# Amicus Curiae Brief — Bolivarian Republic Venezuela v. Helmerich & Payne Int'l Drilling Co., 136 S. Ct. 1242 (2016) (No. 15-423)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2016

## Text

FILED

AUG 26 2016

OFFICE OF THE CLERK
No. 15-423
eee

In the Supreme Court of the United States

BOLIVARIAN REPUBLIC OF VENEZUELA, ET AL..
PETITIONERS

v.

HELMERICH & PAYNE INTERNATIONAL DRILLING Co.,
ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
SUPPORTING PETITIONERS

IAN HEATH GERSHENGORN
Acting Solicitor General
Counsel of Record
EDWIN 8S. KNEEDLER
Deputy Solicitor General
ELAINE J. GOLDENBERG
Assistant to the Solicitor
General

BRIAN J. EGAN
Adviser

of State Washington, D.C. 20530-0001

SupremeCtBriefs ,
Washington, D.C. 20520 tale ona Gna? @usdoj.gov

QUESTION PRESENTED

The Foreign Sovereign Immunities Act of 1976,
28 U.S.C. 1330, 1441(d), 1602 et seg., provides that a
foreign state and its instrumentalities are immune
from suit in United States courts, subject to limited
statutory exceptions. The expropriation exception
provides that a foreign state is not immune “in any
case * * * in which rights in property taken in viola-
tion of international law are in issue” and there is a
specified commercial-activity nexus to the United
States. 28 U.S.C. 1605(a)(3).

The question presented is whether a district court
lacks jurisdiction under Section 1330(a) and Section
1605(a)(3) on the ground that a plaintiff in an action
against a foreign state has failed to make legally suffi-
cient allegations of “rights in property” or a “tak[ing]
in violation of international law” only when the plain-
tiff’s claim that “rights in property taken in violation
of international law are in issue” is frivolous or com-
pletely devoid of merit.

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TABLE OF CONTENTS

Page
Interest of the United States..................c.c0cssssscsesesereerereeeessenseees l
tei iieretiniehenienisininencctesccsnnccncenternvesssennscsseusmennsenascemmanseuasti 1
I ertoneemnesemnsnsensentnsnmntenpementenspsncnennnsiacention 7
Argument:

A. A foreign state is immune from state or federal
court jurisdiction in a suit brought pursuant to

allegations are legally sufficient to satisfy ithe
exception’s substantive requirements .......................-. )
B. The court of appeals erred in ruling that juris-
diction was proper so long as respondents’ alle-
gations that the substantive standards of the
expropriation exception were satisfied were not
“wholly insubstantial or frivolous” ............................. 23
C. The judgment should be vacated and the case
remanded for further consideration under the
a iaitenrienterecicensimecnreincemacnnsccsecens 32
EST A 3A
Appendix — Statutory provisions...........................cs-cecesesesee la
TABLE OF AUTHORITIES
Cases:
Abelesz v. Magyar Nemzeti Bank, 692 F.3d 661
CO ae Sa errr rccescnseenennsesnsnssscscseveccsssnenssonseensvensnscsosesesese 23
Agudas Chasidei Chabad of U.S. v. Russian Fed’n,
528 F.3d 934 (D.C. Cir. 2008) «00, 6, 23, 25, 28, 29
American Nat'l Red Cross v. S.G., 505 U.S. 247
(1992) aes 23
Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) 7 .27, 29, 30
Argentine Republic v. Amerada Hess Shipping
Corp., 488 U.S. 428 (1989) ........ccccccesccsesceseeveeneeeeees 11, 15, 18

(IIT)

Cases—Continued: Page

Asociacion de Reclamantes v. United Mexican

States, 735 F.2d 1617 (D.C. Cir. 1984),

cert. denied, 470 U.S. 1061 (1985) .............c.ccccesereesesereeees 17
Banco Nacional de Cuba v. Sabbatino, 307 F 2d

845 (2d Cir. 1962), rev’d on other grounds by 376

Cs I vrencsenesnsnecnnssstnsnzsnecssncnsncocesossstesssnecesonsssoessees 6
Bell v. Hood, 327 U.S. 678 (1946)........-.-c0ceceseseesvenevenes passim
Boos v. Barry, 485 U.S. 312 (1988) ..........ccsreererseserseeeseees 22
Cary v. Curtis, 44 U.S. (3 How.) 236 (1845) ..........0.0c..00000 15

Case Concerning the Barcelona Traction, Light &
Power Co. (Belgium v. Spain), 1970 1.C.J. 3,

(Feb. 5) ssvoee BO
de Sanchez v. Banco Cent. de Nicaragua, 770 F.2d

1385 (5th Cir. 1985) 17, 23, 33
Dole Food Co. v. Patrickson, 538 U.S. 468 (2003)...... 19, 33
EM Ltd. v. Republic of Argentina, 473 F.3d 463

(2d Cir.), cert. denied, 552 U.S. 818 (2007) ....................- 19
Fairv. ‘<nanbuntngnantatanogmel USS. 22

ee eit catentnsnrmcansccscnssusseneasensacapstmmneansenensnesseemmmenncsneaseeee 26
Foremost-McKesson, Inc. v. Islamic Republic of

Tran, 905 F.2d 438 (D.C. Cir, 1990) .0...........0.ccececcececeseneee 19
Franchise Tax Bd. v. Construction Laborers

Vacation Trust, 463 U.S. 1 (1983) .............ccccecerereeeeeeeeees 15
Garb v. Se ee 579 (2d Cir.

a rcnrenitennsteninnniersenisnagnsmmnestneninntintinemapeinnesassemsccssentenasosces 21
Harlow v. Fitzg rald, 457 U.S. 800 (1982) I iseatiacnniniesniiin 19
Hertz Corp. v. Friend, 559 U.S. 77 (2010) ...............-.000000+- 30
McCulloch v. Sociedad Nacional de Marineros de

Honduras, 372 U.S. 10 (196B)..........0..-cscscseeeseeseseereeeeerees 22

Merrill Lynch v. Manning, 136 S. Ct. 1562

Cases—Continued: Page
Mezerhane v. Repiiblica Bolivariana de
Venezuela, 785 F.3d 545 (11th Cir. 2015),

cert. denied, 136 S. Ct. 800 (2016) .0...........cccccccccececceseenees 23
Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740
(ESET SSR Ese Aa POON ca 24

Ministry of Def. & Support for the Armed Forces
of the Islamic Republic of Iran v. Elahi, 556 U.S.

366 (2009) maieehdesdiedipaniiatianieeiataingmatibcememeecme 16
Mitchell v. Forsyth, 472 U.S. 511 (1985) ..........cccsereeeeeees 19
Moran v. Kingdom of Saudi Arabia, 27 F.3d 169

ee aettreiccscctreremrensunemnsnemerseseemnenios 19, 20, 31
Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle,

a ttetirirtrniteseniasncincsensanccsnsencentsescscancsnscecte 18
National City Bank v. Republic of China,

I cerrtnicnicenssninsetnmensennimesnmmmacsenese 20, 21
OBB Personenverkehr AG v. Sachs, 136 8. Ct. 390

(2015) a pcesenenanpedannbaiediniamtatinnimenacmes 18, 31
Oliver Am. Trading Co. v. Mexico, 264 U.S. 440

(1924) eS 12
Owens v. Republic of Sudan, No. 01-2244,

2016 WL 1170919 (D.D.C. Mar. 23, 2016) .................0.-+- 26
Permanent Mission of India to the U.N. v. City of

N.Y., 651 U.S. 198 (2007)...........-c-ccercsceresseee 8, 10, 18, 20, 33
Persinger v. Islamic Republic of Iran, 729 F 2d

835 (D.C. Cir.), cert. denied, 469 U.S. 881 (1984).......... 22
Phoenix Consulting, Inc. v. Republic of Angola,

ee 14
Rein v. Socialist People’s Libyan Arab

Jamahirya, 162 F.3d 748 (2d Cir. 1998),

cert. denied, 527 U.S. 1008 (1999) ...........cssceserecoessesneeee 20

Republic of Austria v. Altmann, 541 U.S. 677

Cases—Continued: Page

Republic of Mexico v. Hoffman, 324A U.S. 30

(1946)... . —— +
Republic of Peru, Ex Parte, 318 U.S. 578

Gaia iertncterecsassrsupsvcsnscssnecevccensespenanopetnanenassecesusesesss 10, 12, 21
Republic of Philippines v. Pimentel, 553 U.S. 851

ei irecenescasensancanscesemneansnsentenmesnseasusesessnaecetanesetscsesese 19, 20
Robinson v. Government of Malaysia, 269 F.3d

ee ietianarisciienicniitninitniiinstenescncenecccenssseseeses 31
Samantar v. Yousuf, 560 U.S. 306 (2010) ............cccccceeeeee 10

Saudi Arabia v. Nelson, 507 U.S. 349 (1993) ........ 11, 18, 30
Schooner Exch. v. McF addon, 11 U.S.

(7 Cranch) 116 (1812) liiiaineeendiiaiapatieneanasmecsenes )
Segni v. Commercial Office of Spain, 816 F.2d 344
COR I ip herenncnsancnvcenensessscnenenscconessennnevesesessszenscssesesess 20

Siderman de Blake v. Republic of Argentina, 965
F.2d 699 (9th Cir. 1992), cert. denied, 507 U.S.

1017 (1993) satetinendnbenintitaasbhiensentnemsensceccsccssnen 23
Simon v. Republic of Hungary, 812 F 3d 127

(D.C. Cir. 2016)... 25, 26, 28, 30
Sosa v. Alvarez-Machain, 542 U.S. 692 (2004)................. 26
Steel Co. v. Citizens for a Better Env’ t, 523 U.S.

83 (1998)..... ssi lesetnaneidittadilaiididatiatiaialdidaiieteesescaceneseccees 25
Swafford v. Templeton, 185 U.S. TT 24
United States v. Congress Constr. Co., 222 U.S.

199 (1911) seeeeitihentilaadinaniateaduitaameenasnentcnscccscsssseses 15
United States v. Curtiss-Wright Exp. Gu.

A 21
Verlinden B.V. v. Central Bank of Nigeria,

a i inticcinneniccsnncccntintiensetcccsncvscsceseses passim

Zappia Middle East Constr. Co. v. Emirate of
Abu Dhabi, 215 F.3d 247 (2d Cir. 2000) .......... asia 21, 23

Vil
Case—Continued: Page
Zschernig v. Miller, 389 U.S. 429 (1908) ........cccccesesesesesees 21
Constitution, statutes and rules: Page
U.S. Const. Art. I seahalinaiaieeaiimepaeaniois 12
Foreign Sovereign Immunities Act of 1976,

28 U.S.C. 1330, 1441(d), 1602 ef 86. ........c.csr-csrerecereresereees 1
28 U.S.C. 1330(a) pasnsiligatedisionnts 2, 8, 11, 12, 15, 30
ne eae 11
TT 13, 23, 24
rn ee 18
i ciiniciscintiatenintecenenmeinnianmnieniontinies 30
natin icin seieinnainetnccmintincaennaitins 8, 10, 15
eee 2, 11, 28
a 18, 29
oi crrcicrcccncsnssscesersenscmnnppeciiinenntity 2,11
it iccsccncsceresnsnceenennsmesnentencennncnitn 4,18
a crcersercctenetenniermnntnented passim
rc incnrsnsescemenntepreenennnenonsdsiinti 8, 18
TT TEE 26
EERE tree 29
STi dainastcteanectntencnesensccenesninenorenienedinenicinginn 26

ita iertiianiccicsimesnnsuiceninineinvicmenninaion 27
hi cccencinniceninnscentapsammmmnesentiatapenntnsinita 29
NT 24
Fed. R. Civ. P.:
i icinincennieesenemnietinenemmemnetin 7, 14, 18, 29, 30, 31
ITT ies desennssnnsetnneietindinninieneniedinmaritiensiasiniaiiaiies 31
Miscellaneous:
Joseph W. Dellapenna, Suing Foreign Govern-
ments and Their Corporations (2d ed. 2003) ................ 20

Vill

Miscellaneous—Continued: Page

Dep't of Justice, Office of Foreign Litigation,
https://www justice.gov/civil/office-foreign-

litigation seiienianaiadeeanies 21
Bryan A. Garner, A Dictionary of Modern Legal

Usage (2d ed. 1995) lima 15
H.R. Rep. No. 1487, 94th Cong., 2d Sess.

