Solicitor General Recommends Denial of Cert in NSO v. WhatsApp
December 5, 2022
Photo by Rachit Tank on Unsplash
On November 21, the Solicitor General (SG) filed a brief recommending that the Supreme Court deny cert in NSO Group Technologies Ltd. v. WhatsApp Inc. NSO, an Israeli company that makes surveillance technology, claims that it is entitled to immunity from suit under federal common law because it acted as the agent of foreign states. The SG’s brief cites several reasons to deny cert: the State Department has not suggested immunity in this case; there is no established practice of granting immunity to agents of foreign states; no foreign state has requested immunity for NSO; NSO has not even identified the foreign states for which it was working; and there is no circuit split on the question.
But the SG refuses to endorse the Ninth Circuit’s “categorical holding” that the Foreign Sovereign Immunities Act (FSIA) occupies the field with respect to immunity for entities, “which would foreclose the Executive Branch from recognizing the propriety of an immunity in a particular context in the future even if such a recognition were found to be warranted, including by developments in international law or practice in foreign courts.” The SG’s “never say never” position here is characteristic of a troubling trend in immunity cases. The executive branch consistently strives to preserve its own discretion to suggest immunity in particular cases, recreating the dysfunctional system that led Congress to pass the FSIA in the first place.
In 2019, the messaging platform WhatsApp sued NSO, alleging that it had unlawfully installed spyware on devices of WhatsApp users. NSO claimed immunity from suit because it acted as an agent for undisclosed foreign governments.
The Ninth Circuit held that the FSIA “occupies the field of foreign sovereign immunity as applied to entities and categorically forecloses extending immunity to any entity that falls outside the FSIA’s broad definition of ‘foreign state.’” The FSIA defines “foreign state” to include “any entity” that “is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interests is owned by a foreign state or political subdivision thereof.” According to the Ninth Circuit, “[i]f an entity does not fall within the Act’s definition of ‘foreign state,’ it cannot claim foreign sovereign immunity. Period.” (Disclosure: I joined an amicus brief with Chimène Keitner and Sarah Cleveland arguing for this result.)
The CVSG Brief
NSO filed a petition for cert, and the Supreme Court called for the views of the Solicitor General (CVSG). The CVSG brief recommends that the Court deny cert. First, as further discussed below, the executive branch’s position has been that, in cases not governed by the FSIA, courts in the United States are bound to defer to the State Department’s case-specific immunity determinations and to principles of immunity articulated by the executive branch. In this case, however, the State Department made no case-specific determination and has not developed a practice in other cases of suggesting immunity for entities that act as agents of foreign states.
Second, no foreign government requested immunity for NSO. Indeed, NSO has not even identified the foreign governments for which it was working. Moreover, while the case was pending, the United States added NSO to its Entity List, accusing NSO of “suppli[ng] spyware to foreign governments that used these tools to maliciously target government officials, journalists, businesspeople, activists, academics, and embassy workers.” The SG also disagreed with NSO’s assertion that the Ninth Circuit’s decision threatened the United States’ ability to claim immunity for its own contractors abroad under “applicable law,” a subtle acknowledgment that the immunity of U.S. contractors in foreign courts will be governed by foreign law.
Third, the SG saw no conflict between the Ninth Circuit’s decision and the Supreme Court’s decision in Samantar v. Yousuf or the decisions of other circuits. In Samantar, the Court held that the FSIA did not govern the immunity of foreign officials, which remains subject to federal common law. The SG (correctly) reads Samantar as limited to natural persons and as not addressing the immunity of entities like NSO. Nor did the SG see any conflict with the D.C. Circuit’s decision Broidy Capital Management v. Muzin, which did not directly address the immunity of entities, or with the Fourth Circuit’s decision in Butters v. Vance International, Inc., which involved a claim of derivative immunity under the FSIA. These reasons are more than enough for the Supreme Court to deny cert.
