Sovereign Immunity of Foreign Central Bank Assets

Professor Ingrid Wuerth introduces her new paper on the sovereign immunity of foreign central bank assets in today’s post. I agree with Professor Wuerth about the risk of a loss the US faces before the International Court of Justice, and I would only add the following observation: even in the age when our hegemony was mostly undisputed, the US failed to think ahead on matters of international law. When thinking about central bank immunity, remember that the US dollar won’t always be the world’s reserve currency. When thinking about the Law of the Sea Convention, remember that the US Navy won’t always be the strongest the world has ever seen. When thinking of the Judgments Convention, remember that they won’t always keep all the money in New York. In other words, we should want international law to protect weaker states against stronger states when appropriate because we will not always be the strongest. So yes, Congress has the power to legislate contrary to customary international law, and arguably the Supreme Court’s decision in the case was correct for that reason. But the political branches need a dose of humility and a little foresight.

Central bank immunity from execution has been an important issue in the efforts to enforce judgments against Argentina and Iran in U.S. courts. With respect to the assets of the Argentine central bank located in the United States, the Second Circuit issued decisions interpreting both the central bank’s separate juridical status (EM Ltd. v. Banco Central de la República Argentina (2015)) and the Foreign Sovereign Immunities Act language in 28 U.S.C. § 1611(b)(1) protecting the property of a central bank “held for its own account” (NML Capital Ltd. v. Republic of Argentina (2011)). Both decisions protected central bank assets. With respect to certain assets of Bank Markazi (the Central Bank of Iranian), however, Congress cleared the way for the execution of terrorism-related judgments through the Iran Threat Reduction and Syria Human Rights Act of 2012.

These developments in U.S. law are part of a series of important cases and legislation from around the world pertaining to the immunity from execution for foreign central bank assets, a topic explored in detail in my forthcoming paper. Examining state practice from Europe, China, Russia, Argentina, Japan, the United States, and other countries, the paper argues that there is trend toward greater and more specific protection of central bank assets and but there is also a trend toward explicit conditions of reciprocity. It also discusses the Certain Iranian Assets case pending before the International Court of Justice, in which Iran has filed an application against the United States alleging violations of customary international law governing the immunity due central bank assets. I welcome comments by readers. In particular, send me any cases or legislation on this topic that I have overlooked, especially from outside the United States. Finally, let me conclude by saying that I appreciate the opportunity to post on the terrific Letters Blogatory, which I read carefully and with great interest.

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