As we’ve previously written, complications arise for foreign sovereigns (States) and private companies when they structure commercial transactions. States prefer to hold as much of their immunities as is possible, while private companies prefer the State waive all immunities. This is particularly true with respect to execution on a judgment for breach of the agreement underlying the transaction. The latter is complicated because enforcement or execution immunities (garnishments or execution on assets to satisfy a judgement) are more narrow than jurisdictional immunities (haling the State into Court to obtain a judgment).

Many foreign missions reside in New York. And a recent New York state court decision highlights the complications arising from leases of real property made by a State and a private company. Although it does not address execution immunity, it highlights the issues that arise when arranging lease terms, preparing and serving civil actions, lease terms that in the court’s view operated as implied waivers of immunity, commercial activity exceptions to jurisdictional immunity, and contractual arrangements for service implied from the notice provisions of the lease. The case provides a reminder that foreign sovereign immunity issues can come up in many contexts, including otherwise “routine” disputes.

101-115 West 116th Street Corp. v. Consulate General of the Republic of Senegal, Index No. 154994/2020 (N.Y. Cty. Sup. Ct.) involved a dispute between a landlord and the Consulate General of the Republic of Senegal. The landlord and the Consulate entered into a lease for the second floor of a building on 116th Street in Manhattan. The landlord argued the Consulate held-over in the premises for several months after the lease ended, and asserted the Consulate  failed to pay rent for those months pursuant to the terms of the agreement (which included a rent calculation for any hold-over period). The landlord eventually sued in New York state court for breach. The Consulate did not remove the case to federal court, and argued that it was immune from the Court’s jurisdiction under both the Foreign Sovereign Immunities Act (FSIA) and the Vienna Convention on diplomatic immunity. On summary judgment, the New York state court ruled in favor of the landlord, rejecting the Consulate’s various immunity defenses.[1] 

The court began by noting the well-known rule that the FSIA “provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country,” and that courts can exercise jurisdiction only if exceptions to immunity set forth in the FSIA are present.[2]   

The court first addressed the Consulate’s threshold argument that the Consulate cannot be sued because it “is not a cognizable legal entity.” The Consulate argued that the landlord should have sued the Permanent Mission of the Republic of Senegal.[3] The court responded by noting case law that consulates general can be sued.[4] The court also did not accept the Consulate’s argument that the Vienna Convention on diplomatic immunity applied because the Convention applies only to individuals, not to the Consulate itself.[5]

Turning to the heart of the dispute – the lease — the court found that the Consulate had waived its immunity for two, independent reasons. First, the court found that the Consulate had impliedly waived its immunity in its lease with the landlord, which stated that the lease would be construed under New York law and that actions or proceedings arising out of the lease would be litigated only in federal or state courts located in New York City. The court held that “[t]his language illustrates defendant’s intent, by implication, to subject any dispute arising out of the Lease to adjudication in accordance with New York law in courts within the United States.”[6]  The FSIA withdraws immunity under certain exceptions. This aligns with the theory of restrictive sovereign immunity, which, put briefly, derives from the difference between acts taken by a State in its sovereign capacity versus acts taken in the commercial market similar to a private actor. The court found that the Consulate was not immune because entering into a lease for property is a “commercial activity” and thus it concluded it fell under the commercial activity exception to the FSIA.[7] 

The court also determined that a third FSIA exception relating to “immovable property” did not apply because the dispute related to unpaid rent, rather than to the property itself, but that was irrelevant because the other two exceptions applied.[8] 

Finally, the court addressed the FSIA’s specific requirements for service of process on a sovereign entity. The FSIA prescribes the requirements for service on a State in terms different from the rules applicable to private parties. Among these provisions, the FSIA permits service by “any special arrangement for service between the plaintiff and the foreign state or political subdivision.” The Court construed the lease’s general notice provision – which covered routine notices about the lease – to be a “special arrangement”[9] that covered service of process, even though the provision did not mention service.

