Foreign Sovereign Research Articles

Diag Human SE v Czech Republic-Ministry of HealthA Broad Interpretation of the ‘Arbitration Exception’ of the Foreign Sovereign Immunities Act

Diag Human SE v Czech Republic-Ministry of HealthA Broad Interpretation of the ‘Arbitration Exception’ of the Foreign Sovereign Immunities Act

: GCC (Lower Oil Prices and Economic Cooperation between Korea and the Middle East)

Korean Abstract: 본 연구는 최근 국제유가 하락에 따라 한ㆍ중동 경제협력이 위축될 것이라는 우려가 있지만, 유가 하락이 중동 산유국에는 오히려 경제 체질을 개선할 수 있는 기회가 될 수 있고, 우리는 이러한 기회요인을 적극적으로 활용하여 향후 한ㆍ중동 동반성장을 위한 지속적인 경협관계를 만들어나가야 한다는 점을 제시한다는 데 의의가 있다. English Abstract: The aim of the research is to suggest economic cooperation framework between Korea and the Middle East in the times of lower oil prices. A rapid decline of oil prices since the second half of 2014 has negatively impacted on economy of the GCC(Gulf Cooperation Council) countries which heavily depend on oil and gas sector. GCC countries are facing economic recession with the worsening of the financial situation, lack of liquidity and decrease of investment. The sharp drop in oil revenues due to lower oil prices caused government fiscal distress and made the GCC countries use accumulated foreign exchange reserves and sovereign wealth fund. They also prioritize projects focusing on social infrastructure including education and public services, leading to decrease of number of project contracts awarded in the GCC region. In response to the economic slowdown and fiscal burden, GCC countries have strengthened policy measures for economic diversification. They have promoted various supporting policies to nurture their strategic industries - most notably the renewable energy sector - and competitive small and medium-sized enterprises in the region. In order to regain fiscal soundness, GCC countries have been trying to cut their energy subsidies and revise the tax system, expanding government loans and privatization of their state-owned companies than the past. Moreover, they are making more efforts to increase foreign direct investment inflows with improvement of business environment and PPP(Public-Private Partnership) procedures. The economic difficulties facing the GCC countries due to lower oil prices is causing a significant concern over dwindling economic cooperation between Korea and the GCC countries. In response to this, a new cooperation framework is needed to strengthen bilateral ties for shared growth. Four fields of cooperation can be identified as follows. First, industrial cooperation should be reinforced to expand economic diversification and job creation in the GCC countries. Second, energy cooperation should be broadened into the fields of renewable energy development and energy efficiency technology other than energy trade. Third, investment cooperation need to be strengthened to facilitate joint investment in the region including joint ventures. Fourth, institutional cooperation between governments is needed to share Korean institutional reforms in the fields of tax, subsidy, privatization, FDI and so on, deepening mutual understanding of economic partners for co-development.

New Legislation Seeks to Confirm Immunity of Artwork and Facilitate Cultural Exchange

On December 16, 2016, President Obama signed into law the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act (FCEJICA). This act amends the Foreign Sovereign Immunity Act (FSIA) in order to confirm the jurisdictional immunity of foreign states in connection with lending artwork to the United States for temporary exhibit. The FCEJICA contains two exceptions, described below, that introduce some uncertainty about the extent of protection the statute provides to foreign states.

The Application of International Law in State Courts: The Case of Florida

Despite the United States Supreme Court’s pronouncement on the role of international law in U.S. courts over a century ago in the case of The Paquette Habana, courts and judges throughout the United States have largely been reticent to apply international law equally alongside domestic law to decide cases and controversies. Even with this reticence, cases involving interpretation and application of international law continue to be heard in courtrooms throughout the country. This Article intends to contribute to the vast international law literature by discussing the cases involving international law which have appeared in Florida courtrooms. With its international prominence, Florida provides a great case study on the issues which a state domestic court may face involving international law. Florida’s example includes issues as varied as foreign sovereign immunity, the act of state doctrine, the principle of comity, the Warsaw Convention and Montreal Convention, the Geneva Convention on the High Seas, the Hague Convention on the Civil Aspects of International Child Abduction, the Vienna Convention on Consular Relations, the Hague Service Convention, and the International Covenant on Civil and Political Rights. With today’s global, interconnected world, with international commerce becoming commonplace, cases involving interpretation and application of international law will continue to be heard in Florida and other states in the future.

