Amicus Curiae Brief — Permanent Mission of India v. City of NY

No. 06-134

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On Writ of Certiorari to the

United States Court of Appeals For the Second Circuit

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QUESTION PRESENTED

Amici will address the following question:

Whether United States courts have jurisdiction under the

Foreign Sovereign Immunities Act of 1976 to declare the va-

lidity of a tax lien held by a municipal authority for unpaid

property taxes imposed on property owned by a foreign na-

tion.

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TABLE OF CONTENTS

Page

ey Ge iininidicicicrsiniscininssisneingenvicnsennialeii iv

INTEREST OF THE AMICI CURIAE..........cccccccscsessereeeeeresees l

INTRODUCTION AND SUMMARY OF

TE setiicensesiacesnviiniinntinntatidibintieneiniiniamaminainiiieinnt 2

FETE insitipninecveesiniiintsdnintnsininmnnsiaaniesnemieneaiitonaines 5

I. THE TEXT OF FSIA PLAINLY

ENCOMPASSES SUITS TO DETERMINE THE

VERRISS © GR CORTE CIB Ue cencssssesercesccsensvesevessessconsoonees 5

Il. CONGRESS ENACTED FSIA RELYING ON

CONTEMPORANEOUS MATERIALS

MAKING CLEAR THAT THE IMMOVABLE

PROPERTY EXCEPTION INCLUDES

DISPUTES OVER PROPERTY TAXES. ..........0006 cesses 8

A. A Fundamental Goal Of FSIA Was To Codify

The “Restrictive” Theory Of Sovereign

Immunity, Which Denies Immunity In Cases

Involving “Private” Acts Such As The

Ownership Of Real Property. ..2........ccccccseseeeceesereeees 10

B. Based on Representations By The Executive

Branch, Congress Expected The Immovable

Property Exception To Apply To Litigation

“Relating To” Or “With Respect To”

Immovable Property, Including Tax

BI: cnsisininictnccncetsinnsnninaiidnniniumntasenniennanmnneen 13

C. The Executive Branch Made Clear To

Congress That FSIA Was Consistent With

International and Domestic Practice..................:00 15

1. Congress Understood FSIA To Be

Consistent With The European

Convention, Which Contains A Similarly

Broad Immovable Property Exception. .............. 15

ili

TABLE OF CONTENTS—continued

Page

2. The State Department Expressly Advised

Congress That Existing U.S. Practice Did

Not Grant Sovereign Immunity In Cases

Involving Liens For Unpaid Property

TRE, cciemeneisncenernsnccnmcenstasbtnasasiunmuiisepennnnesnesnen 18

Il]. POST-ENACTMENT AND CONTEMPORARY

PRACTICE SUPPORTS THE INFERENCE

THAT FSIA WOULD PERMIT SUITS TO

DETERMINE THE VALIDITY OF TAX LIENS. ....... 20

A. The Third Restatement Makes Clear That

’ Foreign States Are Not Immune From Suits

For Unpaid Property Taxes. ..........0.erssrecsscsssssesseess 21

B. Since FSIA’s Enactment, Foreign States and

International Organizations Have Construed

And Applied The Immovable Property

TINE CIID orescesencsnsenescsrsensensnsnovennnpecenncoonseoes 23

C. Recent Congressional Appropriations Statutes

Show That Congress Still Interprets FSIA To

Provide American Courts Jurisdiction Over

Property Tax Suits Against Foreign Nations............ 28

D. The United States’ Amicus Brief In

Englewood Explicitly States That FSIA Does

Not Make Foreign States Immune From Suits

og een 28

CRIED erarvecesecesecnsrentmneseunatenenencmnenpensenienatsconsninontees 30

iV

TABLE OF AUTHORITIES

Page(s)

CASES

Asociation de Reclamantes v. United Mexican States,

735 F.2d 1517 (D.C. Cir. 1984) ..........cccscccseseseees 4,8, 22

City of Englewood v. Socialist People's Libyan

Arab Jamahiriya, 773 F.2d 31 (3d Cir. 1985)........ passim

City of New Rochelle v. Republic of Ghana, Republic

of Indonesia, and Republic of Liberia, 255

N.Y.S.2d 178 (County Ct. 1964)... eeeeeeseeeees 18, 20

29A C.J.S. Eminent Domain § 200 (1955)......cccccecceeesereeees 7

BS CFB. Tema EDO (IGT access ssncsecscccsocsscesecsssscssssoncese 7

INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) .....ccceccceeseees 3

Lance v. Coffman, 127 S. Ct. 1194 (2007) .......ccceecereeseenes 10

Mallard v. United States Dist. Court,

ae eT ciecinieaiiininiiitpininniccsiisscnsondideninnentiosniintions 3

er a eR BI is istrnsicsnntsnapsicnntinigeniepniadinieadaniinnmeseniinte 6

Republic of Austria v. Altmann, 541 U.S. 677 (2004)........... 3

Roby v. Baker, 432 N.Y.S.2d 917 (3d Dept. 1980)............... 7

United States v. Curtiss-Wright Export Co.,

Be ee SEI creinitenivoiscenenemntinniniegeremacemninenindntioen 9

Verlinden B.V. v. Central Bank of Nigeria,

Se I ctihcrnestianeenntninecnisintnssinntiaceenimnnnindion 17

Weilamann v. Chase Manhattan Bank,

192 N.Y.S.2d 469 (Sup. Ct. N.Y. 1959)... cesereeeeeeens 20

TREATIES, STATUTES, RULES AND REGULATIONS

Consolidated Appropriations Act of 2005,

P.L. No. 108-447, § 543 (2004) .......cccesccecseceseeseesseeeees 28

European Convention on State Immunity, done May

1G, 972, SDS UN. TB. FBI .nccccececcosecsesessosees 4,7, 15, 16

Vv

TABLE OF AUTHORITIES—continued

Page(s)

Foreign Operations, Export Financing, and Related

Programs Appropriations Act of 2006,

P le POD. BGREGR, § SGD CIBRD) ncvccncccccvcccsecesessscoocesascoce 28

Foreign States Immunities Act, No. 196 (1985)

(Austl.), reprinted in Andrew Dickinson et al.,

eds., State Immunity: Selected Materials and

Commentary 469-87 (2004) ........csecssssssseesesereesseseesenes 24

Foreign States Immunities Regulation, No. 77 (as

amended) (1987) (Austl.), available at:

http://www.comlaw.

gov.au/ComLaw/Legislation/LegislativeInstrume

nt] .nsf/0/87C39DB5671D39CCCA256F8F00181

874/$file/1996B00775 pdf. ...........:cccccsceseecsseesecerseeeeeees 24

Foreign Sovereign Immunities Act of 1976, 28 U.S.C.

