The Media Coverage of Turkiye Halk Bankasi, in Review
January 26, 2023
Last week, the Supreme Court heard oral arguments in Turkiye Halk Bankasi A.S. v. United States, a criminal case originating in the Second Circuit. The defendant, Turkiye Halk Bankasi A.S. (“Halkbank”), is a foreign state-owned commercial bank, headquartered in Istanbul, and a subsidiary of the Turkish government’s sovereign wealth fund. Charged with laundering over $1 billion of sanctioned Iranian funds through the U.S. financial system, Halkbank moved to dismiss the case in the Southern District of New York, arguing that sovereign immunity shields it from prosecution under 18 U.S.C. § 3231 and the Foreign Sovereign Immunities Act (“FSIA”). The case asks the Supreme Court to decide whether U.S. district courts can exercise subject-matter jurisdiction over criminal prosecutions of foreign sovereigns and their instrumentalities under § 3231 and whether the FSIA otherwise immunizes these entities from criminal prosecution. Most commentators gleaned little obvious direction from the Justices’ questions at oral argument, though some predict that the Court will remand the case for further development of several issues.
Writing for TLB and Just Security, Chimène Keitner predicts a remand, concluding that the Court “did not seem persuaded that the FSIA, taken as a whole, should be read to exclude the possibility of prosecuting a foreign state-owned corporation.” Keitner points out Justice Gorsuch’s initial skepticism of whether Halkbank is even a separable entity from the government of Turkey, and she highlights that Halkbank’s jurisdictional argument “did not get much traction” with Justices Thomas and Barrett. Keitner also notes the range of policy concerns raised by the Justices, especially the impact on diplomatic and national security policy of permitting state and municipal prosecutors to bring suits against foreign governments. Dustin Hartuv and I summarize the opposing amici’s analysis of this risk in the Legal Information Institute’s Supreme Court Bulletin, where we weigh the possibility of economic and diplomatic retaliation against the United States for such suits against the national security threat posed by shielding foreign state-owned corporations from prosecution.
Also writing for TLB, Ingrid (Wuerth) Brunk and William S. Dodge criticize the government’s position that if the FSIA does not apply, the executive branch maintains complete control over immunity determinations. Noting Justice Sotomayor’s concern that executive control would expose the executive branch to pressure by foreign governments when making immunity determinations, Brunk and Dodge highlight the government’s repeated concession about the limits of this position in response to the Justices’ questions. Brunk and Dodge go on to distinguish executive control over immunity determinations from deference to executive expertise, urging the Court to turn to federal common law to fill in the gaps left by the FSIA.
On The Lawfare Podcast, Keitner and Brunk discuss their reactions to last Tuesday’s arguments with Scott R. Anderson. Anderson highlights the Justices’ uniformly cool reception to Halkbank’s jurisdictional arguments, which Brunk characterizes as getting “no love” from the Court. Keitner questions the focus of Halkbank’s advocate on these arguments despite pushback from Justice Thomas, noting that “the strength of the rhetoric was not matched by the substantive understanding of the issues.” Regardless of the Court’s decision in this case, both Brunk and Keitner predict a legislative response from Congress to “fix whatever the Court does,” either by establishing some form of preemption of state and municipal prosecutions of foreign sovereigns if the Court finds for the government or by authorizing prosecutors to go after foreign state-owned corporations if the Court goes the other way.
David P. Stewart also advocates for a remand in TLB, analyzing at length the government’s failure in its briefing to resolve the ambiguities in the FSIA’s application to criminal law, consider the role of customary international law in sovereign immunity determinations, and contemplate the implications for U.S. diplomatic and economic relations abroad if the Court rules in the government’s favor. Keitner, Brunk and Stewart debated these and other perspectives on the parties’ briefed arguments at a panel discussion hosted by the Washington Foreign Law Society on January 10, moderated by Mark B. Feldman.
In Bloomberg Law, meanwhile, Greg Stohr agrees with Keitner on the odds of a remand, noting the Justices’ interest in potentially returning the case to the Second Circuit to assess whether federal common law might bar the prosecution. And for the New York Times, Adam Liptak diagnoses the Justices as “looking for a middle path between the parties’ positions,” although he chalks up Justice Kavanaugh as seemingly in the government’s column and Justices Gorsuch and Sotomayor in that of Halkbank.
And finally, on Lawfare, Curtis Bradley and Jack Goldsmith write the last in a three-part series on the case, following up on their first argument that the FSIA confers immunity in criminal cases and their second alternative argument that, if not, the executive branch should make such immunity determinations. Bradley and Goldsmith focus on the Justices’ apparent interest in applying the FSIA to criminal cases, particularly examining the resulting hypothetical scenario in which states could prosecute foreign sovereigns irrespective of the federal government. Characterizing the government’s response at oral argument (that the federal government could form executive agreements with defendant sovereigns to preempt state prosecutions) as “a strange argument for the government to be leaning on,” Bradley and Goldsmith argue that the government would have been better off by instead contending that Article II leaves control over immunity decisions to the executive branch. Underscoring the comparative strength of the foregone argument, Bradley and Goldsmith detail the “shaky precedent” on which the government’s chosen reasoning relies, the “highly uncertain” nature of negotiated executive agreements, and the government’s failure to explain why Congress would have only provided for removal of civil cases under the FSIA.
We won’t know for several months what decision the Justices’ mixed reception last week ultimately foreshadows. In the meantime, as Keitner and Brunk point out, many of the Justices’ questions seemed to invite a legislative remedy to the FSIA’s opacity on criminal prosecutions, an invitation Congress is likely to accept.