Introduction
The Foreign Sovereign Immunity Act is a law that has been codified in the United States that was specifically made to establish the grounds and limitations as to whether a foreign entity, or a foreign sovereign nation at that, can be charged and be subject to trial in a U.S. federal or state court . Apart from being a common legal ground for various legal cases that mostly involve multi-national entities or those that have different international origins, the Foreign Sovereign Immunity Act (FISA) may also be used as a strong basis—in fact, in many legal cases, it the Act is being used as the sole basis, in determining whether an international entity can be considered as a Sovereign State or not . In simple terms the Foreign Sovereign Immunity Act limits federal and state courts in the U.S. from processing hearings that involve a local entity or a U.S. government-related entity as the plaintiff and an international entity or a Sovereign State as the defendant. There are many chapters in the Foreign Sovereign Immunity Act that a legal and justice professional should review if he wants to be able to use certain parts of the act to his side’s advantage .
The objective of this paper is to recommend a possible legal move for Alpha Limited Corporation after being charged with a lawsuit by a partner commercial international firm, Lodo incorporated under the grounds of a breach in contract. The two entities’ case, just like any other case concerning two international organizations, will revolve around the question whether the provisions of the Foreign Sovereign Immunity Act can be applied to the situation of both the plaintiff and the defendant or not. In such cases, the most logical first move is to determine whether the defendant, which in this case is Alpha Corporation, meet the criteria and conditions in order to be considered as a foreign sovereign state because if so, the lawsuit against it, considering it is one that has been initiated by another legal entity would automatically be terminated as per the provisions of the Foreign Sovereign Immunity Act. An evidence-based approach will be used in arriving at an informed legal solution for Alpha Corporation by way of studying past cases that also revolved around the Foreign Sovereign Immunity Act.
Verlinden B.V. v. The Central Bank of Nigeria – 461 U.S. 480 (1983)
This was a case between Verlinden and the Central Bank of Nigeria that was tried in court in the 11th of January 1983 and was decided approximately three months later in the 23rd of May 1983. The lawsuit started when a contract between the Verlinden (a cement manufacturer and construction corporation based in Denmark) and the Federal Republic of Nigeria was signed and established, the circumstances in which the Republic of Nigeria was set to purchase cement from Verlinden based on an agreed price which would be confirmed and paid by the latter’s issuance of a letter of credit equivalent to the purchase price addressed to the former. All was working well until the petitioner (Verlinden) sued the Central Bank of Nigeria, which in relation to the Foreign Sovereign Immunity Act, can automatically be considered as an instrumentality of Nigeria, in a Federal District Court, under grounds that it allegedly breached and violated certain parts of the letter of credit. The petitioner in this case knew that the Central Bank of Nigeria, as a direct instrumentality of the Republic of Nigeria, would be immune from the lawsuit because the federal district court would not be allowed to have jurisdiction on that case under the provisions of the Foreign Sovereign Immunity Act of 1976. It is clear at first glance that the plaintiff would immediately come out as the loser over Nigeria’s Central Bank because not a single point under the FSIA foreign state immunity section could be applicable to Nigeria’s Central Bank, which appeared to be the only practical way to just ensure that the case can be allowed to be processed by the federal district court. In the end, the Central Bank of Nigeria won the case under the provisions of the FSIA suggesting that the bank was indeed a state—an instrumentality of Nigeria, and even though the issue of immunity was not raised by them. Under the FSIA, it is part of the court’s responsibility to determine whether an entity can be considered as a foreign state and therefore be granted immunity regardless whether the issue was raised or not .
Republic of Austria v. Altmann 541 U.S. 677 (2004)
This was a case between the Republic of Austria and Altmann held before the Supreme court of the United States about the retroactive applicability of the Foreign Sovereign Immunities Act of 1976. Retroactive applicability refers to the act’s usability in cases that have been settled prior to the enactment or codification date which in this case would be 1976 for the FSIA. This was actually one of the most popular cases that contrasted the anti-retroactivity doctrine which suggested that courts should not review any statute retroactively or in scenarios that took place before an act was enacted. The cause of the lawsuit was the Austrian government’s seizure of several Nazi-era paintings which were allegedly under the ownership of Altmann. The latter filed for a civil charge against Austria but was later on forced to voluntarily dismiss the case because the total amount of filing and processing the case was in close proportion to the overall monetary value of the painting at that time. The filing fee was merely too much for Altmann to afford and so he was forced to drop the case. However, after being made aware of the FSIA retroactivity provision, a new case was filed which resulted to a court’s decision wherein both parties agreed to reconcile before an Austrian court in favor of Altmann in 2005 which ended up in favor of Altmann a year later .
