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Last Updated: 17 September 2018
Precarious Employment? Varying Approaches to Foreign
Sovereign Immunity in Labor Disputes
In 1998 I completed the first major article in the United
States on the application of the rules of foreign sovereign immunity in
employment disputes.[1] Typically,
immunity is pleaded by a foreign state as a defence to a claim for unfair
dismissal, unpaid wages or sex discrimination
by an employee of the state. A
successful plea of immunity will result in the employee's case being dismissed
without the merits
being investigated. Immunity can therefore be a powerful
weapon in the hands of a foreign state in thwarting the vindication of
employee
rights.
In the 1998 article it was found that US courts have taken
varying approaches to the question of foreign sovereign immunity with
occasionally
inconsistent results on similar facts. The aim of the present
article is to review the decisions of the past two decades to assess
whether a
clearer position has emerged on the rights of foreign state employees. While
the earlier article examined disputes arising
from employment in all foreign
state-owned enterprises, both within and outside the United States, the present
discussion focuses
predominantly on employment taking place in the United States
in embassies and consulates and other foreign state organisations responsible
for implementing government policy. Disputes arising from these types of
employment are not only the most common but also often
the most controversial.
Before considering the recent decisions,
the relevant legislation must first be examined. In the United States foreign
sovereign
immunity is governed by the Foreign Sovereign Immunities Act 1976
(FSIA) which makes a general grant of immunity to foreign states
subject to
exceptions. For the purposes of this study, the key exception is found in
section 1605(a)(2)(1) of the FSIA which removes
immunity where the action is
'based upon a commercial activity carried on in the United States' by the
foreign state.
In considering whether the 'commercial activity
exception' is satisfied in an employment situation US courts have relied upon
four
approaches, which are also noticeable in the jurisprudence of other
countries.[2]
The first
approach involves situations where courts and legislative bodies have focused on
the context or location of the employment.
Where a person is employed in a
highly sovereign context such as an embassy, regardless of the employee's level
or capacity, the
forum state should grant immunity to the foreign sovereign.
The basis for such immunity is that any inquiry into activities at such
a place
necessarily would intrude upon the foreign state's sovereignty. By contrast,
where a person is employed in an organization,
the nature and functions of which
are identical to corporations in the private sector, a plea of foreign sovereign
immunity rarely
should be available because no sensitive governmental concerns
are implicated.
A second approach to employment claims by foreign states
has paid particular attention to the status and duties of the employee. A
finding of immunity should be more likely where the plaintiff employee is in a
senior, policy-oriented position because he or she
is closer to the sovereign
"core" of the foreign state. However, where an employee is engaged in routine,
purely "operational" duties,
or in work that is highly similar to that performed
by persons in private corporations, then a grant of immunity would not be
appropriate.
This analysis, focusing on the functions and role of the employee,
is advocated in this article as best method for protecting the
rights of
both employer and employee and because it arguably now represents the
customary international law standard applied in the majority of
nation
states.[3]
A third approach to
resolving immunity pleas in employment actions focuses on the territorial
connection between the forum, the employee,
and the employment contract. A
number of national immunity statutes, including the FSIA, expressly require a
territorial connection
between the claim and the forum of adjudication before
jurisdiction can be exercised. In addition, the nationality of the employee,
in
particular, whether he or she is a citizen of the foreign state, the US or a
third country, has been considered a relevant criterion.
The fourth
tendency perceptible in the case law and legislation of countries dealing with
employment disputes with foreign states
has been the isolation and
characterization of the particular claim brought by the employee in order to ask
whether such an action
excessively implicates the sovereignty of the foreign
state. For example, where an employment action involves an investigation into
the conduct of a state's security services, a court should deny jurisdiction,
granting immunity. However, where the claim merely
requires an examination of
conduct typically performed by persons situated in the private sector, immunity
should not be granted.
All these approaches represent attempts to
reconcile a number of competing interests at work in a foreign sovereign
employment case.
While there is a plaintiff employee's interest in obtaining
redress, there is also a foreign state employer's interest in protecting
its
governmental functions from the scrutiny of other states. Similarly, while the
forum state has an interest in protecting its
nationals and residents employed
by the foreign state, it also has a conflicting concern to maintain good
diplomatic and commercial
relations with the foreign state defendant.
The legislative history of the FSIA on the commercial activity exception
should also be considered. The history indicates that commercial
activity is
conduct that is not 'public or governmental in
nature'.[4] Further, the employment
of diplomatic, civil service or military personnel would be public or
governmental in nature but not the
employment of United States citizens or third
country nationals by the foreign state in the United
States.[5] The 'engagement of
laborers, clerical staff or public relations or marketing agents' would also be
considered commercial activity.[6]
Such history arguably focuses principally on the second and third of the two
approaches above, namely the status and duties of the
employee and the
territorial nexus in the immunity determination. The suggestion that the
employment of diplomatic or civil service
personnel would be sovereign activity
while employment of laborers, clerical staff or public relations or marketing
agents would
be commercial appears to emphasise the different role and duties
performed by such staff. The reference to the employee having US
or third
country nationality also implies that the foreign state's interest in precluding
adjudication should be given less weight
in such cases.
Despite these
observations in the legislative history, US courts in decisions both before and
after 1998 have also relied on the other
two criteria referred to above in
immunity determinations, namely the place of employment and the nature of the
claim. A brief appraisal
of the pre-1999 decisions will first be made in order
to provide a background to the recent cases.
Embassies
and consulates are arguably the most sovereign locations of a foreign state in
another country’s territory where matters
of important and sensitive
national policy are considered. Consequently, disputes concerning employment at
such missions have always
been difficult and controversial. In 1996 the
9th Circuit gave a resounding endorsement of 'the employee's rights
and duties' approach to immunity in such cases in Holden v Canadian
Consulate.[7] The court there
held that a US citizen employed as a commercial officer within the trade and
investment section of a consulate was
entitled to sue her employer for sex and
wage discrimination.
The distinction in the legislative history to the
FSIA between the employment of diplomatic or civil service personnel and
clerical
staff, public relations or marketing agents was relied upon, with the
court noting that it required an assessment of the duties of
the employee. The
claimant was not a civil servant because she completed no examination prior to
being hired and was not entitled
to tenure or any benefits provided to foreign
service officers from her employer.[8]
Nor was she a member of the diplomatic personnel: although employed in the
consulate and not in a separate trade office her activities
were not those of a
diplomat.[9] She was engaged in
promoting and marketing of products of the foreign state, which was the type of
work regularly done by private
persons. The employee was not involved in policy
determination, lobbying activity or legislative work for the government and
could
not speak on its behalf. As a US citizen she could not enter the Consulate
unless in the company of a foreign service officer.