Ricardian Equivalence and Sovereign Default Risk

We study the impact of sovereign default risk on the private–public savings offset. Using data on 80 countries for the period 1989–2010, we find robust evidence for a U-shaped pattern in the private–public savings offset in foreign currency sovereign credit ratings. While Ricardian Equivalence holds approximately at intermediate levels of sovereign solvency, it breaks down at very low and very high levels of sovereign default risk. In particular, the U-shaped pattern is an emerging market phenomenon as well as confirmed by external public debt, but not domestic public debt. A key result is that in the presence of foreign ownership of sovereign bonds, sovereign default constitutes a net wealth gain for domestic consumers as the present value of saved future taxes outweighs their wealth loss on bond holding. Thus, in times of high default risk, consumers appear to anticipate that the government would rather dilute bondholders than repay sovereign debt using higher taxes.

Beyond Home Bias: Portfolio Holdings and Information Heterogeneity

We show that international portfolios reflect the underlying heterogeneity in investors' beliefs. Using data on foreign sovereign debt holdings of European banks matched with their forecasts on future bond yields, we find that expecting higher returns and having more accurate forecasts are associated with larger bond holdings. Crucially, the elasticity of portfolio holdings to expected returns is increasing in the precision of the forecast, implying that investors optimally exploit comparative advantages in information production. We rationalize the results in a model where partial information specialization arises endogenously by introducing some degree of unlearnable uncertainty about asset payoffs.

Beyond Home Bias: Portfolio Holdings and Information Heterogeneity

We provide new evidence that international portfolios reflect the underlying heterogeneity in investors' beliefs. Using data on foreign sovereign debt holdings of European banks matched with their forecasts on future bond yields, we find that expecting higher returns and having more accurate forecasts are associated with larger bond holdings. Crucially, the elasticity of portfolio holdings to expected returns is increasing in the precision of the forecast, implying that investors optimally exploit comparative advantages in information production. We rationalize the results in a model where partial information specialization arises endogenously, which leads to further testable implications that we confirm in the data.

Sovereign risk and deposit dynamics: evidence from Europe

ABSTRACTThe unprecedented expansion of sovereign balance sheets since the beginning of the global crisis has given a new meaning to the term sovereign risk. Developments in Europe since early 2010 revealed new challenges for the functioning of private banks in an environment of heightened sovereign risk and may have contributed to deleveraging. The article uses an innovative way of measuring the perception of sovereign risk and its impact. Using an extension of a common market discipline framework, it shows that exposure to sovereign risk may have limited the ability of banks in Europe to collect deposits. Potential identification issues between deposits and bank efficiency are controlled by using data envelopment analysis (DEA). The results are robust to inclusion of conventional measures of bank performance and the sector-wide holdings of foreign sovereign debt.

Вопросы иммунитета государства в законодательной и судебной практике США

Protection of foreign investment is the basis of modern international investment relations. At the level of state acts such protection primarily means the adoption of investment legislation, which is a manifestation of a state sovereignty and the related with it immunity from actions of other states. In the USA the Foreign Sovereign Immunities Act was adopted in 1976. The law solves main legal problems: gives the definition of the term “foreign country”, establishes cases of the immunity and refusal to grant it, the procedural aspects of the proceedings on granting immunity. The complexity of the application of law leads to attempts to change it and to prohibit similar legal doctrines. Act as an expression of a unilateral will of the State may not always resolve the issues related to international cooperation. For regulation of state immunity was developed and opened for signature the UN Convention, which may become a fundamental international instrument in the field of State immunity.

Venezuela v. Helmerich: Will Formalism Win Over Substantive Law? Again?

The essay offers an analysis of Venezuela v. Helmerich & Payne International, a case to be argued before the Supreme Court on November 2. That case involves the interpretation and application of the Foreign Sovereign Immunities Act (FSIA). The question presented is whether, when pleading jurisdiction under the expropriation exception to the FSIA, a higher pleading standard should be employed, one under which it is necessary to show that there “actually is” a claim, essentially requiring the plaintiff to establish something more exacting than the plausibility standard. The Petitioners’ argument in Helmerich presents a classic example of arguing from a conception — sovereign immunity — to an abstract but controlling proposition of law. A more realistic approach, one that examines the facts, is put to the side in the interest of the conception. This essay resists that approach and promotes a jurisdictional and pleading analysis that is conducive to the evolution of substantive law and the enforcement of substantive rights.

