Document Type

Article

Disciplines

International Law

Abstract

The Foreign Sovereign Immunities Act of 1976 [FSIA],' provides the exclusive basis upon which American courts may assume jurisdiction over suits against foreign nations and their agencies and instrumentalities.' However, a compendium of the rules respecting the rights and obligations of parties to FSIA cases does not exist. Some federal statutory rules of decision on the liability of foreign states to private entities have been enacted, but they are few in number and limited in scope. In the absence of a detailed listing of rights, one conceivable option is to determine the applicable law through existing choice-of-law rules and approaches. Indeed, in 1983 the United States Supreme Court, in its dictum in First National City Bank v. Banco para el Comercio Exterior de Cuba3 [Bancec], took the position that section 1606 of the FSIA requires the application of state law, including conflict of laws rules, to issues of the liability vel non of foreign states.4 In Bancec an agency of the Cuban government was subjected to a counter-claim for expropriation losses suffered by the petitioner, First National City Bank. The Court found that the issue of liability hinged upon whether the agency would be considered a separate juridical entity, which it was under Cuban law. Although the Court found that "principles . . .common to both international law and federal common law"' governed rather than municipal conflict of law rules, it examined the question of what, if any, role municipal law would play:

Section 1606 [of the FSIA] provides that "[a]s to any claim for relief with respect to which a foreign state is not entitled to immunity . .., the foreign state shall be liable in the same manner and to the same extent as a private person in like circumstances." Thus, where state law provides a rule of liability governing private individuals, the FSIA requires the application of that rule to foreign states in like circumstances. The statute is silent, however, concerning the rule governing the attribution of liability among entities of a foreign state.

Not surprisingly, the dictum has been taken as gospel by lower courts and a rule is emerging that section 1606 requires the application of the conflict of laws rules of the state in which the federal district court sits. 7 Besides being a misinterpretation of congressional intent, the implications of such a rule probably were not foreseen by the Supreme Court. Nevertheless, for purposes of discussion, we will assume that, where appropriate,8 state choice-of-law rules will be utilized to determine issues of liability in FSIA cases.

This article is an investigation of the advantages and disadvantages involved in determining the liability of foreign states through the application of the choice-of-law rules of the state in which the action is commenced. Such an approach raises several questions which will be explored herein: the general pertinence of the law of choice-of-law to issues of governmental liability, the rules subject to choice, the applicable law in light of choice-of-law theories, the wisdom of subjecting issues of foreign nation liability to state choice-of-law approaches and alternative approaches.

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