Foreign Sovereign Immunities Act: Supreme Court Upholds New York City Action for Tax Liens against UN Missions

Alexander K.A. Greenawalt
August 28, 2007

In its previous session, the U.S. Supreme Court held in Permanent Mission of India to the United States v. City of New York[1] that the Foreign Sovereign Immunities Act of 1976 ("FSIA")[2] provides jurisdiction over a suit brought by New York City to establish tax liens on certain real property owned by the governments of India and Mongolia. In the 7-2 opinion, the Court ruled that tax liens fall within the FSIA exception to immunity from jurisdiction for cases where "rights in immovable property situated in the United States are in issue."[3] The Court's majority opinion is noteworthy for its limited reliance on international and foreign legal sources to inform its interpretation of the FSIA and for its lack of deference to the contrary expressed views of the Executive Branch.


The case arose out of New York City's attempt to collect real estate taxes on buildings owned respectively by the Permanent Mission of India to the United Nations and the Permanent Representative of Mongolia to the United Nations. New York law provides a tax exemption for foreign government-owned property "used exclusively" for diplomatic offices or for living quarters used by a diplomat with the rank of "ambassador or minister plenipotentiary."[4] Although India and Mongolia did employ their respective buildings for these enumerated purposes, they did not do so exclusively: Several floors in each building provided apartments for lower-level diplomatic employees and their families. For several years New York City levied taxes on the buildings, invoking a statutory provision requiring foreign governments to pay property taxes on the portions of their property not used for tax-exempt purposes.[5] The governments refused to pay, and by operation of New York law the unpaid taxes eventually converted into tax liens held by New York City against the two properties. In 2003, the city brought suit in state court against the diplomatic missions, seeking recognition of the tax liens. By that time India's tax arrears totaled around $16.4 million and Mongolia's $2.1 million.[6]

The foreign governments removed the suits to federal court, where they claimed immunity from jurisdiction under the FSIA. The FSIA generally provides immunity to foreign states sued within the United States, subject to certain enumerated exceptions for which the statute provides an affirmative grant of subject matter jurisdiction in federal court.[7] New York City maintained that the dispute fell within those exceptions, first as a matter concerning "rights in immovable property situated in the United States"[8] and second as one based upon "commercial activity carried on in the United States."[9] Without passing on the latter argument, the District Court found jurisdiction under the immovable property exception, and the U.S. Court of Appeals for the Second Circuit upheld that determination on appeal.[10]

In affirming the lower court, the Second Circuit found that the applicable text of FSIA was sufficiently ambiguous to require consideration of legislative history. As part of this analysis the Court looked to two multilateral treaties "the European Convention on State Immunity (the "European Convention") and the United Nations Convention on Jurisdictional Immunities of States and Their Property (the "U.N. Convention")"as evidence of an international practice which, in the Court's view, the FSIA sought to codify.[11] As the appeals court noted, Article 9 of European Convention embraces a broadly phrased exception to immunity, "presumably known to the drafters of the FSIA," for proceedings that relate to a party state's "(a) rights or interests in, or its use or possession of, immovable property; or (b) its obligations arising out of its rights or interests in, or use or possession of, immovable property and the property is situated in the territory of the State of the forum."[12] The Court also looked to similar language in the U.N. Convention, and to two statements from U.S. officials (a 1984 statement of the U.S. member of the International Law Commission, and 2002 statement of the Deputy Legal Counselor of the U.S. Mission to the United Nations), which it read to support the relevance of the U.N. Convention to the FSIA.[13] The United States has never been a party to either the European or U.N. Convention, and the text of the latter had not even been finalized for signature at the time of the FSIA's passage.[14]

Supreme Court Affirms Action for Tax Liens

The Supreme Court granted the foreign governments' petition for certiorari to resolve two questions: whether a tax lien against a foreign sovereign fell within the FSIA's immovable property exception, and whether "it [is] appropriate for U.S. courts to interpret U.S. statutes by relying on international treaties that have not been signed by the U.S. Government and that do not accurately reflect international practice because they have only been signed by a limited number of other nations."[15]

In an opinion authored by Justice Thomas, a seven-member majority of the Supreme Court upheld the result in the Court of Appeals, but employed a different analysis. The Court rested its holding on the text of the statute which, unlike the Court of Appeals, it found unambiguous. In reaching the conclusion that a suit to establish the validity of a lien plainly "implicates 'rights in immovable property'" as contemplated by the FSIA, the majority looked to dictionary definitions, New York statutes, prior precedent, and the "practical consequences" of tax liens.[16]

