Editor’s Note: This article also appears in Transnational Litigation Blog.
Members of Congress and President Zelenskyy of Ukraine have called for U.S. Secretary of State Antony Blinken to designate Russia a state sponsor of terrorism, and late last month the Senate Foreign Relations Committee reported out a resolution to this effect. The designation would have important implications for transnational litigation. It could also ultimately harm the interests of the Ukrainian government and the people of Ukraine.
Designating Russia as a State Sponsor of Terrorism
Countries that the Secretary of State concludes have repeatedly provided support for acts of international terrorism may be designated as state sponsors of terrorism under Section 1754(c) of the National Defense Authorization Act for Fiscal Year 2019, Section 40 of the Arms Export Control Act, and Section 620A of the Foreign Assistance Act of 1961. Only Cuba, the Democratic People’s Republic of Korea (North Korea), Iran, and Syria are currently designated as state sponsors of terrorism.
Countries so designated are sanctioned through restrictions on U.S. foreign assistance, a ban on defense exports and sales, certain controls over exports of dual use items, and miscellaneous financial and other restrictions. It is unclear that these sanctions would have much effect on Russia because Russia is already heavily sanctioned by the United States. For example, Russia receives no foreign assistance from the United States, there is already a ban on defense exports and sales, and Russia has already been subject to significant financial restrictions.
As a State Department spokesman has commented, “the sanctions we have in place and have taken are the same steps that would be entailed by the designation of a state sponsor of terrorism.” In other words, the move may be largely symbolic in terms of tangible impact on Russia’s war machine. But it could have other effects that would complicate both the future use of Russian assets to compensate Ukrainians (and others) for their losses in the war and the long-term normalization of relations with Russia.
Effects on Foreign Sovereign Immunity – Jurisdiction to Adjudicate
Designating Russia as a state sponsor of terrorism would also limit Russia’s entitlement to foreign sovereign immunity in courts in the United States, for both the adjudication of claims and the execution of judgments. It might also have important effects on Russian government assets that are currently frozen.
In terms of jurisdiction to adjudicate, foreign nations are entitled to immunity in federal and state courts in the United States unless an exception applies under the Foreign Sovereign Immunities Act (FSIA). Foreign states can only be sued pursuant to the FSIA. The statute has special exceptions to immunity for cases against state sponsors of terrorism. It denies immunity to state sponsors of terrorism – and also provides a cause of action against them – for claims by certain plaintiffs for damages caused by an “act of torture, extra-judicial killing, aircraft sabotage, hostage taking, or the provision of material support or resources for such an act[.]” In terms of timing, claims are permitted if “the foreign state was designated as a state sponsor of terrorism at the time of the act” or if the state was “so designated as a result of such act.”
The Senate Resolution calling for the designation of Russia as a state sponsor of terrorism lists many actions by Russia as the basis for such a designation. These include the use of “brutal force targeting civilians during the Second Chechen War;” support for “separatists engaging in acts of violence against Ukrainian civilians in the Donbas region;” the targeting of “innocent civilians in Syria with attacks on civilian markets, medical facilities, and schools;” the provision of material support to Syria, and the spread of “terror throughout the world through private military networks of mercenaries, such as the Wagner Group,” which “collaborates with the Ministry of Defense of the Russian Federation to support the foreign policy objectives of the Russian Federation” and which has engaged in activities in “Ukraine, Syria, Sudan, and Libya, [that] have generated insecurity and incited violence against innocent civilians.” In addition, the resolution states that “the Russian Federation has and continues to commit war crimes by directing and authorizing the indiscriminate targeting of civilian centers within Chechnya, Georgia, Syria, and Ukraine, resulting in the deaths of countless innocent men, women, and children.”