OD Ee OF GU, cninicsscuninsoccsietninsninnsiianiainnamsadiibidiins passim

Immunity of Foreign States from the Jurisdiction of

Argentinean Courts, Law No. 24, 488 (1995)

(Arg.), reprinted in Andrew Dickinson et al., eds.,

State Immunity: Selected Materials and Commen-

SN, 6D I Ge cs tnctctsertianintitsinsnneritnnsinatiaiintacuisiins 24

International Law Association Revised Draft Articles

for a Convention on State Immunity (Buenos Ai-

res, 14-20 August 1994), Article III(D), reprinted

in Andrew Dickinson et al., at 196.............ccc:cceceeeeseeeees 27

L’ Institut de Droit International on Contemporary

Problems Concerning the Immunity of States in

Relation to Questions of Jurisdiciton and En-

forcment (Basle, 2 September 1991), reprinted in

Andrew Dickinson et al., at 206-21 1............:cc:cceeee 26, 27

New York City Charter § 1519(2)...........:cecseccesseseseseeseseeens 6

vi

TABLE OF AUTHORITIES—<continued

Page(s)

Organization of the American States, Inter-American

Draft Convention on Jurisdictional Immunities of

States, Articles 5 and 6, reprinted in Andrew

SRR 27

Restatement (Third) of Foreign Relations Law of the

Re NN Cp orcxscencsccensenessusnnennsccesnensnessensesnes 21, 22

Restatement (Third) of Foreign Relations Law of the

United States, Tentative Draft No. 6, Volume |

SE Bs SE hccareenenscensenmsnenscenssaneninsastncnecanennarennennes 22

State Immunity Act (1978) (U.K.), reprinted with

commentary in Andrew Dickinson et al., eds.,

State Immunity: Selected Materials and Commen-

ci cessrtninceneeennaitgnenemeenteneenenmenses 24, 25

State Immunity Act, Ch. 313 (revised version 1985)

(Sing.), reprinted in Andrew Dickinson et al.,

eds., State Immunity: Selected Materials and

Commentary 504-12 (2004) ..........ccccsecssessessteseteeeensenes 24

State Immunity Ordinance, No. VI (1981) (Pak.), re-

printed in Andrew Dickinson et al., eds., State

Immunity: Selected Materials and Commentary,

5. _ . Sve eeee Tennent seannnnnN 25

United Nations Convention on Jurisdictional Immuni-

ties of States and Their Properties, opened for

signature Jan. 17, 2005, 44 I.L.M. 803 (2005).............. 23

Vienna Convention on Diplomatic Relations,

23 U.S.T. 3227, Art. 1 & Art. 23......ccccccececeeeees 10, 14, 19

vil

TABLE OF AUTHORITIES—continued

Page(s)

MISCELLANEOUS:

American Law Institute, Proposed Revision and * x

pansion of the Restatement of the Foreign Rela-

tions Law of the United States, Background and

Description of the Project (NOV. 1977) ......cccceceseeererees 21

Black’s Law Dictionary 941 (8th ed. 1999) ............:cccecsesenees 6

Explanatory Report of the European Convention on

State Immunity, ETS No. 74 ...........cccssceseeeeseeseeeees 16, 17

Hearings before the Subcommittee on Administrative

Law and Governmental Relations of the Commit-

tee on the Judiciary, House of Representatives,

94th Cong., 2nd Sess., (June 2 and 4, 1976) .......... passim

Hearing before the Subcommittee on Claims and

Governmental Relations of the Committee on the

Judiciary, House of Representatives, 93rd Cong.,

I Se Fe Bee nicceseccatastciiinninniameninnnesinies passim

House Report No. 1487, 94th Cong., 2d. Sess. ............ passim

Joseph S. Sweeney, The International Law of Sover-

eign Immunity, U.S. Department of State, Bureau

of Intelligence and Research (October 1963).............++: 12

Letter from Jack B. Tate, Acting Legal Adviser, U.S.

Dep’t of State, to Phillip B. Perlman, Acting Att’y

Gen. (May 19, 1952), reprinted in Alfred Dunhill

of London, Inc. v. Republic of Cuba, 425 U.S.

ee en 12

Stephen McCaffrey, Current Development: The

Thirty-Fifth Session of the International Law

Commission, 78 A.J.1.L. 457 (1984) .0........ccccceceeceeeeeeees 24

Powell & Rohan, The Law of Real Property (1954)............. 6

Vili

TABLE OF AUTHORITIES—continued

Page(s)

Sixth Report on Jurisdictional Immunities of States

and Their Property, Sompong Sucharitkul, Spe-

cial Rapporteur, U.N. Doc. A/CN.4/376 (1984) ........... 24

State Department Note, No. 44 (June 8, 1964), Mi-

chael Sandler et al., eds., Sovereign Immunity

Decisions of the Department of State: May 1952

to January 1977, reprinted in John A. Boyd, Di-

gest of United States Practice in International Law

ee SD Cee criecerncetersenemimicsnnnsensssiaummeeiens 19

David P. Stewart, The U.N. Convention on Jurisdic-

tional Immunities of States and Their Property, 99

RA, F. Se, Ce crcictentnentavntnmmamnenenmen 24

United States amicus brief in City of Englewood,

bf 3, 6, 7, 29

INTEREST OF THE AMICI CURIAE'

Amicus International Municipal Lawyers Association

(“IMLA”) is a nonprofit, nonpartisan professional organiza-

tion consisting of more than 1,400 members. The member-

ship is comprised of local government entities, including cit-

ies and counties, and subdivisions thereof, as represented by

their chief legal officers, state municipal leagues, and indi-

vidual attorneys. IMLA is the oldest and largest association

of attorneys representing United States municipalities, coun-

ties, and special districts. Since its establishment in 1935,

IMLA has advocated for the rights and privileges of local

governments and the attorneys who represent them through

its Legal Advocacy Program. IMLA has appeared as amicus

curiae on behalf of its members before the United States Su-

preme Court, in the United States Courts of Appeals, and in

state supreme and appellate courts.

Amicus U.S. Conference of Mayors (“USCM”) repre-

sents more than 1,100 cities with populations of 30,000 or

more. USCM promotes the development of effective urban

policy, strengthens federal-city relationships, and creates a

forum in which mayors can share ideas and information. It

also represents urban interests in litigation and has often ap-

peared as an amicus curiae in this Court

The question presented in this case directly affects the

operation of local governments because of their significant

reliance on property taxation as a source of municipal fund-

ing. Because IMLA and the USCM have unique expertise

- with respect to these issues as well as a strong interest in their

' Pursuant to Rule 37.6, amici state that no counsel for a party au-

thored this brief in whole or in part and that no person other than

amici, their members, and their counsel made a monetary contribu-

tion to its preparation or submission. The parties’ letters consent-

ing to the filing of this brief have been filed with the Clerk’s of-

fice.

2

appropriate resolution, amici submit this brief to assist the

Court in the resolution of this case.

INTRODUCTION AND SUMMARY OF ARGUMENT

Congress enacted the Foreign Sovereign Immunities Act

(FSIA), 28 U.S.C. § 1602 et seq., in 1976. The Act advances

two principal goals: it aligns United States practice on sover-

eign immunity with what Congress understood to be the

then-prevailing practice among other nations; and it “trans-

fer{[s] the determination of sovereign immunity from the ex-

ecutive branch to the judicial branch,” thereby ensuring that

such decisions are made “on purely legal grounds” and are

untainted by political considerations.” The only issue in this

case is how Section 1605(a)(4) of the Act, which excepts

suits involving immovable property owned by foreign states

from FSIA’s general grant of sovereign immunity, should be

construed in light of these goals.

Resolving this question does not require the Court to

give any formal weight to foreign practice or international

law. Nothing in the question at issue or in the judgment of

the court below even remotely implies otherwise. Rather, the

Second Circuit properly recognized that such sources are

relevant only insofar as they provide useful guidance on what

Congress expected or intended when it enacted FSIA, since

one of the Act’s goals was to conform U.S. sovereign immu-

_hity standards to then-prevailing international practice. Nor

does this case require the Court to defer to the Executive

Branch’s interpretation of FSIA. A key purpose of the Act

was to “eliminate the peculiar and * * * outdated practice of

having a political institution, namely, the State Department,

House Report No. 1487, 94th Cong., 2d. Sess., 7, reprinted in

William H. Manz, ed., Foreign Sovereign Immunities Act of 1976,

with Amendments: A Legislative History of Pub. L. No. 94-583

[hereinafter “House Report”).

3

decide many of these questions of law,” and hence to trans-

form issues of immunity into “pure question(s] of statutory

interpretation” that are “well within the province of the Judi-

ciary.” Republic of Austria v. Altmann, 541 U.S. 677, 701

(2004) (citing INS v. Cardoza-Fonseca, 480 U.S. 421, 446,

448 (1987).

