Judgment
The case came before Vaisey J at first instance who dismissed the claim. That decision was upheld by the Court of Appeal (Lord Evershed MR, Jenkins LJ and Morris LJ). The Government of India then appealed to the House of Lords.
The House of Lords held unanimously that the claim failed. Viscount Simonds gave the lead judgment.
My Lords, I will admit that I was greatly surprised to hear it suggested that the courts of this country would and should entertain a suit by a foreign State to recover a tax.
He summarised the general prohibition at common law, citing various earlier cases on point, including King of Hellenes v Broston (1923) 16 Ll L Rep 190, Re Visser [1928] Ch 877 and Sydney Municipal Council v Bull [1909] 1 KB 7. Having cited the general rule, he then discussed the two alternative grounds upon which counsel for the Government of India was arguing that an exception should be made:
- Firstly, that as India was a republic within the Commonwealth, recognising the Queen as Head of the Commonwealth, it should not be treated in the same way as other wholly foreign countries; and
- Secondly, that the general rule applied to natural persons and personal claims - neither consideration should apply to a company in winding-up, which is required to make provision for all claims made against it.
Viscount Simonds rejected both arguments, describing them as "frail weapons with which to attack a strong fortress". [5] He noted that the general common law had tacit Parliamentary approval in the passing of the Foreign Judgments (Reciprocal Enforcement) Act 1933, section 1(2)(b). [6] He ultimately summarily rejected both arguments.
Lord Keith gave a short concurring judgment, specifically endorsing the recent judgment in Peter Buchanan Ltd v McVey [1954] Ir 89 [7] (unreported at the time).
Lord Somervell also gave a short concurring speech, affirming the general statement of Lord Mansfield CJ in Holman v Johnson (1775) 1 Cowp 341 at 343 that "no country ever takes notice of the revenue laws of another." He then went on to state that "after considerable research no case of any country could be found in which taxes due to State A had been enforced in the courts of State B."
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