On April 21, 2022, the U.S. Supreme Court decided Cassirer v. Thyssen-Bornemisza Collection Foundation, 2022 WL 1177497 (U.S. Apr. 21, 2022), holding that courts should apply state choice-of-law rules when deciding which law applies to non-federal claims against a foreign state under the Foreign Sovereign Immunities Act (“FSIA”).   In doing so, the Supreme Court reaffirmed the rule that suits against foreign sovereigns in federal court are subject to the same substantive law as is applied in suits against private parties.  The decision reversed the Ninth Circuit, which had applied federal common law to the choice-of-law question, and resolved a circuit split with the Second and Fifth Circuits Courts of Appeals.

Background

The FSIA provides that a court lacks subject-matter jurisdiction over a foreign state unless one of the FSIA’s exceptions apply.  Once subject-matter jurisdiction is established, Section 1606 of the FSIA requires that “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.”  28 U.S.C. § 1606.

Under long-running U.S. Supreme Court precedent, a federal court with diversity subject-matter jurisdiction (in general, a case without federal-law claims) borrows the choice-of-law rules from the state in which it sits.  See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).  Many U.S. Courts of Appeals, including the Second and Fifth Circuits, concluded that the same rule should apply in a FSIA case without federal-law claims, relying on the text of Section 1606.  The Ninth Circuit has long disagreed, however, positing that federal common law applies to the choice-of-law question because jurisdiction over a foreign state is based on federal law—the FSIA.  

The claims in Cassirer revolve around a painting, Rue Saint-Honoré, by Camille Pissarro.  In 1939, the plaintiff’s grandmother, a Jewish woman who fled Nazi-controlled Germany, was forced to sell the painting.  The painting disappeared for decades until it resurfaced in a museum owned by the Thyssen-Bornemisza Collection Foundation, an instrumentality of Spain.  The plaintiff sued the Foundation in the federal district court in California, asserting that he had inherited rights to the painting and was entitled to its return.  Following Ninth Circuit precedent, the district court applied federal common law choice-of-law principles, and determined that Spanish law applied to the claims.  This determination ended up being fatal to the plaintiff’s lawsuit:  while under California law the plaintiff might have prevailed, the district court concluded that, under Spanish law, the plaintiff was not entitled to the painting.  Cassirer appealed, first to the Ninth Circuit, which affirmed, and then to the U.S. Supreme Court, arguing that California’s choice-of-law rules should have applied to his claims. 

The Supreme Court’s Decision

In an opinion by Justice Kagan, the Supreme Court unanimously reversed, holding that state choice-of-law rules apply to non-federal claims under the FSIA. 

The Court started by noting that the FSIA was not intended to govern the substantive law determining liability of a foreign state—instead, a foreign sovereign “is subject to the same rules of liability as a private party.”  The Court also looked to Section 1606 of the FSIA, which provides that once jurisdiction is established, “the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances.”  Drawing from these principles, the Court reasoned that, for a foreign state’s liability be identical to that of a private party in a similar suit, the same choice-of-law rules must also apply.  In Justice Kagan’s words, “if the choice-of-law rules in . . . two suits differed, so might the substantive law in fact chosen . . . and so might the suits’ outcomes.”  As a result, the district court should have applied California’s choice-of-law rules, because under Klaxon those rules would apply in a case not involving a foreign state. 

Key Takeaways

Notably, this decision might not result in the return of the Rue Saint-Honoré:  when conducting its choice-of-law analysis, the district court concluded that under both Spanish and Californian choice-of-law principles, Spanish law should apply to the claims.  If this analysis sticks on remand, the plaintiffs’ claims may once again be denied. 

Nonetheless, the Supreme Court’s decision resolves an important circuit split, helping to ensure that federal courts apply the FSIA in a uniform manner.  The decision also affirms that immunity under the FSIA is meant only as a jurisdictional gateway and does not modify the rules governing the liability of a defendant foreign sovereign.