The Immunity of Foreign Subsidiarie Under the Foreign Sovereign Immunities Act

Judge Kaplan of the Southern District of New York has suggested a “beneficial interest” approach to determine whether a lower tier subsidiary of a foreign government-owned corporation should be allowed protection under the FSIA.   The “beneficial interest” approach would grant immunity only if the foreign state’s interest in its subsidiary exceeds 50%.  Thus, the beneficial interest approach advances congressional intent by ensuring that immunity will only be granted where the foreign state holds a substantial interest in a company. This article argues that the Congress should legislatively overrule the Dole decision and adopt the “beneficial interest test” for determining whether a corporation should enjoy federal subject matter jurisdiction under the FSIA.