Never Say Never
But the SG does not agree with the Ninth Circuit’s holding that the FSIA deals comprehensively with the immunity of entities, so that “[i]f an entity does not fall within the Act’s definition of ‘foreign state,’ it cannot claim foreign sovereign immunity.” The brief says:
The United States is not prepared at this time to endorse that categorical holding, which is not necessary to resolve this case—and which would foreclose the Executive Branch from recognizing the propriety of an immunity in a particular context in the future even if such a recognition were found to be warranted, including by developments in international law or practice in foreign courts.
Of Negative Inferences
Although the SG’s brief acknowledges that the FSIA’s grant of immunity to some entities might create a negative inference that immunity was not available for other entities, it argues that such an inference is appropriate only if there was reason to think that Congress considered the possibility and rejected it. The brief characterizes the question whether an entity should be treated as a foreign state as a “status-based determination” distinct from the question of whether “conduct-based immunity” might be recognized for entities performing acts on behalf of a foreign state. Readers familiar with foreign official immunity will recognize the terms “status-based” and “conduct-based” from that context, which Chimène Keitner and I have discussed at length here.
But this is an odd distinction to make with respect with respect to the FSIA. To be sure, the FSIA requires a “status-based determination” that an entity is a “foreign state” or an “agency or instrumentality of a foreign state.” But the FSIA goes on to apply conduct-based rules to those entities, allowing them to be sued for commercial activities, expropriations in violation of international law, tortious acts in the United States, etc. By the same token, the “conduct-based” immunity of foreign officials requires an initial “status-based determination” that the defendant is a current or former foreign official. If the United States were to recognize “conduct-based” immunity for entities acting on behalf of foreign states, courts would similarly have to make a “status-based determination” that the entity was the agent of a foreign state or met some other test of status. In fact, every kind of immunity requires a “status-based” determination that the defendant falls into the class of persons covered by the immunity and, unless the immunity that follows from that status is absolute, a “conduct-based” determination with respect to the acts covered.
In short, it makes no sense to distinguish the FSIA on the ground that it is status-based, whereas the immunity NSO seeks is conduct-based. It is clear from both the text and the legislative history of the FSIA that Congress considered which entities to grant immunity and limited immunity to those entities that meet the FSIA’s definition.
Of Core Sovereign Authority
On a policy level, the executive branch seems concerned to preserve discretion to suggest immunity when “a private entity acted as the agent of a foreign state in connection with the exercise of certain core sovereign authority.” It is not clear, however, why an entity exercising “core sovereign authority” would not qualify as an “organ of a foreign state” entitled to immunity under the FSIA.
The FSIA does not define the term “organ,” and lower courts have adopted varying tests. But the tests adopted by the Second, Third, Fifth, and Ninth Circuits allow courts to consider the character of an entity’s activities. As the Restatement (Fourth) of Foreign Relations Law summarizes in § 452 comment e, all these tests consider “whether the entity engages in public (governmental) activity on behalf of the foreign state.”
The SG’s brief does not give any example of an entity exercising sovereign authority that would not be considered an “organ.” Indeed, the brief does not mention the possibility that an entity could qualify for immunity as an “organ” at all. But it is difficult to conceive of an entity exercising “core sovereign authority” that would not be considered an “organ of a foreign state” under the current tests.
Of International Law
The SG’s brief, which is also signed by the State Department’s Acting Legal Adviser, correctly observes that customary international law does not require immunity for entities that act as agents of foreign states. There is no “history of State Department suggestions of immunity on behalf of private entities acting as agents of foreign states” that would constitute state practice by the United States. And the brief notes that “there is not a well-developed international practice” either.
NSO relies on the United Nations Convention on Jurisdictional Immunities of States and Their Property, which extends immunity to “agencies or instrumentalities of the State or other entities, to the extent that they are entitled to perform and are actually performing acts in the exercise of sovereign authority of the State.” Similar language appears in the United Kingdom’s State Immunity Act and a few other countries’ immunity statutes. But the Commentaries to the Draft Articles on which the Convention is based explain that “other entities” was added to cover “exceptional cases” in which a non-governmental entity is “endowed with governmental authority” as with a bank entrusted to deal with import and export licensing. It certainly does not cover all agency relationships.
