A View of Transnational Litigation from the State Department
November 2, 2023
I recently had the pleasure of reading Footnotes to History: Law and Diplomacy by TLB contributor Mark Feldman. Mark spent sixteen years (1965-1981) at the U.S. State Department’s Office of the Legal Adviser, where he helped write the Foreign Sovereign Immunities Act (FSIA), the Foreign Corrupt Practices Act, and the Iran Claims Settlement Agreement.
The book takes the form of an oral history, with Mark interviewed by Robin Matthewman, a veteran foreign service officer. It has the delightful feel of a conversation, as Mark and Robin discuss everything from Mark’s early work on the treatment of POWs in Vietnam to his brief stint at the Defense Department during the Iraq War. In this post, I focus on those parts of the book most relevant to transnational litigation, specifically the FSIA, foreign official immunity, the act of state doctrine, and extraterritoriality.
The Foreign Sovereign Immunities Act
Mark is perhaps best known for his work on the FSIA, which Congress enacted in 1976. The main purpose of the Act, Mark explains, “was to transfer immunity determinations from the State Department to the courts.” At the time, the State Department was responsible for making immunity determinations in specific cases and had developed a practice of holding hearings so the parties could present their cases. “As deputy legal adviser, I presided over a few of those hearings,” Mark says. “[T]ypically, the plaintiff would be represented by counsel, the foreign state by its ambassador. No one was happy with this process.”
Responsibility for making immunity determinations put the State Department on the hot seat. “As the caseload grew,” Mark recalls, “there were more foreign relations problems when we did not allow immunity and more complaints from the private sector when we did.” He recounts one case of diplomatic pressure when Henry Kissinger was Secretary of State.
Kissinger was discussing Middle Eastern policy with the Soviet ambassador and the ambassador had raised his government’s serious concern over the attachment of a Russian vessel by a U.S. court in the Panama Canal Zone. The ambassador asked the secretary to have the U.S. intervene with the court to release the vessel. So, Kissinger called the legal adviser who asked me, “Do we have the authority to do that?”
Mark said probably not and advised telling the ambassador: “That may be difficult. We’ll look into it.” The case settled. “But this is a graphic example,” Mark says, “of diplomatic pressure on a matter than should be decided by judicial process.”
Drafting the FSIA began during the Johnson Administration. The Nixon Administration sent a bill to Congress in January 1973, and hearings followed. “Congressional staff told the department that Congress could not process a bill of this complexity with so many different interests,” Mark recalls, “unless the administration was able to put together a consensus draft supported by all the stakeholders.” Acting Legal Adviser Charles Brower assigned that task to Mark. “We accomplished that in 1974,” Mark says, “obtained Kissinger’s approval, and sent the bill to DOJ and OMB … for formal interagency review.” Mark continues: “For some reason, we heard nothing from Justice for many months, until Nixon had left office, Gerald Ford was president, and Monroe Leigh had become legal adviser.” Mark coordinated the final revisions, and the Ford Administration sent the revised bill to Congress in October 1975. Hearings were held, more changes made, and Ford signed the bill into law on October 22, 1976.
“There are two areas where the Act pushed beyond established practice in 1976,” Mark explains: “jurisdiction over foreign expropriations” and “execution of a judgment against foreign state assets.” “In the 1960s and 1970s, when the FSIA was being drafted, there were dozens of expropriations of American investments abroad without compensation,” Mark recalls. “Expropriation became an important foreign policy issue and a matter of intense congressional interest.”
Foreign Official Immunity
Mark has less to say in the book about foreign official immunity, but I found it equally fascinating. First, he notes, the question whether suits against foreign officials fall within the FSIA was one “that troubled the courts for years,” although “the department thought [was] clear.” The answer was no, as the Supreme Court finally held in Samantar v. Yousuf (2010). “Official acts immunity is a matter of common law informed by international practice.”
As Chimène Keitner and I have explained, there are many kinds of foreign official immunity. Diplomatic and consular immunity are governed by treaty. Under customary international law, foreign heads of state, heads of government, and foreign ministers are entitled to absolute immunity during their tenures in office. Other foreign officials are entitled to immunity for acts taken in their official capacities. Mark explains: “I initiated the modern State Department practice of issuing Suggestions of Immunity on behalf of foreign officials sued personally for actions in the conduct of their official duties in 1976 when the FSIA was still pending.” The case was Greenspan v. Crosbie, in which a Newfoundland official was sued for securities fraud in the Southern District of New York. Mark wrote a letter expressing the view of the State Department that the foreign official was immune from suit. “The Justice Department submitted my letter to the federal district court, and the court accepted the Suggestion.”
