. v. Bank of England.⁵¹ It is an instance of indirect impleading which has scope beyond an action in rem.

As to the question of bailment, the bank was the custodian of the bars for its customers, although a possible view is that though it was not the bailee in the sense of being bound to return specific bars to specific customers it was bailee for the pool of gold for all its customers.

49 [1927] P. 122.

50 [1938] A.C. 485, 491, 505.

51 [1951] Ch. 33, 41.

[1952]		596
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

The American cases relied on by the company are not binding on the House of Lords and, in any event, turn on their own facts. Perhaps they exemplify a more liberal view from the subject's standpoint so that actions which would have been stayed here have not been stayed in the United States. The key to those cases lies in the degree of control left in the bailor. There is nothing in the doctrine of sovereign immunity in English law to suggest that the sovereign's interest must be exclusive.

As to possession, although it is true that possession cannot reside in two persons who have adverse claims, the argument for the company involves too strict an interpretation of the peculiar English doctrine of possession based on the old forms of action. It is an over-refinement to say that a person who has had possession loses it the moment he places it in the temporary custody of some person, not his servant, to hold it safe. This is not supported by English authority and is contrary to the rule of international law. Roman law has had a great influence on the law of bailment: see Halsbury's Laws of England, 2nd ed., Vol. I, p. 725, para. 1196. Considering possession broadly one can have regard to the principles of Roman law. A bailee did not have the animus to hold as owner and so he had not got possession although he held the corpus: see Buckland's Textbook of Roman Law, 2nd ed., pp. 196, 467, 500. The true view is that a bailor with an immediate right to possession has possession. Although the trover and detinue cases are not conclusive on this matter a bailor can sue in trover and detinue when he has an immediate right to possession and the bailee is his delegate. [He referred to The Arantzazu Mendi⁵²; Government of the Republic of Spain v. The Arantzazu Mendi⁵³; Ancona v. Rogers⁵⁴; Lincoln Wagon and Engine Co. v. Mumford⁵⁵ and Holmes on The Common Law, p. 235.]

As to control by the foreign sovereign, the shipping authorities are not inapplicable to the present case and the second limb of Lord Atkin's observations in The Cristina⁵⁶ does not apply to ships only. One can have control of a chattel apart from possession. In the user of bars of gold the significant thing is how they shall be employed, whether as security or as a medium of exchange or as a symbol of value. In this respect the appellants controlled the gold and it does not matter how it was kept. It is an offence to common sense to say that a foreign sovereign who

52 [1938] P. 233, 236, 240-1, 248; (C.A.) [1939] P. 37.

53 [1939] A.C. 256, 263.

54 1 Ex.D. 285.

55 41 L.T. 655.

56 [1938] A.C. 485, 490.

[1952]		597
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

in the ordinary course of dealing with such things as gold puts them into the custody of some other person loses his right of immunity. For example, while he is staying at an hotel he may deposit jewellery in the hotel keeper's safe. There has never been a case in which an argument such as the company's has succeeded.

If it is claimed that damages is merely an alternative remedy the court should not allow this. If it were allowed it would drive a horse and cart through the doctrine of sovereign immunity. In the present case the claims for delivery up and for damages are alternative remedies in the same cause of action. To order the bank to pay damages because it will not deliver up something which it holds for the foreign sovereigns is an interference with the rights of the foreign sovereigns. If it paid damages it could assert a title to the gold against the governments. The effect of the company's argument is that at some stage or other the governments must prove their title and that is just what they are not to be forced to do. Such a proceeding has the indirect result of putting pressure on the bailee to deliver up the goods, and this device would largely destroy the possession and control of property which a sovereign can exercise through a bailee. The court can neither award damages nor order delivery up.

Only in the case of the 13 bars which have been disposed of, thereby destroying the possession and control of the governments, may damages perhaps be awarded. But if the respondents were right in their main contention, no bailee in the position of the bank would be safe from an action for damages whether he dealt with the goods in accordance with the bailment or not.

Their Lordships took time for consideration.

1952. Feb. 25. EARL JOWITT. My Lords, Dollfus Mieg et Cie., the respondents to this appeal, are a French company who before the outbreak of war in 1939 had acquired as their property 64 bars of gold. These bars of gold were stored in a bank at Limoges in a special vault which the respondents had hired. When the German armies overran Limoges they captured the 64 bars in question and carried them off to Germany; and when the American armies occupied that part of Germany at which the bars had been stored by the Germans they were taken possession of by the Americans and brought to Frankfurt, where they remained for some time in American custody. Negotiations followed between the various allied governments as to the course

[1952]		598
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

to be followed with gold captured by the allied armies in Germany and finally a treaty was signed between 18 allied governments. Nothing, I think, turns for present purposes on the precise terms of that treaty - it is sufficient to say that the 64 gold bars in question, together with other gold bars, passed into the possession of the American, British and French Governments. These governments established a "Tripartite Commission for the Restitution of Monetary Gold" to deal with gold taken from Germany on their behalf.

In March, 1948, a "gold set-aside account" was opened at the Bank of England in accordance with the terms of a letter from H.M. Treasury dated March 9, 1948, and the bank's reply dated March 11, 1948. The trial judge set out the terms of these letters in his judgment and came to the conclusion that the effect of the letters was to create a contract between the Bank of England and the American, British and French Governments. He regarded the Treasury as a mere intermediary acting on behalf of the governments who were to operate the account. I think he was amply justified in reaching this conclusion.

The terms of the contract must be construed in the light of the course of business which was well known to all the contracting parties. Ever since 1940 the Bank of England in operating a gold set-aside account had not kept separate the gold belonging to one customer from the gold belonging to another customer, though the customers' gold, considered globally, was kept separate from gold belonging to the bank itself. Under the "gold set-aside" account as managed in 1948 the bank on receiving gold in whatever form from a customer would weigh the gold and assay it and, if necessary, bring it up to the standard of fineness for good delivery in the London Bullion Market. Until the completion of weighing and assay the particular gold would be kept separate in the name of the depositor, but once these operations were completed there would be recorded in the books of the bank the number of ounces of fine gold comprised in the deposit, and the depositor would be entitled to receive from the bank the number of ounces of fine gold so ascertained, less charges. The customer would, however, no longer be entitled to receive any particular bars of gold in satisfaction of his contract. The contract, in short, once weighing and assaying had been completed, created a relationship between the depositor and the bank closely resembling that of debtor and creditor, except that the bank's obligation was to be discharged by the handing over of the requisite number of ounces of fine gold.

[1952]		599
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

During the hearing in your Lordships' House we had produced for our inspection the bank's account. This is headed "Bar Gold set aside o/a His Majesty's Treasury o/a the Governments of the United States, the United Kingdom and France." The account opens under date May 20/April 19-23, 1948, with an item imported from B.N. Suisse Berne," and this is entered as 578700 oz. fine."

