Defining 'Organ of a Foreign State' Under the Foreign Sovereign Immunities Act of 1976

Abstract

Many foreign states are active players in global commerce. When these states establish or control global enterprises, those entities often seek special treatment available under the Foreign Sovereign Immunities Act. Courts only allow such special treatment to enterprises that are organs of a foreign state, a murky term undefined in the statute and undertheorized in the literature. This Article argues that in determining when an enterprise is an organ, courts should focus on whether the denial of sovereign status has the potential to interfere with diplomatic relations between the United States and the relevant foreign state. The United States Supreme Court recently highlighted the importance of this question when it granted certiorari to consider whether a Canadian power company was an organ. The Court ultimately dismissed that case on jurisdictional grounds, leaving the issue unresolved for the short term. The need for clarity will only heighten as the web of globalization tightens and the concurrent explosion in the number and variety of entities with significant ties to foreign sovereigns, including Public/Private Partnerships and Sovereign Wealth Funds, increases litigation of this issue. To measure the potential for interference with the conduct of foreign relations, courts must look at the extent to which the sovereign would be justifiably affronted if the entity were not treated as its organ. In creating a workable standard by which to measure this risk, this Article borrows heavily from the conceptually similar doctrines of the arm of the state in Eleventh Amendment jurisprudence and alter ego veil piercing in corporate law. Ultimately, this Article's proposal synthesizes the existing precedent with those doctrines to provide a coherent approach to resolving the confusion surrounding how far the sovereign's cloak should spread over related entities.