Second Circuit Denies Common-Law Sovereign Immunity For Foreign State-Owned Entities

The court held that the Executive Branch's decision to criminally prosecute a foreign state-owned entity for commercial activity is entitled to deference and thus strips the entity's immunity under common law.

On October 22, 2024, the Second Circuit held in United States v. Turkiye Halk Bankasi that common-law foreign sovereign immunity does not protect Halkbank, a bank majority-owned by the Republic of Turkey, from criminal prosecution relating to an alleged conspiracy to evade U.S. economic sanctions against Iran. As we previously reported in our Alert, "U.S. Supreme Court Rules that FSIA Does Not Grant Foreign State-Owned Entities Immunity from Prosecution," on April 19, 2023, the U.S. Supreme Court narrowly held that the Foreign Sovereign Immunities Act ("FSIA") does not provide instrumentalities of foreign states with immunity from criminal proceedings, but remanded the case to the Second Circuit to consider whether such immunity is available under the