INTERNATIONAL LAW—THE FOREIGN SOVEREIGN IMMUNITIES ACT: DO TIERED CORPORATE SUBSIDIARIES CONSTITUTE FOREIGN STATES?

INTRODUcrIONIn today's global economy, United States citizens increasingly come into contact with foreign corporations.! When a legal injury arises out of that contact, a United States plaintiff often finds to his or her surprise that the offending corporation qualifies for sover eign immunity under U.S. laws because of ownership, albeit partial and indirect, by a foreign government.The Foreign Sovereign Im munities Act ("FSIA"),2 the sole basis of jurisdiction in federal and state courts for suits involving foreign governments,3 extends immu nity protection not only to foreign states, but also to foreign corpo rations that are majority-owned by foreign states.4 The situation often arises that a corporation is not directly ma jority-owned by a foreign state, but through a parent/subsidiary structure is majority-owned by another corporation which is di rectly majority-owned by a foreign state.This hierarchical system of ownership is known as "tiering."Courts struggle with the issue of whether a particular entity in a "tiered" corporate structure ful fills the requirements of the FSIA's definition of a foreign state, thus enjoying the many protections afforded by the FSIA.5A split between two federal courts of appeals recently developed over the