This New York state court decision provides a potentially useful summary of issues that can arise between foreign sovereigns and private contracting parties, as well as summarizing principles both parties should keep in mind when entering into contracts.

[1] Index No. 154994/2020, NYSCEF Doc. No. 37.

[2] Id. at 6 (internal quotation marks omitted). 

[3] Id.

[4] Id. at 8-9.

[5] Id. at 9.

[6] Id. at 11-12.

[7] Id. at 12. 

[8] Id.

[9] Id. at 13-16. 

Seyfarth’s Commercial Litigation practice group is pleased to provide the third annual installment the Commercial Litigation Outlook, where our nationally-recognized team provides insights about litigation issues and trends to expect in 2023.

The continuing global tumult and increasing chances for a recession will weigh heavily on the litigation outlook for 2023. We expect an uneven year where some litigation booms, some busts. As was true last year, the trick to navigating the upcoming challenges will require clients and their counsel to be adaptive, creative, and proactive.

Trends covered in this edition include: Antitrust, Bankruptcy, Consumer Class Actions, Consumer Financial Services Litigation, eDiscovery & Innovation, ESG, Franchise & Distribution, Health Care Litigation, Insurance, International Dispute Resolution, Privacy, Real Estate Litigation, Securities Litigation, Trade Secrets, Computer Fraud & Non-Competes and the Trial Outlook.

Click here to download the 2023 Commercial Litigation Outlook.

On 16 November 2022, EU Regulation 2022/2065, better known as the Digital Services Act (“DSA”), came into force. The DSA is a key development in the use of online services in the European Union (“EU”), with an impact on online services as significant as the one which the General Data Protection Regulation (“GDPR”) had upon the collection, use, transfer, and storage of data originating in the EU on 25 May 2018.


The DSA sets out rules and obligations for digital services providers that act as intermediaries in their role of connecting consumers with goods, services, and content.  

Continue Reading The EU Digital Services Act

Seyfarth partners Rebecca Davis is moderating and Sara Beiro Farabow is speaking on the “Year In Review” panel for GAR: Live: Atlanta 2022. Rebecca Davis is co-chair of the program. Seyfarth is also sponsoring the GAR: Live: Atlanta, which will take place on September 13th in Atlanta, Georgia.

Topics at GAR: Live this year include:

  • Keynote address
  • Year in Review
  • Looking forward – Dealing with disruption
  • Afternoon keynote address
  • Arbitration’s “new normal” – what’s on the cards?
  • The GAR Live: Debate

For more information or to register, click here.

On June 1, 2022, Bill 96, an act passed by the Québec legislature, became law.  In general, Bill 96 broadens French language requirements, affecting many aspects of commercial, governmental, and public life in Québec.  Sanctions for non-compliance can include fines ranging up to $7,000 per day for individuals and up to $30,000 per day for entities, with increased fines for repeat offenders.

Bill 96’s new requirements include the following:

Continue Reading New Law in Québec Will Impact Businesses And Trademarks

As we’ve previously written (most recently here), 28 U.S.C. § 1782 is a useful federal statute that allows overseas litigants to obtain discovery through U.S. federal courts for use in the overseas litigation.  With respect to adjudication of Section 1782 applications, some federal courts have disagreed about whether such are “dispositive” or “non-dispositive” matters when the application is decided by a federal magistrate judge, as opposed to a federal district judge.  The distinction is relevant because federal district judges review magistrate judges’ reports and recommendations on “dispositive” matters de novo, but review magistrate judges’ rulings on “non-dispositive” matters only to determine whether the ruling was clearly erroneous or contrary to law.[1]

