The Due Process and Other Constitutional Rights of Foreign Nations

Abstract

The rights of foreign states under the U.S. Constitution are becoming more important as the actions of foreign states and foreign state-owned enterprises expand in scope and the legislative protections to which they are entitled contract. Conventional wisdom and lower court cases hold that foreign states are outside our constitutional order and that they are protected neither by separation of powers nor by due process. As a matter of policy, however, it makes little sense to afford litigation-related constitutional protections to foreign corporations and individuals but to deny categorically such protections to foreign states.

Careful analysis shows that the conventional wisdom and lower court cases are wrong for reasons that change our basic understanding of both Article III and due process. Foreign states are protected by Article III’s extension of judicial power to foreign-state diversity cases, designed to protect foreign states from unfair proceedings and to prevent international conflict. The Article III “judicial power” over “cases” imposes procedural limitations on federal courts that we today associate with due process. In particular, Article III presupposes both personal jurisdiction and notice for all defendants, not just foreign states. Under the Fifth Amendment, foreign states are “persons” due the same constitutional “process” to which other defendants are entitled. “Process” only reaches defendants within the sovereign power, or jurisdiction, of the issuing court, clarifying the obscure relationship between due process and personal jurisdiction for all defendants.

Examining the Constitution from the perspective of foreign states thus reveals the document in a new light, illuminating its core features in ways that advance our historical and theoretical understanding of Article III and due process. The analysis also lays the groundwork for determining whether foreign states have additional constitutional rights.

Keywords: foreign states, state owned enterprises, SOEs, personal jurisdiction, due process, separation of powers, Bank Markazi, Bancec, Article III

JEL Classification: K33, K41