Argentine Republic v. Amerada Hess Shipping Corp 488 U.S. 428 (1989)
The use of the Foreign Sovereign Immunities Act of 1976 as the sole and exclusive basis in determining whether any international entity can be considered as a foreign state and would therefore be granted immunity under the Act’s provisions was the focus of this case. During the Falkland Islands War of 1983, two Liberian-based corporations (Plaintiffs) charged Argentina (Defendant) before a U.S. district court under the grounds of destruction of property. United Carriers—the first Liberian corporation, sent the vessel Hercules to Amerada Hess Shipping Corporation to undertake a commercial fuel transport operation involving the two corporations but was irreparably damaged after it was shot by Argentinian forces which were in the midst of the 1983 Falklands War. The U.S. district court dismissed the case holding that the jurisdiction for the case was absent. The U.S. Supreme Court later on granted the plaintiffs a review after having appealed that court jurisdiction could exist under the provisions of the Alien Tort Statute of 1789, which according to the plaintiffs’ legal counsel, could also be used to look for jurisdiction. However, the case was again dismissed by the U.S. Supreme Court holding that the FSIA can be the only source of court jurisdiction in cases involving a foreign state. It should be made clear however, that the FISA does not work and exist against the Alien Tort Statute. The case was only dismissed in this case because the latter cannot be used as a basis to confer jurisdiction over international entities. The focus of the FSIA is also more on the commercial types of conflicts and what differentiates the use of the Alien Tort Statute from that of FSIA in legal cases is the sheer number and variety of commercial activities that can occur outside U.S. boundaries that can lead to a lawsuit against foreign states .
Dole Food Company v. Patrickson 538 U.S. 468 (2003)
This was a case between Dole Food Company (Defendant), Dead Sea Bromine Corporation and Bromine Compounds Limited aka collectively known as the Dead Sea Group of Companies (Defendants), and Israeli farm workers employed by Dole Food Company (Plaintiff). What triggered the plaintiff to file a lawsuit—particularly a state-court action against the three business organizations was the alleged injuries they concurred secondary to chemical exposure. This case tackles on issues related to an international entity charged before a U.S. district court can be considered as an instrumentality of a foreign state and under what grounds can it be considered to be so. There is no doubt that the lawsuit filed against the Dole Food Company can proceed because it is not in any way linked to the foreign state of Israel aside from the commercial operations it spearheads in the country. So, the corporation has no choice but to face the charges and actually manage to win them in court. What is disputable here is the Dead Sea Group of Companies’ stand and situation. They have contended that they should be granted immunity from jurisdiction of a U.S. district court under the basis that they—both the two companies, are considered instrumentality of the foreign state of Israel. Instrumentalities of a foreign state, under the provisions of the FSIA, would be automatically immune from charges pressed against them before any U.S. federal or local court. So, the root of the issue here is whether the two companies under the Dead Sea group of companies can be considered as foreign state instrumentalities under the rules and requirements set under the FSIA and therefore be granted immunity. Under the FSIA, for any organization to be considered as a foreign state instrumentality, majority of its public shares should be owned by the subject foreign state which in this case would be Israel; and the instrumentality status should be determined not before but during the time the complaint has been filed. The Dead Sea group of companies did not meet the first condition. Majority of their shares was not owned by the Israeli foreign state and so the court moved to not grant them the immunity under the grounds that the companies cannot be considered as legal instrumentalities of a foreign state. The Dead Sea group however appealed that the two companies were subsidiaries of and have been actively controlled by the Israeli government. Despite these supporting facts, the two companies still did not satisfy the direct ownership requirement under the FSIA. Therefore, the group’s claim for immunity against U.S. court jurisdiction was dismissed .
Conclusion
The biggest and most legally relevant issue that should concern Alpha Corporation is whether they can be considered as an instrumentality of the foreign state of Taral because that is one of their limited avenues to be granted with immunity under the Foreign Sovereign Immunity Act of 1976. If they would be able to satisfy the direct foreign state ownership conditions under the foreign state Instrumentality section of the FSIA, then they can be granted immunity and the U.S. courts would be forced to dismiss the lawsuit filed against them by virtue of jurisdictional absence. Based on the information provided by Alpha Corporation, 51 percent of the company’s shares is owned by the State of Taral which makes it a direct and majority shares owner of Alpha and at the same time, the ownership assessment also happened at the time the complaint was filed. In summary, the U.S. District Court does not have jurisdiction over Lodo and Alpha Corporation’s case because it is clear that Alpha Corporation (Defendant) is under direct ownership of and is therefore an instrumentality of the foreign state of Taral. Hence, under the provisions codified under the Foreign Sovereign Immunity Act of 1976, it should be granted jurisdictional immunity. The best way to for Alpha Corporation to do as this point is to immediately raise the issue of immunity by means of becoming a foreign state instrumentality so that the U.S. district court would not have to discover that it is by virtue of the FSIA immune to jurisdiction by itself.
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