parent nodes: act of state | customary international law | foreign relations law | judicial review of foreign relations | Republic of Argentina v Weltover | Saudi Arabia v Nelson | Schooner Exchange v McFaddon | Verlinden BV v Central Bank of Nigeria
Foreign Sovereign Immunities Act
An act that comprehensively regulates foreign sovereign immunity, replacing the common-law categorical and Tate Letter regimes. Note also that a foreign sovereign may be immune from suit in federal court under the common-law act of state doctrine.
History
Common law approach
The doctrine of foreign sovereign immunity was first set forth by the Marshall court as a common-law doctrine imported from natural law, custom, and international principles. Foreign sovereign immunity was defined in categorical terms, although such categories could be open to interpretation. See Schooner Exchange v McFaddon (exempting a French warship forced to dock in the US from suit, on the ground that a nation's armies were immune from suit when given permission to enter another's territory, and that the US had constructively consented to allow French warships to enter US ports under such necessity).
By the nineteenth century, sovereign immunity was gradually expanded until any suit against a foreign nation was barred. But by the earlier twentieth century, other nations developed an alternative, 'restrictive' theory of sovereign immunity, in which foreign nations were immune for public or sovereign acts (acta jure imperii), but not for private or commercial acts (acta jure gestionis).
As early as the 1920s, the State Department began to advocate for the restrictive approach by arguing that US courts should deny immunity for certain commercial acts of foreign states. The courts deferred to the executive as far as which countries would be recognized, but did not necessarily defer to the executive's claim of foreign sovereign authority.
In the 1930s and 1940s, however, the Court moved towards the view that US federal courts should defer to executive claims of authority on behalf of a foreign state. [Ex parte Peru]. The Court thus moved to follow the executive's national policy, even where in conflict with international law.
Tate Letter regime
In 1952, the State Department announced in the 'Tate letter' that it would adhere to the restrictive theory of foreign sovereign immunity "in the consideration of requests of foreign governments for a grant of sovereign immunity." As a result, foreign states could seek immunity either by (1) asking the State Department for a "Suggestion of Immunity," which the courts would treat as binding, or (2) seek immunity directly in the courts, who would apply the restrictive theory by reference to State Department precedent.
FSIA
Because of the uncertainty, inconsistency, and overly political nature of the Tate Letter regime, Congress passed the Foreign Sovereign Immunities Act in 1976. Note, however, that the courts will still give consideration to the State Department's views in any particular case, although it does not consider itself bound by them. [Altmann v Republic of Austria]. This practice carries the obvious risk of politicization and inconsistency that FSIA sought to prevent.
Jurisdiction
(a) The district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) . . . as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement.
(b) Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction . . .
28 USC § 1330(a)-(b)
Subject to international agreements to which the United States is a party . . .a foreign state shall be immune from jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.
28 USC § 1604
As to any claim for relief with respect to which a foreign state is not entitled to immunity . . .the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances; but a foreign state except an agency or instrumentality shall not be liable for punitive damages. . .
28 USC § 1606
In any action brought by a foreign state . . . in a court of the United States or of a State, the foreign state shall not be accorded immunity with respect to any counterclaim--
(a) for which the foreign state would not have been entitled to immunity under section 1605 had such claim been brought in a separate action . . .
(b) arising out of the transaction or occurrence that is the subject matter of the claim of the foreign state; or
(c) to the extent that the counterclaim does not seek relief exceeding in amount or differing in kind from that sought by the foreign state.
28 USC § 1607
The Court has held that the FSIA's grant of federal jurisdiction is a valid type of Article III federal question jurisdiction, describing the application of FSIA's immunity provisions as an application of federal law, claiming that such law is "substantive" in so far as it might determine the outcome of a suit against a foreign state, and citing Congress' Foreign Commerce Clause powers. Verlinden BV v Central Bank of Nigeria (allowing FSIA jurisdiction of a suit between a Dutch company and the Nigerian government over a contract under Dutch law to deliver concrete in Nigeria, where Nigeria had sought credit in New York, thus breaching the contract). Note also that the Court applies pre-FSIA, Tate Letter-era precedent to interpret the terms of the FSIA. Republic of Argentina v Weltover (interpreting "commercial activity").
The FSIA may be viewed as a type of "protective jurisdiction" in so far as it vindicates federal interests involving foreign relations. If not, the FSIA may be an unconstitutional attempt at bootstrapping cases into federal court through the use of a jurisdictional statute alone. Further, the FSIA did not purport to necessarily extend federal jurisdiction over a suit between two aliens; rather, it sought to regulate the continuing practice of granting immunity to sovereigns in suits where the court would otherwise have valid Article III jurisdiction.
One possibility besides protective jurisdiction is that Article III diversity jurisdiction may extend to a suit between two foreigners, on the ground that Marshall's 'complete diversity' rule in [Strawbridge v Curtiss] interprets 28 USC § 1332 and not Article III itself.
Note also that the 'minimum contacts' test of personal jurisdiction may apply to suits under FSIA, since foreign states are arguably "persons" under the [Due Process Clause], and since foreign private parties are protected by personal jurisdiction requirements. [Asahi Metal Industry Co v Superior Court]. As a result, FSIA's state sponsor of terrorism exception, which only requires that the victim be a US national, may raise due process concern.