A Brief Overview of Recent Supreme Court Precedent – Keeping Foreign Litigation at Bay

GLOBALIZATION marches on. Consistent with this, connections between the United States and the outside world (both perceived and actual) have become commonplace. (1) Of particular relevance to products liability practitioners, from the 1990s through present day, exports of goods and services as a percentage of United States gross domestic product have continued to increase, as has international trade in general. (2) For the United States judiciary, this likely means more litigation that is international in nature. Along with that international flavor comes more claims between persons and entities of different national origins, as well as more choice-of-law, venue, and jurisdictional issues. Due to the civil jury system that it provides, its more generous damages laws, and the different compensation structures available to its legal counsel, the United States (and its constituent states and territories) will likely continue to be an attractive litigation situs for claims with greater connections to foreign countries. (3) In light of this, for products practitioners, as well as defense counsel in other contexts, it is important to understand some of the more recent United States Supreme Court precedent addressing tools to keep foreign litigation at bay. Considered together, these decisions demonstrate the High Court's tendency to err on the side of keeping foreign-centered litigation outside of the United States court system. Examples of such decisions include those addressing where the principal conduct at issue is centered for purposes of the Foreign Sovereign Immunities Act (FSLA); the presumption against extraterritorial application of United States statutory law; personal jurisdiction over foreign defendants; and the doctrine of forum non conveniens. I. Recent Precedent Demonstrating The High Court's Tendency To Keep Foreign Litigation At Bay A. OBB Personenverkehr AG v. Sachs and FSIA's Commercial-Activity Exception In OBB Personenverkehr AG v. Sachs, a California resident sued the Austrian state-owned railway for injuries that she sustained while attempting to board a train in Innsbruck, Austria. (4) She predicated her suit on a United States-based travel agent's Internet sale of a Eurail pass to her before she left for her trip to Europe. (5) Such passes are available only to non-Europeans, who may purchase them both directly from the Eurail Group and indirectly through a worldwide network of travel agents. (6) The Austrian governmental defendant raised FSIA, 28 U.S.C. [section][section] 1330, 1332, 1391(0- 1441(d), and 1602-11, as a defensive bar. (7) In response, the plaintiff argued (successfully in Ninth Circuit Court of Appeals) that her case satisfied FSIA's commercial-activity exception. (8) The commercial-activity exception abrogates sovereign immunity for suits based a commercial activity carried on in the United States by [a] foreign state. (9) The Sachs plaintiff contended that this exception allowed her suit to proceed in United States federal district court because her suit was based upon her Massachusetts travel agent's Internet-based sale of a Eurail pass in the United States, and the travel agent's sale was attributable to the Austrian state-owned railway through common-law principles of agency. (10) Under the plaintiffs and the Ninth Circuit's analysis, so long as at least of her claim was tied to the United States-based ticket sale, the commercial-activity exception applied and allowed her action to proceed here. Without reaching the agency question, the United States Supreme Court unanimously rejected the plaintiff's position and reversed the Ninth Circuit. (12) Chief Justice Roberts' opinion for the Court reasoned that conduct comprising only one element of a plaintiffs cause of action is insufficient to satisfy the based upon requirement of the first clause of FSIA's commercial-activity exception. …

State Responsibility for Acts of CyberrTerrorism

This article discusses international law mechanism allowing to prosecute a state for electronic threats generated from its territory, directed against a foreign sovereign. It analyses the possibility to recognize a cyber‐attack as an act of international aggression and shows existing difficulties at the present state of international debate. Afterwards, it turns to the traditional notion of state responsibility for the lack of due diligence as a source of state’s responsibility for cyber‐attacks. Such due diligence should be guaranteed through sufficient criminal law regulations that are properly executed in order to effectively prevent and persecute electronic attacks. The article submits in this context that an international debate, resulting in international guidelines is required. The results of such a debate would than allow harmonize national criminal law regulations. Although the author points to the need of an international debate on the system of protection against cyberattacks on state key electronic infrastructure, she also emphasizes already existing international obligations for states to take responsibility for attacks conducted form their territory.

Sovereign Immunity and Source State Taxation of Sovereign Wealth Funds: Is It Time to Re-Evaluate?

