Permanent Mission of India v. City of New York
Encyclopedia
In Permanent Mission of India v. City of New York, 551 U.S. 193 (2007), the Supreme Court construed the Foreign Sovereign Immunities Act
to allow a federal court to hear a lawsuit brought by the City of New York
to recover unpaid property taxes levied against India
and Mongolia
, both of which own real estate in New York.
. They used part of their buildings for diplomatic business, and another part to house lower-level diplomatic staff, who did not pay rent.
Under New York law, real property owned by foreign governments was exempt from taxation if it was "used exclusively" for diplomatic offices or for the quartering of diplomats "with the rank of ambassador or minister plenipotentiary" to the United Nations
. If the foreign government only used part of its property for these purposes, then the remainder of the property was subject to taxation.
The City of New York had levied taxes against India and Mongolia for the appropriate portions of their buildings, but India and Mongolia refused to pay. Eventually the unpaid taxes became tax liens
. As of February 1, 2003, India's lien amounted to $16.4 million, and Mongolia's amounted to $2.1 million.
The City brought suit in state court to enforce the liens, and India and Mongolia removed
the suit to federal court. Once in federal court, India and Mongolia argued they were immune
to suit under the Foreign Sovereign Immunities Act (FSIA). The district court disagreed, reasoning that the FSIA did not exempt foreign governments from suits in which "rights in immovable property situated in the United States are in issue." The Second Circuit
agreed with the district court, adding that the tax obligations owed by India and Mongolia qualified as "rights in immovable property." India and Mongolia asked the Supreme Court to review the case, and it agreed to do so.
A "lien" is a "charge or security or incumbrance upon property." An "incumbrance," in turn, is any "right to, or interest in, land which may subsist in another to the diminution of its value." A tax lien "inhibits one of the quintessential rights of property ownership—the right to convey that property. Thus, a suit to declare the validity of a tax lien inquestionably places "rights in immovable property" in issue.
This interpretation is consistent with the prevailing view of international law in 1976, the year FSIA was enacted. Under international law, sovereign immunity exists for inherently public acts but not with respect to private acts. Property ownership was held to not be an inherently public function.
argued that none of the exceptions to sovereign immunity under the FSIA applied to suits to enforce tax liens. Because tax liens are available to force payment in a variety of situations, such as pest control, litter removal, and emergency repairs, a "whole host of routine civil controversies could be converted into property liens and then used—as the tax lien was in this case—to pierce a foreign sovereign's traditional and statutory immunity." In this way, the tax-lien exception could swallow the rule, imposing upon those foreign governments the duty to defend against these lawsuits.
Foreign Sovereign Immunities Act
The Foreign Sovereign Immunities Act of 1976 is a United States law, codified at Title 28, §§ 1330, 1332, 1391, 1441, and 1602-1611 of the United States Code, that establishes the limitations as to whether a foreign sovereign nation may be sued in U.S. courts—federal or state...
to allow a federal court to hear a lawsuit brought by the City of New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
to recover unpaid property taxes levied against India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
and Mongolia
Mongolia
Mongolia is a landlocked country in East and Central Asia. It is bordered by Russia to the north and China to the south, east and west. Although Mongolia does not share a border with Kazakhstan, its western-most point is only from Kazakhstan's eastern tip. Ulan Bator, the capital and largest...
, both of which own real estate in New York.
Background
India and Mongolia owned buildings in ManhattanManhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
. They used part of their buildings for diplomatic business, and another part to house lower-level diplomatic staff, who did not pay rent.
Under New York law, real property owned by foreign governments was exempt from taxation if it was "used exclusively" for diplomatic offices or for the quartering of diplomats "with the rank of ambassador or minister plenipotentiary" to the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
. If the foreign government only used part of its property for these purposes, then the remainder of the property was subject to taxation.
The City of New York had levied taxes against India and Mongolia for the appropriate portions of their buildings, but India and Mongolia refused to pay. Eventually the unpaid taxes became tax liens
Tax lien
A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes....
. As of February 1, 2003, India's lien amounted to $16.4 million, and Mongolia's amounted to $2.1 million.
The City brought suit in state court to enforce the liens, and India and Mongolia removed
Removal jurisdiction
In the United States, removal jurisdiction refers to the right of a defendant to move a lawsuit filed in state court to the federal district court for the federal judicial district in which the state court sits. This is a general exception to the usual American rule giving the plaintiff the right...
the suit to federal court. Once in federal court, India and Mongolia argued they were immune
Sovereign immunity
Sovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution....
to suit under the Foreign Sovereign Immunities Act (FSIA). The district court disagreed, reasoning that the FSIA did not exempt foreign governments from suits in which "rights in immovable property situated in the United States are in issue." The Second Circuit
United States Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit is one of the thirteen United States Courts of Appeals...
agreed with the district court, adding that the tax obligations owed by India and Mongolia qualified as "rights in immovable property." India and Mongolia asked the Supreme Court to review the case, and it agreed to do so.
Majority opinion
Under the FSIA, a foreign government is presumptively immune from suit in federal court unless a specific exception applies. This case involves the exception for "rights in immovable property situated in the United States." The question before the Supreme Court was whether a suit declaring the validity of a tax lien places "rights in immovable property" in issue.A "lien" is a "charge or security or incumbrance upon property." An "incumbrance," in turn, is any "right to, or interest in, land which may subsist in another to the diminution of its value." A tax lien "inhibits one of the quintessential rights of property ownership—the right to convey that property. Thus, a suit to declare the validity of a tax lien inquestionably places "rights in immovable property" in issue.
This interpretation is consistent with the prevailing view of international law in 1976, the year FSIA was enacted. Under international law, sovereign immunity exists for inherently public acts but not with respect to private acts. Property ownership was held to not be an inherently public function.
Dissenting opinion
Justice John Paul StevensJohn Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
argued that none of the exceptions to sovereign immunity under the FSIA applied to suits to enforce tax liens. Because tax liens are available to force payment in a variety of situations, such as pest control, litter removal, and emergency repairs, a "whole host of routine civil controversies could be converted into property liens and then used—as the tax lien was in this case—to pierce a foreign sovereign's traditional and statutory immunity." In this way, the tax-lien exception could swallow the rule, imposing upon those foreign governments the duty to defend against these lawsuits.
See also
External links
- [ Official slip opinion]
- Text of opinion, LII, Cornell University
- [ Transcript of oral argument]
- Brief of petitioners India and Mongolia
- Brief of respondent City of New York
- Amicus brief of the Solicitor General
- Oyez.com "Audio"