Jurisdictional Immunity of a Foreign State: a Commercial Lease is Not a Sovereign Act

Imagine the scene: you are the owner of a fine building in Falaise, in the Calvados department. You sign a commercial lease with a tourist agency which turns out to be an emanation of a foreign state. Everything goes well for years, until one day the tenant stops paying. You start eviction proceedings, and then, surprise: the foreign state hides behind its jurisdictional immunity, claiming that the French courts cannot judge it. What should you do? This question was asked by a landlord from Lisieux in 1973, and the answer given by the French Supreme Court has become an essential reference.

What this decision says is that a foreign state which acts like any private individual cannot hide behind its sovereignty. In plain terms, when it leases premises for commercial activities – like a tourist agency – it is subject to ordinary law. French judges can therefore decide the dispute.

But what exactly does this change for you, landlord or tenant? Let us dive into the details of this case, which, although more than 50 years old, remains highly relevant.

The facts: a story like any other

In 1964, the Consul General of Spain in Paris, acting on behalf of the Spanish Directorate General of Tourism, signed a commercial lease for premises located in Rue Saint-Honoré. The owner, a certain Mr X (whom we shall call Mr Dupuis, for convenience), leased to Spain offices intended to promote Spanish tourism. The contract was a standard lease subject to French law. For several years, everything ran smoothly. But in 1969, Mr Dupuis decided to give notice to refuse renewal of the lease, without compensation. He sought the eviction of Spain.

Spain responded by invoking its jurisdictional immunity: as a sovereign state, it considered that the French courts could not evict it. The landlord found himself stuck. The court of first instance (the Tribunal de grande instance de Paris) ruled in favour of the landlord, but the Paris Court of Appeal, in a judgment of 25 February 1971, reversed the decision: it recognised Spain's immunity on the ground that the lease was intended for a public service (the promotion of tourism).

Mr Dupuis appealed to the Supreme Court. The French Supreme Court, in its judgment of 17 January 1973, quashed the Court of Appeal's decision. It held that the lease, even if it ultimately served a public service, had been concluded according to the rules of private law. Spain had not acted as a sovereign state, but as any commercial tenant would. It therefore did not deserve immunity.

The court's reasoning — analysed

The core of the Supreme Court's reasoning lies in one sentence: "Jurisdictional immunity cannot be granted to a foreign state when that state, having contracted in accordance with the formal and substantive rules of private law, did not, at the time of signing the contract giving rise to the dispute, perform an act of public authority, nor act in the interest of a public service, but on the contrary behaved as any private person would have done."

In other words, to benefit from immunity (the privilege of not being judged by the courts of another country), the foreign state must prove that it was acting within the scope of its sovereignty (what is called an act of public authority). Here, the leasing of offices for a tourist agency was an act of private management, not an act of government. Spain signed a private law contract, subject to French law, and must bear the consequences.

The Court specifies that even if the activity of the tourist agency subsequently took on a public service character, that does not change anything: at the time of signing, Spain had not indicated this intention by a special clause. The lease was therefore an ordinary private contract.

This reasoning fits into a worldwide jurisprudential evolution: a distinction is made between the act jure imperii (sovereign act) and the act jure gestionis (act of management). Only the former benefit from immunity. France, through this judgment, joins the trend of Western countries that limit state immunity for commercial activities.

What this changes for you — practically

For landlords: if you lease premises to an embassy, consulate, or any foreign public body, you can now rest assured. In the event of a dispute (non-payment, disturbance of enjoyment, refusal of renewal), you can bring proceedings before the French courts. For example, if a country's embassy leases a flat for its ambassador in Lisieux and stops paying rent, you can seek eviction before the tribunal judiciaire of Caen.

For tenants: if you are a private individual and you rent property from a foreign state (for example, you are a tenant of a dwelling belonging to a foreign country), you also benefit from this case law. The foreign state cannot evict you without respecting French procedure.

Caution, however: immunity may still be invoked for sovereign acts (such as the purchase of an embassy itself, or military supply contracts). But for a simple commercial lease, it is now clear.

undefined, I have encountered cases where a landlord in Falaise had leased premises to a tourist office of a neighbouring country. When the office stopped paying, the landlord obtained an eviction order in less than a year, thanks to this judgment.

Four tips to avoid this type of dispute

• Draft a written lease in French, subject to French law. Specify that the tenant waives any jurisdictional immunity. Even though the case law is clear, an explicit clause avoids any challenge.
• Check the signatory's authority. Ensure that the person signing the lease has the power to bind the foreign state. Request a resolution or express mandate.
• Require a guarantee or security. If you lease to a state, ask for a bank guarantee or a substantial deposit (e.g. 6 months' rent). This protects you in case of non-payment.
• Act quickly in the event of a dispute. Do not let arrears drag on. Issue proceedings before the competent court (the court of the property's location) without waiting for the foreign state to leave the premises.

Further reading: related case law and developments

The 1973 judgment has been confirmed subsequently. For example, in a judgment of the French Supreme Court of 14 March 1984 (case État iranien c. Société des grands hôtels), the Court held that the management of a hotel by a foreign state was an act of private management, not a sovereign act. Similarly, the judgment Société Eurodif c. République islamique d'Iran (1983) reiterated that commercial contracts do not benefit from immunity.

Conversely, certain decisions have maintained immunity for acts such as the hiring of a consular agent (act of public service). The general trend is clear: foreign states are treated as private persons for their commercial activities.

What this means for the future: with globalisation, states are increasingly leasing real estate for their consular or tourist services. This case law protects French landlords and secures the rental market.

In practice: what to do

What to do if you are faced with immunity invoked by a foreign state?

1. Do not panic. Immunity is not automatic. Gather the lease and all written exchanges.
2. Consult a lawyer lawyer. A professional can verify whether the act is one of private management or public authority. In Caen, for example, Maître Zakine can help you.
3. Issue proceedings before the competent court. The tribunal judiciaire of Paris is often competent for disputes involving foreign states, but if the property is in Lisieux, it is the court of Caen.
4. Apply for an interim payment. In summary proceedings, you can obtain payment of unpaid rent or eviction, even if the foreign state contests jurisdiction.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →