Foreign Sovereign Immunities Act

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Foreign Sovereign Immunities Act
Great Seal of the United States.
Long title An Act to define the jurisdiction of United States courts in suits against foreign states, the circumstances in which foreign states are immune from suit and in which execution may not be levied on their property, and for other purposes.
Colloquial acronym(s) FSIA
Enacted by the  94th United States Congress
Effective January 19, 1977[1]
Citations
Public Law 94-583
Stat. 90 Stat. 2891
Codification
Title(s) amended 28
U.S.C. sections created §1330, §1391(f), §1441(d), §1602-11
Legislative history

The Foreign Sovereign Immunities Act (FSIA) of 1976 is a United States law, codified at Title 28, §§ 1330, 1332, 1391(f), 1441(d), and 1602-1611 of the United States Code, that establishes the limitations as to whether a foreign sovereign nation (or its political subdivisions, agencies, or instrumentalities) may be sued in U.S. courts—federal or state. It also establishes specific procedures for service of process, attachment of property and execution of judgment in proceedings against a Foreign State. The FSIA provides the exclusive basis and means to bring a lawsuit against a foreign sovereign in the United States. It was signed into law by President Gerald Ford on October 21, 1976.[6] Since the passage of the FSIA in 1976, numerous legal issues have arisen in regards to the manifold interpretations of the Act, leading to the formation of a working group of the American Bar Association that seeks to enact various reforms of the FSIA. [7]

History[edit]

Sovereign Immunity has long been the norm in U.S. courts. In an early case, the Supreme Court held that a private party could not sue the government of France. In that case, The Schooner Exchange v. M'Faddon, 11 U.S. 116 (1812), the Supreme Court concluded that a plaintiff cannot sue a foreign sovereign claiming ownership to a war ship which had taken refuge in Philadelphia. Relying on common law principles, U.S. courts routinely refused to hear claims against foreign governments, even where those claims related to commercial activities. In addition, courts generally relied on suggestions of immunity filed by the U.S. State Department in actions against foreign sovereigns. In 1952, the State Department, noting the development of immunity in other nations, adopted the Restrictive Theory of Sovereign Immunity according to which the Public Acts (Jure Imperii) of a Foreign State are entitled to immunity, while the Private Acts (Jure Gestionis) are not.

The United States was the first nation to codify the law of foreign sovereign immunity by statute. The FSIA had three broad objectives: (1) to transfer responsibility for immunity determinations from the Department of State to the judiciary; (2) to define and codify the “restrictive” theory of immunity; and (3) to provide a comprehensive, uniform regime for litigation against foreign states and governmental agencies. A drafter's perspective is presented in "The United States Foreign Sovereign Immunities Act of 1976 in Perspective: A Founder's View," Mark B. Feldman, 35 International and Comparative Law Quarterly 302 (1986).

Though the Act places the determination of sovereign immunity fully in the hands of the judiciary, many courts have expressed reluctance to find that a defendant is a sovereign if the "state" in question is one that the U.S. government has not officially recognized, even if the defendant may arguably satisfy the definition of statehood under international law.

Jurisdictional statute[edit]

The FSIA is in practice primarily a jurisdictional statute. For the most part, it indicates what conditions must be met in order for a lawsuit against a foreign state to be instituted, not what conduct by a foreign sovereign is actionable. If a foreign defendant qualifies as a "Foreign State" under the FSIA, the Act provides that it shall be immune to suit in any U.S. Court—federal or state—unless a statutory exception to immunity applies. The applicability of an exception to immunity is a matter of subject-matter jurisdiction, meaning if there is no exception to immunity, a court cannot hear the claim and must dismiss the suit. In Verlinden B.V. v. Central Bank of Nigeria, defendant challenged the jurisdiction of the district court, saying that FSIA could not give jurisdiction to the district court since it was not a case "arising under" federal law. The Supreme Court then found that since any invocation of jurisdiction under the FSIA would necessarily involve analysis of the exceptions to FSIA, FSIA cases by definition arise under federal law.

Under the FSIA, the burden of proof is initially on the defendant to establish that it is a "Foreign State," under the FSIA and therefore entitled to sovereign immunity. "Foreign State" is defined at 28 U.S.C. § 1603(a),(b). Once the defendant establishes that it is a Foreign State, for the lawsuit to proceed, the plaintiff must prove that one of the Act's exceptions to immunity apply. The exceptions define both the types of actions as to which immunity does not attach and the territorial nexus required for adjudication in U.S. courts. The Act creates a form of long-arm statute establishing jurisdiction over claims that meet the criteria.

