UPDATED: Only Time Will Tell: Canadian and American approaches to State Immunity

UPDATED: On June 1st, 2010, the U.S. Supreme Court released its decision in Samantar v. Yousef. Justice Stevens wrote the opinion, while Justices Alito, Thomas and Scalia filed concurring opinions.
The U.S. Supreme Court held that, based upon a textual reading and legislative history of the Foreign Sovereign Immunities Act , the petitioner’s qua individual’s claim for immunity failed. The FSIA’s scope was limited to states and their agencies or instrumentalities, which, the Court held, does not include natural persons. At pp. 19-20 of the opinion, Justice Stevens held: 

“We are thus not persuaded that our construction of the statute’s text should be affected by the risk that plaintiffs may use artful pleading to attempt to select between application of the FSIA or the common law. And we think this case, in which respondents have sued petitioner in his personal capacity and seek damages from his own pockets, is properly governed by the common law because it is not a claim against a foreign state as the Act defines that term.Although Congress clearly intended to supersede the common-law regime for claims against foreign states, we find nothing in the statute’s origin or aims to indicate that Congress similarly wanted to codify the law of foreign official immunity.

Our review of the text, purpose, and history of the FSIA leads us to the conclusion that the Court of Appeals correctly held the FSIA does not govern petitioner’s claim of immunity. The Act therefore did not deprive the District Court of subject-matter jurisdiction. We emphasize, how-ever, the narrowness of our holding. Whether petitioner may be entitled to immunity under the common law, and whether he may have other valid defenses to the grave charges against him, are matters to be addressed in the first instance by the District Court on remand. The judgment of the Court of Appeals is affirmed, and the case is remanded for further proceedings consistent with this opinion.”


ORIGINAL POST:

Over at Opinio JurisChimène I. Keitner (University of California, Hastings College of the Law) writes about the Samantar v. Yousuf case (briefs and transcript available here), where the U.S. Supreme Court recently heard arguments on the interpretation of the 1976 Foreign Sovereign Immunities Act (FSIA).

The FSIA generally grants immunity to foreign sovereigns, it also lays out a number of exceptions under which U.S. courts can exercise jurisdiction. Plaintiffs have thus used this statute as a basis to sue foreign governments and their agencies and instrumentalities in a variety of contexts, ranging from purely commercial disputes to wrongful death claims on behalf of victims of state-sponsored terrorism (Foreign Sovereign Immunities Act, 8 U.S.C. §§ 1602 et seq .) Keitner notes:

“…this suit for torture and extrajudicial killing was brought against Samantar, a former Somali official who now lives in Virginia, not against Somalia itself. As Justice Kennedy interjected after Samantar’s lawyer Shay Dvoretzky had barely introduced himself, “I’m having difficulty seeing how the issues as presented in the brief really resolve very much.” That is because, with respect to suits against individuals, the FSIA doesn’t resolve very much.”

Keitner concludes:

“So, what is the Court likely to do? It seems that the result will turn on whether a majority of the Justices accepts that Congress was addressing a significant but narrow problem in 1976, and simply did not address the immunities of current or former officials in this particular statute (leaving that to the common law and, potentially, to future legislation), or whether a majority feels compelled in this decision to rule definitively on the precise contours of individual immunities without any statutory guidance. As Justice Scalia observed about the FSIA’s apparent omission of any reference to individual officials, “I mean, I guess – I guess you could write it that way, but I don’t know why anybody would want to write it that way.” If the Justices cannot accept this perceived imperfection, they might be tempted to rewrite the FSIA. Given the various specialized immunities that apply to individuals as a matter of custom and treaty and do not fit within the text of the FSIA, this would be a mistake.”

A line of American cases previously considered whether an agency is an arm of the state for Eleventh Amendment purposes, which reads:

“The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”

There are two recognized exceptions to a state’s Eleventh Amendment immunity. First, Congress may abrogate the states’ immunity under section five of the Fourteenth Amendment. Second, a state may waive its immunity and consent to suits by private citizens. (Bd. of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 363 (2001) ; Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 73 (2000). For example, Illinois has waived its Eleventh Amendment protection by enacting the State Lawsuit Immunity Act, as amended by section five of Public Act 93-414, which reads as follows:

“[e]xcept as provided in the Illinois Public Labor Relations Act, the Court of Claims Act, and the State Officials and Employees Ethics Act, the State of Illinois shall not be made a defendant or party in any court.” (State Lawsuit Immunity Act, 745 ILCS 5/1, Ill. Pub. Act 93-414, § 5)