(1976) . . 10, 11, 16, 21

13D Charles Alan Wright et al., Federal Practice
and Procedure (3d ed. Supp. 2016) .............-0-eceserereevens 14

In the Supreme Court of the Anited States

No. 15-423

BOLIVARIAN REPUBLIC OF VENEZUELA, ET AL.,
PETITIONERS

v.

HELMERICH & PAYNE INTERNATIONAL DRILLING Co.
ET AL.

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

This case concerns the appropriate standard for es-
tablishing jurisdiction in an action against a foreign
state under the Foreign Sovereign Immunities Act of
1976 (FSIA or Act), 28 U.S.C. 1330, 1441(d), 1602 et
seq. Because application of the FSIA’s jurisdictional
provisions has implications for the treatment of the
United States in foreign courts and for its relations
with other sovereigns, the United States has a sub-
stantial interest in this case. At the Court’s invitation,
the Solicitor General filed an amicus brief on behalf of
the United States at the petition stage of this case.

STATEMENT

1. The FSIA establishes “a comprehensive set of
legal standards governing claims of immunity in every

(1)

2

civil action against a foreign state or its political sub-
divisions, agencies, or instrumentalities.” Verlinden
B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488
(1983). The FSIA provides that a foreign state and its
agencies and instrumentalities “shall be immune from
the jurisdiction” of federal and state courts except as
provided by certain international agreements and by
exceptions enumerated in the statute. 28 U.S.C. 1604;
see 28 U.S.C. 1605-1607. It also provides that federal
district courts shall have jurisdiction “of any nonjury
civil action * * * as to any claim for relief in perso-
nam with respect to which the foreign state is not
entitled to immunity either under sections 1605-1607
of this title or under any applicable international
agreement.” 28 U.S.C. 1330(a).

The exception to immunity involved in this case,
which is set forth in Section 1605(a)(3), is known as
the expropriation exception. It provides that “(a
foreign state shall not be immune from the jurisdic-
tion of courts of the United States or of the States in
any case * * * in which rights in property taken in
violation of international law are in issue” and there is
a specified commercial-activity nexus to the United
States. 28 U.S.C. 1605(a)(3). The nexus requirement
is that the property taken or “any property exchanged
for such property” must be (1) “present in the United
States in connection with a commercial activity car-
ried on in the United States by the foreign state,” or
(2) “owned or operated by an agency or instrumentali-
ty of the foreign state and that agency or instrumen-
tality is engaged in a commercial activity in the Unit-
ed States.” /bid.

2. a. In the mid-1970s, petitioner Bolivarian Re-
public of Venezuela (Venezuela) nationalized its oil in-

3

dustry. Pet. App. 4a. As a result, Venezuela controls
production and exportation of oil through two state-
owned corporations, petitioners Petréleos de Venezue-
la, S.A., and PDVSA Petréleo (collectively PDVSA).
Ibid.

For many decades, respondent Helmerich & Payne
International Drilling Company (H&P-IDC), a United
States company, provided oil-drilling services to peti-
tioners through a wholly owned subsidiary, most re-
cently respondent Helmerich & Payne de Venezuela,
C.A. (H&P-V). H&P-V is incorporated under Venezue-
lan law. Pet. App. 3a-4a, 39a.

In 2007, H&P-V entered into contracts with PDVSA
to provide drilling services for a fixed period using
highly specialized drilling rigs, which H&P-IDC pur-
chased and then transferred to H&P-V. Pet. App. 4a.
By 2009, petitioners had failed to pay approximately
$100 million owed to H&P-V for its drilling services.
H&P-V responded by fulfilling its existing contractual
obligations, announcing that it would not renew the
contracts until it was paid, and disassembling its drill-
ing rigs. Jd. at 4a-5a.

In June 2010, petitioners blockaded H&P-V’s prop-
erties where the disassembled rigs were located. Pet.
App. 5a; see id. at 5a-6a. Shortly thereafter, the Vene-
zuelan National Assembly enacted a measure recom-
mending that then-President Hugo Chavez expropri-
ate H&P-V’s property, and he issued an expropriation
decree the same day. /d. at 6a, 44a. Petitioners “now
use[] H&P-V’s rigs and other assets in [their] state-
owned drilling business.” /d. at 8a.

b. Respondents filed suit in the District Court for
the District of Columbia, claiming that (1) PDVSA and
Venezuela took respondents’ property in violation of

4

international law, and (2) PDVSA breached the drill-
ing contracts with H&P-V. Pet. App. 45a-46a; see J.A.
103-104; see also J.A. 84 (alleging that respondents
were “subjected to discriminatory treatment” because
of their association with the United States). As to the
first count, respondents asserted that the court had
jurisdiction over the claim under 28 U.S.C. 1605(a)(3).'
Pet. App. 8a.

As relevant here, petitioners moved to dismiss re-
spondents’ expropriation claims on the ground that
they did not fall within the scope of the exception to
immunity in Section 1605(a)(3). Pet. App. 8a. The
parties agreed to brief certain threshold issues, in-
cluding whether “H&P-V is a national of Venezuela
under international law” and whether “H&P-IDC has
standing to assert a taking in violation of international
law” based on Venezuela’s expropriation of H&P-V’s
property. /d. at 9a; see J.A. 119 (order stating that
resolution of those issues would “assum/(e] the truth”
of the complaint’s factual allegations).

The district court granted the motion to dismiss in
part and denied it in part. The court dismissed H&P-
V’s expropriation claim because it determined that
H&P-V is a national of Venezuela. Pet. App. 49a-59a,
9la; see id. at 12a (“(GJenerally, a foreign sovereign’s
expropriation of its own national’s property does not
violate international law.”); id. at 93a-94a. But the
court declined to dismiss H&P-IDC’s expropriation

' Respondents’ contract claims are the subject of a certiorari
petition pending before this Court (No. 15-698) involving the
separate commercial-activity exception to immunity in 28 U.S.C.
1605(a)(2). The United States filed an amicus brief in that matter,
at this Court’s invitation, expressing the view that the Court
should deny the petition.

5

claim, reasoning that although H&P-IDC did not own
the property petitioners allegedly seized from H&P-V,
H&P-IDC asserted that petitioners effectively took its
interest in H&P-V as a going concern. /d. at 8l1a-90a.

3. The court of appeals affirmed the district court’s
expropriation-related rulings in part and reversed in
part. Pet. App. 1a-29a.

a. The court of appeals first addressed the stand-
ard for determining whether respondents’ “takings
claim[s]” fell within the scope of the expropriation
exception. Pet. App. 10a-12a. The court rejected the
contention that the claims should be dismissed be-
cause they did not, as a legal matter, sufficiently
allege “rights in property taken in violation of inter-
national law” under Section 1605(a)(3). 28 U.S.C.
1605(a)(3); Pet. App. lla. Relying on Bell v. Hood, 327
U.S. 678 (1946), and D.C. Circuit precedent relying on
Bell, the court stated that subject-matter jurisdiction
“is not defeated” by the possibility that a complaint
“might fail to state a cause of action on which petition-
ers could actually recover.” Pet. App. lla (citation
omitted); see Agudas Chasidei Chabad of U.S. v. Rus-
sian Fed’n, 528 F.3d 934, 940-941 (D.C. Cir. 2008).
The court concluded instead that it “will grant a mo-
tion to dismiss” for lack of jurisdiction under the
FSIA “on the grounds that the plaintiff has failed to
plead a ‘taking in violation of international law’ or has
no ‘rights in property ... in issue’ only if the claims
are ‘wholly insubstantial or frivolous’”—a standard
that the court described as setting an “exceptionally
low bar.” Pet. App. lla (quoting Chabad, 528 F.3d at
943, 946).

The court of appeals next held that H&P-V had “as-
serted a non-frivolous international expropriation claim.”

6

Pet. App. 12a; see id. at 13a-17a. The court acknowl-
edged that, under the so-called domestic-takings rule,
a foreign state’s expropriation of its own national’s
property does not violate international law. /d. at 12a.
But the court understood a pre-FSIA Second Circuit
decision, Banco Nacional de Cuba v. Sabbatino, 307
F.2d 845, 861 (1962), rev’d on other grounds by 376
U.S. 398 (1964), to hold that international law prohib-
its a state from expropriating the property of a do-
mestic corporation based on discrimination against
the corporation’s foreign shareholders. Pet. App. 13a-
14a. In light of Sabbatino, and in the absence of “any
decision from any circuit that so completely forecloses
H&P-V’s discriminatory takings theory as to inescap-
ably render the claim{) frivolous and completely de-
void of merit,” the court held that H&P-V’s claim “has
satisfied this Circuit’s forgiving standard.” /d. at l6a
(citation and internal quotation marks omitted).

The court of appeals likewise held that H&P-I1DC’s
claim that its own “rights in property” had been taken
in violation of international law was not frivolous. Pet.
App. 17a-22a. The court noted that “shareholders
may have rights in corporate property” that are not
derivative of the corporation’s rights, id. at 20a, and
that H&P-IDC alleged that it had suffered “a total
loss of control over its subsidiary,” id. at 22a. Accord-
ingly, without resolving the legal question of whether
H&P-IDC had viably alleged “rights in property”
under Section 1605(a)(3), the court ruled that “H&P-
IDC has ‘put its rights in property in issue in a non-
frivolous way.” Jbid. (quoting Chabad, 528 F.3d at
941).

b. Judge Sentelle dissented in part. Pet. App. 30a-
36a. He would have held that both H&P-V and H&P-

_

7

IDC had “failed to plead a taking in violation of in-
ternational law.” Id. at 34a (citation omitted); see id.
at 32a-33a (“To extend our examination of Venezuelan
law to adjudicate its fairness appears to me to violate
Venezuela’s sovereignty, the value protected by the
FSIA.”).

SUMMARY OF ARGUMENT

Section 1605(a)(3) of the Foreign Sovereign Im-
munities Act creates a narrow exception to foreign
sovereign immunity in certain cases “in which rights
in property taken in violation of international law are
in issue.” 28 U.S.C. 1605(a)(3). Like the FSIA’s other
exceptions to immunity, the expropriation exception
“codifies the standards governing foreign sovereign
immunity as an aspect of substantive federal law.”
Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.
480, 497 (1983). And “whether statutory subject-matter
jurisdiction exists under the [FSIA] entails an appli-
cation of the substantive terms of the Act to deter-
mine whether one of the specified exceptions to im-
munity applies.” Jd. at 497-498. The court of appeals
erred in holding that merely non-frivolous allegations
regarding the substantive requirements of an immuni-
ty exception were sufficient to establish jurisdiction—
a standard that the court itself described as “excep-
tionally low.” Pet. App. lla.

For a case to come within the scope of Section
1605(a)(3), the complaint must assert a claim that is
legally sufficient to satisfy the provision’s substantive
requirements. When the foreign state challenges the
legal sufficiency of the complaint’s jurisdictional alle-
gations under Federal Rule of Civil Procedure 12(b)(1),
the district court must determine whether the plain-
tiff’s allegations, if true, actually describe a “tak[ing)

8

in violation of international law”—that is, conduct that
is prohibited by internationai expropriation law—and
identify “rights in property” that were impaired as a
result of the foreign state’s conduct. If those substan-
tive requirements are not satisfied, the foreign state is
immune from suit both federal and state courts, the
district court lacks subject-matter jurisdiction, and
the claim must be dismissed.

That conclusion is dictated by the FSIA’s text and
purposes, as well as by this Court’s precedent. The
FSIA calls for courts to decide a foreign state’s “enti-
tle{ment}” to immunity, not to hypothesize about what
the outcome of that analysis could conceivably be. 28
U.S.C. 13830(a); see 28 U.S.C. 1602. Section 1605(a)(3)
requires that “rights in property taken in violation of
international] law are in issue”—not that such rights
may be in issue, or that there may have been a taking
that international law might proscribe. 28 U.S.C.
1605(a)(3). And requiring a legal determination of
immunity at the “threshold” of the action, Verlinden,
461 U.S. at 493-494, is necessary to ensure that the
foreign state actually receives the protections of im-
munity if no exception applies, to preserve the dignity
of the foreign state and comity between nations, and
to safeguard the interests of the United States when it
is sued in foreign courts. This Court has made just
such an analysis of legal sufficiency when considering
the application of other FSIA exceptions, including
the exception for cases “in which * * * rights in
immovable property situated in the United States are
in issue.” 28 U.S.C. 1605(a)(4); see Permanent Mis-
sion of India to the U.N. v. City of N.Y., 561 U.S. 193,
198-199 (2007).

