Embassy Law Web Log   
Washington, DC, USA      

Embassy May Lose Its Building

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.

FSIA Effect of Joining European Union

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).
The United States District Court for the District of Columbia had granted a petition of the plaintiff and three affiliated corporations to confirm an arbitration award against the Government of Romania. -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.

State's Promissory Notes Under the FSIA

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.