Absolute theory is following by the English and Australian court in the 1970s. The absolute theory applied in the case of The Porto Alexander  P 30 and Republic of China  QWN 5 which stated that foreign state is not allow to be sue directly or indirectly, it was need not to see the nature of the act or transaction which was the subject matter of the suit.
Restrictive theory is formed because of the growth of state intervention in commercial matters. This theory also implies that a foreign state and instrumentalities are not as regards of transactions that are governmental in character. It is also part of common law which was adopted by the House of Lords in I Congreso del Partido  1 AC 244.
The restrictive theory adopted by Australia, in the Foreign States Immunities Act 1985 (Cth) (hereinafter referred to as FSIA 1985). This act will only take into effect after the commencement then the statute only applies to transactions or events.The general rule on state immunity is stated in section 9 FSIA 1985 that a foreign state is immune from the jurisdiction of the courts of Australia.The persons who having or entitled to state immunity is the Head of State, territory or unit and executive government.The FSIA 1985(Cth) applies to visiting forces in Australia, on events occurring on or after 1 April 1986. Previously the law in immunity could under some circumstances be claim even foreign was not directly .In United States and Fance v Dollfus Miegetcie and the Bank of England  AC 582.
Exeptions from immunity
Immunity is entitled to the foreign state entity, but s 9 FSIA 1985 provided some exceptions from immunity. There are three exceptions namely by submission, commercial transactions, and proceedings in tort, property and company law.
State immunity may be waived by submission. The entity or person instituting proceedings in a court in Australian or proceedings other than for the purpose of asserting immunity, making an application for costs, or intervening for the purpose of asserting an interest in property. The effect of submission can be undone when the person commencent that state was reasonable ignorant of the immunity and a such the same without unreasonable delay, even after the procedural step has taken place submission can also be done by agreement, either make it advance or during the proceeding. An entity entitled to state immunity may also be bound by an arbitration agreement. In addition, any person who has a authority to submit to the jurisdiction of Australian courts under the law of foreign state is also confer of death of authority on the head of states in Australian an the person who has entered into an contract with the authority of that states in pursuant with s 10(11) FSIA 1985.
Section 11(1) FSIA stated that a foreign state is not immune in a proceeding in relation to a commercial transaction unless all parties are government, or have agree to immunity, or the proceeding is concerning a payment in respect of a grant, a scholarship, a pension, or a payment similar.
The definition of ‘commercial transaction’ in s 10(3) is very broad. It covers any commercial, trading, business, professional or industrial or like activity, including specifically:
A contract for the supply of goods or services;
An agreement for a loan or some other transaction for or in respect of the provision of finance; and
A guarantee or indemnity in respect of a financial obligation.
Section 12 of FSLA 1985 provides contract make in the respect of employment. Immunity is denied in respect of such contract make in Australian or to be perform in Australian unless at the time of entry into the contract, the employee was a citizen or resident of the foreign states, or the contract excluded jurisdiction permitted by Australian law, or the employee is a diplomatic or consular official of the foreign state who was not a citizen of Australian during the making of the contract.
Proceedings in tort, property and company law
Section 13 FSIA 1985 states that a foreign state entity cannot claim immunity based on personal injury or property damage done by acts or omissions in Australian. The act also reaffirms the common law position in relation to property, where the foreign state entity must submit to the jurisdiction of Australian courts in respect of its ownership, possession or use of immorable property situated in Australian.
Foreign state is not immune in a proceeding regarding interest which is on a trust or by way of gift or succession.
Services of process
Unless the foreign State entity has agreed to a particular mode of service upon it, service of process must be affected by delivering it to the Federal Attorney General for transmission to the equivalent department of the foreign State concerned. The rules of the court out of which the process issued in relation to service out of the jurisdiction must also be complied with. Other services of the process are ineffective, unless the foreign State entity waives the objection by entering an unconditional appearance. For there to be a waiver of objection for these purposes, the State must have conducted itself in such a way as to indicate that it does not challenge the jurisdiction of the court on the grounds of ineffective service as per Robinson v Kuwait Liaison Office145 ALR 68 There is a problem if there has been a disagreement of diplomatic relations. In that case, it would seem, service may be impossible as per Westminister Country Council v Islamic Republic of Iran 3 All ER 284
Section 7 FSIA 1985 states that unless the court is satisfied that the service has been effected in accordance with the Acts, no default judgment can be entered into. A default judgment cannot be enforced until two months after it has been served on the State entity in accordance with Section 28 FSIA 1985.