The 64 bars, the subject-matter of these proceedings, were dealt with on a different basis. By a letter of July 10, 1948, a Monsieur Rueff, who was acting on behalf of the French delegation of the Inter-Allied Reparations Agency, wrote to the Secretary-General of the Tripartite Commission asking that the 64 bars should be preserved in their present form, and, as a result of this request, the Secretary-General of the Tripartite Commission, in a letter dated July 16 addressed to the Bank of England, asked if the bank would be able and willing to "have these bars set aside intact on arrival, if they can be identified, pending receipt of a further communication from the Commission." By a letter of July 19, 1948, the Bank of England answered as follows: "The proposal which you make is acceptable to the Bank of England provided that at the time we receive the authority of the Commission to hold the gold at the disposal of the Bank of France we also receive instructions from them to ship the gold from London."

Shortly after these letters the bank received the 64 bars and, as requested, set them aside. The weighing and assaying of the 64 bars was not completed until shortly before October 25, 1948, and their gold content was on that day entered in the "gold set-aside account" as 25,679.605 fine ounces. This entry was, however, plainly not intended to terminate the bank's obligation to hold the specific 64 bars, for the letter of October 25, 1948, from the bank to the Tripartite Commission recording the above facts concludes with this sentence: "I would mention that in view of the circumstances outlined in your letter under reference these bars have been temporarily segregated pending the receipt of instructions as to their disposal."

In these circumstances, I think that the correct view is that the letters of July coupled with the sending of the 64 bars to the bank constituted a bailment of the 64 bars "pending receipt of a further communication from the Commission," and that the contract of bailment continued, notwithstanding the entry of October 25. If there had been no special arrangement constituted

[1952]		600
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

by the July letters I should have been of opinion that the bailment of the individual bars had been terminated when the account was credited with the fine gold content.

The writ in the action in which Dollfus Mieg were plaintiffs and the Bank of England were defendants was issued on October 18, 1948, and claimed delivery of the 64 bars and an injunction restraining the defendants from parting with the bars; and on November 2 the plaintiffs asked for an injunction restraining the defendant bank from selling or parting with the possession of the 64 bars. On the same day the bank served notice of motion asking the court to set aside the writ on the ground that the 64 bars were in the possession or control of the Governments of the United States of America, the Republic of France and the United Kingdom, and upon the further ground that the two foreign governments who declined to submit to the jurisdiction were directly or indirectly impleaded. On March 8, 1949, the writ was amended by the insertion of a claim for damages for detention and conversion of the 64 bars.

The respondents Dollfus Mieg by an affidavit sworn on their behalf by Frederic Engel on October 16, 1948, asserted that the 64 gold bars in question had been purchased by them and remained their property at all material times; and an affidavit sworn by Mr. Rootham, an assistant chief cashier in the employment of the Bank of England, set out the terms of the letters of March 9 and 11, 1948, and was relied upon by the bank in support of their application to stay all further proceedings. It is the fact that this latter affidavit made no reference to the July correspondence. Further affidavits were put in establishing the fact that the Governments of the United States of America and of the Republic of France were not willing to submit to the jurisdiction. Mr. Engel made a further affidavit dated December 17, 1948, referring to and exhibiting the letter from Mr. Rueff of July 10, 1948, and this produced a further affidavit by Mr. Rootham exhibiting the two letters of July 16 and 19, 1948, respectively.

I have briefly referred to all the evidence that was available to Jenkins J. when the case was heard before him in March, 1949. Unfortunately the fact that by some mistake 13 of the 64 bars had been delivered to purchasers outside the bank between December 30, 1948, and January 26, 1949, had not then been discovered, so that the case before the trial judge proceeded on the basis, which everyone believed to be the fact, that the 64 bars were still intact in the bank's possession. If discovery had been ordered it is possible that this fact would have been brought to

[1952]		601
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

light; but, whether this would have been so or not, it seems to me desirable that in a case of this sort an order should be made for full disclosure of documents before the hearing. In the present case, as is apparent from the judgment of the Master of the Rolls, documents were produced before the Court of Appeal which had not been produced before the trial judge, and in your Lordships' House still further documents were produced which had not been available to either of the courts below. This would have been avoided if full discovery had been given.

Jenkins J. delivered his reserved judgment on April 6, 1949, setting aside the writ.⁵⁷ He regarded the three governments as being in possession or control of the 64 bars of gold, which were held for their public purposes, and regarded the action against the Bank of England as being an attempt to sue indirectly the three governments, two of whom he treated as foreign sovereign States. He decided that so long as property is in the possession or control of a foreign sovereign State no court in this country can entertain proceedings which, if successful, would result in any interference with the foreign sovereign State's exercise of such possession or control, whether directly (as by removing the property from the custody of an agent to whom the foreign sovereign State has entrusted it), or indirectly (as by casting in damages for wrongful possession an agent through whom the foreign sovereign State is exercising its possession or control).

Dollfus Mieg appealed to the Court of Appeal, and before the conclusion of the hearing in that court the fact that by some error 13 of the 64 bars had been delivered on the market was revealed. I have not overlooked the fact that the disposal of the 13 bars did not take place until after the issue of the writ. This difficulty could have been surmounted by the issue of a further writ after January 26, 1949, and all the parties have asked us to treat the case as though the writ had been issued on the later date. My Lords, it is, I think, clear that so treating the date of the writ the action in regard to these 13 bars must be allowed to proceed, for in regard to them it may well be argued that no question any longer arises of interfering with the possession or control of a foreign sovereign State. I do not think it would be proper for us to come to any final conclusion as to this matter. It is not for us to try the case. We have merely to decide at this stage whether the action should or should not be allowed to go for trial, and in so far as the 13 bars are concerned I certainly think that

57 [1949] Ch. 369.

[1952]		602
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

the action should be allowed to go on. All the members of the Court of Appeal thought, however, that the disposal of the 13 bars made it inevitable that the action should be allowed to proceed as to the entire 64 bars. The Master of the Rolls⁵⁸ thought that the disposal of the 13 bars had "destroyed at a single blow the whole premiss on which the judgment below proceeded." Somervell L.J. would have agreed with the judgment of Jenkins J. but for the disposal of the 13 bars. He states his view as follows⁵⁹: "The 64 bars for all relevant purposes at all material times were in the pool. Thirteen of them were disposed of, and the whole 64 might have been disposed of without instructions from or reference to the Tripartite Commission. In these circumstances it seems to me impossible to hold that these 64 bars were in the possession or control of the three governments." Cohen L.J. agreed with Somervell L.J. My Lords, I cannot agree with this reasoning. If the bars were in the possession or control of the governments I cannot think that the fact that by some error of internal management 13 bars were disposed of alters the position except as to those 13 bars. For the question of possession or control must depend on the terms of the contract under which the bars in question came to the bank; if possession or control was retained by the governments that position is not altered by the fact that through an error 13 bars were disposed of in breach of the contract. Unless the disposal of the 13 bars throws some light upon the terms of the contract it seems to me to be irrelevant in regard to the remaining 51 bars. I have already stated my view that in regard to the 64 bars there was a contract of bailment and an obligation was thereby imposed on the bank to keep these bars separate and intact and not to allow them to become merged in the general pool of customers' gold pending the receipt of further instructions. The Master of the Rolls, differing in this respect from the other judges in the Court of Appeal, thought that Jenkins J. had come to an erroneous conclusion on the facts as presented to him. He thought that from and after the time at which the 64 bars were delivered to the bank the governments no longer had such a degree of possession or control as would justify them in asking to have the action stayed.