If Russia is designated as a result of these acts – which go back more than two decades – they could provide the basis for potential lawsuits in U.S. courts. In particular, Russian actions could qualify as “extrajudicial killing[s]”, which are defined in U.S. law as “deliberate killing[s] not authorized by a previous judgment pronounced by a regularly constituted court affording all the judicial guarantees which are recognized as indispensable by civilized peoples” (incorporated into the FSIA through the Torture Victim Protection Act, or TVPA). However, the private right of action against a state sponsor of terrorism is limited to certain plaintiffs: namely nationals of the United States, members of the U.S. armed forces, and U.S. government employees.
In other words, the designation of Russia as a state sponsor of terrorism (at least as described by the Senate resolution) would allow a very limited group of plaintiffs (U.S. nationals and government employees) to sue Russia for a broad range of potential claims based on conduct that is not limited to the war in Ukraine. News outlets have reported on a handful of U.S. citizens killed in the war in Ukraine. Depending upon the circumstances of their deaths, their families might be able to sue Russia under the FSIA if Russia is designated a state sponsor of terrorism. Americans killed in Syria, Libya, and Sudan might also be able to sue – but Ukrainian, Syrian and other victims of Russian actions would not be entitled to do so.
Effects on Foreign Sovereign Immunity – Jurisdiction to Enforce
Designation of Russia as state sponsor of terrorism might also allow victorious plaintiffs to enforce their judgments against frozen Russian assets. Congress has passed several statutes allowing victims of terrorism who successfully sue under the FSIA to recover against the assets of state sponsors of terrorism, to the particular benefit of claimants with judgments against Iran.
The FSIA provides that “property with respect to which financial transactions are prohibited or regulated” pursuant to the International Emergency Economic Powers Act (IEEPA) or “any other proclamation, order, regulation, or license issued pursuant thereto” shall be subject to execution “of any judgment relating to a claim for which a foreign state” is not immune under Section 1605A of the FSIA (the section providing for suits against state sponsors of terrorism). Financial transactions relating to Russian government property have been prohibited pursuant to an Executive Order by President Biden (pursuant in part to the IEEPA) and a Directive of the U.S. Department of the Treasury’s Office of Foreign Assets Control. This is an admittedly cursory analysis of a complex regulatory scheme but, in short, judgment creditors (i.e., the plaintiffs in FSIA cases following an SST designation) would likely be able to satisfy judgments in their favor using frozen Russian government assets.
That would be an unfortunate result. Frozen Russian assets might provide important leverage in any post-war settlement negotiations. They might also be used to compensate Ukrainian victims of Russian aggression or to help rebuild the country. As Chiara Giorgetti, Markiyan Kliuchkovsky, and Patrick Pearsall recently explained, “[t]he Government of Ukraine recently expressed its intension to cooperate with interested Parties to establish an international commission… to adjudicate claims for compensation arising out of Russia’s actions.” Such a commission might use frozen Russian assets to provide compensation to war victims – the very same assets that could already be committed to plaintiffs in domestic lawsuits under the FSIA if Russia is designated as a state sponsor of terrorism. (Note: I have advised the International Claims Settlement Project working with the government of Ukraine on establishing a claims commission.)
American claimants who might be able to recover under the FSIA against Russia for terrorism-related claims may well be equally deserving of compensation, but the United States should not begin to turn over Russian assets to them without a better understanding of the outcome of the conflict and the other uses to which the money could be put. Compensating U.S. victims of Russian aggression from frozen Russian state-owned assets might also encourage other countries to compensate their nationals from Russian assets that they have frozen, further diminishing the global pool of resources available to assist Ukraine.
Secretary of State Blinken should not designate Russia as a state sponsor of terrorism. And the U.S. Congress should not seek to force his hand. The U.S. government has already imposed crippling sanctions on Russia that have forced the country to default on its sovereign debt, so the sanctions-related implications of the designation might not be significant. Likely the most significant effect of designating Russia would be to allow litigation against it for acts of terrorism that have harmed U.S. citizens. In light of the ongoing war in Ukraine, the many people who have been harmed by it, and the limited resources available to remedy those harms, such litigation is at the very least premature and might never be a good way to punish Russia or to compensate victims.