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The Foreign Sovereign Immunities Act of 1976 in Practice

Published online by Cambridge University Press:  27 February 2017

Charles N. Brower ,
F. Walter Bistline Jr.  and
George W. Loomis Jr.
Charles N. Brower
Affiliation:
Of the District of Columbia and New York Bars U.S. Department of State
F. Walter Bistline Jr.
Affiliation:
Of the New York Bar
George W. Loomis Jr.
Affiliation:
Of the New York Bar
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Extract

The U.S. Foreign Sovereign Immunities Act of 1976 (the Act), which became effective on January 19, 1977, sought to codify the substantive law of sovereign immunity in the United States, while also modifying it in certain respects. An even more important goal was to make the application of such law more uniform, fair, and hence predictable, by relieving the Department of State of the responsibility to determine claims of such immunity, and remitting them exclusively to judicial determination, preferably in federal courts. Now, 2 years after it first took effect, it is appropriate to review the roughly two dozen cases that have applied and interpreted the Act, as well as certain questions that have otherwise arisen in practice, in order to ascertain whether (and, if so, where) significant uncertainties remain and amendment of the Act may be in order. Further, the taking effect of the new State Immunity Act 1978 in the United Kingdom on November 22, 1978, has provided an opportunity to see what others have learned from our experience. It also demonstrates the extent to which they have diverged from our design, suggesting the ultimate utility of a broad international convention on the subject.

Type
Research Article
Information
American Journal of International Law , Volume 73 , Issue 2 , April 1979 , pp. 200 - 214
Copyright
Copyright © American Society of International Law 1979

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References

1 28 U.S.C. §§1330, 1332(a)(2), (3), and (4), 1391(f), 1441(d), 1602-1611, reprinted in 71 Ajil 595 (1977).

2 H.R. Rep. NO. 1487, 94th Cong., 2d Sess. 7-8 (1976).

3 Ibid.

4 Ibid.

5 The Act has been generally discussed elsewhere. See Delaume, Sovereign Imnunity in America: A Bicentennial Accomplishment, 8 J. Mar. L. 349 (1977); Delaume, Public Debt and Sovereign Immunity: The Foreign Sovereign Immunities Act of 1976, 71 Ajil 399 (1977); Levine, Loan Agreements: The Growing Problem of Sovereign Immunity, Euromoney 74 (May 1977); von Mehren, The Foreign Sovereign Immunities Act of 1976, 17 Colum. J. Transnat'l l. 33 (1978); note, International Law: Act of State Doctrine: Foreign Sovereign Immunities Act of 1976, 18 B.C. Indus. & Com. L. Rev. 318 (1977); note, The Foreign Sovereign Immunities Act of 1976: Judicial Predominance, 4 Brooklyn J. Int'll. 146 (1977); note, The Foreign Sovereign Immunities Act of 1976: Giving The Plaintiff His Day in Court, 46 Fordham l. Rev. 543 (1977); note, Sovereign Immunity: Limits of Judicial Control: The Foreign Sovereign Immunities Act of 1976, 18 Harv. Int'l l.J. 429 (1977).

6 An appendix to this article lists all cases citing The Act that research and consultation with The Department of State have disclosed.

7 State Immunity Act 1978, ch. 33; reprinted in 17 Ilm 1123 (1978). This statute is discussed comprehensively in Delaume, The State Immunity Act of The United Kingdom, supra at p. 185.

8 State Immunity Act 1978 Commencement Order (Stat. Inst. 1978 No 1572).

9 Complaint, Letelier v. The Central National de Informationes, No. 78-1477 (D.D.C., filed Aug. 8, 1978).

10 28U.S.C. §1605(a)(5).

