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The Foreign Sovereign Immunities Act (FSIA) was passed by Congress as a comprehensive statute to cover all instances when foreign states are to be immune from suit in the courts of the United States, as well as when foreign state immunity is to be limited. Judicial interpretation of one of the FSIA’s exceptions to immunity has undergone significant evolution over the years with respect to foreign state property expropriations committed in violation of international law. U.S. courts initially construed this FSIA exception by denying immunity only if the defendant state had expropriated property of a citizen of a nation other than itself. Later, such suits were allowed even where the plaintiffs were deemed by the court to have been formal citizens so long as they had not been treated as such at the time of the expropriation. This tended to occur where states had dispossessed groups of citizens, often minority populations, of their property rights, and often coincided with grave human rights violations.

In the most recent appellate decisions to consider the issue, two circuits, the Seventh and D.C., nationality has been discarded entirely as a criterion to abrogate immunity if a court considers the defendant state’s expropriation to have been part of a policy of genocide. The D.C. Circuit has gone still further in the later of the cases and equates the act of property expropriation with genocide. Both circuits initially also imposed a new exhaustion of local remedies requirement. As of 2018, a conflict exists between the two circuits on that issue.

The genocide interpretation with the imposition of exhaustion distorts both the FSIA and international customary law. It risks trivializing the concept of genocide, and in the Seventh Circuit it removes exhaustion from its international law roots in cases that occur exclusively in international tribunals by inserting the requirement into a domestic court framework. Neither development is consistent with the FSIA statute. Coupling the new genocide category with an exhaustion requirement also has a net effect of depriving plaintiffs of recovery inasmuch as lawsuits in the foreign defendant states are unlikely to succeed, and the obstacles are steep for persuading U.S. federal courts subsequently to retry a case once an adverse foreign judgment has been issued.