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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.
The Explosion of Private International Law in Asian Scholarship
The 21st century has witnessed a remarkable surge in academic scholarship on private international law in Asia. This is not to say that significant studies on the subject were absent before this period. However, in recent decades, Asian scholars have brought renewed vigour and depth to the field, establishing private international law as a critical area of legal inquiry on the continent.
A testament to this intellectual flourishing is Hart Publishing’s extensive series on private international law in Asia, featuring no fewer than 16 volumes with Professors Anselmo Reyes and Paul Beaumont as Series Editors. These works serve as a rich repository of comparative legal thought, offering valuable insights that extend far beyond Asia’s borders. Scholars and practitioners seeking inspiration from diverse jurisdictions will find these books to be an essential resource. Moreover, other publishers have also contributed to this growing body of literature, further amplifying Asia’s voice in the global discourse on private international law.
Having read and reviewed many of these works on the blog, I am continually struck by the depth of scholarship they offer. Each new book reveals fresh perspectives, reinforcing the notion that private international law is not merely a regional concern but a truly global conversation.
As someone deeply engaged with African private international law, I have found immense value in these Asian publications. The parallels between Asia and Africa—particularly in terms of legal pluralism and cultural diversity—make these studies both relevant and instructive. The cross-pollination of ideas between these regions has the potential to strengthen the development of private international law in both continents.
What is most striking about this surge in Asian scholarship is its outward-looking nature. No longer confined to internal discussions, private international law in Asia is now exporting ideas, influencing legal developments worldwide. This is a phenomenon that deserves both recognition and emulation. The rise of Asian scholarship in private international law is not just an academic trend—it is a pivotal force shaping the future of global legal thought.
The $24 Billion Judgment Against China in Missouri’s COVID Suit
This article was written by Prof. William S. Dodge (George Washington University Law School) and first published on Transnational Litigation Blog. The original version can be found at Transnational Litigation Blog. Reposted with permission.
On March 7, 2025, Judge Stephen N. Limbaugh, Jr. (Eastern District of Missouri) entered a default judgment for more than $24 billion against the People’s Republic of China and eight other Chinese defendants for hoarding personal protective equipment (PPE) during the early days of the COVID pandemic in violation of federal and state antitrust laws. The Eighth Circuit had previously held that the Foreign Sovereign Immunities Act (FSIA) barred most of Missouri’s claims but that the hoarding claim fell within the act’s commercial activity exception.
Missouri now has the judgment against China that it wanted. But Missouri may find that judgment hard to enforce. As discussed below, there appear to be significant procedural problems with the judgment that at least some defendants might raise. More broadly, the properties of foreign states and their agencies or instrumentalities are entitled to immunity from execution under the FSIA. Immunity from execution is broader than immunity from suit, and it is not clear that any of the defendants have property in the United States that can be used to satisfy the judgment. Read more
News
Making private law resilient: The role of private litigation in a democracy – PhD scholarship at Leuphana University Lüneburg, Germany
Axel Halfmeier (Leuphana University Lüneburg, Germany) has kindly shared the following advertisement for a 3-year PhD scholarship with us, which will be part of a research project on ‘Making private law resilient: The role of private litigation in a democracy’.
The research project will investigate the role of private litigation in a democracy, in particular collective litigation, public interest actions or strategic litigation. There is an ongoing discussion about these phenomena and whether they support deliberative democracy by empowering citizens or are anti-democratic in the sense that they transfer excessive power to the judiciary in political questions. To answer this question, normative (legal doctrine, legal theory, political theory) but also empirical approaches are possible. The project can also focus on specific areas of private law, such as media and data protection law, climate litigation, capital markets or tort law in general. The exact study design will be discussed with a view to the interests and qualifications of the candidate.
Application deadline is October 1st, 2025.
Further information on the ‘Embracing Transformation’ scholarships can be found here.
Further information on the specific research project on ‘Democratic Resilience’ is available here.
Questions may be directed to Axel Halfmeier.
HCCH Monthly Update: June 2025
Conventions & Instruments
On 17 June 2025, the Republic of Korea deposited its instrument of ratification of the 1993 Adoption Convention. With the ratification of the Republic of Korea, the 1993 Adoption Convention now has 107 Contracting Parties. It will enter into force for the Republic of Korea on 1 October 2025. More information is available here.
On 30 June 2025, Denmark signed the 2007 Child Support Convention and deposited its instrument of approval of the Convention. With the approval of Denmark, 55 States and the European Union are bound by the 2007 Child Support Convention. It will enter into force for Denmark on 1 October 2025. More information is available here.
Meetings & Events
On 5 June 2025, the first meeting of the Working Group established to finalise the Good Practices document relevant to the 1965 Service, 1970 Evidence, and 1980 Access to Justice Conventions was held online, hosted by the Permanent Bureau. More information is available here.
On 13 June 2025, the Working Party on Cross-Border Family Mediation in the Context of the Malta Process met online. More information is available here.
From 16 to 18 June 2025, the Experts’ Group on Digital Tokens met for the first time. More information is available here.
From 25 to 27June 2025, HCCH Asia Pacific Week 2025 was held in Seoul, co-hosted by the Republic of Korea and the HCCH. The conference brought together over 400 participants from across Asia and the Pacific and beyond for wide-ranging discussions on the most recent developments relating to the HCCH’s key Conventions and instruments, ongoing normative projects, and possible future work. More information is available here.
Other Developments
On 2 June 2025, the Host Seat Agreement between Morocco and the HCCH was signed in Rabat, establishing the Regional Office for Africa of the HCCH. More information is available here.
These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.