Foreign Sovereign Immunities Act – What’s Next?
The Foreign Sovereign Immunities Act of 1976 (FSIA) establishes limitations on suits, in U.S. federal or state courts, against foreign sovereign nations and institutions thereof. The United States was the first nation to codify the law of foreign sovereign immunity by statute. Until 1976, the U.S. State Department decided whether foreign nations could obtain immunity from suits in U.S. courts. The State Department’s decisions sometimes appeared to be too political, so Congress passed the FSIA to transfer immunity decision-making to the judiciary. The FSIA seeks to define and codify the restrictive theory of immunity and provide a comprehensive and uniform litigation procedure against foreign states and governmental agencies.
Disputes under the FSIA often arise in commercial suits. Globalization has resulted in many national governments undertaking commercial activities. State-controlled enterprises across the world are active in international energy, mining, aviation, shipping, and other sectors. Foreign government sovereign wealth funds invest in foreign markets and property. Where foreign governments are acting as private entities, the general assumption is that they should be treated as such during litigation.
Recently, for example, courts have applied the FSIA in litigation between hedge funds and the Republic of Argentina over Argentina’s refusal to pay bondholders on its defaulted sovereign debt. One court has entered an injunction against Argentina requiring it to pay holders of its defaulted bonds at the same time it pays holders of its restructured debt. Courts have also upheld wide-ranging asset discovery that judgment creditors have sought in an effort to uncover attachable property.
The FSIA has also been applied in disputes beyond commerce. For example, Congress has repeatedly amended the statute to permit litigation against U.S. government-designated state sponsors of terrorism such as Iran. Those amendments have led to clashes with the Executive Branch, as Congress’s desire to provide compensation has often conflicted with the Executive’s foreign policy goals. They have also raised questions over the extent to which state-owned instrumentalities should be treated as distinct from the sovereigns that own them for purposes of immunity and attachment.
Finally, in the past several years, there has been an increase in employment-related claims brought against foreign sovereign employers by employees working in consulate offices, embassies, other sovereign-related agencies, or nationalized entities in the U.S. In fact, a foreign sovereign with consulate offices in various states was recently named as a defendant in a California wage and hour class action. In some instances, foreign sovereign employers may avoid the application of complicated U.S. employment laws, and in other situations, sovereign employers should consider taking measures to comply with certain U.S. laws to avoid claims from personnel working for them in the U.S.
The twists and turns in application of the FSIA expand and continue to broaden beyond mere commerce. It behooves those dealing with state controlled and sponsored entities to understand the Act, issues of scope and territoriality, immunity and its exceptions, and liability and enforcement procedures.
Our expert panel will provide you with a practical look at the FSIA and how it affects the execution of judgments against foreign governments and their instrumentalities. Experts on the FSIA will discuss who can be sued and in which courts, what constitutes a “foreign state,” the presumptions of immunity and their exceptions, and liabilities, damages, and enforcement proceedings under the Act.
Robert K. Kry, Partner
Molo Lamken LLP
- Asset Discovery Against Foreign Sovereigns. In Republic of Argentina v. NML Capital, the Supreme Court held that the Foreign Sovereign Immunities Act generally does not restrict discovery against foreign sovereigns otherwise subject to a court’s jurisdiction. That decision opens up new opportunities for judgment creditors seeking information about how to satisfy sovereign debts. Nonetheless, the Court recognized that other legal doctrines may still restrict the scope of discovery, including governmental privilege and discretionary control.
- Sovereign Debt. Many high profile cases in recent years have involved efforts to collect defaulted sovereign bonds from nations like Argentina. Those enforcement actions provide important lessons into the scope and limits of the commercial activities exception, collective action clauses and other mechanisms to deal with sovereign default, and the types of remedies courts may order without running afoul of the Act’s restrictions on attachment and execution.
- Related Immunities. The Foreign Sovereign Immunities Act is the centerpiece of immunity law, but there are a number of related doctrines. Those doctrines include treaty-based immunities such as diplomatic immunity under the Vienna Convention, as well as common-law immunities such as the immunity for foreign heads of state and other foreign officials. These immunities also play a crucial role.
Andreas Frischknecht, Partner
Chaffetz Lindsey LLP
- Commercial Activity Exception to Immunity. The commercial activity exception is likely the single most important exception to sovereign immunity. It allows for jurisdiction in cases where a plaintiff’s claim is “based upon” a sovereign defendant’s “commercial activity.” The Foreign Sovereign Immunities Act requires a sufficient nexus between the defendant’s commercial activity and the United States—such as where the commercial activity has “substantial contact with the United States” or “causes a direct effect in the United States.” These open-ended terms require interpretation and case-by-case analysis.
- Agencies and Instrumentalities. Foreign sovereign immunity law generally respects distinctions in corporate form between a sovereign and its separate agencies and instrumentalities, even when those entities are wholly owned by the state. While the Act defines agencies and instrumentalities and treats them differently from the sovereign itself, courts have also developed tests designed to distinguish agencies and instrumentalities from entities deemed part of the state itself, as well as tests for piercing the corporate veil to hold an instrumentality liable for sovereign debts or vice versa.
