Foreign Sovereign Immunities Act - Definition of "foreign State"

Definition of "foreign State"

The FSIA only applies to lawsuits involving a "foreign state." The FSIA defines "foreign state" to include three entities:

1. Foreign State
2. A political subdivision of a foreign state
3. An "agency or instrumentality" of a foreign state

28 U.S.C. § 1603(a)

"Agency or Instrumentality" is then defined as any entity which:

1. Has a separate legal identity and
2. Is either (a) an "organ of a foreign state or political subdivision" or (b) a "majority of whose shares or other ownership interest" is owned by a foreign state or political subdivision. 28 U.S.C. § 1603(b). Although it is unclear precisely what entities qualify as an agency or instrumentality, case law has demonstrated the foreign government agencies (particularly to the extent they perform governmental functions) and foreign government-owned corporations are generally considered to be "Foreign States" on whom the FSIA applies.

In Dole Food Co. v. Patrickson, 538 U.S. 468 (2003), the Supreme Court determined that in order for a government owned corporation to qualify as a Foreign State under the FSIA because a majority of its "shares or other ownership interest" are owned by a foreign state or political subdivision, the Foreign State must directly own a majority of the corporation's shares. In Dole, two chemical corporations indirectly owned by the Israeli government sought to remove a case from Hawaii State Court to Hawaii Federal Court on the basis that the FSIA applied. The Supreme Court concluded that because the Israeli government did not directly own a majority of the companies shares, the corporations could not be considered "Foreign States" and the FSIA therefore did not apply. The Court specifically rejected the companies' argument that Israel's majority interest in the companies through indirect ownership qualified as an "other ownership interest" under the FSIA or that Israel's actual control over the corporations would qualify. In reaching its conclusion the Court also held that the determination as to whether a defendant qualifies as a Foreign State is made at the time the plaintiff files the complaint.

There had been disagreement among the courts as to whether an individual government official is covered by the Foreign Sovereign Immunities Act, and therefore immune to suit according to its provisions or whether traditional (pre-FSIA) common law rules of immunity apply. The majority of Federal Courts of Appeals had concluded that individuals are covered under § 1603(b) as "agents or instrumentalities" of foreign states. See In re Terrorist Attacks on September 11, 2001, 538 F.3d 71 (2d Cir. 2008) (finding Saudi government officials to be entitled to immunity under the FSIA). Other courts however, noting that the language and structure of the FSIA and particularly § 1603(b) appear to contemplate that entities and not individuals are covered by the "agency or instrumentality" definition, had concluded that individuals are not entitled to immunity under the FSIA. See Yousuf v. Samantar, 552 F.3d 371 (4th Cir. 2009) (holding that former Somalian government official is not covered by, and therefore entitled to immunity under the FSIA and remanding to District Court to determine whether defendant is entitled to common law immunity).

However, the Supreme Court in 2010 decided that the Act does not extend immunity to a government official acting on behalf of a state. In the case of Samantar v. Yousuf decided in June 2010, the Supreme Court found that there is nothing to suggest that "foreign state" within the FSIA should be read to include an official acting on behalf of that state.

Moreover, the potential of the FSIA to undermine foreign policy goals of the Executive branch has been an on-going concern.