Client Alert 07 Feb. 2022

Curtis Issues 2021 Year-in-Review Report on Sovereign Litigation in the US and UK

In 2021, courts in the United States and the United Kingdom decided significant cases affecting the rights, privileges and immunities of foreign states and their agencies and instrumentalities. In this year-in-review report, we highlight key cases from these two jurisdictions, including a case in which Curtis, Mallet-Prevost, Colt & Mosle successfully represented the foreign state defendant in the UK Supreme Court.

UK Highlights

In the United Kingdom, the State Immunity Act 1978 (the “SIA”) recognises immunity for foreign sovereign states, but then establishes a number of exceptions to this immunity. Not all cases involving state litigants deal with the SIA. One significant case this year concerned which of two rival governments the British courts would recognize. Other cases have dealt with the SIA often in the context of enforcement against assets of the state. In such cases the UK Supreme Court has held that diplomatic service on a foreign state is mandatory. In some ways this decision bucks a pro-enforcement trend as seen in another case this year where the exception to immunity based on a “commercial purpose” was broadly interpreted. On the other hand, the court has taken a more cautious approach to enforcement of perhaps the single largest arbitral award, holding that any issues of state immunity should be determined before enforcement can be considered. Read more about these cases in our full report.

US Highlights

In the United States, foreign states and their agencies and instrumentalities are generally immune from the jurisdiction of U.S. courts, except in few circumstances enumerated in the Foreign Sovereign Immunities Act (the “FSIA”). All four cases featured in this section involved the FSIA or its interplay with the U.S. Constitution or other statutes.

In 2021, the U.S. Supreme Court limited the circumstances in which U.S. courts may hear expropriation claims against foreign states, holding that the FSIA’s expropriation exception to sovereign immunity does not encompass claims for alleged takings in violation of international human rights law. The U.S. Court of Appeals for the Fifth Circuit (New Orleans) held that foreign states who face actions to enforce arbitral awards may raise the absence of an arbitration agreement as a threshold sovereign immunity defense under the FSIA. The U.S. Court of Appeals for the Second Circuit (New York) reaffirmed that legally distinct corporations owned by foreign states are persons under the U.S. Constitution’s due process clause, meaning that they cannot be sued in the U.S. courts unless they are found to be “at home” in the United States or the claims against them arise out of or are related to their contacts with the United States. The Second Circuit also held that a foreign state-owned corporation may be subject to criminal prosecution, despite the FSIA’s grant of jurisdiction only in a “civil action,” because a separate statute granting jurisdiction over all federal crimes applies to prosecutions against those entities too. Read more about these cases in our full report.

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