11 H.R. Rep. NO. 1487, supra note 2, at 20.

12 Fisheries Resources (Jurisdiction and Conservation) Act, 1977, §§5, 6.

13 Fishery Conservation and Management Act of 1976, §101, 16 U.S.C. §1811.

14 Complaint, Perez v. The Bahamas, No. 78-4110 (S.D. Fla., filed August 30, 1978).

15 Amoco Overseas Oil v. Compagnie Nationale, etc., 459 F.Supp. 1242 (S.D.N.Y. 1978); Martrópico Companía Naviera S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), 428 F.Supp. 1035 (S.D.N.Y. 1977); Martrópico Companía Naviera S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), New York Law Journal, June 28, 1977, at 11, col. 3 (Sup. Ct.); Rasu Maritima v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), 77 Civ. 263 (S.D.N.Y. Mar. 7, 1977). See also National American Corp. v. Federal Republic of Nigeria, 448 F.Supp. 622 (S.D.N.Y. 1978).

16 40 D 6262 Realty Corp. v. United Arab Emirates Government, 447 F.Supp. 710 (S.D.N.Y. 1978); Gray v. Permanent Mission of People's Republic of Congo, 443 F.Supp. 816 (S.D.N.Y. 1978).

17 Zamnik v. Veterans Administration, 77 Civ. 1610, slip op. at 11 (S.D.N.Y. Dec. 19, 1977).

18 408 N.Y.S.2d 600 (Sup. Ct. 1978).

19 453 F.Supp. 1097 (S.D.N.Y. 1978), aff'd, No. 78-7323 (2d Cir. Jan. 24, 1979).

20 Id. at 1100 n.2.

21 Edlow International Co. v. Nuklearna Elektrarna Krsko, 441 F.Supp. 827, 831 (S.D.N.Y. 1977). This case is unusual in that The plaintiff was attempting to establish, rather than deny, The “foreign state” status of The defendant, apparently because The Act offered The only available basis for jurisdiction over The defendant, and The plaintiff was confident that The defendant would be held not immune.

22 Yessenin-Volpin v. Novosti Press Agency, 443 F.Supp. 849, 852 (S.D.N.Y. 1978).

23 Given this apparent, or at least potential, split of authority, an attorney involved in a transaction with a socialist state enterprise may be well advised to include a favorable venue selection in any agreement. Section 5 of The Act amends 28 U.S.C. §1391 so as to provide four express provisions for venue in actions against foreign states. These include (1) The district where The events giving rise to The claim occurred or property in question is located; (2) The district where, in an admiralty action, The vessel or cargo is located; (3) The district where an agency or instrumentality against which suit is brought is doing business or is licensed to do business; and (4) The United States District Court for The District of Columbia, if The action is against a foreign state or political subdivision.

24 78 Civ. 2451 (S.D.N.Y. Aug. 17, 1978).

25 Id., slip op. at 3. It is not clear from The opinion whether The court reasoned that a majority of CORFO was owned by The state and a majority of Cap owned by Corfo and thus, by “boot-strapping,” Cap fell within The definition of a “foreign state,” or whether The court felt that Corfo, which it described as “a governmental agency” whose chief officer and directors “hold ministerial rank within The Chilean government,” was in and of itself an integral part of The Chilean Government, so that The elevation of Cap to statehood was only a one-step process.

26 The Act added §1330 to Title 28, United States Code, so as to provide for original jurisdiction in The federal district courts, without regard to amount in controversy, over any nonjury civil action against a foreign state as defined in §1603(a). In Herzberger The court concluded that CAP was entitled to removal to federal court under 28 U.S.C. §1441(d).

27 22 U.S.C. $§288-288g.

28 No. 77-1974 (D.D.C. Mar. 28, 1978).

29 Id., slip op. at 2.

30 Broadbent v. Organization of American States, No. 78-1465 (D.C. Cir., docketed May 25, 1978).

31 Brief for The United States as Amicus Curiae, Broadbent v. Organization of American States, No. 78-1465 (D.C. Cir., filed Oct. 18, 1978).

32 22 U.S.C. §288a(b).

33 Brief for The United States, supra note 31, at 6.

34 See also Dupree Associates, Inc. v. Organization of American States, No. 76-2335 (D.D.C. June 1, 1977); Weidner v. International Telecommunications Satellite Organization, No. 12328 (D.C. Ct. App. Sept. 21, 1978). In Broadbent The United States, despite its disagreement with The district court over The applicability of The Act, urged affirmance on The grounds that The subject of The suit—The international Organization's management of its civil service—does not constitute a commercial activity within The meaning of The Act.

