The Foreign Sovereign Immunities Act: Using Separation of Powers Analysis to Guide Judicial Decision-Making

By Connors, Todd | Law and Policy in International Business, Fall 1994 | Go to article overview

The Foreign Sovereign Immunities Act: Using Separation of Powers Analysis to Guide Judicial Decision-Making


Connors, Todd, Law and Policy in International Business


[T]he Foreign Sovereign Immunities Act of 1976 ... [is a]

statutory labyrinth that, owing to the numerous interpretive

questions engendered by its bizarre structure and its many

deliberately vague provisions, has during its brief lifetime been a

financial boon for the private bar but a constant bane of the

federal judiciary.(1)

INTRODUCTION

Will foreign, state-owned firms be held accountable under U.S. antitrust law in U.S. courts? For Polish state-owned golf cart manufacturers the answer was yes;(2) however, the state-owned oil producers of the OPEC nations escaped such liability.(3) The raw inconsistency of these cases illustrates a problem that extends beyond the application of antitrust law to the very means by which the United States asserts jurisdiction over foreign state defendants.(4)

The Foreign Sovereign Immunities Act of 1976 (FSIA),(5) in attempting to separate the roles of the executive and judicial branches in foreign sovereign immunity decisions,(6) has needlessly entangled them, to the detriment of private litigants, foreign states, and the foreign relations interests of the United States.(7)

The FSIA requires a general grant of immunity to foreign states(8) unless a specific exception of the Act applies.9 Section 1605(a) (2), which pertains to foreign state commercial activity, is "the most significant of the FSIA's exceptions."(10) However, the FSIA provides the judiciary virtually no guidance as to how to apply the commercial activity exception.(11) The courts are told that commercial activity is "either a regular course of commercial conduct or a particular commercial transaction," and that they should determine whether the activity in question is commercial by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.(12) By offering so little guidance for judicial decision-making, the FSIA has encouraged the improvident formulation and exercise of foreign relations policy by the judiciary, a result inconsistent with its constitutional function.(13)

This Note argues that adoption of a separation of powers approach to interpretation of the FSIA will guarantee fairness to private litigants and foreign states. Part I establishes the legal problem, detailing the entanglement of constitutional powers wrought by the U.S. system of sovereign immunities determinations. It concludes that the FSIA, as currently implemented, merely inverts the malignities of prior judicial practice. Part II advocates judicial interpretation of the FSIA's commercial activity exception consistent with the separation of powers principles elucidated in the political question doctrine. Part III argues that an unexpressed separation of powers approach to foreign sovereign immunity determinations has already begun in Federal Courts of Appeal through the amalgamation of the act of state doctrine with FSIA decisions. Part IV demonstrates that a separation of powers approach to FSIA decisions will presumptively warrant judicial resolution of contract based claims against foreign states.

I. SOVEREIGN IMMUNITY DETERMINATIONS IN U.S. COURTS

To illustrate the constitutional issues relevant to U.S. foreign sovereign immunity determinations, Part I details the development of the foreign sovereign immunity doctrine in the United States. Prior to the enactment of the FSIA, common law precedent welcomed executive branch intrusion into the judicial functions, to the joint detriment of U.S. litigants, foreign state defendants, and U.S. foreign policy.(14) Ironically, in attempting to alleviate this infringement of constitutionally mandated separation of powers,(15) the Act merely inverts the constitutional problem by encouraging judicial encroachment on the executive function.(16)

A. Pre-Statutory Foreign Sovereign Immunity Determinations

The foreign sovereign immunity doctrine has a rich history in the United States that long predates the FSIA. …

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