Rising to the challenge
Foreign Sovereign Immunities Act (FSIA)
What the FSIA is and does
The FSIA provides the “sole basis for obtaining jurisdiction over a foreign state” in United States courts.
Wye Oak Tech., Inc. v. Republic of Iraq, 24 F.4th 686, 691 (D.C. Cir. 2022) (quoting Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989)). It also “establishes the general rule for granting foreign sovereign immunity” and enumerates the only nine exceptions to immunity. Id. The sovereign immunity afforded by the FSIA can impact the ability of a claimant to sue, to seek discovery from, and to enforce judgments and arbitral awards against a foreign sovereign, as well as the foreign sovereign’s “agencies and instrumentalities,” even where those agencies and instrumentalities are separate legal persons. See Gater Assets Ltd. v. Moldovagaz, 2 F.4th 42, 49 (2d Cir. 2021).
Jurisdiction and venue
The FSIA imposes special requirements for service of lawsuits upon foreign sovereigns and their agencies and instrumentalities, compliance with which can be complicated and time-consuming. The service statute, 28 U.S.C. § 1608, provides the “exclusive procedures for service,” which include a hierarchy of four means of service the latter of which are available only if the earlier-listed options are not possible. Lewis & Kennedy, Inc. v. Permanent Mission of Republic of Bots. to the UN, 2005 U.S. Dist. LEXIS 13756, at *8 (S.D.N.Y. July 12, 2005). Strict compliance with the special service requirements of § 1608 is required. Chiejina v. Fed. Republic of Nigeria, No. 21-2241 (RJL), 2022 U.S. Dist. LEXIS 152675, at *4 (D.D.C. Aug. 23, 2022). While the service requirements are not necessarily onerous in themselves—they include, for example, preparing a Notice of Suit and arranging for the translation of the complaint into the official language of
Service of lawsuits
Enforcement and discovery in aid of execution
the foreign sovereign served—small mistakes can render the service defective with disastrous results. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 152 (D.C. Cir. 1994) (“The case before us paints the dangers of section 1608 in somber tones. Today we must face the possibility that an attempt at service made six years ago was defective….”). Depending on the circumstances of the case, service pursuant to the requirements of an international convention such as the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters or the Inter-American Service Convention may be required to effect service as directed by Section 1608. See 28 U.S.C. § 1608(a)(2). The apostille and central authority review process that those and other conventions often require can lead to months and even years of delay.
The FSIA confers subject matter jurisdiction to federal courts over any dispute with a foreign sovereign to which the sovereign is not immune. Subject matter jurisdiction is dependent upon compliance with special service requirements discussed below. For foreign sovereigns, no separate showing of personal jurisdiction is necessary, but personal jurisdiction over agencies and instrumentalities ordinarily will require at least a showing of minimum contacts. Gater Assets, 2 F. 4th at 49.
In addition to relatively traditional venue rules (e.g., venue is proper in “any judicial district in which a substantial part of the events or omissions giving rise to the claim occurred,” 28 U.S.C. § 1391(f)(1)), the FSIA also provides that venue for an action against a foreign sovereign is always proper in the United States District Court for the District of Columbia, 28 U.S.C. § 1391(f)(4). For practical reasons, the vast majority of actions involving the FSIA are filed in the Southern District of New York, a major banking hub and of foreign sovereign assets in the US, and in the District of Columbia, due to the general venue provided there against foreign sovereigns.
While the assets of a foreign sovereign remain generally immune from attachment or enforcement in the US under the FSIA, an important exception is made for those assets used for “commercial activity,” meaning “either a regular course of commercial conduct or a particular commercial transaction or act.” 28 U.S.C. §§ 1603, 1610. A foreign sovereign’s assets are used for commercial activity when the foreign sovereign, with respect to that transaction or conduct, acts “not as regulator of a market, but in the manner of a private player within it.” Republic of Arg. v. Weltover, Inc., 504 U.S. 607, 614 (1992). Thus, for example, when a foreign sovereign is purchasing or selling in the
open market, the associated assets generally fall within the commercial activity exception to immunity. Further, because the FSIA incorporated the immunities of any international agreements to which the US was a party at the time of its enactment, diplomatic properties are generally immune from attachment and execution. Wyatt v. Syrian Arab Republic, 83 F. Supp. 3d 192, 195 (D.D.C. 2015). Nonetheless, the FSIA does not prohibit broad discovery of a foreign sovereign’s assets, including those outside the US. Republic of Arg. v. NML Capital, Ltd., 573 U.S. 134, 144 (2014).
