../../../MYDOCU%7E1/WESTBU%7E1/0501/West%20Legal%20Studies%20in%20Business

Liability of Foreign Government at Home May Not Lead to Loss of Foreign Immunity in U.S.
Description Appeals court held that a foreign government, while possibly subject to liability at home for losses suffered by a company there, was protected by sovereign immunity from suit in the U.S. when there was an effort to enforce a judgment from that country in the courts of the U.S. Since the matter was not commercial, but based on government policy, immunity was protected.
Topic International Law
Key Words Sovereign Immunity; Exceptions; Jurisdiction
C A S E   S U M M A R Y
Facts Novotec is a Peruvian company that imports goods from the U.S. Money for its operations came from a line of credit from BCRP, the central bank of Peru, an arm of the Peruvian government. Novotec sued BCRP for $400,000 in losses it suffered due to exchange rate fluctuations. Novotec claimed that BCRP had promised to cover such losses. Peruvian courts agreed and the supreme court of Peru affirmed a judgment in favor of Novotec. Novotec then assigned its interest in the judgment to Corzo. Soon after, the supreme court reversed its earlier holding, stating that the judgment in favor of Novotec was a mistake. This decision caused a scandal in Peru; the court was attacked by the National Council of the Judiciary, which claimed that the members of the court were guilty of criminal misconduct. After almost a decade, nothing changed. Corzo then sued BCRP in federal court in the U.S. to domesticate the judgment in order to seize BCRP assets in the U.S., contending that the original decision of the Peruvian supreme court was valid and enforceable. The district court held that BCRP was entitled to sovereign immunity and dismissed the suit. Corzo appealed.
Decision Affirmed. The Foreign Sovereign Immunities Act governs this case. Foreign sovereigns are presumed immune from suit in the U.S. unless one of several exceptions applies. If this case concerned commercial activity, BCRP may be subject to jurisdiction of U.S. courts under one of the exceptions. This was not a commercial activity. This suit arose from the bank's authority to engage in monetary policies. Monetary matters, including foreign exchange rate matters, are subject to sovereign immunity. Even though BCRP was possibly subject, under Peruvian law, to liability for the losses suffered by Novotec, this matter is protected against jurisdiction by U.S. courts.
Citation Corzo v. Banco Central De Reserva Del Peru, - F.3d - (2001 WL 237401, 9th Cir., 2001)

Back to International Law Listings

©1997-2002  SW Legal Studies in Business. All Rights Reserved.