9

In holding otherwise, the court of appeals relied
only on this Court’s decision in Bell v. Hood, 327 U.S.
678 (1946), which construed the “aris{ing] under” re-
quirement in the federal-question jurisdictional stat-
ute. But the Bell standard, which is derived from a
statute that does “nothing more than grant jurisdic-
tion over a particular class of cases,” Verlinden, 461
U.S. at 496-497, has no application in the FSIA con-
text, where Congress—impelled by foreign relations
concerns that are specific to suits against foreign
sovereigns—made foreign states presumptively im-
mune and imposed substantive preconditions to the
existence of jurisdiction that must be satisfied in eve-
ry case.

The court of appeals failed to assess whether re-
spondents’ allegations were legally sufficient to estab-
lish that petitioners’ alleged actions violated interna-
tional law or that H&P-IDC’s own rights in property
were in issue. Accordingly, the judgment should be
vacated and the case remanded for further considera-
tion under the proper standard.

ARGUMENT

A. A Foreign State Is Immune From State Or Federal
Court Jurisdiction In A Suit Brought Pursuant To The
Expropriation Exception Unless The Plaintiff's Alle-
gations Are Legally Sufficient To Satisfy The Excep-
tion’s Substantive Requirements

1. The United States has long recognized that for-
eign sovereigns are generally immune from suit in our
courts. See Schooner Exch. vy. McFaddon, 11 US. (7
Cranch) 116, 137 (1812) (explaining that sovereign
immunity rests on the “perfect equality and absolute
independence of sovereigns, and th{e) common inter-
est impelling them to mutual intercourse”); see also

10

Samantar v. Yousuf, 560 U.S. 305, 311 (2010). For
much of the Nation’s history, the United States ad-
hered to the “absolute” theory of foreign sovereign
immunity, under which foreign states were not subject
to suit without their consent. See, e.g., Verlinden, 461
U.S. at 486-487; Permanent Mission, 551 U.S. at 199.

The courts. historically looked to “the political
branch of the government charged with the conduct of
foreign affairs” to decide whether absolute immunity
should be recognized in a particular case. Republic of
Mezico v. Hoffman, 324 U.S. 30, 34 (1945); see Ver-
linden, 461 U.S. at 486; Ex parte Republic of Peru,
318 U.S. 578, 588-589 (1943). In 1952, the Department
of State adopted the “restrictive” theory of foreign
sovereign immunity, under which a foreign state gen-
erally was immune from suit for sovereign or public
acts but not for commercial acts. See Verlinden, 461
U.S. at 486-487.

In 1976, Congress enacted the FSIA, which estab-
lishes comprehensive “legal standards” governing
claims of immunity in all civil actions against foreign
states. Verlinden, 461 U.S. at 488. “For the most
part, the Act codifies, as a matter of federal law, the
restrictive theory of sovereign immunity.” J/bid.; see
H.R. Rep. No. 1487, 94th Cong., 2d Sess. 14 (1976)
(House Report). The Act also “transfers primary res-
ponsibility for immunity determinations from the
Executive to the Judicial Branch.” Republic of Aus-
tria v. Altmann, 541 U.S. 677, 691 (2004); see 28 U.S.C.
1602.

The FSIA sets forth a general rule that a foreign
state “shall be immune” from suit in federal and state
courts unless the suit comes within one of the FSIA’s
specific exceptions to that rule (or an exception is

1]

provided by an applicable international agreement).
28 U.S.C. 1604; see 28 U.S.C. 1605-1607; Altmann, 541
U.S. at 691; see also House Report 17 (FSIA “starts
from a premise of immunity”). The exception invoked
in this case provides that “[a] foreign state shall not
be immune from the jurisdiction of courts of the Unit-
ed States or of the States in any case * * * in which
rights in property taken in violation of international
law are in issue” and a specified commercial-activity
nexus with the United States is present. 28 U.S.C.
1605(a)(3).

The FSIA also provides that when the require-
ments of one (or more) of the immunity exceptions are
met, and a foreign state is therefore not immune from
suit, 28 U.S.C. 1604, federal district courts shall have
subject-matter jurisdiction over the relevant claims.
28 U.S.C. 13830(a) (conferring jurisdiction “of any non-
jury civil action * * * as to any claim for relief in
personam with respect to which the foreign state is
not entitled to immunity either under sections 1605-
1607 of this title or under any applicable international
agreement”). Accordingly, “subject-matter jurisdic-
tion” in any action against a foreign state “depends on
the existence of one of the specified exceptions to
foreign sovereign immunity.” Verlinden, 461 U.S. at
493; see Saudi Arabia v. Nelson, 507 U.S. 349, 355
(1993) (same); Argentine Republic v. Amerada Hess
Shipping Corp., 488 U.S. 428, 434 (1989) (same); see
also 28 U.S.C. 1330(b)-(c) (when district court has
subject-matter jurisdiction and service is proper, then
“{pjersonal jurisdiction over a foreign state shall ex-
ist”).

2. As this Court held in Verlinden, the FSIA sets
forth “substantive” standards of federal law governing

12

the sovereign immunity of a foreign state, and Section
1330(a)’s grant of subject-matter jurisdiction there-
fore also incorporates those substantive requirements.
461 U.S. at 493, 497; see Altmann, 541 U.S. at 694-
696; see also Hoffman, 324 U.S. at 36 (sovereign im-
munity is “accepted rule of subs:antive law”); Ex
parte Peru, 318 U.S. at 588 (sovereign immunity is
“overriding principle of substantive law”); Oliver Am.
Trading Co. v. Mexico, 264 U.S. 440, 442-443 (1924).

In Verlinden, the Court considered “whether Con-
gress exceeded the scope of Art. III of the Constitu-
tion by granting federal courts subject-matter juris-
diction over certain civil actions * * * against for-
eign sovereigns” that fall outside the bounds of diver-
sity jurisdiction. 461 U.S. at 491. Interpreting the
FSIA in light of its text, context, and purposes, the
Court held that “a suit against a foreign state under
th[e] [FSIA] necessarily raises questions of substan-
tive federal law at the very outset, and hence clearly
‘arises under’ federal law, as that term is used in Art.
III.” Jd. at 498; see id. at 492. That is so, the Court
explained, because the FSIA’s rule of immunity and
its exceptions to that immunity are an exercise of
Congress’s “undisputed power” under Article I “to
decide, as a matter of federal law, whether and under
what circumstances foreign nations should be amena-
ble to suit in the United States”—a decision that
“raise[s] sensitive issues concerning the foreign rela-
tions of the United States” and as to which the “pri-
macy of federal concerns is evident.” Jd. at 493; see
ibid. (noting Congress’s “authority over foreign com-
merce and foreign relations”). It was to “promote
these federal interests” that Congress chose to “en-
act[] a statute comprehensively regulating the amena-

13

bility of foreign nations to suit” in federal or state
court under “detailed federal law standards.” /d. at
493-494.

In so ruling, the Court in Verlinden rejected sever-
al arguments that the FSIA’s immunity-related provi-
sions have a limited, non-substantive reach. As an
initial matter, the Court explained that Congress’s
power to enact the relevant provisions was not con-
strained by the various limitations that have been
imposed in interpreting 28 U.S.C. 1331, “which grants
district courts general federal-question jurisdiction
over any case that ‘arises under’ the laws of the Unit-
ed States.” Verlinden, 461 U.S. at 494; see id. at 495
(“the Court of Appeals’ heavy reliance on decisions
construing [Section 1331] was misplaced”).

The Court also rejected the contention that the
FSIA is merely “a jurisdictional statute” and there-
fore “can never constitute the federal law under which
the action arises, for Art. III purposes.” Verlinden,
461 U.S. at 496. The Court contrasted statutes that
seek “to do nothing more than grant jurisdiction over
a particular class of cases” with the FSIA, which “does
not merely concern access to the federal courts” but
rather is a “comprehensive scheme” substantively
regulating “foreign commerce” and foreign relations.
Id. at 496-497; see ibid. (noting that the FSIA “gov-
erns the types of actions for which foreign sovereigns
may be held liable in a court in the United States,
federal or state”) (emphasis added); id. at 495 n.22.
The Court concluded that because “(t]he [FSIA] codi-
fies the standards governing foreign sovereign im-
munity as an aspect of substantive federal law,” and
“applying those standards will generally require in-
terpretation of numerous points of federal law,” the

14

fact that “the inquiry into foreign sovereign immuni-
ty” is “labeled” a matter of subject-matter jurisdiction
“does not affect the constitutionality” of the statute.
Id. at 497.

3. The Court further explained in Verlinden that
the substantive question of immunity is one that must
be resolved at the outset of a case. “At the threshold
of every action in a district court against a foreign
state, * * * the court must satisfy itself that one of
the exceptions applies—and in doing so it must apply
the detailed federal law standards set forth in the
Act.” 461 U.S. at 493-494; see id. at 497-498 (“whether
statutory subject-matter jurisdiction exists under the
[FSIA] entails an application of the substantive terms
of the Act to determine whether one of the specified
exceptions to immunity applies”). It necessarily fol-
lows that when a foreign state moves to dismiss a
complaint for lack of jurisdiction under Federal Rule
of Civil Procedure 12(b)(1) on the ground that the
claim as pleaded does not meet the substantive re-
quirements of the relevant exception to immunity, the
district court must determine whether the allegations
are legally sufficient to satisfy those requirements.” If
not, the court must dismiss the case.

a. The text of the relevant FSIA provisions dic-
tates that conclusion. Assessing whether a claim falls

* When the foreign state challenges the factual basis for jurisdic-
tion, the court must go beyond the pleadings and resolve disputed
issues of fact necessary to determine subject-matter jurisdiction.
See Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36,
40 (D.C. Cir. 2000); see generally 13D Charles Alan Wright et al.,
Federal Practice and Procedure § 3564, at 93 n.7 (3d ed. Supp.
2016). In this Court, this case involves a legal, not factual, chal-
lenge to jurisdiction.

15

within a particular statutory grant of jurisdiction is,
after all, a question of statutory construction, see
Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 21-22 (1983), and “the subject-
matter jurisdiction of the lower federal courts is
determined by Congress ‘in the exact degrees and
character which to Congress may seem proper for
the public good,’” Amerada Hess, 488 U.S. at 433-434
(quoting Cary v. Curtis, 44 U.S. (3 How.) 236, 245
(1845)).

In Section 1330(a), Congress provided that a dis-
trict court has subject-matter jurisdiction over ar
action against a foreign state only if “the foreign state
is not entitled to immunity either under sections 1605-
1607 of [Title 28] or under any applicable international
agreement.” 28 U.S.C. 1330(a). And in Section 1602,
which defines the purposes of the FSIA, Congress
provided that “{cjlaims of foreign states to immunity
should henceforth be decided by courts of the United
States * * * in conformity with the principles set
forth in this chapter.” 28 U.S.C. 1602. Those provi-
sions establish that a federal court lacks the power to
proceed until it has actually “decided” that the foreign
state is not legally “entitled to immunity.” 28 U.S.C.
1330(a), 1602. Hypothesizing about what the outcome
of such a substantive determination might ultimately
be is not sufficient.

In order for a foreign state to lack immunity under
the FSIA exception invoked in this case, the suit must
be one “in which rights in property taken in violation
of international law are in issue.” 28 U.S.C 1605(a)(3).
The term “in issue” means under discussion or in
dispute. See Bryan A. Garner, A Dictionary of Mod-
ern Legal Usage 470 (2d ed. 1995); see also United

16

States v. Congress Constr. Co., 222 U.S. 199, 200-201
(1911); ef. Ministry of Def. & Support for the Armed
Forces of the Islamic Republic of Iran v. Elahi, 556
U.S. 366, 379-384 (2009) (interpreting statutory term
“at issue” similarly). And Section 1605(a)(3) defines
what must be in dispute in the case for the exception
to apply: actual “rights in property taken in violation
of international law.” In other words, the allegations
in the complaint must be legally sufficient to identify
property rights that serve as the basis for the plain-
tiff’s claim, as well as to establish that a “tak[ing] in
violation of international law” has indeed taken place,
in order for a district court to have the power to re-
solve a dispute stemming from such an alleged taking.