The FSIA imposes special requirements for service of lawsuits upon foreign sovereigns and their agencies and instrumentalities, compliance with which can be complicated and time-consuming. The service statute, 28 U.S.C. § 1608, provides the “exclusive procedures for service,” which include a hierarchy of four means of service the latter of which are available only if the earlier-listed options are not possible. Lewis & Kennedy, Inc. v. Permanent Mission of Republic of Bots. to the UN, 2005 U.S. Dist. LEXIS 13756, at *8 (S.D.N.Y. July 12, 2005). Strict compliance with the special service requirements of § 1608 is required. Chiejina v. Fed. Republic of Nigeria, No. 21-2241 (RJL), 2022 U.S. Dist. LEXIS 152675, at *4 (D.D.C. Aug. 23, 2022). While the service requirements are not necessarily onerous in themselves—they include, for example, preparing a Notice of Suit and arranging for the translation of the complaint into the official language
of the foreign sovereign served—small mistakes can render the service defective with disastrous results. See Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 152 (D.C. Cir. 1994) (“The case before us paints the dangers of section 1608 in somber tones. Today we must face the possibility that an attempt at service made six years ago was defective….”). Depending on the circumstances of the case, service pursuant to the requirements of an international convention may be required to effect service as directed by Section 1608, such as the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters or the Inter-American Service Convention. See 28 U.S.C. § 1608(a)(2). The apostille and central authority review process that those and other conventions often require can lead to months and even years of delay.
The FSIA confers subject matter jurisdiction to federal courts over any dispute with a foreign sovereign to which the sovereign is not immune. Subject matter jurisdiction is dependent upon compliance with special service requirements discussed here. For foreign sovereigns, no separate showing of personal jurisdiction is necessary, but personal jurisdiction over agencies and instrumentalities ordinarily will require at least a showing of minimum contacts. Gater Assets, 2 F. 4th at 49.
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Where FSIA issues arise and our experience
FSIA issues frequently arise in the context of government contracting and in enforcing arbitral awards. A claimant company may find that initiating a lawsuit or subsequently collecting on a judgment or award is significantly more difficult as the foreign sovereign uses the protections the FSIA provides to it. Our experience includes addressing FSIA issues both on behalf of claimants and foreign sovereigns. We have navigated the service requirements to successfully secure jurisdiction over foreign sovereigns, have secured judgments, and have employed discovery in aid of execution to collect on judgments and arbitral awards. Our experience and expertise not only aids our ability to litigate these disputes, it also allows us to counsel with clients at the contracting stage—before any dispute has arisen—to place them in as strong of a position as possible should a dispute arise. Chambers has spotlighted Will O’Brien’s and our team’s international arbitration award enforcement practice, particularly with respect to the enforcement of awards against sovereigns and state-owned enterprises. We speak, write, and teach on international arbitration award enforcement. Will O’Brien is an adjunct professor of law at the Georgetown University Law Center, teaching international commercial arbitration with a focus on sovereigns and immunity issues. Will O’Brien and Daniel Morris have also served as faculty at the International Law Institute, lecturing on arbitrations with sovereigns, including immunity issues.
Representative matters
Established jurisdiction under the FSIA over a South African agency to enforce an international arbitration award worth more than US$100 million.
Advised a global financial institution regarding restrictive and absolute immunities as applied to potential amenability to suit, discovery, and enforcement as well as alternative proposals and the means to manage and minimize those threats. We also provided longer-term strategies for managing legal risks arising from developing US law on immunity.
Advised company on FSIA issues and enforced a subpoena against an international organization notwithstanding immunities conferred by the International Organization Immunities Act (IOIA).
Advised investment firm on piercing the FSIA and the IOIA and successfully resolved tortious interference and defamation claims against various international financial institutions.
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Related concerns
Disputes arising from the application of the FSIA do not, of course, happen in a vacuum. At least two other issues regularly arise alongside FSIA actions. The first is the act of state doctrine, which states that when it comes to the acts of a foreign state, US courts “‘will not sit in judgment’ of those acts when done within the territory of the foreign state.” Samantar v. Yousuf, 560 U.S. 305, 322 (2010). This, however, is not so much an immunity as it is a “substantive defense” for foreign sovereigns. Id. In the commercial context, this defense often arises when the foreign sovereign is a contracting party, and the other party contends the foreign sovereign breached or frustrated the purpose of the contract with some action. The second issue is the immunities of international organizations. The IOIA generally governs the specific immunities to which international organizations are entitled. However, the Supreme Court has held that international organizations’immunity from suit under the IOIA is coextensive with foreign sovereigns’ immunity from suit under the FSIA. Jam v. Int’l Fin. Corp., 139 S. Ct. 759, 772 (2019).
For further information, please contact:
William O'Brien
Partner, Global Co-Head of International Arbitration, Washington DC
Washington DC + 202 220 8236 williamobrien@eversheds-sutherland.com
