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Florida State University Journal of Transnational Law & Policy

Phillip Riblett

Abstract

Foreign state-owned companies (SOCs), particularly those in the energy sector, are more powerful than ever before. Yet under the Foreign Sovereign Immunities Act of 1976 (FSIA), agencies and instrumentalities-a category in which many SOCs fall-enjoy a presumption of immunity. At the same time, however, pursuant to the U.S. Supreme Court's 1983 decision in First National City Bank v. Banco Para el Comercio Exterior de Cuba, in most cases the foreign state also enjoys the benefit of legal separateness-i.e., it is very difficult for a third party to "pierce the corporate veil" between the sovereign and its subsidiary. Thus, SOCs enjoy immunity (a principle applied to sovereigns) while their parent governments are not responsible for the obligations of the SOCs (a principle more typically applied to traditional companies). In the author's view, there is a significant underlying tension in such cases that gives one pause in an era of dominant SOCs. Over thirty years following the enactment of the FSIA, it is appropriate to re-examine the legal regime applicable to SOCs. In addition to the issues outlined above, there is significant confusion in the courts with respect to when an SOC is considered an agency or instrumentality and thus is entitled to a presumption of immunity. This Article proposes amendments to the FSIA in order to provide a more predictable and just legal regime for application to SOCs. In particular, the proposed amendments would involve eliminating immunity for agencies and instrumentalities altogether and revising the definition of foreign state to include specific types of entities, as well as other entities that engage in essentially public, noncommercial activity.

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