A court cannot “satisfy itself” that a claim comes
within its jurisdiction, Verlinden, 461 U.S. at 494,
unless it determines the scope of the substantive re-
quirements in Section 1605(a)(3) and decides that the
plaintiff’s allegations fulfill them. Section 1605(a)(3)
thus cannot be read to obviate a foreign state’s im-
munity when “rights in property taken in violation of
international law” may be “in issue”—when, for ex-
ample, there is an unresolved dispute about whether a
taking of property (as alleged) violated international
law or simply the foreign state’s own law. A dispute
encompassed by Section 1605(a)(3) is one in which the
plaintiff’s allegations, if true, are sufficient as a mat-
ter of law to establish that a taking in violation of
international law has occurred and that the plaintiff
has rights in the relevant property, and the plaintiff
seeks some form of relief on the ground that those
rights have not been vindicated. See House Report
19-20 (“[tJhe term ‘taken in violation of international
law’ would include the nationalization or expropriation

17

of property without payment of the prompt adequate
and effective compensation required by international
law,” and “takings which are arbitrary or discrimina-
tory in nature”).

Congress’s decision to limit the exercise of jurisdic-
tion over a foreign sovereign under Section 1605(a)(3)
to cases in which “rights in property taken in violation
of international law are in issue” no doubt stems from
the very nature of the substantive restriction that the
exception embodies. Governmental decisions involv-
ing property—particularly real property—within a
sovereign’s own territorial jurisdiction are generally
reserved to that sovereign free of interference by the
courts of another nation. See, e.g., Asociacion de
Reclamantes v. United Mexican States, 735 F.2d 1517,
1520-1524 (D.C. Cir. 1984) (Sealia, J.), cert. denied, 470
U.S. 1051 (1985). In enacting Section 1605(a)(3), Con-
gress decided that foreign states would be subject to
suit in U.S. courts in only a narrow class of cases—
ones in which “international law” has been “violat{ed}”
by such an action and a commercial-activity nexus to
the United States is present. Without those limita-
tions, the case would raise what would otherwise be
purely a question of the domestic law of the nation
where the property is located or would lack a suffi-
cient connection to the United States to justify the
exercise of jurisdiction over a foreign state. See, e.g.,
de Sanchez v. Banco Cent. de Nicaragua, 770 F.2d
1385, 1395-1398 (5th Cir. 1985). And to ascertain
whether such a dispute is before the court, the legal
adequacy of the plaintiff’s allegations must be as-
sessed before the case moves forward.

Evaluating a complaint’s legal adequacy in that
way is precisely the approach that this Court has

18

already taken with respect to a closely analogous
subsection of Section 1605: Section 1605(a)(4), which
creates an exception to immunity for suits “in which
* * * rights in immovable property situated in the
United States are in issue.” 28 U.S.C. 1605(a)(4). In
Permanent Mission, supra, the Court determined
whether, as a matter of law, the plaintiff’s claim to
enforce a tax lien under New York law fell within
Section 1605(a)(4). The Court first determined the
scope of Section 1605(a)(4)’s reference to “rights in
* * * property,” concluding that it extended to non-
ownership and non-possessory interests. 551 U.S. at
198-199. The Court then analyzed the content of the
lien right asserted under New York law, concluding
that the tax lien encumbered the right to convey the
relevant property. See ibid. The Court accordingly
held that the lien-enforcement suit “implicate[d]
‘rights in immovable property’” in the United States
within the meaning of the FSIA exception. /d. at 199.
The Court thus determined that the claim pleaded in
the complaint was legally sufficient to fulfill Section
1605(a)(4)’s requirements.’

* The Court has given similar treatment to other immunity ex-
ceptions. See OBB Personenverkehr AG v. Sachs, 136 S. Ct. 390,
395-398 (2015) (conclusively resolving at Rule 12(b)\(1) stage
whether action for personal injury was “based upon a commercial
activity” under Section 1605(a)2)); Nelson, 507 U.S. at 361 (same);
Amerada Hess, 488 U.S. at 439-443 (conclusively deciding at Rule
12(b)(1) stage that “none” of the FSIA’s immunity exceptions
“apply to the facts of this case”). Outside the sovereign-immunity
context, certain other jurisdictional provisions have been held to
call for a definitive legal assessment of substantive requirements
at the threshold of the case. See, ¢.g., Mt. Healthy City Sch. Dist.
Bd. of Educ. v. Doyle, 429 U.S. 274, 278-279 (1977) (explaining that
28 U.S.C. 1343, which grunts federal courts jurisdiction over

19

b. Ensuring that an action does not proceed past
the “threshold,” Verlinden, 461 U.S. at 493-494, unless
the allegations of the complaint are legally sufficient
to satisfy the requirements of an exception to immuni-
ty is critical to carrying out the purposes of the FSIA.

First, the FSIA is intended to confer immunity
from suit, not merely liability. Making a legal deter-
mination at the outset of the case about whether im-
munity is applicable is the only way to ensure that a
foreign state can realize that important protection. It
is the very nature of immunity to protect({] against
“the costs, in time and expense, and other disruptions
attendant to litigation.” EM Ltd. v. Republic of Ar-
gentina, 473 F.3d 463, 486 (2d Cir.) (citation omitted),
cert. denied, 552 U.S. 818 (2007); see Republic of Phil-
ippines v. Pimentel, 553 U.S. 851, 865 (2008) (immuni-
ty is designed to “give foreign states and their in-
strumentalities some protection from the inconven-
ience of suit”) (quoting Dole Food Co. v. Patrickson,
538 U.S. 468, 479 (2003)); Moran v. Kingdom of Saudi
Arabia, 27 F.3d 169, 172 (5th Cir. 1994) (“[S]overeign
immunity under the FSIA is immunity from suit, not
just from liability.”); cf. Mitchell v. Forsyth, 472 U.S.
511, 526 (1985) (qualified immunity protects govern-
ment officials from “the costs of trial or * * * the
burdens of broad-reaching discovery”) (quoting Har-
low v. Fitzgerald, 457 U.S. 800, 817-818 (1982)). Mak-
ing jurisdiction a negligible requirement would “frus-
trate the significance and benefit of entitlement to
immunity” by imposing the very burdens and costs
that immunity is intended to shield against. Fore-

actions brought to redress deprivation of federal rights under color
of state law, requires inquiry into “whether a statutory action had
in fact been alleged”).

-

20

most-McKesson, Inc. v. Islamic Republic of Iran, 905
F.2d 438, 449 (D.C. Cir. 1990) (citation omitted); see
ibid. (“Where, as with foreign sovereigns, immunity
involves protection from suit, not merely a defense to
liability, more than the usual is required of trial courts
in making pretrial * * * legal determinations.”);
Segni v. Commercial Office of Spain, 816 F.2d 344,
847 (7th Cir. 1987). For those reasons, appellate
courts have consistently concluded that the denial of a
Rule 12(b)(1) motion asserting sovereign immunity
may be appealed immediately. See Permanent Mis-
sion, 551 U.S. at 197; Moran, 27 F.3d at 172; Rein v.
Socialist People’s Libyan Arab Jamahiriya, 162 F.3d
748, 755-756 (2d Cir. 1998), cert. denied, 527 U.S. 1003
(1999); Joseph W. Dellapenna, Suing Foreign Gov-
ernments and Their Corporations, at 694-700 (2d ed.
2003) (collecting authorities).

Second, the FSIA’s general rule of presumptive
immunity, and the limited exceptions thereto, are
intended to preserve the dignity of foreign sovereigns
and to ensure comity between nations. See, e¢.g., Pi-
mentel, 553 U.S. at 865-866; National City Bank v.
Republic of China, 348 U.S. 356, 362 (1955) (sovereign
immunity derives from concerns that include “respect
for the ‘power and dignity’ of the foreign sovereign”).
Subjecting a foreign sovereign to the jurisdiction of a
U.S. court without first making the substantive legal
determination that the FSIA’s immunity exceptions
dictate may well be understood as “an affront to [that
sovereign’s| dignity.” Hoffman, 324 U.S. at 35-36. It
also may well damage relations with that sovereign.
See id. at 35 (“Every judicial action exercising or
relinquishing jurisdiction over * * * a foreign gov-

ernment” may “effect * * * our relations with that

21

government.”); Ex parte Peru, 318 U.S. at 588-589;
see also generally Zschernig v. Miller, 389 U.S. 429,
441 (1968) (assertions of state authority in matters of
international importance have “a direct impact upon
foreign relations and may well adversely affect the
power of the central government to deal with those
problems”). In the “vast external realm, with its im-
portant, complicated, delicate and manifold prob-
lems,” United States v. Curtiss-Wright Exp. Corp.,
299 U.S. 304, 319 (1936), perceived affronts to foreign
states may result over the long term in reduced coop-
eration in a variety of areas. That is the opposite of
what the FSIA was intended to accomplish. See
House Report 26-27 (expressing intent to “ease the
conduct of foreign relations by the United States”); id.
at 11, 32, 45; see also Zappia Middle East Constr. Co.
v. Emirate of Abu Dhabi, 215 F.3d 247, 250-252 (2d
Cir. 2000).

Finally, and relatedly, ensuring that a substantive
threshold determination is made about whether a
plaintiff's allegations satisfy one of the statute’s ex-
ceptions to immunity serves the “reciprocal self-
interest” of the United States—another one of the
FSIA’s purposes. National City Bank, 348 U.S. at 362;
see House Report 9; Garb v. Republic of Poland, 440
F.3d 579, 585 (2d Cir. 2006). The United States engag-
es in extensive activities overseas in support of its
worldwide diplomatic, security, and law enforcement
missions, and it is not infrequently sued in foreign
courts. See generally Dep’t of Justice, Office of For-
eign Litigation (OF L), https://www.justice.gov/civil/
office-foreign-litigation (“At any given time, foreign
lawyers under OF L’s direct supervision represent the
United States in approximately 1,000 lawsuits pending

22

in the courts of over 100 countries.”). Because “some
foreign states base their sovereign immunity decisions
on reciprocity,” Persinger v. Islamic Republic of Iran,
729 F.2d 835, 841 (D.C. Cir.), cert. denied, 469 U.S.
881 (1984), a full substantive determination about a
foreign sovereign’s immunity under the FSIA must be
made at the outset of the case—lest suits against the
United States abroad be permitted to proceed past
their initial stages, thus embroiling the United States
in expensive and difficult litigation, based on legally
insufficient assertions that sovereign immunity should
be vitiated. Cf. McCulloch v. Sociedad Nacional de
Marineros de Honduras, 372 U.S. 10, 21 (1963) (con-
struing statute to avoid “invit{ing} retaliatory action
from other nations”); Persinger, 729 F.2d at 841 (de-
clining to adopt construction of FSIA that bore the
“potential for international discord and for foreign
government retaliation”); cf. also Boos v. Barry, 485
U.S. 312, 323 (1988) (highlighting importance of “con-
cept of reciprocity” in international law and diplomacy
and explaining that respecting diplomatic immunity of
foreign states “ensures that similar protections will be
accorded” to the United States). That damaging con-
sequence is one that Congress would have wanted to
avoid in enacting the strong immunity protections in
the FSIA.

B. The Court Of Appeals Erred In Ruling That Jurisdic-

tion Was Proper So Long As Respondents’ Allegations

That The Substantive Standards Of The Expropriation

Exception Were Satisfied Were Not “Wholly Insub-
stantial Or Frivolous”

The court of appeals did not undertake the re-

quired analysis. Instead of determining whether

H&P-V’s allegations actually state a violation of inter-

23

national law and whether H&P-IDC’s allegations
actually place its own “rights in property” in issue, the
court—applying an “exceptionally low” standard—
considered only whether respondents’ allegations on
those points are “wholly insubstantial or frivolous.”
Pet. App. lla (citation omitted); see id. at 16a, 20a.
The court thus did not correctly resolve those ele-
ments of the immunity inquiry.‘

1. In framing the jurisdictional question as wheth-
er respondents’ expropriation claims were frivolous,
the court of appeals relied only on this Court’s deci-
sion in Bell v. Hood, 327 U.S. 678 (1946), which con-
strued the “arising under” requirement in the federal-
question jurisdictional statute, now 28 U.S.C. 1331.
See Pet. App. lla (citing Bell, 327 U.S. at 682, and
Agudas Chasidei Chabad of U.S. v. Russian Fed’n,
528 F.3d 934, 940 (D.C. Cir. 2008), which also cites
Bell). That reliance was misplaced. Cf. Verlinden,
461 U.S. at 494-495 (finding that court of appeals
erred in importing federal-question-statute precedent
into FSIA context); American Nat'l Red Cross v. S.G.,
505 U.S. 247, 258 (1992) (explaining that Section 1331

* In contrast, other courts of appeals (with the exception of the
Ninth Circuit) have understood the inquiry under Section
1605(aX(3) to require a decision about the legal sufficiency of the
allegations. See Mezerhane v. Repiiblica Bolivariana de Venezue-
la, 785 F.3d 545, 548-561 (11th Cir. 2015) (holding that the claim
did not come within the expropriation exception because the for-
eign state’s alleged actions did not constitute a taking in violation
of international law), cert. denied, 136 S. Ct. 800 (2016); Zappia
Middle East Constr. Co., 215 F.3d at 251 (same); de Sanchez, 770
F.2d at 1894-1398 (same); Abelesz v. Magyar Nemzeti Bank, 692
F.3d 661, 678-685 (7th Cir. 2012) (same); see also Siderman de
Blake v. Republic of Arg., 965 F.2d 699, 711 (9th Cir. 1992), cert.
denied, 507 U.S. 1017 (1993).

