Foreign Sovereign Immunities Act
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The Foreign Sovereign Immunities Act (FSIA) of 1976 is a statute under United States law that sets the limitations on how a foreign sovereign nation (or its agents, instrumentalities, or subdivisions) may be sued in U.S. courts. It is the only way to bring a lawsuit against a foreign sovereign in the United States, and its provisions are considered a matter of subject-matter jurisdiction, which means that if its requirements are not satisfied, the court cannot hear the claim in the first place. The FSIA is codified at Title 28, sections 1602-1611 of the United States Code.
Under the FSIA, the burden of proof is initially on the defendant to establish that they represent the authority of a foreign state, and therefore sovereign immunity should prevent them from being sued. Once this has been established, the plaintiff must then prove that one of the Act's exceptions to immunity apply for the lawsuit to proceed. Aside from an explicit waiver of sovereign immunity by the defendant, the exceptions all relate to the nature of the conduct for which the sovereign is being sued. A sovereign can be sued for its commercial acts—governmental acts that essentially duplicate those a private citizen could undertake, such as the buying or selling of products or services—in contrast to its public acts as a sovereign, as long as those commercial acts had a sufficient effect in the U.S. In making the commercial/public act distinction, courts look to the nature of the act itself, rather than the purpose expressed by the sovereign. For example, the operation of a fee-based transportation system would likely be a commercial act, while imposing fines for parking tickets would be a public act, even if the former was undertaken to provide a public service, and the latter was initiated to raise revenue. The FSIA also excludes acts of expropriation, terrorism, and torture from immunity, as well as torts not otherwise covered in the above, if committed within the U.S.
Previous to its enactment, sovereign immunity had been a matter of discretion by the Executive Branch, and courts typically followed its recommendations in deciding whether a claim should be heard. The 1976 Act essentially codified the standards already followed at the time, though the exceptions for torture and terrorism were added in the 1990s. Though the FSIA places the determination of sovereign immunity fully in the hands of the judiciary, many courts have expressed reluctance to find that a defendant is a sovereign if the "state" in question is one that the U.S. government has not officially recognized, even if the defendant may arguably satisfy the definition of statehood under international law.
In 1992, the United States Supreme Court heard the case of Republic of Argentina v. Weltover, (504 US 607). Here, two Panamanian corporations and a Swiss bank sued the government of Argentina for defaulting on bond payments when they matured. Richard Davis, on behalf of the Argentine government, argued that Argentina should not have to pay, as the default could not be considered to have had a "direct effect" upon American commerce. Davis' adversary, Richard Cutler, countered this claim by arguing that since New York was one of several cities in which the bonds could be retired, that was sufficient to prove a direct effect in the United States. In the end, the justices issued a unanimous opinion in favor of Cutler's position, written by Justice Antonin Scalia in the spring of 1992.
In 2004, the Supreme Court ruled in Republic of Austria v. Altmann that the FSIA applies retroactively. This means that, regarding lawsuits filed after its enactment, the FSIA standards of immunity and its exceptions apply even to conduct that took place before 1976. See Republic of Austria v. Altmann, 126 S. Ct. 1210 (2004); Note, 79 Tul. L. Rev. 1113 (2005) (discussing history of FSIA).
