On December 22, 2010, the United States Court of Appeals for the Second Circuit in New York City affirmed the ruling of the District Court for the Southern District of New York to dismiss the case of Gulnar Hijazi v. Permanent Mission of Saudi Arabia to the United Nations, docket number 10-0904, due to a lack of subject matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA).

Hijazi had been employed as an Advisor to the Permanent Mission of Saudi Arabia to the United Nations, and had filed suit, claiming she had been subjected to sexual harassment, discrimination by reason of her gender and national origin, and unlawful retaliation. Hijazi asserted that the work she did for the mission was generally clerical, and consequently private or commercial in character. Therefore, Hijazi argued that under the Foreign Sovereign Immunities Act, the Mission of Saudi Arabia should not enjoy immunity according to the commercial activity exception to the FSIA.

The mission contended that the question of immunity was dependent upon its activities and functions rather than an individual employee. The court noted that

It is undisputed that Hijazi attended and took notes at diplomatic meetings, conducted research, wrote memoranda, and, on one occasion, spoke on behalf of the Mission. Her duties were thus in service of the Mission's governmental function.

At the request of the U.S. government, Iran's diplomatic properties in the United States were released from attachment by the United States Court of Appeals for the District of Columbia Circuit. Section 201 of the Terrorism Risk Insurance Act precluded the attachments, the court determined in December 3, 2010 with a detailed opinion and concurring opinion.

The post-judgment attachment was intended to satisfy an award under terrorism legislation which removes some of the jurisdictional protections afforded by the Foreign Sovereign Immunities Act. In Bennett v. Iran, docket no. 09-5147, the court noted:

The United States has held Iran's diplomatic and consular properties for the past thirty years pursuant to Article 45 of the Vienna Convention on Diplomatic Relations, Apr. 18, 1961, 23 U.S.T. 3227, 500 U.N.T.S. 95, which requires signatory states to "respect and protect" the premises and property of a mission if diplomatic relations are severed or a mission is recalled, and the Foreign Missions Act, 22 U.S.C. § 4305(c)(1) (2006), which authorizes the Secretary of State to "protect and preserve" the property of a foreign mission that has ceased conducting diplomatic activities in the United States.

Over the extended Thanksgiving weekend, the German Embassy in Washington, DC moves to its new interim location at 2300 M Street, NW. The move affects also the Legal and Consular Section which handles visas, among other things. Telephone numbers remain unchanged, the embassy reports at its website. All buildings at the existing facility on Reservoir Road and Foxhall Road, except for Ambassador Scharioth's residence, will be refurbished. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Banks have forced embassies out of their customer base for years but the effects of the Partiot Act, enhanced OFAC enforcement and Know Your Customer rules are turning up the heat on embassies. Even the Wall Street Journal goes into detailed reporting on the issue.

The State Department is providing new guidance to embassies, the paper reports in a comprehensive analysis Banks Exit From Embassy Business -- Moves By Largest Lenders Could Strain Relations Between U.S. Government and Other Countries on November 20, 2010. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Disclosure: The author's firm has assisted affected foreign entities and financial institutions in such matters.

The facts in the United States Court of Appeals for the Ninth Circuit's unpublished decision in the matter Hilsenrath v. The Swiss Confederation et al., docket number 07-17127, surprise:

The Hilsenraths alleged that the Swiss Confederation, the Federal Attorney General of Switzerland and an employee of the Swiss Attorney General violated the Hilsenraths' constitutional rights when they froze the Hilsenraths' Swiss bank assets during the course of a criminal investigation into allegedly illicit financial dealings.

The district court properly dismissed the action for lack of subject matter jurisdiction because the Swiss government and its employees are immune from this action under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602 etseq. ("FSIA") and the Hilsenraths did not establish the applicability of any of the FSIA's exceptions to sovereign immunity.

