The FSIA’s Recurring Burden Problem

The FSIA has a burden problem, and it is not going away.

The trouble began with loose language in the House Report at the time of the FSIA’s passage.  The Report characterized the FSIA’s burden-shifting regimen as follows:

Evidence must be produced to establish that a foreign state or one of its subdivisions, agencies or instrumentalities is the defendant in the suit and that the plaintiff’s claim relates to a public act of the foreign state – that is, an act not within the exceptions in sections 1605-1607.  Once the foreign state has produced such prima facie evidence of immunity, the burden of going forward would shift to the plaintiff to produce evidence establishing that the foreign state is not entitled to immunity.  The ultimate burden of proving immunity would rest with the foreign state.

H.R. Rep. No. 94-1487, at 17 (1976) (emphasis added).

The House Report’s description of the foreign state’s initial burden was inconsistent with the FSIA’s statutory scheme.  Indeed, a foreign state’s claim of immunity can rest on the contention that a plaintiff’s claim arises out of a private act.  For example, if a foreign state employee has a car accident after work, the foreign state is likely to claim that the employee was engaged in private, personal conduct that is outside the scope of employment – and therefore not within the scope of the FSIA’s tort exception to immunity.  See, e.g., Randolph v. Budget Rent-A-Car, 97 F.3d 319, 326-28 (9th Cir. 1996); Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 173-74 (5th Cir. 1994); see also 28 U.S.C. § 1605(a)(5).  Similarly, a foreign state may concede that a plaintiff’s commercial claim arises out of private conduct, but contend that there is no jurisdiction under the commercial activity exception because the actions are not attributable to the sovereign or because the specific requirements of section 1605(a)(2)’s clauses are not met.  See 28 U.S.C. § 1605(a)(2).  In other words, whether or not a claim arises out of a public act is not coextensive with a foreign state’s entitlement to immunity under the FSIA, and it thus makes no sense to require a foreign state to make a prima facie showing that a plaintiff’s claim arises out of a public act.

Nevertheless, the legislative history’s “public act” language found its way into important early FSIA cases.  See, e.g., Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 708 n.9 (9th Cir. 1992); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 n.5 (6th Cir. 1988); Alberti v. Empresa Nicaraguense De La Carne, 705 F.2d 250, 256 (7th Cir. 1983).  And although the majority of courts now do not identify the public act requirement as part of a foreign sovereign’s initial burden, the problem persists in recent jurisprudence.  See, e.g., Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Malewicz v. City of Amsterdam, 517 F. Supp. 2d 322, 327 (D.D.C. 2007); see also O’Bryan v. Holy See, 549 F.3d 431 (6th Cir. 2008), opinion amended and superseded by O’Bryan v. Holy See, 556 F.3d 361 (6th Cir. 2009).

To the extent that a plaintiff or a court relies upon a public act requirement, defense counsel in FSIA cases would be well-served to argue that a foreign state need not make that initial showing to shift the burden of production to the plaintiff.  Such an argument should include three basic points.

First, as set forth above, the public act requirement is inconsistent with the statutory scheme since a foreign sovereign can be immune for private conduct.  See, e.g., Phaneuf v. Republic of Indonesia, 106 F.3d 302, 306 (9th Cir. 1997) (holding that requiring a foreign state “to prove a public act conflicts with the plain language of the statute: a foreign state is immune from suit unless one of the enumerated exceptions applies.  There is no exception for non-public acts.”)

Second, if the legislative history opened the door to a public act requirement, it was closed by the Supreme Court’s decision in Saudi Arabia v. Nelson, 507 U.S. 349 (1993).  The Nelson Court held that “a foreign state is presumptively immune from the jurisdiction of United States courts” under 28 U.S.C. section 1604.  Id. at 355.  Since a presumption “imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption,” Fed. R. Evid. 301, the presumption of immunity based upon sovereign status automatically shifts a burden of production to the plaintiff.  In fact, since Nelson was decided, courts have generally determined that the party claiming FSIA immunity bears only the initial burden of establishing prima facie that it satisfies the FSIA’s definition of a foreign state.  See Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1016 (2d Cir. 1993) (relying on Nelson in describing burden-shifting regimen under FSIA with no public act requirement); Orient Mineral Co. v. Bank of China, 506 F.3d 980, 991-92 (10th Cir. 2007) (same); Good v. Aramco Serv. Co., 971 F. Supp. 254, 256 (S.D. Tex. 1997) (same); see also Mann v. Hanil Bank, 900 F. Supp. 1077, 1087 (E.D. Wis. 1995) (stating that the public act requirement “violated the . . . notion of presumptive immunity as articulated” by the Nelson Court).

Third, while there were early FSIA cases that followed the public act requirement, the overwhelming majority of circuit courts now describe the foreign sovereign’s initial burden as requiring only that a defendant make a prima facie showing that it qualifies as a foreign state under the FSIA.  See BP Chemicals Ltd., an English Corporation v. Jiangsu SOPO Corp., 420 F.3d 810, 816 (8th Cir. 2005);  Int’l Ins. Co. v. Caja Nacional De Ahorro y Seguro, 293 F.3d 392, 397 (7th Cir. 2002); Keller v. Central Bank of Nigeria, 277 F.3d 811, 815 (6th Cir. 2002); S & Davis Intern., Inc. v. The Republic of Yemen, 218 F.3d 1292, 1300 (11th Cir. 2000); Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 388 (5th Cir. 1999); Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1285 (3d Cir. 1993).  While the D.C. Circuit left the issue open in 2004 (Kilburn v. Socialist People’s Libyan Arab Jamahiriya, 376 F.3d 1123, 1131 (D.C. Cir. 2004)), it now appears to follow the other circuits as well.  See Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, — F.3d —, 2013 WL 5853916, at *6 (D.C. Cir. Nov. 1, 2013); see also Recent Developments: The D.C. Circuit’s Latest FSIA Decision.

The Ninth Circuit’s holding in Phaneuf that a foreign state is not required to make an initial showing of a “public act” makes the recent re-emergence of the public act requirement in Terenkian – a case that cited the Phaneuf precedent (694 F.3d at 1131) – all the more baffling.  Terenkian and other recent cases show that counsel must remain vigilant to ensure that courts do not require a sovereign to meet a burden that is contrary to the statutory scheme, in violation of Nelson, and inconsistent with the vast majority of circuit cases.

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