The exceptions are listed at 28 U.S.C. §§ 1605, 1605A, and 1607. The most common exceptions are when the Foreign State waives immunity (§ 1605(a)(1)) or agrees to submit a dispute to arbitration (§ 1605(a)(6)), engages in a commercial activity (§ 1605(a)(2)), commits a tort in the United States (such as a common traffic accident case) (§ 1605(a)(5)) or expropriates property in violation of international law (§ 1605(a)(3)). The FSIA also excludes immunity in cases involving certain counterclaims (§ 1607) and admiralty claims (§ 1605(b)). In addition, exceptions for torture, extrajudicial killing, aircraft sabotage and hostage-taking were added by amendment to the FSIA in connection with anti-terrorism law and updated again in 2008.

Scope and Applicability of the FSIA[edit]

Retroactive Application. In 2004, the Supreme Court held in Republic of Austria v. Altmann, 541 U.S. 677 (2004) that the FSIA applies retroactively. That case involved a claim by the descendants of owners of famous paintings against the Austrian government for return of those paintings, which were allegedly seized during the Nazi era. As a consequence of Altmann, for lawsuits filed after the enactment of the FSIA (1976), FSIA standards of immunity and its exceptions apply, even where the conduct that took place prior to enactment of the FSIA. See Note, 79 Tul. L. Rev. 1113 (2005) (discussing history of FSIA).

Exclusive Basis for Suit. In Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989), the Supreme Court held that the Foreign Sovereign Immunities Act provides the "sole basis for obtaining jurisdiction over a foreign state." In that case, a Liberian-owned oil tanker which was traveling outside of the "war zones" designated by the United Kingdom and Argentina during the Falklands War in 1982 was struck by an air to surface rocket fired by an Argentine jet. The shipping company sued Argentina in federal court claiming that Argentina's actions violated the Alien Tort Statute 28 U.S.C. § 1350 and general admiralty law. Because the Court found that the FSIA provided the exclusive means of suing the foreign sovereign, the Court determined that the plaintiffs were not permitted to bring suit under the Alien Tort Statute or general admiralty law.

Definition of "foreign state"[edit]

The FSIA only applies to lawsuits involving a "foreign state." The FSIA defines "foreign state" to include three entities:

  1. Foreign State
  2. A political subdivision of a foreign state
  3. An "agency or instrumentality" of a foreign state

28 U.S.C. § 1603(a)

"Agency or Instrumentality" is then defined as any entity which:

  1. Has a separate legal identity and
  2. Is either (a) an "organ of a foreign state or political subdivision" or (b) a "majority of whose shares or other ownership interest" is owned by a foreign state or political subdivision. 28 U.S.C. § 1603(b). Although it is unclear precisely what entities qualify as an agency or instrumentality, case law has demonstrated the foreign government agencies (particularly to the extent they perform governmental functions) and foreign government-owned corporations are generally considered to be "Foreign States" on whom the FSIA applies.

In Dole Food Co. v. Patrickson, 538 U.S. 468 (2003), the Supreme Court determined that in order for a government owned corporation to qualify as a Foreign State under the FSIA because a majority of its "shares or other ownership interest" are owned by a foreign state or political subdivision, the Foreign State must directly own a majority of the corporation's shares. In Dole, two chemical corporations indirectly owned by the Israeli government sought to remove a case from Hawaii State Court to Hawaii Federal Court on the basis that the FSIA applied. The Supreme Court concluded that because the Israeli government did not directly own a majority of the companies shares, the corporations could not be considered "Foreign States" and the FSIA therefore did not apply. The Court specifically rejected the companies' argument that Israel's majority interest in the companies through indirect ownership qualified as an "other ownership interest" under the FSIA or that Israel's actual control over the corporations would qualify. In reaching its conclusion the Court also held that the determination as to whether a defendant qualifies as a Foreign State is made at the time the plaintiff files the complaint.