In a recent decision, the Ninth Circuit Court of Appeals held that Section 1782 applications are “dispositive” for purposes of a magistrate judge’s ruling on the issue.[2] The Ninth Circuit reasoned that the matter was “dispositive” because “the magistrate judge’s order denied the only relief sought by [the applicant] in this federal case: court-ordered discovery.” The court distinguished the situation from the types of discovery matters typically heard by a magistrate judge because those discovery matters are usually in the context “of an ongoing civil case in that same federal court for monetary damages, injunctive relief, or the like.” In the Section 1782 context, however, there is no ongoing federal civil case: the Section 1782 application is the only relief sought in, and the only purpose for having commenced, the action.[3]

Continue Reading Ninth Circuit Weighs In On Section 1782 Issue That Has Split Federal Courts

One of the key challenges in the course of an international arbitration with a Mainland China based counterparty is the enforcement of interim measures granted by the tribunal. As a general rule, a Mainland court will not grant any interim relief or provide any assistance to parties to an arbitration outside of Mainland China. This was an issue in Hong Kong until the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region came into force on 1 October 2019 and enabled recognized institutional arbitration institutions in Hong Kong to apply for relief in Mainland China and vice versa.

The arrangement has given Hong Kong the edge when choosing an arbitration seat for a contract with a Chinese counterparty. Macau, China’s other special administrative region, has not had the same advantages, meaning that whilst Hong Kong is one of Asia’s major arbitration hubs international arbitration in Macau is relatively uncommon.

Continue Reading New Interim Arbitration Measures between Mainland China and Macau: Bringing Macau in line with other Favored Arbitral Seats in Asia

Post Achmea and Komstroy, arbitration provisions in bilateral investment treaties have come into doubt with respect to intra-EU disputes between investors and EU member states.  Most recently, the Contracting Parties to the Energy Charter Treaty (ECT) on June 24, 2022, announced their agreement in principle on the modernisation of the ECT.[1]  Part of the agreement “confirm[s] that an investor from a Contracting Party that is part of a regional economic integration organisation (REIO), like the EU, cannot bring an Investor-state dispute settlement (ISDS) claim against another Contracting Party member of the same REIO.”  The Parties addressed that aspect in order to “finally bring an end to the intra-EU applications under the ECT that are contrary to the EU law and recent judgments by the Court of Justice of the EU.”  This post summarizes the background, recent decisions post-Achmea and Komstroy, and the resort to enforcement outside of the EU, particularly the actions pending in the United States.

Continue Reading The Future of Bilateral Investment Treaty Arbitrations Between EU Member Countries

The federal statute 28 U.S.C. §1782 allows litigants in a foreign proceeding to obtain discovery in the United States, under the broad US discovery rules, for use in such proceedings. Although Section 1782’s use has been expanding (which you can read about here) and has been applied even to documents held overseas (which you can read about here and here), there was a split in authority regarding whether the statute was broad enough to permit US courts to authorize discovery for use in private arbitrations overseas. The Fourth and Sixth Circuit courts of appeals held that it was broad enough to cover private arbitrations, while the Second, Fifth and Seventh Circuits held that the statute does not extend to private arbitrations. On June 13, 2022, the US Supreme Court resolved the split and sided with the courts holding that the statute does not extend to private arbitrations overseas.1 Continue Reading US Supreme Court Clarifies the Scope of 28 U.S.C. § 1782

The Supreme Court on May 23, 2022, in its decision in Morgan v. Sundance, Inc., rejected the “arbitration specific waiver rule demanding a showing of prejudice” to the party opposing the petition to enforce the arbitration agreement. That rule had been followed for decades by nine Circuits.[1] Post Morgan, the analysis reverts to the standard contract waiver analysis “focus[ing] on the actions of the person who held the right; … [rather than] the effects of those actions on the opposing party.”[2] Although the case is an employment matter, the new rule applies whenever a party seeks to stay litigation and send the matter to arbitration under Sections 3 and 4 of the Federal Arbitration Act in essentially all commercial litigation contexts. Continue Reading Supreme Court Rejects Prejudice Element of Waiver Analysis When Enforcing Agreements to Arbitrate