Tuesday, September 29, 2015

Can a Non-American Employee of a Foreign Embassy Sue the Embassy in the United States?

Living in Washington D.C. there is no shortage of embassies – and no shortage, therefore, of employees who may have reason to bring a complaint against their foreign employers. Recently, one such employee, a resident but not a citizen of the U.S., brought me an employment contract he had entered into with a foreign embassy. Is it possible, I wondered, to sue a foreign embassy in a U.S. court?  

The Foreign Sovereign Immunities Act (“FSIA”) is the “sole basis for obtaining jurisdiction over a foreign state in our courts.” Ashraf-Hassan v. Embassy of France in the United States, 40 F.Supp. 3d 94, 99 (D.D.C. 2014) (quoting Argentine Republic v. Amerada Hess Shipping Corp. 488 U.S. 428, 434 (1989)). Federal district courts have jurisdiction over “any claim . . . with respect to which the foreign state is not entitled to immunity . . . under [the listed sections of the Act].” Id. (citing 28 U.S.C. § 1330(a)).   

The FSIA contains a commercial activities exception providing that:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

Id. at § 1605(a)(2). The D.C. Circuit has held that the commercial-activities exception may apply to employment relationships under some circumstances. El-Hadad v. United Arab Emirates, 216 F.3d 29, 34 (D.C. Cir. 2000) (proposing a “multi-factor inquiry” to determine the application of the exception). While the employment of civil servants is non-commercial for the purposes of the FSIA (see Broadbent v. Organization of American States, 628 F.2d 27, 34 (D.C. Cir. 1980), the federal courts in Washington, D.C. have suggested that, “if an employee is contracted to work as a non-civil servant and has duties of a clerical nature, the foreign state cannot claim immunity from any suits brought by her that are based upon this employment relationship.” Ashraf-Hassan, supra, 40 F.Supp. at 102 (citing 28 U.S.C. § 1605(a)(2)). Thus, a clerical worker, hired in a purely administrative position, who is neither a civil servant nor involved in governmental decisions, may have a right to sue a foreign embassy on claims arising out of the employment relationship.

The FSIA also provides that:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver.

Id. § 1605(a)(1). A foreign state may provide the explicit waiver mentioned in the statute in a treaty or a contract, by stating that the state waives immunity as to a certain class of disputes. 

The implied waiver of section 1605(a)(1)  is construed narrowly. Ashraf-Hassan, 40 F. Supp. 3d at 100. As the D.C. Circuit explained:

The FSIA does not define an implied waiver. We have, however, followed the “virtually unanimous” precedents construing the implied waiver provision narrowly. Shapiro v. Republic of Bolivia, 930 F.2d 1013, 1017 (2d Cir. 1991). In particular, we have held that implicit in § 1605(a)(1) is the requirement that the foreign state have intended to waive its sovereign immunity. See Princz v. Federal Republic of Germany, 26 F.3d 1166, 1174 (D.C. Cir. 1994) (“[A]n implied waiver depends upon the foreign government's having at some point indicated its amenability to suit”); Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 444 (D.C. Cir. 1990) (“courts rarely find that a nation has waived its sovereign immunity . . . without strong evidence that this is what the foreign state intended”).

Creighton Ltd. v. Gov't of State of Qatar, 181 F.3d 118, 122 (D.C. Cir. 1999).

Courts have found a waiver to be implied in three circumstances: (1) where a foreign state is party to a contract that contains a choice-of-law provision for U.S. law; (2) where a foreign state files a responsive pleading without raising the defense of sovereign immunity; and (3) when a foreign state agrees to submit a dispute to arbitration in the United States. Id.

A choice-of-law provision for U.S. law will act to waive the foreign power’s sovereign immunity for claims arising under the contract. Even before the FSIA, courts had recognized that a foreign power, “when it consents to subject its contractual dealings to U.S. law . . . voluntarily assume[s] obligations under [that] law.” Id. (citing Transamerican S.S. Corp v. Somali Democratic Republic, 767 F.2d 998, 1006 (D.C. Cir. 1985)). “[C]hoice of law clauses designating U.S. law as applicable appear to ‘contemplate a role for United States courts’ in resolving disputes.” Id. (citing Maritime Int’l Nominees Establishment v. Republic of Guinea, 693 F.2d 1094, 1103 (D.C. Cir. 1982); see also Joseph v. Office of Consulate Gen. Of Nigeria, 830 F.2d 1018, 1023 (9th Cir. 1987). 

In a similar way, a foreign government’s agreement to arbitrate acts as a waiver of sovereign immunity. Creighton Ltd. v. Gov't of State of Qatar, 181 F.3d at 123-24 (citing Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993); Chromalloy Aeroservices v. Arab Republic of Egypt, 939 F.Supp. 907, 909 (D.D.C. 1996)). Unsurprisingly, a foreign power’s failure to assert sovereign immunity as a defense also acts as a waiver. See Von Dardel v. Union of Soviet Socialist Republics, 736 F. Supp. 1, 4 and note 5 (D.D.C. 1990).

The contract I reviewed provided – in French –  (roughly) that “the tribunals competent in the event of litigation are American tribunals” and that “the contract is subject to the American laws in effect” – a choice of laws clause for U.S. law, and a waiver of sovereign immunity in favor of U.S. courts for disputes under the contract. Under the FSIA, the foreign employer has waived its immunity from suit and negotiations can begin.

-This blog was written by Mary Kuntz  

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