U.S. courts have applied various factors and tests to resolve the question whether an entity falls within the FSIA’s definition of a foreign state. In some cases, U.S. courts analyze the nature of the entity (or individual) being sued, or how the entity has been treated by others, to determine whether it is entitled to the protections of the FSIA. In other cases, U.S. courts apply specific tests to determine whether one or more elements of the definition of “foreign state” have been met. For example, in considering whether an entity qualifies as an “organ” of the sovereign, courts have applied the following five-factor analysis, considering:

(1) whether the foreign state created the entity for a national purpose;

(2) whether the foreign state actively supervises the entity;

(3) whether the foreign state requires the hiring of public employees and pays their salaries;

(4) whether the entity holds exclusive rights to some right in the [foreign] country; and

(5) how the entity is treated under foreign state law. (Ocean Line Holdings Ltd. v. China Nat’l Chartering Corp., 578 F. Supp. 2d 621, 624 (S.D.N.Y. 2008) (quoting Filler v. Hanvit Bank, 378 F.3d 213, 217 (2d Cir. 2004)) (citations omitted); Intelsat Global Sales & Mktg., Ltd. v. Community of Yugoslav Posts Telegraphs & Telephones, 534 F. Supp. 2d 32 (D.D.C. 2008) (citing Peninsula Asset Mgmt. v. Hankook Tire Co., 476 F.3d 140, 143 (2d Cir. 2007)).

In Santilli v. Cardone, No. 8:07-cv-308-T-23MSS, 2008 WL 2790242, at *2 (M.D. Fla. July 18, 2008) an Italian university claimed immunity from suit as a “foreign state” because of its close ties to the Italian government. The university’s president attested that (a) the university had been re-established in 1964 by the Italian Government; (b) it received approximately 75% of its funding from the Italian Government; (c) the Italian Government oversaw and controlled the university’s budget; and (d) the university was required to account to the Government for its spending. Despite these facts, the court refused to grant immunity to the university, finding no evidence that (1) the university’s purpose of teaching and conducting research served a national purpose; (2) the Italian Government actively supervised the university or required it to hire public employees; (3) the university held any exclusive rights; or (4) Italian law treated the university as dependent upon the Government.

Applying the five-factor analysis for determining whether an entity is an “organ” of a foreign state, the Florida court found that the university was not an agency or instrumentality of the Italian government entitled to immunity from suit under the FSIA. A fortiori, a finding by this Honourable Court that the defendants are neither agencies nor instrumentalities of the U.S. government entitling them to immunity under the SIA, accords with American notions of comity and standards of jurisdiction, recognition and enforcement. Finally, on February 18, 1997, the Governor General in Council issued a Ministerial Order restricting certain immunity in relation to the United States which reads as follows:

 


The Canadian Approach to State Immunity 

Foreign state immunity in Canada is governed by the State Immunity Act (“SIA”). Under the SIA, a foreign state is immune from the jurisdiction of any court in Canada unless one of the following enumerated exceptions applies:

 

 

“· the proceedings relate to any “commercial activity” of the foreign state, or

· the state has waived immunity by expressly submitting to the court’s jurisdiction. (State Immunity Act, R.S.C. 1985, c. S-18)

 

Even if a foreign state fails to defend itself in legal proceedings, Canadian courts must give effect to state immunity. The relevant provisions of the State Immunity Act are as follows:

State Immunity

2. In this Act,

“agency of a foreign state” means any legal entity that is an organ of the foreign state but that is separate from the foreign state;

“commercial activity” means any particular transaction, act or conduct or any regular course of conduct that by reason of its nature is of a commercial character;

“foreign state” includes

(a) any sovereign or other head of the foreign state or of any political subdivision of the foreign state while acting as such in a public capacity,

(b) any government of the foreign state or of any political subdivision of the foreign state, including any of its departments, and any agency of the foreign state, and

(c) any political subdivision of the foreign state.

(3)(1) Except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada.

Court to give effect to immunity

(2) In any proceedings before a court, the court shall give effect to the immunity conferred on a foreign state by subsection (1) notwithstanding that the state has failed to take any step in the proceedings.

Immunity waived

4. (1) A foreign state is not immune from the jurisdiction of a court if the state waives the immunity conferred by subsection 3(1) by submitting to the jurisdiction of the court in accordance with subsection (2) or (4).

