Opinion ID: 151499
Heading Depth: 4
Heading Rank: 1

Heading: Successor State Assumption of Liability

Text: State succession occurs when one State is replaced by another in its responsibility for the international relations of territory. Paul Williams & Jennifer Harris, State Succession to Debts and Assets: The Modern Law and Policy, 42 Harv. Int'l L.J. 355, 362 & n. 21 (2001) (internal quotation marks and citations omitted). The Third Restatement of Foreign Relations Law provides that where part of the territory of a state becomes territory of another state, local public debt [is] transferred to the successor state; [and] where a state is absorbed by another state, the public debt. . . pass[es] to the absorbing state. Restatement (Third) of Foreign Relations Law § 209(2)(a)-(b) (1987). Mortimer alleges that East Germany and the FRG automatically acceded to liability for the East German Bonds as successor states of Prussia and that this assumption of liability constitutes an action. . . based upon a commercial activity 28 U.S.C. § 1605(a)(2). While we have our misgivings as to whether successor state liability is even applicable in this case, [12] we need not reach that question. Even if we were to find successor state liability, Mortimer's cause of action would nevertheless not lie because it would fail to allege an action . . . based upon a commercial activity. § 1605(a)(2). Accession to liability by the rules of customary international law entails no action by the successor state with respect to the commercial activity at issuethe assumption of liability. The state performs no action when it automatically assumes liability. This stands in sharp contrast to a country's assumption of liability through an explicit act, such as West Germany did here. E.g., Weltover, 504 U.S. at 609, 615, 112 S.Ct. 2160 (holding that Argentina's issuance of bonds was an action that satisfied the FSIA's commercial activity exception). Because no action within the meaning of § 1605(a)(2) occurs when a successor state accedes to liability, the requirements of FSIA's commercial activity exception are not met in that context and jurisdiction under the FSIA based on such an accession will not lie.