Holden
therefore is a very clear case of a court resolving the immunity determination
by reference to the role and duties of the employee
but such an approach was not
universally adopted in embassy/consulate cases prior to 1999. For example, in
Ferdman v Consulate General of
Israel[10] immunity was
imposed in a suit by a public affairs officer for sex discrimination on the
basis that because a consulate was a highly
sovereign workplace, no
investigation of its affairs or activities was
permissible.[11] As is apparent, an
approach that focuses on the nature of the employee's workplace can be
particularly harsh on employees in sovereign
location cases, where the worker is
engaged in menial or routine duties. Such an analysis also appears inconsistent
with the legislative
history to the FSIA above.
Distinct from embassies and consulates are organizations established by
foreign states to carry out broad policy aims such as the
dissemination of
cultural material or assistance in the marketing of the home country's products
or tourism. There was one pre-1999
decision in which the governmental nature of
such a body was instrumental in an employee’s claim being dismissed on
immunity
grounds. In Re Claim of
Iacobelli[12] a secretary was
not permitted to sue to recover unemployment benefits after her employment at
the Japanese Development Bank ended
because the court found that the nature of
the activities undertaken by the organization was governmental. Despite the use
of the
term 'bank' in the employer's title, it was in fact an instrument of
government policy with responsibility for gathering governmental,
financial and
economic information for the foreign state.
By contrast, in other
pre-1999 decisions involving marketing and cultural bodies, commercial activity
was found to be present by reference to the status and duties of the
employee. In Segni v Commercial Office of
Spain,[13] a claimant was
permitted to sue his employer, an agency of the Spanish Government responsible
for promoting Spanish exports to the
United States. What was important in the
immunity determination was not the nature of his employer's activities--which
was found
to be governmental--but rather the position and duties of the
employee. His role was to provide services in product marketing and
he was not
involved in either the creation or implementation of government policy. A
similar approach was taken in allowing suits
by a marketing executive of a
foreign state-owned tourist
authority[14] and a receptionist
switchboard operator at a foreign government owned institution for cultural,
educational and informational
exchange.[15] Also significant in
those decisions, decided similarly to Holden, was that the employee did
not hold the nationality of the foreign state employer.
By contrast, in
another pre-1999 cultural bodies case, Goethe House (German Cultural Center)
v National Labor Relations
Board,[16] a US court resolved
the question of commercial activity by reference to the nature of the employee's
claim before the court. Specifically,
immunity was denied in the context of a
claim for union certification on behalf of US nationals employed at a foreign
state subsidised
cultural center because the court’s entertaining the
claim would not involve an intrusion into the sovereign functions of the
foreign
state.
A. The Nature of the
Employee as Commercial Activity
In the majority of cases since 1999
involving embassy and consular employment courts have favoured the second
approach above, namely
resolving the immunity question by reference to the
status, role and duties of the employee. The leading decision comes from the
District of Columbia Federal Circuit Court of Appeals in El-Hadad v United
Arab Emirates (UAE).[17]
El-Hadad involved an action for breach of employment contract and
defamation by an Egyptian citizen against the UAE. The claimant had been
employed as an auditor and supervising accountant in the cultural attaché
office at the UAE Embassy.
The court began by quoting the legislative
history to the FSIA, noting that a foreign government's civil servants and
diplomats ‘do
not qualify for the commercial activity
exception’.[18] Yet at the
same time, the court noted, the reverse does not apply: merely because an
employee is not a civil servant or diplomat
does not mean that such a person
cannot 'still be engaged in quintessentially governmental work--like, for
example, a judge'.[19] Hence, if
the court finds the claimant to be a civil servant, immunity will be imposed but
if he or she is not within that category
the court must still proceed to examine
the nature of the person's employment and duties to determine if they are
sovereign in nature.
Before considering whether the employee was a civil
servant on the facts, the court in El-Hadad made other important comments
about the commercial activity exception in employment disputes. First, it
specifically rejected the
nature of the claim approach for determining whether
commercial activity exists, for example, where a court focuses simply on the
circumstances which underpinned the employee's action (such as the
employer’s acts of discrimination). Application of such
a test may mean
that the ‘case might entirely defy
analysis’[20] in the sense
that it would be difficult to determine whether commercial activity was present
at all. Instead, it was necessary for
the court to look at the employment
relationship 'as a whole'.[21] The
nature of the claim approach is discussed in more detail at VI.B below.
Secondly, the court, while endorsing the employee's
duties and responsibilities
approach from the Holden and Segni cases (above), nevertheless
departed from the courts in those decisions' analysis of the legislative
history. Specifically, in those
cases, the courts suggested that once an
employee was found not to be a civil servant, then a finding of commercial
activity must
follow. The court in El-Hadad however said that this
approach misread the legislative history since the description 'diplomatic or
civil service personnel' was
meant to be illustrative, not exhaustive, and would
not preclude a court from finding immunity even where the employee was not a
civil servant or
diplomat.[22]
The court in
El-Hadad then articulated the following criteria for determining whether
an employee was a civil servant of the foreign
state.[23] First, how does the law
of the foreign country define its civil service and did the employee's
‘job title and duties come
within that
[description]’?[24] Second,
what is the nature of the claimant's relationship with the foreign state-- is it
purely contractual or is it based solely
upon the civil service laws of the
foreign country? Third, was there any connection between the claimant's prior
working history
in the foreign state and his or her subsequent employment at the
embassy? Specifically, was the embassy role a 'new job' or a continuation
of
domestic civil service? Fourth, what is the nature of the claimant's work at
the embassy? Finally, what is the relevance of
the claimant holding a
nationality other than that of the foreign state and, in particular, is the
foreign state a country that would
employ non-nationals in governmental
positions? The foreign state employer has the burden of proof of establishing
the above criteria.
