RESPONDENT:City of New York, New York
LOCATION:United States Court of Appeals for the Ninth Circuit
DOCKET NO.: 06-134
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 551 US 193 (2007)
GRANTED: Jan 19, 2007
ARGUED: Apr 24, 2007
DECIDED: Jun 14, 2007
John J.P. Howley – for the petitioners
Michael A. Cardozo – on behalf of Respondent
Sri Srinivasan – for the United States as amicus curiae, by special leave of the Court, supporting the petitioners
Facts of the case
Foreign countries can own buildings surrounding the United Nations in New York City tax-free if the buildings are used exclusively for diplomatic purposes. The City filed lawsuits against the Indian and Mongolian consulates in a District Court for failing to pay taxes on properties used for non-diplomatic purposes. The two consulates argued that the Foreign Sovereign Immunity Act (FSIA) granted them immunity from suit. The District Court ruled that it had jurisdiction to hear the suit under the FSIA’s “immovable property” exception, which removes immunity from foreign countries when “rights in immovable property situated in the United States are in issue.” The two countries argued that “rights” denoted a narrow set of property laws and did not extend to tax matters. The U.S. Court of Appeals for the Second Circuit affirmed.
1) Does a suit to recover property taxes imposed on property owned by a foreign state fall within the Foreign Sovereign Immunity Act’s “immovable property” exception to sovereign immunity?
2) Did the court of appeals err in relying on two international agreements to which the United States is not a party in the course of interpreting the Foreign Sovereign Immunity Act?
Media for Permanent Mission of India to the United Nations v. City of New York
Audio Transcription for Opinion Announcement – June 14, 2007 in Permanent Mission of India to the United Nations v. City of New York
John G. Roberts, Jr.:
Justice Thomas has the opinion of the court this morning in two cases.
First case I have is The Permanent Mission of India, et al. versus The City of New York, 06-0134.
This case comes to us on a writ of certiorari to the United States Courts of Appeals for the Second Circuit.
For several years New York City has levied property taxes against the Permanent Mission of India to the United States and the Mongolian Ministry of Foreign Affairs for the portions of their New York buildings used to house lower level employees.
Petitioners have refused to pay those taxes by operation of the New York Law the unpaid taxes converted into tax liens and the City sought a declaration in State Court that the tax liens were valid.
Petitioners remove to Federal Court and argued that they were immune from the suits under the Foreign Sovereign Immunities Act.
The District Court disagreed relying on the acts exception to immunity for “immovable property” which provides that a foreign state shall not be immune from jurisdiction in any case in which “rights and immovable property situated in the United States are in the issue.”
The Court of Appeals affirmed.
In an opinion filed with the clerk today, we affirmed the judgment of the Court of Appeals.
We hold that an action seeking a declaration of the validity of a tax lien places rights and immovable property in the issue.
Contrary to petitioners’ position, the immovable property exception does not expressly limit itself to cases in which the specific right at issue is titled ownership or possession.
Rather the exception focuses more broadly on rights in property.
At the time, of the acts adoption in 1976, Black’s Law Dictionary defined a lien as a charge or security or incumbrance upon property.
Incumbrance in turn was defined as “any right or interest in land which may subsist in another to the diminution of its value.”
The most recent edition of Black’s similarly defines lien as a “legal right or interest that a creditor has in another’s property.”
The practical effects of a lien are consistent with these definitions.
A lien on real property runs with the land and is enforceable against subsequent purchasers.
As such a lien has an immediate adverse effect upon the amount to which property could be sold.
This constitutes a direct interference with the property and inhibits one of the quintessential rights property ownership the right to convey.
It is therefore plain that a suit to establish the validity of a lien implicates rights and immovable property.
Two well recognized and related purposes of the act adoption of the restrictive view of sovereign immunity and codification of international law at the time of the acts enactment support our reading of the text.
Justice Stevens has filed a dissenting opinion which Justice Breyer has joined.