The US Court of Appeals for the Second Circuit recently issued a decision that will be important for foreign sovereign entities and those who manage them. In In re Terrorist Attacks on September 11, 2001,1 the Second Circuit held that the US Foreign Sovereign Immunities Act ("FSIA")2 applies to foreign government officials acting in their official capacities. Specifically, four princes of the Saudi royal family were immune from claims in the United States arising from the events of September 11th that were based on their acts as agents of the Saudi state — which also was immune. The court also held that a Saudi charitable organization was immune from US jurisdiction because it was an organ of the Saudi state under the FSIA, and that allegations about the activities of the Saudi princes relating to al Qaeda otherwise were too attenuated to support the jurisdiction of a US court.
The ruling related to a collection of cases brought by victims of the terrorist attacks, their families, and those who lost property in the September 11th attacks. Plaintiffs alleged that Saudi Arabia and four princes of the royal family who hold government positions made substantial contributions to and/or oversaw the Saudi High Commission for Relief to Bosnia and Herzegovina ("SHC"), with knowledge that the SHC actively supported and financed al Qaeda.
The FSIA is the sole basis for establishing US jurisdiction over a foreign state and its agencies or instrumentalities. Immunity is presumed unless a plaintiff establishes that one of the exceptions to immunity listed in the FSIA applies. The FSIA makes no reference to government officials. At least one federal circuit and the US government have opined that federal common law (i.e., law derived from prior court decisions) rather than the FSIA provides whatever immunity may exist for foreign government officials. Here, plaintiffs argued that (i) the FSIA did not protect the princes, (ii) SHC was not an "agency" of the Saudi state, and (iii) several of the listed exceptions to immunity permitted claims against Saudi Arabia, the SHC, and the princes. The lower court dismissed the case as against the Kingdom, the Princes, and the SHC.
The Second Circuit affirmed the dismissal. Disagreeing with the stated position of the US government, the court joined five other circuit courts in ruling that the FSIA applies to foreign government officials, like the princes, when they act in their official capacities. Reasoning that a "state cannot act except through individuals," the court adopted, for purposes of the FSIA, a broad definition of "agency" as including "a thing or person through which action is accomplished."3 The court found that SHC was an organ of the Saudi state, and thus was immune from suit, because it (i) was created for a national purpose (channeling humanitarian aid to Bosnian Muslims) by a Saudi entity with the authority to do so, (ii) is actively supervised by the Saudi government, (iii) has employees who mostly work for the Saudi government, and (iv) can be sued in Saudi courts.4 Rejecting plaintiffs’ demand for discovery on SHC’s ownership structure, the court noted that SHC was "a non-corporate governmental entity that, like numerous agencies within our own government, has no owners or shareholders."5
Having found that the FSIA applied to these defendants, the court then held that none of the exceptions to immunity applied. The court noted that the FSIA has been amended to allow for terrorism-related claims, but that this exception is limited to states on a list maintained by the US government — and Saudi Arabia is not on that list. The court then refused to apply the general FSIA tort exception, noting that "[w]e and our sister circuits have repeatedly rejected efforts to shoehorn a claim properly brought under one exception into another."6 The court also refused to apply the commercial activity exception to sovereign immunity to claims that SHC laundered money to support terrorists.7
Finally, the court held that the Saudi princes did not otherwise have sufficient US contacts to support the jurisdiction of the court, holding that allegations about the princes' support for al Qaeda did not establish the required level of US contacts. Thus, plaintiffs did "not allege that the Four Princes directed the September 11 attacks or commanded an agent (or authorized al Qaeda) to commit them ... Rather, the plaintiffs rely on a causal chain to argue a concerted action theory of liability: the Princes supported Muslim charities knowing that their money would be diverted to al Qaeda, which then used the money to finance the September 11 attacks." Rejecting plaintiffs' theory, the court held that "[e]ven if the Four Princes were reckless in monitoring how their donations were spent, or could and did foresee that recipients of their donations would attack targets in the United States, that would be insufficient" to support personal jurisdiction because plaintiffs had not alleged facts showing that the defendants intentionally acted to direct activities at the United States.8
In recent years, victims of terrorist attacks have pursued claims against sovereigns, sovereign-related entities, sovereign individuals (including royal family members throughout the Mideast), and companies based on alleged financial support or connections with terrorist organizations that are beyond the reach of US courts or judgments.9 The ruling in the September 11th cases may make it harder for plaintiffs to pursue these types of claims.