What Is an Agency or Instrumentality?

• Author: Ernesto Sanchez
• Pages: 81-92

81

WH AT ISA NAG E NC Y OR

INS T RU M EN TA L IT Y ?

§ 7.1 INTRODUCTION

If an entity that is not a state, nor an equivalent national government, claims FSIA immunity

and does not qualify as a political subdivision of a foreign state under the criteria illustrated in

the previous chapter, the entity must qualify as an agency or instrumentality of a foreign state,

or a foreign state’s political subdivision, for the FSIA to apply.

§ 7.2 PERTINENT STATUTORY TEXT

Section 1603(b) of the FSIA states:

An “agency or instrumentality of a foreign state” means any entity –

(1) which is a separate legal person, corporate or otherwise, and

(2) which is an organ of a foreign state or political subdivision thereof, or a majority

of whose shares or other ownership interest is owned by a foreign state or political

subdivision thereof, and

(3) which is neither a citizen of a State of the United States as dened in section

1332(c) and (e) of this title, nor created under the laws of any third country.1

§ 7.3 DETERMINING AGENCY OR INSTRUMENTALITY

STATUS

A state’s agency or instrumentality is (1) either an “organ” of a foreign state or political subdi-

vision thereof or has a majority of its shares owned by a foreign state or political subdivision

thereof and (2) is neither a U.S. citizen nor created under the laws of a dierent third country.

(1) Separate Legal Personhood

e distinction between a separate unit qualifying as a political subdivision and a unit qualify-

ing as an agency or instrumentality can often be subtle and nuanced. To use U.S. examples,

such entities as the State Department, Securities and Exchange Commission, or Internal Rev-

enue Service are part of, yet separate from, the U.S. central government itself. What the “core

functions” test illustrates is that the dierence between these two types of entities primarily

depends on the same “nature of activity” analysis underlying the restrictive approach to foreign

sovereign immunity.2

1. 28 U.S.C. § 1603(b).

2. See infra Pt. I, Ch. 1, § 1.3(2)(B).

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