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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
Publication of the fifth editions of the Practical Handbooks on the Operation of the 1965 Service and 1970 Evidence Conventions
The Permanent Bureau of the HCCH is pleased to announce that the fifth editions of the Practical Handbooks on the Operation of the 1965 Service and 1970 Evidence Conventions are now available for purchase in both paper and e-book format.
The 1965 Service and 1970 Evidence Conventions establish uniform frameworks of cooperation mechanisms to streamline, respectively, the transmission of documents for service abroad and the taking of evidence abroad. The Service and Evidence Handbooks are intended to assist users of the Conventions, including Central Authorities, government officials, courts, counsel and legal practitioners, by providing practical guidance on their implementation and operation.
The Practical Handbook on the 1965 Service Convention is designed first and foremost to assist users with the operation of the main and alternative channels of transmission and the provisions regarding adequate protection of the defendant. As for the Practical Handbook on the 1970 Evidence Convention, it is designed to assist users with the operation of the two systems of taking evidence that are provided by the Convention, namely (1) Letters of Request and (2) Consuls and Commissioners. The Practical Handbooks also explain how information technology is and may be used to further enhance the operation of the Conventions, including by incorporating, for the 1970 Evidence Convention, relevant information from the HCCH Guide to Good Practice on the Use of Video-Link.
Incorporating recent developments, court decisions, and practical examples provided by experts from around the world, as well as updates from the meeting of the Special Commission held in July 2024, the fifth editions of the Handbooks are essential resources for anyone involved in the implementation and operation of the 1965 Service and 1970 Evidence Conventions.
More information on how to purchase hard copies and/or e-book copies is available on the Publications section of the HCCH website (for the general public). Specific instructions for HCCH National and Contact Organs and Member Central Authorities designated under the Service and Evidence Conventions are also provided on the Publications section of the HCCH website.
This post is published by the Permanent Bureau of the Hague Conference of Private International Law (HCCH).
Extended Deadline – Call for Papers: “Tariffs: Emerging challenges in global trade” by the Journal of Law, Market & Innovation (JMLI)
We have recently shared the call for papers by the Journal of Law, Market & Innovation (JLMI) for its first issue of 2026. The deadline has now been moved to 20 July 2025.
For further information, we are again referring to the editors who can be reached at editors.jlmi@iuse.it.
Call for Papers: Special Issue of the Akdeniz University Faculty of Law Journal in Honor of Peter Hay
Necla Ozturk (Editor of the Akdeniz University Faculty of Law Journal) has kindly shared the following call for papers with us:
On the occasion of the 90th birthday of distinguished legal scholar Professor Dr. Peter Hay, Akdeniz University Faculty of Law Journal is preparing a special issue to be published in 2025, dedicated to his outstanding contributions to Private International Law and Comparative Law.
Throughout his illustrious academic career, Professor Hay has profoundly influenced the field through his pioneering work on the relationships between American, German, and European Private Law systems. His publications, teaching, and international engagements have left a lasting mark on the legal world.
We would be honored to receive a contribution from you for this commemorative issue. We especially welcome articles that address topics aligned with Professor Hay’s areas of expertise or offer critical reflections inspired by his scholarly legacy.
Suggested Topics Include:
• Private International Law
• Comparative Law
• Convergence/Divergence of Legal Systems
• American And European Private Law
• Critical Assessments of Professor Hay’s WorkSubmission Deadline: November 15, 2025
Languages Accepted: Turkish, English, German, French.
Submission Guidelines: https://dergipark.org.tr/en/pub/akdhfd/writing-rulesPlease submit your article via https://dergipark.org.tr/en/pub/akdhfd or hukukdergi@akdeniz.edu.tr by the deadline indicated above.
We look forward to your valuable contribution to this special issue that pays tribute to Professor Peter Hay’s scholarly achievements and influence.