By Haggai Carmon

Turning in a fugitive for a promised cash reward is commercial activity that is excluded as a defense of sovereign immunity, according to the ruling of the United States Court of Appeals for the 11th Circuit.  The court indicated that since Peruvian officials ”ventured into the marketplace to buy information” they engaged in commercial not sovereign activity. The appeals court affirmed the earlier finding of federal District Court in Florida. Upon remand, a U.S. District Judge Marcia Cooke ordered on December 15, 2008 the Peruvian government to pay Jose Guevara $8.2 million for turning in Vladimiro Montesinos in 2001. The District Court’s summary judgment that the government of Peru owed Guevara the reward money remained intact, and Peru’s counterclaims against the plaintiff were dismissed.

Vladimiro Montesinos was a fearful intelligence chief of Peruvian President Alberto Fujimori. Montesinos was notorious for his violent propensities and the hard-line tactics he used against any opposition to president Fujimori. Following Fujimori’s resignation, Montesinos faced criminal charges for ordering death squads to murder opposition members, drug trafficking, money laundering and arms dealing. He escaped Peru and in 2001, the interim Peruvian president Valentin Corazao, promised a $5 million reward for information leading for the arrest of Montesinos.

Jose Guevara was an aide to Montesinos and went on his behalf to a Florida bank in 2001 to withdraw $700,000 in cash and a $3 million wire transfer. FBI agents arrested him. Under an agreement with the US government, after Guevara disclosed information regarding the location of Montesinos, he was released, the criminal charges against him were dropped and he was cleared to claim the $5 million reward. Although Montesinos was arrested in June 2001, in Caracas, Venezuela and extradited to Peru, the reward Guevara claimed, was refused. Guevara sued Peru in the federal court in Florida. The Peruvian government moved to dismiss on grounds of sovereign immunity. When the claim of immunity was denied and the case remanded to the federal district court, a U.S Judge ordered the Peruvian government pay Guevara the $5 million reward, plus $3.2 million in interest. The court also rejected Peru’s request that the Court reconsider its decision finding that Guevara had proven his entitlement to collect the reward for Montesinos’ capture.

A decade ago, an Israeli company sued the U.S government and U.S Custom Service in an Israeli Court. They alleged that U.S Customs incorporated two dummy corporations in the U.S who placed a bogus order with the Israeli company to purchase fighter jets navigation parts. The Israeli company believed it was doing a bona fide commercial transaction and shipped the parts to New York, where Customs agents seized them as stolen and contraband. The Israeli company complained in a Tel Aviv District Court that the U.S used its sovereign power to avoid payment for the parts. The Tel Aviv District Court disagreed. The Court identified the law enforcement purpose behind the operation and dismissed the Complaint. On appeal to the Israeli Supreme Court, the Israeli company attacked the finding of the District Court, but Chief Justice Barak agreed with the U.S that it was performing a police action and the appeal was withdrawn and denied. I represented the United States government in both courts.

Back to Guevara case in the U.S; it is unclear whether the Peruvian government claimed immunity because the promise of reward was part of a law enforcement effort to bring a fugitive to justice. However, since the 11^th Circuit has already defined the promise of a reward as “commercial” it is unclear whether Peru will choose to appeal the judgment to the same appeals court. Nonetheless, unless Peru pays the judgment voluntarily, Jose Guevara might face significant difficulties in collecting the judgment. Under Article 1610 (a)(1) of the Foreign Sovereign Immunity Act the property in the United States of a foreign state used for a commercial activity in the United States, is not immune from attachment if the property is or was used “for the commercial activity upon which the claim is based.” Since the subject matter of the dispute with Peru was not over any assets located in the U.S. plaintiff could end up with a judgment he cannot enforce in the U.S and would have to seek Peruvian assets elsewhere.

By Haggai Carmon

An Israeli citizen sued UNTSO, (United Nations Truce Supervision Organization) in the Jerusalem Magistrate Court for damages resulting from bodily injuries he had suffered during his employment with UNTSO. The organization did not appear and the Plaintiff obtained a default. When the plaintiff tried to execute the judgment against UTSO’s assets in Israel, the Legal Advisor to the Government (roughly equivalent to the U.S Attorney General) appeared in court and asked to quash the execution proceedings. The Legal Advisor’s motion to dismiss was granted. On appeal to the Jerusalem District Court, the Court affirmed the dismissal.

