Turkiye Halk Bankasi A.S. v. United States

JURISDICTION UNDER 18 U.S.C. § 3231

Halkbank argues that 18 U.S.C. § 3231, the statute that grants federal courts jurisdiction to rule on criminal violations of federal law, does not grant the courts jurisdiction over violations by foreign governments. Brief for Petitioner, Turkiye Halk Bankasi A.S. at 14. Halkbank points out that, at the time when the predecessor of § 3231, the Judiciary Act of 1789, was passed, international law had universally codified sovereign immunity, restricting one country’s courts from exercising jurisdiction over another country’s government. Id. at 15-19, 24. Halkbank also points out that the Supreme Court has consistently interpreted federal law to respect sovereign immunity. Id. at 21. Halkbank therefore argues that, where Congress does not explicitly grant federal courts jurisdiction over foreign governments, sovereign immunity is presumed to apply. Id. at 20-22. Halkbank maintains that §3231, which grants general jurisdiction for criminal violations to district courts, but does not explicitly grant jurisdiction over foreign governments, fails to overcome this presumption of sovereign immunity. Id. Halkbank further highlights that Congress explicitly granted jurisdiction over foreign governments in other statutes while leaving the Judiciary Act largely unchanged since 1789. Id. at 27. Halkbank argues that Congress therefore did not intend for the Judiciary Act to apply to foreign governments and explains that criminal law at the time of the Act’s passage only applied to human persons, not to foreign governments. Id. at 23, 27. Halkbank highlights that the federal government has historically shown itself to be unwilling to prosecute American state governments or foreign governments, or to be prosecuted abroad itself. Id. at 28-29. Halkbank therefore argues that both of these historical nuances of criminal law suggest that, consistent with the federal government’s historical practices, Congress did not intend for § 3231 to apply to foreign governments. Id. at 23, 28-29. Finally, Halkbank notes that Congress gave the Supreme Court exclusive jurisdiction to prosecute the ambassadors and diplomats of foreign governments. Id. at 25. Pointing to this fact, Halkbank suggests that a ruling that authorizes district courts to prosecute foreign governments would be inconsistent with Congress’s evident intent to limit jurisdiction over international matters to the Supreme Court. Id.

The United States counters that Congress expressly provided federal courts with jurisdiction over any criminal defendant under § 3231, which includes entities of a foreign government. Brief for Respondent, United States at 10-11. The United States asserts that the text of both § 3231 and the Judiciary Act of 1789 broadly encompass all violations of federal law, regardless of the actor’s identity. Id. at 14. The United States disputes Halkbank’s distinction between persons and corporations, noting that corporate entities were persons under constitutional and statutory criminal law from the Founding Era, and subject to some of the same punishments as human persons. Id. Moreover, the United States distinguishes majority-government-owned companies like Halkbank from foreign governments like that of Turkey, noting that the Supreme Court has long held that majority-government-owned companies lack immunity from suit notwithstanding their government’s ownership stake. Id. at 16-17, 24-25. The United States argues that the executive branch’s authority to oversee foreign affairs includes its discretion to prosecute foreign government-owned entities that violate U.S. laws. Id. at 10. Accordingly, the United States points out that the federal government has often brought civil and criminal cases against majority-government-owned companies like Halkbank. Id. at 25-26. The United States also notes that this practice is consistent with the practices of many other nations. Id. at 29. The United States therefore concludes that sovereign immunity does not apply where the executive branch determines, within its discretion, that criminal prosecution, rather than diplomacy, is preferable for resolving a dispute with a foreign government. Id. at 21-22.

JURISDICTION UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT

Halkbank maintains that the FSIA broadly denies federal courts jurisdiction over foreign governments in both criminal and civil suits, unless one of the exceptions under § 1605-1607 applies. Brief for Petitioner at 33-34. Halkbank explains that under § 1604 of the FSIA, foreign sovereigns are afforded general immunity from all proceedings; § 1330(a) grants jurisdiction for civil proceedings that fall under the exceptions listed in § 1605-1607. Id. at 34. Halkbank argues that the commercial activity exception under § 1605 should be read in tandem with § 1330(a). Id. Halkbank maintains that since § 1330(a) exclusively addresses civil proceedings, its exceptions should not be interpreted to affect general immunity from criminal prosecutions under § 1604. Id. Noting that the FSIA defines foreign sovereigns to include their majority-government-owned commercial entities, Halkbank concludes that the FSIA’s prohibition on federal courts hearing any proceeding against foreign sovereigns bars them from hearing the United States’ criminal case against Halkbank. Id. at 32-33.

