U.S. Supreme Court To Decide The Scope Of Federal Courts' Criminal Jurisdiction Over Foreign Sovereign Defendants

• Published date: 14 October 2022
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Criminal Law, Money Laundering, Sovereign Immunity: Public Sector Government, Crime
• Law Firm: Morrison & Foerster LLP
• Author: Mr J. Alexander Lawrence and Victor Lopez

On October 3, 2022, the United States Supreme Court granted certiorari in Turkiye Halk Bankasi A.S. v. United States, No. 21-1450 ("Halkbank"), to determine whether federal courts have subject-matter jurisdiction over criminal prosecutions against foreign sovereign defendants.¹ Specifically, Halkbank, a bank majority-owned by Turkey, asks the Court to decide whether 18 U.S.C. ' 3231 ("Section 3231") and the Foreign Sovereign Immunities Act (FSIA) grant federal courts jurisdiction over criminal actions brought against foreign states or their agencies or instrumentalities.²

Section 3231 and the FSIA

Section 3231 provides that "[t]he district courts of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States."³ Thus, Section 3231 grants federal courts broad jurisdiction over criminal matters.

The FSIA generally provides that "[t]he district courts shall have original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) of this title."⁴ And the FSIA makes clear that a "foreign state" is not limited to countries, but includes "a political subdivision of a foreign state or an agency or instrumentality of a foreign state."⁵ Such agencies or instrumentalities include foreign corporations where a majority of their "shares or other ownership interest is owned by a foreign state or political subdivision thereof."⁶ Thus, the FSIA applies to many foreign majority-owned enterprises, including many banks like Halkbank.

From the FSIA's general grant of jurisdiction follow two key provisions that are at issue in Halkbank. Section 1604 of the FSIA recognizes that, under existing international agreements, some foreign states will be immune "from the jurisdiction of the courts of the United States and of the States," but Section 1604 carves out certain exceptions to this general recognition of sovereign immunity.⁷ In turn, Section 1605 of the FSIA enumerates these exceptions.⁸ In particular, Section 1605(a)(2), the commercial-activity exception, provides the exception at issue in Halkbank and states, in part, that "[a] foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which the action is based upon a commercial activity carried on in the United States by the foreign state . . . ."⁹

The Court will decide whether Section 3231 of the...