What Is a Political Subdivision?

• Author: Ernesto Sanchez
• Pages: 71-79

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WH AT IS A POL IT IC A L SU B DI V I SI ON ?

§ 6.1 INTRODUCTION

e FSIA’s denition of a “foreign state” includes “a political subdivision of a foreign state or an

agency or instrumentality of a foreign state . . .”1 A subsequent three-pronged framework then

sets forth the criteria for qualifying as an agency or instrumentality.2 e rst prong states that

an entity must be “a separate legal person,”3 while the second prong states that an agency or

instrumentality must either be “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 sub-

division thereof.” 4 An entity also cannot be a citizen of the United States or any third country.5

e statute’s reference to “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 ” indicates that a state’s political subdivision is distinct from an agency or

instrumentality.6 But as the statute does not dene what constitutes a foreign state proper, it also

does not dene the term “political subdivision.” is omission is quite signicant.

Whether an entity qualies as a state or a political subdivision thereof makes no dierence—

“[t]he entity is either the one or the other, and both are governed by precisely the same rules

throughout.”7 Agencies or instrumentalities of foreign states or their political subdivisions, how-

ever, are ultimately subject to dierent treatment regarding their potential liability for punitive

damages,8 service of process,9 or appropriate enforcement and remedial measures.10 Distinguish-

1. 28 U.S.C. § 1603(a).

2. Id. at (b) (“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 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.”) (emphasis added); see also 2A N. S  J. S, S S C-

 (hereinafter S), § ., p. 306 (7th ed. 2007) (“A denition which declares what a term ‘means,’

excludes any meaning that is not stated.”).

3. 28 U.S.C. § 1603(b)(1).

4. 28 U.S.C. § 1603(b)(2).

5. 28 U.S.C. § 1603(b)(3).

6. 28 U.S.C. § 1603(b)(2) (emphases added).

7. See 28 U.S.C. §§ 1391(f)(4) (making the U.S. District Court for the District of Columbia as a venue for actions

against a “foreign state or political subdivision thereof”), 1606 (only allowing punitive damages against agencies or

instrumentalities); 1608(a) (same rules for service of process govern states and their political subdivisions), (e) (same

rules for notice of default judgments with respect to states and their political subdivisions), 1610(b) (additional rules

governing attachment in aid of execution or execution of judgments with respect to agencies or instrumentalities only);

D at - (summarizing similar treatment of foreign states and their political subdivisions); but see 28

U.S.C. § 1605A(c) (allowing punitive damages in actions arising under the FSIA’s exception for state-sponsored ter-

rorist activity).

8. 28 U.S.C. § 1606 (only allowing punitive damages against agencies or instrumentalities); but see id. § 1605A(c)

(allowing punitive damages in actions under the FSIA’s terrorist activity exception).

9. Id. § 1608(a) (rules for states and their political subdivisions), (b) (rules for agencies or instrumentalities).

10. Id. § 1610(b) (additional rules for enforcement actions against agencies or instrumentalities).

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