Verlinden BV v Central Bank of Nigeria
FSIA applies retroactively to the acts of a foreign state before FSIA's enactment, on the grounds that FSIA does not change the rights or duties of foreign states, so that the usual prohibition against retroactivity should not apply. [Altman v Republic of Austria] (rejecting case brought under § 1605(a)(3) challenging the confiscation of paintings by the Nazis). Note the obvious conflict with Verlinden, where the court had held that the FSIA does enact substantive and outcome-determinative law.
Another justification of retroactivity is that FSIA is meant to apply 'henceforth' and comprehensively to the conduct of foreign states, thus implying that it should apply both prospectively and retroactively. Further, it could be argued that FSIA's statute of limitations (10 years), not its provisions on immunity, govern the extent of liability for past actions, so that FSIA govern new claims, that is, newly-brought suits, not necessarily to new action by states alone.
NEED NOTES ON ALTMAN
Note that even when FSIA is applied retroactively, a suit will still be barred without an established exception to sovereign immunity. See, for example, [Garb v Republic of Poland] (refusing to hear case brought by Polish Jews challenging their government's confiscation of their property after WWII).
FSIA provides five main exceptions that allow jurisdiction over a foreign sovereign: the commercial activity exception, noncommercial torts in the US, real property held in the US, certain acts by countries designated by the executive as state sponsors of terrorism, and possibly claims based on customary international law.
Commercial activity exception
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case--
(1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver;
(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States;
(3) in which rights or property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States;
28 USC § 1605(a)(1)-(3)
(d) A "commercial activity" means either a regular course of conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.
28 USC § 1603(d).
"When a foreign government does not act as a regulator of a market, but in the manner of a private player within it, the foreign sovereign's actions are 'commercial' within the meaning of the FSIA." The type of act, and not its purpose or underlying motive, controls. Republic of Argentina v Weltover (holding that Argentina's issuing bonds was a "commercial activity," even where the bonds were used to finance a forex regulation scheme); Saudi Arabia v Nelson (holding that Saudi Arabia's torture of a whistleblower was not a "commercial act," even if the torture was in retaliation for reporting safety violations at a hospital).
An activity has a "direct effect" in the US if something happens in the US as an "immediate consequence" of the foreign sovereign's actions. Republic of Argentina v Weltover (holding that the nonpayment of bonds had a direct effect in the US where NYC was the contractual place for payment to be made).
Commercial activity "based upon" conduct in the US
A claim is "based upon activity . . ." in the US if the activity in the US provides the elements of a cause of action. Saudi Arabia v Nelson (holding that a suit alleging torture in Saudi Arabia by an employee hired in the US was not "based upon" activity in the US). Not every element of a claim, however, must be commercial rather than sovereign activity to satisfy FSIA. Saudi Arabia v Nelson.
Republic of Argentina v Weltover
Saudi Arabia v Nelson
Commercial exceptions chart:
Is the action based upon a commercial activity in the US?Yes- jurisdiction 1605(a)(2)
No: Is the foreign state involved in commercial activity elsewhere?
Yes: Is the action based upon an act performed in the US in connection with such commercial activity?
Yes: jurisdiction 1605(a)(2)
No: Does the action have a direct effect in the US?
Yes: jurisdiction 1605(a)(2)
No: Are rights or property taken in violation of international law in issue?
No: no jurisdiction
Yes: Are the property or its exchanged property in the US?
Yes: jurisdiction 1605(a)(3)
No: Is the property or its exchanged property owned by an agency or instrumentality of the foreign state?
No: no jurisdiction
Yes: Is the foreign state involved in commercial activity in the US?
Yes: jurisdiction 1605(a)(3)
No: no jurisdiction
Noncommercial tort exception
(a)A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case--
(5) not otherwise encompassed in paragraph (2) above, in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment; except that this paragraph shall not apply to--
(A) any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused; or
(B) any claim arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights;
28 USC § 1605(a)(5)
Note that § 1605(a)(5) only applies to torts that happen in the United States. Cf. Saudi Arabia v Nelson (a hospital worker tortured in Saudi Arabia could not rely on § 1605(a)(5), since the torture did not occur in the US); Saudi Arabia v Nelson (Kennedy concurring and dissenting in part) (arguing that the Saudi government was negligent when it hired the worker in the US).
Property held in the US
FSIA also excepts from sovereign immunity cases "in which rights in property in the United States acquired by succession or gift or rights in immovable property situated in the United States are in issue." 28 USC § 1605(a)(4). The Supreme Court has interpreted this provision to imply that "property ownership is not an inherently sovereign function." [Permament Mission of India v City of New York] (allowing suit to determine validity of tax liens placed upon the diplomatic residences of foreign countries).
State sponsor of terrorism exception
(a)A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case--
(7) not otherwise covered by paragraph (2), in which money damages are sought against a foreign state for personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support for terrorism . . .if such act or provision of material support is engaged in by an official, employee or agent of such foreign state while acting within the scope of his or her office, employment, or agency, except that the court shall decline to hear a claim under this paragraph--
(A) (if the foreign state was not listed as a state sponsor of terrorism)
(B) (if the foreign state was listed as a state sponsor of terrorism, and (i) the foreign state has not had an opportunity to arbitrate such claims or (ii) neither the claimant nor the victim was a US national).
28 USC § 1605(a)(7)
[alias: FSIA]
[alias: foreign sovereign immunity]