Published by The Lawfare Institute
in Cooperation With
On Tuesday, Jan. 17, the Supreme Court heard oral argument in Turkiye Halk Bankasi A.S. v. United States, a case about whether the U.S. government can criminally prosecute corporations owned by foreign states. We have written two articles on the case. In the first, we argued that the best reading of the text and structure of the Foreign Sovereign Immunities Act (FSIA) is that it confers immunity on foreign states in criminal cases, and that this is true in both federal and state courts. In the second, we argued that if the Supreme Court rejects this argument and agrees with the government that the FSIA does not address the immunity of foreign sovereigns in criminal cases, such immunity should be determined by the federal executive branch, unless and until Congress regulates the issue.
The Court inquired about these issues at oral argument. A number of the justices seemed to take seriously the idea that § 1604 of the FSIA confers immunity in criminal cases, both because of its plain language and because otherwise states could prosecute a foreign state without even the possibility of removal of the case to federal court. In response to the potential problem of state prosecutions against foreign sovereigns without federal statutory constraint, Deputy Solicitor General Eric Feigin repeatedly maintained that the federal government could make an executive agreement with the foreign state in question and then use that agreement to preempt the state criminal prosecution. He relied primarily on American Ins. Assn. v. Garamendi (2003), a decision that held that an executive agreement that called for the establishment of a fund to compensate victims of Nazi persecution preempted a California state insurance recovery law.
We thought that this was a strange argument for the government to be leaning on. A stronger and more straightforward argument, on the assumption that the FSIA provides no immunity from criminal suit, and an argument that is at least resonant in historical practice, is that the executive branch controls the issue directly under Article II of the Constitution. As we argued in our second article, “If the executive branch is the source of immunity determinations in the domestic realm in this context, that determination, as an embodiment of national policy, would likely be binding on states.” By contrast, reliance on executive agreements strikes us as significantly less persuasive as the protection against state prosecutions.
First, Garamendi is a shaky precedent for the government to be invoking for this claim. It is a 5-4 decision involving the particular context of a settlement of war-related claims. Moreover, since that decision, the Court, in Medellin v. Texas, described the executive’s power to make executive agreements over claims to be “narrow and strictly limited.” The Court also emphasized that its prior decisions that gave domestic effect to executive agreements involved situations involving long-standing executive practice acquiesced in by Congress. The lack of such long-standing practice was a key reason the Court in Medellin rejected the executive branch’s effort to preempt state law in that case. There is no such long-standing practice, however, of using executive agreements to override state criminal prosecutions. Given that lack of practice, moreover, it is difficult to conclude that Congress acquiesced in such an authority when it enacted the FSIA. Justice Neil Gorsuch, among others, pressed on this preemption point in the oral argument, wondering what basis there would be under the Supremacy Clause for overriding state law.
Second, if the main protection against problematic state prosecutions is that the executive branch could in theory negotiate an agreement with the foreign sovereign concerning the matter, this would be a highly uncertain form of protection. Negotiating an agreement, by definition, requires negotiation, and there may well be difficulties—both practical and political—in reaching an agreement. Imagine, for example, if a U.S. state tried to prosecute China related to the pandemic, and the executive branch sought to negotiate an agreement with China concerning the matter. (Some states have already tried bringing civil claims against China and its instrumentalities relating to the pandemic but have been blocked by the FSIA.) This might not be a simple negotiation. The very fact that an executive agreement would not be guaranteed to have preemptive effect, for the reasons we’ve discussed, would further complicate any such bargaining.
Third, and most importantly, the main issue in Halkbank is whether Congress in the FSIA conferred immunity on foreign sovereigns in criminal cases. The government’s executive agreement argument is an effort to account for why Congress allegedly would have allowed state criminal prosecutions, consistent with its claim that § 1604 of the FSIA does not immunize states from such prosecutions. But the government cannot explain why, on its view, Congress established removal for civil cases but not for criminal ones. After all, the executive agreement preemption argument could be made with respect to those cases as well (indeed, perhaps more easily). It makes little sense of the language and structure of the FSIA for Congress to provide for removal in civil cases and rely on executive agreement preemption to take care of criminal proceedings in state court—proceedings that, if anything, would be even more sensitive.
The better conclusion that makes sense of all of the FSIA provisions, as we argued in our first article, is that Congress precluded criminal prosecutions altogether in § 1604 and provided for removal in the only type of cases for which there were limitations on immunity—civil cases. If, however, the FSIA does not address state criminal prosecutions of foreign states, it is much more likely that Congress would have thought that such criminal cases would be handled by executive suggestion under Article II, for which there was a long practice in analogous contexts, and not by negotiation and agreement with the foreign nation subject to prosecution.
As we emphasized in our earlier articles, these and other difficult and uncertain issues about preemption can be avoided if the Court simply applies § 1604 of the FSIA as it is written. The government’s most compelling argument against this reading sounds more in policy than law. It is that, since the FSIA was enacted, the U.S. government has developed a serious need to use criminal process against some foreign government-owned instrumentalities. This might well be true, but we think the answer to this policy concern is to seek an amendment to the FSIA from Congress. Such an amendment could address what exceptions there should be to criminal immunity, whether such exceptions should apply to foreign states or only to their instrumentalities, and what role (if any) the state courts should have. All of these are issues best addressed in the first instance by the legislature rather than the courts.