35 That The “commercial activity” forming The basis for The denial of immunity must be The specific activity of The foreign state upon which The action is based, if not already clear from a reading of §1605(a)(2) of The Act, has been confirmed by The U.S. District Court for The Southern District of New York. See Yessenin-Volpin v. Novosti Press Agency, 443 F.Supp. 849-57 (S.D.N.Y. 1978).

36 Carey v. National Oil Corp., 453 F.Supp. 1097 (S.D.N.Y. 1978) (Duffy, J.), aff'd, No. 78-7323 (2nd Cir. Jan. 24, 1979).

37 Id. at 1101.

38 326 U.S. 310 (1945).

39 National American Corporation v. Federal Republic of Nigeria, 448 F.Supp. 622, 639 (S.D.N.Y. 1978) (Goettel, J.). See also The court's unreported memorandum opinion, National American Corporation v. Republic of Nigeria, 76 Civ. 2745 (S.D.N.Y. Dec. 19, 1977); Upton v. Empire of Iran, 459 F.Supp. 264 (D.D.C. 1978).

40 Carey v. National Oil Corp., 453 F.Supp. at 1102, citing Victory Transport, Inc. v. Comisaria General, 336 F.2d 354 (2d Cir. 1964), cert, denied, 381 U.S. 934 (1965). The court also rejected claims alleging that Libya induced Lnoc to breach various contracts. Viewing such claims as allegations of tortious interference with contract rights, The court noted that under §1605(a)(5)(B), claims arising out of interference with contract rights are excluded from The exception to sovereign immunity set forth in §1605(a)(5) of The Act. Nor was The exception to immunity for commercial acts provided by §1605(a)(2) applicable, for The court found Libya's actions to be part of no commercial activity. In The court's view, such actions “were deliberate weapons of foreign policy, aimed at influencing The conduct of other nations, or at least punishing undesirable conduct.” 453 F.Supp. 1102.

41 See also The arbitration award of January 19, 1977 in Texaco Overseas Petroleum Co. v. Libya (Dupuy, Arb.), translated and reprinted in 17 ILM 1 (1978).

42 von Mehren, supra note 5, at 57-58; but see Lowenfeld, Claims Against Foreign States—A Proposal For Reform of United States Law, 44 N.Y.U. L. Rev. 901, 916-18 (1969).

43 Public Notice No. 507 of The Department of State of The United States of America, 41 Fed. Reg. 50883 (1976).

44 Yessenin-Volpin v. Novosti Press Agency, 443 F.Supp. 849, 851 n.l (S.D.N.Y. 1978).

45 See [1977] Digest Of United States Practice In International Law 515-16.

46 U.S. Const, art. II, $2, cl. 2; see Jurisdiction of U.S. Courts in Suits against Foreign States: Hearings on H.R. 11315 Before The Subcomm. on Administrative Law and Governmental Relations of The House Comm. on The Judiciary, 94th Cong., 2d Sess. 56 (1976) (testimony of Michael H. Cardozo). See also von Mehren, supra note 5, at 65 n.116.

47 28 U.S.C . 51608(a)(1) and (b) (1) .

48 See Martin v. Bank of Spain, [1952J ILR 202 (France, Com de cassation) (immunity of a central bank).

49 Fed. R. CIV. P. 26-37.

50 See, e.g., Barr v. Matteo, 360 U.S. 564 (1959); Gregoire v. Biddle, 177 F.2d 579 (2d Cir. 1949).

51 Rasu Maritima, S.A., v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), No. 20424/76 (Sup. Ct. N.Y. June 23, 1977); see also Lowenfeld, Litigating a Sovereign Immunity Claim—The Haiti Case, 49 N.Y.U. L. Rev. 377, 415-19 (1974).

