Foreign Sovereign Immunities Act (FSIA)

The Foreign Sovereign Immunities Act (FSIA) — enacted in 1976 and codified at 28 U.S.C. §§ 1330, 1602–1611 — is the exclusive framework determining when foreign governments and their agencies can be sued in U.S. federal or state courts, codifying the restrictive theory of sovereign immunity: foreign states are presumptively immune from U.S. court jurisdiction, but that immunity is lifted for their commercial activities and certain other specified categories. Before FSIA, the State Department made discretionary, politically influenced immunity determinations case by case; FSIA moved those determinations to courts applying statutory criteria. The key exception: if a foreign government engages in commercial activity that has a direct effect in the United States, it can be sued in U.S. courts for that activity — meaning Saudi Aramco, Air France, or a state-owned bank can be held liable in U.S. courts for breach of contract, employment discrimination, or other claims arising from commercial transactions. FSIA contains several significant additional exceptions: the terrorism exception (28 U.S.C. § 1605A) allows U.S. nationals to sue countries designated as state sponsors of terrorism (Iran, Syria, North Korea, Cuba) for personal injury and death resulting from terrorist acts — generating multi-billion dollar judgments against Iran for the Marine Barracks bombing, September 11, and other attacks. The expropriation exception allows suits by U.S. nationals for nationalized property taken in violation of international law. When a foreign state loses FSIA immunity, the practical challenge is enforcement: foreign state assets in the United States (central bank reserves, diplomatic property, sovereign wealth fund holdings) are largely protected from attachment.

Current Law (2026)

Legal Authority

• 28 U.S.C. § 1604 — Immunity of a foreign state from jurisdiction (foreign states are immune from the jurisdiction of federal and state courts except as provided in §§ 1605-1607 — establishes the baseline of sovereign immunity)
• 28 U.S.C. § 1605(a)(2) — Commercial activity exception (foreign states are not immune for claims based on: commercial activity carried on in the U.S.; an act performed in the U.S. in connection with commercial activity elsewhere; or an act outside the U.S. in connection with commercial activity that causes a direct effect in the U.S.)
• 28 U.S.C. § 1605A — Terrorism exception (foreign states designated as state sponsors of terrorism are not immune for personal injury or death caused by torture, extrajudicial killing, aircraft sabotage, or hostage taking; claimants may recover compensatory damages, solatium, and punitive damages)
• 28 U.S.C. § 1605B — JASTA terrorism exception (any foreign state is not immune for physical injury, death, or damage occurring in the U.S. from an act of international terrorism, if the foreign state aided, abetted, or conspired in the act — enacted in 2016 to allow 9/11 lawsuits against Saudi Arabia)
• 28 U.S.C. § 1609-1610 — Immunity from attachment and execution (property of a foreign state in the U.S. is generally immune from attachment, arrest, and execution; exceptions exist for property used for commercial activity, terrorism judgment enforcement, and waiver)

How It Works

The FSIA is the exclusive legal framework for determining when foreign governments can be sued in American federal courts. It codifies the principle that sovereign nations are generally immune from each other's jurisdiction — while creating important exceptions for commercial dealings, terrorism, and other situations where immunity would be unjust.

The FSIA establishes foreign sovereign immunity as the baseline: foreign states — including their agencies, instrumentalities, and political subdivisions — are presumptively immune from the jurisdiction of U.S. federal and state courts under 28 U.S.C. § 1604, with that immunity extending to both jurisdiction (whether a court can hear the case) and execution (the ability to seize property to satisfy a judgment). The most important and frequently litigated exception, codified at 28 U.S.C. § 1605(a)(2), strips immunity when a foreign state engages in commercial activity — buying goods, issuing bonds, operating a state-owned airline, engaging in trade. When a foreign government acts as a market participant rather than as a sovereign, it can be sued like any commercial entity. Courts look at the nature of the activity, not its purpose: a government purchasing military equipment is engaged in commercial activity even though the purpose is sovereign defense; a government legislating or taxing is not.

The FSIA's terrorism exceptions have become its most politically prominent feature. Section 1605A allows victims to sue designated state sponsors of terrorism — currently Cuba, Iran, North Korea, and Syria — for personal injury or death from torture, extrajudicial killing, aircraft sabotage, or hostage-taking, with recovery including compensatory damages, solatium, pain and suffering, and punitive damages; billions in judgments have been entered against Iran for the Beirut barracks bombing, September 11, and other attacks. The Justice Against Sponsors of Terrorism Act (JASTA) (§ 1605B), enacted in 2016 over President Obama's veto, broadened this to allow suits against any foreign state that aided or conspired in terrorism causing injury in the United States — specifically designed to enable 9/11 lawsuits against Saudi Arabia. Winning a judgment is, however, only half the battle: foreign state property in the United States is generally immune from attachment and execution under 28 U.S.C. §§ 1609–1610, with exceptions for property used for commercial activity and certain terrorism judgments. The U.S. has facilitated collection of terrorism judgments by transferring frozen Iranian assets held under OFAC sanctions to victims, but many large judgments remain uncollected.

