In TIG Insurance Co. v. Republic of Argentina, the United States Court Appeals for the District of Columbia Circuit ruled on July 30, 2020, that the lower court must look at the totality of circumstances when assessing whether real estate owned by a foreign state is immune from jurisdiction and execution. The plaintiff sought to execute a judgment into such a property in Washington, DC, arguing that it was used commer­ci­al­ly when the embassy put it up for sale. The embassy countered that it was not com­mer­cially used because (1) it held embassy files, and (2) it was removed from the mar­ket before the court ruled on the registration of the judgment in Wa­sh­ing­ton and issued a writ of execution.

The appellate court found that the lower court based its dismissale of the plaintiff's motion on too narrow grounds. It explains the factors in the analysis of the ex­cep­ti­ons of a state from foreign sovereign immunity under the Foreign Sovereign Im­mu­nities Act which range from jurisdictional immunity to execution immunity. After considering the standards proposed by the parties, it sent the case back to the Uni­ted States District Court for the District of Columbia, ordering an assessment of the totality of circumstances. Ultimately, the embassy may lose its property to the creditor. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

In Micula v. Government of Romania, the United States Court of Appeals for the Di­strict of Columbia looked at the arbitration exception in the Foreign Sovereign Im­munities Act in the context of an arbitration agreement signed by an E.U. member state. The member now be­longs to the E.U. but did not when it signed. The E.U. Com­mission joined the matter as an amicus to state that the court lacked jurisdiction over the foreign sovereign under the FSIA. On May 20, 2020, the court held:

A U.S. court lacks jurisdiction over a foreign sovereign unless an exception to so­ve­reign immunity applies. 28 U.S.C. §§1330(a); 1604. As Romania now ag­re­es, the district court properly invoked the exception for actions to enforce ar­bitration awards. Id. § 1605(a)(6). The European Commission questions whe­ther Ro­mania's agreement to arbitrate was nullified by its ascension to the Euro­pe­an Union. But as the district court carefully explained, Romania did not join the EU until after the underlying events here, so the arbitration agree­ment applied. See Micula v. Gov't of Rom., 404 F. Supp. 3d265, 276-80(D.D.C. 2019).

Commercial Activity with direct effect is the central argument of the plaintiff in Friedman v. Abu Dhabi who sued a foreign government and a guarantor bank for lobby fees earned 32 years ago. He thought the payment promise made by promissory notes delivered to his U.S. home for work performed in the United States were fraudulent, as the foreign sovereign had argued. Only in 2019 did he learn that he might be able to collect on them.

On May 14, 2020, the United States District Court for the District of Columbia discussed the applicable exceptions under the Foreign Sovereign Immunities Act which would permit it to exercise jurisdiction over the otherwise immune foreign sovereign. It determined the issuance of the promissory notes to constitute commercial activity that private issuers would similarly engage in, even if the underlying work causing the obligation involved lobbying for sovereign interests.

The notes did not cause any direct effect in the United States, however, mostly because they were payable anywhere, without performance required in the United States. Neither the dollar denomination nor the payment demand in the United States would matter, the court concluded. The court also found that an equitable remedy might have been available to the plaintiff but he waited far too long beyond the three-year state of the limitations period. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

On October 23, 2019, the United States Court of Appeals for the First Circuit in Boston provided plaintiffs and defendants with more ammunication in disputes over employment terms governing local hires at consulates and, possibly, embassies, with its interpretation of the Foreign Sovereign Immunities Act in the matter Merlini v. Canada. In the latest release, a minority opinion argues that the FSIA must be construed by its text, not merely the legislative history. As such, the opinion finds certain restraints of foreign missions incompatible with the FSIA, congressional intent as well as the interests of U.S. missions abroad:

The majority's conclusion that Canada's administration of its own statutory workers' compensation scheme here is not protected by its sovereign immunity leads to the conclusion that our government's similar actions as to employees, foreign or American, of its consulates and embassies will not be granted immunity. … By denying Canada's choice to implement a federal workers' compensation scheme the respect and deference it is entitled to, the consequences of the opinion will likely be that FECA--Congress's choice of comprehensive workers' compensation--will not be given that deference.

On October 21, 2019, the Federal Register will publish two special restraints on Chinese diplomats. Under the title Determination Pursuant to the Foreign Missions Act, the State Department subjects travel plans of military staff to a prior notice requirement if the travel would exceed a distance 25 miles from Washington.

A second rule, Designation and Determination Pursuant to the Foreign Missions Act imposes a prior notification requirement for all diplomatic interactions with U.S. officials and other institutions.. Both restraints are based on the Foreign Missions Act, 22 U.S.C. 4301, et seq., and require notification of the Office of Foreign Missions. The latter scrutiny is extensive:

1. All official meetings with representatives of state, local, and municipal governments in the United States and its territories;
2. All official visits to educational institutions (public or private) in the United States and its territories; and
3. All official visits to research institutions (public or private), including national laboratories, in the United States and its territories.

On August 9, 2019, the United States Court of Appeals for the Second Cir­cuit af­fir­med the judgment of the United States District Court for the Southern District of New York in the case of Kirschenbaum v. Assa Corp., which classifies the De­fen­dants as a "for­eign sta­te" and "terrorist party" under two statutes, the FSIA and the TRIA. The Plain­tiffs-Appellees are victims of direct and indirect ter­rorism and ob­tained de­fault judg­ments in federal court against the Islamic Republic of Iran over the cour­se of a few decades. In an effort to execute their judgments, the victims tar­get­ed Iranian assets located in the United States by claiming they are subject to attachment and exe­cu­ti­on under these statutes.

