In today’s global marketplace it is common for States to become involved in various commercial activities through State-owned enterprises. National practices regarding sovereign immunity are so diverse that formulating rules of universal application is a very difficult task. That task is even more complex when State-owned enterprises are involved in international business transactions. The purpose of this chapter is to highlight recent trends and issues in the area of sovereign immunity that are frequently encountered in international arbitration.
II. The State View of Immunity
State practice suggests that whether a State is seeking immunity from jurisdiction or from execution against State-owned property, the State and its wholly owned or controlled enterprises consider themselves to be functionally the same, so that the activities of State enterprises are considered to be carried out by the State in its exercise of sovereign authority. This view is consistent with the view of the United Nations International Law Commission (ILC), which has made relentless efforts to codify the universally acceptable rules on State jurisdictional immunity over the last two decades or so.