Mark notes that the practice of submitting suggestions of immunity is well established today and that the State Department “takes the position that its views are binding on the courts.” Writing at TLB, Mark has endorsedthat view. Ingrid Brunk and I have respectfully disagreed.
Act of State Doctrine
Mark also discusses the act of state doctrine in the context of expropriation claims against Cuba. As he notes, the Supreme Court held in Banco Nacional de Cuba v. Sabbatino (1964) that the act of state doctrine barred courts in the United States from reviewing the validity of a foreign government’s expropriation of property within its own territory. Mark recalls: “The Sabbatino decision enraged American business, led to a congressional override narrowed by the courts, and became a cause célèbre among lawyers lasting for years.”
When Cuba later sued Citibank for return of its deposits, Citibank counterclaimed, seeking compensation for its own assets expropriated by Cuba. Citibank’s counsel urged the State Department to ask the Supreme Court to overrule Sabbatino. Mark developed an alternative approach:
I was sympathetic to Citibank’s equities, but, knowing that the Johnson administration had supported the act of state doctrine in Sabbatino, I was wary of promoting outright repeal that could lead to litigation impacting U.S. foreign relations in a wide range of circumstances. Accordingly, I recommended that the legal adviser, John R. Stevenson, write a letter for submission to the Supreme Court advising that the department had no foreign policy objection to judicial decision of the bank’s counterclaim against Cuba—a “Bernstein” letter in legal parlance.
A Bernstein letter is a letter from the State Department waiving application of the act of state doctrine, which was given effect by the Second Circuit in Bernstein v. Nederlandsche-Amerikaansche (1954). The letter that Mark drafted (attached as an appendix to this decision) was only the second such letter the State Department had ever sent, the first being the letter in Bernstein itself. The Citibank letter argued narrowly that the act of state doctrine should not be applied to counterclaims when (a) the foreign state’s claim arises from a relationship existing when the act of state occurred; (b) the counterclaim is limited to the amount of the foreign state’s claim; and (c) the foreign policy interests of the United States do not require application of the doctrine.
The Supreme Court remanded to the Second Circuit for reconsideration in light of this letter, but the lower court adhered to its position, suggesting that Bernstein should be limited to its facts. The case returned to the Supreme Court in First National City Bank v. Banco Nacional de Cuba (1972). The Supreme Court was badly split. Three Justices accepted the argument that the State Department could waive application of the act of state doctrine with a Bernstein letter. Six Justices rejected this argument, but in separate concurring and dissenting opinions, allowing the possibility of a Bernstein letter to live on.
Mark was also involved in the Uranium Antitrust Litigation, in which Westinghouse alleged a conspiracy to fix prices by foreign producers, some of whom were owned by foreign governments. “State was following the case,” Mark explains, “because many of our closest trading partners strongly objected both to the extraterritorial application of U.S. antitrust laws and to orders issued by U.S. courts for the production of foreign documents.” As he notes, this case led several countries to adopt blocking statutes, such as the United Kingdom’s Protection of Trading Interests Act (1980).
Nine defendants refused to appear, and the district court entered default judgments against them. On appeal, several foreign governments filed amicus briefs challenging the extraterritorial jurisdiction of U.S. courts. The briefs drew a rebuke from the Seventh Circuit, which expressed shock that “the governments of the defaulters have subserviently presented for them their case against the exercise of jurisdiction.” “This comment was particularly unfortunate,” Mark recalls, “because the State Department had encouraged these governments to brief their issues directly to the courts.” In 1978, as discussed here, the U.S. Supreme Court told the Solicitor General that the federal courts preferred amicus filings to the old system of transmitting foreign government views by diplomatic note.
The State Department wrote a letter to the Court of Appeals explaining that this language had embarrassed the United States, and the Justice Department followed up with a statement of interest asking the district court to give the views of foreign governments “appropriate weight.” “We must have done something right,” Mark says. “The offending language was excised from the court’s opinion, a Canadian official wrote me a personal thank you note; the parties settled the litigation, and the law firm representing Westinghouse offered me a job.”
Mark took that job, although not before helping to negotiate the Iran Claims Settlement Agreement, which established the Iran-U.S. Claims Tribunal, as part of the Algiers Accords that led to the release of U.S. diplomats held hostage in Iran. He finished his days at the State Department by serving as Acting Legal Adviser during the early days of the Reagan Administration. Although Mark worked on some interesting international cases in private practice and was brought back into the government on occasion, I came away from reading his book with the feeling that he absolutely loved being a lawyer for the State Department.
I have focused here on Mark’s work involving transnational litigation. But he did a great deal more during his career at the State Department and thereafter. Many of the non-litigation matters he worked on are just as interesting. For anyone curious about what a career in international law might look like, Mark provides a fascinating account.