Prosecuting Foreign States

Abstract

In recent years, the Department of Justice has shown increased interest in prosecuting entities associated with foreign states for activities including cybercrime, economic espionage, and sanctions violations. It has also sought third-party evidence from foreign state-owned entities in connection with high-profile criminal investigations, including the Mueller investigation. These actions raise fundamental questions about the immunities of foreign states and state-owned entities from U.S. criminal proceedings. This article provides the first comprehensive analysis of—and answer to—these basic questions. In doing so, it upends the widespread but misleading perception that the Foreign Sovereign Immunities Act of 1976 (FSIA) provides the sole basis for exercising jurisdiction over foreign states in every context. The better view is that the FSIA neither authorizes nor prohibits criminal proceedings. Until Congress enacts appropriate legislation, claims to immunity from such proceedings will remain a matter of common law. The common law of foreign state immunity from criminal proceedings warrants legislative attention. First, Congress can and should make explicit that the FSIA only governs civil proceedings. Second, it should clarify that state-owned enterprises are not entitled to blanket immunity from criminal proceedings simply because they are majority-owned by foreign states. Misapplying the FSIA’s expansive definition of “foreign state” to preclude criminal proceedings can impede the effective investigation and prosecution of foreign corporations whose activities have a significant impact in the United States, and that international law does not necessarily view as entitled to immunity. The default position should be that foreign state-owned companies are subject to the criminal jurisdiction of U.S. courts, at least with respect to their commercial activities.