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Foreign Sovereigns Must Respond to State Property Tax Suits in State Court
Description Supreme Court held that the Foreign Sovereign Immunities Act, which generally allows foreign nations to force litigation into federal court, does not apply to a tax dispute over local taxes owed on real property held by a foreign government. That matter goes to state court for consideration.
Topic International Law
Key Words Foreign Sovereign Immunities Act; Domestic Property; Tax Liens
C A S E   S U M M A R Y
Facts Under New York law, real property owned by foreign governments is exempt from taxes when used exclusively for diplomatic officers or housing for ambassadors to the United Nations. The City of New York levies property taxes on foreign governments for the portion of diplomatic office buildings used to house lower-level employees. The government of India refused to pay those taxes. The City filed a tax lien on the property in state court. India removed to federal court, contending that, under the Foreign Sovereign Immunities Act (FSIA), the matter had to be heard in federal court. The trial court ruled against India, as did the appeals court. India appealed.
Decision Affirmed. An action seeking declaration of validity of a tax lien against domestic real property owned by a foreign sovereign invokes the "rights in immovable property" immunity exception of FSIA. Therefore, the City has the right to seek a tax lien against the property in state court and India must defend itself in that court. The building is real property, hence the immunity applies to the tax issue.
Citation Permanent Mission of India to the United Nations v. City of New York, 127 S.Ct. 2352 (Sup. Ct., 2007)

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