24

pleading rule should not have been invoked with re-
spect to “jurisdiction based on a separate and inde-
pendent jurisdictional grant”).

The federal-question statute confers on federal
courts jurisdiction over any action that “aris[es] un-
der” the Constitution, treaties, or laws of the United
States. 28 U.S.C. 1831; see 28 U.S.C. 41(1) (1940)
(version of statute discussed in Bell). That statute is
not a source of substantive law. See, ¢.g., Mims v.
Arrow Financial Servs., LLC, 132 S. Ct. 740, 748-749
(2012). Rather, it grants federal courts power to hear
“a particular class of cases,” Verlinden, 461 U.S. at
496—those asserting “a right to recover under the
Constitution and laws of the United States,” Bell, 327
U.S. at 681; see Merrill Lynch v. Manning, 136 S. Ct.
1562, 1570 (2016).

As Bell explains, a claim “arises under” federal law
if the claim will be “sustained if the Constitution and
laws of the United States are given one construction
and will be defeated if they are given another.” 327
U.S. at 685; see Manning, 136 S. Ct. at 1569-1570.
Thus, the federal-question statute has been under-
stood to separate the jurisdictional inquiry from any
examination of the legal sufficiency of the plaintiff's
claim: a claim may “aris[e] under” federal law even if
the court’s ultimate construction of federal law will
defeat that claim. See Bell, 327 U.S. at 685; see also,
e.g., Swafford v. Templeton, 185 U.S. 487, 493-494
(1902). The Court applied that principle in Bell, hold-
ing that “the failure to state a proper cause of action
calls for a judgment on the merits and not for a dis-
missal for want of jurisdiction.” 327 U.S. at 682. The
Court also explained, however, that a suit asserting an
“alleged claim under the Constitution or federal stat-

25

utes” that “is wholly insubstantial and frivolous” may
be “dismissed for want of jurisdiction.” Jd. at 682-683;
see Steel Co. v. Citizens for a Better Env't, 523 U.S.
83, 89-90 (1998) (collecting cases).

The D.C. Circuit has understood Bell to establish a
more general rule, equally applicable to the FSIA as
to the federal-question statute, that “[jjurisdiction . . . is
not defeated ... by the possibility that” a complaint
“might fail to state a cause of action.” Pet. App. lla
(quoting Bell, 327 U.S. at 682); see Chabad, 528 F.3d
at 940. That court has accordingly held that whenever
“the plaintiff’s claim on the merits directly mirror{(s)
the jurisdictional standard” set forth in the FSIA, the
district court should find the jurisdictional standard
satisfied and the foreign state amenable to suit so long
as the plaintiff’s claim is not frivolous. Simon v. Re-
public of Hungary, 812 F.3d 127, 140 (2016). When
the “jurisdictional and merits inquiries” are not “fully
overlap[ping],” however, the district court is to under-
take a more stringent inquiry that asks “whether the
plaintiffs’ allegations satisfy the jurisdictional stand-
ard.” Jd. at 141; see ibid. (declining to apply the frivo-
lousness standard to inquiry under the expropriation
exception because plaintiffs asserted common-law
claims (such as conversion) on the merits and alleged
a taking that violated international law only to estab-
lish jurisdiction). Although the D.C. Circuit has thus

® The D.C. Circuit assumed that the jurisdictional and merits
inquiries “fully overlap” under Section 1605(a)(3) when a plaintiff
pleads a cause of action against a foreign state asserting a taking
in violation of international law, rather than a garden-variety
state-law claim (like conversion, restitution, or breach of contract)
in which the property that is the subject of the suit is alleged to
have been taken in violation of international law. Simon, 812 F.3d

26

far applied that rule only in cases involving the expro-
priation exception, it appears that the court may ex-
tend its rule to cases involving other exceptions to
foreign-state immunity.°

The D.C. Circuit’s approach is founded on a misun-
derstanding of the scope of Bell. Rather than an-
nouncing a general rule that applies to other jurisdic-
tional grants without regard to their text, Bell rested
on an interpretation of the federal-question statute,
see 327 U.S. at 680, 683, which has its own language,
“history,” and “judicial policy” considerations, Man-
ning, 136 S. Ct. at 1570 (citation omitted), and which
does not contain any substantive limitations. Bell's
frivolousness standard is merely a way of ascertaining
whether a claim is so plainly not a true assertion of a
right of recovery pursuant to federal law that it can-
not be said to fall within the bounds of the broad cate-
gory marked out by the “arising under” requirement.
See 327 U.S. at 682-683; see also Fair v. Kohler Die &
Specialty Co., 228 U.S. 22, 25 (1913).

at 141. But the D.C. Circuit did not address whether there would
be a distinct cause of action based directly on an alleged taking in
violation of international law, and that issue is not presented here.
See Pet. App. 12a (describing respondents’ claims as “international
expropriation claim{s]” without further discussion); J.A. 103-104;
cf. Sosa v. Alvarez-Machain, 542 U.S. 692, 732 (2004).

* See Owens v. Republic of Sudan, No. 01-2244, 2016 WL
1170919, at *22-°25 (D.D.C. Mar. 23, 2016) (applying rule in Simon
to case involving 28 U.S.C. 1606A, an immunity exception for claims
for personal injury or death “caused by an act of torture, extraju-
dicial killing, aircraft sabotage, [or] hostage taking”); see also, e.g.,
28 U.S.C. 1606(aX5) (immunity exception for claims for personal
injury or death “caused by the tortious act or omission of [a]
foreign state”).

27

That standard has no application to the FSIA. Un-
like the federal-question statute, the FSIA does not
merely address the question of subject-matter juris-
diction over a general category of cases. Instead, it
establishes substantive federal immunity standards
that both state and federal courts must apply at the
outset to determine whether a foreign state is amena-
ble to suit at all. Verlinden, 461 U.S. at 493, 497; see
pp. 11-18, supra; see also Arbaugh v. Y & H Corp., 546
U.S. 500, 514-515 & n.11 (2006) (explaining that Con-
gress may condition subject-matter jurisdiction on
satisfying a substantive requirement). Thus, “decid-
ing whether statutory subject-matter jurisdiction
exists under the [FSIA] entails an application of the
substantive terms of the Act to determine whether
one of the specified exceptions to immunity applies.”
Verlinden, 461 U.S. at 497-498. And among the ex-
propriation exception’s substantive standards is that
the claim must put in issue “rights in property taken
in violation of international law.” 28 U.S.C. 1605(a)(3).
That exception therefore requires a legal inquiry that
the federal-question statute eschews: jurisdiction
under Section 1605(a)(3) turns on the legal sufficiency
of the plaintiff’s claim that the alleged taking violated
international law.’

’ This Court recently interpreted a jurisdictional provision word-
ed differently than the federal-question statute to embody the
same “jurisdictional test” that has been “formulated for § 1331.”
Manning, 136 S. Ct. at 1570. But the provision involved in that
case—conferring jurisdiction over suits “brought to enforce any
liability or duty created by” certain securities-law provisions, 15
U.S.C T8aa(a)—is similar to the federal-question statute, and
distinct from the FSIA, in asking only about the general nature of
a plaintiff's claim (not its substance) and in governing claims as to
which there is no presumptive immunity.

28

The required legal inquiry under the FSIA reflects
Congress’s judgment about the limited scope of the
exceptions to immunity, which in turn stems from
important comity and foreign-relations concerns that
are unique to suits against foreign states. That judg-
ment and those underlying concerns have no relevance
to a jurisdictional determination under the federal-
question statute. In establishing a framework that
starts with a presumption that a foreign state “shall
be immune” from “jurisdiction,” 28 U.S.C. 1604, Con-
gress did not intend that a foreign state would be
subjected to the burdens of suit based merely on non-
frivolous allegations that the FSIA’s requirements
have been satisfied.

The ill fit between Bell and the FSIA is emphasized
by the extent to which the D.C. Circuit has departed
from the FSIA’s text and purposes in creating two
different jurisdictional standards—one that applies if
the merits of the underlying cause of action “fully
overlap” with an element of the jurisdictional inquiry,
and another that applies if partial or no overlap exists.
Simon, 812 F.3d at 141. That elaborate jurisdictional
superstructure is nowhere to be found in the relevant
provisions of the FSIA, and it is divorced from the
statute’s underlying goals. Cf. Chabad, 528 F.3d at
955-957 & n.3 (Henderson, J., concurring). Congress
mandated a careful, substantive inquiry into whether
a foreign state is immune from jurisdiction in every
case, not just in a limited class of cases.

2. Other rationales that have been advanced by re-
spondents in support of the “exceptionally low” stand-
ard applied by the court of appeals, Pet. App. 11a, also
fail to justify use of that standard to make jurisdic-
tional determinations under the FSIA.

29

First, it is not correct to say (e.g., Resp. Supp. Br.
8) that Section 1605(a)(3) merely requires “as-
sert{ion]” of “a certain type of claim”—that is, that a
plaintiff must merely assert as a (non-frivolous) legal
conclusion that its rights in property have been taken
in violation of international law in order to clear the
hurdle of Rule 12(b)(1). Chabad, 528 F.3d at 941.
Section 1605(a)(3) could, of course, have been worded
to refer to claims “alleging” or “asserting” a taking
of property in violation of international law, see, ¢.9.,
15 U.S.C. 8405, or to claims “arising under” or
“brought to enforce” international law, see Manning,
136 S. Ct. at 1570-1575." But Congress chose in Sec-
tion 1605(a)(3) to impose substantive requirements
rather than simply to describe the subject matter of
the suit. See Verlinden, 461 U.S. at 496 (distinguish-
ing FSIA from statutes that “do nothing more than
grant jurisdiction over a particular class of cases”).

Second, a more searching standard than the D.C.
Circuit’s is not unworkable merely because a determi-
nation of whether Section 1605(a)(3) applies may also
involve examination of questions that are pertinent to
the merits of the plaintiff’s claim. See Resp. Supp. Br.
7-8. Other courts of appeals deciding expropriation-
related FSIA cases have applied the correct legal
standard without any difficulty. See note 4, supra; see
also Arbaugh, 546 U.S. at 515 n.11 (discussing Con-
gress’s “prerogative” to define jurisdiction by impos-
ing substantive requirements that may be “relevant to

* Indeed, Congress did use “arising out of” language in Sectior
1605 when it so intended. See 28 U.S.C. 1605(aX5)(B) (stating that
the domestic-torts exception does not apply to “any claim arising
out of malicious prosecution, abuse of process, libel, slander,
misrepresentation, deceit, or interference with contract rights”).

30

the merits of a case”). Outside the FSIA context,
concerns that have arisen about a robust jurisdictional
inquiry in cases of overlap with the merits are often
driven by a prospect that a plaintiff may be deprived
of a right to have a jury resolve disputed factual ques-
tions. See, e.g., Arbaugh, 546 U.S. at 514. But the
Rule 12(b)(1) motion in this case makes only a legal
challenge to the sufficiency of the jurisdictional alle-
gations, and in any event no plaintiff in an action
against a foreign sovereign is ever entitled to a jury
trial. See 28 U.S.C. 1330(a) and 1441(d).

