Year In Review And Developments To Watch In Foreign Sovereign Litigation In U.S. Courts

In 2024, U.S. courts issued consequential decisions in cases brought against foreign states and their agencies and instrumentalities under the Foreign Sovereign Immunities Act ("FSIA").¹This alert summarizes key decisions in FSIA cases and other litigation involving foreign sovereign defendants and discusses developments that will likely have significant implications for litigation involving foreign sovereigns in 2025 and beyond.

The FSIA provides the sole basis for jurisdiction in U.S. courts over foreign states and their agencies and instrumentalities. Although such entities are presumptively immune under U.S. law, they are subject to jurisdiction in U.S. courts when one of the FSIA's exceptions to immunity applies and service is properly effected. Nearly 80 new civil actions under the FSIA were filed in federal courts in 2024, indicating that U.S. courts remain an attractive forum for claims against foreign sovereign defendants. The majority of these cases were brought under the FSIA's terrorism exception – which applies when the action seeks damages for personal injury or death caused by an act of terrorism, or material support for such an act, by a designated state sponsor of terrorism – or the commercial activity exception – which applies when the action is based on commercial activity performed in the United States or with direct effects in the United States. Cases involving a foreign state's waiver of immunity or efforts to confirm and enforce arbitration awards against foreign states remained active areas of litigation as well.

Key developments in 2024 include:

1. The Supreme Court granted certiorari to address several key FSIA issues during its 2024-2025 term. After granting cert and hearing oral argument in 2024, the Court issued a decision in February 2025 in Republic of Hungary v. Simon, holding that the requisite commercial nexus to the United States had not been satisfied in an expropriation case where Hungary allegedly took property in violation of international law from Hungarian Holocaust victims, commingled the expropriation proceeds with other government funds, and later used funds from those commingled accounts in connection with commercial activities in the United States. The Court held that such commingling allegations alone are insufficient to establish the required commercial nexus with the United States. The Supreme Court heard oral argument in CC/Devas (Mauritius) Limited v. Antrix Corp. Ltd., which has the potential to raise the bar for plaintiffs seeking to establish personal jurisdiction over foreign state defendants. The Supreme Court also granted, vacated, and remanded in a case concerning the law applicable to determining ownership rights in art expropriated by the Nazi regime, and is considering cert petitions in several consequential cases involving the FSIA's terrorism, arbitration, expropriation, and commercial activity exceptions.
2. The D.C. Circuit weighed in on key cases concerning the confirmation and enforcement of arbitration awards against foreign sovereigns. Notably, the D.C. Circuit held that U.S. courts have jurisdiction to enforce arbitral awards issued in intra-EU disputes under the Energy Charter Treaty in NextEra Energy v. Kingdom of Spain. This decision may prompt further involvement of U.S courts in European disputes as holders of awards arising from intra-EU disputes have increasingly turned to U.S. courts to enforce their awards. This trend follows decisions from the EU's highest court holding that intra-EU arbitration is incompatible with EU law and decisions by national courts in several EU member states to annul, or refuse enforcement of intra-EU awards.
3. The Second Circuit issued important decisions in cases brought by holders of sovereign bonds issued by foreign states. For example, the decision in Petróleos de Venezuela, S.A. v MUFG Union Bank, N.A., held that the validity of Venezuelan bonds is a question of Venezuelan law, rather than New York law Although the bondholder plaintiffs may still establish liability for PDVSA's defaults on the bonds, the decision has further delayed their efforts and may make it impossible for them to join ongoing enforcement and attachment litigation by U.S. judgment holders in the U.S. District Court for the District of Delaware. The district court has ordered the sale of PDVSA's subsidiary, PDVH, to satisfy more than $20 billion in judgments against Venezuela and PDVSA.
4. Plaintiffs continued to file new cases under the FSIA's terrorism exception, which applies to claims against designated state sponsors of terrorism for damages caused by violent attacks, hostage-taking, torture, and other acts of terrorism. Of the 29 such cases filed in 2024, the majority were filed in the U.S. District Court for the District of Columbia. In 2024, the number of cases filed against Syria increased to 10 while the number filed against Iran decreased to 20. Courts in 2024 issued large punitive damages awards to plaintiffs, notwithstanding concerns expressed by some judges that such awards may not deter terrorism and may impose foreign policy burdens on the U.S. government.
5. Federal courts issued decisions in a number of consequential cases concerning the FSIA's expropriation and commercial activity exceptions. Some of these decisions narrowed the scope of these exceptions, making it potentially more difficult for plaintiffs to establish jurisdiction over foreign states in similar cases. However, other decisions demonstrate the continuing viability of these exceptions for vindicating the rights of U.S. litigants who have been harmed by foreign state conduct.