After the decision of the Court of Appeal had been given, and in view of the then contemplated appeal to your Lordships' House, the two foreign governments applied to be added as

58 [1950] Ch. 333, 344.

59 Ibid. 364.

[1952]		603
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

defendants to the action. An order was made that they should be so added, with the result that we have had the advantage of hearing counsel on their behalf as well as counsel for the Bank of England in support of the appeal.

My Lords, I think that the question for our decision is whether the foreign governments, notwithstanding the delivery of the 64 bars to the Bank of England, still retained such an interest in the bars as to entitle them to have the action stayed.

The decided cases which illustrate the way in which the principle of immunity has been applied by our courts are largely concerned with ships and actions in rem. Lord Wright in Compania Naviera Vascongado v. The Cristina⁶⁰ refers with approval to the observation of Sir Hardinge Giffard S.-G. in his argument on The Parlement Belge⁶¹: "The privilege depends on the immunity of the sovereign, not on anything peculiar to a ship of war, though it seldom arises as to anything else, because hardly anything belonging to a sovereign in his public capacity, except a ship of war, ever goes wandering into the jurisdiction of foreign courts." In his judgment in The Parlement Belge⁶²Brett L.J. deduces the following principle from the decision of the English and United States cases: "The principle to be deduced from all these cases is that, as a consequence of the absolute independence of every sovereign authority, and of the international comity which induces every sovereign State to respect the independence and dignity of every other sovereign State, each and every one declines to exercise by means of its courts any of its territorial jurisdiction over the person of any sovereign or ambassador of any other State, or over the public property of any State which is destined to public use, or over the property of any ambassador, though such sovereign, ambassador or property be within its territory, and, therefore, but for the common agreement, subject to its jurisdiction." In that case the Belgian Government was the owner of the ship: "But the rule is not limited to ownership. It applies to cases where what the Government has is a lesser interest, which may be not merely not proprietary but not even possessory," per Lord Wright, The Cristina.⁶³ Lord Atkin stated the principle in the following terms⁶⁴: "The foundation for the application to set aside the writ and arrest of the ship is to be found in two propositions of international law engrafted into our domestic

60 [1938] A.C. 485, 510.

61 (1880) 5 P.D. 197, 202.

62 5 P.D. 197, 214-5.

63 [1938] A.C. 485, 507.

64 Ibid. 490.

[1952]		604
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

law which seem to me to be well established and to be beyond dispute. The first is that the courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages. The second is that they will not by their process, whether the sovereign is a party to the proceedings or not, seize or detain property which is his or of which he is in possession or control. There has been some difference in the practice of nations as to possible limitations of this second principle as to whether it extends to property only used for the commercial purposes of the sovereign or to personal private property. In this country it is, in my opinion, well settled that it applies to both."

My Lords, I think it probable that Lord Atkin inserted the words "or control" in his second proposition so as to make it wide enough to cover those cases which had been cited to him in argument in which the foreign government had requisitioned or directed a ship without depriving the owners of their possession. This is, I think, merely an illustration of one of those interests "lesser than a proprietary interest or even than a possessory interest" to which Lord Wright referred; there is, I think, no special doctrine applying to ships which does not equally apply to gold bars.

We were pressed in argument with the difficulty which might arise if it were alleged that a foreign sovereign whilst in this country seized goods in this country without any legal justification and then made a bailment of such goods to a private person within the jurisdiction. We are not dealing with any such case at present and I should prefer not to make any pronouncement in regard to such a case. In the present case the foreign governments had undoubtedly been in possession of the gold bars before they were sent to this country. They decided in the public interest to send these gold bars to the Bank of England in London. In my view the bank became bailees of these bars and were bound to keep them intact pending further instructions.

In the case now before us the action is an action in personam and not an action in rem. I do not think that the foreign governments can be said to be directly impleaded; neither do I think they are being indirectly impleaded, for the present action is an action in personam brought against the Bank of England.

The word "control" in the second limb of Lord Atkin's proposition is a word of vague import, and I think it fallacious to

[1952]		605
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

treat Lord Atkin's words as though they were the words of a statute. I do not think that the word "control" is apt in the present context. The bars of gold did not require any treatment or anything in the nature of management. All that was required was that they should be left intact and undisturbed in the vaults of the bank.

Under these circumstances I think we should consider whether the foreign governments had such a possessory right in relation to the gold bars as to entitle them to ask that this action should be stayed. Under English law, where there is a simple contract of bailment at will the possession of the goods bailed passes to the bailee. The bailor has in such a case the right to immediate possession, and by reason of this right can exercise those possessory remedies which are available to the possessor. The person having the right to immediate possession is, however, frequently referred to in English law as being the "possessor" - in truth the English law has never worked out a completely logical and exhaustive definition of "possession." We are bound to decide this case in accordance with the English law and we have no evidence of any other system of law; yet it is germane to remember that the English law has incorporated the doctrine of State immunity from international law. It would be an unsatisfactory position if the extent and ambit of this doctrine were to depend on the special and peculiar doctrines of each jurisdiction in relation to "possession," with the result that differing results might be arrived at according to whether the case was governed by English law or, for example, by Scottish law. The basis of the rule was explained by Lord Atkin in the case of Government of the Republic of Spain v. The Arantzazu Mendi⁶⁵ as being intended either to secure reciprocal rights of immunity or to avoid the risk of injured pride if jurisdiction is sought to be exercised, or to avoid the risk of belligerent action if government property is seized or injured; and the distinction between "possession" and the "immediate right to possession" would have no bearing upon these considerations.

I agree with Jenkins J. in thinking that the fact that the foreign governments had the immediate right to possession of the 64 bars made it impossible, consistently with the established principle of English law relating to State immunity, for relief to be given in this action by ordering the delivery up of the bars or by granting an injunction restraining the bank from parting with

65 [1939] A.C. 256, 265.

[1952]		606
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

their possession; for if either of these courses were taken it would be necessary for the foreign governments to take proceedings in this country if they wanted to recover the gold here.