52 See, e.g., Trans World Airlines, Inc. v. Hughes, 332 F.2d 602 (2d Cir. 1964), cert, dismissed as improvidently granted, 380 U.S. 248 (1965). A court is likely to be more tolerant of a party who fails to comply with discovery where such failure stems not from a simple refusal but rather from observance of a provision of foreign law prohibiting The disclosure in question. See Societe Internationale v. Rogers, 357 U.S. 197 (1958).

53 Fed. R. CIV. P. 55(e).

54 28 U.S.C. §1608(e).

55 See Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363 (1973).

56 State Immunity Act 1978, ch. 33, section 13(1).

57 28 U.S.C. §1330(a); H.R.. Rep. NO. 1487, supra note 2, at 13.

58 H.R. Rep. NO. 1487, supra note 2, at 16.

59 State Immunity Act 1978, ch. 33, section 3(3) (b) (emphasis added).

60 For an example of an administrative proceeding in The United States involving a claim of sovereign immunity, see Brower, ‘ Litigation of Sovereign Immunity Before a State Administrative Body and The Department of State: The Japanese Uranium Tax Case, 71 Ajil 438 (1977).

61 See 28 U.S.C. §1330(a).

62 State Immunity Act 1978, ch. 33, section 22 (1).

63 28 U.S.C. §1607.

64 Id. §1610(d).

65 Id §1611(b)(l).

66 E.g., there are recent indications that Canada is considering The enactment of sovereign immunity legislation.

67 Political subdivisions generally are also treated as separate entities except as to service of process, unless otherwise provided by Order in Council. State Immunity Act 1978, ch. 33, sections 14(5) and 14(6).

6S The UK Act denies states jurisdictional immunity generally as to “any other transaction or activity (whether of a commercial, industrial, financial, professional or other similar character) into which a State enters or in which it engages otherwise than in The exercise of sovereign authority.” Id., section 3 (3) (c).

69 28 U.S.C. §§1603 and 1604.

70 Id. §1605(a)(2).

71 Id. §1610(a)(2).

72 Id. §1610(b)(2).

73 However, where The defendant state is a party to The European Convention on State Immunity, execution may be altogether unavailable in The United Kingdom. State Immunity Act 1978, ch. 33, section 13(4).

74 28 U.S.C. §1610(b).

75 The UK Act accomplishes this by providing that property of central banks and monetary authorities “shall not be regarded … as in use or intended for use for commercial purposes” unless “written consent” is given. State Immunity Act 1978, ch. 33, section 14(4).

76 28 U.S.C. §1611﹛b)(i).

77 State Immunity Act 1978, ch. 33, sections 2(1) and 2(2).

78 Id. sections 13(2)(a) and 13(3).

79 28 U.S.C. §1606.

80 H.R. Rep. No. 1487, supra note 2, at 22.

81 28U.S.C. §1608(a)(3), (b)(2), and (b)(3)(B).

82 Id. §§1605(a)(l), 1610(a)(1), and 1610(b)(1).

83 State Immunity Act 1978, ch. 33, sections 2(1) and 2(2).

84 Id. section 9.

85 Compare State Immunity Act 1978, ch. 33, section 2(2) with H.R. Rep. No. 1487, supra note 2, at 18.

86 State Immunity Act 1978, ch. 33, section 13(3).

87 See Mareva Companía Naviera, S.A.v. International Bulk Carriers, Ltd., [1975] 2 Lloyd's Rep. 509 (C.A.); Rasu Maritima, S.A. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), [1977] 3 W.L.R. 518 (C.A.); Siskina v. Distos Companía Naviera, S.A., [1977] 3 W.L.R. 803, [1977] 3 All E.R. 803 (H.L.).

88 28 U.S.C. §1610(b) and (d).

89 Report of The International Law Commission, 30th Session, Un Doc. A/33/10, at 379-82 (1978).

90 Council of Europe: European Convention on State Immunity and Additional Protocol, Basle, May 16, 1972, reprinted in 66 Ajil 923 (1972), 11 ILM 470 (1972