The court may make lawfully order, where immunity does not apply. The issue of immunity must need to consider, so it may come into enforcement. Under s 30 FSIA 1985 states the general rule that the property of a foreign state is not available for the carrying out the judgment, order or arbitration award or, in Admiralty proceedings, for the arrest, detention or sale of the property. Nevertheless, execution may be imposed against the property of bodies in the following matters.
Under the law of state, immunity from execution could be taking away by the head of the state’s diplomatic mission in Australian or person who has authority. Previously, the state has submitted to the jurisdiction of the court concerning to the dispute. It does not mean that execution on the resulting judgment waiver of immunity.
Immunity from execution may waived by agreement. Sometimes the waiver may be subject to specified limitations. Diplomatic or military property is preventing from the waiver except when expressly specified.
Commercial property is not give the immunity from execution under s 32 is defined ‘commercial property that ‘property, other than diplomatic property or military property that is in use by the foreign state concerned substantially for commercial purposes.’ This test is not to be same from the objective test of what is a commercial transaction with reference to immunity from litigation. In the case of Alcom v Republic of Cplumbia  AC 580 stated that a diplomatic mission is keep a bank account with a trading bank is ‘commercial property’ only if it is used to cover the daily expenses of the mission, it is not used for commercial purposes.
If the property is vacant or apparently not in use, for example, the abandoned Embassy of Iran in Westminster City Council v Islamic Republic of Iran is used for commercial purposes except the court is contended that it has revoke for non- commercial purposes which s 32(3)(b) FSIA 1985(Cth).
In pursuant with s 14 of the Foreign States Immunities Act 1985 (Cth), in relation to the ownership, possession or use of immovable property in Australia or in relation to property of any kind acquired by gift or succession, that property is not immune from execution.
The property of separate entities, other than central banks or monetary authorities, is not immune from execution unless the separate entity would, but for its submission to the litigation, have been entitled to immunity. Therefore a state trading corporation sued in respect of a commercial transaction will be liable to the execution in respect of all its assets whether used for commercial purposes or not. In situations where it only became liable to suit because of waiver of immunity, its position is the same as that of a foreign State, that is, immunity applies unless the matter falls within one of the three exceptions mentioned.
Acts of state
Diplomatic and Consular immunity
Australia is a party to both the 1961 Vienna Convention on Diplomatic Intercourse and the 1963 Vienna Convention on Consular Relations. The former is part of our law by virtue of the Diplomatic Privileges and Immunities Act 1967 (Cth) and the latter by virtue of the Consular Privileges and Immunities Act 1972(Cth). The continued operation of the privileges and immunities conferred by those Acts is preserved by s6 FSIA 1985 (Cth).
These conventions apply to all representatives of overseas countries including members of the Commonwealth of Nations. Under Section 9 of the Consular Privileges and Immunities Act 1972 (Cth), the Governor General may advise on the personnel of a post establish by a declared Commonwealth country on the personnel of a post established by a declared Commonwealth country which is not otherwise entitled to diplomatic or consular immunity, all or any of the privileges or immunities that are conferred by the Act and Convention on consular officers. This provision enables the granting of consular immunity to officers established by Commonwealth countries.
The diplomatic Convention
Under Art 31(1) of the Convention a diplomatic enjoys immunity from the criminal, civil and administrative jurisdiction of the foreign country with the exception where there is a real action in relation to private immovable property situated in the receiving country, unless he holds it on behalf of his country for the purposes of the mission. A real action’ is an action in which the title to, or possession of, the property is at issue as per the case of Intpro Properties v Sauvel QB 1019. Another exception is where there is an action relating to succession where he is involved in a private capacity. The last exception is where the action is relating solely to any professional or commercial activity carried on by him in the receiving country outside his official functions. It has been held in the case of Marriages of De Andrade (1984) 19 Fam LR 271 that the institution of matrimonial proceeding, including a claim for property adjustment in respect of a property purchased as an investment, does not fall within this exception.