Indeed, if anything warrants deference here, it is the

State Department’s longstanding view — in the years leading

up to FSIA’s enactment and beyond — that the immovable

property exception provides United States courts jurisdiction

to declare the validity of property tax liens. As the United

States’ amicus brief in City of Englewood v. Socialist Peo-

ple’s Libyan Arab Jamahiriya, 773 F.2d 31 (3d Cir. 1985)

stated, “Congress never intended that the principle of sover-

eign immunity should permit foreign governments to ignore

their [property tax] obligations to state and local communi-

ties.” U.S. Englewood Br. 3. That representation, made much

closer in time to the passage of FSIA than the United States’

submission in this case, was correct.

Relying on appropriate sources of meaning, the identity

and relative importance of which has been recognized repeat-

edly by the Court in this context, it is clear that the judgment

below should be affirmed.

I. First in importance is the text of FSIA itself. See, e.g.,

Mallard v. United States Dist. Court, 490 U.S. 296, 300-01

(1989). The language of Section 1605(a)(4) contains no limi-

tation, denying immunity “in any case * * * in which * * *

rights in immovable property are in issue.” This text does not

hinge anything on whose “rights” must be “at issue.” In this

* Hearings before the Subcommittee on Administrative Law and

Governmental Relations of the Committee on the Judiciary, House

of Representatives, 94th Cong., 2nd Sess., (June 2 and 4, 1976),

25, reprinted in William H. Manz, ed., Foreign Sovereign Immuni-

ties Act of 1976, with Amendments: A Legislative History of Pub.

L. No. 94-583 [hereinafter Hearings (1976)].

4

case, both New York City (through its statutory tax lien on

the properties) and the nations of India and Mongolia

(through their ownership of the property) have rights at stake

in the litigation. As a result, this suit falls within the plain

terms of FSIA’s immovable property exception to sovereign

immunity and should proceed to a hearing on the merits.

I]. Next in importance are contemporaneous materials

relied upon by Congress when it enacted FSIA. See, e.g.,

Asociation de Reclamantes v. United Mexican States, 735

F.2d 1517, 1521-22 (D.C. Cir. 1984) (Scalia, J.) (utilizing

contemporaneous sources available to Congress, including

treatises, international practice, and domestic U.S. materials,

to help interpret Section 1605(a)(4)). At the time, Congress

anticipated that FSIA would bring the United States into line

with international law and practice; it also had a specific un-

derstanding concerning the meaning and scope of the im-

movable property exception. Both sets of expectations are

relevant to this case.

Four key facts emerge from the legislative materials.

First is the universal and well-documented understanding that

FSIA was understood to embrace the restrictive theory of

sovereign immunity, both generally and with respect to the

immovable property exception. Second is the broad under-

standing of Section 1605(a)(4) held both by Congress and by

the State and Justice Departments, whose officials not only

drafted the Act but also were relied upon by Congress for

their considerable knowledge of the state of existing interna-

tional practice. Third is evidence showing that Congress be-

lieved FSIA would mirror the European Convention on State

Immunity (“EC”), which also contains a broad immovable

property exception. And fourth are the State Department’s

explicit indications to Congress that FSIA would be consis-

tent with existing U.S. practice, which did not recognize gen-

eral immunity for foreign states against suits involving liens

for unpaid property taxes.

5

III. The final source of evidence bearing on the original

meaning of FSIA is the subsequent practice of the United

State and other nations. While that practice post-dates FSIA’s

enactment, it nonetheless sheds light on how the Act was

originally understood because there is no evidence suggest-

ing that the fundamental understanding of the Act, or of the

international law of sovereign immunity more generally, has

changed since 1976.

Domestic and international practice since 1976 clearly

reflect the historical continuity of providing United States

courts jurisdiction to enforce the tax obligations of foreign

states. For example, the Third Restatement of U.S. Foreign

Relations not only makes clear that FSIA’s immovable prop-

erty exception extends to suits for unpaid taxes, but also con-

firms that this result follows from the restrictive theory of

sovereign immunity, which the Act was intended to broadly

codify. Likewise, in Englewood, the first major case address-

ing the precise issue presented here, the United States’

amicus brief argued that the original understanding of FSIA

did not preclude local municipalities from suing foreign

states for failure to pay property taxes. Other post-enactment

evidence consistent with this understanding includes recent

congressional statutes and the acceptance of a broad immov-

able property exception in numerous foreign statutes and in-

ternational covenants.

ARGUMENT

I. THE TEXT OF FSIA PLAINLY ENCOMPASSES

SUITS TO DETERMINE THE VALIDITY OF TAX

LIENS.

The text is the starting point for interpreting FSIA’s im-

movable property exception. Section 1605(a)(4) provides that

a foreign state shall not be immune in “any case in which

rights in immovable property situated in the United States are

in issue.” Because the text does not modify or condition the

“rights” that must be in issue, the exception by its plain terms

6

encompasses all rights held by anyone in the disputed prop-

erty — including those held by municipalities against proper-

ties with outstanding tax liabilities.

In common parlance, disputes involving tax liens in-

volve just such rights in immovable property — and were un-

derstood to do so at the time of FSIA’s enactment. In general,

a lien is a “legal right or interest{] * * * in another’s prop-

erty.” Black’s Law Dictionary 941 (8th ed. 1999). State law

defines the specific contours of rights in property, and in

New York a lien on realty is defined as “a possessory nght in

the encumbered property with a concomitant right to sell that

property if the debt is not satisfied.” 75 N.Y. Jur.2d, Liens §

5, at 138. Like other encumbrances on real property, New

York City tax liens run with the land and are perpetual in du-

ration. New York City Charter § 1519(2). And as respondent

convincingly shows, tax liens are widely recognized by

courts, legislatures, and commentators as rights in real prop-

erty.

The United States used to agree that there is “substantial

authority to support the proposition that a tax lien * * * con-

veys upon its holder an interest in the land which is subject to

the lien.” U.S. Englewood Br. 11; see ibid. (stating that a lien

constitutes an interest in the debtor’s land that deserves sub-

stantial protection) (citing Powell & Rohan, The Law of Real

Property § 477 (1954)). In its Englewood filing, the United

States accordingly argued that a “narrow definition of rights”

excluding an interest in tax liens — the definition for which it

now contends — was “inconsistent with principles of real

property law, at least with respect to tax liens,” relying for

this proposition on multiple authorities that existed prior to

the passage of FSIA in 1976.

The United States used these contemporaneous authori-

ties to highlight four examples where “courts and legislatures

have held that liens are rights in the property which is subject

to the lien.” U.S. Englewood Br. 11. First, the holder of a tax

lien may bring an action against the taxpayer to enjoin

7

“waste” of the land, which typically is a suit that may be

brought only by parties with a right or interest in the prop-

erty. /d. at 12 (citing 85 C.J.S. Taxation § 901 (1955)). Sec-

ond, “holders of tax liens are entitled to compensation when

the government exercises its power of eminent domain and

condemns the underlying property.” /bid. (citing 29A C.J.S.

Eminent Domain § 200 (1955)). Third, “‘a tax lien is not ex-

tinguished when a delinquent taapayer sells the land to inno-

cent third parties.” /bid. (citing Roby v. Baker, 432 N.Y.S.2d

917 (3d Dept. 1980)). And fourth, the Uniform Commercial

Code “implicitly recognized that liens are property interests

in the property to which the lien is attached,” because under

the U.C.C.’s definition of the word “purchase,” “acquisition

of a lien creates an interest in the underlying property.” /d. at

12-13.

The United States was right then and is wrong now: its

cramped new reading of FSIA’s language — which maintains

that the immovable property exception is limited to the adju-

dications of the foreign sovereign’s right to title, possession,

or ownership — finds no support in the text. On this point, it is

instructive to look at the “rights” language of the EC’s im-

movable property exception, which expressly does abrogate

immunity only when the foreign sovereign’'s property rights

or obligations are in issue. Article 9 of the EC provides: “A

Contracting State cannot claim immunity from the jurisdic-

tion of a court of another Contracting State if the proceedings

relate to — its rights or interests in, or its use or possession of,

immovable property; or its obligations arising out of its nghts

or interests in, or use or possession of, immovable property.”