It is, in fact, the D.C. Circuit’s approach that raises
practical difficulties. See generally Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010) (“administrative sim-
plicity is a major virtue in a jurisdictional statute”). It
would not always be clear whether the jurisdiction and
the merits sufficiently “mirror{]” each other to meet
the D.C. Circuit’s atextual standard. Simon, 812 F.3d
at 140-141. Application of that standard could result
in very similar FSIA cases being decided under dif-
ferent (and sometimes outcome-determinative) juris-
dictional analyses, giving rise to confusion among for-
eign states and other litigants. See ibid; see also
Verlinden, 461 U.S. at 487-488, 497 (acknowledging
need for uniformity under FSIA so that foreign states
do not perceive unequal treatment). And the D.C.
Circuit’s requirement strongly encourages plaintiffs
to “recast” their claims to try to achieve the necessary
correspondence between the jurisdictional and merits
inquiries—the kind of practice on which this Court has
frowned as a means of bypassing sovereign-immunity
protections. Nelson, 507 U.S. at 363; see ibid. (refus-
ing to give “jurisdictional significance” to “feint of

31

language”); see also OBB Personenverkehr AG v.
Sachs, 136 S. Ct. 390, 396 (2015).

Finally, the problems associated with the D.C. Cir-
cuit’s standard cannot be obviated simply by pointing
to the foreign state’s ability to file a Rule 12(b)(6)
motion to dismiss for failure to state a claim. See
Resp. Supp. Br. 6 (citing Robinson v. Government of
Malaysia, 269 F.3d 133, 149 n.1 (2d Cir. 2001) (So-
tomayor, J., concurring)). Assuming that the plain-
tiff’s cause of action in a case involving Section
1605(a)(3) can ever overlap completely with the sub-
stantive requirements of that exception, see note 5,
supra, a Rule 12(b)(6) motion would provide a way of
testing whether a plaintiff’s allegations, taken as true,
made out a taking in violation of international law.
But if the foreign state made a Rule 12(b)(6) motion
and lost, that decision would not be appealable, and
the case would proceed to full discovery, dispositive
motions, and (perhaps) a bench trial. By contrast, the
denial of a Rule 12(b)(1) motion asserting sovereign
immunity in an FSIA case may be appealed immedi-
ately, thus helping to ensure that a foreign state’s
immunity is truly an “immunity from suit” and not
merely an immunity from liability. Moran, 27 F.3d at
172.

3. Application of the D.C. Circuit’s “exceptionally
low” standard for establishing jurisdiction under Sec-
tion 1605(a)(3) in a case like this one, Pet. App. 11a,
may well do real harm. Recognizing that “[a]ctions
against foreign sovereigns in our courts raise sensitive
issues concerning the foreign relations of the United
States,” Verlinden, 461 U.S. at 493, Congress careful-
ly crafted the FSIA’s exceptions to immunity to take
into account prevailing customary international-law

32

standards of foreign state immunity, id. at 487-488.
The D.C. Circuit’s use of the frivolousness standard
effectively nullifies key elements of the immunity
analysis under the expropriation exception, and sub-
jects a foreign state to the power of another sover-
eign’s judicial system and the burdens of litigation,
whenever the plaintiff can muster a non-frivolous
argument that it has “rights in property” and that
international law could be interpreted to prohibit the
alleged taking. That permissive approach could result
in adverse foreign-relations consequences and recip-
rocal adverse treatment of the United States in for-
eign courts. See pp. 20-22, supra.

C. The Judgment Should Be Vacated And The Case Re-
manded For Further Consideration Under The Correct
Legal Standard

Because the court of appeals applied an insuffi-
ciently rigorous standard, it failed to determine whether
resp /ndents’ allegations satisfied Section 1605(a)(3)’s
requirements.

With respect to whether respondent H&P-V’s ex-
propriation claim satisfied Section 1605(a)(3)’s re-
quirement that a “tak[ing] in violation of international
law” be “in issue,” 28 U.S.C. 1605(a)(3), the court of
appeals held only that H&P-V’s argument was “non-
frivolous,” Pet. App. 17a (citation omitted). The court
acknowledged that international law does not general-
ly speak to a sovereign’s actions with respect to the
property of its own nationals, but believed that a col-
orable argument could be mustered that a corporate
plaintiff's own nationality may be disregarded “[w]hen
a foreign state treats a corporation in a particular way
because of the nationality of its shareholders.” Jd. at
14a (citation omitted). That ruling set the bar for

33

making the jurisdictional determination too low. The
court should, instead, have answered the legal ques-
tion before it and definitively ruled on whether a
“generally accepted norm” of international expropria-
tion law prohibits the taking of a domestic corpora-
tion’s property to discriminate against foreign share-
holders. de Sanchez, 770 F.2d at 1396.

The court of appeals made the same error with re-
spect to whether respondent H&P-IDC adequately
alleged that its own “rights in property” were “in
issue.” 28 U.S.C. 1605(a)(3); see Pet. App. 22a. The
court recognized that “[a] corporation and its share-
holders are distinct entities” and that a shareholder
generally does not have an ownership interest in the
corporation’s property. Dole Food, 538 U.S. at 474-
475. But the court nonetheless held that H&P-IDC
might have “rights in” respondent H&P-V’s property
for purposes of Section 1605(a)(3), without examining
the source or scope of those potential rights. Pet.
App. 19a-22a. The court should, instead, have deter-
mined whether respondents’ allegations were legally
sufficient to place H&P-IDC’s “rights in property” in
issue. The court should have first examined whether
the law of the state of H&P-V’s incorporation—
Venezuela—gave H&P-IDC, as H&P-V’s shareholder,
any direct rights. See Case Concerning the Barcelona
Traction, Light & Power Co. (Belgium v. Spain), 1970
L.C.J. 3, 1 47 (Feb. 5). The court then should have
considered whether any such rights constitute “rights
in property” for purposes of Section 1605(a)(3). See
Permanent Mission, 551 U.S. at 198-199. Finally, had
it identified any relevant “rights in property,” the
court should have determined whether the complaint
sufficiently alleges that “rights in property [were]

34

taken in violation of international law.” 28 U.S.C.

1605(a)(3).

CONCLUSION

The judgment of the court of appeals should be va-
cated and the case remanded for consideration under

the proper standard.
Respectfully submitted.

AUGUST 2016

IAN HEATH GERSHENGORN
EDWIN S. KNEEDLER
Deputy Solicitor General
ELAINE J. GOLDENBERG
Assistant to the Solicitor
General
SHARON SWINGLE
LEwis S. YELIN
8

APPENDIX

1. 28 U.S.C. 1330 provides:
Actions against foreign states

(a) The district courts shall have original jurisdiction
without regard to amount in controversy of any nonjury
civil action against a foreign state as defined in section
1603(a) of this title as to any claim for relief in personam
with respect to which the foreign state is not entitled to
immunity either under sections 1605-1607 of this title or
under any applicable international agreement.

(b) Personal jurisdiction over a foreign state shall
exist as to every claim for relief over which the district
courts have jurisdiction under subsection (a) where ser-
vice has been made under section 1608 of this title.

(c) For purposes of subsection (b), an appearance by
a foreign state does not confer personal jurisdiction with
respect to any claim for relief not arising out of any
transaction or occurrence enumerated in sections 1605-
1607 of this title.

2. 28 U.S.C. 1331 provides:

Federal question

The district courts shall have original jurisdiction of
all civil actions arising under the Constitution, laws, or
treaties of the United States.

3. 28 U.S.C. 1602 provides:
Findings and declaration of purpose

The Congress finds that the determination by United
States courts of the claims of foreign states to immunity

(la)

2a

from the jurisdiction of such courts would serve the in-
terests of justice and would protect the rights of both
foreign states and litigants in United States courts.
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 satisfaction of judgments
rendered against them in connection with their commer-
cial activities. Claims of foreign states to immunity
should henceforth be decided by courts of the United
States and of the States in conformity with the principles
set forth in this chapter.

4. 28 U.S.C. 1608 provides:
Definitions.

For purposes of this chapter—

(a) A “foreign state”, except as used in section 1608 of
this title, includes a political subdivision of a foreign state
or an agency or instrumentality of a foreign state as
defined in subsection (b).

(b) An “agency or instrumentality of a foreign state”
means any entity—

(1) which is a separate legal person, corporate or
otherwise, and

(2) which is an organ of a foreign state or political
subdivision thereof, or a majority of whose shares or
other ownership interest is owned by a foreign state
or political subdivision thereof, and

(3) which is neither a citizen of a State of the
United States as defined in section 1332 (c) and (e) of

3a

this title, nor created under the laws of any third

country.

(c) The “United States” includes all territory and wa-
ters, continental or insular, subject to the jurisdiction of
the United States.

(d) A “commercial activity” means either a regular
course of commercial conduct or a particular eymmercial
transaction or act. The commercial character of an activ-
ity shall be determined by reference to the nature of the
course of conduct or particular transaction or act, rather
than by reference to its purpose.

(e) A “commercial activity carried on in the United
States by a foreign state” means commercial activity car-
ried on by such state and having substantial contact with
the United States.

5. 28 U.S.C. 1604 provides:

Immunity of a foreign state from jurisdiction

Subject to existing international agreements to which
the United States is a party at the time of enactment of
this Act a foreign state shall be immune from the juris-
diction of the courts of the United States and of the
States except as provided in sections 1605 to 1607 of this
chapter.

4a

6. 28 U.S.C. 1605 provides:

General exceptions to the jurisdictional immunity of a
foreig=: stat-

(a) A foreign state shall not be immune from the ju-
risdiction of courts of the United States or of the States
in any case—

(1) in which the foreign state has waived its im-
munity either explicitly or by implication, notwith-
standing any withdrawal of the waiver which the for-
eign state may purport to effect except in accordance
with the terms of the waiver;

(2) in which the action is based upon a commer-
cial activity carried on in the United States by the
foreign state; or upon an act performed in the United
States in connection with a commercial activity of the
foreign state elsewhere; or upon an act outside the
territory of the United States in connection with a
commercial activity of the foreign state elsewhere and
that act causes a direct effect in the United States;

(3) in which rights in property taken in violation
of international law are in issue and that property or
any property exchanged for such property is present
in the United States in connection with a commercial
activity carried on in the United States by the foreign
state; or that property or any property exchanged for
such property is owned or operated by an agency or
instrumentality of the foreign state and that agency
or instrumentality is engaged in a commercial activity
in the United States;

(4) in which rights in property in the United
States acquired by succession or gift or rights in im-

5a

movable property situated in the United States are in
issue;

(5) not otherwise encompassed in paragraph (2)
above, in which money damages are sought against a
foreign state for personal injury or death, or damage
to or loss of property, occurring in the United States
and caused by the tortious act or omission of that for-
eign state or of any official or employee of that for-
eign state while acting within the scope of his office or
employment; except this paragraph shall not apply
te

(A) any claim based upon the exercise or per-
formance or the failure to exercise or perform a

discretionary function regardless of whether the
discretion be abused, or

(B) any claim arising out of malicious prosecu-
tion, abuse of process, libel, slander, misrepresen-
tation, deceit, or interference with contract rights;
or

(6) in which the action is brought, either to en-
force an agreement made by the foreign state with or
for the benefit of a private party to submit to arbitra-
tion all or any differences which have arisen or which
may arise between the parties with respect to a de-
fined legal relationship, whether contractual or not,
concerning a subject matter capable of settlement by
arbitration under the laws of the United States, or to
confirm an award made pursuant to such an agree-
ment to arbitrate, if (A) the arbitration takes place or
is intended to take place in the United States, (B) the
agreement or award is or may be governed by a trea-
ty or other international agreement in force for the

6a

United States calling for the recognition and en-
forcement of arbitral awards, (C) the underlying
claim, save for the agreement to arbitrate, could have
been brought in a United States court under this sec-
tion or section 1607, or (D) paragraph (1) of this sub-
section is otherwise applicable.

(b) A foreign state shall not be immune from the ju-
risdiction of the courts of the United States in any case in
which a suit in admiralty is brought to enforce a maritime
lien against a vessel or cargo of the foreign state, which
maritime lien is based upon a commercial activity of the
foreign state: Provided, That—

(1) notice of the suit is given by delivery of a copy
of the summons and of the complaint to the person, or
his agent, having possession of the vessel or cargo
against which the maritime lien is asserted; and if the
vessel or cargo is arrested pursuant to process ob-
tained on behalf of the party bringing the suit, the
service of process of arrest shall be deemed to consti-
tute valid delivery of such notice, but the party bring-
ing the suit shall be liable for any damages sustained
by the foreign state as a result of the arrest if the par-
ty bringing the suit had actual or constructive know-
ledge that the vessel or cargo of a foreign state was
involved; and

(2) notice to the foreign state of the commence-
ment of suit as provided in section 1608 of this title is
initiated within ten days either of the delivery of no-
tice as provided in paragraph (1) of this subsection or,
in the case of a party who was unaware that the vessel
or cargo of a foreign state was involved, of the date
such party determined the existence of the foreign
state’s interest.

