The United States Supreme Court has rejected arguments made by Turkiye Halk Bankasi A.S. ("Halkbank") that, as a majority state-owned bank and thus an agency or instrumentality of the Republic of Türkiye, it enjoys immunity from criminal prosecution in the United States.
Specifically, the Supreme Court addressed two questions. First, does 18 U.S.C. ' 3231 ("Section 3231")'which provides district courts with subject-matter jurisdiction over "all offenses against the laws of the United States"'allow the United States to bring criminal prosecutions against foreign sovereign defendants in federal court? If so, does the Foreign Sovereign Immunities Act (FSIA) provide foreign sovereign defendants immunity from such criminal prosecutions?
In an opinion issued on April 19, 2023, the Supreme Court held that (i) the district court has jurisdiction under Section 3231 over the United States' prosecution of Halkbank, and (ii) the FSIA does not provide foreign sovereign defendants immunity from criminal prosecution.1 The Supreme Court, however, remanded the case back to the Second Circuit Court of Appeals to decide whether Halkbank is entitled to common law immunity from prosecution.
I. Background and Lower Court Decisions2
On October 15, 2019, the U.S. Attorney's Office for the Southern District of New York charged Halkbank with a six-count indictment alleging fraud, money laundering, and sanctions offenses "related to the bank's participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran."3 On August 10, 2020, Halkbank moved to dismiss the indictment on sovereign immunity grounds under the FSIA.4 The district court denied Halkbank's motion, finding that "Halkbank [was] not immune from prosecution."5 The district court reasoned that (i) the FSIA did not "appear to grant immunity in criminal proceedings," and (ii) even if it did, Section 1605(a)'s commercial-activity exception would apply and thus bring Halkbank within the scope of the court's jurisdiction; the district court further rejected Halkbank's argument that it was entitled to immunity under common law.6
The Second Circuit affirmed. The court of appeals held, among other things, that the district court had "subject matter jurisdiction over the federal criminal prosecution of Halkbank," under Section 3231 (the general grant of criminal jurisdiction).7 The Second Circuit found that it did not need to address whether Section 1604 of the FSIA, which recognizes that, under existing international agreements, some foreign states will be immune "from the jurisdiction of the courts of the United States and of the States," conferred immunity on foreign sovereigns in the criminal context.8 The Second Circuit so found...