These developments are discussed in further detail below.

2024-2025 Litigation Developments:

1. The Supreme Court Has Decided – Or Will Decide – Several Key FSIA Issues During Its 2024-2025 Term

The Supreme Court has decided, or soon will decide, several important FSIA cases during its 2024-2025 term that will affect the ability of plaintiffs to establish jurisdiction over foreign states or their agencies or instrumentalities. Additionally, the Court is or will be considering cert petitions in numerous cases involving different exceptions to immunity under the FSIA.

On February 21, 2025, the Supreme Court issued a unanimous ruling in Republic of Hungary v. Simon, a case brought by Hungarian Holocaust survivors and their heirs seeking compensation for property that the Hungarian government expropriated during the Holocaust.²This is the second time that the Simon case has reached the Supreme Court. The question presented in Simon was whether the plaintiffs could satisfy the commercial nexus requirement of the FSIA expropriation exception by showing that Hungary commingled proceeds from the sale of the expropriated property with other government funds and then used those general government funds in connection with commercial activity in the United States, or whether the plaintiffs must show a tighter connection between the expropriated property and the funds used in connection with commercial activity in the United States.

The Court rejected the Simon plaintiffs' "commingling" theory, holding that plaintiffs must have evidence to show that funds used in connection with commercial activity in the United States are traceable to their expropriated property. The Court reached this decision despite concerns expressed at oral argument that rejecting the plaintiffs' commingling theory could make it easier for foreign states to expropriate property with impunity.³While the Court concluded that this "tracing" requirement did not entirely foreclose jurisdiction under the expropriation exception where the expropriated property has been sold for money, it likely makes it more difficult for plaintiffs to maintain expropriation claims against foreign sovereigns in U.S. courts in these circumstances. That may be the case particularly when there is a significant time lapse between the alleged expropriation and the timing of the alleged commercial activity using the proceeds (as there was in the Simon case).

Notably, the decision appeared to be driven at least in part by a concern that adopting the plaintiffs' commingling theory would de-couple the expropriation exception from international law – an argument raised by the U.S. Solicitor General in an amicus brief filed in support of Hungary.⁴Adopting in large part the Solicitor General's views, the Court expressed concerns that the expropriation exception already "goes beyond even the restrictive view" of foreign sovereign immunity "[b]y permitting the exercise of jurisdiction over certain public [as opposed to private] acts" and noting that "it appears that 'no other country has adopted a comparable limitation on [foreign] sovereign immunity.'"⁵

The Court remanded the case for further proceedings consistent with the opinion. Read WilmerHale's further analysis of the Simon decision here.

Next up for the Court is CC/Devas (Mauritius) Limited v. Antrix Corp. Ltd., which concerns the conditions that must be met for a federal court to assert personal jurisdiction over foreign states sued under the FSIA.⁶The Supreme Court is considering whether the FSIA requires plaintiffs to establish for purposes of personal jurisdiction that a foreign state has minimum contacts with the United States. The FSIA's long-arm provision does not impose a minimum contacts analysis but instead requires that one of the FSIA's exceptions to sovereign immunity apply and that service be properly made.⁷ In CC/Devas, however, the Ninth Circuit interpreted the FSIA to require a minimum contacts analysis,⁸thereby creating a split with the D.C. Circuit.⁹The Supreme Court could also reach the question of whether foreign states are protected by the Due Process Clause of the Fifth Amendment, such that courts must conduct a minimum contacts analysis to exercise jurisdiction over foreign states – a constitutional question that the Court has previously declined to address.

The Court heard...