- Terrorism Suits. Over the past few decades, Congress has repeatedly cut back on the scope of sovereign immunity in suits against designated state sponsors of terrorism. Those amendments have led to clashes with the Executive Branch, as Congress’s desire to provide compensation has often conflicted with the Executive’s foreign policy goals. Specific disputes have included the use of “blocked assets” to pay terrorism judgments, the seizure of foreign antiquities, and efforts to override the presumption of separate status for state instrumentalities.
Rebecca M. Aragon, Shareholder
Littler Mendelson P.C.
- Interplay between the Foreign Sovereign Immunities Act and U.S. employment laws
- Federal and state employment laws applicable to foreign sovereign employers that have personnel in the U.S.
- Recent single-plaintiff and class action litigation trends against foreign sovereign employers
- Special defenses under the FSIA and the Vienna Convention foreign sovereign employers should assert in pending employment litigation
- Measures foreign sovereign employers should take to minimize their exposure to employment-related claims by employees who work in the U.S.
Who Should Attend:
- Debt Investors
- Trade Specialists
- State and Federal Officials
- Foreign Government Contractors
- Lawyers and Legal Counsel
- Foreign Embassies and Consulate Offices
Rebecca Aragon, a shareholder in Littler’s Los Angeles office’s has litigated more than 300 suits to conclusion. Her practice focuses on leading litigation matters, with particular emphasis on wage and hour class actions. She has a proven track record of guiding national, California-based and foreign sovereign employers through the intricacies of federal and state employment laws to achieve favorable outcomes. As part of her international practice, Aragon advises foreign government regarding sovereign immunity matters and the application of federal and state employment laws to their personnel in the U.S. She also assists U.S. clients with the creation of corporate entities and establishment of workforces in Mexico. Aragon is a widely published author and frequent lecturer on labor and employment issues effecting national, state and foreign sovereign employers.
Rebecca Aragon, a shareholder in Littler’s Los Angeles office’s has litigated more than 300 suits to conclusion. Her practice focuses …
Robert Kry's practice focuses on trial and appellate litigation. He represents clients before the United States Supreme Court, the federal courts of appeals, and other federal and state courts. He has authored approximately 20 Supreme Court briefs and has argued numerous matters in trial and appellate courts. His practice covers a broad array of subject matters, including constitutional law, sovereign immunity, business litigation, securities fraud, criminal law, and intellectual property.
Before joining MoloLamken, Mr. Kry was an associate with Baker Botts LLP. Before that, Mr. Kry served as a law clerk to Justice Antonin Scalia of the United States Supreme Court and to Judge Alex Kozinski of the United States Court of Appeals for the Ninth Circuit.
Robert Kry's practice focuses on trial and appellate litigation. He represents clients before the United States Supreme Court, the federal …
Andreas Frischknecht is a partner with Chaffetz Lindsey LLP, a New York-based boutique dispute resolution firm focused on international arbitration and commercial litigation. Mr. Frischknecht has 12 years of dispute resolution experience and has litigated a broad range of cases in the state and federal courts in New York and elsewhere, in trial courts and on appeal. He regularly represents corporate clients in transnational cases, including complex commercial contract and financial disputes, as well as sovereign clients in disputes arising under the Foreign Sovereign Immunities Act (FSIA). Mr. Frischknecht's FSIA experience includes litigating sovereign immunity under the "commercial activity" exception as well as judgment enforcement proceedings.
Andreas Frischknecht is a partner with Chaffetz Lindsey LLP, a New York-based boutique dispute resolution firm focused on international arbitration …
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About Littler Mendelson P.C.
Littler is the largest global employment and labor law practice, with more than 1,000 attorneys in over 60 offices worldwide. Littler represents management in all aspects of employment and labor law and serves as a single-source solution provider to the global employer community. Consistently recognized in the industry as a leading and innovative law practice, Littler has been litigating, mediating and negotiating some of the most influential employment law cases and labor contracts on record for over 70 years. Littler Global is the collective trade name for an international legal practice, the practicing entities of which are separate and distinct professional firms. For more information visit: www.littler.com.
About Molo Lamken LLP
MoloLamken is a law firm focused exclusively on representing clients in complex litigation. We handle civil as well as criminal and regulatory matters across the United States. Our clients are across the globe.
Our founding partners, Steven Molo and Jeffrey Lamken, developed national reputations based on their courtroom successes while partners at large full-service firms where they held leadership positions. With an abiding belief that complex litigation is most effectively handled by smaller teams comprised of smart, highly experienced lawyers focused on results rather than process, they formed the firm in the midst of the worst economic crisis since the Great Depression.
We provide experienced advocacy before judges, juries, and courts of appeal, including the Supreme Court of the United States. We also represent clients in regulatory and criminal investigations and conduct internal investigations.
Our lawyers are courtroom advocates, not merely paper litigators. We possess years of collective experience acting for plaintiffs and defendants in high stakes disputes.
Our strength lies in the intellect, creativity, and tenacity of our lawyers and our experience in applying those traits to achieve great results for clients in serious matters.
About Chaffetz Lindsey LLP
Chaffetz Lindsey is a litigation and international arbitration firm based in New York. Established in 2009 by five partners from one of the world’s largest firms, Chaffetz Lindsey offers clients first tier capability with the focus and flexibility of a boutique firm. The firm has extensive experience representing clients in the US and around the world across the spectrum of complex commercial and financial disputes.