Ta

(c) Whenever notice is delivered under subsection
(b)(1), the suit to enforce a maritime lien shall thereafter
proceed and shall be heard and determined according to
the principles of law and rules of practice of suits in rem
whenever it appears that, had the vessel been privately
owned and possessed, a suit in rem might have been
maintained. A decree against the foreign state may
include costs of the suit and, if the decree is for a money
judgment, interest as ordered by the court, except that
the court may not award judgment against the foreign
state in an amount greater than the value of the vessel or
cargo upon which the maritime lien arose. Such value
shall be determined as of the time notice is served under
subsection (b)(1). Decrees shall be subject to appeal and
revision as provided in other cases of admiralty and mari-
time jurisdiction. Nothing shall preclude the plaintiff in
any proper case from seeking relief in personam in the
same action brought to enforce a maritime lien as provid-
ed in this section.

(d) A foreign state shall not be immune from the ju-
risdiction of the courts of the United States in any action
brought to foreclose a preferred mortgage, as defined in
section 31301 of title 46. Such action shall be brought,
heard, and determined in accordance with the provisions
of chapter 313 of title 46 and in accordance with the prin-
ciples of law and rules of practice of suits in rem, when-
ever it appears that had the vessel been privately owned
and possessed a suit in rem might have been maintained.

((e), (f) Repealed. Pub. L. 110-181, div. A, title X,
§ 1083(b)(1)(B), Jan. 28, 2008, 122 Stat. 341.]

8a

(g) LIMITATION ON DISCOVERY.—

(1) IN GENERAL.—~A) Subject to paragraph (2), if
an action is filed that would otherwise be barred by
section 1604, but for subsection 1605A, the court, up-
on request of the Attorney General, shall stay any re-
quest, demand, or order for discovery on the United
States that the Attorney General certifies would sig-
nificantly interfere with a criminal investigation or
prosecution, or a national security operation, related
to the incident that gave rise to the cause of action,
until such time as the Attorney General advises the
court that such request, demand, or order will no
longer so interfere.

(B) A stay under this paragraph shall be in effect
during the 12-month period beginning on the date on
which the court issues the order to stay discovery.
The court shall renew the order to stay discovery for
additional 12-month periods upon motion by the Unit-
ed States if the Attorney General certifies that dis-
covery would significantly interfere with a criminal
investigation or prosecution, or a national security
operation, related to the incident that gave rise to the
cause of action.

(2) SUNSET.—{A) Subject to subparagraph (B),
no stay shall be granted or continued in effect under
paragraph (1) after the date that is 10 years after the
date on which the incident that gave rise to the cause
of action occurred.

(B) After the period referred to in subparagraph
(A), the court, upon request of the Attorney General,
may stay any request, demand, or order for discovery

9a

on the United States that the court finds a substantial
likelihood would—

(i) create a serious threat of death or serious
bodily injury to any person;

(ii) adversely affect the ability of the United
States to work in cooperation with foreign and in-
ternational law enforcement agencies in investi-
gating violations of United States law; or

(iii) obstruct the criminal case related to the
incident that gave rise to the cause of action or
undermine the potential for a conviction in such
case.

(3) EVALUATION OF EVIDENCE.—The Court’s
evaluation of any request for a stay under this subsec-
tion filed by the Attorney General shall be conducted
ex parte and in camera.

(4) BAR ON MOTIONS TO DISMISS.—A stay of dis-
covery under this subsection shall constitute a bar to
the granting of a motion to dismiss under rules
12(b)(6) and 56 of the Federal Rules of Civil Proce-
dure.

(5) CONSTRUCTION.—Nothing in this subsection
shall prevent the United States from seeking protec-
tive orders or asserting privileges ordinarily available
to the United States.

10a
7. 28 U.S.C. 1605A provides:

Terrorism exception to the jurisdictional immunity of a
foreign state
(a) INGENERAL.—

(1) NO IMMUNITY.—A foreign state shall not be
immune from the jurisdiction of courts of the United
States or of the States in any case not otherwise cov-
ered by this chapter in which money damages are
sought against a foreign state for personal injury or
death that was caused by an act of torture, extrajudi-
cial killing, aircraft sabotage, hostage taking, or the
provision of material support or resources for such an
act if such act or provision of material support or re-
sources is engaged in by an official, employee, or
agent of such foreign state while acting within the
scope of his or her office, employment, or agency.

(2) CLAIM HEARD.—The court shall hear a claim
under this section if—

(AXi)(I) the foreign state was designated as a
state sponsor of terrorism at the time the act de-
scribed in paragraph (1) occurred, or was so des-
ignated as a result of such act, and, subject to sub-
clause (II), either remains so designated when the
claim is filed under this section or was so desig-
nated within the 6-month period before the claim
is filed under this section; or

(II) in the case of an action that is refiled un-
der this section by reason of section 1083(c)(2)(A)
of the National Defense Authorization Act for Fis-
cal Year 2008 or is filed under this section by rea-
son of section 1083(c)(3) of that Act, the foreign

lla

state was designated as a state sponsor of terror-
ism when the original action or the related action
under section 1605(a)(7) (as in effect before the
enactment of this section) or section 589 of the
Foreign Operations, Export Financing, and Re-
lated Programs Appropriations Act, 1997 (as con-
tained in section 101(c) of division A of Public Law
104-208) was filed;

(ii) the claimant or the victim was, at the time
the act described in paragraph (1) occurred—

(I) anational of the United States;
(II) a member of the armed forces; or

(III) otherwise an employee of the Govern-
ment of the United States, or of an individual
performing a contract awarded by the United
States Government, acting within the scope of
the employee's employment; and
(iii) in a case in which the act occurred in the

foreign state against which the claim has been
brought, the claimant has afforded the foreign
state a reasonable opportunity to arbitrate the
claim in accordance with the accepted internation-
al rules of arbitration; or

(B) the act described in paragraph (1) is relat-
ed to Case Number 1:00CV03110 (EGS) in the
United States District Court for the District of
Columbia.

(b) LIMITATIONS.—An action may be brought or
maintained under this section if the action is commenced,
or a related action was commenced under section
1605(a)(7) (before the date of the enactment of this sec-

12a

tion) or section 589 of the Foreign Operations, Export
Financing, and Related Programs Appropriations Act,
1997 (as contained in section 101(c) of division A of Public
Law 104-268) not later than the latter of—

(1) 10 years after April 24, 1996; or

(2) 10 years after the date on which the cause of
action arose.

(c) PRIVATE RIGHT OF ACTION.—A foreign state that
is or was a state sponsor of terrorism as described in
subsection (a)(2)(A)(i), and any official, employee, or
agent of that foreign state while acting within the scope
of his or her office, employment, or agency, shall be liable
to—

(1) anational of the United States,
(2) amember of the armed forces,

(3) an employee of the Government of the United
States, or of an individual performing a contract a-
warded by the United States Government, acting
within the scope of the employee’s employment, or

(4) the legal representative of a person described
in paragraph (1), (2), or (3),

for personal injury or death caused by acts described in
subsection (a)(1) of that foreign state, or of an official,
employee, or agent of that foreign state, for which the
courts of the United States may maintain jurisdiction
under this section for money damages. In any such ac-
tion, damages may include economic damages, solatium,
pain and suffering, and punitive damages. In any such
action, a foreign state shall be vicariously liable for the
acts of its officials, employees, or agents.

13a

(d) ADDITIONAL DAMAGES.—After an action has been
brought under subsection (c), actions may also be
brought for reasonably foreseeable property loss, wheth-
er insured or uninsured, third party liability, and loss
claims under life and property insurance policies, by
reason of the same acts on which the action under sub-
section (c) is based.

(e) SPECIAL MASTERS.—

(1) IN GENERAL.—The courts of the United
States may appoint special masters to hear damage
claims brought under this section.

(2) TRANSFER OF FUNDS.—The Attorney General
shall transfer, from funds available for the program
under section 1404C of the Victims of Crime Act of
1984 (42 U.S.C. 106038c), to the Administrator of the
United States district court in which any case is pend-
ing which has been brought or maintained under this
section such funds as may be required to cover the
costs of special masters appointed under paragraph
(1). Any amount paid in compensation to any such
special master shall constitute an item of court costs.

(f) APPEAL.—In an action brought under this section,
appeals from orders not conclusively ending the litigation
may only ‘e taken pursuant to section 1292(b) of this
title.

(g) PROPERTY DISPOSITION.—

(1) IN GENERAL.—In every action filed in a Unit-
ed States district court in which jurisdiction is alleged
under this section, the filing of a notice of pending ac-
tion pursuant to this section, to which is attached a
copy of the complaint filed in the action, shall have the

l4a

effect of establishing a lien of lis pendens upon any
real property or tangible personal property that is—

(A) subject to attachment in aid of execution,
or execution, under section 1610;

(B) located within that judicial district; and

(C) titled in the name of any defendant, or ti-
tled in the name of any entity controlled by any
defendant if such notice contains a statement list-
(2) NOTICE.—A notice of pending action pursu-

ant to this section shall be filed by the clerk of the dis-
trict court in the same manner as any pending action
and shall be indexed by listing as defendants all
named defendants and all entities listed as controlled
by any defendant.

(3) ENFORCEABILITY.—Liens established by rea-
son of this subsection shall be enforceable as provided
in chapter 111 of this title.

(h) DEFINITIONS.—F or purposes of this section—

(1) the term “aircraft sabotage” has the meaning
given that term in Article 1 of the Convention for the
Suppression of Unlawful Acts Against the Safety of
Civil Aviation;

(2) the term “hostage taking” has the meaning
given that term in Article 1 of the International Con-
vention Against the Taking of Hostages;

(3) the term “material support or resources” has

the meaning given that term in section 2339A of title
18;

15a

(4) the term “armed forces” has the meaning giv-
en that term in section 101 of title 10;

(5) the term “national of the United States”
has the meaning given that term in section 101(a)(22)

of the Immigration and Nationality Act (8 U.S.C.
1101(a)(22));

(6) the term “state sponsor of terrorism” means a
country the government of which the Secretary of
State has determined, for purposes of section 6(j) of
the Export Administration Act of 1979 (50 U.S.C.
App. 2405(j)), section 620A of the Foreign Assistance
Act of 1961 (22 U.S.C. 2371), section 40 of the Arms
Export Control Act (22 U.S.C. 2780), or any other
provision of law, is a government that has repeatedly
provided support for acts of international terrorism;
and

(7) the terms “torture” and “extrajudicial killing”
have the meaning given those terms in section 3 of the
Torture Victim Protection Act of 1991 (28 U.S.C. 1350
note).

8. 28 U.S.C. 1606 provides:
Extent of liability

As to any claim for relief with respect to which a for-
eign state is not entitled to immunity under section 1605
or 1607 of this chapter, the foreign state shall be liable in
the same manner and to the same extent as a private
individual under like circumstances; but a foreign state
except for an agency or instrumentality thereof shall not
be liable for punitive damages; if, however, in any case
wherein death was caused, the law of the place where the

l6a

action or omission occurred provides, or has been con-
strued to provide, for damages only punitive in nature,
the foreign state shall be liable for actual or compensato-
ry damages measured by the pecuniary injuries resulting
from such death which were incurred by the persons for
whose benefit the action was brought.

9. 28 U.S.C. 1607 provides:
Counterclaims

In any action brought by a foreign state, or in which a
foreign state intervenes, in a court of the United States
or of a State, the foreign state shall not be accorded
immunity with respect to any counterclaim—

(a) for which a foreign state would not be entitled
to immunity under section 1605 or 1605A of this chap-
ter had such claim been brought in a separate action
against the foreign state; or

(b) arising out of the transaction or occurrence
that is the subject matter of the claim of the foreign
state; or

(c) to the extent that the counterclaim does not
seek relief exceeding in amount or differing in kind
from that sought by the foreign state.

