The FSIA’s Direct Effects Problem

Post authored by Lance Huckabee, JD candidate and Global Legal Scholar at the University of Pittsburgh School of Law

When a foreign sovereign breaches a commercial contract with a private entity, what recourse does the wronged party have? In the United States, the Foreign Sovereign Immunities Act (FSIA) governs such disputes, providing an exception for commercial activity that causes a “direct effect” in the U.S. Yet, the definition of “direct effect” has remained elusive, leading to decades of judicial inconsistency and a deepening circuit split.

At the heart of this legal uncertainty is the Supreme Court’s decision in Republic of Argentina v. Weltover (1992), which sought to clarify the issue but instead left room for widely divergent interpretations. Some circuits have adopted a flexible, causation-based approach, analyzing whether a foreign state’s breach had an immediate consequence in the U.S. Others, like the recent D.C. Circuit decision in Wye Oak Tech., Inc. v. Republic of Iraq, have imposed rigid bright-line rules—specifically requiring that the contract contemplate the U.S. as a place of performance. This formalistic approach creates a dangerous loophole, allowing foreign states to structure agreements in a way that insulates them from jurisdiction. As a result, a U.S. business may suffer substantial financial harm from a foreign sovereign’s breach but find itself without legal recourse simply because the contract was silent on where payments were to be made.

This restrictive interpretation undermines the FSIA’s core purpose: to hold foreign sovereigns accountable when their commercial activities impact U.S. businesses. By prioritizing contractual language over economic reality, decisions like Wye Oak erode the ability of American companies to seek redress, making sovereign breaches effectively consequence-free. A proper interpretation of the FSIA should align with Weltover’s focus on causation, ensuring that foreign states cannot exploit technicalities to evade liability. If left uncorrected, the current trend risks turning the FSIA into little more than a paper shield—one that protects sovereigns rather than those they harm.

The Wye Oak decision exacerbates both intra- and inter-circuit inconsistencies, further complicating the FSIA’s application and weakening the commercial activity exception in breach-of-contract cases. By imposing a rigid bright-line rule, it unduly narrows the scope of what qualifies as a “direct effect,” creating uncertainty for U.S. businesses engaged in international commerce. With Wye Oak’s attorneys petitioning for certiorari in January 2025, the case presents a critical opportunity for the Supreme Court to resolve the longstanding circuit split on the FSIA’s direct effects clause.

Chinese International Lawyers Bulletin: Call for Submissions

With the trend of globalization, legal exchange and cooperation, even competition and conflict between nations have become the norm. The demand for legal services in cross-border investment, international trade, and transnational dispute resolution is also sharply on the rise. As the world’s second-largest economy, China’s legal system is playing an increasingly significant role in cross-border legal services. However, the international legal community generally does not have much understanding of China’s foreign-related legal system and practice. There is a need for a platform that can, systematically and timely, provide information for the Chinese foreign-related legal development including updating China’s foreign-related legal policy, explaining the making and amending of relevant Chinese laws and reporting Chinese foreign-related cases etc. Read more

University of Edinburgh: Lecturer in Global Law

The University of Edinburgh is looking to fill a new position in Global Law – which is understood to include private international law. More here.

Virtual Workshop (in German) on November 12: Dennis Solomon on the foreign element in Private International Law and International Civil Procedure Law

On Tuesday, November 12, 2024, the Hamburg Max Planck Institute will host its monthly virtual workshop Current Research in Private International Law at 11:00-12:30 (CET). Prof. Dr. Dr. h.c. Dennis Solomon, LL.M. (Berkeley) (University of Passau) will speak, in German, about the topic

 

The foreign element in Private International Law and International Civil Procedure Law: same same, but different?

The presentation will be followed by open discussion. All are welcome. More information and sign-up here.

If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.

Delhi High Court Grants Rare Anti-Enforcement Injunction: Implications for International Disputes

By Ananya Bhargava, Jindal Global Law School, OP Jindal Global University, India.