The doctrine of immunity should not, I think, be confined to those cases in which the foreign sovereign was either directly in possession of property by himself or at least indirectly by his servants, for if it were so confined the doctrine would not be applicable to the case of any bailment. I can find nothing in any decided case to support any such limitation. We have been referred to certain American cases, which I have considered with care, but I do not think that any of these cases affords any justification for such a limitation of the doctrine of sovereign immunity as is here sought to be introduced.

Jenkins J. in the course of his judgment, to which I would desire to express my indebtedness, expresses the matter as follows⁶⁶: "A foreign sovereign State (unless embodied in a personal sovereign visiting this country) cannot, so far as I can see, be in actual physical possession of property here otherwise than by its servants. Accordingly, if actual physical possession by a foreign sovereign State were essential to immunity on the score of possession by such State, immunity on that ground could only be claimed in respect of property in this country in the actual physical possession either of some personal sovereign or of a person who could be shown to be in the strict sense a servant of a foreign sovereign State (so as to make his possession that of his master) or else to be himself entitled to diplomatic immunity. The application or exclusion of the principle of immunity would thus be made to depend on nice distinctions respecting the particular mode in which a foreign sovereign State might happen to exercise dominion over property brought by it to this country in its possession or control. For instance, if gold were brought to this country by a foreign sovereign State to be applied in the purchase of goods for the public purposes of that State and placed in the hands of a servant of the State concerned to be applied in making such purchases in accordance with its directions, the gold would be protected by the principle of immunity on the score of possession by the foreign sovereign State, irrespective of any immunity from process the servant might be entitled to claim in his own person. If on the other hand gold brought to this country by a foreign sovereign State for similar purposes was deposited by it with a banker or other

66 [1949] Ch. 369, 389.

[1952]		607
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Earl Jowitt.

agent for safe custody and disposal in accordance with its directions, the gold would at once become exposed in the hands of the banker or other agent to any adverse claims there might be, and the principle of immunity would afford no protection from actions brought by third parties against the banker or other agent for the purpose of establishing such claims. I cannot think it would be right to make the application or exclusion of the principle of immunity (based as it is on substantial reasons of policy) turn upon nice distinctions of this kind."

Although I agree with the observations of Lord Maugham in The Cristina⁶⁷ that the doctrine of immunity should not be extended, yet I think that we should unduly limit the doctrine if we were to decline to apply it to any bailment which might be made by or on behalf of the foreign sovereign in which the action is brought against the bailee. If it were so limited the result would be that if the foreign sovereign deposited his bag or his jewellery with the railway or with the hotel or with the bank, proceedings could be taken against the bailee, claiming the delivery of the article which had been deposited by or on behalf of that sovereign.

It remains to consider whether the fact that the writ, by reason of the amendment, claims damages for conversion should be allowed to make any difference. The only act of conversion in respect of the 51 gold bars which can be relied upon is the fact that the Bank of England refused to deliver any of the gold bars which they were holding for the three governments to the respondents. If the bank were ordered to pay damages representing the value of the gold bars, then, on payment, they would acquire the title of the respondents to the gold and could set up that title against their bailors, the three governments. This would result in an interference with the rights of the three governments, who would be obliged, if they wanted to recover the gold, to submit to the jurisdiction by starting proceedings as plaintiffs in our courts. Moreover, if the court cannot order the bank to deliver the gold bars to the respondents, it is difficult to see how the court can order the bank to pay damages for not so delivering the gold bars.

On the whole, therefore, I come to the conclusion that the action should be allowed to continue as to the 13 bars only.

With regard to the question of costs, I think that all orders already made as to costs should be allowed to stand and that in relation to any steps in these proceedings in which orders as to

67 [1938] A.C. 485, 519.

[1952]		608
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))

costs have not already been made, including this appeal and the previous application by the governments to be joined as defendants, each party should pay their own costs.

LORD PORTER. My Lords, in this action the respondents, as plaintiffs, sued the Bank of England in detinue for the recovery of 64 bars of gold which were at one time their property but were seized by the Germans in the course of the late war, taken by them to Germany and found and taken possession of by the Allies. The bars were then transferred to a Tripartite Commission set up by the French, American and English Governments for the purpose of recouping the losses suffered by their countrymen as a result of the depredations of the Germans. For the purpose of the present appeal the appellants are prepared to accept the view that the property in the bars remains where it originally was, viz., with the respondents.

Undoubtedly the bars were at one time in the possession of the three governments and were entrusted by them to the Bank of England. The question for your Lordships is whether the plaintiffs can sue the bank or whether that body can rely upon the immunity accorded to a sovereign state on the ground that the bars are still in the possession or control of the governments which deposited them, and whether the result of allowing the case to proceed would be to implead such a State or States.

The Crown of this country is not a party to the appeal inasmuch as, since the Crown Proceedings Act, 1947, the British Government can claim no greater protection than that accorded to a private individual, but the United States of America and France are still protected by the doctrine of State immunity where that doctrine applies.

The facts have been set out by Jenkins J. in the court of first instance, by Cohen L.J. in the Court of Appeal, and by the noble Earl on the woolsack in your Lordships' House. I need not repeat them.

Jenkins J. stayed the action, but when he gave his judgment he was unaware that after action brought the bank had delivered 13 of the 64 bars to third parties. The majority of the Court of Appeal, as I understand them, would have reached the same conclusion as the learned judge if they had had to depend on the same material, but thought that the disposal by the bank of the 13 bars destroyed the argument for staying the proceedings in respect of the whole of the 64; Somervell L.J.'s view being that the bank had ceased to keep them separate because, though

[1952]		609
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

it had stacked them in two special trucks and placed a notice that they were not for disposal, it had failed to enter a warning note on the cards relating to the consignment in question and that the entry of the note was a precaution which must be observed if the bars are to be regarded as separated from the pool. The Master of the Rolls went further and thought that even without the additional evidence a case had been made for allowing the action to proceed against the bank. In his view it was not established that the bank were ever under a duty to keep the bars separate and, even if they were, he agreed with the other members of the court in thinking that they had not done so.

This portion of the case involves a question of fact or inference from fact and, in my view, the inference drawn by the Court of Appeal is not justified. The correspondence and affidavit evidence show that though since 1940 it has not been the practice of the bank, except as the consequence of a special arrangement, to keep a customer's gold separate from that of other customers, yet in this special case they agreed to do so and took steps to carry out their agreement. I cannot read the letter dated October 25, 1948, from the bank to the Tripartite Commission as bearing any other meaning. The suggestion that it means "We have in fact but without obligation held the bars separate but that separation ceased once we had assayed," is inconsistent with that letter, and indeed with the general import of the correspondence. The entry in the account crediting it with the value of the bars and the charges made for assaying do not conflict with this view. It is but an account-keeping device and it would be odd if the bank, knowing that an action had been brought against it and, indeed, as a result of that fact, were to change the whole relationship between itself and its customer.