Cross-border investments of states have rapidly increased over the last few years and are, more often than not, structured through special purpose investment funds or arrangements, known as sovereign wealth funds (SWFs). The total value of assets under the management of SWFs is currently estimated at USD 7.1 trillion (as at March 2016). In relation to states, their subdivisions and their wholly owned entities, the OECD Commentary mentions the customary international law principle of sovereign immunity. According to this principle, a foreign sovereign state can be held immune from the jurisdiction of the courts of another sovereign state in civil proceedings (jurisdictional immunity), and this principle may also apply to state-owned entities. A number of states, including Australia, Canada, the United Kingdom and the United States, apply the sovereign immunity principle to taxation as well. SWFs might also benefit from these tax immunities. The preferential tax treatment over other (private) investors to which a tax immunity regime potentially gives rise has historically been explained (or justified) by reference to the sovereign immunity principle as a principle of customary international law. However, an examination of the tax immunity regimes and the rules on jurisdictional immunity in all four states strongly suggests that the tax exemptions accorded to foreign sovereigns and SWFs are not (or, at least, are no longer) truly motivated by sovereign immunity. As a result, these states, and other states in which a comparable situation exists, would need to re-evaluate their existing tax immunity framework.

Differing Perceptions? Market Practice and the Evolution of Foreign Sovereign Immunity

The 20th century witnessed a transformative, “tectonic” shift in international law, from “absolute” to “restrictive” theories of sovereign immunity. As conventionally understood, however, this dramatic transformation represented only a shift in the default rule. Under absolute immunity, national courts could not hear lawsuits and enforce judgments against a foreign sovereign without its consent. Under restrictive immunity, foreign sovereigns were presumptively not immune when they engaged in commercial acts. We demonstrate that market practices undermine this conventional understanding. Using an extensive, two-century data set of contracts between foreign governments and private creditors, we show that contracting parties have long treated absolute immunity as akin to a mandatory rule, which they could not reliably change by contract. By contrast, we show that the Foreign Sovereign Immunities Act in the U.S. and the State Immunities Act 1978 in the U.K. — two statutes largely overlooked by international law scholarship — fundamentally reordered a global market for contracts. We explore why the conventional narrative, which relies on analysis of traditional legal materials, is at such odds with the “law on the ground.”

The "Based Upon" Analysis for the Commercial Activity Exception Under the United States Foreign Sovereign Immunities Act - Comment on OBB Personenverkehr AG v. Sachs

On December 1, 2015, the United State Supreme Court in OBB Personenverkehr AG v. Sachs held that the United States courts lacked jurisdiction over the state-owned railway in Austria, OBB, by accepting the OBB's argument of sovereign immunity. This lawsuit against the Austrian railway was brought by a California resident, Sachs, who bought a Eurail pass from a travel agent in the United State and suffered injuries while she was boarding on a train of OBB in Austria. OBB asserted its sovereign immunity not to be sued in the United States courts while Sachs claimed that the commercial activity exception to sovereign immunity applies to this case, and thus, that the United States courts may exercise jurisdiction over OBB. Under the Foreign Sovereign Immunities Act, foreign states or their instrumentalities shall be immune from jurisdiction of the United States courts unless one of exceptions to sovereign immunity including commercial activity exception applies. The commercial activity exception under the FSIA can be recognized if the action of a foreign state is based upon a commercial activity carried on in the United States by the foreign state or other activity having contacts with the United States. Relying on the phrase of the FSIA, the plaintiff claims that the rail pass sale by an OBB's agent can be categorized as a commercial activity which meets the meaning of the FSIA’s commercial activity exception. However, the United States Supreme Court rejected the plaintiff’s argument. The Court ruled that the particular act of Sachs's claims is the incident occurred in Austria, not the rail pass sale in the United States, and the incident in Austria is not a commercial activity for purposes of the commercial activity exception. The incident was caused by wrongful conduct and dangerous conditions in Austria which led to Sachs's injuries. To determine whether the commercial activity exception applies or not, the Court in Sachs elaborated how to identify the particular conduct on which a plaintiff's action is based and looked for whether the plaintiff's claim is based upon the conduct constituting the gravamen of her suit.

