SCOTUS Says Sovereign Immunity Law Does Not Apply to Criminal Cases, Kicks Case Back to 2nd Circuit

The Foreign Sovereign Immunities Act does not apply to criminal cases, the Supreme Court of the U.S. held in an April 17 opinion, opening Turkish state-owned Halkbank up to criminal prosecution for conspiring to evade U.S. sanctions on Iran. Justice Brett Kavanaugh, the author of the opinion, said the text of the FSIA, which the bank claimed protected it from prosecution, clearly shows it only addresses civil suits. Six of the court's justices sided with Kavanaugh, with Justices Neil Gorsuch and Samuel Alito dissenting (Turkiye Halk Bankasi A.S. v. U.S., Sup. Ct. # 21-1450).

The Supreme Court remanded the case to the U.S. Court of Appeals for the 2nd Circuit, however, since the appellate court "did not fully consider various common-law immunity arguments that the parties raise in this Court." Gorsuch and Alito said in a dissenting opinion that the same statute routinely used to analyze sovereign immunity in civil cases "applies equally in criminal ones," though the justices concluded that the "case against Halkbank may proceed."

The case originally was brought to a New York district court, where a judge found that the FSIA doesn't extend to criminal cases. The 2nd Circuit upheld the ruling, finding it had the jurisdiction to hear the case (see 2110260042), but stopped short of answering whether the FSIA universally confers immunity on foreign sovereigns in a criminal context.

At the Supreme Court, the U.S. claimed that the district court had jurisdiction under 18 U.S.C. 3231, which grants district courts jurisdiction on "all offenses against the laws of the United States." Halkbank argued that since this statute does not mention foreign states or their instrumentalities, which would include the bank, it excludes them.

Kavanaugh said the court "declines to graft such an atextual limitation onto §3231’s broad jurisdictional grant. The scattered express references to foreign states and instrumentalities in unrelated U. S. Code provisions to which Halkbank points do not shrink the textual scope of §3231."

The court further ruled that the FSIA does not cover criminal cases. The statute lays out a "carefully calibrated scheme that relates only to civil cases," Kavanaugh said, adding that other elements of the statute show its "exclusively civil focus," including the use of the term "litigants." The statute is also silent on criminal matters. "If Halkbank were correct that the FSIA immunizes foreign states and their instrumentalities from criminal prosecution, the subject undoubtedly would have surfaced somewhere in the Act’s text," the opinion said. "Congress typically does not 'hide elephants in mouseholes.'”

The court sent back the case, though, to address Halkbank's claim that common-law immunity principles work differently in criminal cases than in civil cases.

In his dissent, Gorsuch said that none of the arguments relied on by the majority "packs the punch necessary to displace the plain statutory text" of the FSIA. The justice decried the majority's move to kick the case back to the 2nd Circuit to sort out the case on the "common law" path since "[m]any thorny questions lie down" that road "and the Court fails to supply guidance on how to resolve any of them."

"Today’s decision overcomplicates the law for no good reason. In the FSIA, Congress supplied us with simple rules for resolving this case and others like it," Gorsuch said. "Respectfully, I would follow those straightforward directions to the same straightforward conclusion the Second Circuit reached: This case against Halkbank may proceed."