Under Art 31(3) no measure of execution may be taken against a diplomatic agent except where the case comes under(a),(b) or (c) above and then only subject to the proviso that the inviolability of his or her person and residence is respected.
Article 24 provides that the correspondence and documents of the foreign sovereign and the mission shall be kept inviolate. This has been held to exclude the jurisdiction of English courts in relation to a defamation action arising out of a memorandum written by the head of mission about the alleged misdoings of a member of his staff in England as per Fayed v Al-Tajir  QB 712. For the same reason it has been held that a body enjoying diplomatic immunity cannot b compelled to produce its documents unless they had been communicated to a third party with its authority as per Shearson Lehman Bros Inc v Maclaine Watson & Co Ltd ( No 2) 1 All ER 116.
In pursuant with Art 38(1) a diplomatic agent who is a citizen of, or is permanently resident in, the receiving country is only entitled to immunity in respect of official acts performed in the course of his or her functions.
Articles 37(1) provides that the members of the family of a diplomatic agent forming part of his or her household shall, if they are not Australian citizens, enjoy the same privileges and immunities.
Member of the administrative and technical staff also enjoys immunity. This includes clerks, stenographers, chipher clerks and the like. Such persons, together with their families forming part of their respective households, enjoy under Art 37(2), if they are not citizens or permanent residents of the receiving country, the same privileges and immunities as a diplomatic agent, except that their immunity from civil and administrative jurisdiction does not extend to acts performed outside the course of their immunity from civil and administrative jurisdiction does not extend to acts performed outside the course of their duties.
Members of the administrative and technical staff who are citizens of, or permanent residents in, the receiving country are only entitled to immunity from criminal, civil or administrative jurisdiction in respect of acts performed in the course of their duties: s 11(a) Diplomatic Privileges and Immunities Act 1967 (Cth). Their families do not enjoy any immunity.
Members of the service staff also enjoys immunity. This includes persons such as cooks, butlers, footmen and the like who are employed by the mission itself and not by the diplomatic staff. Members of the service staff who are citizens of, or permanently resident in, Australia.
Private servants of members of a diplomatic mission are not entitled to immunity under the convention. Such persons are not entitled to immunity under the Convention. However, the Diplomatic Privileges and Immunities Act 1967 (Cth) in s 11 provides for immunity in respect of acts performed in the course of duty for private servants who are citizens of, or are ordinarily resident in, Australian and private servants of the head of mission, who are not citizens of, or ordinarily resident in, Australia.
The Consular Convention
The Consular Convention also draws a line between different classes of personnel. The widest degree of immunity is enjoyed by consular officers. This refers to any person, including the head of a consular post, entrusted with the exercise of consular functions. A lesser degree of immunity is enjoyed by consular functions. A lesser degree of immunity is also enjoyed by consular employees, which refers to persons employed in the administrative or technical service of a consular post, and the least immunity is held by members of the service staff who are employed in the domestic service of the consular post.
By virtue of Art 43 consular officers and consular employees, including persons who are citizens of, or are ordinarily resident in, Australia, are not agreeable to the jurisdiction of the judicial or administrative authorities of the receiving country in respect of acts performed in the exercise of consular functions. But, this immunity does not apply in the case of a civil action either in a contract concluded by a consular officer or consular employee in which he did not contract expressly or impliedly as an agent of the sending State or by a third party for damage arising from an accident in the receiving State caused by a vehicle, vessel or aircraft.
Art 44 provides that all persons employed at a consider post may be called upon to attend as witnesses in the course of judicial or administrative proceedings. However, they are under no obligation to give evidence concerning matters connected with the exercise of their functions or to produce official correspondence and documents. They are also permitted to decline to give evidence with regard to the law of the sending State. Apart from this they may not decline to give evidence. However, a consular officer cannot be punished for refusing to do so.
