An act done in exercise of sovereign power in relation to another State or subjects of another State is an Act of State and cannot be questioned by municipal courts. According to Wade and Philips, the term “‘Act of State’ means an act of the Executive as a matter of policy performed in the course of its relations with another State, including its relations with the subjects of that State, unless they are temporarily within the allegiance of the Crown”.
Act of State : How far the State is vicariously liable for the torts of its servants has been discussed in the Chapter of “Vicarious Liability”. The position of the State for ‘Act of State’, for acts harming aliens to which the municipal law does not apply, has been discussed.
In the words of Hidayatullah J. “an Act of State is an exercise of power against an alien and neither intended nor purporting to be legally founded. A defence of this kind does not seek to justify the action with reference to the law but questions the very jurisdiction of the courts to pronounce upon the legality or justice of the action.”
The essentials of an Act of State are
- The act is done by the representative of a State.
- The act is injurious to some other State or its subject.
- The act may be either previously sanctioned or subsequently ratified by the State.
In Buron v. Denman, an action was brought against Captain Denman, a captain in the British Navy, for releasing slaves and burning the slave barracoons owned by the plaintiff on the West Coast of Africa (outside British Dominion). The defendant had no authority to do so but his act was ratified by the British Government. It was held to be an act of State for which no action could lie. The plaintiff, therefore, could not recover anything.
The question has arisen that when a State has reduced its independence, by transferring defence, external affairs and communications to another State, can the controlling State exercise an act of State in relation to the controlled State? It has been held that if by the dependence on a powerful State, essential attributes of sovereignty are not lost, the State can still continue to be an independent/ Sovereign State for the purpose of exercise of an act of State. It was observed by Viscount Finlay in the case Duff Development Co.Ltd. v. Kelantan Government “It is obvious that for sovereignty, there must be certain amount of independence, but it is not the least necessary that for sovereignty, there should be complete independence.
It is quite consistent with sovereignty that the sovereign may in certain respects be dependent upon another power, for instance, the control of foreign affairs may be completely in the hands of a protecting power, and there may be agreements or treaties which limit the powers of the Sovereign even in internal affairs without entailing a loss of the position of a sovereign power.”
In Secretary of State in Council of India v. Kamachee Boye Saheba, the Rajah of Tanjore, who was an independent sovereign, was by virtue of treaties, under the protection of the East India Company. The Rajah died without any male issue and the directors of the Company declared the Raj to have been lapsed to the British Government. The widow of the Rajah Kamache Boye Saheba filed a suit against the East India Company. The Privy Council held that it was an act of State and for such wrong, no Municipal Court of Justice can afford remedy. Lord Kingsdown observed ‘The transactions of independent States between each other are governed by other laws than those which municipal courts administer. Such courts have neither the means of doing what is right nor the power of enforcing any decisions they make.”
There can be no such thing as an Act of State between a sovereign and his own subjects. It was observed in Jahangir v. Secretary of the State for India : “An act of State in respect of which the jurisdiction of the Court is barred must be an act which does not purport to be done under colour of legal title at all, and which must rest for its jurisdiction on consideration of external politics and interstated duties and rights….In dealing with its own subjects, therefore, a Government must defend its action as justified by positive law, and cannot rely on a plea of political expediency which would only justify action in relation to foreign matters to which the law of the land does not extend.”
In Johnstone V. Pedlar, Pedlar, who was an Irishman, became a naturalized American citizen. He again went to Ireland and there he was found guilty of illegal drilling for which he was arrested and the money found with him was confiscated by the police and the act was adopted by the Chief Secretary for Ireland. In a suit by Pedlar against the Chief Commissioner of Police to recover the money seized from his possession, the defence of Act of State was pleaded. The House of Lords gave judgment for Pedlar. This case shows that a resident alien has the same right as a British subject.
In Hardial Singh v. State of Pepsu, the ruler of Nabha made a grant of property known as ‘Malwa House’ at Nabha to the appellant, Hardial Singh. The State of Nabha subsequently came to be merged in Patiala and East Punjab States Union (PEPSU). The State of PEPSU which was formed on 20-8-1948 repudiated the above stated grant, in 1952. In an action challenging the repudiation, the defence of Act of State was taken. The Punjab High Court rejected the Act of State as a defence in this case and accepted the claim of the appellant. It was held that when different States were merged on 20-8-1948 by a covenant amongst their rules and the new State of PEPSU was created by such merger, all the citizens of covenanting States had become the citizens of PEPSU on that date. The act of repudiation of grant in 1952 was an act as regards its own citizens for which the Act of State could not be pleaded.
In State of Saurashtra v. Memon Haji Ismail, on 17-11-1941, the Nawab of Junagarh had gifted some property to Abu Panch, who sold the same to the respondent for Rs. 30,000. After the passing of the Independence Act, 1947, the Nawab of Junagarh became a sovereign but unlike various other rulers of India, did not accede to India. The Nawab of Junagarh then left for Pakistan and there was chaos in the State. At the request of the Nawab’s Council, the administration of Junagarh was taken over by the Government of India on 9-11-1947, and on 14-11-1947, an administrator was appointed to administer the State. In a referendum held in February, 1948, the people there voted in favour of the accession of the State to India. On 21-1-1949, Junagarh State was merged into the United States of Saurashtra.