Introduction & Background
Against the Biden administration’s opposition, the Supreme Court agreed in October to hear an appeal from the Second Circuit by a Turkish state-owned bank, Halkbank, on whether the Foreign Sovereign Immunities Act (“FSIA”) protects foreign sovereigns from criminal prosecution. Halkbank was indicted in 2019 by the United States for its alleged role in helping a Turkish-Iranian national to launder money and circumvent U.S. sanctions on Iran. The involvement of certain Turkish political figures and the U.S.’s prosecution of entities connected to the scandal has elicited condemnation by Turkey.
Halkbank asserts in its defense that, since it is a foreign sovereign within the meaning of the FSIA because it is majority-owned by the Turkish government, it is immune from criminal prosecution. Both the district court and the court of appeals below rejected this argument or otherwise asserted jurisdiction over Halkbank.
This article will provide an overview of the legal landscape concerning the FSIA and criminal prosecution, summarize the Halkbank litigation thus far, and explore the ramifications of possible outcomes at the Supreme Court.
Halkbank’s case comes to the Supreme Court amid a circuit split over whether the FSIA prevents criminal prosecution of a foreign sovereign. At base, this circuit split comes down to the meaning of “jurisdiction” in the FSIA’s general provision at 28 U.S.C. § 1604: “[A] foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.” On one side of the split, the Sixth Circuit has determined that the FSIA’s unqualified use of “jurisdiction” should be understood to include protection from a court’s criminal jurisdiction for a foreign sovereign, especially in light of the further provision of the FSIA, 28 U.S.C. § 1330(a), which grants district courts jurisdiction over “any nonjury civil action against a foreign state . . . [if] the foreign state is not entitled to immunity.” On the other side, the Tenth, D.C., and now the Second Circuits have broadly concluded that the use of the term “jurisdiction,” when read in light of § 1330(a), excludes criminal jurisdiction from foreign sovereign immunity. That is, the latter circuits have concluded that Congress’ silence on criminal jurisdiction involving foreign sovereigns, but not on civil jurisdiction, indicates that there is no immunity for foreign sovereign from criminal prosecution because there is no explicit modification to the federal courts’ statutory authority for jurisdiction at 18 U.S.C. § 3231: “[t]he district courts of the United States shall have original jurisdiction . . . of all offenses against the laws of the United States.”
The Litigation Thus Far
In the District Court for the Southern District of New York, Halkbank sought to dismiss the indictment against it by, inter alia, arguing that it is immune from criminal charges under the FSIA. The government responded that the FSIA does not apply in criminal proceedings and the Court, after examining the FSIA’s text and legislative history, concluded that Congress did not intend for the FSIA to grant foreign sovereigns immunity from criminal proceedings.
Halkbank then filed an interlocutory appeal on the matter of whether the FSIA protected it from criminal prosecution. The Second Circuit found Halkbank’s argument — that the FSIA’s §§ 1604 and 1330(a) grant absolute immunity from criminal prosecution, even in the presence of enumerated exceptions to § 1604 — unavailing in light of the broad jurisdictional grant in § 3231. The Court indicated a need for an explicit statutory restriction on the courts’ authority under § 3231, other than what is present in the FSIA, to immunize foreign sovereigns from criminal prosecution. While the Court reserved ultimate judgment on this latter point of whether the FSIA provides general immunity from criminal prosecution, the Court concluded, on narrower grounds, that Halkbank was subject to the District Court’s criminal jurisdiction because Halkbank’s conduct satisfies the “commercial activity” exception to § 1604.
In its Petition for a Writ of of Certiorari, Halkbank renewed its argument that §§ 1604 and 1330(a) provide foreign sovereigns immunity from criminal prosecution since “jurisdiction” in § 1604 should be read to provide absolute immunity in all cases, except for the affirmative grant of jurisdiction in civil cases, contained in § 1330(a). Halkbank further asserts that an 1812 Supreme Court case supports the notion that general jurisdictional grants, like § 3231, do not apply to foreign sovereigns because foreign sovereigns are historically considered immune from the jurisdictional reach of U.S. courts.
Ramifications of the Outcome at the Supreme Court
Aside from stalling a potentially embarrassing trial on the Turkish government’s alleged complicity in an Iran sanctions evasion scheme, Halkbank’s appeal to the Supreme Court will likely have a resounding impact on litigation against foreign sovereigns and on U.S. foreign policy. If the Supreme Court determines that the FSIA grants absolute immunity to foreign sovereigns from criminal prosecution, then the efficacy of U.S. foreign policy tools, like sanctions, may be reduced. Indeed, sanctioned entities could enlist foreign sovereigns, like Halkbank, to circumvent sanctions without fear of recourse in U.S. courts. Concerns over circumvention of the U.S.’s sanctions on Russia, more generally, have already prompted the Office of Foreign Assets Control to impose additional sanctions on circumventing entities. Alternatively, if the Supreme Court finds that the FSIA does not accord absolute immunity to foreign sovereigns for criminal prosecution, then U.S. foreign policy may find itself with a new, judicial tool. In the event of such a ruling, the Biden administration may be largely free to sue sovereigns like Vladimir Putin, whom President Biden recently labeled a “war criminal.” In Halkbank’s opinion, such an outcome would “risk retaliatory actions around the world” and offend the sovereign dignity accorded by international law.
Furthermore, the Supreme Court could find that the FSIA accords non-absolute immunity from criminal prosecution—that is, that the immunity is subject to the FSIA exceptions that are currently accepted as applicable to civil immunity. Such an outcome may allow the criminal prosecution of Halkbank and other foreign sovereigns to go forward, so long as their conduct satisfies an enumerated exception to immunity, like the commercial activity exception.
Ultimately, the Supreme Court’s granting cert in Turkiye Halk Bankasi A.S. v. United States presents the Court with the opportunity to leave an indelible mark on U.S. foreign policy. The Court’s decision will likely either open the door to further sanctions evasion by foreign sovereigns or to the further implementation of U.S. foreign policy through the U.S. judiciary. Given the choice between potentially handicapping a key U.S. foreign policy tool in the former situation, and damaging U.S. foreign relations by indicting foreign sovereigns in the latter, neither appears wholly without negative consequences. Time will, of course, tell where the Supreme Court comes down on these issues and at the end if it all, U.S. foreign policy may well need to adapt to the Court’s decision.
Author Biography: Drew Weisberg is a Moderator of the International Law Society’s International Law and Policy Brief (ILPB) and a J.D. candidate at The George Washington University Law School. He has a B.A. in Political Science, with a second International Studies major focused on political economy and development in Africa, from Northwestern University.Tweet