Sovereign Immunity & the Foreign Sovereign Immunities Act
The Foreign Sovereign Immunities Act of 1976 is the exclusive legal framework governing when foreign governments can be sued in US courts. The baseline rule is immunity — foreign states cannot be dragged into US courts without their consent. But FSIA creates critical exceptions: commercial activity, waiver, expropriation of property, terrorist-state-sponsored acts, and maritime tort. These exceptions have been the battleground for lawsuits against Iran, Saudi Arabia, and other foreign governments with US interests at stake.
Primary Text
28 U.S.C. §§ 1602–1611“Under international law, states are not immune from the jurisdiction of foreign courts insofar as their commercial activities are concerned, and their commercial property may be levied upon for the execution of judgments rendered against them in connection with their commercial activities. (28 U.S.C. § 1602, Congressional Findings)”
What It Means
Sovereign immunity is one of the oldest principles in international law: independent states do not submit to the jurisdiction of foreign courts. For most of history, this immunity was absolute. The Foreign Sovereign Immunities Act (FSIA) codified a 'restrictive immunity' approach — foreign states retain immunity for their sovereign (governmental) acts but not for their commercial activities conducted in or affecting the United States. FSIA transferred jurisdiction over these determinations from the State Department (where diplomatic considerations dominated) to the federal courts, creating a more rule-based framework. It remains the sole basis for suing a foreign state in a US court.
The commercial activity exception is the most-used FSIA hook. Under § 1605(a)(2), a foreign state is not immune for commercial activity carried out in the US, commercial activity outside the US that causes a direct effect inside the US, or commercial activity carried out in the US by a foreign state in connection with its commercial activities abroad. The line between 'sovereign' and 'commercial' activity has been extensively litigated: a government's decision to issue sovereign bonds is treated as commercial, but the decision to expropriate a company's assets is sovereign. Courts have applied a 'nature of the act' test rather than a 'purpose of the act' test — what matters is whether the act is the kind of thing a private entity could do, not whether the government did it for governmental reasons.
The terrorism exception (§ 1605A) is the most politically consequential FSIA provision. Congress added it in 1996 to allow victims of state-sponsored terrorism to sue designated state sponsors of terrorism — a list that has included Iran, Iraq, Libya, Syria, Cuba, Sudan, and North Korea. Iran has been the primary defendant under § 1605A, with billions of dollars in default judgments entered against it for acts including the 1983 Beirut Marine barracks bombing, the 1988 Pan Am 103 bombing (Libya), and 9/11-related litigation. Collection of these judgments is a separate challenge entirely — sovereign assets remain largely protected — and Congress has enacted special mechanisms to allow victims to attach certain frozen Iranian assets.
Real-World Application
The 9/11 litigation against Saudi Arabia is the most prominent contemporary FSIA dispute. Families of September 11 victims spent years arguing that Saudi Arabia was not entitled to immunity for the financial and logistical support allegedly provided by Saudi government officials to the hijackers. Congress passed the Justice Against Sponsors of Terrorism Act (JASTA) in 2016 — over President Obama's veto — to create a narrower exception allowing suits against foreign states for acts of terrorism occurring in the US regardless of terrorism designation. Saudi Arabia mounted an aggressive defense, and the litigation has continued for years, generating extensive classified discovery disputes. The case illustrates FSIA's dual role as a barrier to accountability and a negotiated gateway through which victims can sometimes pass.
Related Laws
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