The Narrow Implied Waiver Exception

A recent decision from the United States District Court for the District of Columbia underscores the difficulty of establishing FSIA jurisdiction based upon a foreign state’s implied waiver of immunity.  The case also highlights that defense counsel in FSIA cases should take a simple step to prevent an inadvertent waiver of immunity in litigation.

The FSIA’s legislative history indicates that implied waivers may be found “in cases where a foreign state has agreed to arbitration in another country or where a foreign state has agreed that the law of a particular country should govern a contract.”  H.R.Rep. No. 94–1487, at 18 (1976).  In addition, “[a]n implicit waiver would . . . include a situation where a foreign state has filed a responsive pleading in an action without raising the defense of sovereign immunity.”  Ibid.  Based upon this legislative history, “[f]ederal courts have been virtually unanimous in holding that the implied waiver provision of Section 1605(a)(1) must be construed narrowly.”  Shapiro v. Republic of Bolivia , 930 F.2d 1013, 1017 (2d Cir. 1991).  Moreover, while “the examples given in the House Report are not necessarily the only circumstances in which an implied waiver might be found,” Smith v. Socialist People’s Libyan Arab Jamahiriya, 101 F.3d 239, 244 (2d Cir. 1996), “courts have been reluctant to stray beyond these examples when considering claims that a nation has implicitly waived its defense of sovereign immunity.” Princz v. Federal Republic of Germany, 26 F.3d 1166, 1174 (D.C. Cir. 1994).

Diag Human S.E. v. Czech Republic-Ministry of Health, CV 13-0355 (ABJ), 2014 WL 3956747 (D.D.C. Aug. 14, 2014), is consistent with precedent narrowly construing implied waivers under section 1605(a)(1).  In determining whether the Czech Republic had implicitly waived its immunity, the district court held that there had been no implied waiver because the foreign state’s conduct did not fall within any of the three examples set forth in the legislative history.  Diag Human, 2014 WL 3956747, at *6.

While the analysis in Diag Human is straightforward, the case highlights an important issue for FSIA defense counsel.  The Czech Republic filed a motion to dismiss in Diag Human that did not raise the issue of foreign sovereign immunity.  The district court determined that such a filing did not fall within the “responsive pleading” implicit waiver exception, because a motion to dismiss is not a responsive pleading.  Diag Human, 2014 WL 3956747, at *6.  As a procedural matter, the district court was correct: under the Federal Rules of Civil Procedure, a motion to dismiss is technically not a “responsive pleading.”  See, e.g., Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995).  However, as a practical matter, defense counsel in FSIA cases should be cautious about filing a motion to dismiss that fails to include a sovereign immunity defense.  At a bare minimum, any such motion should expressly reserve the sovereign immunity defense so that the plaintiff cannot argue implicit waiver under section 1605(a)(1).  In fact, it is good practice for defense counsel to include explicit “non-waiver” language in all early filings in an FSIA case – including, for example, stipulations to extend time to file an answer or otherwise respond – to avoid waiver becoming an issue in the litigation.

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