The Theory and Practice of the Foreign Sovereign Immunities Act: Untying the Gordian Knot

The Theory and Practice of the Foreign Sovereign Immunities Act: Untying the Gordian Knot by Gerard Lacroix INTRODUCTION .................................................. I. II. THE PROVISIONS OF THE FSIA .............................. JUDICIAL INTERPRETATION OF THE ACT'S CONSTITUTIONAL B ASES . ..................................................... A. The Conceptual Ambiguities ............................ B. The Texas Trading Model ............................... 1. Subject Matter Jurisdiction and Article III ............ 2. Personal Jurisdiction and Due Process ................ III. 146 147 COMMENCING AN ACTION AGAINST A FOREIGN SOVEREIGN UNDER THE ACT ........................................... A . W aiver ................................................ 1. W aiver Prior to Litigation ........................... 2. W aiver During Litigation ............................ B. The Commercial Activity Exception ..................... 1. Statutory Subject Matter Jurisdiction ................. a. Section 1605(a)(2) Clause One .................... b. Section 1605(a)(2) Clause Two .................... c. Section 1605(a)(2) Clause Three ................... 2. Personal Jurisdiction and Due Process ................ a. A Narrower Standard than Constitutionally Perm issible ...................................... b. Due Process Restrictions on Section 1605(a)(2) .... C. The Expropriation Exception ............................ 1. Statutory Subject Matter Jurisdiction ................. a. Rights in Property ............................... b. Property Taken in Violation of International Law.. c. The Nexus Requirement .......................... 2. Personal Jurisdiction and Due Process ................ D. The Immovable Property Exception ..................... E. The Non-Commercial Tort Exception .................... 1. Statutory Subject Matter Jurisdiction ................. a. The Enabling Provision .......................... 150 150 151 152 152 157 157 158 164 167 167 167 173 176 185 186 188 190 190 191 192 193 194 196 197 197 197 FOREIGN SOVEREIGN IMMUNITIES ACT 145 b. Two Statutory Exceptions ........................ 2. Personal Jurisdiction and Due Process ................ F. Counterclaim s .......................................... CONCLUSION . .................................................... 201 204 204 207 208 TEXT OF THE FOREIGN SOVEREIGN IMMUNITIES ACT .............. 146 INTERNATIONAL TAX & BUSINESS LAWYER [Vol. 5:144 The Theory and Practice of the Foreign Sovereign Immunities Act: Untying the Gordian Knot by Gerard Lacroixt INTRODUCTION The Foreign Sovereign Immunities Act 1 [hereinafter FSIA or Act], a federal statute codifying the conditions under which foreign sovereign states may be sued, is celebrating its tenth anniversary. 2 On balance, the FSIA has fulfilled its drafters' primary objective: providing a judicial forum for resolving certain claims against foreign states.3 There is no doubt that the Act has been a great improvement over the state of the law which existed prior to its enactment. Nonetheless, the Act is exceedingly complex in application. As one court has noted, "One would be hardpressed to exaggerate the difficulty of interpreting the [FSIA]." 4 This is so initially because the doctrine of sovereign immunity is a compromise between competing interests: the forum state must weigh the advantages of providing redress for its citizens against the potentially adverse consequences that such suits may have on foreign relations. To complicate matters, the FSIA addresses a myriad of issues: subject matter and personal jurisdiction, service of process, immunity from suit and execution, prejudgment attachment, the right to jury trial, removal and venue. t Associate, Debevoise & Plimpton, New York, New York; J.D. LL.M 1986 Boalt Hall School of Law, University of California, Berkeley; C.A.P.A. 1984, C.F.P. de Paris; DEA 1984, University of Paris I Sorbonne; Diplome, Political Science 1983, Sc. Po. Paris; B.A. Political Science 1979, University of Chicago. 1. Pub. L. No. 94-583, 90 Stat. 2891, 2892, 2894-98 (1976) (codified at 28 U.S.C. §§ 13301332, 1391, 1441, 1602-11 (1982)). The text of the Foreign Sovereign Immunities Act appears in an appendix to this article. 2. Passed in 1976, the FSIA went into effect on January 21, 1977. The literature dealing with the FSIA is too voluminous to be cited exhaustively here. See generally J. STEVENSON, J. BROWNE, AND L. DAMROSCH, THE UNITED STATES LAW OF SOVEREIGN IMMUNITY 153-57 (1983) [hereinafter STEVENSON]; Hill, A Policy Analysis of the American Law of Foreign State Immunity, 50 FORDHAM L. REV. 155, 156-57 nn.3-4 (1981). 3. 28 U.S.C. § 1602 (1982); H.R. REP. No. 1487, 94th Cong., 2d Sess. 1, 6, reprinted in 1976 U.S. CODE CONG. & AD. NEWS 6604 [hereinafter HOUSE REPORT]; Jurisdiction of US. Courts in Suits Against ForeignStates: HearingsBefore the Subcomm. on Administrative Law and Governmental Relations of the House Comm. on the Judiciaryon H.R. 11314, 94th Cong., 2d Sess. 24 (1976) [hereinafter 1976 Hearings]. 4. De Letelier v. Republic of Chile, 567 F. Supp. 1490, 1498 (S.D.N.Y. 1983). 1987] FOREIGN SOVEREIGN IMMUNITIES ACT The technical and practical problems created by such a comprehensive attempt to address many different issues are evident. First, the FSIA is essentially a jurisdictional statute. Since any exercise of Federal jurisdiction must comport with both due process and the Article III limitations on federal power, the FSIA encounters these delicate constitutional issues. Second, courts have experienced great difficulties in applying the Act consistently. The circuits have not applied it uniformly, and this discrepancy has led to unnecessary litigation even though one of the Act's stated purposes was to avoid this problem. 5 Third, from the parties' standpoint, the tortuous drafting is not conducive to either judicial security or certainty. To use the clich6, the Act is a trap for the unwary. The object of this Article is to provide a systematic guide to the theoretical and practical intricacies of the FSIA. The structure of the FSIA makes it futile to address only one of these types of problems to the exclusion of the other. To gain a proper understanding of the Act, therefore, both types of problems must be addressed concurrently. Accordingly, the discussion will focus on how courts have resolved the theoretical difficulties inherent in the Act, interpreted the Act, and applied it in the decade since its inception. After briefly examining the provisions of the Act in Part I, Part II will deal primarily with the Act's theoretical problems and examine one court's proffered approach to resolving them. Part III will then use the lessons learned in Part II to address the practical difficulties the federal courts have had in applying the Act. This discussion will focus on the six main exceptions to sovereign immunity which allow a litigant to bring an action against a foreign sovereign (...truncated)