But it is said H.M. Treasury was the customer and the Tripartite Commission was merely empowered to draw on the account through certain specified persons nominated by the Treasury. I cannot take that view. The Treasury was no doubt the instrument by means of which the relationship between the bank and the Tripartite Commission was brought about; the Commission, however, were the only body entitled to deal with it and, in fact, through their secretary, gave instructions to the bank and were informed by its officials of the action taken. It is true that instructions as to the operation of the account are, in the words of Sir Edward Rowe Dutton, in his letter of March 9, 1948, entrusted to certain named representatives, but this arrangement is limited to instructions for the operation of the

[1952]		610
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

account and leaves the Commission to make arrangements through its secretary as to the disposal of the bars. In fact, the Commission gave such instructions and the bank accepted them.

Had, then, the 64 bars remained intact, I find myself in agreement with the original judgment of Jenkins J.

Does it, then, make a difference that in error 13 bars were treated as if they were part of the pool from which gold could be drawn for customers generally instead of being treated as confined in use to one particular customer? The reason for the decision of the majority in the Court of Appeal is perhaps most clearly exemplified in the words of Somervell L.J. He says⁶⁸: "The authorities of the bank responsible for the correspondence with the Tripartite Commission intended that these bars should be kept apart from the pool and held as individual bars for the three governments. Some steps were taken to this end, but, as the facts show and as is admitted, one necessary step was not taken. The 64 bars for all relevant purposes at all material dates were in the pool." My Lords, with all due respect, I am unable to concur with this view. In fact, the bars were kept separate in two trucks and a notice was placed on them to indicate that they were to be used only for a particular purpose. It is true that one precaution, viz., an entry on the cards, which would have been helpful in avoiding a misuse of the bars and might have prevented it, was not taken, but that neglect did not cancel the instructions of the Tripartite Commission or the bank's acceptance of them. So long as the bars remained in the possession of the bank, a failure to take all possible precautions or indeed even a failure to take all reasonable precautions to prevent the bars being dealt with in the ordinary course, is not effective to destroy the conditions on which the bank were instructed to hold the bars and on which they agreed that the bars should be held. Misdelivery may in certain cases put an end to a claim to possession, though it will not in the normal case destroy a right of property. On the other hand, negligence in failing to take all possible steps to see that an arrangement which had been made is carried out does not alter the fact that all bars in the possession of the bank remained in their possession subject to the terms upon which they were deposited. In such a case, however, misdelivery does, in my view, affect the position, since, as regards the 13 bars, it can no longer be asserted that they are in the possession of the three governments through their bailees, the bank.

68 [1950] Ch. 333, 364.

[1952]		611
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

That the bank are bailees is, I think, not open to doubt, but that fact leaves undecided the difficult and interesting question: Can those who assert a possessory title to goods but make no claim to the property in them be said still to retain possession after they have entrusted those goods to a bailee to hold on their behalf? There is no direct English authority which decides the point, much less one binding on your Lordships. The nearest, I suppose, is Ancona v. Rogers,⁶⁹ a decision on the words "apparent possession" contained in section 1 of the Bills of Sale Act, 1854 (17 & 18 Vict. c. 36). In delivering the judgment of the court in that case Mellish L.J. said⁷⁰: "There is no doubt that a bailor, who has delivered goods to a bailee to keep them on account of the bailor, may still treat the goods as being in his own possession, and can maintain trespass against a wrongdoer who interferes with them. It was argued, however, that this was a mere legal or constructive possession of the goods and that in the Bills of Sale Act the word 'possession' was used in a popular sense and meant actual or manual possession. We do not agree with this argument. It seems to us that goods which have been delivered to a bailee to keep for the bailor, such as a gentleman's plate delivered to his banker, or his furniture warehoused at the pantechnicon, would, in a popular sense, as well as in a legal sense, be said to be still in his possession." It is urged, however, that these "dicta" are "obiter," and wrong; that, in any case, the judgment was not concerned with "possession" as opposed to property and that the true view is that the rule applies only in a case where the bailor has the property and the bailee has the possession. In such a case it is maintained that the bailor can sue in right of his property but that an action in right of possession belongs to the bailee only. This contention may be true where the bailor has no right to demand an immediate return of the article at his will, but the better opinion is, I think, that where the bailor can at any moment demand the return of the object bailed, he still has possession. See Pollock and Wright on Possession (1888), p. 166; Beal on Bailments (1900), p. 40; and Halsbury's Laws of England, 2nd ed., Vol. I, p. 775, sub tit. Bailment. In each of the authorities referred to the right of the bailor is limited to a case of gratuitous bailment, a requisite which, in my opinion, is fulfilled in the present case. The bank held the bars, without any right of lien, at the will of the Commission.

69 (1876) 1 Ex.D. 285.

70 Ibid. 292.

[1952]		612
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

The Commission being, in my opinion, as I have indicated, still in possession of 51 of the bars, it has to be determined whether they or the bank are entitled to immunity from suit instituted by the respondents. Such an action, it is argued on behalf of the latter, can be brought and determined without in any way impleading the two governments or affecting their rights. It is accepted by both parties that the principles to be considered are those laid down by Lord Atkin in Compania Naviera Vascongado v. The Cristina.⁷¹ In the relevant passage he says, in regard to those principles: "The first is that the courts of a country will not implead a foreign sovereign, that is, they will not by their process make him against his will a party to legal proceedings whether the proceedings involve process against his person or seek to recover from him specific property or damages. The second is that they will not by their process, whether the sovereign is a party to proceedings or not, seize or detain property which is his or of which he is in possession or control." As, in the view which I have expressed, the three governments are in possession of the 51 bars, it is not necessary to inquire what is the exact meaning to be attributed to the word "control." It is enough that they are in possession and an attempt is being made to interfere with that possession.

But it is said that the decision in The Cristina⁷² is not of universal application but applies only to an action in rem and that, in other cases, retention in the hands of the possessor himself is required to bring its principles into force. It is true that the matter then under consideration was a ship and that a decision in respect of a ship is an action in rem and would therefore bind all the world and not the parties only, but the observations of those members of your Lordships' House who sat to decide the case were by no means confined to actions in rem. They extended to the case of all chattels: see, in particular, the observations of Lords Maugham and Wright. The principle, in my opinion, is a wider one and embraces any chattel, whether the subject of an action in rem or not. No doubt the doctrine should, as Lord Maugham said in The Cristina,⁷³ be narrowly watched, but it has always to be remembered that governments must act through servants or agents and often through bailees, and it would destroy the efficacy of the doctrine if it were strictly confined to personal possession.

71 [1938] A.C. 485, 490.

72 [1938] A.C. 485.

73 Ibid. 518.

[1952]		613
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

I do not myself find any great enlightenment in the American cases on the subject under discussion. They all, I think, turn on who was in possession at a particular time and depend on their own facts.