Recently, the Delhi High Court in the case of Honasa Consumer Limited v RSM General Trading LLC granted an anti-enforcement injunction against the execution proceedings instituted in the Dubai Court on the ground that it threatened the arbitral process in India. The Court deemed the proceedings before the Dubai Court as an attempt to frustrate a possible arbitration envisaged by the contract between the parties.  The injunction was granted under S.9 of the Indian Arbitration and Conciliation Act 1996 as an “interim measure.”  This is a significant turning point in the intersection of arbitration and cross-border litigation in India since the remedy of anti-enforcement injunction is rarely granted by judicial authorities across jurisdictions.

Read more

Prof. Diego P. Fernández Arroyo is appointed president of the Curatorium of the Hague Academy of International Law

This month Prof. Diego P. Fernández Arroyo, a renowned expert in Private International Law, has been appointed president of the Curatorium of the Hague Academy of International Law. He succeeded Prof. Yves Daudet. For more information, click here and here.

Prof. Fernández Arroyo is the first Latin American to ever hold that position.

Below is an image circulated by ASADIP. Many congratulations!

6e Journée de droit patrimonial international, Université de Lausanne, 12 Sept 24

On 12 September 2024, the Centre de droit comparé, européen et international (CDCEI) and the Centre du droit de l’entreprise (CEDIDAC) at the Université de Lausanne are hosting the 6e Journée de droit patrimonial international. The conference will focus on the EU Succession Regulation (no. 650/2012) and the section on international successions of the Swiss Private International Law Act.

The flyer can be found here.

 

Yong Pung How Professorship Lecture 2024

The Yong Pung How Professorship Lecture 2024 will be held on Thursday 23 May 2024 5:00 to 6:30pm Singapore time. Professor Yeo Tiong Min, SC (Hon), who holds the Yong Pung How Chair Professor of Law at Singapore Management University, will be speaking on ‘Past, Present, and Future Tensions: Jurisdiction over Absent Defendants’.

The synopsis is as follows: ‘This lecture considers the historical backdrop to the current law in Singapore on when overseas defendants may be subject to the in personam jurisdiction of the court, with a view to understanding the old and new issues arising from the overhaul of the rules for service out of jurisdiction in 2021 and the amendments in 2023 to accommodate the Hague Service Convention. The future-readiness of these rules will also be considered.’

The event will be in hybrid format. Further details may be found here.

American Society of International Law Private International Law Interest Group Editor Recruiting

• PILIG newsletter editors recruiting

American Society of International Law Private International Law Interest Group publishes a newsletter and commentaries covering private international law development in Africa, Asia, Europe, North America, Oceania, and South America.

The editor team is working on the 2024 issue and invites scholars, practitioners, and students to contact us to become a PILIG newsletter editor.

ASIL Private International Law Interest Group Co-Chairs

Jeanne Huang <jeanne.huang@sydney.edu.au>

George Tian <YiJun.Tian@uts.edu.au>

Call for papers workshop Collective Actions on ESG

For a workshop on collective actions on ESG toics that will take place in Amsterdam on 21 and 22 November 2024 a call for paper has been posted, deadline 1 July 2024.

As a follow-up from the 4th International Class Action Conference in Amsterdam, 30 June – 1 July 2022, the University of Amsterdam, Tilburg University and Haifa University are jointly organizing a workshop on large scale collective actions on Environmental, Social and Governance topics. The workshop is intended to act as a forum for the sharing of experiences and knowledge. In an increasingly interconnected world, such opportunities for international scholars and practitioners to come together and discuss notes and views on the development of collective redress in their jurisdictions, are more relevant than ever. We choose to organize this as a workshop centered around academic papers in order to both give serious substance to the forum and to convert the exchange of knowledge into lasting contributions in the shape of publications in a special issue journal.

More information is available here: Call for papers for workshop on ESG collective action in Amsterdam – 21 and 22 Nov 2024