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Saudi Arabia, Princes Immune From 9/11 Suit, 2nd Circuit Rules
New York Law Journal
August 15, 2008
The Kingdom of Saudi Arabia and four of its princes cannot be sued for funding Muslim charities that funneled money to al-Qaida in the period leading up to the 2001 terror attacks, a federal appeals court ruled Thursday.
The 2nd U.S. Circuit Court of Appeals held that the Foreign Sovereign Immunities Act shields Saudi Arabia, its leaders, a Saudi banker and the Saudi High Commission for Relief to Bosnia and Herzegovina from suit in the United States.
The plaintiffs were a collection of 9/11 victims and their families as well as major insurance companies and property owners, including the Port Authority of New York and New Jersey.
Second Circuit Judges Dennis Jacobs and Jose Cabranes and, sitting by designation, Eastern District of New York Judge Eric Vitaliano said the act "most obviously" protects the Kingdom itself.
But the circuit held for the first time that the act "applies to individual officials of foreign governments in their official capacities," a ruling that means immunity for Prince Salman bin Abdulaziz al-Saud, president of the commission; Crown Prince Sultan bin Abdulaziz al-Saud, chairman of the Supreme Council of Islamic Affairs; Prince Naif bin Abdulaziz al-Saud, interior minister; and Prince Turki al-Faisal bin Abdulaziz al-Saud, director of the Department of General Intelligence.
In its ruling Thursday, the circuit upheld an opinion of the late Southern District of New York Judge Richard C. Casey that there was no personal jurisdiction over the four princes.
In the circuit's 67-page decision, Jacobs said even if the princes were "reckless in monitoring how their donations were spent, or could or did foresee that recipients of their donations would attack targets in the United States, that would be insufficient to ground the exercise of personal jurisdiction."
That language was tough to swallow for Justin T. Green of Kreindler & Kreindler, one of several lawyers who represented the plaintiffs.
"We're very concerned about the standard this case sets on jurisdiction," he said. "The court said that even if they could foresee the attacks that wasn't enough. That's a very tough standard."
William H. Jeffress Jr. of Baker Botts in Washington, D.C., represented Princes Salman, Sultan and Naif.
"Obviously this is a welcome ruling -- they upheld the district court on every point except the ones they didn't have to reach," Jeffress said. "My clients have felt from the beginning offended that they would be accused of knowingly assisting Osama bin Laden. They stripped him of his citizenship, kicked him out of the country and seized his assets over 10 years ago. I know there may be a petition for certiorari to the Supreme Court, but this is a big step toward the successful conclusion of the case."
Thursday in In Re Terrorist Attacks on September 11, 2001, the circuit said the Saudi High Commission for Relief to Bosnia and Herzegovina also gets the protection of the act because it is "an agency or instrumentality" of Saudi Arabia.
The court also found that none of the exceptions to sovereign immunity in the act apply, including the exception for state-sponsored terrorist acts in 28 U.S.C. §1605(a).
The reason, Jacobs explained, was that Saudi Arabia has not been designated by the United States as a state sponsor of terror.
The plaintiffs had tried to fit their case into two other exceptions to immunity in the act: the exception for personal injury or death caused by a foreign sovereign's tortious act, §1605(a)(5), and the exception for a foreign sovereign's commercial activity, §1605(a)(2).
On the former, Jacobs said the panel declined "to characterize plaintiffs' claims -- expressly predicated on a state-sponsored terrorist act -- as sounding in tort."
On the latter, he said, the statutory exception for a foreign state's commercial activity does not apply "because the defendants' specific alleged conduct -- supporting Muslim charities that promote and underwrite terrorism -- is not conduct in trade, traffic or commerce."
The high commission was formed in 1993 to support Bosnian Muslims, but according to the plaintiffs, it was "a fully integrated component" of al-Qaida's "logistical and financial support infrastructure."
The plaintiffs also cited the U.S. government's efforts to shut down several Islamic charities controlled by Saudi Arabia that have provided money, weapons, false documents and logistical support to al-Qaida.
In ruling that "an individual of a foreign state acting in his official capacity is the 'agency or instrumentality' of the state and thereby protected" by the act, the 2nd Circuit joined the 4th, 5th, 6th, 9th and D.C. circuits, as well as the rulings of three judges in the Southern and Eastern districts of New York.
Only the 7th Circuit has excluded individuals from the scope of immunity under the Foreign Sovereign Immunities Act.
ORGAN OF THE STATE
Judge Jacobs said the 2nd Circuit joined the majority of courts in part because the law, enacted in 1976, was intended to codify the existing common law principles of sovereign immunity, which included individuals acting in their official capacity.
In construing the meaning of the term "agency" in the statute, he said "an agency is any thing or person through which action is accomplished" and "it is easily open enough to include senior members of a foreign state's government and secretariat."
Because a state "cannot act except through individuals," he said, "the act-of-state doctrine precludes our courts from sitting in judgment 'on the acts of the government of another done within its own territory' including acts committed by individual officers of foreign governments."
The panel was persuaded that the high commission was an organ of the state because "it was created for a national purpose (channeling humanitarian aid to Bosnia Muslims); the Kingdom actively supervises it," many commission workers are on the kingdom's payroll, the commission has "sole authority" to collect money and distribute it in Bosnia; and the commission can be sued in Saudi Arabia's administrative courts.
The exception for tortious conduct does not apply, Jacobs said, both because the exception was designed to apply to things like traffic accidents caused by foreign officials in this country and because the terrorism exception governs the alleged tortious conduct -- material support for terrorism.
"We decline to read the statute in a way that would deprive the Terrorism Exception (or its limitations) of meaning," the judge said.
While the Foreign Sovereign Immunities Act opened the way for redress for "certain individual victims of state-sponsored terrorism," Jacobs said the U.S. government has a number of means at its disposal to conduct its foreign policy and to "deter (or punish) foreign sovereigns."
Jacobs said the act made clear it "did not delegate to victims, their counsel and the courts the responsibility of the executive branch to make America's foreign policy response to acts of terrorism committed by a foreign state, including whether federal courts may entertain a victim's claim for damages."
The circuit also rejected the claim that the charitable contributions were a form of money laundering and that money laundering should fit into the commercial exception.
"It does not matter that the defendants made (and oversaw) donations to charities with a specific intent as to where these donations would end up," he said. "The alleged conduct itself -- giving away money -- is not a commercial activity."