Scandinavian allegations of U.S. embassies spying in host countries without coordination with the host ministries are being refuted by the embassies in Oslo and Stockholm. The Stockholm embassy statement of November 6, 2010 notes that the embassy in Sweden welcomes opportunities to respond to questions and regrets inflammatory and inaccurate press reporting which began in Norway. Tim Moore, U.S. Embassy Oslo spokesperson, explained on November 4, 2010 that his embassy works very closely with host country authorities to ensure the safety and security of U.S. Embassies and all our visitors around the world. On November 7, 2010, CNN observed that similar surveillance programs exist in Copenhagen and Berlin. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

The difficulties facing courts in convicting embassy bombers is the topics of Pakistan Danish embassy bombing suspects acquitted. The Reuters report of the September 25, 2010 acquittal of attackers on the embassy of Denmark in Islamabad notes the production of 32 witnesses, including eye witnesses of the event, and the government's plans to appeal the ruling.

Model behavior by diplomats contrasts with a few bad apples. May mistreated domestic personnel of foreign diplomats in the United States sue the foreign sending state in a United States court?

The United States Court of Appeals for the Second Circuit explored the exposure of both the diplomatic employer and the foreign nation, under doctrines ranging from the Foreign Sovereign Immunities Act to the Alien Tort Claims Statute.

With respect to the state, the court held on September 24, 2010, that neither the tortious activity exception nor the commercial activities exception removed the state's FSIA immunity, in the matter Swarna v. Al-Awadi, docket number 09-2525. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

In the context of an attack on the embassy of Malaysia in Jakarta, Salleh Buang explores on September 6, 2010 various sovereignty and immunity issues under the Vienna Convention on Diplomatic Relations. In Assault on our embassy a heinous act, she also touches upon the popular misconception that embassies stand on foreign soil. Their property forms part of the host nation's territory while that nation's jurisdiction ends at the gates to the embassy. Buang's New Straits Times report finally explains the history of locations such as Guantanamo and Vatican City. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

On August 16, 2010, the United States Court of Appeals for the Third Circuit confirmed the District Court's decision that the European Space Agency is not entitled to immunity in the case of Oss Nokalva, Inc. v. European Space Agency, docket number 09-3601. While the District Court concluded that ESA waived the absolute immunity that it usually is entitled to, the decision by the U.S. Court of Appeals was made for different reasons.

The District Court based its ruling on the precedent of Atkinson v. Inter-American Development Bank, 156 F.3d 1335, 1340 (D.C. Cir. 1998), which determined that the Inter-American Development Bank, an international organization under the International Organizations Immunities Act, was entitled to virtually absolute immunity. The court found that ESA was entitled to absolute immunity under the IOIA. However, the appellate court did not accept the District Court's finding that ESA was entitled to absolute immunity and did not need to address whether ESA waived its immunity or not.

The reasoning behind its decision relies on the IOIA which states that international organizations shall enjoy the same immunity from suit and every form of judicial process as is enjoyed by foreign governments… 22 USC §288a(b). Such shorthand legislation linked the immunity of international organizations with the immunity of foreign governments.

While the District Court interpreted this statutory reference as the IOIA providing international organizations indefinitely with the same "virtually absolute" immunity as foreign sovereigns regardless of later changes to the law, the appellate court recognizes the changes to foreign sovereign immunity that have occurred since 1945.

With the creation of the Foreign Sovereign Immunities Act of 1976, foreign governments enjoy immunity from the jurisdiction of U.S. courts with a few specific exceptions. The exception relevant to this case states that

"the foreign state has waived its immunity either explicitly or by implication and in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere…" §1605(a)(1)-(2).

It is undisputed that the Agreements at issue here constituted such commercial activity and, because we construe the IOIA to incorporate the exceptions to immunity set forth in the FSIA, we will affirm the District Court's order denying ESA's motion to dismiss.

On August 17, 2010, the United States Court of Appeals for the Second Circuit in New York City ruled against New York City and in favor of The Permanent Mission of India to the United Nations and the Principal Resident Representative of the Mongolian People's Republic to the United Nations. It reversed the judgment of the District Court, which permitted the city to tax property owned by the governments of India and Mongolia being used to house mission employees.

In its decision, the Court pointed to a June 2009 Notice from the U.S. State Department, which exempted foreign governments from paying real property taxes on property used to house the staff of permanent missions to the United Nations. The State Department explained that

As the largest foreign-government property owner overseas, the United States benefits financially much more than other countries from an international practice exempting staff residences from real property taxes, and it stands to lose the most if the practice is undermined.