Applying the above guidelines to the
facts,[25] first, while the law of
the UAE had no definition of civil service, the employee in El-Hadad was
not eligible for civil service benefits. Second, the employee fell within the
definition of 'local employee of a mission abroad'
which expressly excluded
civil servants. Third, there was no doubt that the employment at the embassy
was separate and unrelated
to his prior employment in the UAE. Fourth, it was
clear that the claimant had no role in the creation of UAE government policy
and
was not a party to UAE political decisions and performed only the ordinary
auditing duties of any commercial accountant with
no discretion in his duties.
While the plaintiff did have supervisory authority over other accountants in his
office, his exclusion
from policy formulation and lack of discretion were more
compelling factors. Finally, the fact of the claimant holding the nationality
of a third country was irrelevant given that 'small countries like the UAE at
times employ non-nationals in high governmental
positions'.[26] Where, by contrast,
a state 'rarely if ever hires non-citizens for its civil service',
'non-citizenship strongly indicates that
someone is not a civil
servant'.[27] Yet, in all cases,
the fact that an employee has the citizenship of the foreign state will support
a finding that the person is
a civil servant.
Therefore, the applicant
was found not to be a civil servant and the court then had to consider next
whether his duties nevertheless
involved the exercise of governmental power for
which immunity should attach.[28]
According to the court a 'distinctive mark' of governmental work is
'discretionary involvement with sovereign law or
policy'.[29] Since, as noted above,
the claimant had no role in the creation of government policy, his duties were
not discretionary and he 'did
standard accounting work of a character easily
found in commercial enterprise' the commercial activity exception
applied.
El-Hadad is a compelling affirmation of the employee's
role and duties approach both in its analysis of the meaning of 'civil servant'
and
its assessment of the status of a foreign state employee who is not a civil
servant. Given the highly sovereign context of employment
involved in that
case--an embassy--this is a significant step in favour of protecting the rights
of foreign state employees.
A similar approach has been taken in other
embassy/consulate cases. In Mukaddam v Permanent Mission of Saudi Arabia to
the United Nations,[30] a
plaintiff who was employed to write speeches for Saudi government officials,
draft correspondence and public statements and reports
to the foreign ministry
and establish a data bank classification system was held entitled to sue her
employer for wrongful termination
of employment. The court first found that
that the employee was not a civil servant. First, no evidence of Saudi law was
led on
this question and second, the facts showed that she did not complete a
competitive examination prior to being hired, did not have
tenure and did not
receive the same benefits as foreign service officers or civil service
protections more generally. The plaintiff's
employment contract showed that she
‘was a contract employee hired to conduct research and perform clerical
duties’.[31] The employee was
also not a member of the state's diplomatic personnel as she was not involved in
the ‘administration of government
policy, privy to policy
deliberations’, engaged in legislative and lobbying activities or
authorised to speak on behalf of
the foreign
state.[32] At most, the claimant
‘drafted speeches and statements that set forth [the foreign state's]
governmental policy and
positions’[33]. Once the
court established that the employee was neither a civil servant nor a diplomat
it then proceeded to find, again by reference
to her above duties and
responsibilities, that her action was based upon commercial
activity.[34] The plaintiff’s
US citizenship was another factor in support of denying immunity.
Mukaddam is therefore another emphatic statement of the employee role and
duties approach.
Note that in Mukaddam the foreign state also
sought to rely on Article 7 of the Vienna Convention on Diplomatic Relations
(VCDR) to support its claim to
immunity. Article 7 provides that the sending
state may 'freely appoint the members of the staff of [its] mission' but the
court
properly found that such provision on its face confers no 'absolute grant
of immunity' from 'any legal challenge to the hiring and
firing of mission
staff'.[35] More fundamentally,
while the VCDR provides rules on the immunities of diplomatic personnel,
the instrument says nothing about foreign sovereign immunity, which is
comprehensively dealt with in the
FSIA.[36] Hence, if jurisdiction
over a foreign state is established under the FSIA, the VCDR cannot alter this
conclusion.
A very recent decision of the District Court of the District
of Columbia with highly similar facts confirms that where an embassy
or consular
employee is not a member of the foreign state's civil service and is performing
generic administrative tasks with no
involvement in governmental decision
making, immunity will not be available. In Ashraf-Hassan v Embassy of
France,[37] the court
stated that employment will be considered commercial ‘if an employee is
contracted to work as a non-civil servant
and has duties of a clerical
nature’.[38] Here the
plaintiff was engaged in supervising the embassy's placement program and
coordinating its partnership with the French-American
Cultural Exchange in New
York. As a result, commercial activity was found. Her position was purely
administrative with no involvement
in governmental decisions.
Interestingly, in the appeal in Ashraf-Hassan, the foreign
state conceded the question of commercial activity and instead argued (rather
ambitiously) that the claimant's case
was not 'based upon' such activity because
her action on the merits would almost certainly fail. The court quite properly
rejected
such an assertion, noting that it 'erroneously conflates the question
of subject matter jurisdiction with an inquiry into the merits.
A plaintiff
need not be successful on the merits for a court to have [subject matter]
jurisdiction.'[39]
In some
decisions involving embassy and consular employees the application of the role
and duties approach has, by contrast, resulted
in the imposition of immunity.
Sanchez-Ramirez v the Consulate of Mexico in San
Francisco[40] concerned two
consular employees, both nationals of the foreign state: G, who assisted Mexican
nationals with issuing and renewing
of passports and visas and S, who was a
lawyer and notary public responsible for authenticating legal documents. G and
S both sued
for breaches of the California Labor Code for failing to provide
meal and rest breaks and pay overtime and S brought an individual
action for
disability and sex discrimination. The court noted that both G and S were
Mexican nationals working in the US under A2
visas which are granted to persons
travelling to the US to engage in solely official and governmental activities of
the foreign state
(but who are not ambassadors, ministers or diplomatic
officers).
The court agreed with the foreign state that both G and S
were civil servants and that the nature of both of their jobs was 'integral'
to
government as the services could not be provided to Mexican nationals without
employees such as the plaintiffs. The work also
could not be performed by a
private party in commerce.[41] In
the case of S, while he did not have final approval over the submission of
documents to government, he had primary drafting responsibility
and his role
involved selection and filling out the correct forms. Similarly, G's role, in
‘verifying the identity of persons
seeking government-issued
identification’ (passports) was a uniquely governmental
position.[42] While the court noted
some of the employees' tasks could be characterized as 'clerical and
administrative' in the terms of the legislative
history, 'almost any job
involving documentation will have 'clerical' and 'administrative'
aspects'.[43] The court also noted
that both employees also received many of the same type of benefits that
diplomatic and consular officers enjoyed
such as health benefits and relief from
taxation.
