Luther v Sagor (UK) 1921
Luther v Sagor (UK) 1921
Principle
- Once a government is recognized, its acts will be granted as valid (by De-Facto recognization), even those prior to its recognition, known as the retrospective effect.
- Act of state doctrine
Fact
Luther was a British Citizen who used to run a Timber industry in Soviet Russia. On 1917 the Russian Government nationalized his factory and thereafter Mr Luther left Russia and went to the UK. In 1920 Mr. Sagor came to an agreement with Russian Nationalized business company to buy some timber, the company sent timbers accordingly but when timers reached in UK Mr. Luther claimed that those timbers were his timbers, he pointed that as UK never recognized the government of Russia, as well as Russia, wrongfully took over his factory, therefore, the civilized court of UK cannot validate the rule of Russian law.
The lower court held the judgment in Luther’s favour but on appeal to the Kings Bench Division it held that they cannot interfere in an internal matter of another state, because in the meantime Russia was given the De Facto Recognition, the court also declare the retrospective effective on that recognition form 1917.
Luther v Sagor (UK) 1921
Issues
- Whether Russia was recognized by Britain or not?
- Whether the nationalization was legal or valid?
Decision
In this case, the lower court of Britain found the judgment in favour of Luther by considering his argument, being aggrieved on such judgment Sagor appeal to the Higher Court of Britain. After appeal, it was found that Britain provided De-Facto Recognition to in 1921 as a result the Kings Bench Division, Court of Appeal held the judgment in favour of Sagor.
It was held that the British Government recognized the Government of Russia and the retrospective effect will be applicable for that recognition. So the Nationalization by Russia was legal and valid.
Reasoning
To determine the issues the Kings Bench Division considered the following matters
- That the British Government provided de-facto recognition of the present government of Russia.
- That the recognition of Russia had retrospective effect, therefore, the time in question is not a concern.
- That, in the matter of effective relationships and in the question of law De-facto or De-jury recognition does not create any real difference.
It also takes the “Act of state doctrine” into consideration, this doctrine articulates that A state can not take any step to question the legality of another states internal matter for being a sovereign country.
Kings Bench Division it held that they cannot interfere in an internal matter of another state, because in the meantime Russia was given the de Facto Recognition, the court also declare the retrospective effective on that recognition form 1917. So the Nationalization by Russia was legal and valid.
REF: KING’S BENCH DIVISION AKSIONAIRNOYE OBSCHESTVO DLIA MECHANICHESKOYI OBRABOTKY DIEREVA (1) A. M. LUTHER (COMPANY FOR MECHANICAL WOODWORKING A. M. LUTHER) v. JAMES SAGOR AND COMPANY [1921] 1 K.B 456