So far I have dealt with the claim of the respondents to recover the gold bars themselves and with their claim to an injunction. Sir Andrew Clark, however, on their behalf, expressed himself as willing to give up that claim and rest on his right to recover damages for conversion. Such a claim, he maintained, neither impleaded the sovereigns nor involved a seizure of their property. It was merely a claim for damages against the bank. But if the bank were ordered to pay damages to the respondents, Messrs. Dollfus Mieg et Cie.'s right of property would in law be transferred to them on their paying the damages awarded, and it would follow that, if the Tripartite Commission required the bank to return the bars, the bank could refuse to do so, relying on the title acquired by the payment of the damages, and thereby compel the governments either to bring an action or forgo their rights. The object of the rule, it has been said, is that a sovereign may not be compelled either to submit to a foreign jurisdiction or be compelled to go to law to obtain or preserve his right. Such an object might be defeated if this action were permitted to proceed since the bank is in possession and could refuse to surrender the bars and so compel the governments, if so minded, to take action in an endeavour to recover them.

One other point on the question of substance has been mentioned. It was suggested that immunity would only be granted where the country claiming it, in itself, granted reciprocal immunity to other nations. I can find no authority for this proposition, and in any case it was not taken either before Jenkins J. or in the Court of Appeal, and no material of fact has therefore been presented to your Lordships to enable them to deal with the argument or to ascertain whether the two governments concerned grant reciprocal immunity or not. In my view, the argument in any case is not established. The question is, what is the law of nations by which civilized nations in general are bound, not how two individual nations may treat one another. See per Lord Maugham in The Cristina.⁷³

I would only add that, in my opinion, it might have been possible for the Court of Appeal to refuse to stay the action and allow it to proceed against the bank, and in the course of that

73 [1938] A.C. 485, 518.

[1952]		614
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Porter.

proceeding to ascertain the true relationship between the bank and the Tripartite Commission. If, as a result of those proceedings, it should have been held that the Commission was in possession or control of the gold bars, the claim to immunity would have succeeded and the action against the bank would have failed. But, in fact, a different course was taken. The three governments, whose interest it was contended took away the jurisdiction of the court to hear the case, applied to your Lordships' House either to be permitted to attend and argue the case before your Lordships or to be added as parties. On this application they were given leave to be added in order that they might enter a conditional appearance and claim immunity from the jurisdiction of the courts of this country to deal with the matter. The two governments concerned then applied to Romer J. to be added. They were given leave and were so added. Thereupon they filed further evidence and again applied that the action might be stayed. Both the learned judge and the Court of Appeal refused to stay, and from that refusal the two governments appeal to your Lordships' House. Had the action continued to be carried on against the bank only, it might have been possible to ascertain all the facts more fully and accurately, and if it was found, after further steps had been taken, that the bank had rightfully claimed immunity on the ground that the foreign governments would be implicated or their rights invaded, the action could then have been stayed. As it is, the two governments are parties, and it is therefore incumbent on your Lordships here and now to stay or refuse to stay the action. In these circumstances and on the material facts before your Lordships, I would agree with the noble Earl on the woolsack in staying the action as to the 51 bars but allowing it to proceed in respect of the 13.

LORD OAKSEY. My Lords, I agree.

LORD RADCLIFFE. My Lords, I do not think that the difficulty of this case lies in deciding what relation the Bank of England bore to the Tripartite Commission in respect of the 64 gold bars that were delivered to the bank. No doubt it was difficult to establish the facts upon which this relation depended, primarily because the bank themselves seem to have known less than they might have about the real nature of their own proceedings. It was this uncertainty that led the Court of Appeal to take what I regard as a mistaken view of the facts. But when those facts

[1952]		615
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

are finally established and can be surveyed in their proper setting it seems to me reasonably clear that both at the date of the issue of the writ and at the dates of the launching of the relevant motions in this action the bank were holding such of the bars as they then retained as mere depositees on behalf of the Commission. These bars were held for the time being in specie to the order of the Commission, subject to the stipulation that instructions placing them at the disposal of the Bank of France were not to be given unless accompanied by instructions from that bank to ship at once from London. This deposit amounted to no more than a bailment at will.

I think that this view of the facts is the one which in substance commends itself to all your Lordships, and I do not think it necessary to say anything more about it. It follows that I do not attach to the disposal of the 13 bars of the original consignment which disappeared from the vault the same significance as was attached to it by all the members of the Court of Appeal. That incident can mean only one of two things. Either the fact that it happened at all is itself such cogent evidence that the bars were not held in specie that it ought to outweigh all other evidence that they were, or the removal of the bars was merely something which ought not to have been done and the doing of which was contrary to the arrangement which the bank had come to. If the latter was all that the incident amounted to it is of no importance for our purpose. In my opinion the latter was all that the incident did amount to.

The important and difficult question is whether, on that basis of fact, anything ought to be done to arrest the plaintiffs' action. For the time being I will confine myself to the action so far as it relates to the 51 gold bars which are now all that the bank retain. Does that action also offend against the rule of immunity of independent sovereigns which forms part of our municipal law? I treat the Commission as no more than three sovereigns joined in a particular relation. It is, of course, beyond question that there is some such rule and that it has been expounded or applied in a number of decisions in our courts. But I do not feel confident that it can be, or that it ought to be, expressed in any very precise language: and I do not at all share the view, which rather dominated the argument of this appeal, that a definition of the rule has now become, as it were, graven on tables of stone and that those tables consist of the speech of Lord Atkin in Compania Naviera Vascongado v. The Cristina.⁷⁴ For myself I think that

74 [1938] A.C. 485.

[1952]		616
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

the range and purpose of our rule is expressed as well as may be in Dicey's Conflict of Laws, 6th ed., p. 131: "The court has ... no jurisdiction to entertain an action or proceeding against (1) any foreign sovereign. ... Any action or proceeding against the property of [a foreign sovereign] is an action or proceeding against such person." This is the rule which Scrutton L.J. quoted with approval in The Jupiter.⁷⁵ The rule so expressed leaves open the question what is an action "against the property of a foreign sovereign" in any particular case. But I am afraid that the abundant argument that we had in this case as to the application of the words "of which he is in possession or control," as used by Lord Atkin,⁷⁶ shows that even his summary leaves open as many questions as it settles. In fact this is not a field in which the law can be set at rest by any neat combination of words. But the rule as expressed in Dicey has this advantage: it does make clear that the property of a sovereign enjoys no immunity in legal proceedings except so far as those proceedings amount in one way or another to a suit against the sovereign.