The decision in Sanchez-Ramirez, while a disappointing
result for the employees in question, appears on balance to be a defensible
application of the duties and
responsibilities approach to defining commercial
activity. While neither party was in a senior, policy-oriented role their work
was nonetheless uniquely governmental in that the tasks performed had no private
sector counterpart and both employees were citizens
of the foreign state who
enjoyed civil service benefits. Therefore, it is understandable that a foreign
state would not want public
adjudication of matters that could reveal its
policies and practices regarding immigration and the benefits provided to its
civil
service.
A more contentious category of embassy and consulate
employment cases concerns persons employed as chauffeurs. While the courts in
such cases have purported to apply an employee duties test, in reality, they
excessively defer to the interests of foreign states.
In Crum v Kingdom of
Saudi Arabia[44] a
chauffeur at the Saudi Embassy, responsible for transporting embassy officials,
their families and guests, was not permitted to
sue his employer because his
work was not commercial as it involved the securing of the safety of the
state’s officials. This
result was reached despite the employee not being
a US citizen or a member of the Saudi civil service. The court also bolstered
its conclusion by reference to article 7 of the VCDR but, as noted above by the
court in Mukaddam, neither this provision, nor the VCDR as a whole, has
any relevance to foreign sovereign immunity in employment
cases.[45]
In a more recent
decision, Figueroa v The Ministry of Foreign Affairs of
Sweden,[46] it was confirmed
that a chauffeur, responsible for transporting the ambassador of a foreign
state, his or her family and other diplomatic
staff was not permitted to sue for
workplace claims. Again, it was noted by the court that 'the safe transport of
(foreign state)
dignitaries (is) an activity integral to effecting the
governmental function of the Mission. A sovereign's decisions on how best
to
address the safety concerns of government officials are peculiarly sovereign
because a failure to protect or safeguard a sovereign
representative such as an
ambassador or a titular head of state can have extremely adverse consequences
for the sovereign nation.'[47]
While the court acknowledged that a chauffeur stands closer to a clerical worker
than a civil servant in terms of the FSIA legislative
history, such comments
were only 'informative, not outcome
determinative’.[48] Also,
while the chauffeur was unlikely to have been a civil servant under Swedish law,
he was still subject to a special benefits
scheme for locally engaged staff.
It is relevant that the courts in Crum and Figueroa relied
heavily on the 4th Circuit Court of Appeals decision in Butters v Vance
International[49] in support of
their conclusion that a chauffeur was in a uniquely 'sovereign' position.
Butters involved a security agent assigned to the Saudi Arabian royal
family, with direct responsibility for securing the safety of its members,
whose
employment suit was also barred by immunity because it was not based upon
commercial activity.
It is questionable, however, whether these
decisions involve a correct application of the employee's 'role and duties'
criterion.
The preferable rationale for this principle is that certain types of
employment involve activities that simply cannot be performed
by persons in the
private sector, for example, because of their seniority, involvement in
government policy or proximity to sensitive
information belonging to the foreign
state. To say that a chauffeur and a security guard fall within such a category
simply because
the persons they are looking after happen to be senior officials
of the foreign state seems an unreasonable extension of immunity.
It is notable
in Figueroa that the court referred to the 'adverse consequences' to a
foreign state of harm to its leading representatives. But what if the
chauffeur
had been transporting more junior officials of the foreign state or leading CEOs
of major private corporations? There
would be ‘commercial
activity’ in such cases yet concerns about safety would still be present.
Also, how does allowing
a chauffeur to sue for discrimination in relation to his
or her employment endanger the safety or security of the foreign state or
its
leaders? Embarrassment to the state may be caused but that is a feature of any
litigation; imposing immunity hardly deters such
undesirable workplace practices
in the future. The correct focus should instead be on the nature of the work
involved, which is
driving and transport, an activity which can equally be
performed in the private sector, rather than focusing on the persons for
whom
the job is being done. A concentration on the employer in this context is
therefore effectively an application of the first
criterion for defining
commercial activity above--the nature of the workplace or the employer--which
will almost always lead to absolute
immunity where the worker is employed at an
embassy or consulate. Arguably it is the employee who suffers the greater
'adverse consequences'
of such a test, particularly where they are US citizens
and residents with effectively only one forum in which to seek redress.
A
much more defensible grant of immunity in the ‘state security’
context can be seen in the decision of the 9th Circuit
Court of Appeals in
Eringer v Principality of
Monaco.[50] There, a person
employed as the Director of Monaco Intelligence Services and acknowledged
'spymaster'[51] was precluded from
suing his foreign state employer. The claimant here was engaged in liaising
with other intelligence agencies,
investigating potential government
appointments, investigating suspicions of corruption and other illegal activity
in Monaco and
protecting the Prince of Monaco from improper foreign influence.
Obviously, these are tasks and activities unique to government--with
the
employee here operating at a high level of sensitive national security. Not
only could such conduct not be performed in the
private sector but there are
compelling reasons of comity and inter-state relations why a US court should not
be placed in the position
of reviewing such matters.
B. The Nature of
the Employer as Commercial Activity
Having considered the decisions which
purported to apply the employee duties and responsibilities criterion for
defining commercial
activity, it is worth mentioning one case involving embassy
employment where the first approach--that is, the nature of the employer--was
explicitly relied upon to resolve the issue. Hijazi v Permanent Mission of
Saudi Arabia to the United
Nations[52] involved a Jordanian
claimant employed at the Saudi Arabian Mission who sued for workplace
discrimination. The claimant was an adviser
whose role included taking notes at
diplomatic meetings, conducting research, writing memoranda and speaking on
behalf of the Mission
on one occasion. In essence, this case presented highly
similar facts to Mukaddam (above) yet the court reached the opposite
conclusion on the issue of commercial activity and upheld the plea of immunity.
