Remember the Chinese drywall problem of the last few years? It’s come to Congress’ attention, and Senator Chuck Grassley (R-Iowa) would like to do something about it, particularly the problem that the company in question was a subsidiary of a government-owned company – which means the parent has sovereign immunity (I’ve linked to “state immunity” as “sovereign immunity” doesn’t appear to apply here – and you’ll see why in a moment), although the subsidiary can be sued in American courts. Senator Grassley’s bill would remove the immunity of the state-owned company as well.
This makes international lawyer John Bellinger nervous for its possible unintended consequences. He explains it on Lawfare:
In his Senate floor statement introducing the legislation, Senator Grassley states that the amendment “would mean only that a foreign state-owned company would have to respond to the claims brought by American companies and consumers, just like any other foreign company that isn’t owned by a government.”
I expressed concern earlier this year that Congress might amend the FSIA to reverse a single district court decision with an amendment with far-reaching consequences that could upset the delicate balance in the FSIA between sovereign immunity and the need to ensure accountability by foreign states for certain acts.
I have also previously written at Lawfare about “earmarks for lawyers”—legislation that is intended by trial lawyers to reverse judicial decisions against them. As I said then, “Members of Congress and their staffs should ensure that these bills and others urged by plaintiffs’ lawyers to reverse their losses in federal courts are subject to very rigorous review.” U.S. companies have objected strongly to “special” legislation in other countries, such as Ecuador and Nicaragua, that has made it easier to sue U.S. companies in their courts. It makes it harder for the U.S. Government and U.S. companies to complain about special-purpose laws in other countries that limit the immunity of the United States or limit the defenses of U.S. companies when the U.S. Congress engages in similar actions.
It would be interesting to know more: do American companies expect/get special treatment in foreign countries? Does it really make sense that government-owned companies should have immunity?
In this age of international companies does it even really make sense to suggest that the companies with substantial international reach, not only for sales but for manufacturing, have any nationality at all? When a company can by another company so that it may claim its headquarters is in Ireland, mostly for the tax benefits, then how should it expect to claim protection from American laws (and firepower!) when a foreign country takes some action to which it objects?