If the sovereign is actually named as a party to a suit the proceedings identify themselves. Even then I think that it is going too far to say that such a suit must necessarily be arrested. It may depend on the purpose for which the sovereign is made a party. But certainly a special difficulty begins when he is not actually named but the suit is one which may result in a judgment or order that will affect his interest in some piece of property. Even to say that much begs one important question, for it assumes that he has a valid interest in that property: whereas a stay of proceedings on the ground of immunity has normally to be granted or refused at a stage in the action when interests are claimed but not established, and indeed to require him to establish his interest before the court (which may involve the court's denial of his claim) is to do the very thing which the general principle requires that our courts should not do. The Parlement Belge⁷⁷ is a leading case on this branch of the law, but it does not offer much help on the particular aspect of it with which your Lordships are now concerned because it was common ground throughout the case that the ship was the public property of the Kingdom of Belgium. What the plaintiffs objected to in that case was the staying of an action in rem about the ship having regard to the uses that she was put to by her sovereign owner. Once it was settled that those uses did

75 [1924] P. 236, 243.

76 [1938] A.C. 485, 490.

77 5 P.D. 197.

[1952]		617
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

not disqualify the owner from taking advantage of the general rule, it was easy to show that the court's order for the arrest of the ship, if made, would be in substance an order against the sovereign.

But the principle recognized in The Parlement Belge⁷⁷ has been carried much further since then. It has been applied even when the sovereign had not claimed, let alone proved, that he was the owner of the property that was the subject of the action. It has been regarded as sufficient to stay the proceedings (1) that he had de facto possession of the property (The Gagara,⁷⁸ The Jupiter,⁷⁹ The Cristina⁸⁰ or such rights of direction and control, without possession, as arise from requisitioning (The Broadmayne⁸¹, and (2) that the nature of the proceedings is such that, if successful, they would result in an order of the court affecting that possession or those other rights. The Cristina⁸² is, of course, a decision of this House: in it, the other decisions that I have referred to, all unanimous decisions of Courts of Appeal, were reviewed and, as I think, approved: in my opinion they constitute a principle wide enough in application to be conclusive of the present appeal.

The special feature that we have to deal with is that the plaintiffs' action is not an action in rem, it does not come from the Court of Admiralty, it is an action for trover or detinue the basis of which is our common law of tort. Decisions of our courts as to how to apply the principle of immunity to such a case are curiously lacking. Apart from the Admiralty cases, of which I have noticed a few, the other line of authority is to be traced in decisions of the Court of Chancery. These decisions depend essentially on the existence of a trust fund or other item of trust property within the area of jurisdiction of the Chancery courts: given the trust fund or property there is a trust to be administered by the court and it was evidently the belief of the judges who were responsible for the equity jurisdiction that they had a responsibility for administering and in due course determining the rights to such property, even though a foreign sovereign might be known to be a possible or certain claimant to an interest in it. I do not see any other explanation of Lord Hatherley's decision in Larivière v. Morgan⁸³ that does not to some extent threaten the principle that has been well established

77 5 P.D. 197.

78 [1919] P. 95.

79 [1924] P. 236.

80 [1938] A.C. 485.

81 [1916] P. 64.

82 [1938] A.C. 485.

83 (1872) L.R. 7 Ch. 550.

[1952]		618
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

in the Admiralty cases; and it is in effect the explanation of it that was given by Lord Cairns when the same case was before your Lordships' House (Morgan v. Larivière⁸⁴. Perhaps there is no real analogy between the actual possession or rights that existed in the Admiralty cases and the possible claim or interest envisaged by the Chancery cases. Perhaps it is enough to say that the Courts of Chancery treated trust property within their jurisdiction as a domestic responsibility to an extent that would not have commended itself to the Court of Admiralty when dealing with a ship that was found to be within the reach of its process.

The Chancery decisions are well known and of long standing, and it is, I think, easier to treat them as a separate branch of our general law of sovereign immunity or as an exception from the main principle than to accept the cogency of Lord Langdale's explanation in Duke of Brunswick v. King of Hanover⁸⁵ that to make a foreign sovereign a party to administration proceedings does not "compel" him to take part in them, for it merely gives him "an opportunity to come in to ... establish his interest." But I do not think that this line of authority is of any direct relevance in this appeal. Here there is no trust property and no trust. In my view the Admiralty decisions and the principles to be extracted from them have much more bearing upon the present case.

Now what is the situation of fact here and what does this suit seek to get the court to do? We know that the bars of gold entered this country from the possession of the Tripartite Commission and that the bank hold them merely to the order and at the disposition of that Commission. In those circumstances I regard the gold as in the possession of the Commission for the purpose of the rule that we are considering. The property of a sovereign State, which is an abstraction, must be in the physical possession of some actual person, and I do not see any distinction of substance in a matter of this kind between the possession of a servant of the State and the possession of its bailee when the bailment is of such a nature as that of the bank in this case. Indeed, I think that the Commission's "possession and control" of the gold bars in the hands of the bank amounted to a form of property more substantial than that which H.M. Government acquired by requisitioning the Broadmayne. Yet the Broadmayne

84 (1875) L.R. 7 H.L. 423, 430.

85 (1845) 6 Beav. 1, 39.

[1952]		619
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

was held to be exempt from arrest by virtue of His Majesty's immunity.⁸⁶

The suit began as a claim in detinue. That means that the court was going to be asked or at any rate could be asked to make an order upon the bank to hand over the bars to the plaintiffs. Such an order would unquestionably interfere with the Commission's possession of them and compel the Commission, if they wished to recover possession, to come to court and try to get them back from the plaintiffs. I cannot feel any doubt that such a suit offends against the principle of sovereign immunity. But then the plaintiffs through their counsel have said that they are willing, if necessary, to drop their claim in detinue and proceed with their action on the basis that it is a claim for conversion only, with the result that they will seek to obtain a judgment for damages against the bank and no more. They say that no principle of immunity can be offended merely by mulcting the bailees in damages. How far this argument goes I am not clear. very servant who insists on his master's title to property in his physical possession is liable to be sued for damages for conversion by the rightful owner, and there would be no such thing as the immunity of a foreign sovereign from suits "against his movable property" in this country except suits in rem against ships. I have found much more difficulty than the learned judges in the courts below in dealing with this point. They felt it to be an obvious proposition that if the court could not make a direct order upon the bank to hand over the bars (and I agree that it could not) it was impossible that it could have any jurisdiction to award damages for a failure to do that very thing. I do not feel altogether satisfied that this is convincing logic: but when I consider the real nature of a claim for damages for conversion I come to the same conclusion. Subject to the payment of costs and special damages (if there are any) an action for damages for conversion can always be stayed if the defendant offers to hand over the property in dispute. In that sense a suit for damages for conversion is an attempt to use the court's process to interfere with the existing possession of the chattel the title to which is in dispute. If the defendant continues to resist and damages are awarded against him he may keep the chattel and pay the damages; but if he does he becomes entitled, if he is a bailee, to set up the plaintiffs' title to the goods, which he has thus paid for, against his own bailor. In other words the court's judgment in the personal action against him would materially affect the

86 [1916] P. 64.