The court was heavily influenced by the decision in
Kato[53] (discussed at
section VI.A below) which shifted the focus in defining commercial activity in
employment immunity cases to 'whether
particular actions that the foreign
state perform[s] ... are the type of actions by which a private party
engage[s] in trade and traffic or
commerce'.[54] Once the foreign
state is found to engage in sovereign activities at a particular workplace the
question becomes whether the plaintiff
employee's duties form part of such state
functions. The practical effect of such a test is that where a highly sovereign
workplace
is involved, it will be difficult for the employee to show that his or
her tasks are not part of the state's functions. The Hijazi court almost
admits as much by saying that 'the focus of the inquiry should be on the
employer's general actions rather than the
specific employment contract at
issue'.[55]
Such a test
effectively reinstates absolute immunity for embassy and consular employees, and
in Hijazi, the court had little difficulty in finding that the
employee's duties were 'sufficiently intertwined with the defendant's
governmental
functions' to fall outside the commercial activity exception. On
appeal, the Second Circuit Court of
Appeals[56] affirmed, noting that
the claimant's duties were 'in service of the Mission's governmental
function'.[57] Again the point must
be made: once a foreign sovereign's workplace is used as a starting point for
determining whether commercial
activity exists the inquiry into the employee's
duties inevitably becomes only secondary or incidental with the result that it
will
be difficult to show that such duties are not part of the state’s
governmental functions. The contrast with the second criterion
above is stark:
instead of considering whether the employee's role is uniquely sovereign and
cannot be performed by a comparatively
placed employee in the private sector the
court simply considers whether the employee is part of the apparatus of
government, which
will almost always be so in the case of an embassy or consular
employee. It is suggested that such an approach is excessively protective
of
foreign state interests at the expense of legitimate claims for redress by
routine employees.[58]
It was noted above that a general trend in the pre-1999
authorities on marketing, tourism and cultural bodies, especially the Segni
case, was to determine the issue of commercial activity by reference the
status and duties of the employee. In more recent decisions
a serious divide
has emerged in the US case law between courts that continue to apply an employee
role and duties approach, others
that focus on the nature of the employer and
its activities and still others that give primacy to the particular claim or
action
that forms the basis of the suit. As will be argued, while the nature of
the employer test unduly privileges foreign states at the
expense of employee
rights, the nature of the claim analysis goes in the opposite direction, making
it almost impossible for a state
to claim immunity. The employee role and
duties approach, by contrast, is an appropriate middle ground that allows for a
balancing
and weighing of the competing interests.
A. The Nature of the
Employer as Commercial Activity
The leading case from the Second
Circuit is the decision of the Federal Court of Appeals in Kato v
Ishihara.[59] Kato
involved a Japanese citizen employed by the Tokyo Metropolitan Government (TMG)
in New York who sued for gender discrimination.
Kato was employed under the
terms of a Japanese law applicable to 'local public servants', which included
qualification by competitive
examination, guaranteed life tenure and rotation of
employment placements. The claimant's tasks included promotional activities
on
behalf of Japanese companies, such as manning booths at trade shows to promote
specific products and preparing marketing reports
for Japanese
companies.
After referring to the legislative history of the FSIA the
court noted that ‘although the claimant was employed in activities
relating to marketing and business (she) ...was concededly a 'civil servant'
under Japanese law and subject to many of the protections
afforded the Japanese
civil service'.[60] The court
therefore made the important point that despite the apparently separate
references to 'civil servant' and 'marketing agent'
in the legislative history,
in practice they are not always wholly distinct categories. Instead, according
to the court, the key
inquiry was 'whether TMG's activities in New York were
typical of a private party engaged in
commerce'.[61] In one swoop, the
court has shifted the focus away from the employee's duties and responsibilities
to the nature and functions of
the employer or workplace. Applying this test to
the facts, it was found that 'TMG performed actions that were only superficially
similar to actions typically undertaken by private
parties'.[62] Its role was product
promotion for Japanese companies, general business development assistance and
participation in trade shows
on behalf of the companies to promote those
companies' products for sale. While 'a private Japanese business might engage
in those
activities on its own behalf', such a business 'will not typically
undertake the promotion of other Japanese businesses, or the promotion
of
Japanese business interests in
general'.[63] Hence the court
concluded that where an entity engages in 'the promotion of commerce' as opposed
to simply 'commerce', it is performing
a 'quintessentially governmental
function'.[64] Since TMG was not
involved in commercial activity, the claimant's 'involvement in such activities
on TMG's behalf' must also necessarily
be governmental. The conclusion that TMG
was engaging in governmental activity and Kato was doing so on its behalf also
meant that
Kato was a civil servant.
Kato is a highly significant
decision in that it almost has the effect of bringing absolute immunity back to
many foreign sovereign employment
disputes. The reality is that apart from the
most obviously commercial places of employment such as private corporations and
banks,
engaged in profit making activities, an employee's rights will now be
dependent on the activities performed by his or her employer.
Such a result can
be highly unjust, especially where the employee's own duties are routine and
generic, with no policy dimension.
Hence, for any employees of organizations
engaged in policy implementation or formulation the position is bleak after
Kato. While the result in Kato could possibly be justified on the
ground that the employee there was a Japanese citizen who was a civil servant
under Japanese law,
her duties were nonetheless of a low-level nature that would
be unlikely to implicate the sovereignty and security concerns of the
foreign
state.
The impact of Kato has already been seen in the Hijazi
case discussed at V.B above. Its influence is also apparent in other recent
decisions such as Kim v Korean Trade Promotion Investment Agency
(KOTRA)[65] and Salman v Saudi
Arabian Cultural Mission.[66]
Kim concerned a US citizen responsible for researching and
identifying potential buyers of goods and services in the US for Korean
exporters
and linking up exporters and buyers with his job title being marketing
manager and consultant. KOTRA was an entity established for
the purpose of
promoting development of the Korean economy by providing services to Korean
industries and enterprises, specifically
to act as a local office to assist
Korean enterprises in selling goods and services in the United States. The
court applied the
approach in Kato based on 'the nature of the employer'
to find that no commercial activity existed in this case. After noting that
KOTRA's activities
were 'virtually indistinguishable from the services offered
by TMG (in Kato)' the court found that the organization's 'sole purpose'
was the furtherance of Korean government policy in facilitating Korean trade
and
economic interests'.[67]
Furthermore, the claimant's employment was 'closely intertwined' with KOTRA's
government role of promoting Korean
companies.[68]
As argued
above, the 'intertwined' test may at first blush appear to be a middle ground
between the nature of the workplace and the
employee's role and duties tests in
defining commercial activity but ultimately in its application it gives great
weight to the activities
of the employer. This conclusion flows from the fact
that in every case where the employer was found to be engaged in sovereign
acts
(for example, Kato, Kim and Hijazi, discussed above) the
‘intertwined’ test has always been found to be satisfied. Again, it
is clear that where an employee
happens to work in a 'sovereign' location it
will be almost impossible for them to show that their duties were somehow
extraneous
or peripheral to their employer's functions.