There had been disagreement among the courts as to whether an individual government official is covered by the Foreign Sovereign Immunities Act, and therefore immune to suit according to its provisions or whether traditional (pre-FSIA) common law rules of immunity apply. The majority of Federal Courts of Appeals had concluded that individuals are covered under § 1603(b) as "agents or instrumentalities" of foreign states. See In re Terrorist Attacks on September 11, 2001, 538 F.3d 71 (2d Cir. 2008) (finding Saudi government officials to be entitled to immunity under the FSIA). Other courts however, noting that the language and structure of the FSIA and particularly § 1603(b) appear to contemplate that entities and not individuals are covered by the "agency or instrumentality" definition, had concluded that individuals are not entitled to immunity under the FSIA. See Yousuf v. Samantar, 552 F.3d 371 (4th Cir. 2009) (holding that former Somalian government official is not covered by, and therefore entitled to immunity under the FSIA and remanding to District Court to determine whether defendant is entitled to common law immunity).

However, the Supreme Court in 2010 decided that the Act does not extend immunity to a government official acting on behalf of a state. In the case of Samantar v. Yousuf decided in June 2010, the Supreme Court found that there is nothing to suggest that "foreign state" within the FSIA should be read to include an official acting on behalf of that state.[8]

Moreover, the potential of the FSIA to undermine foreign policy goals of the Executive branch has been an on-going concern. [9]

Commercial Activity Exception[edit]

The most important exception to sovereign immunity is the commercial activity exception, 28 U.S.C. § 1605(a)(2). That section provides three bases on which a plaintiff can sue a foreign state:

  1. When the plaintiff's claim is based upon a commercial activity carried on in the U.S. by the foreign state.
  2. When the plaintiff's claim is based upon an act by the foreign state which is performed in the U.S. in connection with commercial activity outside the U.S.
  3. When the plaintiff's claim is based upon an act by the foreign state which is performed outside the U.S. in connection with commercial activity outside the U.S. and which causes a direct effect in the U.S.

In determining whether the Foreign State's activities are commercial, the FSIA requires that courts look to the nature of the act itself, rather than the purpose for which the foreign sovereign engaged in the act. 28 U.S.C. 1603(d). For example, the operation of a fee-based transportation system would likely be a commercial act, while imposing fines for parking tickets would be a public act, even if the former was undertaken to provide a public service, and the latter was initiated to raise revenue.

Republic of Argentina v. Weltover, 504 U.S. 607 (1992), concerned a breach of contract claim asserted by bondholder (two Panamanian corporations and a Swiss bank) against the government (Argentina) that issued the bonds arising from Argentina's default on the bond payments. Under the terms of the bonds, the bond-holders were given the option of having the bonds paid in London, Frankfurt, Zurich, or New York. Because the case concerned a default in Argentina on bonds issued in Argentina (i.e. an act performed outside the U.S in connection with activity outside the U.S.), in order to establish jurisdiction, the plaintiff's could only rely on the third basis to sue Argentina under the commercial activity exception. Argentina made two primary arguments as to why the FSIA commercial activity exception should not apply: (1) the issuance of sovereign debt to investors was not a "commercial" activity and (2) the alleged default could not be considered to have had a "direct effect" in the United States. In a unanimous opinion, written by Justice Antonin Scalia, the Supreme Court held that Argentina was not entitled to sovereign immunity. Reasoning that "when foreign government acts, not as regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are 'commercial,'" the Court concluded that Argentina's issuance of the bonds was of a commercial character. As for the "direct effect" in the U.S., the Court rejected the suggestion that under the FSIA the effect in the U.S. necessarily needed to be "substantial" or "foreseeable" and instead concluded that in order to be "direct," the effect need only "follow as an immediate consequence" of the defendant's activity. Because New York was the place where payment was supposed to be made, the Court concluded that the effect was direct, notwithstanding the fact that none of the plaintiffs were situated in New York. Weltover's victorious position was argued by New York-based attorney Richard Cutler, while Argentina's case was argued by attorney Richard Davis.

