Case Analysis: Luther Vs. Sagor, 1921

Brief Facts of Luther vs. Sagor:

This is the case of Luther vs. Sagor. British citizen Luther used to run the timber business in Soviet Russia. On June 20, 1918, the Russian Soviet Government allegedly issued a decree stating, among other things. That the Russian Federative Republic was the owner of all mechanical sawmills operated by limited or private companies with a capital of more than 1,000,000 roubles. And all woodworking facilities outfitted with such machinery.

After that, Mr. Luther left for the UK from Russia. The mill or factory, as well as the veneer or plywood-created stock, belonged to the plaintiff company until 1919. Then agents of the Russian Soviet Government seized and confiscated them. The Russian nationalization business and Mr. Sagor from England came to an agreement for the acquisition of certain wood. The plaintiff (Mr. Luther) filed a lawsuit seeking a determination that they had a right to the wood after the defendants carried it into England.

Accordingly, the company dispatched the wood. But when the timer got to the UK, Mr. Luther insisted that it was his wood. He emphasized that the British Civilization Court could not validate Russian legislation because the UK had never acknowledged that the government and Russia had unintentionally taken over his factory. Luther won his case at the lower court, but he lost his appeal to the King’s Bench Division.


The issue was raised before the King’s Bench Division to decide whether Russia is recognized by Britain? And whether the nationalization was legal or valid?


The Chamber of the King’s Court declared that they could not interfere in the internal affairs of another country because, at the same time, Russia acquired de facto recognition, and the court also proclaimed the retroactive entry into force of the 1917 recognition form. The nationalization of Russia is legitimate and successful as a result. Therefore, recognition confers rights, privileges, and obligations; it might be de jure or de facto.

Rights, privileges, and obligations are scaled back when a nation is recognized de facto. However, when a nation is recognized legally, it will be granted absolute rights, responsibilities, and obligations. When powerful states recognize newly constituted states, they frequently put up barriers. The new state may even withdraw if the acknowledgment indicates that it does not meet the requirements to become a sovereign state. Expressive or implicit forms of identification are both acceptable, however real and legal identity vary depending on the circumstances.

In this case, the British lower court ruled in favor of Luther after taking into account his arguments. Sagor, feeling wronged by this decision, went to the British higher court. Following an appeal, it was determined that Britain had granted De-Facto Recognin in 1921, and as a result, the Kings Bench Division Court of Appeal upheld Sagor’s ruling.


The Kings Bench Division took into account the following factors to determine the issues.

  • That the current Russian government received de facto recognition from the British government.
  • The period in question is therefore unimportant because the recognition of Russia had a retrospective impact.
  • De-facto or De-jury recognition does not make a significant impact in the matter of productive relationships and in the question of law.

It also takes into account the “Act of State Doctrine,” which states that if a state is a sovereign nation, it is not permitted to dispute the legitimacy of another state’s internal affairs. Because Russia had already received de facto recognition, according to Kings Bench Division, they are not allowed to meddle in the internal affairs of another country. The court also declared the recognition Russia received in 1917 to be retroactively effective. Therefore, Russia’s nationalization was legitimate and legal.

Based on the precedent set by previous cases, this Court came to the conclusion that the Russian Soviet Government has not been acknowledged by the British Government as a sovereign independent state. Even if the British Government has recognized the Russian Soviet Government, the court will not give effect to the penal laws of the Russian Soviet Government by its decree, thus the plaintiffs’ rights will not be protected by the courts of this nation.

The court ruled that they could not because “the penal laws of foreign countries are strictly local, and affect nothing more than they can reach, and can be seized by virtue of their authority; a fugitive who passes here comes with all his transitory rights; he may recover money held for his use, stock, obligations, and the like; and cannot be affected in this country, by proceedings against him in that which he has left, beyond the limits of which such proceedings do not extend.” and around the same time Russia got the de facto recognition adding to which the court also declared it retroactively in 1917


It is clear from the Kings Court’s decision in this case that the British government formally recognized Russia as a sovereign state. The court granted retrospective de jure recognition to the Russian Soviet Government in addition to acknowledging its de facto.

This case established the principle of public international law that: Once a government is recognized, its acts will be granted as valid (by De-Facto recognition), even those prior to its recognition, known as the retrospective effect. This case provided the validity of legislation and administrative acts of a recognized government on its own territory while applying the doctrine of Acts of state


  • 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
  • 12 brity .b. Int’l l. 95 (1931) recognition of foreign laws by municipal courts

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