When the State Sovereign Immunity Rule Meets Sovereign Wealth Funds in the Post Financial Crisis Era: Is There Still a Black Hole in International Law?

Abstract

This article examines the state sovereign immunity rule in the context of a rising number of sovereign wealth funds and their ever-increasing value of cross-border commercial activities in the aftermath of the latest global financial crisis. The concept of sovereignty and the rule of sovereignty remain in a state of flux while new actors such as sovereign wealth funds are participating in global commercial activities in a nontransparent and politically motivated manner. Accordingly, states may pursue strategic foreign policy objectives through these newer investment arms in an unconventional way, thereby being deeply involved in the political-economic arena and distorting the existing concepts of international law. This article posits that there is an international law black hole in which sovereign wealth funds have come to engage in commercial activities as well as exercise the public functions traditionally associated with states (acts jure imperii). The doctrine of restrictive immunity has come into question and the bulk of local court decisions have offered little clear guidance. Against this backdrop three interconnected perspectives are then discussed with reference to emerging economies like China: the immunity rule, the principle of sovereignty, and the balance of power in globalization.