By virtue of Art 58(2) the immunities set out in Art 43 and the right to decline to give evidence connected with the exercises of their functions or to decline to give evidence connected with the exercises of their functions or to give evidence as expert witnesses with regard to the law of the sending State also applies to honorary consular officers.
Agreements between the states have been creates the bodies of international organizations. For example, United Nations, International Court of Justice, the international Labour organization and the world Health Organisation. Their members have legal personality under international law from the states. Under the International Organisation Acts 1963, Australian’s legal personality has no standing in the domestic law except the body has juridical personality conferred upon it.
In JH Rayner (Mincing Lane) Ltd v Dept of Trade and Industry 1989 Ch 253 stated that an international body whose constituent members are sovereigns stated. It does not need to share the immunity of its constituent member.
It is done under the s 6(1)(a)(i) International Organisation Act 1963 (Cth) in Australia. Such a regulation does not convert the body into a domestic corporation. Its relationship with its members and their responsibility for its actions and debts are governed by international law. Section 6(1) also confers immunity from suit and other legal process and for the inviolability of the assets of such organizations in Australia and the immunity from suit and other legal process of the officers and representative of such organization in respect of acts done as such officer or representative as per Von Arnin v Federal Republic of Germany(1999) 107 A Crim R 529.
Period of immunity
The immunity stop when a person leaves the receiving country or upon expiry of a reasonable period in which to depart under s 39(2) Diplomatic Convention Art and s 53(3) Consular Convention Art. However, immunity in respect of acts done in an official capacity will remain. But the person formerly entitled to immunity may now be sued for acts done in a private capacity even though done at time when that person was entitled to absolute immunity. The immunity is merely a procedural bar, not a justification of what is otherwise unlawful. Once that bar is lifted an action in respect of anything done by the official concerned can be brought at any time before the cause of action is a statute-barred as per Empson v Smith  1 QB 106. Conversely, an action begun against a person who did not then have immunity must be strayed as soon as immunity is conferred as per the case of Ghosh v D’Rozario  1 QB 426.
The Minister of Foreign Affairs and Trade are given certificate to a particular person or at any time who has entitled immunity. Under s 14 Diplomatic Privileges and Immunities Act 1967 (Cth), such a certificate shall be evidence of the facts certified. Since the relevant provisions do not state that the certificate is conclusive evidence to contradict the certificate as per Duff v R (1980) 28 ALR 663. At common law such as certificate would be conclusive as per Engelke v Musmann  AC 433
Waiver of immunity
The court must stay an action as soon as soon as it perceives that a diplomat, consular official or other person entitled to immunity has been impleaded unless it is satisfied that the transaction concerned is excluded from immunity as per Australian Federation of Islamic Councils Inc v Westpac Banking Corp (1988) 17 NSWLR 623. The diplomatic and consular conventions both provide that the immunity of diplomatic and consular officials may be waived by the sending State in pursuant with S32 (1) Diplomatic Convention Art and s 45(1) Consular Convention Art. In the case of international organizations, the regulation setting out the immunity of such organization and its officials may also provide for the waiver of immunity by that organization or official by virtue of s 10 International Organisation Act 1963(Cth).
State immunity is an important issue in international litigation and can sometimes have case dispositive impact. Because of the pervasiveness of foreign states, subdivisions, agencies, instrumentalities, organs and state-enterprises in the world economy, many disputes are likely to involve sovereignty issues. The United States and most other nations have endorsed a restrictive form of sovereign immunity pursuant to which the “public acts” of foreign states are immune from jurisdiction in another state but the “private acts” (particularly commercial activity) of the foreign state may be subject to jurisdiction in another state. In the United States, state immunity is based upon the FSIA. Some other countries have similar legislation. The UN Convention, which was only recently approved by the General Assembly, may serve as an important multilateral treaty governing the field. Regardless of what happens to the UN Convention, the legal landscape for state immunity has experienced dramatic change in the last several decades both in the United States and internationally. Evolution of the sovereign immunity doctrine will undoubtedly continue in the future.
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