Republic of Nauru v Reid

The Republic of Nauru (the applicant) sought special leave to appeal from a judgment of the Full Court of the Federal Court of Australia, which had dismissed its appeal from a decision of a single judge of that court. The respondent, Mr. Reid, had brought proceedings against the Republic of Nauru in the Federal Court, seeking damages for personal injury sustained while he was employed by the Republic of Nauru as a police officer. The dispute concerned the Republic of Nauru's liability for the injuries Mr. Reid suffered.

The primary legal issue before the High Court was whether the Republic of Nauru, as a foreign sovereign state, was immune from suit in Australian courts in relation to a contract of employment entered into within Australia for services to be performed in Australia. Specifically, the court had to consider the application of the Foreign States Immunities Act 1985 (Cth) and the common law doctrine of sovereign immunity. The court also considered whether the employment contract fell within an exception to sovereign immunity, such as that relating to commercial transactions or contracts of employment.

The High Court, by majority, granted special leave to appeal and allowed the appeal, holding that the Republic of Nauru was not immune from suit. The majority reasoned that the Foreign States Immunities Act 1985 (Cth) abrogated sovereign immunity in cases where a foreign state engaged in commercial activities or entered into contracts of employment within Australia. The court found that the employment contract between Mr. Reid and the Republic of Nauru was a commercial transaction and that the employment itself was a commercial activity for the purposes of the Act, thus falling within an exception to sovereign immunity. The principles applied centred on the interpretation of the Foreign States Immunities Act 1985 (Cth) and the distinction between sovereign and commercial acts of a state.

The High Court set aside the orders of the Full Court of the Federal Court and remitted the proceedings to the Federal Court for determination of the substantive claim for damages.