Foreign Sovereign Immunities Act
Encyclopedia
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 and attachment of property for 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.
, 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. In passing the Foreign Sovereign Immunities Act in 1976, Congress largely codified the Restrictive Theory of Immunity, but, in an effort to de-politicize sovereign immunity determinations, it vested the courts (rather than the Executive) with authority to determine whether a Foreign State is entitled to immunity. 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
.
, meaning if there is no exception to immunity, a court cannot hear the claim and must dismiss the suit.
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 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.
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 English and Argentinians 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.
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
.
28 U.S.C. § 1603(a)
"Agency or Instrumentality" is then defined as any entity which:
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.
Moreover, the potential of the FSIA to undermine foreign policy goals of the Executive branch has been an on-going concern.
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.
In Republic of Argentina v. Weltover, 504 U.S. 607 (1992). The case 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 plaintiff's were situated in New York.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
law, codified at Title 28, §§ 1330, 1332, 1391(f), 1441(d), and 1602-1611 of the United States Code
United States Code
The Code of Laws of the United States of America is a compilation and codification of the general and permanent federal laws of the United States...
, that establishes the limitations as to whether a foreign sovereign
Sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...
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 and attachment of property for proceedings against a Foreign State. The FSIA provides the exclusive basis and means to bring a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
against a foreign sovereign in the United States. It was signed into law by President Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...
on October 21, 1976.
History
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'FaddonThe Schooner Exchange v. M'Faddon
The Schooner Exchange v. M'Faddon, is a United States Supreme Court case.The Schooner Exchange, owned by John M'Faddon and William Greetham, sailed from Baltimore, Maryland, on October 27, 1809, for St. Sebastians, Spain. On December 30, 1810, the Exchange was seized by order of Napoleon Bonaparte...
, 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. In passing the Foreign Sovereign Immunities Act in 1976, Congress largely codified the Restrictive Theory of Immunity, but, in an effort to de-politicize sovereign immunity determinations, it vested the courts (rather than the Executive) with authority to determine whether a Foreign State is entitled to immunity. 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
International law
Public international law concerns the structure and conduct of sovereign states; analogous entities, such as the Holy See; and intergovernmental organizations. To a lesser degree, international law also may affect multinational corporations and individuals, an impact increasingly evolving beyond...
.
Jurisdictional statute
The FSIA is 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 jurisdictionSubject-matter jurisdiction
Subject-matter jurisdiction is the authority of a court to hear cases of a particular type or cases relating to a specific subject matter. For instance, bankruptcy court only has the authority to hear bankruptcy cases....
, meaning if there is no exception to immunity, a court cannot hear the claim and must dismiss the suit.
Under the FSIA, the burden of proof is initially on the defendant to establish that it is a "Foreign State
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...
," under the FSIA and therefore entitled to sovereign immunity
Sovereign immunity
Sovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution....
. "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 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
Torture
Torture is the act of inflicting severe pain as a means of punishment, revenge, forcing information or a confession, or simply as an act of cruelty. Throughout history, torture has often been used as a method of political re-education, interrogation, punishment, and coercion...
, 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
Retroactive Application. In 2004, the Supreme CourtSupreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
held in Republic of Austria v. Altmann
Republic of Austria v. Altmann
Republic of Austria v. Altmann, 541 U.S. 677 , was a case in which the Supreme Court of the United States held that the Foreign Sovereign Immunities Act applies retroactively...
, 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 English and Argentinians during the Falklands War
Falklands War
The Falklands War , also called the Falklands Conflict or Falklands Crisis, was fought in 1982 between Argentina and the United Kingdom over the disputed Falkland Islands and South Georgia and the South Sandwich Islands...
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
Alien Tort Statute
The Alien Tort Statute ) is a section of the United States Code that reads: "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." This statute is notable for allowing...
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.
In 2008, the FSIA was invoked by Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
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
Al-Qaeda
Al-Qaeda is a global broad-based militant Islamist terrorist organization founded by Osama bin Laden sometime between August 1988 and late 1989. It operates as a network comprising both a multinational, stateless army and a radical Sunni Muslim movement calling for global Jihad...
.
Definition of "foreign state"
The FSIA only applies to lawsuits involving a "foreign state." The FSIA defines "foreign state" to include three entities:- Foreign State
- A political subdivision of a foreign state
- An "agency or instrumentality" of a foreign state
28 U.S.C. § 1603(a)
"Agency or Instrumentality" is then defined as any entity which:
- Has a separate legal identity and
- 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
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
rules of immunity apply. The majority of Federal Courts of Appeals
United States courts of appeals
The United States courts of appeals are the intermediate appellate courts of the United States federal court system...
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.
Moreover, the potential of the FSIA to undermine foreign policy goals of the Executive branch has been an on-going concern.
Commercial Activity Exception
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:- When the plaintiff's claim is based upon a commercial activity carried on in the U.S. by the foreign state.
- 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.
- 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.
In Republic of Argentina v. Weltover, 504 U.S. 607 (1992). The case 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 plaintiff's were situated in New York.
Notable Legal Cases
- The Foreign Sovereign Immunities Act was invoked in John V. Doe v. Holy SeeJohn V. Doe v. Holy SeeJohn V. Doe v. Holy See is a lawsuit involving the sovereign immunity status of the Holy See in relation to the Catholic sexual abuse scandal in the United States...
, a lawsuit against the Holy See in cases related to child abuse incidents in various U.S. churches.
External links
- http://archive.usun.state.gov/hc_docs/hc_law_94_583.html U.S. State Department text.
- Foreign Sovereign Immunities act from Cornell LII