In a 14 page opinion, the United States Court of Appeals for the District of Columbia affirmed the District Court in the matter MBI Group, Inc. v. Credit Foncier Du Cameroun , docket number 09-7079, on August 6, 2010. An American plaintiff sued the government of Cameroon and parties from Cameroon in a contract and bribery matter.

The lower court had found the nexus to Cameroon to be very strong and the public interest nexus to the United States to be outweighed by the public interest of a trial in Cameroon that it had dismissed the matter under the forum non conveniens doctrine.

Instead of pursuing litigation in Cameroon as instructed by the District Court, the plaintiffs undertook minimal efforts abroad and soon petitioned the U.S. court to resume its proceedings because filing suit in Cameroon would be too expensive and a fair trial would be elusive.

On further instruction, the parties returned to the Cameroonian judiciary and defendants managed to arrange for hearings which could potentially reduce the burdensome filing fees for the plaintiffs. The latter refused to pursue such remedies, however, and turned once more to the District Court which again found against plaintiffs.

The Circuit Court upheld the forum non conveniens analysis of the lower court in all respects. There is not absolute right of an American plaintiff company doing business abroad to have its case heard in a United States court, the court explained. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

On August 3, 2010, the United States Court of Appeals for the Second Circuit in New York City ruled in favor of EM Ltd. and NML Capital Ltd. in confirming ex parte orders dated May 22, 2007. The orders restrain and attach certain assets of the Republic in a trust administered by the U.S. Bank Trust National Association and deny BNA's motion to vacate these orders. The case is EM Ltd. v. The Republic of Argentina, docket number 09-3908. -- Sara Harr, Legal Assistant, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Post removed at reader's request. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP.

On July 27, 2010, the United States Court of Appeals for the Second Circuit in New York City ruled in favor of Germany in confirming the dismissal of claims for old East German debentures by adding as a basis for dismissal the lack of allegations of commercial activities by state actors. The case is Mortimer Off Shore Services Ltd. v. The Federal Republic of Germany, docket number 08-1783. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

On July 22, 2010, the International Court of Justice issued its advisory opinion on the unilateral declaration of independence by Kosovo. The 123-page decision is published on the court's website. -- Clemens Kochinke, partner, Berliner, Corcoran & Rowe, LLP, Washington, DC.

Actual notice is insufficient in the service of process on Brazil, the United States District Court for the District of Columbia explained on July 10, 2010. In the matter Ibiza Business Ltd. et al. v. United States of America et al., docket number 10-296, the plaintiff had sought entry of a default judgment against Brazil but the court advised it to serve in strict compliance with 28 USC §1608(a)(3). -- Clemens Kochinke,, partner, Berliner, Corcoran & Rowe, LLP, Washingcton, DC.

The United States Court of Appeals for the Second Circuit in New York City followed the Supreme Court and, on June 28, 2010, affirmed in part, vacated in part and remanded the lower court's decision in Carpenter v. Republic of Chile, docket number 09-3743, with an eight-page opinion which begin as follows:

Plaintiff appeals from a judgment of the United States District Court for the Eastern Districtof New York (Joanna Seybert, Judge) dismissing plaintiff's claims against the Republic of Chile, various government officials of Chile, and British Airways. Because the Supreme Court's recent opinion in Samantar v. Yousuf, --- S. Ct. ---, No. 08-1555, 2010 WL 2160785 (S. Ct. June 1, 2010) abrogated our prior holding that the Foreign Sovereign Immunities Act extends to officials of a foreign government acting in their official capacities, we vacate the judgment of the District Court insofar as it dismissed plaintiff's claims against the government officials of Chile.

On June 18, 2010, the United States District Court for the District of Columbia entered final judgment in the matter of Elisa Nili Cirilo Peres Ben-Rafael, et al. v. Islamic Republic of Iran, et al., docket number 08-0716. This case is based on the default judgment in favor of the estate of David Ben-Rafael, a victim of a 1992 terrorist bombing at the Israeli Embassy in Buenos Aires, Argentina.

Less than one month before the court entered default judgment in the original case, the National Defense Appropriations Act for Fiscal Year 2008 28 USC §1605A was signed into law by then-President Bush, replacing the Foreign Sovereign Immunities Act's original state-sponsor-of-terrorism exception. The act allows for awards of punitive damages and attempts to make it easier to collect FSIA judgments by entitling plaintiffs to impose liens on property belonging to state sponsors of terrorism.