The New Tate Letter: Foreign Official Immunity and the Case for a Statutory Fix

Plaintiffs sometimes bring civil lawsuits in U.S. federal courts against officials or ex-officials of foreign governments accused of committing atrocities abroad. In these types of cases, the foreign individuals will almost certainly invoke the affirmative defense of foreign official immunity. In the 2010 decision, Samantar v. Yousuf, the Supreme Court unanimously held that the Foreign Sovereign Immunities Act (FSIA) — a 1976 statute governing the immunity of foreign states — did not control judicial determination of a foreign individual’s request for immunity. Instead, the Court said that foreign officials may be entitled to immunity as a matter of federal common law. Because of the sensitive foreign policy implications of these types of cases, the executive branch — specifically the State Department — has aggressively asserted control over all foreign official immunity requests. In 2012, in the so-called “Rosenberg Statement” and “Koh Letter,” the Justice Department and Legal Adviser to the State Department, Harold Hongju Koh, declared that (1) federal courts must refrain from deciding any foreign official immunity request that was not first presented to the State Department and (2) it was for the Executive, not the courts, to evaluate whether a foreign individual acted in an official capacity.While the Executive is certainly the branch of government with principal responsibility for foreign affairs, the Koh Letter and Rosenberg Statement represent executive branch overreach into judicial supervision of a federal lawsuit. Judicial deference to the Executive on foreign official immunity calls may be proper; blind obedience is not. In fact, such unilateral control ultimately hurts the State Department itself, which must balance complex and countervailing foreign policy interests. So how should the Executive’s power play be answered? Despite the Supreme Court’s reference to judge- made federal common law in Samantar, this Note argues that the tug-of-war between the executive and judicial branches requires congressional action because the courts are in disarray, with some already having acquiesced to executive control. The current disorder is a striking replay of what happened in the doctrine of foreign sovereign immunity in the late 1950s and 1960s in the aftermath of the 1952 Tate Letter — an earlier dispatch from a different State Department Legal Advisor that sparked such confusion in the federal common law of foreign sovereign immunity that Congress was compelled to intervene with the FSIA. This Note concludes with a model statute that Congress should consider enacting.

Sovereign Risk and Deposit Dynamics: Evidence from Europe

The unprecedented expansion of sovereign balance sheets since the global financial crisis has given a new meaning to the term sovereign risk. Developments in Europe since early 2010 presented new challenges for the functioning of private banks in an environment of heightened sovereign risk. This paper uses an innovative way of measuring the perception of sovereign risk and its impact on deposit dynamics during 2006–11. Using an extension of a common market discipline framework, it shows that exposure to sovereign risk may have limited the ability of banks in Europe to attract deposits. The results are robust to inclusion of conventional measures of bank performance and the sector-wide holdings of foreign sovereign debt.

Sovereign Risk and Deposit Dynamics: Evidence from Europe

The unprecedented expansion of sovereign balance sheets since the global financial crisis has given a new meaning to the term sovereign risk. Developments in Europe since early 2010 presented new challenges for the functioning of private banks in an environment of heightened sovereign risk. This paper uses an innovative way of measuring the perception of sovereign risk and its impact on deposit dynamics during 2006–11. Using an extension of a common market discipline framework, it shows that exposure to sovereign risk may have limited the ability of banks in Europe to attract deposits. The results are robust to inclusion of conventional measures of bank performance and the sector-wide holdings of foreign sovereign debt.

Impact of sovereign rating changes on stock market co-movements: the case of Latin America

ABSTRACTWe aim to determine if long-term foreign currency sovereign rating assessments (from S&P, Moody’s and Fitch) for the advanced emerging Latin American countries (Brazil, Mexico and Chile) have any significant effect on the correlation between their stock market returns in the last decade. With that purpose in mind, we obtain the time-varying correlation by cDCC modeling using ARX-APARCH filtered returns. The analysis shows that the rating changes do not have a significant effect on the correlations in general. After testing for robustness, we reveal that an upgrade to an investment grade level for a country is more likely to positively diversify it from others in the region instead of creating a common positive regional investment environment. Results have important implications for investors and policymakers.

Cross-Border Regulatory Interferences and Liberalisation of Government Procurement Markets

In my doctoral research, I have dealt with interfering with foreign sovereign regulatory matters with government purchases. For example, imagine that one day, some governmental agency in some Western country will refuse to buy Iphones because some reports allege that Apple’s sub-contractors abuse workers in their Chinese plants, and this governmental agency will keep Apple blacklisted until working conditions in those plants are improved. I will deliver more examples throughout this presentation. I have dealt with the problem of meddling with foreign regulatory matters in this way from the perspective of international trade and of opening government contracts to foreign goods, services and contractors. The link between government procurement and international trade is very straightforward in the global village in which we live now. For example, German industry wants to sell high speed trains to state enterprises in China, whereas Chinese giants like Huawei want to sell communications systems in the US, and so forth. However, in practice public procurement markets are still largely closed to free international competition, because governments still protect public procurement markets in more or less covert manner. The purpose of my project has been to look at interferences in foreign regulatory matters as a form of modern protectionism in public procurement markets. In simple terms, I wanted to prove that such interference undermine international liberalization of public procurement markets. And I wanted to propose some solutions to the problem which I had illustrated in the first place.