Notable legal cases[edit]

  • In 2008, the FSIA was invoked by Saudi Arabia to preclude a lawsuit filed by families and victims of the September 11 attacks who alleged that the Saudi leaders had indirectly financed al-Qaeda.[10]
  • The Foreign Sovereign Immunities Act was invoked in John V. Doe v. Holy See, a lawsuit against the Holy See in cases related to child abuse incidents in various U.S. churches.[11]
  • On 16 June 2014, the U.S. Supreme Court ruled (in Republic of Argentina v. NML Capital) against Argentina's appeal of a lower court ruling that Argentina's government must uphold its contractual obligation to pay in full those bondholders who refused to accept reduced payments negotiated in foreign debt restructurings carried out by Argentina in 2005 and 2010 after that nation's government defaulted on its debt in 2001. [12] Later the same day, the U.S. Supreme Court, in a 7-1 ruling (Associate Justice Sonia Sotomayor recused herself from both cases without giving a reason for doing so), gave permission for those bondholders to seek information on Argentina's assets in the U.S. and abroad by issuing subpoenas to banks to trace those assets. [13]

Amendments[edit]

Proposed[edit]

On March 25, 2014, U.S. Representative Steve Chabot introduced the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act (H.R. 4292; 113th Congress) into the United States House of Representatives.[14] According to a legislative digest provided by House Republicans, the bill "narrowly amends the Foreign Sovereign Immunities Act (FSIA) to make it easier for U.S. cultural and educational institutions to borrow art and other culturally significant objects from foreign countries."[15] However, the changes made by the bill would not provide any immunity to art or objects that were "taken in violation of international law by Nazi Germany between January 30, 1933 and May 8, 1945."[15] The Congressional Budget Office reported that "under current law, works of art loaned by foreign governments generally are immune to certain decisions made by federal courts and cannot be confiscated if the President, or the President’s designee, determines that display of the works is in the national interest. However, commercial activity in which foreign governments are engaged does not have immunity in federal courts. H.R. 4292 would clarify that importing works of art into the United States for temporary display is not a commercial activity, and thus that such works would be immune from seizure."[16] The bill was scheduled to be voted on under suspension of the rules on May 6, 2014.[17]

References[edit]

  1. ^ "This Act shall take effect ninety days after the date of its enactment." Pub. Law. 94-583, §8
  2. ^ See House Report No. 94-1487. Sept 9, 1976.
  3. ^ See Senate Report No. 94-1310. September 27, 1976. This report concerned the identical Senate bill, S. 3553
  4. ^ 122 Cong. Rec. H11587
  5. ^ 122 Cong. Rec. S17721
  6. ^ A widely-cited drafter's perspective is presented in "The United States Foreign Sovereign Immunities Act of 1976 in Perspective: A Founder's View," Mark B. Feldman, 35 International and Comparative Law Quarterly 302 (1986). Feldman, Mark B. (April 1986). ""The United States Foreign Sovereign Immunities Act of 1976 in Perspective: A Founder's View"". http://journals.cambridge.org. Cambridge University Press (paywall). Retrieved 17 June 2014. 
  7. ^ Vollmer et. al., Andrew N. (April 2001). "Recommendations and Report on the U.S. Foreign Sovereign Immunities Act". http://www.americanbar.org. Working Group of the International Litigation Committee of the Section of International Law and Practice of the American Bar Association. 
  8. ^ Oyez US Supreme Court Media, http://www.oyez.org/cases/2000-2009/2009/2009_08_1555
  9. ^ Tim Wafa (J.D.) (2010). "Foreign Sovereign Immunity in a Hyper-Globalized World". SSRN. 
  10. ^ Honan, Edith (2008-08-14). "U.S. court rules Saudi Arabia immune in 9/11 case". Reuters. 
  11. ^ U.S. Case Against Holy See May Go Forward, Court Rules
  12. ^ Liptak, Adam (16 June 2014). "Argentina’s Debt Appeal Is Rejected by Supreme Court". http://dealbook.nytimes.com. The New York Times Company. Retrieved 17 June 2014. 
  13. ^ "Syllabus and Opinion of the Court, in Republic of Argentina vs. NML Capital, Ltd.". http://www.supremecourt.gov. United States Supreme Court. 16 June 2014. Retrieved 17 June 2014. 
  14. ^ "H.R. 4292 - Summary". United States Congress. Retrieved 5 May 2014. 
  15. ^ a b "Legislative Digest - H.R. 4292". House Republican Conference. Retrieved 6 May 2014. 
  16. ^ "CBO - H.R. 4292". Congressional Budget Office. Retrieved 5 May 2014. 
  17. ^ Marcos, Cristina (2 May 2014). "The week ahead: House to hold ex-IRS official in contempt". The Hill. Retrieved 5 May 2014. 

External links[edit]