## Facts

- Trendtex Trading Corporation Ltd., a Swiss trader, sold cement for shipment to Nigeria amid large government cement purchases in 1975.
- The Central Bank of Nigeria (CBN), established by statute as Nigeria’s central bank, issued an irrevocable letter of credit exceeding US$14 million to pay for cement destined for Nigeria for government use.
- Lagos port congestion and a change in Nigeria’s military government led to suspension of cement imports and a requirement of special approvals and confirmations for letters of credit.
- CBN refused to honor the letter of credit for Trendtex’s shipments, including amounts connected to demurrage, prompting Trendtex to sue for sums due.

## Issues

1. Whether CBN was an “emanation,” “arm,” “alter ego,” or department of the Nigerian state entitled to claim state immunity.
2. If CBN were part of the state, whether state immunity extended to an ordinary commercial transaction (a letter of credit) under the then-current rule of international law (absolute vs. restrictive immunity).
3. How English courts should treat evolving customary international law on state immunity when earlier domestic authority suggested broader immunity.

## Decision

- The Court of Appeal allowed Trendtex’s appeal and permitted the action to proceed in England.
- It held CBN was not a department or alter ego of the Nigerian state for immunity purposes because it was constituted as a separate legal entity without clear legislative intent to confer governmental status.
- A majority further stated that, even if CBN were part of the state, immunity would not apply to an ordinary commercial transaction such as issuing a letter of credit.
- The lower court’s setting aside of the writ and stay of proceedings on immunity grounds were reversed.

## Legal Principles

- A foreign state-owned entity is not automatically immune; courts examine statutory constitution, separate legal personality, functions, and degree of governmental control to determine whether it is legally a state organ for immunity purposes.
- Under the restrictive doctrine, immunity does not protect a foreign state (or its departments) from suit arising out of ordinary commercial transactions (acta jure gestionis), as distinct from sovereign governmental acts (acta jure imperii).
- Customary international law may be treated as part of the common law unless displaced by statute or binding higher-court authority; courts may recognize changes in customary international law when not barred by controlling precedent.

## Conclusion

The Court of Appeal held that CBN could be sued because it was not, on its statutory footing, a Nigerian state department, and it indicated that modern restrictive immunity would in any event deny immunity for a commercial letter of credit claim.


Trendtex Trading Corp. Ltd. v. Cent. Bank of Nigeria, [1977] 1 Q.B. 529 (C.A.)