Source: https://supreme.justia.com/cases/federal/us/551/193/opinion.html
Timestamp: 2016-10-26 11:32:05
Document Index: 138941967

Matched Legal Cases: ['§1441', '§1604', '§1605', '§1604', '§1605', '§102', '§68', '§543', '§543', '§540']

Permanent Mission of India to United Nations v. City of New York (Opinion by Justice Thomas) :: 551 U.S. 193 (2007) :: Justia U.S. Supreme Court Center Log In
› Permanent Mission of India to United Nations v. City of New York
Permanent Mission of India to United Nations v. City of New York 551 U.S. 193 (2007)
On April 2, 2003, the City filed complaints in state court seeking declaratory judgments to establish the validity of the tax liens.[Footnote 1] Petitioners removed their cases to federal court, pursuant to 28 U. S. C. §1441(d), which provides for removal by a foreign state or its instrumentality. Once there, petitioners argued that they were immune from the suits under the FSIA’s general rule of immunity for foreign governments. §1604. The District Court disagreed, relying on the FSIA’s “immovable property” exception, which provides that a foreign state shall not be immune from jurisdiction in any case in which “rights in immovable property situated in the United States are in issue.” §1605(a)(4).
“[T]he FSIA provides the sole basis for obtaining jurisdiction over a foreign state in federal court.” Argentine Republic v. Amerada Hess Shipping Corp., 488 U. S. 428, 439 (1989). Under the FSIA, a foreign state is presumptively immune from suit unless a specific exception applies. §1604; Saudi Arabia v. Nelson, 507 U. S. 349, 355 (1993). At issue here is the scope of the exception where “rights in immovable property situated in the United States are in issue.” §1605(a)(4). Petitioners contend that the language “rights in immovable property” limits the reach of the exception to actions contesting ownership or possession. The City argues that the exception encompasses additional rights in immovable property, including tax liens. Each party claims international practice at the time of the FSIA’s adoption supports its view. We agree with the City.
At the time of the FSIA’s adoption in 1976, a “lien” was defined as “[a] charge or security or incumbrance upon property.” Black’s Law Dictionary 1072 (4th ed. 1951). “Incumbrance,” in turn, was defined as “[a]ny right to, or interest in, land which may subsist in another to the diminution of its value . . . .” Id., at 908; see also id., at 941 (8th ed. 2004) (defining “lien” as a “legal right or interest that a creditor has in another’s property”). New York law defines “tax lien” in accordance with these general definitions. See N. Y. Real Prop. Tax Law Ann. §102(21) (West Supp. 2007) (“ ‘Tax lien’ means an unpaid tax … which is an encumbrance of real property …”). This Court, interpreting the Bankruptcy Code, has also recognized that a lienholder has a property interest, albeit a “nonpossessory” interest. United States v. Security Industrial Bank, 459 U. S. 70, 76 (1982).
Our reading of the text is supported by two well-recognized and related purposes of the FSIA: adoption of the restrictive view of sovereign immunity and codification of international law at the time of the FSIA’s enactment. Until the middle of the last century, the United States followed “the classical or virtually absolute theory of sovereign immunity,” under which “a sovereign cannot, without his consent, be made a respondent in the courts of another sovereign.” Letter from Jack B. Tate, Acting Legal Adviser, U. S. Dept. of State, to Acting U. S. Attorney General Phillip B. Perlman (May 19, 1952) (Tate Letter), reprinted in 26 Dept. of State Bull. 984 (1952), and in Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U. S. 682, 711, 712 (1976) (App. 2 to opinion of the Court). The Tate Letter announced the United States’ decision to join the majority of other countries by adopting the “restrictive theory” of sovereign immunity, under which “the immunity of the sovereign is recognized with regard to sovereign or public acts (jure imperii) of a state, but not with respect to private acts (jure gestionis).” Id., at 711. In enacting the FSIA, Congress intended to codify the restrictive theory’s limitation of immunity to sover-
eign acts. Republic of Argentina v. Weltover, Inc., 504 U. S. 607, 612 (1992); Asociacion de Reclamantes v.
United Mexican States, 735 F. 2d 1517, 1520 (CADC 1984) (Scalia, J.).
As a threshold matter, property ownership is not an inherently sovereign function. See Schooner Exchange v. McFaddon, 7 Cranch 116, 145 (1812) (“A prince, by acquiring private property in a foreign country, may possibly be considered as subjecting that property to the territorial jurisdiction, he may be considered as so far laying down the prince, and assuming the character of a private individual”). In addition, the FSIA was also meant “to codify … the pre-existing real property exception to sovereign immunity recognized by international practice.” Reclamantes, supra, at 1521 (Scalia, J.). Therefore, it is useful to note that international practice at the time of the FSIA’s enactment also supports the City’s view that these sovereigns are not immune. The most recent restatement of foreign relations law at the time of the FSIA’s enactment states that a foreign sovereign’s immunity does not extend to “an action to obtain possession of or establish a property interest in immovable property located in the territory of the state exercising jurisdiction.” Restatement (Second) of Foreign Relations Law of the United States §68(b), p. 205 (1965). As stated above, because an action seeking the declaration of the validity of a tax lien on property is a suit to establish an interest in such property, such an action would be allowed under this rule.
But as the City shows, it is far from apparent that the term “real action”—a term derived from the civil law—is as limited as petitioners suggest. See Chateau Lafayette Apartments, Inc. v. Meadow Brook Nat. Bank, 416 F. 2d 301, 304, n. 7 (CA5 1969). Moreover, the exception for property held “on behalf of the sending State” concerns only the case—not at issue here—where local law requires an agent to hold in his own name property used for the purposes of a mission. 1957 Y. B. Int’l L. Comm’n 94–95 (402d Meeting, May 22, 1957); see also Deputy Registrar Case, 94 I. L. R. 308, 313 (D. Ct. The Hague 1980). Other tribunals construing Article 31 have also held that it does not extend immunity to staff housing. See id., at 312; cf. Intpro Properties (U. K.) Ltd. v. Sauvel, [1983] 1 Q. B. 1019, 1032–1033. In sum, the Vienna Convention does not unambiguously support either party on the jurisdictional question.[Footnote 2] In any event, nothing in the Vienna Convention deters us from our interpretation of the FSIA. Under the language of the FSIA’s exception for immovable property, petitioners are not immune from the City’s suits.
Footnote 1 The City concedes that even if a court of competent jurisdiction declares the liens valid, petitioners are immune from foreclosure proceedings. See Brief for Respondent 40 (noting that there is no FSIA immunity exception for enforcement actions). The City claims, however, that the declarations of validity are necessary for three reasons. First, once a court has declared property tax liens valid, foreign sovereigns traditionally concede and pay. Second, if the foreign sovereign fails to pay in the face of a valid court judgment, that country’s foreign aid may be reduced by the United States by 110% of the outstanding debt. See Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006, §543(a), 119 Stat. 2214 (hereinafter Foreign Operations); Consolidated Appropriations Act of 2005, §543(a), 118 Stat. 3011 (hereinafter Consolidated Appropriations). Third, the liens would be enforceable against subsequent purchasers. 5 Restatement of Property §540 (1944).
Footnote 2 The City offers several other arguments against immunity based on the Vienna Convention, but those arguments ultimately go to the merits of the case, i.e., whether petitioners are actually responsible for paying the taxes. Because the only question before us is one of jurisdiction, and because the text and historical context of the FSIA demonstrate that petitioners are not immune from the City’s suits, we leave these merits-related arguments to the lower courts.