EC, Art. 9 (emphasis added). In contrast, the use of the word

“its” to modify rights in property is conspicuously absent

from FSIA. That Congress was aware of and chose not to

replicate the EC’s language indicates a desire to make

8

FSIA’s immovable property exception apply whenever

rights, in general, are in issue.*

Therefore, the appropriate inference from the plain text

of FSIA is that Congress intended to let United States courts

adjudicate cases whenever either party to the litigation pos-

sesses a right in immovable property located in the United

States. Because Congress understood from contemporaneous

law and practice that tax liens were rights in property, and

because FSIA does not explicitly exempt tax liens from the

immovable property exception, there is no immunity with re-

spect to tax disputes.

II. CONGRESS ENACTED FSIA RELYING ON

CONTEMPORANEOUS MATERIALS MAKING

CLEAR THAT THE IMMOVABLE PROPERTY

EXCEPTION INCLUDES DISPUTES OVER

PROPERTY TAXES.

The plain meaning of FSIA’s text is confirmed by the

legislative background. To the extent that they were available

for congressional inspection — and were explicitly presented

to Congress during the drafting process — materials bearing

on prevailing international practice furnish powerful evi-

dence of congressional intent, given Congress’s manifest

goal to conform U.S. sovereign immunity law with interna-

tional practice. See Reclamantes, 735 F.2d at 1521 (Scalia,

J.).

The Court should place particular weight on representa-

tions that the State and Justice Departments made to Con-

* Congress’ omission of the limiting term “its” from FSIA made it

unnecessary for Congress to borrow the EC’s “obligations” lan-

guage. In FSIA, a separate obligations prong would have been su-

perfluous because in cases where a foreign sovereign has obliga-

tions arising out of its ownership of property (such as tax liability),

another party (such as the taxing authority) necessarily has atten-

dant rights in that property, sufficient to provide jurisdiction under

FSIA.

9

gress on this issue. Understandably in need of expert guid-

ance on how to bring the United States into conformity with

international law and practice, Congress consulted with and

placed great reliance on the Executive Branch — “the sole or-

gan of the federal government in the field of international re-

lations.” United States v. Curtiss-Wright Export Co., 299

U.S. 304, 320 (1936). Indeed, the Departments of State and

Justice played a key role in drafting FSIA, and furnished the

initial version of the explanatory section-by-section commen-

tary contained in the House and Senate Reports.’ In addition,

senior State and Justice Department officials twice testified

before Congress ~ once in 1973 when the initial version of

FSIA was first proposed, and again in 1976 after an amended

version was re-introduced — to explain the meaning of spe-

cific provisions and the ways in which these provisions fit

into the international legal regime. Hearings (1973) at 14-33;

Hearings (1976) at 24-54.

The representations made by the Executive Branch and

other contemporaneous materials bearing on international

practice provide powerful support for the conclusion, evi-

denced in the statutory text, that Section 1605(a)(4) gives

courts jurisdiction to determine the validity of tax liens on

property owned by a foreign state.

> Hearing before the Subcommittee on Claims and Governmental

Relations of the Committee on the Judiciary, House of Representa-

tives, 93rd Cong., Ist Sess., (June 7, 1973), 33-48, reprinted in

William H. Manz, ed., Foreign Sovereign Immunities Act of 1976,

with Amendments: A Legislative History of Pub. L. No. 94-583

[hereinafter “Hearings (1973)"]. See also House Report at 6-33.

10

A. A Fundamental Goal Of FSIA Was To Codify

The “Restrictive” Theory Of Sovereign Immu-

nity, Which Denies Immunity In Cases Involv-

ing “Private” Acts Such As The Ownership Of

Real Property.

There is no doubt that FSIA was passed in large part to

codify the “restrictive” theory of sovereign immunity, which

permits lawsuits in cases arising from a state’s “private”

acts.° And it is undisputed that ownership of non-diplomatic

property is an example of such a private act. Given that the

taxes at issue here were assessed on property used as private

housing for staff-level employees — and not for the public

purpose of maintaining an embassy or consulate, or housing

the head of mission, as stipulated by the Vienna Convention

— the restrictive theory allows jurisdiction to be exercised in

this case.*

The United States tries to avoid this conclusion by argu-

ing that the immovable property exception pre-dates the re-

strictive theory, and hence should be read against the back-

ground of the absolute theory of sovereign immunity that

prevailed prior to the Tate Letter. U.S. Br. 6, 9-11. Under this

approach, the United States maintains, immunity should be

denied only when there is a “necessity” that a sovereign “be

able to determine all issues relating to the title and possession

° See House Report 7-10, 14, 45; Hearings (1976) 25-27, 31.

” See Vienna Convention on Diplomatic Relations, 23 U.S.T.

3227, Art. 1 & Art. 23 (exempting states from taxes on the prem-

ises of the mission, defined as the parts of buildings used for the

purposes of the mission, including the residence of the head of

mission).

* To the extent there is a dispute here about whether the property at

issue is tax-exempt diplomatic property, it should be resolved in

the merits stage of the proceeding, under the standards established

by the Vienna Convention. Cf. Lance v. Coffman, 127 S. Ct. 1194,

1196 (2007) (‘Federal courts must determine that they have juris-

diction before proceeding to the merits”).

11

of property within its realm.” /d. at 6. The United States con-

cludes that the absence of pre-FSIA suits adjudicating tax

claims demonstrates that there is no such “necessity” for do-

mestic courts to adjudicate suits for local property taxes.

Ibid.

This novel theory has perverse implications; although

the reasons for waiving immunity as to disputes involving

real property were sufficiently compelling that they were

recognized even when absolute foreign sovereign immunity

otherwise prevailed, the United States now says that real

property disputes should be viewed against the background

of a uniquely broad background understanding of immunity.

This approach finds no support in the text or legislative his-

tory of FSIA. Nowhere in the Act itself, the House or Senate

reports, or the testimony of senior State and Justice Depart-

ment officials is it suggested that FSIA’s immovable prop-

erty exception seeks to codify the understanding of the real

property exception that prevailed under the outdated “abso-

lute” theory, instead of the more modern “restrictive” ap-

proach to immunity.

On the contrary, the legislative materials show that Con-

gress understood ail provisions of FSIA to embrace the re-

strictive theory. As Bruno Ristau, Chief of the Foreign Liti-

gation Section of the Justice Department’s Civil Division,

testified before Congress, “[t]he [FSIA] is designed to codify

as a matter of Federal law the restrictive theory of sovereign

immunity, and thus put to rest once and for all the question as

to what doctrine of sovereign immunity the United States fol-

lows.” Hearings (1976) at 31. And as State Department Legal

Adviser Monroe Leigh further made clear, the “principles of

international law” constituting the restrictive theory “are em-

bodied in sections 1604 through 1607” — including, of

course, the very Section 1605({a)(4) now at issue here. Hear-

ings (1976) at 27.

In light of this contemporaneous evidence, there is no

reason to accept the United States’ contention that, unlike the

12

rest of FSIA, Section 1605(a)(4) should be read as though the

tule of absolute immunity still prevailed. Such a reading flies

in the face of the Act’s central purpose — to formally break

from the traditional approach and curtail state reliance on

immunity in cases arising from private acts.

Moreover, even if the United States is right that the im-

movable property exception should be construed in accor-

dance with the absolute theory, its conclusion is incorrect be-

cause it misstates the broad application of the real property

exception that was applied even during the period when ab-

solute immunity prevailed. Even at the time, as described in

the Tate Letter, the exception was thought generally to allow

suit “with respect to real property (diplomatic and perhaps

consular property excepted).” House Report at 20 (emphasis

added).’ That understanding of the pre-Tate Letter real prop-

erty exception, which was stated in terms broad enough to

reach suits involving tax liens (suits that surely are “with re-

spect” to real property) and which was familiar to Congress

in 1976, cannot be squared with the United States‘ current

position.