How It Affects You

If you have a commercial dispute with a foreign government or state-owned enterprise: The FSIA's commercial activity exception (28 U.S.C. § 1605(a)(2)) is your path into U.S. federal court. A foreign state that enters into contracts, buys goods, issues bonds, operates an airline, or engages in trade is acting as a commercial participant — not a sovereign — and loses its immunity for those activities. The test is the nature of the activity, not its purpose: a sovereign buying military equipment is engaged in commercial activity even though the end use is governmental. You can sue in federal district court (the FSIA grants exclusive federal jurisdiction); there is no jury trial against foreign states. If you win a judgment, collecting is the hard part: foreign state property is generally immune from attachment unless it's property used for commercial activity in the U.S. or the state has waived immunity. Draft contracts with foreign state entities to include express waivers of sovereign immunity and consent to U.S. jurisdiction — these are critical for enforceability.

If you're a terrorism victim or family member seeking to hold a foreign government accountable: The FSIA terrorism exceptions (§§ 1605A and 1605B) provide two distinct routes. Section 1605A applies to U.S. nationals (or their families) injured by torture, extrajudicial killing, aircraft sabotage, or hostage-taking attributable to a designated state sponsor of terrorism (Iran, North Korea, Syria, Cuba as of 2026). Recoverable damages include compensatory damages, solatium (grief damages for family members), pain and suffering, and punitive damages. Iran has the most extensive terrorism judgment docket — billions in default judgments have been entered; collection is facilitated when frozen Iranian assets are transferred to victims by Congress or Treasury. Section 1605B (JASTA) applies to any foreign state that aided or conspired in terrorism causing injury in the United States — designed for 9/11 litigation against Saudi Arabia. These cases are highly specialized: work with attorneys who focus exclusively on FSIA terrorism litigation.

If you do business internationally with foreign government entities, sovereign wealth funds, or state enterprises: FSIA compliance planning belongs at the contract stage, not after a dispute arises. Include: (1) an express waiver of sovereign immunity in the contract; (2) consent to U.S. federal court jurisdiction; (3) designation of a U.S. agent for service of process; and (4) a waiver of immunity from attachment and execution (specifically including property in the U.S. used for commercial activity). Without these provisions, you may win in arbitration but find the award unenforceable. For international arbitration involving foreign states: the New York Convention (which the U.S. has ratified) governs enforcement of foreign arbitral awards; FSIA's waiver exception extends to foreign states that have entered into arbitration agreements. Several international arbitration institutions (ICSID for investment disputes) have their own enforcement frameworks outside FSIA.

If you're a U.S. company with expropriated assets or investments nationalized by a foreign government: The FSIA's expropriation exception (§ 1605(a)(3)) allows suits against foreign states for rights in property taken in violation of international law — primarily wrongful nationalizations and expropriations. The Supreme Court heard arguments in February 2026 on whether U.S. companies can recover under domestic law for Cuban government confiscations of their properties, testing the scope of this exception. Investment Treaty Arbitration (through bilateral investment treaties — BITs — or multilateral frameworks) provides a parallel enforcement route; the U.S. has BITs with over 40 countries protecting U.S. investors from expropriation without fair compensation.

State Variations

• The FSIA preempts state law on foreign sovereign immunity — it is the exclusive federal framework
• State courts must apply the FSIA when cases involving foreign states are filed in state court
• Some states have their own international commercial arbitration statutes that interact with FSIA in enforcement proceedings

Implementing Regulations

FSIA (28 U.S.C. §§ 1602–1611) is self-executing — federal courts apply the statute's immunity and exception provisions directly. No CFR implementing regulations exist.

Pending Legislation

• S 3180 — Require disclosure of foreign litigation funders, ban funding by foreign states and sovereign wealth funds. Status: Introduced.
• HR 2675 (Rep. Cline, R-VA) — Foreign litigation funding disclosure, ban sovereign wealth fund funding, annual AG reports. Status: In committee.
• S 3470 — Allow suits against federal agencies under 42 USC 1983 by waiving sovereign immunity for constitutional violations. Status: Introduced.
• S 3745 — Allow suits against U.S. for CBP/ICE constitutional violations, waive sovereign immunity, permit punitive damages. Status: Introduced.

Recent Developments

• 9/11-related litigation against Saudi Arabia under JASTA continues, with courts addressing complex questions of aiding-and-abetting liability and evidentiary discovery from foreign governments
• Terrorism victims continue to seek enforcement of judgments against Iran, with frozen assets and legislative assistance facilitating some collections
• The Supreme Court has addressed FSIA issues regarding state-owned enterprise immunity and the scope of the commercial activity exception
• Reciprocity concerns raised by JASTA have not materialized into significant foreign suits against the U.S. government
• The Foreign Service navigates sovereign immunity issues in its day-to-day diplomatic operations. Debates continue about whether additional countries should be designated as state sponsors of terrorism, which would expand FSIA terrorism jurisdiction
• The Supreme Court heard oral arguments in February 2026 on whether U.S. companies can recover under domestic law for losses resulting from Cuban government confiscations, testing the scope of FSIA exceptions for expropriation claims.