SCOTUS Questions Whether Turkish State-Owned Bank Is Immune From Prosecution

The Supreme Court of the U.S. held oral arguments on Jan. 17 over Turkish state-owned Halkbank's claims that the U.S. judicial system does not have the jurisdiction to hear criminal cases against foreign governments and their state-owned entities. Halkbank is attempting to shirk prosecution over its efforts to help Iran evade U.S. sanctions in violation of the International Emergency Economic Powers Act. The bank's arguments received a mixed reaction from the Supreme Court, with numerous justices expressing doubt over the plaintiff's claims that it is immune from criminal prosecution under the Foreign Sovereign Immunities Act (Turkiye Halk Bankasi A.S. v. U.S., #21-1450).

The case was originally brought to a New York district court, where a judge allowed the prosecution to proceed, finding that the FSIA doesn't extend to criminal cases and that if it did, its commercial activity exemptions allow for prosecution of the case. The U.S. Court of Appeals for the 2nd Circuit upheld the ruling, finding it had the jurisdiction to hear the case (see 2110260042). The appellate court said the New York district court properly decided the matter. However, the three-judge panel stopped short of answering whether the FSIA universally confers immunity on foreign sovereigns in a criminal context.

Now before the Supreme Court, Halkbank put forth its FSIA claims but was met with some skepticism from the top court. For instance, Justice Brett Kavanaugh said that he found it "pretty bizarre for this Court to tell the President of the United States as a matter of his national security exercise that" even though neither the Constitution nor a statute prohibits this action, the Supreme Court will block the president's exercise of national security authority. "Talk about big steps," he said.

Lisa Blatt, counsel for Halkbank, countered that a suit of this type is unusual and unprecedented, urging the dismissal of the case. "The world has been around for, like, 7,000 years and no country has ever tried another country. Well, it's just never happened," the attorney said. DOJ lawyer Eric Feigin said that while he's not going to claim that the U.S. has been undertaking these types of cases for 7,000 years, the need for this case emerged among a rise of government-owned companies "concealing some very serious crimes."

Justice Neil Gorsuch, meanwhile, expressed his own concerns centered on the effects the case might have by allowing it to proceed. The justice said that states could then be welcomed to bring suits against sovereign nations due to a range of cultural or geopolitical issues. Justice Sonia Sotomayor bolstered this concern with her own thoughts, speculating that the case may allow federal or state prosecutors to "insult another nation by giving them this unbridled power to initiate suits."

Certain justices, including Justice Ketanji Brown Jackson, discussed remanding the case to the U.S. Court of Appeals for the 2nd Circuit to further discuss whether U.S. law allows criminal prosecutions of foreign countries. Jackson questioned who should be deciding whether Halkbank is a foreign corporation or the state of Turkey itself. "Shouldn't we send it back to the Second Circuit to really flesh that out?" the justice asked.