* Letter from Jack B. Tate, Acting Legal Adviser, U.S. Department

of State, to Phillip B. Perlman, Acting Attorney General (May 19,

1952), reprinted in Alfred Dunhill of London, Inc. v. Republic of

Cuba, 425 U.S. 682, 711-715 (1976). Further support for this un-

derstanding of the absolute theory can be found in a study com-

missioned by the State Department — and endorsed by its Legal

Adviser — in 1963. See Joseph S. Sweeney, The International

Law of Sovereign Immunity, cover page and 1, U.S. Department

of State, Bureau of Intelligence and Research (October 1963).

13

B. Based on Representations “y The Executive

Branch, Congress Expected The Immovable

Property Exception To Apply To Litigation

“Relating To” Or “With Respect To” Immov-

able Property, Including Tax Obligations.

In both 1973 and 1976, officials from the State and Jus-

tice Departments made representations to Congress about the

prevailing norms of international practice and suggested leg-

islative language for FSIA’s immovable property exception

to reflect that practice. These representations strongly suggest

that FSIA provides U.S. courts jurisdiction to determine the

validity_of tax liens on such property owned by foreign

States.

In 1973, Secretary of State William P. Rogers and Attor-

ney General Richard G. Kleindeist sent Congress an initial

draft of FSIA with an immovable property exception identi-

cal to the final text of Section 1605(a)(4) enacted three years

later. Hearings (1973) at 36. Along with the draft, Rogers and

Kleindeist attached a section-by-section commentary giving

interpretive guidance on the meaning of each provision. Ac-

cording to the commentary, Section 1605(a)(4) reaches “iti-

gation relating to immovables and to the property of dece-

dents.” Hearings (1973) at 41 (emphasis added). The com-

mentary went on to note that “a foreign state cannot deny to

the local state the right to adjudicate on questions of owner-

ship, rent, servitudes, and other similar matters, as long as

the foreign state’s possession of the premises is not dis-

turbed.” /bid. (emphasis added). These broad formulations

would appear to describe actions to establish the validity of

tax liens on immovable property.

Testifying on behalf of the bill in 1973, State Depart-

ment Acting Legal Adviser Charles Brower used similar lan-

guage, confirming the broad scope of Section 1605(a)(4). He

declared that the immovable property exception permitted

litigation “against a foreign state relating to * * * rights in

14

immovable property situated in the United States.” Hearings

(1973) at 21. He went on to explain that “this is a pretty clear

exception for estate and real estate matters in this country, in

keeping with the law at the present time.” /bid. (emphasis

added). Brower gave no indication that the exception applied”

only to the rights of foreign states or that the assessment of a

property tax was not included within the general category of

“real estate matters.”

The House Report accompanying the final version of

FSIA in 1976 endorsed this broad approach. The Report ex-

plains that Section 1605(a)(4) “denies immunity in litigation

relating to rights in real estate * * * located in the United

States.” House Report at 20 (emphasis added). It goes on to

note that, in accordance with the Tate Letter of 1952, “sover-

eign immunity should not be granted in actions with respect

to real property, diplomatic and consular property excepted

*** . It does not matter whether a particular piece of prop-

erty is used for commercial or public purposes.” /bid. (em-

phasis added). Moreover, in its discussion of the immovable

property exception and its relationship to the Vienna Conven-

tion, the 1976 House Report reflected the Executive Branch

commentary, noting that “a foreign state cannot deny to the

local state the right to adjudicate questions of ownership,

rent, servitudes, and similar matters, as long as the foreign

State’s possession of the premises is not disturbed.” House

Report at 20.

This review of the contemporaneous sources shows that

the discussion of Section 1605(a)(4) prior to FSIA’s passage

in 1976 uniformly endorsed the broad scope of the immov-

able property exception to sovereign immunity. Indeed, each

of the formulations used by the House Report to explain the

scope of that exception — “litigation relating to rights in real

estate,” “actions with respect to real property,” the right of

courts “to adjudicate questions of ownership, rent, servitudes,

and similar matters” — is expansive enough to include dis-

putes regarding tax liens and is significantly broader than the

15

reading now offered by the United States, which would limit

the immovable property exception to suits concerning only

“ownership, use, or possession.” U.S. Br. 8. Such a construc-

tion would narrow the exception’s scope well beyond the

general understanding that prevailed at the time FSIA was

enacted.

C. The Executive Branch Made Clear To Con-

gress That FSIA Was Consistent With Interna-

tional And Domestic Practice.

/ Congress Understood FSIA To Be Consistent

With The European Convention, Which Con-

tains A Similarly Broad Immovable Property

Exception.

There is no dispute that one of Congress’s principal

goals in drafting FSIA was to align the United States’ prac-

tice on sovereign immunity with that of other states. At the

time FSIA was under consideration, the most ambitious in-

ternational attempt to generate consensus on the law of sov-

ereign immunity was the European Convention, which was

completed in the years immediately preceding passage of

FSIA. References to the EC in FSIA legislative materials in-

dicate that both Congress and the Executive Branch believed

the Act to be fully consistent and harmonious with the EC.'°

That is significant, because the EC strongly supports the con-

clusion that disputes concerning tax liens are permissible un-

der FSIA.

0 See Hearings (1973) at 18 (testimony by State Department Act-

ing Legal Adviser Charles Brower, discussing the general intent of

FSIA’s drafters to “conform fairly closely” to “accepted interna-

tional standards” such as the EC); Hearings (1976) at 37 (Con-

gressman George Danielson asked whether there was “any incon-

sistency” between the EC and the proposed FSIA, and Monroe

Leigh, State Department Legal Adviser, replied: “[iJn general

terms, no.”’).

16

As we note above, the EC waives immunity not only

with respect to suits concerning a state’s rights in property,

but also when the suit concerns obligations arising out of

state ownership of property. EC, Art. 9. The Explanatory Re-

port to Article 9 notes that the terms “rights, use and posses-

sion” in the immovable property exception “must be inter-

preted broadly.” Explanatory Report of the European Con-

vention on State Immunity, ETS No. 74 (“Explanatory Re-

port”), 9 44."' This understanding, with its express reference

to state obligations, is flatly inconsistent with petitioners’ and

the United States’ submission that the real property exception

is generally understood to reach only disputes concerning a

sovereign’s rights to title or possession of property.

Petitioners and the United States seek to escape this con-

clusion by observing that the EC provides, in Article 29, that

the Convention does not cover proceedings concerning “cus-

toms duties, taxes or penalties.” U.S. Br. 28-29. But the

United States draws precisely the wrong conclusion from this

limitation. Article 29 does not give states immunity in tax

disputes, as the United States implies. See U.S. Br. 19 n.15

(EC “does not permit adjudication of tax claims”); see also

id. at 28-29 (EC “dofes] not abrogate immunity in cases to

recover property taxes imposed on — or to declare a tax lien

on — foreign governmental property”). Rather, Article 29 en-

sures that the EC neither grants nor denies immunity in tax

cases; it limits both the broad grant of state immunity of Ar-

ticle 15 and the immovable property exception to that grant

of immunity stipulated in Article 9.

Unlike FSIA, the EC is limited to issues of private law.

Treatment of customs duties, taxes, penalties and fines was

'' The Explanatory Report was prepared by an expert committee

and submitted to the Committee of Ministers of the Council of

Europe. It was intended to provide useful but non-authoritative

guidance as to how the Convention should be interpreted. Sce Ex-

planatory Report, 4 II.

17

omitted because, in many countries, such matters “‘d[id] not

fall exclusively under public law or because the dividing line

between public and private law [was] ill-defined or non-

existent.” Explanatory Report, § 113. Because the EC was

“essentially concerned with private law disputes between in-

dividuals and States,” the drafters wanted to ensure that taxa-

tion disputes would not be drawn into Article 9’s broad im-

movable property exception. See ibid. (stating that without

Article 29, “Article 9 in particular might otherwise have been

applicable” and waived immunity as to tax disputes).

