And here's Justice Stevens's full dissent:Under New York law, real property owned by a foreign government is exempt from taxation when used exclusively for diplomatic offices or quarters for ambassadors or ministers plenipotentiary to the United Nations. For years, respondent (City) has levied property taxes against petitioner foreign governments for that portion of their diplomatic office buildings used to house lower level employees and their families. Petitioners have refused to pay the taxes. By operation of state law, the unpaid taxes converted into tax liens held by the City against the properties. The City filed a state-court suit seeking declaratory judgments to establish the liens’ validity, but petitioners removed the cases to federal court, where they argued that they were immune under the Foreign Sovereign Immunities Act of 1976 (FSIA), which is “the sole basis for obtaining jurisdiction over a foreign state in federal court,” Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428. The District Court disagreed, relying on an FSIA exception withdrawing a foreign state’s immunity from jurisdiction where “rights in immovable property situated in the United States are in issue.” 28 U.S.C. §1605(a)(4). The Second Circuit affirmed, holding that the “immovable property” exception applied, and thus the District Court had jurisdiction over the City’s suits.
Held: The FSIA does not immunize a foreign government from a lawsuit to declare the validity of tax liens on property held by the sovereign for the purpose of housing its employees.
(a) Under the FSIA, a foreign state is presumptively immune from suit unless a specific exception applies. In determining the immovable property exception’s scope, the Court begins, as always, with the statute’s text. Contrary to petitioners’ position, §1605(a)(4) does not expressly limit itself to cases in which the specific right at issue is title, ownership, or possession, or specifically exclude cases in which a lien’s validity is at issue. Rather, it focuses more broadly on “rights in” property. At the time of the FSIA’s adoption, “lien” was defined as a “charge or security or incumbrance upon property,” Black’s Law Dictionary 1072, and “incumbrance” was defined as “[a]ny right to, or interest in, land which may subsist in another to the diminution of its value,” id., at 908. New York law defines “tax lien” in accordance with these general definitions. A lien’s practical effects bear out the definitions of liens as interests in property. Because a lien on real property runs with the land and is enforceable against subsequent purchasers, a tax lien inhibits a quintessential property ownership right - the right to convey. It is thus plain that a suit to establish a tax lien’s validity implicates “rights in immovable property.”
(b) This Court’s reading is supported by two of the FSIA’s related purposes. First, Congress intended the FSIA to adopt the restrictive theory of sovereign immunity, which recognizes immunity “with regard to sovereign or public acts (jure imperii) of a state, but not . . . private acts (jure gestionis).” Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682. Property ownership is not an inherently sovereign function. The FSIA was also meant to codify the real property exception recognized by international practice at the time of its enactment. That practice supports the City’s view that petitioners are not immune, as does the contemporaneous restatement of foreign relations law. The Vienna Convention on Diplomatic Relations, on which both parties rely, does not unambiguously support either party, and, in any event, does nothing to deter this Court from its interpretation.
446 F.3d 365, affirmed and remanded.
Diplomatic channels provide the normal method of resolving disputes between local governmental entities and foreign sovereigns. See Schooner Exchange v. McFaddon, 7 Cranch 116, 146 (1812). Following well-established international practice, American courts throughout our history have consistently endorsed the general rule that foreign sovereigns enjoy immunity from suit in our courts. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486 (1983); Nevada v. Hall, 440 U.S. 410, 417 (1979). The fact that the immunity is the product of comity concerns rather than a want of juridical power, see Verlinden B.V., 461 U. S., at 486, does not detract from the important role that it performs in ordering our affairs.
The Foreign Sovereign Immunities Act of 1976 (FSIA) both codified and modified that basic rule. The statute confirms that sovereigns are generally immune from suit in our courts, 28 U.S.C. §1604, but identifies seven specific exceptions through which courts may accept jurisdiction, §1605(a). None of those exceptions pertains, or indeed makes any reference, to actions brought to establish a foreign sovereign’s tax liabilities. Because this is such an action, I think it is barred by the general rule codified in the FSIA.
It is true that the FSIA contains an exception for suits to resolve disputes over “rights in immovable property,” §1605(a)(4), and New York City law provides that unpaid real estate taxes create a lien that constitutes an interest in such property, N. Y. C. Admin. Code §11–301 (Cum. Supp. 2006). It follows that a literal application of the FSIA’s text provides a basis for applying the exception to this case. See ante, at 4–5. Given the breadth and vintage of the background general rule, however, it seems to me highly unlikely that the drafters of the FSIA intended to abrogate sovereign immunity in suits over property interests whose primary function is to provide a remedy against delinquent taxpayers.
Under the majority’s logic, since “a suit to establish the validity of a lien implicates ‘rights in immovable property,’” ante, at 5, whenever state or municipal law recognizes a lien against a foreign sovereign’s real property, the foreign government may be haled into federal court to litigate the validity of that lien. Such a broad exception to sovereign immunity threatens, as they say, to swallow the rule. Under the municipal law of New York City, for example, liens are available against real property, among other things, to compel landowners to pay for pest control, emergency repairs, and sidewalk upkeep. See N. Y. C. Admin. Code §§17–145, 17–147, 17–151(b) (2000); see also M. Mitzner, Liens and Encumbrances, in Real Estate Titles 299, 311–314 (J. Pedowitz ed. 1984). A whole host of routine civil controversies, from sidewalk slip-and-falls to landlord-tenant disputes, could be converted into property liens under local law, and then used - as the tax lien was in this case - to pierce a foreign sovereign’s traditional and statutory immunity. In order to reclaim immunity, foreign governments might argue in those cases - just as the Governments of India and the People’s Republic of Mongolia tried to argue here - that slip-and-fall claims, even once they are transformed into property liens, do not implicate “rights in immovable property.” But the burden of answering such complaints and making such arguments is itself an imposition that foreign sovereigns should not have to bear.
The force of the arguments of the Solicitor General as amicus curiae supporting petitioners buttresses my conviction that a narrow reading of the statutory exception is more faithful to congressional intent than a reading that enables a dispute over taxes to be classified as a dispute over “rights in immovable property.” It is true that insofar as the FSIA transferred the responsibility for making immunity decisions from the State Department to the Judiciary, Verlinden B.V., 461 U.S., at 487–488, the views of the Executive are not entitled to any special deference on this issue. But we have recognized that well-reasoned opinions of the Executive Branch about matters within its expertise may have the “power to persuade, if lacking power to control.” Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
And I am persuaded. At bottom, this case is not about the validity of the city’s title to immovable property, or even the validity of its automatic prejudgment lien. Rather, it is a dispute over a foreign sovereign’s tax liability. If Congress had intended the statute to waive sovereign immunity in tax litigation, I think it would have said so.
Accordingly, I respectfully dissent.
