Turkiye Halk Bankasi A.S. v. United States, Part 3: The Odd Executive Agreement


Editor’s Note: This is the third in a three-part series on oral arguments in Turkiye Halk Bankasi A.S. v. United States. Click here for part one and here for part two

On Tuesday, Jan. 17, the Supreme Court heard oral argument in Turkiye Halk Bankasi A.S. v. United States, a case about whether the U.S. government can criminally prosecute corporations owned by foreign states.  We have written two essays on the case.  In the first, we argued that the best reading of the Foreign Sovereign Immunities Act’s text and structure is that it confers immunity on foreign states in criminal cases, and that this is true in both federal and state court.  In the second, we argued that if the Supreme Court rejects this argument and agrees with the government that the FSIA does not address the immunity of foreign sovereigns in criminal cases, such immunity should be determined by the federal executive branch, unless and until Congress regulates the issue.

The Court inquired about these issues at oral argument. A number of the justices seemed to take seriously the idea that Section 1604 of the FSIA confers immunity in criminal cases, both because of its plain language, and because otherwise states could prosecute a foreign state without even the possibility of removal of the case to federal court. In response to the potential problem of state prosecutions against foreign sovereigns without federal statutory constraint, the Deputy Solicitor General, Eric Feigin, repeatedly maintained that the federal government could make an executive agreement with the foreign state in question and then use that agreement to preempt the state criminal prosecution. He relied primarily on American Ins. Assn. v. Garamendi (2003), a decision that held that an executive agreement that called for the establishment of a fund to compensate victims of Nazi persecution preempted a California state insurance recovery law.

We thought that this was a strange argument for the government to be leaning on. A stronger and more straightforward argument, on the assumption that the FSIA provides no immunity from criminal suit, and an argument that is at least resonant in historical practice, is that the executive branch controls the issue directly under Article II of the Constitution. As we argued in our second post, “If the executive branch is the source of immunity determinations in the domestic realm in this context, that determination, as an embodiment of national policy, would likely be binding on states.”  By contrast, reliance on executive agreements strikes us as significantly less persuasive as the protection against state prosecutions.

First, Garamendi is a shaky precedent for the government to be invoking for this claim. It is a 5-4 decision involving the particular context of a settlement of war-related claims. Moreover, since that decision, the Court, in Medellin v. Texas, described the executive’s power to make executive agreements over claims to be “narrow and strictly limited.” The Court also emphasized that its prior decisions that gave domestic effect to executive agreements involved situations involving longstanding executive practice acquiesced in by Congress. The lack of such longstanding practice was a key reason the Court in Medellin rejected the executive branch’s effort to preempt state law in that case. There is no such longstanding practice, however, of using executive agreements to override state criminal prosecutions. Given that lack of practice, moreover, it is difficult to conclude that Congress acquiesced in such an authority when it enacted the FSIA. Justice Gorsuch, among others, pressed on this preemption point in the oral argument, wondering what basis there would be under the Supremacy Clause for overriding state law.

Second, if the main protection against problematic state prosecutions is that the executive branch could in theory negotiate an agreement with the foreign sovereign concerning the matter, this would be a highly uncertain form of protection. Negotiating an agreement, by definition, requires negotiation, and there may well be difficulties—both practical and political—in reaching an agreement. Imagine, for example, if a U.S. state tried to prosecute China related to the pandemic, and the executive branch sought to negotiate an agreement with China concerning the matter. (Some states have already tried bringing civil claims against China and its instrumentalities relating to the pandemic but have been blocked by the FSIA.)  This might not be a simple negotiation. The very fact that an executive agreement would not be guaranteed to have preemptive effect, for the reasons we’ve discussed, would further complicate any such bargaining.

Third, and most importantly, the main issue in Halkbank is whether Congress in the FSIA conferred immunity on foreign sovereigns in criminal cases. The government’s executive agreement argument is an effort to account for why Congress allegedly would…



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