Home Insights TGIF 28 June 2024 – High Court says keep calm and don't get wound up (if you have foreign immunity)

TGIF 28 June 2024 – High Court says keep calm and don't get wound up (if you have foreign immunity)

In this week’s TGIF, we examine the High Court’s recent decision in Greylag Goose Leasing 1410 Designated Activity Company & Anor v P T Garuda Indonesia Ltd [2024] HCA 21. In the decision, a majority of the High Court upheld the New South Wales Court of Appeal decision that foreign state immunity extends to a state-owned national airline subject to winding-up proceedings.

In a 5:2 majority decision, the High Court dismissed an appeal by two Ireland-based creditors to wind-up Garuda Indonesia (Indonesia’s national airline). It found that Garuda Indonesia was entitled to immunity under the Foreign States Immunities Act 1985 (Cth) (Immunities Act), which provides immunity from bankruptcy, insolvency and winding up proceedings for foreign corporations that are state-controlled.

This is the first ever decision of the High Court on the intersection between foreign state immunity and winding-up proceedings.

Key Takeaways

  • ‘Separate entities’ of a foreign State – i.e. a state-owned or controlled enterprise – are immune from proceedings in Australia concerning its bankruptcy, insolvency and winding up.

  • Creditors of a foreign person or entity should ascertain whether the person or corporation is a ‘foreign State’ or ‘separate entity of a foreign State as bankruptcy, insolvency and winding up proceedings may be unavailable against such entities in an enforcement scenario.

  • It may be possible for creditors to pursue the winding up of separate foreign State entities through the ‘commercial transactions’ exception alluded to by the High Court.


The defendant, P T Garuda Indonesia Limited (Garuda), is Indonesia’s national airline, and a foreign company in Australia, registered under Div 2 of Pt 5B.2 of the Corporations Act 2001 (Cth) (Corporations Act).

The two plaintiff companies, Greylag Goose Leasing 1410 Designated Activity Company and Greylag Goose Leasing 1446 Designated Activity Company (together, Greylag), are special purpose vehicles incorporated in Ireland. They are owned by New York-based private equity firm, Avenue Capital Group. Greylag leased certain aircraft to Garuda.

In 2022, due to outstanding debts totalling over US$430 million, Greylag filed an application in the New South Wales Supreme Court seeking orders that Garuda be wound up in insolvency under ss 583(c)(i) and (ii) of the Corporations Act.

In response, Garuda filed a motion seeking an order setting aside the winding-up application and a declaration that the Court had no jurisdiction over it pursuant to the operation of ss 9 and 22 of the Immunities Act.

Greylag argued that s 14(3)(a) provides an exception to Garuda's immunity under section 22, as the proceeding pertained to the dissolution of a 'corporate entity'.

Greylag was unsuccessful at first instance and then again on appeal to the NSW Court of Appeal. It then sought (and obtained) special leave to appeal to the High Court on this question.

Relevant legislation

Section 9 of the Immunities Act states that Australian courts cannot exercise jurisdiction over a foreign State, except where specified in the Act. Section 22 extends this immunity to include entities that are part of a foreign State, with a few specific exceptions.

Agreed facts

Both parties agreed that Garuda was a separate entity of a foreign State on the basis that, as Indonesia’s national airline, it is an agency or instrumentality of the Republic of Indonesia. The parties also agreed Garuda is a foreign company registered under Div 2 of Part 5B.2 of the Corporations Act that may be wound up under Part 5.7 of the Act.

Key issue on appeal

The key issue before the High Court was the interpretation of s 14(3)(a) of the Immunities Act, and whether this provided Garuda with immunity from orders to be wound up.

Greylag contended that s 14(3)(a) creates an exemption to Garuda’s immunity as a separate entity of a foreign State, since the proceeding concerned the winding up of a body corporate. It argued that the phrase 'a body corporate' in s 14(3)(a) encompasses any corporate entity, including a foreign State and the separate entity of a foreign State.

In response, Garuda asserted that the term 'body corporate' in s 14(3)(a) excludes corporations that are a foreign State or a separate entity of the foreign State. Based on this interpretation, Garuda maintained that s 14(3)(a) does not apply and, as such, Garuda was immune from winding-up proceedings.

The High Court’s decision

A majority of the High Court (Gageler CJ, Gleeson, Jagot and Beech-Jones JJ) and Edelman J (writing alone) dismissed Greylag’s appeal. They ruled that the provision in s 14(3)(a) did not apply to winding up proceedings concerning Garuda.