17a

10. 28 U.S.C. 1608 provides:
Service; time to answer; default

(a) Service in the courts of the United States and of
the States shall be made upon a foreign state or political
subdivision of a foreign state:

(1) by delivery of a copy of the summons and
complaint in accordance with any special arrange-
ment for service between the plaintiff and the foreign
state or political subdivision; or

(2) if no special arrangement exists, by delivery of
a copy of the summons and complaint in accordance
with an applicable international convention on service
of judicial documents; or

(3) if service cannot be made under paragraphs
(1) or (2), by sending a copy of the summons and com-
plaint and a notice of suit, together with a translation
of each into the official language of the foreign state,
by any form of mail requiring a signed receipt, to be
addressed and dispatched by the clerk of the court to
the head of the ministry of foreign affairs of the for-
eign state concerned, or

(4) if service cannot be made within 30 days un-
der paragraph (3), by sending two copies of the sum-
mons and complaint and a notice of suit, together with
a translation of each into the official language of the
foreign state, by any form of mail requiring a signed
receipt, to be addressed and dispatched by the clerk
of the court to the Secretary of State in Washington,
District of Columbia, to the attention of the Director
of Special Consular Services—and the Secretary shal]
transmit one copy of the papers through diplomatic
channels to the foreign state and shall send to the

18a

clerk of the court a certified copy of the diplomatic

note indicating when the papers were transmitted.
As used in this subsection, a “notice of suit” shall mean a
notice addressed to a foreign state and in a form pre-
scribed by the Secretary of State by regulation.

(b) Service in the courts of the United States and of
the States shall be made upon an agency or instrumental-
ity of a foreign state:

(1) by delivery of a copy of the summons and
complaint in accordance with any special arrange-
ment for service between the plaintiff and the agency
or instrumentality; or

(2) if no special arrangement exists, by delivery
of a copy of the summons and complaint either to an
officer, a managing or general agent, or to any other
agent authorized by appointment or by law to receive
service of process in the United States; or in accord-
ance with an applicable international convention on
service of judicial documents; or

(3) if service cannot be made under paragraphs
(1) or (2), and if reasonably calculated to give actual
notice, by delivery of a copy of the summons and com-
plaint, together with a translation of each into the of-
ficial language of the foreign state—

(A) as directed by an authority of the foreign
state or political subdivision in response to a letter

rogatory or request or

(B) by any form of mail requiring a signed
receipt, to be addressed and dispatched by the
clerk of the court to the agency or instrumentality
to be served, or

19a

(C) as directed by order of the court con-
sistent with the law of the place where service is to
be made.

(c) Service shall be deemed to have been made—

(1) in the case of service under subsection (a)(4),
as of the date of transmittal indicated in the certified
copy of the diplomatic note; and

(2) in any other case under this section, as of the
date of receipt indicated in the certification, signed
and returned postal receipt, or other proof of service
applicable to the method of service employed.

(d) In any action brought in a court of the United
States or of a State, a foreign state, a political subdivision
thereof, or an agency or instrumentality of a foreign state
shall serve an answer or other responsive pleading to the
complaint within sixty days after service has been made
under this section.

(e) No judgment by default shall be entered by a
court of the United States or of a State against a foreign
state, a political subdivision thereof, or an agency or in-
strumentality of a foreign state, unless the claimant
establishes his claim or right to relief by evidence satis-
factory to the court. A copy of any such default judgment
shall be sent to the foreign state or political subdivision in
the manner prescribed for service in this section.

20a

11. 28 U.S.C. 1609 provides:

Immunity from attachment and execution of property of a
foreign state
Subject to existing international agreements to which
the United States is a party at the time of enactment of
this Act the property in the United States of a foreign

state shall be immune from attachment arrest and execu-
tion except as provided in sections 1610 and 1611 of this

chapter.

12. 28 U.S.C. 1610 provides:
Exceptions to the immunity from attachment or execution

(a) The property in the United States of a foreign
state, as defined in section 1603(a) of this chapter, used
for a commercial activity in the United States, shall not
be immune from attachment in aid of execution, or from
execution, upon a judgment entered by a court of the
United States or of a State after the effective date of this
Act, if—

(1) the foreign state has waived its immunity
from attachment in aid of execution or from execution
either explicitly or by implication, notwithstanding
any withdrawal of the waiver the foreign state may
purport to effect except in accordance with the terms
of the waiver, or

(2) the property is or was used for the commer-
cial activity upon which the claim is based, or

(3) the execution relates to a judgment establish-
ing rights in property which has been taken in viola-

Z2la

tion of international law or which has been exchanged
for property taken in violation of international law, or

(4) the execution relates to a judgment establish-
ing rights in property—
(A) which is acquired by succession or gift, or
(B) which is immovable and situated in the
United States: Provided, That such property is
not used for purposes of maintaining a diplomatic
or consular mission or the residence of the Chief
of such mission, or

(5) the property consists of any contractual obli-
gation or any proceeds from such a contractual obli-
gation to indemnify or hold harmless the foreign state
or its employees under a policy of automobile or other
liability or casualty insurance covering the claim
which merged into the judgment, or

(6) the judgment is based on an order confirming
an arbitral award rendered against the foreign state,
provided that attachment in aid of execution, or exe-
cution, would not be inconsistent with any provision in
the arbitral agreement, or

(7) the judgment relates to a claim for which the
foreign state is not immune under section 1605A or
section 1605(a)(7) (as such section was in effect on
January 27, 2008), regardless of whether the property
is or was involved with the act upon which the claim is
based.

(b) In addition to subsection (a), any property in the
United States of an agency or instrumentality of a for-
eign state engaged in commercial activity in the United
States shall not be immune from attachment in aid of

22a

execution, or from execution, upon a judgment entered
by a court of the United States or of a State after the
effective date of this Act, if—

(1) the agency or instrumentality has waived its
immunity from attachment in aid of execution or from
execution either explicitly or implicitly, notwithstand-
ing any withdrawal of the waiver the agency or in-
strumentality may purport to effect except in accord-
ance with the terms of the waiver, or

(2) the judgment relates to a claim for which the
agency or instrumentality is not immune by virtue of
section 1605(a)(2), (3), (5), or 1605(b) of this chapter,
regardless of whether the property is or was involved
in the act upon which the claim is based, or

(3) the judgment relates to a claim for which the
agency or instrumentality is not immune by virtue of
section 1605A of this chapter or section 1605(a)(7) of
this chapter (as such section was in effect on January
27, 2008), regardless of whether the property is or
was involved in the act upon which the claim is based.

(c) No attachment or execution referred to in subsec-
tions (a) and (b) of this section shall be permitted until
the court has ordered such attachment and execution
after having determined that a reasonable period of time
has elapsed following the entry of judgment and the
giving of any notice required under section 1608(e) of this
chapter.

(d) The property of a foreign state, as defined in sec-
tion 1603(a) of this chapter, used for a commercial activi-
ty in the United States, shall not be immune from attach-
ment prior to the entry of judgment in any action
brought in a court of the United States or of a State, or

23a

prior to the elapse of the period of time provided in sub-
section (c) of this section, if—

(1) the foreign state has explicitly waived its im-
munity from attachment prior to judgment, notwith-
standing any withdrawal of the waiver the foreign
state may purport to effect except in accordance with
the terms of the waiver, and

(2) the purpose of the attachment is to secure sat-
isfaction of a judgment that has been or may ultimate-
ly be entered against the foreign state and not to ob-
tain jurisdiction.

(e) The vessels of a foreign state shall not be immune
from arrest in rem, interlocutory sale, and execution in
actions brought to foreclose a preferred mortgage as
provided in section 1605(d).

(f)(1)A) Notwithstanding any other provision of law,
including but not limited to section 208(f) of the Foreign
Missions Act (22 U.S.C. 4308(f)), and except as provided
in subparagraph (B), any property with respect to which
financial transactions are prohibited or regulated pursu-
ant to section 5(b) of the Trading with the Enemy Act (50
U.S.C. App. 5(b)), section 620(a) of the Foreign Assis-
tance Act of 1961 (22 U.S.C. 237((a)), sections 202 and
203 of the International Emergency Economic Powers
Act (50 U.S.C. 1701-1702), or any other proclamation, or-
der, regulation, or license issued pursuant thereto, shall
be subject to execution or attachment in aid of execution
of any judgment relating to a claim for which a foreign
state (including any agency or instrumentality or such
state) claiming such property is not immune under sec-
tion 1605(a)(7) (as in effect before the enactment of sec-
tion 1605A) or section 1605A.

24a

(B) Subparagraph (A) shall not apply if, at the time
the property is expropriated or seized foreign state, the
property has been held in title by a natural person or, if
held in trust, has been held for the benefit of a natural
person or persons.

(2A) At the request of any party in whose favor a
judgment has been issued with respect to a claim for
which the foreign state is not immune under section
1605(a)(7) (as in effect before the enactment of section
1605A) or section 1605A, the Secretary cf the Treasury
and the Secretary of State should make every effort to
fully, promptly, and effectively assist any judgment cred-
itor or any court that has issued any such judgment in
identifying, locating, and executing against the property
of that foreign state or any agency or instrumentality of
such state.

(B) In providing such assistance, the Secretaries—

(i) may provide such information to the court
under seal; and

(ii) should make every effort to provide the in-
formation in a manner sufficient to allow the court to
direct the United States Marshall’s office to promptly
and effectively execute against that property.

(3) WAIVER.—The President may waive any provi-
sion of paragraph (1) in the interest of national security.

25a

(g) PROPERTY IN CERTAIN ACTIONS.—

(1) IN GENERAL.—Subject to paragraph (3), the
property of a foreign state against which a judgment
is entered under section 1605A, and the property of
an agency or instrumentality of such a state, including
property that is a separate juridical entity or is an in-
terest held directly or indirectly in a separate juridi-
cal entity, is subject to attachment in aid of execution,
and execution, upon that judgment as provided in this
section, regardless of—

(A) the level of economic control over the
property by the government of the foreign state;

(B) whether the profits of the property go to
that government;

(C) the degree to which officials of that gov-
ernment manage the property or otherwise con-
trol its daily affairs;

(D) whether that government is the sole bene-
ficiary in iaterest of the property; or

(E) whether establishing the property as a
separate entity would entitle the foreign state to
benefits in United States courts while avoiding its
obligations.

(2) UNITED STATES SOVEREIGN IMMUNITY INAP-
PLICABLE.—Any property of a foreign state, or agen-
cy or instrumentality of a foreign state, to which par-
agraph (1) applies shall not be immune from attach-
ment in aid of execution, or execution, upon a judg-
ment entered under section 1605A because the prop-
erty is regulated by the United States Government by
reason of action taken against that foreign state un-

26a

der the Trading With the Enemy Act or the Interna-
tional Emergency Economic Powers Act.

(3) THIRD-PARTY JOINT PROPERTY HOLDERS.—
Nothing in this subsection shall be cunstrued to su-
persede the authority of a court to prevent appropri-
ately the impairment of an interest held by a person
who is not liable in the action giving rise to a judg-
ment in property subject to attachment in aid of exe-
cution, or execution, upon such judgment.

13. 28 U.S.C. 1611 provides:
Certain types of property immune from execution

(a) Notwithstanding the provisions of section 1610 of
this chapter, the property of those organizations desig-
nated by the President as being entitled to enjoy the
privileges, exemptions, and immunities provided by the
International Organizations Immunities Act shall not be
subject to attachment or any other judicial process im-
peding the disbursement of funds to, or on the order of, a
foreign state as the result of an action brought in the
courts of the United States or of the States.

(b) Notwithstanding the provisions of section 1610 of

this chapter, the property of a foreign state shall be im-
mune from attachment and from execution, if—

(1) the property is that of a foreign central bank
or monetary authority held for its own account, unless
such bank or authority, or its parent foreign govern-
ment, has explicitly waived its immunity from at-
tachment in aid of execution, or from execution, not-
withstanding any withdrawal of the waiver which the

27a

bank, authority or government may purport to effect
except in accordance with the terms of the waiver; or

(2) the property is, or is intended to be, used in
connection with a military activity and

(A) is of a military character, or

(B) is under the contro] of a military authority
or defense agency.

(c) Notwithstanding the provisions of section 1610 of
this chapter, the property of a foreign state shall be im-
mune from attachment and from execution in an action
brought under section 302 of the Cuban Liberty and
Democratic Solidarity (LIBERTAD) Act of 1996 to the
extent that the property is a facility or installation used
by an accredited diplomatic mission for official purposes.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0619%3A11. Public record. Not legal advice.