Legal Definitions - restrictive principle of sovereign immunity

The restrictive principle of sovereign immunity is a legal rule that limits when a foreign country can be sued in the courts of another nation. Historically, countries were largely immune from lawsuits in foreign courts, regardless of the nature of their actions. However, under the restrictive principle, this broad immunity is "restricted." A foreign nation is protected from lawsuits only when the claims arise from its public, governmental acts. It does not receive immunity for claims stemming from its commercial or private activities, meaning it can be sued in those specific circumstances.

Here are some examples to illustrate this principle:

• Commercial Contract Dispute: Imagine a foreign government decides to build a new embassy in another country and contracts with a local construction company for the project. If the foreign government then refuses to pay the construction company after the work is completed, the company might sue the foreign government in the local courts for breach of contract. Under the restrictive principle, the foreign government would likely not be immune from this lawsuit because entering into a construction contract for a building, even an embassy, is considered a commercial activity, not a core public governmental function that inherently requires immunity.

• State-Owned Enterprise Operating Commercially: Consider a national oil company that is wholly owned and operated by a foreign government. This company actively drills for oil, refines it, and sells it on the international market, much like any private oil corporation. If this state-owned oil company enters into a contract to sell oil to a private distributor and then fails to deliver the agreed-upon quantity, the distributor might sue the foreign government (through its oil company) in a foreign court. The restrictive principle would likely apply here, meaning the foreign government would probably not be immune because operating a commercial oil business is a private or commercial activity, not a public governmental act.

• Property Rental Dispute: Suppose a foreign government owns an apartment building in another country and rents out units to private citizens to generate income, similar to a private landlord. If a tenant sues the foreign government for failing to maintain the property, leading to significant damage to their belongings, the foreign government would likely not be protected by sovereign immunity. Managing and renting out commercial or residential property for profit is considered a commercial activity, not a public governmental function, and therefore the foreign government could be sued.