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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
HCCH Monthly Update: December 2025
HCCH Monthly Update: December 2025
Membership
On 4 December 2025, Indonesia applied to become a Member of the HCCH. On the same day, the Secretary General of the HCCH opened the six-month voting period during which all current Members of the HCCH may cast their vote on the proposal. Following this voting period, and provided a majority of votes are cast in favour, Indonesia will be invited to become a Member by depositing an instrument of acceptance of the Statute of the HCCH. More information is available here.
Meetings & Events
On 1 December 2025, the third 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. More information is available here.
From 2 to 4 December 2025, the Experts’ Group on Carbon Markets met for the third time, continuing its study of the private international law issues arising from carbon markets. More information is available here.
On 10 December 2025, the third Post Adoption Services Workshop was held online, hosted by the Central Authority of Canada under the 1993 Adoption Convention. The event had over 120 participants from over 35 Contracting Parties to the Convention. More information is available here.
On 11 December 2025, the Permanent Bureau (PB) of the HCCH hosted a book launch for the publication of The Hague Convention on Choice of Court Agreements: A Commentary, in celebration of the tenth anniversary of the entry into force of the 2005 Choice of Court Convention. More information is available here.
Other Developments
The PB of the HCCH has launched a public consultation on the Draft Text of a possible new convention on parallel proceedings and related actions, to be held from 18 November 2025 to 26 January 2026. Experts, practitioners and judges from diverse legal traditions with experience in cross-border litigation and private international law more broadly are encouraged to participate in the consultation. More information is available here.
On 23 December, the PB of the HCCH announced the conclusion of the e-Country Profiles project, resulting in the development and modernisation of online Country Profiles for a number of key HCCH Conventions. Contracting Parties to these Conventions can now easily publish legal and practical information about their implementation of these instruments, making the e-Country Profiles a valuable tool for use by public authorities, legal practitioners and other interested parties. 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.
The Role of Precedents in Final Appeal Proceedings: Germany, Israel, USA — Panel Discussion (On-Site/Remote), Bonn, 20 January 2026, 6 p.m. German time
The Regional Hubs Bonn, Cologne and Düsseldorf of the German-American Lawyers’ Association (DAJV), together with the German-Israeli Lawyers’ Association (DIJV), the leading law firm Redeker Sellner Dahs and the University of Bonn, invite to a panel discussion at the Bonn offices of Redeker Sellner Dahs.
Germany has recently introduced a “precedent procedure” (“Leitentscheidungsverfahren”) in the German Code of Civil Procedure (“Zivilprozessordnung”, ZPO). The new legislation, only applicable if the outcome is relevant to a “multitude” (“Vielzahl”) of other proceedings, entered into force on 31 October 2024. On that very day, the German Federal Court of Justice (Bundesgerichtshof) immediately made use of this new tool and elevated to a “precedent procedure” a pending litigation against Facebook on damages for immaterial harm from “scraping” according to Article 82 European General Data Protection Regulation (“Scraping Complex”). This was to ensure that the Court be able to deliver an opinion on the relevant question of law even if the parties were to settle the case meanwhile. In the following, the parties did not settle, and the Court delivered its regular judgment soon afterwards, on 18 November 2024. Since then, the Court has not yet used this tool again, as it seems.
Germany is a civil law jurisdiction where, formally speaking (and leaving some exceptions aside), there are no binding precedents. Yet, there has been a long debate on “persuasive precedents”, i.e. the expectation and practice that lower courts follow the judgments of the Federal Court of Justice (and other highest courts), unless they put forward thorough legal reasoning for departing. A plethora of fundamental and practically relevant questions arises in this context: Do judgments of the courts create “law” or do they merely tell us what the law says that the legislator enacted? What, if any, are the constitutional constraints on judicial development of the law? Is the concept of “persuasive precedents” a satisfactory calibration between rendering justice in the individual case and stability of the legal system? What is the status of an opinion of the German Federal Court of Justice in the new precedent procedure in this context? Why does it only cover cases with relevance to a multitude of other proceedings? Is this “multitude” the same as the relevance of the point in law for a “multitude” of cases to grant access to first and final appeal (“fundamental relevance” [“grundsätzliche Bedeutung”])? What is the role of the three layer appeal system in its entirety in this regard? How does the independence of the judiciary come into play and how does this institutional guarantee relate to available disciplinary measures against “slow” and “ineffective” judges? To what extent do judges tend to discipline themselves by following precedents to promote themselves for higher-ranking posts?
All of these questions are highly relevant in other jurisdictions as well, but they are placed in fundamentally different contexts. Israel is a mixed jurisdiction with elements from common law and civil law. How do the Israeli Supreme Court and the lower courts deal with these issues? What is the law-making role of the Supreme Court in the context of constitutional tradition and practice? Is it advisable to combine the function of final appeal with judicial review of the executive and legislative branches of the state? Is there a particular politicization of final appeal proceedings as well, next to this trend in regard to judicial review proceedings? What effect should the role of precedents have on the procedure of appointing judges to the Supreme Court? Similar questions appear with a view to the United States, but there these questions are placed within a common law context. Having regard to recent decisions of the Supreme Court, how binding is precedent, and when can it be overturned? Also, what is the purpose of the “shadow docket”, and what does its apparently increased use signify in current Supreme Court practice? How important is precedent for the rule of law?
These and other questions will be addressed by a distinguished panel that represents the three jurisdictions and diverse perspectives:
Panelists:
Dr Thomas von Plehwe, Attorney admitted to the Bar of the German Federal Court of Justice (“Rechtsanwalt beim Bundesgerichtshof”), Karlsruhe, Germany.
Professor Barak Medina, The Landecker-Ferencz chair in the study of Protection of Minorities and Vulnerable Groups, Hebrew University Jerusalem, Israel.
Professor Russell A. Miller, J.B. Stombock Professor of Law, Washington & Lee School of Law, Lexington, USA.
Moderators:
RA Professor Dr Peter Andreas Brand, Redeker Sellner Dahs Rechtsanwälte, Berlin Offices.
Professor Dr Matthias Weller, Mag.rer.publ., MAE, Director of the Institute for German and International Civil Procedural Law, Regional Board Member for Bonn of the DAJV.
The venue is Willy-Brandt-Allee 11, 53113 Bonn. Participation is possible on site or via video conference.
We are looking forward to seeing you there!
Registration at sekretariat.weller@jura.uni-bonn.de