Earlier today, in a decision (authored by Justice Kavanaugh (and joined by Justice Roberts, Justice Thomas, Justice Sotomayor, Justice Kagan, Justice Jackson – Justice Gorsuch filed an opinion concurring in part and dissenting in part, in which Justice Alito joined), the Court held that the Foreign Sovereign Immunities Act (FSIA) does not provide immunity to foreign states and their instrumentalities from criminal prosecution in the United States.
In terms of relevant background, the opinion states:
“Halkbank is a bank whose shares are majority-owned by the Turkish Wealth Fund, which in turn is part of and owned by the Republic of Turkey. In 2019, the United States indicted Halkbank for a multi-year conspiracy to evade economic sanctions imposed by the United States on Iran. The indictment alleged that Halkbank, with the assistance of high-ranking Turkish government officials, laundered billions of dollars of Iranian oil and gas proceeds through the global financial system, including the U. S. financial system, in violation of U. S. sanctions and numerous federal statutes. The indictment further claimed that Halkbank made false statements to the U. S. Treasury Department in an effort to conceal the scheme. Two individual defendants, including a former Halkbank executive, have already been convicted in federal court for their roles in the alleged conspiracy. According to the U. S. Government, several other indicted defendants, including Halkbank’s former general manager and its former head of foreign operations, remain at large.
Halkbank moved to dismiss the indictment on the ground that an instrumentality of a foreign state such as Halkbank is immune from criminal prosecution under the Foreign Sovereign Immunities Act of 1976, 28 U. S. C. §§1330, 1602 et seq. The U. S. District Court for the Southern District of New York denied the motion, reasoning in relevant part that the FSIA “does not appear to grant immunity in criminal proceedings.”
Halkbank filed an interlocutory appeal, and the U. S. Court of Appeals for the Second Circuit affirmed. The Court of Appeals first determined that the District Court has subject matter jurisdiction over this criminal prosecution under 18 U. S. C. §3231. As to the FSIA, the Court of Appeals assumed without deciding that the FSIA confers immunity in criminal proceedings to foreign states and their instrumentalities, but held that in any event Halkbank’s charged conduct fell within the FSIA’s exception for commercial activities.
[…]
Relying on the Foreign Sovereign Immunities Act, Halkbank contends that it enjoys immunity from criminal prosecution. We disagree because the Act does not provide foreign states and their instrumentalities with immunity from criminal proceedings.”
In pertinent part, the Court reasoned:
“Since the FSIA’s enactment, this Court has repeatedly stated that the statute applies in “civil” actions. […] Although the Court has not expressly held that the FSIA covers only civil matters, the Court has never applied the Act’s immunity provisions in a criminal case. We now hold that the FSIA does not grant immunity to foreign states or their instrumentalities in criminal proceedings. Through the FSIA, Congress enacted a comprehensive scheme governing claims of immunity in civil actions against foreign states and their instrumentalities. That scheme does not cover criminal cases.”
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The FSIA was enacted in 1976 – one year prior to the FCPA’s enactment in 1977.
The FSIA defines “foreign state” to include a “political subdivision of a foreign state or an agency or instrumentality of a foreign state.”
Unlike the subsequently enacted FCPA, the FSIA defines “agency or instrumentality of a foreign state” to mean “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 … nor created under the laws of any third country.
It is a basic canon of statutory construction that if a term (such as instrumentality) is already understood by Congress to include – in this instance a corporation with a majority of shares or other ownership interest owed by a foreign state – it is unnecessary for Congress to specifically mention so.
Unlike the FSIA, the FCPA does not define “instrumentality” and the government has taken the position in various foreign official challenges that Congress intended for that term to capture state-owned or state-controlled entities (SOEs).
This argument of course ignores the fact that statutes passed both before the FCPA (such as the FSIA) and after the FCPA specifically mention “instrumentalities” as well as SOEs or similar concepts.
Moreover, in numerous bills that Congress considered in enacting the FCPA, the definition of foreign official specifically included SOEs or similar concepts, but in the law that Congress actually enacted SOEs or similar concepts are not included.