[1952]		620
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Radcliffe.

existing right of his bailor in respect of the possession and disposal of the chattel. The result of a judgment in damages has thus some analogy to a sale by the court of a chattel which is in the possession or under the requisition of a foreign sovereign: if the sale cannot be ordered in the one case because to order it would be to use the court's process against the sovereign, then the judgment cannot be rendered in the other. It is for that reason that I am of opinion that the action must be stayed so far as it seeks to impose liability upon the bank in respect of the 51 gold bars which they still retain.

This reasoning does not apply to the 13 bars which have been disposed of. This is an accidental feature of the case which can only be attributed to the bank's own error. But your Lordships must, I think, take the facts as you find them, and, so far as they are known to us, no reason appears why an action against the bank for damages for conversion of these 13 bars should be regarded as trenching on the sovereign immunity of the governments which the Commission represent. I agree, therefore, that, as to these 13 bars, the action ought to be allowed to proceed.

LORD TUCKER. My Lords, there can be no question but that a foreign sovereign who is cited to appear in the courts of this country either directly, as where he is made a party, or indirectly, as in the case of a writ in rem against a ship where, in the absence of appearance, a judgment in rem good against all the world will result, must take the earliest opportunity to challenge the jurisdiction by entering a conditional appearance and moving to set aside the writ. Where, however, as in the present case, a properly constituted action disclosing a cause of action against a defendant within the jurisdiction is launched, the foreign sovereign cannot be prejudiced by the defendant entering an appearance and defending the action. As soon, however, as it is made to appear to the court that by such action it is being asked to exercise its territorial jurisdiction over property in the possession or under the control of a foreign sovereign the court will decline jurisdiction and stay the proceedings. Before this stage is reached it will often be necessary for discovery to be had and the present case is, in my opinion, one in which discovery was much to be desired. I mention this as the procedure adopted in this case should not, in my opinion, be regarded as a precedent to be followed in future cases of a like nature. Your Lordships, however, having been supplied with a copy of the bank account

[1952]		621
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Tucker.

and certain further correspondence, are now fully seized of all the materials necessary to a proper decision on the present appeal.

My Lords, I agree that the relationship between the Bank of England and the three governments created by the correspondence and the delivery of the 64 gold bars was that of bailee and bailors, the bailment being for safe custody and immediately determinable at the will of the bailors. I further agree that as regards the 51 bars remaining in the hands of the bank this relationship still exists unaffected by the disposal of the 13 bars which were sold or by any errors by the bank's subordinate officials in the manner in which the remaining bars were dealt with. The case - so far as the 51 bars are concerned - is accordingly restored to the position in which it was when it came before Jenkins J., when it was assumed by both sides that the relationship was that of bailor and bailee. On this basis both Somervell and Cohen L.JJ. would have reached the same conclusion as Jenkins J.

There has, I think, been a tendency in argument on this appeal to approach Lord Atkin's second proposition in Compania Naviera Vascongado v. The Cristina,⁸⁷ which was not necessary to the actual decision of that case, as if it was a statutory definition limiting the circumstances in which the courts of this country would refuse jurisdiction in cases where a foreign sovereign is not directly or indirectly impleaded. I think that Lord Atkin's language must be considered and interpreted in the light of previous authorities and of the speeches of the other members of your Lordships' House in The Cristina⁸⁸ and of Lord Atkin himself in Government of the Republic of Spain v. The Arantzazu Mendi.⁸⁹ The principle being based on the avoidance of the exercise of a jurisdiction which would offend the dignity or impinge on the independence of a foreign sovereign, I cannot think it would be right to place upon the word "possession" as used by Lord Atkin any specially narrow or restricted meaning or to confine it to actual physical possession by the sovereign himself or his servants. The particular subject matter involved in this case could hardly have been placed anywhere else than in a bank save possibly in the vaults of an embassy. Such considerations as this, viewed in the light of the principle underlying the doctrine of immunity, lead me to the conclusion that in this context the word "possession" must include the right to immediate possession of chattels which have been in the actual

87 [1938] A.C. 485, 490.

88 [1938] A.C. 485.

89 [1939] A.C. 256, 265.

[1952]		622
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Tucker.

physical possession of a foreign sovereign or his servants and are deposited for safe custody with a bailee in this country.

The part of the case which has given me most difficulty, but as to which none of the judges in the courts below appear to have felt any doubt, is that which relates to the precise form of relief for which the plaintiffs are now asking, viz., damages only for detinue or conversion based on the failure to return the bars on demand. The plaintiffs have now abandoned all claim to the return of the specific goods or for an injunction and are content to rely only on the claim for damages. It is said that this relief can be afforded to the plaintiffs without in any way affecting the rights of the three governments to possession of the gold bars, and that the doctrine of immunity was designed for the benefit of foreign sovereigns and not for the protection of persons resident within the jurisdiction who choose to enter into contractual relations with foreign governments. Sharing as I do the disinclination expressed by Lord Maugham in The Cristina⁹⁰ and by the Master of the Rolls in the present case⁹¹ to extend the doctrine of immunity beyond the limits already recognized, this is an argument which has seemed to me to require anxious consideration. I have, however, been persuaded to the view that - attractive as this submission is - to accede to it would really be an infringement of the principle of immunity. A defendant who satisfies a judgment in damages representing the value of goods detained or damages for their conversion acquires thereby such title to the goods as was vested in the plaintiff whose judgment has been satisfied. Such a judgment in the present case would accordingly require the bank to do that which would materially alter the rights of the three governments vis-à-vis the bank to the gold bars and enable the bank in its own right to do that which it otherwise could not have done, i.e., to contest its bailor's title. The fact that any such action by the bank in the present case might be highly improbable cannot affect the question of principle involved, and it seems to me that a judgment which would have this effect must be an infringement of the foreign sovereign's right to immediate possession of the bailed chattels and thus amount to a violation of the right to immunity.

As to the 13 gold bars which the bank has sold wholly different considerations apply. It is conceded that the doctrine of immunity would not extend to afford any protection to the purchasers of the bars. The bank, by its own act, has put an

90 [1938] A.C. 485, 515-7.

91 [1950] Ch. 333, 347-8.

[1952]		623
A.C.	UNITED STATES OF AMERICA AND REPUBLIC OF FRANCE v. DOLLFUS MIEG ET CIE. S.A. AND BANK OF ENGLAND. (H.L.(E.))	Lord Tucker.

end to the bailment which alone afforded the protective umbrella of immunity. No case has therefore been made out for staying the plaintiffs' action in so far as it is confined to a claim for damages for conversion of the 13 bars sold by the bank since the issue of the writ - the bank being content to treat such sale as if it had occurred before action brought and not requiring the plaintiffs to issue a fresh writ.

For the reasons previously stated I would stay all further proceedings with regard to the remaining 51 bars.

My Lords, save that I prefer to base myself on the three governments' right to immediate possession rather than on their control of the bars I find myself in complete agreement with the reasoning of the judgment of Jenkins J.

Appeal allowed.

Solicitors: Treasury Solicitor; Freshfields; Slaughter & May.