The High Court majority acknowledged that Greylag’s interpretation was possible on a literal reading of s 14(3)(a), however, this would be at the expense of the context and purpose of the Immunities Act. Their Honours explained that s 14(3)(a) applies through, rather than on, the operation of s 22. In the context of s 14(3)(a):

  • The term ‘body corporate’ refers to an entity distinct from the separate entity.

  • The exception applies only when the proceeding relates to bankruptcy, insolvency or winding up of a ‘body corporate’ that is distinct from the separate entity itself.

In support of this, both the majority and Edelman J drew on the legislative history of the Immunities Act by referring to the Australian Law Reform Commission’s (ALRC) 1984 report on Foreign State Immunity.

Their Honours’ analysis revealed that the ALRC intended s 14(3)(a) to enable an ‘Australian court exercising jurisdiction in a bankruptcy, insolvency or winding up proceeding [to] be able to adjudicate on the proprietary interests of all the interested parties, including the proprietary interests of a foreign State’. Section 14(3)(a) therefore applies to proceedings in which a foreign State or a separate entity of a foreign State has a proprietary interest but it does not empower a proceeding to commence against a foreign State or its separate entity.

Accordingly, the High Court majority concluded that s 14(3)(a) applies to the winding up of a corporate entity other than the foreign State entity claiming immunity. Since Garuda, being a separate entity of a foreign State, was the subject of the winding up proceedings, it was entitled to immunity. Therefore, Greylag could not rely on the winding up exception to seek orders against Garuda.

Dissenting judgment

In a dissenting judgment, a minority of the High Court (Gordon and Steward JJ) considered that s 14(3)(a) should apply to a separate entity of a foreign State. Accordingly, Garuda should not be immune from winding-up proceedings commenced against it in Australia.

Their honours held that Greylag’s construction of s 14(3)(a) created an undesirable situation for creditors of separate entities of foreign States. Either these creditors would need to 'engage in a "race to the court insofar as individual execution is concerned" or pursue the debtor body corporate in its home jurisdiction under its home laws'.

The first option was held to be 'contrary to the provisions of the Corporations Act to which Garuda subjected itself when it registered in Australia' and their Honours viewed the availability of the second option as 'far from certain'.

Edelman J dismissed this argument due to the operation of s 11 (discussed further below). His Honour was ‘satisfied that the elasticity of the concepts of a "commercial transaction" and "a separate entity of a foreign State" provides sufficient reason to doubt the insolvency effects discussed above’.

‘Commercial transactions’ – a possible exception?

The High Court majority alluded to a possible exception to foreign State immunity under s 14(3)(a) that may have potentially been available to Greylag in pursuing winding-up orders against Garuda.

Section 11 of the Immunities Act provides a general exclusion from immunity insofar as a proceeding concerns a ‘commercial transaction’. This is defined in s 11(3) to mean:

“a commercial, trading, business, professional or industrial or like transaction into which the foreign State has entered or a like activity in which the State has engaged’ but excludes ‘a contract of employment’ or ‘a bill of exchange’”.

Greylag did not argue that the Part 5.7 proceeding pertained to a ‘commercial transaction’. It is unclear in the judgment why Greylag did not raise this point. The majority did not give a clear indication as to whether the argument would have been successful but implied Greylag should have raised the point. This perhaps indicates that such an action may have been successful if this line of argument had been raised by Greylag.


The High Court’s decision confirms that a separate entity of a foreign State will be afforded the same immunity from bankruptcy, insolvency, and winding up proceedings as the foreign State. This immunity extends to foreign corporations that are owned or controlled by a foreign State.

Creditors of a separate entity of a foreign State should therefore be aware that winding-up (and other types of insolvency) proceedings may not be available as an option to recover debts owed by those entities.

The High Court has, however, indicated that it may be possible for creditors to pursue insolvency proceedings against a separate entity of a foreign State pursuant to a (potential) 'commercial transactions' exception found in s 11 of the Immunities Act.

Finally, it is worth noting for clarity: the High Court confirmed that where a separate entity of a foreign State holds an interest in property or a trust that is subject to an insolvency proceeding in Australia involving a separate (unrelated) body corporate, that proprietary interest does not itself attract immunity from the proceedings.


Andrew Johnson

Special Counsel

Simon Wright

Law Graduate


Restructuring and Insolvency

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