When Commercial Meets Sovereign: A New Paradigm for Applying the Foreign Sovereign Immunities Act in Crossover Cases

56 Pages Posted: 20 Jun 2014 Last revised: 3 Oct 2014

Date Written: September 22, 2014

Abstract

Lawsuits against foreign states in American courts can be a vital avenue for vindicating the plaintiffs’ rights or enforcing United States law, but inherently raise foreign relations risks. Congress and the Executive Branch attempted to balance these considerations when adopting the Foreign Sovereign Immunities Act (“FSIA”), which creates a general rule that foreign states are immune from jurisdiction in the United States, subject to various exceptions. Yet courts have differed widely in their application of the FSIA’s most important exception, which denies immunity for suits that are based on activity of a foreign state that is “commercial” (rather than “sovereign”) in nature. Courts have had particular difficulty applying this exception in “crossover” cases: disputes arising from a mix of commercial and sovereign conduct. This Article evaluates the conflicting authority and demonstrates that the approaches taken by some lower courts are undermining the balance struck by the political branches and deviating from the limited guidance offered to date by the U.S. Supreme Court. Drawing on the statutory text, legislative history, and Supreme Court jurisprudence, the author proposes a new interpretive framework for applying the commercial activity exception in crossover cases, designed to promote consistency in the case law and realize the drafters’ intent.

Keywords: FSIA, sovereign immunity, international law, litigation, international dispute resolution, antitrust, natural resources, expropriation, commercial activity

JEL Classification: K21, K23, K33, K41, K42

Suggested Citation

Foster, George K., When Commercial Meets Sovereign: A New Paradigm for Applying the Foreign Sovereign Immunities Act in Crossover Cases (September 22, 2014). 52 Houston Law Review 361 (2014), Lewis & Clark Law School Legal Studies Research Paper No. 2014-13, Available at SSRN: https://ssrn.com/abstract=2456443

George K. Foster (Contact Author)

Lewis & Clark Law School ( email )

10015 S.W. Terwilliger Blvd.
Portland, OR 97219
United States

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