The change prompted the plaintiffs to petition for the reissuing of the default judgment from Ben-Rafael I as to defendant Iran using the new jurisdictional grant in §1605A and for the court to declare a new defendant, the International Risk Governance Council, subject to the attachment provisions of §§1605A(g) and 1608(g) as an agency or instrumentality or Iran.

This court noted that it has jurisdiction over this case because service was proper and defendants' conduct falls within the state sponsor of terrorism exception in §1605A. Its jurisdiction to hear the case as a related action to Ben-Rafael I is based on the 2008 NDAA grandfathering related actions to timely commenced prior actions under §1605A's jurisdictional grant.

The court noted its ruling that plaintiffs here established their claims by evidence satisfactory to the court and reentered default judgment as to defendant Iran. The plaintiffs did not meet the burden showing that IRGC is an agency or instrumentality of Iran as required by 28 USC §1603(b). The court agrees that under the core commercial function test the IRGC is a government entity, not a separate legal person. Therefore, the court did not need to reach the second or third elements of the agency or instrumentality analysis.

The court decided that there is no reason for delay in directing the entry of final judgment and this conclusion is supported by the fact that in the past the identical judgment was issued and was itself a final judgment. The court entered judgment for plaintiffs in the amounts specified in Ben-Rafael I, 540 F. Supp. 2d 59 (2008) and directs entry of that judgment as final pursuant to Federal Rules of Civil Procedure. -- Melanie Hardcastle, Legal Assistant, Berliner, Corcoran & Rowe, LLP, Washington, D.C.

On June 18, 2010, in Guevara v. Peru, docket No. 08-17213, a case that one of the Judges claims reads like the latest spy thriller, the United States Court of Appeals for the Eleventh Circuit reversed the district court's judgment and remanded the case with the instruction that the case be dismissed without prejudice.

The claim was brought over Peru's refusal to pay an award to the plaintiff, Jose Guevara, after he successfully led to the capture of Vladmiro Lenin Montesinos Torres. Montesinos was at one time the head of Peru's National Intelligence Agency. During his time as director of the intelligence agency, he allegedly committed a large number of serious crimes including arms trafficking, drug dealing, money laundering, and more than a few murders, id at page 3. After being exposed through a series of videotapes that were leaked to the media, Montesinos fled the country. Peru publically posted an emergency decree which established a financial reward of $5 million dollars for any information leading to his capture.

Montesinos fled to Caracas and was hidden by Jose Guevara who nursed him back to health after he had facial reconstructive surgery meant to hide his identity. Guevara was also handling Montesinos' communications with Pacific Industrial Bank in Miami, Florida. Montesinos requested, through Guevara, that the bank transfer his funds to another bank and, when the bank refused, Montesinos emailed Luis Alfredo Percovich, the officer assigned to the account, and threatened Percovich's life. Guevara then left for Miami to handle the money on Montesinos' behalf. When Percovich discovered that Guevara was on his way to Miami, he called the FBI who intercepted and arrested Guevara upon his arrival in the United States. The FBI offered to drop all charges against Guevara if he provided them with information on Montesinos' whereabouts. With Guevara's help, Montesinos was finally detained by Venezuelan authorities and expedited to Peru.

Peru refused to pay Guevara the reward that it promised in its emergency decree. Guevara sued Peru in the Southern District of Florida. The Court of Appeals was tasked with determining whether or not Peru had sovereign immunity under 28 U.S.C. § 1605(a)(2), the commercial activity exception to the FSIA, because in reaching its decision, the district court bypassed the question of whether, assuming that the offer of a reward constituted commercial activity, Peru established that it had immunity under subsection (a)(2).

While the Court admitted that the act of offering a reward was indeed commercial activity, it did not agree that that the court had subject matter jurisdiction. The opinion carefully takes apart subsection (a)(2) and shows that there is no definite link between the reward and commercial activity within or affecting the United States. Although a country may be sued over legitimate commercial activity, it does not mean that the U.S. courts have the jurisdiction to enforce a judgment against the sovereign. In this case, the country maintained its immunity despite being sued over commercial activities because those activities were not sufficiently linked to the United States. -- Laura P. Valle, Legal Assistant, Berliner, Corcoran & Rowe, LLP, Washington, D.C.