The impact of
Kato can also be seen in the very recent decision in Salman v Saudi
Arabian Cultural Mission.[69]
The claimant in that case, a US citizen, was employed as an academic adviser
with an organisation created by the Saudi government
to administer programs and
policies to meet the educational and cultural needs of Saudis studying in the
United States. The purpose
of the organization was to provide services to
students such as financial aid, accommodation and advice on course selection and
academic
requirements.
The claimant sued for sex discrimination and the
court again endorsed the Kato approach to commercial activity, saying
that ‘the question is not whether an individual employed by a foreign
state performed
job functions with an analogue in the private sector. Rather
the inquiry centers on the nature of the conduct undertaken by the
foreign state
itself and the individual's role in that
activity'.[70] In this case the
court found that a free college education was a public benefit in Saudi Arabia
and the organization was therefore
involved in the distribution of public
benefits with the plaintiff 'tasked' with providing such public benefits to
Saudi students
in the United
States.[71] The Saudi government
'did not buy or sell anything or engage in any profit-driven activity' but
simply acted through [the organization]
to effectuate its educational policy,
ensuring that students studying abroad received precisely the same benefits as
their domestic
counterparts'.[72]
The manner in which the government conducts its educational policy 'has
political, cultural and religious dimensions' and so is
clearly governmental in
nature. The government must therefore have free ‘choice of personnel [in]
implementing [such] policy'.[73]
Again, the almost exclusive focus is on the employer with little or no attention
given to the position and status of the employee.
As mentioned above, the
only situation in which the Kato test will work to the benefit of the
employee is where the activities of the employer are found to be private or
commercial in nature.
An example arose in Ghawanmeh v Islamic Saudi
Academy[74] where a US citizen
employed as a teacher at a Saudi school in the United States was allowed to sue
the school for discrimination.
The administration of a school was found to be
'an activity that was routinely performed by private
parties'.[75] A similar case was
Islamic Saudi Academy v Islamic Saudi Academy Employee Professional
Association[76] where an
employee association was allowed to seek union certification on behalf of
workers at an Islamic school in the United States.
The court found that the
school had engaged in commercial activity by entering into contracts with
teachers, suppliers, local cleaners
and security services, which was again
conduct that could be performed by private parties.
B. The Nature of
the Claim as Commercial Activity
By contrast, in three other cases
involving cultural and marketing organizations courts found commercial
activity to exist by focusing on the nature of the plaintiff's claim and whether
it implicated or compromised the foreign
state's sovereignty. The first of
these cases is Hansen v Dutch Tourist
Board[77] where an action for
age and gender discrimination was declared admissible. The court found that
'the actions that formed the basis
of [the plaintiff's] complaint [for
discrimination] did not reflect the exercise of powers particular to
sovereigns'.[78] Instead, the
actions of the defendant which are challenged are 'basic employment decisions
akin to those made by many small
businesses'.[79]
The 'nature
of the claim' approach was applied in another case involving the KOTRA, Cha v
Korean Trade Center.[80] The
claimant was a US citizen employed first as a secretary and then as a marketing
manager/consultant by KOTRA who complained of
gender discrimination. While the
defendant employer sought to rely on the Kato principle to deny
commercial activity, the court distinguished the case on the ground that the
employee there was both a Japanese
national and civil servant. While such facts
were present in Kato, as argued above, they were not the determinative
elements of the decision. Rather, the main thrust of Kato was to
emphasise the nature of the employer entity. The court then proceeded to hold
that the employee's claim was based on commercial
activity. First, applying
Hansen above, the nature of the employee's action did not implicate the
sovereignty of the foreign state, secondly, she was a US citizen
and thirdly her
employment duties were commercial in
nature.[81] So approaches two,
three and four above to defining commercial activity (nature of the claim,
nature of the employee's duties and
territorial nexus) were all relied upon to
provide a broader analysis of the immunity question.
Thirdly, in Shih
v Taipei Economic and Cultural Representative Office
(TECRO)[82] a group of US citizens
were permitted to sue for age discrimination. The first employee, S, was
involved in answering phones and
translating public documents and articles with
no contact with confidential government information or involvement in policy
decisions,
the second, Yao was engaged in book keeping and other clerical tasks
and the third Yu, performed clerical tasks in the library.
The court first
found that the plaintiffs’ claims for discrimination were based on 'the
adverse employment actions' and management
of their employer that they allegedly
suffered as a result of their age and that the employer's conduct in imposing
such adverse
employment actions was itself commercial activity. 'Making
decisions about what tasks employees perform, how much they are paid
or how they
are treated in the workplace does not implicate concerns peculiar to
sovereigns'.[83] While the court in
Cha distinguished Kato, Shih appeared to reject the
decision outright, saying that the correct approach in defining commercial
activity was not to focus on the
activities of the employer in an abstract sense
but rather to examine 'the nature of the act' upon which the plaintiff's claim
is
based.[84]
While the
above cases relying on the ‘nature of the claim’ approach certainly
produce more positive outcomes for employees
of foreign states, this test is not
recommended. The main problem is that it provides insufficient protection for
foreign states
since in almost every case commercial activity will be found.
Where a plaintiff sues, for example, for discriminatory conduct, failure
to pay
wages or other benefits or unlawful termination, the facts supporting such
claims would be conduct that a private party could
engage in and so commercial.
While it is conceivable that a US court could conclude that a particular action
seriously implicated
the security or sovereignty concerns of a state (for
example if a state were ordered to reinstate a high level official) such cases
have not yet arisen in the United States. The far more common situation is a
suit for damages arising from improper conduct in the
workplace which can and
does occur in any employment location.
C. The Nature of the
Employee’s Duties as Commercial Activity
The final case to
consider under the heading of employment at marketing and cultural bodies
involved a clear application of the employee
duties and responsibilities
approach to commercial activity. Lee v Taipei Economic and Cultural
Representative Office[85] was
another case involving a suit for age discrimination at TECRO. In Lee
the plaintiff was a chauffeur who was a member of the service staff of TECRO.