The District Court indicated that the United Nation’s immunity in Israel is derived from several sources.

Article 105 of the U.N Charter:

“(1) the organization shall enjoy in the territory of each of its Members such privileges and immunities as are necessary for the fulfillment of its purposes.”

Subsequently, the U.N adopted in 1946 the CONVENTION ON THE PRIVILEGE AND IMMUNITIES OF THE UNITED NATIONS.

Article 2 provides:

“The United Nations, its property and assets wherever located and by whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any particular case it has expressly waived its immunity. It is, however, understood that no waiver of immunity shall extend to any measure of execution”. 

Article 3 provides:

 “The premises of the United Nations shall be inviolable. The property and assets of the United Nations, wherever located and by whomever held, shall be immune from search, requisition, confiscations, expropriation and any other form of interference, whether by executive, administrative, judicial or legislative action”.

 Israel adopted the U.N immunity rule even before it became a state and in 1949 joined the Convention.

The Israeli foreign minister was authorized by statute to order that the U.N shall be immune from all proceedings in Israel. Subsequently, his decree granted the U.N with absolute immunity “From any lawsuit and legal action.”

The Appeal Court agreed with the arguments of the Legal Advisor to the  Government.

“I also think that the State of Israel must subject itself to the provisions of a Convention it had signed, and respect the status and immunity of the U.N.

The Appeal Court further indicated that while the U.N may waive its immunity, its immunity from execution of judgment is absolute and cannot be waived, even by the U.N itself.

By Haggai Carmon

A Montreal lawyer and a Notary sued their landlord and the State of Israel in the Quebec Superior Court in Montreal in a case involving sovereign immunity. Plaintiffs are tenants in an office tower in Westmount on the same floor occupied also by the Israeli Consulate General. The plaintiffs sued when security measures taken by the Israeli Consulate to protect its offices, failed to include security enhancements demanded by the plaintiffs. On November 26, 2008, Justice Guy Cournoyer granted Israel’s Motion to Dismiss the lawsuit due to Israel’s sovereign immunity. Plaintiffs said they would appeal. Teitelbaum v. The State of Israel, [2008] J.Q. no 12129.

The plaintiffs sought damages for endangering their security and an order to compel the defendants to protect them, their staff and the visiting public against the alleged increased risks created by the presence of the Israeli Consulate on their office floor.

The territorial torts exception included in the Canadian State Immunity Act (SIA) excludes immunity to foreign states from the jurisdiction of Canadian courts, in cases of “death or bodily injury, or any damage to, or loss of, property that occurs in Canada.” Therefore, the Court denied their complaint and said that the SIA does not establish a cause of action for potential deprivation of life or security of the person.

Another exception to SIA to sovereign immunity relates to  The landlord attempted to use the commercial exception [“any proceedings that relate to any commercial activity of the foreign state.”] to deny Israel’s claim of immunity. The Court disagreed. Citing the Ontario Court of Appeal in Bouzari v. Islamic Republic of Iran, (2004), 243 D.L.R. (4th) 406, Justice Cournoyer indicated that although a lease agreement with the State of Israel and the Consulate General of Israel is patently commercial, the consulate’s installation of security measures constitute an integral part of the operation of the consulate and therefore, Israel is protected by sovereign immunity.

More than a decade ago, a Magistrate Court in Bat-Yam, Israel decided that a house rental agreement for use as the Canadian ambassador’s residence is necessary for the performance of the activities of the foreign sovereign. The Magistrate Court [M. Tarento, Judge] said that the rental agreement was not a for- profit enterprise or a commercial activity usually excluded from the protection of sovereign immunity, and therefore was immune. The Court dismissed the complaint against Canada. That decision was overturned on appeal by the Tel Aviv District Court, and the Israeli Supreme Court denied an appeal on the District Court’s decision on appeal.