Trendtex Trading v Bank of Nigeria [1977] 1 QB 529
FINANCE – SOVEREIGN IMMUNITY – STATE OWNED BANK – ORDINARY COMMERCIAL TRANSACTIONS
Facts
The Central Bank of issued an irrevocable letter of credit to pay for quantities of cement ordered by the Nigerian Ministry of Defence. The credit was, properly, transferred to the plaintiffs who shipped the cement to Nigeria. Because of complications at port caused by substantial over-ordering of cement, the plaintiffs' vessels were delayed prior to discharge; the Bank refused to make payments under the letter of credit upon the plaintiffs applying for the same in respect of demurrage. Upon the plaintiffs issuing proceedings for breach and repudiation of the letter of credit, the Bank contended successfully before Donaldson J. that it was entitled to sovereign immunity.
Issue
The Court of Appeal were required to consider whether the Bank enjoyed governmental status, as an arm of the government of Nigeria, and if so whether the fact that the transactions in question were of an ordinary commercial nature precluded the Bank from pleading sovereign immunity from the suit of the plaintiffs.
Held
The Court of Appeal, in allowing the plaintiffs' appeal, held that the Bank was not entitled to governmental status, as it could not be described as an “alter ego” of the state; Moreover, and in line with contemporary trends in international law, sovereign immunity should not extend to commercial transactions, and in that context no distinction could be drawn between commercial and “governmental” transactions until the law was altered by act of Parliament or by decision of the House of Lords.
Updated 20 March 2026
This article accurately summarises the Court of Appeal’s decision in Trendtex Trading Corporation v Central Bank of Nigeria [1977] QB 529. The case remains good law as an important pre-statutory authority on sovereign immunity and the restrictive theory of immunity in respect of commercial transactions.
However, readers should note that the legislative development anticipated by the Court of Appeal has long since occurred. The State Immunity Act 1978 now governs sovereign immunity in English law. Under that Act, foreign states are broadly immune from the jurisdiction of UK courts, but section 3 provides that a state is not immune in proceedings relating to a commercial transaction entered into by that state. The Act therefore substantially codifies the restrictive approach endorsed in Trendtex. The 1978 Act remains in force and has not been materially amended in ways that would affect the core principles discussed in the article.
The article also touches on the incorporation of customary international law into English law, on which Lord Denning MR expressed influential but contested views in this case. That debate has continued in subsequent case law and academic commentary, and students should be aware that the precise relationship between customary international law and English domestic law remains a nuanced area.
There is also a minor factual omission in the article as published: the name of the defendant is given inconsistently — it is properly the Central Bank of Nigeria (the word ‘Central’ appears to have been dropped from the Facts section).