The court first rejected the argument that the employee
was a civil servant for
a number of reasons. First, the foreign state Taiwan had failed to establish
this status under its law.
Second, there was nothing about the role of a
chauffeur that has either recognised markers of civil service such as
involvement
with political deliberations or that indicates that he was part of
the Taiwanese government. Third, the plaintiff’s employment
did not have
to go through official channels, receive approval from the foreign ministry, nor
did he take any exam at the time of
his employment or receive civil service
benefits.[86] In effect, the
plaintiff was performing 'a civil service staff job that any laborer could have
fulfilled'.[87] Fourth, he was a
dual Taiwanese-US citizen who was locally recruited in the United States to work
only in that country.[88] Finally,
'the strongest evidence' of non-civil service status lay in his responsibilities
as chauffeur: he had no role in political
deliberations and policy making and
performed menial tasks around the office, waited outside at events and had no
discretionary authority.[89]
Once the court found that Lee was not a civil servant, it also, similar
to El-Hadad, again relied on the nature of his duties to conclude that
his employment was commercial. 'His tasks as a driver, maintenance, repairman
and errand runner are standard in the commercial world. His duties involved no
discretionary duties or involvement with sovereign
law or policy. He
participated in official events only in the capacity of a service staff member,
driving officials to events and
waiting outside. His 'job is one that is
commonplace in a commercial enterprise with the outward form ... indisputably
resembl[ing]
service jobs in the commercial
sphere'.[90]
This case is
an emphatic vindication of the ‘status and duties of the employee’
test and a clear riposte to the decisions
in Crum and Figueroa and
Butters above that treated any job where the ‘safety’ of the
employer was involved as beyond review. As argued above, this test
is the best
method for balancing the protection of employee rights against the security
interests of foreign states as it aims to
assess the nature of the
employee’s work compared to similarly situated persons in the private
sector. Obviously, an employee
tasked with handling and analysis sensitive
government materials or making high level policy decisions has no counterpart in
the
commercial world and a US court litigating such a case would pose serious
risks to the foreign state's security and sovereignty.
But an employee whose
tasks differ little from those in an equivalent role working for a non-foreign
state entity should not be
denied justice simply because of his or her possibly
fortuitous choice of a foreign sovereign employer.
The Lee
decision in the area of cultural and marketing entities when coupled with the
compelling and well reasoned opinion of the DC Circuit
Court of Appeals in
El-Hadad in the context of embassy and consulate work point the correct
way forward to resolving foreign sovereign employment disputes. As
noted above,
the employee role and duties approach does not automatically lead to a finding
of commercial activity and hence no immunity
in every case. Where an employee
is in a uniquely governmental position a court will properly decline to
adjudicate to protect the
foreign state's interests as can be seen from the
Sanchez-Ramirez and Eringer decisions. The ‘nature of the
claim' approach should however be rejected for going too far in favour of
employee interests.
The decision in Kato, by contrast, leaves employees
of almost any foreign state organisation with a policy dimension with no scope
for recourse. A more
balanced approach is required.
An alternative argument raised by some
foreign state employees, with varying success, has been to assert that the
foreign state has
implicitly waived its immunity to US jurisdiction. In the
legislative history to the FSIA it was noted that prior to the promulgation
of
sovereign immunity rules, US courts found implied waivers in cases where a
foreign state had agreed that the law of a particular
country should govern a
contract.[91] Such an approach has
been endorsed in subsequent decisions, although courts have taken slightly
different approaches to the issue
of whether an employment contract is governed
by US law.
Where there is a clause in the contract that expressly
states that it is to be ‘governed by US law’ or ‘US
legislation’
then an implied waiver will be found, see, for example
Ashraf-Hassan v Embassy of
France,[92] Ghawanmeh v
Islamic Saudi Academy[93] and
Ewald v Royal Norwegian
Embassy.[94] Where, however,
reference is merely made in the contract to the application of US laws on
employment, discrimination or harassment
then such statements, by themselves,
will be insufficient for a
waiver[95] particularly where the
contract also contains a provision stating that the foreign sovereign employer
does not intend to waive sovereign
immunity.[96] The rationale for
such an approach is that the foreign sovereign lacked an
‘unmistakeable’ or ‘unambiguous’
intention to waive
immunity.
This article has considered a number of important recent US
decisions involving the rights of employees of foreign states where the
commercial activity exception to foreign sovereign immunity in the FSIA has
arisen. While no uniform and consistent approach can
be discerned from those
decisions as to the definition of commercial activity in employment cases, it is
suggested that an approach
that focuses on the employee’s precise role and
responsibilities is the preferable model. Foreign states and their employees
often have competing interests: while states want no review or exposure of their
sensitive, sovereign matters by a foreign court,
employees simply want just
redress for their grievances. An approach that balances these often opposing
objectives and, in particular,
that provides justice to employees whose work is
largely indistinguishable from that in the private or commercial spheres, is
surely
the best way forward. Further, the inclusion of an express choice of US
law in an employment contract, so as to establish an implied
waiver of immunity
by the state, may be the best strategy for a foreign state employee. It is
however recognised that there will
often be inequality of bargaining power
between such a person and their employer which may in practice make insertion of
such a clause
unrealistic.
[1] Richard L Garnett, The
Perils of Working for a Foreign Government: Foreign Sovereign Immunity and
Employment 29 CALIFORNIA WESTERN INT’L LJ 133
(1998).
[2] For analyses of the
position in other jurisdictions, see Richard Garnett, State Immunity in
Employment Matters 46 INT’L & COMP LQ 81 (1997), The Precarious
Position of Embassy and Consular Employees in the United Kingdom 54
INT’L & COMP LQ 705 (2005), State Immunity and Employment Relations
in Canada 18 CANADIAN LABOUR AND EMPLOYMENT LAW JOURNAL 643 (2014) and
State and Diplomatic Immunity and Employment Rights: European Law to the
Rescue? 64 INT’L & COMP LQ 783 (2015) and Julia Brower and Center
for Global Legal Challenges, STATE PRACTICE ON SOVEREIGN IMMUNITY
IN EMPLOYMENT
DISPUTES INVOLVING EMBASSY AND CONSULAR STAFF (December 19, 2015) at
law.yale.edu. The issue has particularly attracted
the attention of European
scholars see eg Philippa Webb, The Immunity of States, Diplomats and
International Organisations in Employment Disputes: The New Human Rights
Dilemma? 27 EUROPEAN J INT L 745 (2016) and Andrew Sanger, State Immunity
and the Right of Access to a Court under the EU Charter of Fundamental
Rights 65 INT’L & COMP LQ 213
(2016).
