Sovereign Immunity

• Author: International Law Group
• Pages: 116-117

Page 116

In May 1998, an armed confl ict broke out on the border between Eritrea and Ethiopia. Approximately one month later, Ethiopia expelled a large number of Eritreans that were living in the country. Plaintiffs, who were among those expelled, claim that Ethiopia also seized their bank accounts and other property. Specifi cally, they allege that Ethiopia had their accounts in the Central Bank of Ethiopia (CBE) frozen and that CBE prevented any access to, or withdrawal of, their funds. It also retained the funds from these accounts or... exchanged them for other assets.

On December 12, 2000, Ethiopia and Eritrea signed a Peace Agreement. It provided for a Claims Commission to adjudicate claims arising out of the confl ict and resulting from a violation of international law. The D.C. Circuit Court had held, at an earlier date, that "the Commission's inability to make an award directly to the Plaintiff s, and Eritrea's ability to set off the Plaintiff s' claim[s], against claims made by ... Ethiopia, show that the Commission is an inadequate forum. See Nemariam v. Fed. Democratic Republic of Ethiopia, 315 F.3d 390, 395 (D.C. Cir. 2003).

Plaintiffs sued Ethiopia and CBE (Defendants) in federal district court. The district court dismissed for lack of subject matter jurisdiction. When Plaintiffs appealed, the District of Columbia Circuit affirms. "The [Plaintiff s] seek to establish jurisdiction pursuant to 28 U.S.C. ß 1605(a)(3) - FSIAs so-called 'expropriation exception' - alleging that Ethiopia and the CBE illegally expropriated their bank accounts (bank account claims) and other property (non-bank account claims)." [Slip op. 4].

As to the bank accounts, the Court held that CBE did not own or operate the bank accounts within the meaning of ß 1605(a)(3). This exception to sovereign immunity applies when "(a) the property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state or (b) the property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.

In the Court's view, the bank accounts constituted property within the meaning of ß 1605(a)(3). It reasoned that: "Neither the plain language of ß 1605(a)(3) nor its legislative history expressly states that the expropriation exception applies only to tangible property. Moreover, 'the tangible/intangible...