Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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Jurisdiction Under the Foreign Sovereign Immunities Act
Lawrence W. Newman and Michael Burrows
In light of the huge foreign debt problem and the participation of
sovereigns and state-owned banks in the restructuring of debt of their
nationals, it is of great interest to participants in debt restructuring to know
whether and where a foreign sovereign can be sued. In complex
international transactions, the criteria for determining when the courts of the United
States are available for recourse against foreign states and their
instrumentalities is significant to both the structuring of financial and other
transactions and the position of the United States as a financial center.
In the United States, jurisdiction to bring suit in the courts against a
foreign sovereign or its agencies or instrumentalities is governed by the
Foreign Sovereign Immunities Act of 1976 (the “FSIA”). The FSIA has
codified a restrictive approach to sovereign immunity, denying immunity to
private or commercial acts of foreign states. The FSIA sets forth the only
exceptions to immunity recognized in the United States, providing the
standards for personal and subject-matter jurisdiction.
Decisions under the FSIA have established that foreign plaintiffs are
entitled to bring suit under the FSIA4 and that the nonpayment by a foreign
sovereign of a debt payable in the United States to a U.S. plaintiff arising
out of the sovereign’s commercial activity was sufficient for asserting
subject-matter jurisdiction under the FSIA.
The Second Circuit's recent decision in Weltover v. Republic of Argentina,
went one step further and held that subject-matter jurisdiction under the
FSIA also obtains in the case of the nonpayment by a foreign sovereign in
the U.S. of a debt payable in the United States to a foreign plaintiff arising
out of the sovereign’s commercial activity—at least insofar as the debt is
payable in New York.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
