The Case against Retroactive Application of the Foreign Sovereign Immunities Act of 1976

Abstract

In 1911 the Imperial Chinese government issued bearer bonds in the sum of six million pounds in order to finance the construction of a section of the Hukuang Railway running between Guangzhou and Beijing.' In the United States at that time, absolute foreign sovereign immunity prevailed, and as a result, neither the Imperial Chinese government nor the holders of the notes could have been under the apprehension that the bonds were enforceable in United States courts. Nevertheless, in 1979 a class action was filed in the United States District Court for the Northern District of Alabama on behalf of holders of the notes against the People's Republic of China The plaintiffs believed that U.S. courts could obtain jurisdiction over these claims against the People's Republic of China through the Foreign Sovereign Immunities Act of 1976 ("FSIA"). 4 The FSIA, codifying a United States policy in place since 1952,' made the "restrictive" theory of sovereign immunity the express law of the United States. Under the FSIA, the presumption in favor of sovereign immunity can be overcome in limited circumstances, which usually involve commer