It is important to realize, however, that Article 29 applies

just as much to the general grant of immunity contained in

Article 15 of the EC. Hence, the provision removes treatment

of tax disputes from the Convention altogether, leaving such

disputes open to “general rules of law.”” See Explanatory Re-

port, 9 113. The EC thus does not take a position one way or

the other on the issue of sovereign immunity for tax disputes,

and member states of the Council of Europe may or may not

be immune, depending upon the particular laws of each

member country. This arrangement is workable because the

EC supplements the laws of its member states; as background

law, it leaves certain questions open to determination by in-

dividual States.

By contrast, FSIA covers the entire field of sovereign

immunity law, and hence provides the “sole and exclusive

standards to be used in resolving questions of sovereign im-

munity raised by foreign states.” House Report at 12. The

Court has stated its understanding of the Act in similar terms.

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488

(1983) <FSIA “contains a comprehensive set of legal stan-

dards governing claims of immunity in every civil action

against a foreign state or its political subdivisions, agencies,

or instrumentalities”). And although Congress included in

FSIA an immovable property exception as broad as the one

in the EC, it chose not to limit that exception with language

like that in the EC’s Article 29. Because the EC’s Article 9

18

would have covered tax liens without Article 29’s specific

exemption, and because Congress did not include such a pub-

lic-law exemption to its equally broad immovable property

exception, the clear inference is that Congress intended to

give United States courts jurisdiction over such disputes.

2 The State Department Expressly Au ‘sed Con-

gress That Existing U.S. Practice Did Not

Grant Sovereign Immunity In Cases Involving

Liens For Unpaid Property Taxes.

Other materials before Congress at the time it enacted

FSIA point to the same conclusion. During Congress’s con-

sideration of the initial version of FSIA in 1973, the Execu-

tive Branch indicated that its practice was not to grant immu-

nity to foreign states involved in suits for unpaid property

taxes. Given Congress’s understandable reliance on the Ex-

ecutive Branch to explain domestic application of sovereign

immunity principles and its consequences for FSIA, this rep-

resentation strongly supports the inference that Congress ex-

pected Section 1605(a)(4) to provide jurisdiction in cases like

this one.

The representation occurred in response to a specific in-

quiry from Congress on the State Department’s record of

granting sovereign immunity. Acting Legal Adviser Brower

agreed to provide a subcommittee of the House Judiciary

Committee with a detailed record of foreign requests for im-

munity, along with the formal responses given to thosé re-

quests. Hearings (1973) at 27. In a subsequent letter, Brower

attached a list of requests received since 1960, annotating

each to indicate how the Department had responded. /d. at

49-51.

In that letter, the State Department characterized City of

New Rochelle v. Republic of Ghana, Republic of Indonesia,

and Republic of Liberia, 255 N.Y.S.2d 178 (County Ct.

1964) — the only case involving suits against foreign states

Over unpaid taxes on immovable property — as one in which

19

“no suggestion of immunity was made.” Hearings (1973) at

49, 50. In New Rochelle, Ghana, Indonesia, and Liberia asked

the State Department to intervene to block local governments

from foreclosing on properties being used by their respective

Permanent Representatives to the United Nations. Their re-

quests to the State Department and their filings in court ar-

gued that U.S. courts lacked jurisdiction to hear the case.

The State Department responded that the real property

used by the missions was subject to tax, but that immunity

nevertheless was appropriate on the narrow grounds that the

subject property was being used as the residence of the am-

bassador to the United Nations and that the city was seeking

to foreclose on the property.'? In advancing this narrow

ground for precluding suit, the State Department did not en-

dorse the theory, advanced by petitioners and the United

States in this case, that foreign states are immune from al/

suits over liens for unpaid property taxes; if that had been the

State Department’s view, it would not have focused on

whether the property had been used to house the U.N. Am-

bassador or was subject to attachment. The understanding

that property tax disputes generally may be adjudicated when

the property is subject to tax is, presumably, why the State

Department informed Congress at the time of FSIA’s enact-

ment that the New Rochelle case was one in which “no sug-

gestion of immunity” was made. Hearings (1973) at 49, 50.

The court’s decision in New Rochelle also \ends support

to the view that there was no blanket state immunity from

suits over property taxation in the years before FSIA. After

'? State Department Note, No. 44 (June 8, 1964), Michael Sandler

et al., eds., Sovereign Immunity Decisions of the Department of

State: May 1952 to January 1977, reprinted in John A. Boyd, Di-

gest of United States Practice in International Law 1977, 1050

(Jan. 1979). See Vienna Convention on Diplomatic Relations, 23

U.S.T. 3227, Art. 1 & Art. 23 (exempting states from taxes on the

premises of the missior, defined to include the residence of the

head of mission).

20

hearing the requests of the foreign states and State Depart-

ment to dismiss the case, the New Rochelle court unambigu-

ously stated that it had the authority to assert jurisdiction.

“This court is of the opinion that it has jurisdiction of the real

property at issue,” it declared, “and the question it is consid-

ering is whether it will exercise its jurisdiction in these par-

ticular proceedings under all of the circumstances.” New Ro-

chelle, 255 N.Y.S.2d at 179. Ultimately, the New Rochelle

court declined to exercise jurisdiction so as to avoid “embar-

rass{ing] the executive arm in its conduct of foreign affairs.”

Id. at 180. In the process, the court cited other decisions to

support its two key propositions — that courts indeed possess

jurisdiction io hear such cases, and that courts should decline

to do so, at the request of the Executive Branch, to avoid in-

terfering with the U.S. government’s conduct of international

relations. Jd. at 179-80; see, e.g., Weilamann v. Chase Man-

hattan Bank, 192 N.Y.S.2d 469, 471 (Sup. Ct. N.Y. 1959).

This background has a significant bearing on Congress’

‘understanding of the real property exception at the time of

FSIA’s enactment. In the most directly relevant judicial pro-

ceeding, the court concluded that it had jurisdiction to resolve

a tax dispute, ultimately declining to do so on narrow

grounds not applicable here. And the State Department de-

scribed the case to Congress as one in which immunity was

not recommended. When Congress sought to codify prevail-

ing practice in FSIA, it accordingly had every reason to be-

lieve that sovereign immunity did not prevent adjudication of

tax disputes involving nondiplomatic property.

Iti. POST-ENACTMENT AND CONTEMPORARY

PRACTICE SUPPORTS THE INFERENCE THAT

FSIA WOULD PERMIT SUITS TO DETERMINE

THE VALIDITY OF TAX LIENS.

Although FSIA was enacted in 1976, subsequent prac-

tice nonetheless also is probative of Congress’ original un-

derstanding of the Act. In the absence of a clearly demar-

cated departure from past practice, it is reasonable to assume

21

that post-1976 international practice tracks the pre-FSIA un-

derstanding that Congress meant to endorse. Against that

background, four discrete sources of post-enactment evi-

dence support the inference that Congress intended to allow

jurisdiction in cases involving the validity of property tax

liens: the Third Restatement of Foreign Relations Law, sub-

sequent international law and practice in the field of sover-

eign immunity, congressional reliance on judicial determina-

tions concerning unpaid property taxes owed by foreign -

states, and the State Department’s own embrace of a broad

interpretation of the immovable property exception in post-

FSIA litigation.

A. The Third Restatement Makes Clear That For-

eign States Are Not Immune From Suits For

Unpaid Property Taxes.

