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Halkbank Ruling Gives Gov't Leverage But Erodes Comity

Solomon Shinerock and Annika Conrad
June 30, 2023

On April 19, the U.S. Supreme Court held for the first time that the Foreign Sovereign Immunities Act did not offer immunity to sovereign entities for criminal charges, meaning that foreign sovereigns and foreign-owned entities are subject to criminal prosecution in U.S. courts.

In Turkiye Halk Bankasi A.S. v. U.S., the Supreme Court held that the FSIA did not provide immunity to a Turkish state-owned bank, Halkbank, for criminal charges, and that the bank could be prosecuted for evading U.S.-imposed economic sanctions against Iran.

By limiting FSIA immunity to only civil causes of action — and even then, the immunity is still limited — the court shifted power from the legislature to the executive, buttressing the theory of a powerful unitary executive.

Though favoring executive power in foreign relations matters is standard separation of powers doctrine, the holding could potentially introduce domestic criminal litigation against foreign entities into the mix of foreign policy tools. The absence of Congress' protections codified in the FSIA erodes the historic principle of comity in favor of the U.S.' imposition of domestic law on foreign states.

But the first question for Halkbank, or for any foreign entity or sovereign wealth fund now potentially subject to criminal litigation, is: What do I do now?

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