[3] Garnett (2015) id,
784
[4] Legislative History of
Foreign Sovereign Immunities Act of 1976 HR REP No. 94-1487 reprinted in UNITED
NATIONS LEGISLATIVE SERIES,
MATERIALS ON JURISDICTIONAL IMMUNITY OF STATES AND
THEIR PROPERTY 107 (1982)
[5]
Id
[6] Id,
108
[7] [1996] USCA9 2543; 92 F 3d 918 (9th Cir
1996)
[8] Id.,
921
[9] Id.,
922
[10] 1998 WL 120230 (ND Ill
1998)
[11] In the court’s
words, ‘consulate activities ... [are] of course the epitome of sovereign
acts’; id at
*4.
[12] 484 NYS 2d 318 (NY App
Div 1985)
[13] 835 F 2d 160
(7th Cir 1987)
[14]
Elliott v British Tourist Authority 986 F Supp 189 (SDNY 1997)
(aff’d 172 F 3d 37 (2nd Cir
1999))
[15] EEOC Decision no.
85-11 1985 WL 32785 (EEOC July 16
1985)
[16] [1989] USCA2 157; 869 F 2d 75
(2nd Cir 1989)
[17]
496 F 3d 658 (DC Cir 2007), substantially affirming its earlier decision at [2000] USCADC 131; 216
F 3d 29 (DC Cir 2000)
[18] Id,
664
[19]
Id
[20] Id,
664
[21]
Id
[22]
Id
[23] Id,
665
[24]
Id
[25] Id,
665-667
[26] Id,
667
[27]
Id
[28] Id,
667
[29] Id,
668
[30] 111 F Supp 2d 457 (SDNY
2000)
[31] Id.,
464
[32]
Id
[33]
Id
[34] Id.,
466
[35] Id.,
468
[36] Id,
469-470
[37] 40 F Supp 3d 94 (DDC
2014) (aff’d 610 Fed Appx 3 (DC Cir
2015))
[38] Id,
102
[39] 610 Fed Appx 3, 6 (DC
Cir 2015) For another recent decision involving an embassy employee (a
receptionist) where the French government conceded
that commercial activity
existed, see Jouanny v Embassy of France in the US 2016 WL 7156465 (DDC
December 7, 2016)
[40] 2013 WL
4013947 (ND Cal August 5, 2013) (aff'd 603 Fed Appx 631 (9th Cir
2015))
[41] Id.,
*9
[42]
Id
[43]
Id
[44] 2005 WL 3752271 (ED Va
July 13 2005). Crum was recently applied, with minimal reasoning, to
another case involving a chauffeur at a consulate in Martinez v Consulate
General of Algeria in New York 2016 WL 6808227 (SDNY November 16,
2016).
[45] Id.,
*4
[46] 222 F Supp 3d 304 (SDNY
2016)
[47] Id,
315
[48] Id,
315-316
[49] [2000] USCA4 187; 225 F 3d 462 (4th
Cir 2000)
[50] 533 Fed Appx 703
(9th Cir 2013)
[51] Id,
705
[52] 689 F Supp 2d 669 (SDNY
2010) (aff’d 403 Fed Appx 631 (2nd Cir
2010))
[53] Kato v Ishihara
[2004] USCA2 67; 360 F 3d 106 (2nd Cir
2004)
[54] Hijazi 689 F
Supp 2d 669, 673 (emphasis
added)
[55] Id,
674
[56] 403 Fed Appx 631 (2nd
Cir 2010)
[57] Id,
632
[58] In Jimenez v The
United Mexican States 978 F Supp 2d 720 (SD Tex 2013) a court dismissed on
immunity grounds a workplace claim by a consulate employee simply on the basis
that there was ‘no
evidence’ of commercial activity. No reasoning
was given for this
conclusion.
[59] [2004] USCA2 67; 360 F 3d 106
(2nd Cir 2004)
[60] Id.,
111
[61]
Id
[62] Id.,
112
[63]
Id
[64]
Id
[65] 51 F Supp 3d 279 (SDNY
2014)
[66] 2017 WL 176576 (ED Va
January 17, 2017)
[67] 51 F Supp
3d 279, 287-288 (SDNY 2014)
[68]
Id, 289 n4
[69] 2017 WL 176576
(ED Va January 17, 2017)
[70] Id,
at *4
[71] Id at
*5
[72] Id at
*5
[73]
Id
[74] 672 F Supp 2d 3 (DDC
2009)
[75] Id, at
9
[76] 2012 NLRB Reg Dir Dec
Lexis 86 (National Labor Relations Board Region 5, June 14,
2012)
[77] 147 F Supp 2d 42 (EDNY
2001)
[78] Id,
151
[79]
Id
[80] 2009 NY Misc Lexis 5165
(SCNY October 27, 2009)
[81] Id,
*16
[82] 693 F Supp 2d 805 (ND
Ill 2010)
[83] Id,
811
[84] Id, 812,
815
[85] 2010 WL 786612 (SD Tex
March 5, 2010)
[86] Id,
*5
[87]
Id
[88] Id,
*6
[89]
Id
[90] Id, *7; see also
Lasheen v Embassy of the Arab Republic of Egypt 485 Fed Appx 203
(9th Cir 2012) where a professor employed at a public university in
Egypt, who was studying in the US on a scholarship, was held not to
be a civil
servant.
[91] HR Rep 94-1487,
18-19
[92] 40 F Supp 3d 94, 101
(DDC 2014) (aff’d on other grds 610 Fed Appx 3 (DC Cir
2015))
[93] 672 F Supp 2d 3 (DDC
2009)
[94] 2013 WL 6094600, *5 (D
Minn November 20, 2013)
[95]
Kim v Korean Trade Promotion Investment Agency (KOTRA) 51 F Supp 3d 279,
285-286 (SDNY 2014)
[96]
Salman v Saudi Arabian Cultural Mission 2017 WL 176576, *3 (ED Va January
17, 2017)
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