Halkbank asserts that the limited exceptions under § 1330(a) and § 1605-1607 allow district courts to hear civil suits against foreign governments involving terrorism and commercial activity, neither of which applies to Halkbank’s criminal prosecution here. Id. at 33-34. Halkbank notes that the FSIA’s commercial-activity exception was enacted to reflect prevailing international law on sovereign immunity, which provided the commercial-activity exception exclusively for civil cases. Id. at 35. Halkbank highlights that Congress included the word “civil” in § 1330(a) but failed to include it in § 1604 of the FSIA, arguing that this omission confirms that Congress intended to limit the commercial-activity exception to civil cases. Id. at 40.

Finally, Halkbank concludes that even if the commercial-activity exception applies to criminal cases, the commercial-activity exception cannot apply to Halkbank because none of Halkbank’s conduct was commercial and did not involve the United States. Id. at 44. Halkbank points out that the money transfer scheme at the heart of its alleged criminal conduct occurred entirely outside the United States. Id. at 46. Halkbank also emphasizes that the alleged scheme did not have any direct effect in the United States, as the money transfers involving the U.S. financial system resulted from transactions that occurred after Halkbank’s transactions were completed. Id. at 47. Finally, Halkbank argues that its alleged conduct was governmental, not commercial in nature, because it was performed at the direction of Turkish government officials. Id. Therefore, Halkbank maintains, the conduct cannot fall under the commercial-activity exception. Id.

The United States, on the other hand, argues that the FSIA only applies to civil suits and not to criminal prosecutions whatsoever; therefore, immunity is not granted for criminal prosecutions under § 1604. Brief for Respondent at 33. In support of its argument, the United States points to the FSIA’s repeated textual references to civil suits and their procedural elements, as well as its use of language that often describes civil litigation. Id. at 34-35. The United States maintains that where the FSIA mentions criminal prosecutions, it does so only to refer to ancillary matters related to civil litigation, and not to include criminal prosecutions more generally within its scope. Id. The United States also highlights the FSIA’s legislative history, pointing out that Congress focused solely on issues involved in civil suits against foreign governments in drafting and passing the FSIA, suggesting that Congress only intended for the FSIA to apply to civil litigation. Id. at 38.

The United States points out that it would be illogical for Congress to deny the government the ability to prosecute commercial conduct in the criminal context but simultaneously allow private parties to litigate the same conduct in the civil context. Id. at 42. The United States therefore argues that even if sovereign immunity under the FSIA applied to criminal cases, Halkbank’s alleged conduct should fall under the commercial-activity exception in § 1330(a). Id. at 41-42. The United States asserts that the commercial activity exception under § 1605 should not be read as limited to the civil context by § 1330(a) but rather should be read as a separate provision, applicable to any proceeding based on illegal commercial activity. Id. at 42-43.

Lastly, the United States maintains that Halkbank’s conduct falls squarely within the commercial-activity exception. Id. at 44. The United States argues that Halkbank’s conduct involved financial transactions conducted through financial institutions in the United States, and therefore that the core of the alleged conduct involved the United States. Id. at 44-45. The United States also notes that some of the criminal charges exclusively allege that Halkbank employees concealed fraudulent conduct by misrepresenting transactions to U.S. Treasury Department officials. Id. Accordingly, the United States argues, those charges involve conduct that qualifies under the commercial-activity exception because it affected the United States by impacting the Treasury Department. Id. Finally, the United States asserts that Halkbank engaged in commercial conduct because the alleged conduct occurred in relation to its traditional banking and financial services businesses. Id. at 47. The United States explains that although the Turkish government granted the bank a license to conduct its activity, this government license does not thereby transform the bank’s conduct from commercial activity into governmental activity. Id.