Eleventh Circuit Affirms Airline’s Foreign State Status Under the FSIA
Under the Foreign Sovereign Immunities Act (FSIA),1 a foreign state is defined to include "a political subdivision of a foreign state or an agency or instrumentality of a foreign state."2 An "agency or instrumentality of a foreign state" is further defined to include "any entity…a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof."3 Accordingly, a foreign corporation, such as an airline, may qualify as an "agency or instrumentality of a foreign state" if the majority of its shares are owned by a foreign state or political subdivision thereof. The U.S. Supreme Court has narrowly interpreted this definition as requiring that the foreign state or political subdivision directly own the shares in the agency or instrumentality.4 In other words, a foreign state or political subdivision's ownership of a parent corporation resulting in that parent's agency or instrumentality status does not confer the same status on a majority-owned subsidiary.
In Singh v. Caribbean Airlines Limited,5 the U.S. Court of Appeals for the Eleventh affirmed a district court's finding that the defendant airline qualified as an agency or instrumentality of a foreign state under the FSIA and, therefore, was entitled to a bench trial in the underlying personal injury action.6
The key issue in Singh was to determine whether the Minister of Finance of Trinidad and Tobago, which owned 84 percent of the airline's stock, qualified as a political subdivision of the country. In deciding this issue, the court applied the "core functions" test, which examines whether an entity's core functions are predominantly commercial or governmental. Plaintiff had argued that the Minister, a corporate subsidiary of the Ministry of Finance, acted as the Ministry's agent or instrument and therefore any sovereign immunity ended with the Minister. A subsidiary owned by the Minister would not have agency or instrumentality status.
In response, the airline contended, and the district court agreed, that the Minister should be characterized as a political subdivision for FSIA purposes. The district court viewed the Minister as "part of the Ministry" and engaging in primarily governmental functions. The Minister conducts the financial, fiscal and administrative functions for Trinidad and Tobago, is responsible for holding and distributing the country's property, and contracts and incurs liabilities on behalf of the country. Additionally, the Minister is appointed by the president, serves as member of the Cabinet, and acts as an arm of the government. That the Minister was created pursuant to government legislation and organized as a separate corporation did not alter the result because the Minister's incorporation was not for purposes of carrying on a business or trade and was expressly excluded from laws governing private companies.
Notes1 28 U.S.C. § 1602 et seq.
2 28 U.S.C. § 1603(a).
3 28 U.S.C. § 1603(b)(2).
4 Dole Food Co. v. Patrickson, 538 U.S. 468, 473-78 (2003) (prohibiting "corporate tiering" theory whereby a corporate subsidiary could claim foreign state status because its parent is majority-owned by a foreign state).
5 __ F.3d __, 2015 WL 4939787 (11th Cir. Aug. 20, 2015).
6 28 U.S.C. § 1441(d) (permitting removal of civil actions brought against a foreign state and providing that "the action shall be tried by the court without jury").