Understanding the Shield and the Sword: FSIA Exceptions

The Foreign Sovereign Immunities Act (FSIA) of 1976 is the sole basis for obtaining jurisdiction over a foreign nation in U.S. courts. Its fundamental principle is that a foreign state, including its political subdivisions, agencies, or instrumentalities, is presumed immune from the jurisdiction of U.S. courts. This codified the “restrictive theory” of sovereign immunity, which acknowledges immunity for a state’s public, governmental acts (acta jure imperii) but denies it for private or commercial acts (acta jure gestionis).

For a lawsuit against a foreign sovereign to proceed in the United States, the plaintiff must successfully demonstrate that the claim falls squarely within one of the FSIA’s specific statutory exceptions. The applicability of an exception is a matter of subject-matter jurisdiction—if no exception applies, the court must dismiss the suit.

The Three Most Common Jurisdictional Exceptions

1. The Commercial Activity Exception (28 U.S.C. § 1605(a)(2))

This is arguably the most litigated and crucial exception. It strips a foreign state of immunity in cases based upon one of three types of commercial activity:

Clause	Requirement
Clause 1	Action based upon a commercial activity carried on in the United States by the foreign state.
Clause 2	Action based upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere.
Clause 3	Action based upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere, and that act causes a direct effect in the United States.

2. The Waiver Exception (28 U.S.C. § 1605(a)(1))

Immunity is lost if the foreign state has waived its immunity either explicitly or by implication. This is often the result of contractual language, such as a clause in a bond indenture or a loan agreement where the sovereign explicitly waives FSIA immunity for dispute resolution purposes.

3. The Noncommercial Tort Exception (28 U.S.C. § 1605(a)(5))

This exception applies to claims seeking money damages for personal injury, death, or damage to property that occurred in the United States, and which was caused by the foreign state’s tortious act or omission. It is important to note two major exclusions from this exception:

• The Discretionary Function Exclusion: The exception does not apply to any claim based upon the exercise or performance of a discretionary function, regardless of whether the discretion was abused. This protects a state’s policy-making decisions, which are sovereign in nature.
• Specific Intentional Torts: Claims arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights are explicitly excluded.

Additional Important Exceptions

4. Expropriation Exception (28 U.S.C. § 1605(a)(3))

This applies when rights in property taken in violation of international law are at issue, provided that property has a commercial connection to the U.S.. In a significant ruling, the Supreme Court has clarified that the “violation of international law” element refers to the international law of property, not human rights or genocide law, which has narrowed its scope, particularly concerning a sovereign’s taking of the property of its own nationals.

5. Terrorism Exception (28 U.S.C. § 1605A)

This exception allows U.S. nationals to seek money damages against foreign states that have been officially designated as “State Sponsors of Terrorism” for personal injury or death caused by specific acts of terrorism, torture, or extrajudicial killing, or the provision of material support for such acts. This has been a frequent basis for litigation against certain foreign sovereigns.

6. Arbitration Exception (28 U.S.C. § 1605(a)(6))

A foreign state is not immune if the action is brought to confirm or enforce an arbitration award governed by a treaty such as the New York Convention. This exception reinforces international commerce by ensuring that a foreign sovereign cannot escape its contractual agreement to arbitrate by later claiming immunity.

Summary: Key Takeaways for International Litigation

Navigating FSIA: A Jurisdictional Checklist

1. A foreign state is immune from suit in the U.S. unless an exception applies—immunity is the rule, exception is the relief.
2. The plaintiff bears the burden of proving that one of the statutory exceptions to immunity applies to the claim.
3. The Commercial Activity Exception requires a nexus: the activity must be in the U.S., an act in the U.S. related to foreign activity, or a foreign act causing a direct effect in the U.S..
4. For tort claims, the Noncommercial Tort Exception requires the injury to occur in the U.S. and excludes claims based on a sovereign’s discretionary function.
5. Contractual provisions containing an explicit Waiver of Immunity are the strongest path to U.S. jurisdiction, though courts interpret even explicit waivers narrowly.

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Frequently Asked Questions (FAQ)

Q: What is the primary difference between a sovereign act and a commercial act under the FSIA?

A: A sovereign act (jure imperii) is a governmental action that only a sovereign can perform, like setting policy or regulating an industry. A commercial act (jure gestionis) is an activity that a private person could also perform, such as borrowing money, buying goods, or hiring personnel. The FSIA provides immunity for the former, but not the latter.

Q: Can I sue a foreign government for a car accident?

A: If the accident occurred in the United States, you may be able to sue under the Noncommercial Tort Exception (28 U.S.C. § 1605(a)(5)). However, the claim must not be based on a discretionary function, such as a state’s policy decision.

Q: Does the FSIA apply to individuals working for a foreign government?

A: An individual may be immune if they were acting in their official capacity and within the scope of their authority when they engaged in the acts which are the subject of the lawsuit. If the individual is sued in their personal capacity for acts outside their official duties, the FSIA would generally not apply.

Q: What constitutes a “direct effect” for the Commercial Activity Exception?

A: The “direct effect” requirement means the foreign act must have an immediate consequence in the United States. For example, a breach of a contract payable in a U.S. bank account is often deemed to have a “direct effect” in the U.S.

Q: What is the main hurdle in the Expropriation Exception?

A: The biggest hurdle is proving the property was “taken in violation of international law,” which is often limited to claims of expropriation against foreign nationals, not a state’s taking of its own citizens’ property.

Knowledge is power. Understanding the exceptions is the first step in seeking accountability from a foreign sovereign.

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