Although giving primary weight to its textual analysis, the Court did not stop there. It next observed that its reading was "supported by two well-recognized and related purposes of the FSIA," both of which are consistent with the lower courts' analysis and which have informed prior case law interpreting the FSIA.[17] The first of these purposes was Congress's intent to codify the "restrictive theory" of sovereign immunity according to which "the immunity of the sovereign is recognized with regard to sovereign or public acts (jure imperii) of a state but not with respect to private acts (jure gestionis)."[18] In the majority's view, this consideration favored New York City's position because "property ownership is not an inherently sovereign function."[19]

Second, the Court observed that the FSIA "was also meant 'to codify . . . the pre-existing real property exception to sovereign immunity recognized by international practice.'"[20] The Court relied here on the 1965 Restatement (Second) of the Foreign Relations Law of the United States, which stood as the most recent restatement prior to the enactment of the FSIA, and which stated that immunity did not extend to an action "to establish a property interest in immovable property located in the territory of the state exercising jurisdiction."[21] In the majority's view, tax liens plainly represent such an "interest," notwithstanding a comment to the pertinent section indicating that immunity was not precluded "with respect to a claim arising out of a foreign state's ownership of possession of immovable property but not contesting such ownership or the right to possession."[22] The Court read the "arising out of" language to refer only to disputes incidental to property ownership-for example, an action concerning "injury suffered in a fall" that did not concern possession of or "interest" in property.[23]

Although the majority further noted that "both parties rely on various international agreements,"[24] it proceeded to consider only one such agreement, the Vienna Convention on Diplomatic Relations, which the United States had joined prior to enacting the FSIA, and which withholds immunity "for a real action relating to private immovable property situated in the territory of the receiving State, unless [the diplomatic agent] holds it on behalf of the sending state for the purposes of the mission."[25] In a brief passage including citations to the International Law Commission and decisions of several foreign courts, the Court dismissed the Diplomatic Convention's relevance to the dispute because it did not "unambiguously support either party on the jurisdictional question."[26]

In dissent, Justice Stevens, joined by Justice Breyer, agreed that a literal application of the FSIA supported the majority's position, but argued that the best reading of the legislative intent cautioned in favor of granting immunity,[27] reasoning that the "breadth and vintage of the background general rule" in favor of sovereign immunity made it highly unlikely that the FISA drafters "intended to abrogate sovereign immunity in suits over property interests whose primary function is to provide a remedy against delinquent tax payers."[28] The dissent further argued that some weight should be given to the Executive Branch's interpretation of the FSIA as expressed in an amicus brief submitted by the Solicitor General. While acknowledging that the history of the FSIA reflected a Congressional scheme to transfer authority away from the tradition of case-by-case immunity determinations by the Executive,[29] the dissent maintained that the Executive is nevertheless entitled to standard Skidmore deference, under which well-reasoned Executive Branch interpretations about matters within its expertise enjoy the "power to persuade," but not to control.[30] Notably, although the dissent disagreed with the majority both as to the result and some aspects of interpretive methodology, it did not dispute the general relevance of international practice to the FSIA's interpretation.


Whether the issue is enforcement of the Geneva Conventions,[31] customary international law,[32] or constitutional rights,[33] judicial reliance on foreign and international law has proven to be a lightening rod in recent years. The India decision, by contrast, provides an example of a case in which recourse to foreign and international sources is less divisive, albeit quite limited in nature. The Court confines its analysis to the specific context of a statute, the FSIA, whose legislative history reflects a conscious design to conform to international practice regarding sovereign immunity. Within that framework, the Court limits it recourse to foreign and international sources to background principles of sovereign immunity as they existed at the time of the FSIA's passage in 1976. Moreover, the Court limits its consultation of international treaties to the U.S.-ratified Vienna Convention, without even mentioning the circuit court's substantial reliance on the European and United Nations Conventions.

Although the degree and scope of deference owed to Executive interpretations remain a perennial source of debate in foreign affairs law,[34] the Court's refusal to extend deference in this case is unsurprising. Indeed, the Court recently affirmed in another FSIA case, Republic of Austria v. Altmann, that pure questions of statutory construction remain the province of the judiciary.[35] In that context, Justice Stevens wrote a majority opinion expressing that "[w]hile the United States' views on such an issue are of considerable interest to the Court, they merit no special deference."[36] Justice Stevens' India dissent elaborates that this "considerable interest" should adopt the form of Skidmore deference, which affords some weight to the Executive's views, however minimal. By contrast, the majority opinion's failure to even address the Solicitor General's brief suggests that even Skidmore deference may be too much, perhaps especially so where, as here, the FSIA's legislative history reflects a congressional desire to wrest authority from the Executive, the government's views are expressed for the first time in a litigation brief, and that interpretation reverses the position taken in litigation by a prior administration.[37] It also bears noting that the India case does not implicate the separate, more controversial suggestion of the Altmann majority: that the Executive Branch might be entitled to greater deference when issuing case-specific opinions about whether particular foreign sovereigns should receive immunity.[38]

About the Author
Alexander K.A. Greenawalt, an ASIL member, is an Associate Professor of Law at Pace Law School.


