THE BLUEPRINT: HOW THE FSIA TRANSFORMED FOREIGN SOVEREIGN IMMUNITY LAW

This year is not only the 250th anniversary of the United States; it is also the 50th anniversary of the Foreign Sovereign Immunities Act (FSIA), a statute that transformed U.S. law and strongly influenced the development of public international law and foreign domestic laws.

I. The Story

In October 1809, an American schooner called the Exchange sailed from Baltimore bound for Spain. Napoleon’s government seized the vessel during her voyage, converted her into a warship renamed the Balaou. When the ship entered Philadelphia harbor in 1811 to undergo repairs, her American owners sued to reclaim their property. The suit handed Chief Justice John Marshall a question with no clear answer: could U.S. courts exercise jurisdiction over the property of a foreign sovereign?

Marshall’s answer in Schooner Exchange v. McFaddon(1812) would govern for the next 140 years. A nation’s jurisdiction within its own territory is “exclusive and absolute,” he reasoned, but the “perfect equality and absolute independence of sovereigns” means all nations “have consented to a relaxation in practice” of that jurisdiction in certain circumstances. As the Supreme Court later put it in Verlinden B.V. v. Central Bank of Nigeria(1983), immunity was extended not as a constitutional command but as “a matter of grace and comity on the part of the United States,” and on the expectation of reciprocal treatment abroad. Though the case involved a warship, the logic that foreign States enjoyed virtually absolute immunity prevailed in United States courts until the mid-20th century.

Following World War II, governments changed their behavior. Foreign states began operating airlines, chartering vessels, and borrowing on international markets, commercial activities often indistinguishable from those of private parties. The absolute rule produced an untenable imbalance: a foreign government could enter the marketplace, breach its contracts, and remain beyond judicial reach. Certain European states began to apply a “restrictive” theory in which no immunity attached for states’ commercial acts (jure gestionis) as distinguished from their sovereign acts (jure imperii).

The turning point in the United States came on May 19, 1952, when Jack B. Tate, Acting Legal Adviser of the State Department, wrote to the Acting Attorney General to announce that the United States would follow the restrictive theory of immunity. The promise proved difficult to keep. Although the Executive Branch made “suggestions of immunity” to U.S. courts with foreign sovereign litigants, diplomatic pressure influenced outcomes, and courts fell back on conflicting precedents to produce standards that were, in the words of the Verlinden court, “neither clear nor uniformly applied.”

Congress addressed this in 1976 by enacting the FSIA, codifying the restrictive principle as federal law and ensuring that courts, not diplomats, would apply it “on purely legal grounds.” Although the restrictive theory had European roots, the FSIA was a pioneer in domestic law, generally regarded as the first comprehensive national statute codifying foreign sovereign immunity. The model traveled quickly, though not uniformly. The United Kingdom enacted its State Immunity Act in 1978, after Parliament expressly considered the American statute alongside the 1972 European Convention on State Immunity. Singapore (1979), Pakistan and South Africa (1981), Canada (1982), and Australia (1985) followed with statutes sharing the same basic architecture of presumptive immunity, enumerated exceptions centered on commercial activity, and separate rules for jurisdiction and execution. The United Nations Convention on Jurisdictional Immunities of States and Their Property (2004)—useful though it never came into force—reflects the same broad framework. Foreign sovereign immunity represents a continual dialogue between international and domestic law.

II. Where We Stand Today

As a general rule in civil actions, the FSIA supplies the jurisdictional framework for suits against foreign states and execution efforts against state assets. The Supreme Court hears two to three FSIA cases each term, reflecting its importance.

The commercial activity exception, the statute’s raison d’être, is the most litigated provision. Commercial character is judged by the nature of the conduct, not its purpose: a state cannot mask a market transaction behind a sovereign shield. But this distinction elides a great deal of nuance. In Republic of Argentina v. Weltover (1992), the Court held that Argentina’s bond issuance was commercial because the instruments resembled ordinary private debt instruments. A recent Second Circuit decision, on the other hand, affirmed the dismissal of a $372 million bondholder suit over the 2023 collapse of Credit Suisse AG when the court found that Switzerland’s instruction to write-down the bonds to zero was sovereign in nature, not commercial.

Other frequently litigated exceptions involve expropriation, non-commercial torts, arbitration, and anti-terrorism litigation. The last significant addition to the FSIA came in 2016, when Congress enacted the Justice Against Sponsors of Terrorism Act (JASTA) over President Obama’s veto, adding to another, preexisting terrorism exception.

In Argentine Republic v. Amerada Hess (1989), the Supreme Court, in an oft-cited passage, called the FSIA, the “sole basis” for obtaining jurisdiction over a foreign state in U.S. courts. A 2026 Supreme Court decision, Exxon Mobil v. Corporación CIMEX, however, held that “the entire architecture” of the later-in-time Helms-Burton Act “establishes that the Act waives the foreign sovereign immunity” of Cuban government entities without need to satisfy one of the FSIA exceptions. Now that Helms-Burton Act plaintiffs no longer need to satisfy an enumerated FSIA exception, the Amerada Hess “sole basis” observation has lost some of its punch.

III. Looking Ahead

In an era of resource nationalism and state capitalism, the sovereign–commercial distinction will be tested in ways the 94th Congress never imagined. Meanwhile, the UN Convention still lacks the ratifications to enter into force but remains a widely accepted encapsulation of customary international law. The terrorism exceptions pioneered by the United States have been adopted in varying forms by only a few allies (Canada in 2012 and, more narrowly, Australia in 2025), with Canada’s version now challenged as a matter of international law before the International Court of Justice. The United States did not create sovereign immunity or the restrictive theory, but the FSIA gave the world its first comprehensive blueprint for adopting foreign sovereign immunity into domestic law..

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The views expressed in this article are those of the author and do not necessarily reflect the views of the author's employer or any organization with which the author is affiliated.

Author Biography
Craig D. Gaver is a partner at Continental PLLC in Washington, DC and a member of the Washington Foreign Law Society’s Board of Governors. He is grateful to Anette Estrella for assistance with this article.