The FSIA and Bankruptc y Actions

AuthorErnesto Sanchez
Just as foreign governments or their instrumentalities can engage in cross-border commer-
cial activities like private enterprises, so too can they become debtors and creditors, including
debtors or creditors involved in U.S. bankruptcy proceedings. It is not the FSIA, however, that
governs U.S. courts’ jurisdiction in this area.
e U.S. Constitution authorizes Congress to enact “uniform Laws on the subject of Bank-
ruptcies throughout the United States.”1 Accordingly, U.S. bankruptcy law is today primarily
set forth in Title 11 of the U.S. Code, initially enacted and codied as the Bankruptcy Reform
Act of 1978, amended several times thereafter, and commonly referred to as the Bankruptcy
Code (“the Code”).2 e Code’s waiver of sovereign immunity was amended by the Bankruptcy
Reform Act of 1994 to include foreign sovereigns.3
Section 106(a) of the Bankruptcy Code “abrogate[s]” the sovereign immunity of “governmental
units.”4 In turn, Section 101(27) denes a “governmental unit” to encompass: “United States;
State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or
instrumentality of the United States (but not a United States trustee while serving as a trustee
in a case under [the Code]), a State, a Commonwealth, a District, a Territory, a municipality, or a
foreign state; or other foreign or domestic government.”5 Section 106 also lists the areas with regard
to which sovereign immunity is unavailable and corresponding Code provisions.6
In conjunction with its overall jurisdictional provisions,7 the Code provides that U.S. bank-
ruptcy courts may hear and determine any issue with respect to these areas as they concern
foreign states and governments.8 Akin to the FSIA’s jurisdictional focus, the Code creates no
1. U.S. C. art. 1, § 8, cl. 4.
2. See generally Pub. L. 95-598, 92 Stat. 2549 (1978).
3. See generally Pub. L. No. 103-394, § 113, 108 Stat. 4106, 4117-18 (1994) (codied at 11 U.S.C. § 106). e pro-
cedural aspects of the bankruptcy process are governed by the Federal Rules of Bankruptcy Procedure (often called the
“Bankruptcy Rules”) and local rules of each bankruptcy court. e Bankruptcy Rules contain a set of ocial forms for
use in bankruptcy cases. e Bankruptcy Code and Bankruptcy Rules (and local rules) set forth the formal legal pro-
cedures for dealing with the debt problems of individuals and businesses. ere is a bankruptcy court for each judicial
district in the country. Each state has one or more districts. ere are 90 bankruptcy districts across the country. e
bankruptcy courts generally have their own clerk’s oces.
4. 11 U.S.C. § 106(a).
5. Id. § 101(27) (emphasis added).
6. Id. § 106(a)(1) (listing applicable Code sections).
7. See id. § 105(a) (“e court may issue any order, process, or judgment that is necessary or appropriate to carry out
the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be
construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropri-
ate to enforce or implement court orders or rules, or to prevent an abuse of process.”).
8. Id. § 106(a)(2) (“e court may hear and determine any issue arising with respect to the application of such sec-
tions to governmental units.”).
ForSovImmunAct_book.indb 229 4/11/13 3:32 PM

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT