Sovereign Immunity

• Pages: 8-15

8Volume 22, January–March 2016 international law update

© 2016 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

Crime, Arts. 5, 3(a), Nov. 15, 2000, 2237 U.N.T.S.

319, 344-45.”

“Sex tracking by force, fraud, or coercion

also implicates the national security of the United

States. e political branches, who are the experts

in these matters, see Holder v. Humanitarian Law

Project, 561 U.S. 1, 33-34 (2010), have identied

sex tracking as a threat to national security. […]

ese threats are more than sucient to invoke the

protective principle. See United States v. Saac, 632

F.3d 1203, 1211 (11th Cir. 2011).”

e Court concluded that “Congress has the

power to require international sex trackers to

pay restitution to their victims even when the sex

tracking occurs exclusively in another country.”

e Court vacated the order of restitution and

remanded to the district court with an instruction

to increase the award of restitution for K.L.’s

prostitution in Australia.

citation: U.S. v. Baston, 818 F.3d 651 (11th Cir.

2016).

SOVEREIGN IMMUNITY

In matter of first impression, Second

Circuit reviews activities of sovereign

wealth fund of the Republic of

Kazakhstan, and ponders whether

the Foreign Sovereign Immunities Act

immunizes an instrumentality of a

foreign sovereign against claims that

it violated federal securities laws by

making misrepresentations outside the

United States concerning the value

of securities purchased by investors

within the United States

e following case involves a matter of

rst impression in the Second Circuit: whether

the Foreign Sovereign Immunities Act of 1976

(“FSIA”), Pub. L. No. 94-583, 90 Stat. 2891,

immunizes an instrumentality of a foreign sovereign

against claims that it violated federal securities laws

by making misrepresentations outside the United

States concerning the value of securities purchased

by investors within the United States.

Plaintis-Appellees Atlantica Holdings, Inc.

(“Atlantica”); Baltica Investment Holding, Inc.

(“Baltica”); Blu Funds, Inc. (“Blu Funds”); Allan

and Anthony Kiblisky (the “Kibliskys”); and Jacques

Gliksberg (“Gliksberg”) (collectively, “Plaintis”),

purchased securities within the United States from

Defendant-Appellant Sovereign Wealth Fund

Samruk-Kazyna JSC (“SK Fund”),”), a sovereign

wealth fund of the Republic of Kazakhstan. SK

Fund is the majority owner of BTA Bank JSC

(“BTA Bank”), a Kazakhstani corporation.

In February 2009, SK Fund made a $1.5

billion investment in the BTA Bank, that way

acquiring 75.1% of BTA Bank’s common stock.

In April 2009, BTA Bank announced that it had

ceased principal payments on all of its outstanding

nancial obligations. Atlantica and Baltica,

Panamanian investment funds, were creditors of

BTA Bank. Both purchased certain of BTA Bank’s

outstanding debt securities that could only be held

in accounts maintained in specic clearing systems.

e access to these accounts is generally limited to

large nancial institutions (“Direct Participants”),

who could hold BTA Bank securities for either their

own account or their customers’ benet. Atlantica

and Baltica were customers of UBS Financial

Services (“UBS”).

In 2010, BTA Bank undertook a restructuring

(the “2010 Restructuring”) of its capital

structure, and issued a 600-plus-page information

memorandum (the “Information Memorandum”)

that incorporated by reference a deed of undertaking

executed by SK Fund (the “Deed of Undertaking”)

and described the terms of the 2010 Restructuring.

A BTA Bank’s existing creditor could access the

Information Memorandum on the bank’s website

if he/she could certify that (1) was located outside

the United States and was not a resident of the

United States, i.e., not a “U.S. person”; or (2) was

an “accredited investor,” as dened in Rule 501(a)