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The Immunity of Foreign Subsidiaries under the Foreign Sovereign Immunities Act

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  • International Law
  • Political Science


The Immunity of Foreign Subsidiaries under the Foreign Sovereign Immunities Act 1 I. Introduction A train derails, killing hundreds of people. Representatives of the decedents sue the train company in state court after finding that the accident was a result of a defective part in the brakes. The train company removes to federal court and impleads both the brake manufacturer, a foreign company indirectly owned by a foreign government, and the brake manufacturer’s subsidiaries, which manufactured the defective part. Can the train company proceed with its impleader action against the brake manufacturer’s subsidiaries? Is the brake manufacturer’s subsidiary immune from litigation under the Foreign Sovereign Immunities Act (“FSIA”)? The FSIA provides the exclusive means by which a federal court may exercise subject matter jurisdiction over a foreign state and its instrumentalities.1 The FSIA provides that “[a]ny civil action brought in State court against a foreign state … may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending.”2 Whether the foreign company would be afforded immunity by the FSIA depends on whether the company is considered an “agency or instrumentality” because the company is owned by a foreign government. Prior to 2003, the circuits were split over whether the FSIA confers federal subject matter jurisdiction on the lower tiers of a multi-tiered subsidiary which is majority owned by a foreign state or its political subdivision, or whether federal jurisdiction should be limited to first-tier subsidiaries.3 The Ninth Circuit refused to 1 Gates v. Victor Fine Foods, 54 F.3d 1457, 1459 (9th Cir. 1995); EIE Guam Corp. v. The Long Term Credit Bank of Japan, Ltd., No. 02-16214, 2003 U.S. App. LEXIS 3531, *5 (9th Cir. February 23, 2003). 2 28 U.S.C.A. §1441(d) (1994). 3 Andrew Lowenstein, The Foreign Sove

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