The Third Restatement of Foreign Relations Law of the

United States is one of the most probative sources of Con-

gress’s intént to enact a broad immovable property exception

to sovereign immunity. In November 1977, the drafting

council began the task of revising the Second Restatement. In

laying out its agenda for modifying the provisions on juris-

dictional immunities, the council noted that FSIA had “su-

perseded the decisional foundation for the present text,”

thereby requiring the drafters “to take account of this Act, as

well as of such developments as the European Convention on

State Immunity.” American Law Institute, Proposed Revision

and Expansion of the Restatement of the Foreign Relations

Law of the United States, Background and Description of the

Project, 2, 6 (Nov. 1977). The Third Restatement thus was

premised on FSIA: “The Foreign Sovereign Immunities Act

is law of the United States. Much of it codifies and applies

international law as the United States views it * * * . This

Restatement adopts the Act as the basis for rules of United

States law.” Restatement (Third) of Foreign Relations Law of

the United States (“Third Restatement”) § 395 (1986).

22

Explicitly noting the source of its text as Section

1605(4), the Third Restatement makes clear. that ‘“‘a state is

not immune from the jurisdiction of the courts of another

state with respect to claims * * * to immovable property in

the state of the forum.” Third Restatement, § 455(1)(c). Di-

rectly addressing the question at issue here, it further explains

that ownership

by a foreign state does not detract from the desir-

ability of adjudicating controversies in local courts.

Premises used for an embassy, consulate, or other

diplomatic mission come under this rule, so that

controversies relating to rights of ownership, pos-

session, occupation, or use, as well as controversies

concerning payment of rent, taxes, and other fees

concerning such premises are subject to adjudication

in the local courts.

Id., § 455 comment b (1986). The United States seeks to

minimize this language on the ground that the Third Re-

statement is “‘controversial.’” U.S. Br. 12 n.8 (citation omit-

ted). But this is a surprising suggestion. Members of the Re-

statement’s drafting council included Ruth Bader Ginsburg

and Henry J. Friendly. And the language concerning the im-

movable property exception changed little in the numerous ~

drafts, with the authors noting shortly before the Third Re-

statement was published that the text on sovereign immunity

had “evoked little debate” among its renowned membership

of judges, international law scholars, and practitioners. Ten-

tative Draft No. 6, Volume 1, at 2, April 12, 1985.'° The

'? In addition, the Third Restatement makes clear that it confirms

the principles articulated in the Second Restatement, published in

1965 prior to the passage of FSIA: “The previous Restatement re-

flected the restrictive theory, and § 451 of this Restatement setting

forth the basic rule is consistent with §§ 65(1), 68, and 69 of the

previous Restatement.” Third Restatement § 396.

23

Third Restatement’s view, derived from a close analysis of

FSIA, is due considerable weight.

B. Since FSIA’s Enactment, Foreign States and

International Organizations Have Construed

And Applied The Immovable Property Excep-

tion Broadly.

Since the passage of FSIA, foreign states and interna-

tional organizations have broadly interpreted the immovable

property exception in clarifying and applying the law of sov-

ereign immunity. Although relatively few court decisions

bearing on the precise question of jurisdiction over property

tax liens exist because most countries choose to honor their

obligations to the nation in which the property is located,'* a

number of states have enacted domestic statutes codifying the

law of sovereign immunity as it relates to real property. In

addition, there have been several attempts by international

organizations and legal scholars to draw up agreements de-

fining the scope of sovereign immunity. While few of these

proposals have been enacted into law, together with the stat-

utes they paint a picture of international practice that sup-

ports a broad interpretation of the immovable property excep-

tion encompassing suits against foreign states over property

tax liens.

The most important international effort to codify the law

of sovereign immunity since FSIA has been the U.N. Con-

vention on Jurisdictional Immunities of States and Their

Property (“U.N. Convention”). The drafters of this Conven-

'* In the United States, the closest case on point is Reclamantes,

which offered the “first and most comprehensive” opinion to inter-

pret the scope of FSIA’s immovable property exception. Pet. App.

18. While not addressing the tax issue specifically, then-Judge

Scalia indicated “in dicta that a broad range of property interests

(including a security interest) can satisfy the exception.” Pet. App.

20. The breadth of this reading suggests that the exception would

include suits to establish the validity of tax liens.

24

tion modeled its broad immovable property exception on the

EC and FSIA, applying it to disputes relating to nights in, or

obligations arising out of an interest in, immovable property.

See Stephen McCaffrey, Current Development: The Thirty-

Fifth Session of the International Law Commission, 78

A.J.1.L. 457, 465 (1984) (noting that Article 13 of the U.N.

Convention embodies the exception to state immunity that is

contained in section 1605(a) of FSIA and Article 9 of the

EC). As with the EC, the reference to “right or interest” in

the UN’s immovable property exception was intended to

have a broad reach. See David P. Stewart, The UN Conven-

tion on Jurisdictional Immunities of States and Their Prop-

erty, 99 Am. J. Int’] L. 194, 203 n.53 (2005).

To be sure, as with the EC, here is some evidence from

the negotiating history that the U.N. Convention’s immov-

able property exception was not meant to cover tax disputes,

instead leaving immunity over such suits to be determined by

other sources of law. The drafters of the U.N. Convention

wanted to avoid comment on tax suits because they did not

intend the Convention to address state-to-state relations at all.

See Sixth Report on Jurisdictional Immunities of States and

Their Property, Sompong Sucharitkul, Special Rapporteur,

Agenda Item 3, at 21-25, Art. 17, U.N. Doc. A/CH.4/376

(1984) (Art. 17). But because Congress did not intend to so

limit FSIA, the breadth of the U.N. Convention’s approach to

the immovable property exception generally supports the

view that the exception is not restricted to disputes concern-

ing the sovereign’s right to title or possession.

Several states have also enacted domestic statutes setting

forth the scope of sovereign immunity. For example, in 1985

Australia passed its Foreign States Immunities Act.'* The Act

itself, together with subsequently issued regulations, explic-

itly makes clear that a foreign state has no immunity from

No. 196 (1985), reprinted in Andrew Dickinson et a/., eds., State

Immunity: Selected Materials and Commentary 469-87 (2004).

25

proceedings concerning obligations “imposed on it * * * with

respect to taxation.”’® Argentina’s 1995 law on Immunity of

Foreign States from the Jurisdiction of Argentinean Courts is

also quite broad, making clear that foreign states “may not

invoke jurisdictional immunity * * * in the event of actions

over real estate located in Argentina.” '”

Of the other states that have passed domestic sovereign

immunity statutes, most have adopted the approach favored

by the European Convention. The United Kingdom"*, Paki-

stan'?, and Singapore,” for example, all have domestic stat-

'° Id. at 478; Foreign States Immunities Regulation, No. 77 (as

amended) (1987) (Austl.), available at: http://www.comlaw.

gov.au/ComLaw/Legislation/LegislativeInstrument 1 .nsf/0/87C39D

B5671D39CCCA256F8F001 81874/$file/1996B00775.pdf.

’ Immunity of Foreign States from the Jurisdiction of Argentinean

Courts, Law No. 24,488 (1995) (Arg.), reprinted in Andrew Dick-

inson etal., supra, at 465.

'® State Immunity Act (1978) (U.K.), reprinted with commentary in

Andrew Dickinson et al., supra, at 329-442. See Section 6 (state is

not immune “‘as respects proceedings relating to * * * any interest

of the state in, or its possession or use of, immovable property in

the United Kingdom; or * * * any obligation of the State arising

out of its interest in, or its possession or use of, any such prop-

erty”); Section 11 (state is not immune “as respects proceedings re-

lating to its liability for * * * rates in respect of premises occupied

by it for commercial purposes”); and Section 16 (Act “does not

apply to proceedings relating to taxation other than those men-

tioned in section 11 above”). /d. at 372, 383, 414-15.

'? State Immunity Ordinance No. VI (1981) (Pak.), reprinted in

Andrew Dickinson et al., supra, at 496-503. See Articles 7, 12,

and 17 (statutory language virtually identical to UK State Immu-

nity Act’s Sections 6, 11, and 16 quoted supra note 18). /d. at 498,

500, 503.

