Here is a guest post from friend of Letters Blogatory Minyao Wang on Opati v. Sudan, the Supreme Court’s latest look at the FSIA. If I can editorialize about his last paragraph for a second: I don’t think that we should encourage Congress to think carefully about retroactivity when putting together a bill to allow COVID-19-related lawsuits against China. I think we should say, “Congress! Stop messing up the law of foreign sovereign immunity! Just leave it alone!”

Earlier this week the Supreme Court unanimously ruled for the plaintiffs in Opati v. Republic of Sudan, holding that a law passed by Congress in 2008 that authorizes punitive damages against foreign governments for supporting terrorism applies to misconduct predating the law.¹ This case gave the Court an unusual opportunity to address the interplay of two different American legal rules: sovereign immunity and the presumption against retroactive application of a new law.

The events giving rise to the litigation were the bombings of United States embassies in Kenya and Tanzania in August 1998. The explosions killed more than 200 people and injured more than a thousand. The United States Government attributed the attacks, which are now seen as a prelude to the 911 terrorist attacks on New York and Washington DC, to Usama bin Laden’s al Qaeda network. Victims of the attacks commenced litigation against Sudan in the District of Columbia district court, alleging that the government of Sudan provided material support and shelter to the terrorist network. The district court awarded billions of dollars in favor of plaintiffs, but an appellate court cut that award in half. It ruled that its legal authority to award punitive damages against a foreign government for supporting terrorism does not operate retroactively.

Under the Foreign Sovereign Immunities Act (“FSIA”), a foreign government cannot be sued in a United States courtroom unless a specific exception set forth in FSIA applies. FSIA also provides that even if an exception applies, a plaintiff generally cannot recover punitive damages from a foreign government. In 1996 (two years before the embassy bombings), Congress added an exception to FSIA permitting lawsuits against certain state sponsors of terrorism, but it did not authorize the award of punitive damages. In 2008, while the lawsuits against Sudan were pending, Congress made further refinement to this “terrorism exception.” First, it moved the exception to a new section of the statute to which the usual prohibition on punitive damages does not apply. Second, it created an express federal cause of action for acts of terror, open to U.S. citizens and U.S. government employees. The new cause of action makes foreign governments liable for punitive damages. Third, Congress authorized plaintiffs to bring new federal claims for past conduct, but this retroactivity provision does not expressly allow these plaintiffs to collect punitive damages for their claims.

Retroactive application of a new law can obviously raise fundamental fairness and due process concerns. Courts in the United States therefore presume that a new law is meant to apply prospectively only, unless there is a clear statement of Congressional intent to apply it retroactively. The issue before the appellate court and the Supreme Court was whether Congress spoke with the requisite clarity to apply the punitive damages provisions retroactively when it enacted the 2008 amendments. A unanimous Supreme Court concluded that Congress could not have been clearer in authorizing plaintiffs to seek punitive damages for conduct that took place before 2008. The Court explained that Congress “expressly authorized punitive damages under a new cause of action” and then it “explicitly made that new cause of action available to remedy certain past acts of terrorism.” “Neither step,” according to the Court, “presents any ambiguity, nor is the” 2008 law “fairly susceptible to any competing interpretation.” The Court rejected Sudan’s argument that the clear statement rule required Congress to use the words “punitive damages” in the retroactivity provision of the 2008 amendments itself.

Because the Court determined that the 2008 amendments met the clear statement requirement, it declined to address plaintiffs’ argument that because sovereign immunity is a “gesture of grace and comity” that can be withdrawn at will, the usual presumption against retroactivity should not apply. The Supreme Court hinted at this exception 16 years ago in Republic of Austria v. Altmann, 541 U. S. 677, 689 (2004). Resolution of the scope of this exception, to the extent it exists, will need to await another case and another day.

One lesson to be learned from this case is that the existence of a clear statement is often in the eyes of the beholder. While the retroactive application of punitive damages is crystal-clear for eight members of the Court, it bears noting for a distinguished and ideologically diverse District of Columbia appellate panel (consisting of Judges Ginsburg, Henderson and Rogers), retroactivity took “one too many a logical leap.” Owens v. Republic of Sudan, 864 F. 3d 751, 818 (D.C. Cir. 2017).

Congress is currently reviewing possible amendments to FSIA to permit legal actions against the government of the People’s Republic of China for alleged acts of commission and omission that led to or exacerbated the COVID 2019 pandemic. Legislators should bear the presumption against retroactivity in mind as they craft an appropriate response to an event that has upended lives worldwide in the past two months.

1. Justice Kavanaugh did not participate in the case.