Moreover, as the SG notes, the Convention has not entered into force, and the United States “has neither signed nor ratified it.” The United States has previously stated that the Convention reflects customary international law with respect to individual officials acting in their official capacities. But the United States has not said the same with respect to the Convention’s treatment of entities, and it clearly does not do so in this brief either.
Notwithstanding the fact that customary international law does not currently require immunity for entities that act as agents of foreign states, the SG’s brief expresses concern that future “developments in international law or practice in foreign courts” might require such immunity, which the Ninth Circuit’s categorical reading of the FSIA would preclude. Such a risk is inherent in any attempt—like the FSIA—to codify rules of domestic law that overlap with rules of customary international law. In 2012, for example, the International Court of Justice held that customary international law requires immunity from suits based on the activities of armed forces during armed conflict, even on the territory of the forum state. Yet the FSIA’s territorial tort exception (28 U.S.C. § 1605(a)(5)) has no express exception for armed forces. U.S. courts would likely interpret the FSIA to be consistent with customary international law under the Charming Betsy canon. Failing that, amendment by Congress remains a possibility.
The executive branch’s effort to preserve the possibility of immunity for entities that act as agents for foreign governments at some point in the future might seem odd since, as noted above, Congress did address the immunity of entities in the FSIA, entities exercising “core sovereign authority” are likely to be considered organs of a foreign state under the FSIA, and customary international law does not require immunity for entities acting as agents. The reason for the executive branch’s position becomes clearer when one recalls that the executive is attempting to preserve discretion for itself.
The SG complains that the Ninth Circuit’s categorical holding “would foreclose the Executive Branch from recognizing the propriety of an immunity in a particular context in the future even if such a recognition were found to be warranted, including by developments in international law or practice in foreign courts.” The key words here appear not to be “developments in international law” but rather “foreclose the Executive Branch.”
If the FSIA does not deal comprehensively with the immunity of entities from suit, then federal common law governs the open questions. The executive reads federal common law as giving it discretion to bind courts by making case-specific determinations of immunity or articulating rules that courts must apply. The SG’s brief says: “Under the common law, courts surrendered their jurisdiction when the State Department filed a suggestion of immunity, or the courts applied the established principles accepted by the State Department if the United States did not participate in the case.” This is the same position the executive takes with respect to foreign official immunity.
In both contexts, the possibility that the executive branch might grant immunity creates the certainty that it will be pressured to do so. One can only imagine the diplomatic pressure that Saudi Arabia brought to bear to secure immunity for Crown Prince Mohammed bin Salman (MBS) in the suit brought by Jamal Khashoggi’s widow, which was resolved only after several extensions from the district court and MBS’s appointment as Prime Minister.
We have seen this film before with state immunity. As the Supreme Court noted in Verlinden B.V. v. Central Bank of Nigeria, before the adoption of the FSIA, “foreign nations often placed diplomatic pressure on the State Department in seeking immunity.” Congress passed the FSIA at the behest of the executive branch “in order to free the Government from the case-by-case diplomatic pressures.” By asserting authority to make case-specific determinations and binding rules in cases not governed by the FSIA, and by reading the FSIA narrowly to create more such situations, the State Department is slowly recreating the same dysfunctional system that existed before the FSIA.
The SG is absolutely right that there are many reasons for the Supreme Court to deny NSO’s petition for cert. But it is disappointing that the executive branch is not ready to endorse the Ninth Circuit’s bright line rule precluding entities from claiming immunity unless they are covered by the FSIA. The SG’s brief continues a trend of the executive claiming more and more discretion over immunity determinations. The last time we saw this film, it ended in tears.