° State Immunity Act, Ch. 313 (revised version 1985) (Sing.), re-

printed in Andrew Dickinson et al., supra, at 504-12. See Articles

8, 13, and 19 (statutory language virtually identical to UK State

26

utes combining broad immovable property exceptions to im-

munity, explicitly applicable to taxes on property used in

commerce, with narrow statements of non-applicability to

other matters of taxation. This approach stems from the de-

sire, as the commentary on the U.K. law (on which the others

were modeled) makes clear, to confine the scope of the im-

munity statute — including both the initial grant of sovereign

immunity and the exceptions to such immunity — to suits be-

tween private individuals and foreign governments.

In addition to domestic statutes enacted after FSIA, a

number of international organizations also have prepared

draft multilateral agreements on sovereign immunity. While

none of these drafts has been enacted into law, they provide a

useful window into contemporary international understand-

ing concerning the scope of the immovable property excep-

tion. In each case, the exception is broad enough to encom-

pass suits arising from the failure of a state to pay property

taxes.

The clearest example of such a provision is the Resolu-

tion of L’Institut de Droit International on Contemporary

Problems Concerning the Immunity of States in Relation to

Questions of Jurisdiction and Enforcement.”' Article 2(2)(b)

of the Resolution makes clear that the courts of the forum

state “are competent in respect of proceedings concerning le-

gal disputes arising from relationships of a private law char-

acter to which a foreign (State) * * * is a party,” including re-

lationships of “ownership, possession, and use of property.”

Id. at 207. Later, Article 2(2)(i) provides that domestic courts

“are competent in respect of proceedings relating to fiscal li-

Immunity Act’s Sections 6, 11, and 16 quoted supra note 18). Jd.

at 507, 509, $12.

*" Resolution of L’ Institut de Droit International on Contemporary

Problems Concerning the Immunity of States in relation to Ques-

tions of Jurisdiction and Enforcement (Basle, 2 September 1991),

reprinted in Andrew Dickinson et a/., supra, at 206-211.

27

abilities, income tax, customs duties * * * and similar impo-

sitions provided that such liabilities are the normal concomi-

tant [of] commercial and other legal relationships in the con-

text of the local legal system.” /d. at 208.

Similarly, the Inter-American Draft Convention on the

Jurisdictional Immunity of States contains broad language

explicitly barring claims of immunity “in actions involving

real property” and “in tax matters regarding [commercial] ac-

tivities * * * for property located in the forum State.”

Likewise, draft articles prepared in 1994 by the International

Law Association for a convention on sovereign immunity de-

clared that states were not immune from jurisdiction in in-

stances where “the cause of action relates to * * * [t]he for-

eign State’s rights or interests in, or its possession or use of,

immovable property * * * or [oJbligations of the foreign

State arising out of its rights or interests in, or its possession -

or use of, immovable property.””’ In both cases, the language

clearly allows jurisdiction to be exercised in suits over un-

paid property taxes. Therefore, laws of foreign states and

proposals of international organizations since FSIA’s passage

further bolster the widely held view that the immovable prop-

erty exception should be construed broadly to refuse immu-

nity for foreign states involved in tax lien disputes.

= Organization of the American States, Inter-American Draft Con-

vention on Jurisdictional Immunities of States, Articles 5 and 6,

reprinted in Andrew Dickinson et al., supra, at 201-02. The draft

was approved by the Inter-American Juridical Committee on Janu-

ary 21, 1983, but never formed the basis of a binding international

agreement.

3 International Law Association Revised Draft Articles for a Con-

vention on State Immunity (Buenos Aires, 14-20 August 1994),

Article IlI(D), reprinted in Andrew Dickinson et al, supra, at 196.

28

C. Recent Congressional Appropriations Statutes

Show That Congress Still Interprets FSIA To

Provide United States Courts Jurisdiction Over

Property Tax Suits Against Foreign Nations.

Recent Congressional appropriations statutes offer addi-

tional evidence that FSIA provides United States courts with

jurisdiction to resolve property tax suits against foreign na-

tions. These statutes penalize states for non-payment of their

tax obligations and rely on court decisions to determine the

nature of these obligations. See Foreign Operations, Export

Financing, and Related Programs Appropriations Act of

2006, P.L. No. 109-102, § 543 (2005); Consolidated Appro-

priations Act of 2005, P.L. No. 108-447, § 543 (2004) (re-

quiring that 110 percent of unpaid property taxes by any

country, determined “in a court order or judgment entered

against such country by a court of the United States or any

State or subdivision thereof,” be withheld from foreign aid

ordinarily provided to the country).

Of course, these statutes long post-date enactment of

FSIA and therefore do not bear directly on Congress’ intent

in 1976. But as the Second Circuit explained, they do reflect

the unbroken understanding that FSIA allows suits against

foreign states for unpaid taxes. See Pet. App. 11 (emphasiz-

ing ““Congress’s explicit reliance on the courts to adjudicate

the property tax liability of foreign governments”). Nothing

in the legislative history hints at equivocation regarding

Congress’s recent decision. See, e.g., Conf. Report, P.L. No.

108-447, 1017.

D. The United States’ Amicus Brief In Englewood

Explicitly States That FSIA Does Not Make

Foreign States Immune From Suits For Prop-

erty Tax Liens.

Finally, one other piece of post-enactment evidence casts

considerable light on the meaning of FSIA: the United

States’ 1985 brief in Englewood, which explicitly endorsea

29

the understanding that Section 1605(a)(4) does not provide

immunity for foreign nations involved in property tax dis-

putes. The United States declared in that brief that “Congress

never intended that the principle of sovereign immunity

should permit foreign governments to ignore their obligations

to state and local communities.” U.S. Englewood Br. 3. In-

stead, the United States explained, Congress meant FSIA to

codify international law, and “international law and practice

* * * encompasses generally all rights and obligations arising

out of the ownership, possession or use of real property, in-

cluding real property taxes.” /d. at 6. The United States also

recognized that “Section 1605(a)(4) was intended to codify

the restrictive theory of sovereign immunity as applied to ac-

tions with respect to real property” (ibid.), implicitly reject-

ing the novel view — which it now advances — that the provi-

sion intended to codify the exception as recognized under the

theory of absolute immunity. The United States went on to

criticize the lower court’s opinion in Englewood on the

ground that it “would deny jurisdiction in cases which Con-

gress explicitly had intended to make justiciable.” /d. at 7.

And, as we note above, the United States argued that under

Section 1605(a)(4), both the holder of a tax lien and the

owner of the property burdened by the lien have “rights in

immovable property * * * in issue.” U.S. Englewood Br. 11.

In a curt footnote to its brief in the instant case, the

United States recants its filing in Englewood. U.S. Br. 19, n.

15. We agree with the United States that a foolish consis-

tency is the hobgoblin of little minds. But the United States

would deserve more credit for its admission of error were it

to give a persuasive explanation for its change in position. It

Says now that its previous filing erred because it overlooked

Article 29 of the EC. But as we have explained, its current

filing also misstates the significance of that provision. The

United States likewise says nothing to explain away its prior

analysis of settled law showing that a lien establishes a nght

in property. And it wholly disregards its prior declaration that

30

“Congress never intended that the principle of sovereign im-

munity should permit foreign governments to ignore their ob-

ligations to state and local communities.” These statements,

made closer in time to enactment of FSIA, got it right.

CONCLUSION

The judgment of the court of appeals should be affirmed.

Respectfully submitted.

DAN KAHAN CHARLES A. ROTHFELD

BRETT DIGNAM Counsel of Record

Yale Law School ANDREW J. PINCUS

Supreme Court Advocacy Mayer, Brown, Rowe &

Clinic Maw LLP

127 Wall Street 1909 K Street, NW

New Haven, CT 0651/1 Washington, DC 20006

(203) 432-4800 (202) 263-3000

Counsel for Amici Curiae

MARCH 2007