Jurisdiction Under the Foreign Sovereign Immunities Act - Part 1 Chapter 9 - The Practice of International Litigation - 2nd Edition
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.
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.