Since the Defendant is owned and controlled by Iran through Bank Melli and acts as the alter ego of the Government of Iran, as the court determined, it qualifies as a "foreign state" under the FSIA definition of the term. The court concluded that it lacks immunity, subjecting it to the District Court's jurisdiction and its assets to attachment and execution. Additionally, as the alter ego of the Government of Iran--a state spon­sor of terrorism and therefore a "terrorist party" for TRIA purposes--Assa qualifies as a "terrorist party" under the TRIA, the court agreed. Finally, the court also found Assa to be an "agency or instrumentality" of Iran since it is ow­ned, controlled or directed by a terrorist party, meaning its property constitutes blocked assets and is subject to attachment and execution. -- Marco Stewart Lopez, legal assistant, Berliner Corcoran & Rowe LLP, Washington, DC.

In the case of James R. Moriarty v. Hashemite Kingdom of Jordan on August 6, 2019, three U.S. Special Forces members were killed while entering a Jordanian air base on November 4, 2016; the Plaintiffs, the surviving family of the service members claim that the Defendant, a service member of the Jordanian Air Force committed an act of terrorism by wrongfully killing the service members, and that the Kingdom aided and abetted the terrorist attack. In the United States District Court for the District of Columbia, the Defendant entered a motion to dismiss, claiming that the court lacks jurisdiction due to Jordan's sovereign immunity.

To establish that defendant Jordan implicitly waived it’s sovereign immunity, the plaintiffs rely on the Status of Forces Agreement between the United States and Jordan; under SOFA, United States military personal are afforded the same status to that of technical and administrative staff of the U.S. Embassy. This is a reference to the Vienna Convention in which technical staff are members of the mission, see Vienna Convention on Diplomatic Relations, art. 1(b) and 1(c), 500 U.N.T.S. 95. Members of the mission are to be given due respect by the receiving state. The plaintiffs argue that the Kingdom did not give them due respect as it did not take all appropriate steps to prevent any attack on their person, freedom or dignity under the admonition of customary international law, Vienna Convention, art. 29.

The plaintiffs offered several arguments to prove Defendant Jordan waived its immunity from suit. However, the arguments failed to prove a waiver of immunity by virtue of SOFA. The court declared that although SOFA sets fourth rules of conduct, how service members are to be treated by the receiving state and defines the status of individuals within the foreign state, SOFA fails to show that violations of these rules result in waived immunity and that suit should be brought in the U.S. -- Thomas Nelson IV, legal assistant, Berliner Corcoran & Rowe LLP, Washington, DC.

Judgment creditor Republic of Argentina won an important argument on the timing of execution immunity when it defeated a proposed attachment of the ambassadors former residence. The residence was put up for sale and the plaintiff in TIG Insurance Co. v. Republic of Argentina filed for its attachment to partially satisfy arbitral awards. Before the court issued the writ of attachment, the defendant pulled back from the sale. At issue in the decision of the United States District Court for the District of Columbia of July 10, 2019 is when and for how long the property had a commercial quality, allowing for attachment under the exception in 28 USC §1610 to execution immunity under the Foreign Sovereign Immunities Act. The court explained:

The parties’ sole dispute is the relevant time for assessing execution immunity. TIG contends that a foreign state's property may be attached as long as it was "used for a commercial activity" at the time a motion for a writ of attachment was filed. Argentina, on the other hand, argues that the commercial activities exception applies if the property is "used for a commercial activity" at the moment a writ of attachment issues. Text, structure, history, and precedent support Argentina's reading: a property is immune from attachment unless it is "used for a commercial activity" at the time a writ of attachment issues.

The former business partners in Farhad Azima v. Rak Investment Authority entered into a Settlement Agreement after Azima claimed RAK owed another business partner for investments made during their joint venture. Their Agreement states that the parties agree to litigate all future, related claims in England.

In 2015-2016, RAKIA hired Azima to help negotiate a resolution of dispute between RAKIA and its former CEO Khater Massaad. After a tentative resolution fell apart, RAKIA blamed Azima and threatened him. Azima’s computer was hacked and his documents were published online. RAKIA then sued Azima when the publicized documents showed that Azima committed fraud during an earlier business deal. Azima filed a suit in the U.S. alleging that RAKIA violated the Computer Fraud and Abuse Act, 18 USC §1030. RAKIA moved to dismiss the suit on two grounds. First, it claimed immunity under the Foreign Sovereign Immunities Act, 28 USC §§1602-11. Second, RAKIA asserted that the Settlement Agreement submits the Parties to the exclusive jurisdiction of the courts of England and Wales, thus the court must dismiss the case on forum non conveniens grounds.

The United States Court of Appeals for the District of Columbia on June 18, 2019 concluded that the district court erroneously placed the burden on RAKIA to show that dismissal was warranted. The Court of Appeals exercised its pendent jurisdiction to reverse the denial of RAKIA’s motion to dismiss on forum non conveniens grounds with an opinion that explains the tensions between sovereign immunity and other jurisdictional principles. -- Marco Stewart Lopez, legal assistant, Berliner, Corcoran & Rowe, LLP, Washington, DC.

The noteworthy dissent in Philipp v. Germany of June 18, 2019 submits the concern that construing exceptions under the Foreign Sovereign Immunities Act may turn federal courts into war crimes tribunals for harm caused abroad. A further concern is the disparate understanding of the exceptions by other appellate courts.

The case deals with the expropriation of property in the context of genocide. The dissenting judge of the United States Court of Appeals for the District of Columbia Circuit notes that under his court's interpretation of the statute, redress for property losses are conceivable while the loss of life in an alleged genocide may not be. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.