State submits to jurisdiction

(2) In any proceedings before a court, a foreign state submits to the jurisdiction of the court where it

(a) explicitly submits to the jurisdiction of the court by written agreement or otherwise either before or after the proceedings commence;

(b) initiates the proceedings in the court; or

(c) intervenes or takes any step in the proceedings before the court.

Exception

(3) Paragraph (2)(c) does not apply to

(a) any intervention or step taken by a foreign state in proceedings before a court for the purpose of claiming immunity from the jurisdiction of the court; or

(b) any step taken by a foreign state in ignorance of facts entitling it to immunity if those facts could not reasonably have been ascertained before the step was taken and immunity is claimed as soon as reasonably practicable after they are ascertained.

Commercial Activity

5. A foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state.

 

Under the SIA, “foreign state” includes the government and departments of the foreign State, as well as those of any political subdivision of the foreign state, such as a province or state. It also includes any “agency of the foreign state”. However, the immunity of agencies materially differs in certain respects from that of states.  The SIA, defines an “agency of a foreign state” as “an organ of the foreign state [that is] separate from the foreign state.” An “organ” of a foreign state is an entity that is co-extensive with or an adjunct of the state and that performs state functions, such as a government ministry or department. Some characteristics typical of state organs are that their board members are appointed by the government, their employees are civil servants, they do not control their daily operations or own their assets, and they cannot directly conduct commercial transactions on their own initiative. Doing Business With Foreign States and State Companies, (2006) Ogilvy Renault LLP.

An agency, while still sufficiently connected to the state to be an organ, is nonetheless legally distinct from the state. For example, state-owned companies are often considered “agencies of a foreign state” where the state has a great degree of control over them. Foreign state agencies can claim fewer benefits of state immunity: for example, property belonging to agencies is not immune from seizure, and the procedural requirements to sue an agency are more flexible than for states. (Collavino Inc. v. Tihama Development Authority (2007), (sub nom. Collavino Inc. v. Tihama Development Authority (TDA) an Organ of the Republic of Yemen) 420 A.R. 89 per N. Wittmann A.C.J.Q.B. (Alta. Q.B.) add’l reasons at (2007), 444 A.R. 1 (Alta. Q.B.)

The decision in TMR Energy Ltd. v. State Property Fund of Ukraine (2003), 244 F.T.R. 1 (F.C.), 2003 FC 1517 aptly summarizes the proper approach to analyzing the characteristics of an agency of a foreign state:

 

“It must be remembered that the alter ego test was developed at a time when the State Immunity Act had not yet been enacted (see Ferranti-Packard Ltd. v. Cushman Rentals Ltd. et al (1980), 30 O.R. (2d) 194, aff’d 31 O.R. (2d) 799, approving and adopting the test refined by Lord Denning in Trendtex Trading Corp. v. Central Bank of Nigeria, [1977] 1 Q.B. 529. At that time, the common law recognized the principle of immunity of foreign governments and extended that immunity to “its department of state or any body which can be regarded as an alter ego or organ of the government.” (Trendtex Trading, at p. 559). The alter ego test was therefore a means of determining whether an entity was an “organ” of the foreign state for the purpose of benefiting from state immunity. It has no use or application to the determination of whether an entity had a distinct legal existence.

Thus, there are three concepts at play here: First, the concept of agency of a foreign state, which is included in the greater definition of foreign state. Then, there are the two defining characteristics of an agency of a foreign state: (1) that it be an organ of the foreign state (and our Courts in interpreting this requirement still use the alter ego test) and (2) that it be a legal entity separate from the foreign state. The concept of separate legal entity necessarily refers to a distinct corporate personality. Thus the concept of “organ of a foreign state” continues to refer to the function and control aspects which distinguishes true emanations of a government regardless of legal status, and a new concept is introduced, that of separate legal entity. The distinction is relevant to the scheme of the State Immunity Act…”.(TMR Energy Ltd. v. State Property Fund of Ukraine (2003), 2003 FC 1517, 2003 CarswellNat 4117, 244 F.T.R. 1 at ¶’s 11-3-115 (F.C.) )

 

In University of Calgary v. Colorado School of Mines, 35 Alta. L.R. (3d) 199, 43 C.P.C. (3d) 189, [1996] 2 W.W.R. 596, 179 A.R. 81 (Alta. Q.B.) ), Justice Kent of the Alberta Court of Queen’s Bench considered a state immunity argument raised by a Colorado college, alleging that it was an agency of state of Colorado in respect of a defamation claim brought against it by a Canadian university. Both parties entered into an agreement whereby the University of Calgary was to do certain work on the Colorado college’s project. A dispute arose and the University of Calgary sued the Colorado college alleging defamation of its employees and breach of contract. The Colorado college later brought an action in Colorado alleging various torts and breach of contract. The Colorado college applied unsuccessfully for an order setting aside the Alberta university’s statements of claim on the basis of forum non conveniens and a declaration that the college was an agency of the Colorado government under the State Immunity Act and therefore immune from the jurisdiction of the Alberta courts. The college appealed the denial of its application.