[1]127 S.Ct. 2352 (2007).

[2]28 U.S.C. §1602 et seq.

[3]28 U.S.C. § 1604(a)(4).

[4]N.Y. Real Prop. Tax Law § 418.


[6]127 S.Ct. at 2354-2355. New York City also brought similar claims against Turkey and the Phillipines, but these did not reach the Supreme Court because Turkey settled its dispute and the Phillipines did not contest jurisdiction. See The City of New York v. The Permanent Mission of India to the United Nations, 446 F.3d 365, 367 n.2 (2nd Cir. 2006).

[7]28 U.S.C. §§ 1604-1605.

[8]28 U.S.C. § 1605(a)(4).

[9]Id. § 1605(a)(2). Notwithstanding its attempt to recognize the lien, the City of New York has acknowledged that the FSIA will prevent it from bringing an action to collect the unpaid taxes by foreclosing on the petitioners' property. By seeking recognition of the lien, however, the city has expressed its hope to procure payment through more indirect pressure, including by making the lien enforceable against subsequent purchasers and by triggering a statutory provision which allows the U.S. Government to reduce foreign aid to the debtor countries by an amount exceeding the unpaid taxes by ten percent.

[10] The City of New York v. The Permanent Mission of India to the United Nations, 376 F.Supp.2d 429 (S.D.N.Y. 2005), aff'd, 446 F.3d 365 (2nd Cir. 2006).

[11]446 F.3d at 372-73.

[12] Id. at 372.

[13] Id. at 372-73.

[14] Id. (noting that the International Law Commission finalized the U.N. Convention's version of the immovable property exception in 1983 and that the U.N. General Assembly did not adopt the treaty for signature until 2004).

[15] Petition for a Writ of Certiorari, India, 127 S.Ct. 2352 (No. 06-134).

[16] 127 S.Ct. at 2356.

[17] Id. at 2356-57; see also Republic of Argentina v. Weltover Inc., 504 U.S. 607, 612 (1992); Associacion de Reclamantes v. United Mexican States, 735 F.2d 1517, 1520 (D.C. Cir. 1984) (Scalia, J.).

[18] Id. (citing Letter from Jack B. Tate, Acting Legal Adviser, U.S. Dept. of State, to Acting U.S. Attorney General Phillip B. Perlman (May 19, 1952), reprinted in 26 Dept. of State Bull. 984 (1952)).

[19]Id. at 2357.

[20] Id. (internal quotation omitted).

[21]Restatement (Second) of Foreign Relations Law of the United States § 68(b).

[22]127 S.Ct. at 2357; Restatement (Second) of Foreign Relations Law of the United States § 68(b) cmt. d (emphasis supplied).

[23]127 S.Ct. at 2357.


[25]Id. (citing Vienna Convention on Diplomatic Relations, art. 31(1)(a), Apr. 18, 1961, [1972] 23 U.S.T. 3227, 3240 T.I.A.S. No. 7502).

[26]Id. at 2358.

[27]Id. at 2358-59. (Stevens, J., dissenting).

[28]Id. at 2359. Noting that New York City municipal law provided for liens against real property in circumstances, including to compel payments for pest control, emergency repairs, and sidewalk upkeep, the dissent argued that the majority's reasoning had the perverse effect of allowing local law to defeat sovereign immunity in any number of routine circumstances simply by converting an obligation into a property lien. Id.

[29] Id. Prior to the FSIA's passage, the general practice was for judges to accept the State Department's case-specific determinations regarding whether a particular defendant was entitled to immunity. Id; Restatement (Third) of Foreign Relations Law of the United States ch. 5(A), introductory note (1987).

[30]Id. at 2359 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).

[31]Hamdan v. Rumsfeld, 126 S.Ct. 2749 (2006)

[32]Sosa v. Alvarez-Machain, 542 U.S. 692 (2004).

[33]See, e.g., Roper v. Simmons, 543 U.S. 551 (2005).

[34]See, e.g., Eric A. Posner and Cass R. Sunstein, Chevronizing Foreign Relations Law, 116 Yale L.J. 1170 (2007); Derek Jinks & Neal Kumar Katyal, Disregarding Foreign Affairs Law, 116 Yale L.J. 1230 (2007)

[35]Republic of Austria v. Altmann, 541 U.S. 677 (2004).

[36]Id. at 701.

[37]446 F.3d at 376 n.17.

[38]Altmann, 541 U.S. at 702.