Kent, J. held that the defamation action was clearly an action in tort, which occurred at least partly in Alberta, or in any event, the University of Calgary’s reputation would be more likely to be harmed in Alberta than in Colorado. Most of the factors weighed in favour of Alberta as the forum conveniens. With respect to state immunity, Kent, J. noted that the State Immunity Act provides that, except in certain circumstances, a foreign state is immune from the jurisdiction of Canadian courts. While the Colorado college was an educational institution, whose board was appointed by the government, in view of the Colorado college’s autonomy, it could not be said that the college was an arm or agency of the state of Colorado. At paragraph 38 the learned judge held:

“38 Although the appointment of all of the members of the board indicates a higher level of control than there was in Harrison or McKinney, when one looks at what the board’s function is, namely to be responsible to the institution for the day to day operation of the institution, CSM is not an arm or agency of the state of Colorado. The board has control and management of the institution, it sets its own bylaws and regulations, it makes decisions like setting the amount of tuition and the legislature has recognized in some circumstances it may act independently, albeit without the aid of government funds. CSM is not immune pursuant to the State Immunity Act. (University of Calgary v. Colorado School of Mines

Readers should take note of Canada’s legislative response to a perceived over-reaching by the FSIA in the form of an Order Restricting Certain Immunity In Relation To The United States, SOR/97-12

Future Implications

Canada’s approach to state immunity in an age of genocide and state-sponsored terrorism requires a paradigm shift in thinking. At least the U.S. Alien Tort Statute, 28 U.S.C. §1350 (also referred to as the Alien Tort Claims Act) has allowed some international human rights claims to proceed in U.S. courts. For example, see  Doe I v. Unocal Corp., 963 F. Supp. 880 (C.D. Cal 1997) which imposed liability under the ATS against private corporations by imposing a standard of “knowing practical assistance or encouragement that has a substantial effect on the perpetration of a crime.”

Recent efforts to amend the Canadian federal State Immunity Act are reflected in the form of Bill C-35- An Act to deter terrorism, and to amend the State Immunity Act, which did not make it past First Reading due to the recent prorogation of Canadian Parliament. Bill C-35 was an Act to deter terrorism, and to amend the State Immunity Act (the Justice for Victims of Terrorism Act or JVTA) which was introduced in the House of Commons on June 2nd 2009 by the Minister of Public Safety, the Honourable Peter Van Loan. The bill was to establish a cause of action that allowing victims of terrorism to sue individuals, organizations and terrorist entities for loss or damage suffered as a result of acts committed or omissions made that otherwise would be punishable under Part II.1 of the Criminal Code (which deals with terrorism offences).

Essentially, Bill C-35 would have allowed victims of terrorism to sue state-sponsors of terrorism for losses or damage occurring inside or outside Canada on or after January 1, 1985. For the Canadian international litigation and arbitration bars, Bill C-35 held promise to expand the narrow exceptions to state immunity by amending the State Immunity Act to create a new—albeit admittedly equally narrow—exception, which would serve to remove state immunity only “when the state in question has been placed on a list established by Cabinet on the basis that there are reasonable grounds to believe that it has supported or currently supports terrorism.” According to the official Legislative Summary:

“Bill C-35 is similar to a number of private members’ bills and senators’ public bills that have been introduced in Parliament since 2005.(4) The primary difference between the previous bills and Bill C-35 is that the other bills sought to include the cause of action in the Criminal Code, whereas Bill C-35 creates a free-standing civil cause of action.”

Only time will tell whether the winds of political change or judicial activism will finally hold sway and allow victims of human rights abuses and torture equal access to American or Canadian justice.

One Response to “UPDATED: Only Time Will Tell: Canadian and American approaches to State Immunity”

  1. Quebec Superior Court Rejects US Approach to State Immunity « The Roaming Lawyer Says:

    […] common law immunity claim.  Reasons for the dismissal have yet to be issued)  Over at The Trial Warrior Blog, Antonin I. Pribetic has provided some coverage on the issue, including musings as to whether […]

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