CAN PEOPLE'S REPUBLIC OF CHINA BE SUCCESSFULLY SUED IN UNITED STATES OF AMERICA-THE JURISDICTIONAL BARRIER AND WAY AHEAD

In the United States of America (US), till date, at least six lawsuits in districts including California, Florida, Nevada, Pennsylvania, Missouri and Texas have been filed against China, claiming damages of about $20 trillion, even more than the GDP of China. The allegations include the creation of Covid?19 virus as a biological weapon, aiding and abetting death, violation of international treaties, provision of material support to terrorists, conspiracy to cause injury and death of US citizens, negligence, wrongful death, assault, etc.

While attempting to bring China into US Courts, these lawsuits face a substantial barrier of jurisdiction vis-à-vis sovereign immunity.

INTERPLAY BETWEEN FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 AND JUSTICE AGAINST SPONSORS OF TERRORISM ACT OF 2016

The law governing sovereign immunity is envisaged in Foreign Sovereign Immunities Act of 1976, 28 USC § 1604 (FSIA) which provides blanket immunity/protection to a foreign government against lawsuits tried in the United States of America as under:

§ 1604. Immunity of a foreign state from jurisdiction

Subject to existing international agreements to which the United States is a party at the time of enactment of this Act a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.

However, one of the lawsuits filed in the District of Texas has claimed jurisdiction, inter alia, under Justice Against Sponsors of Terrorism Act, 28 USC § 1605B (“JASTA”) passed by the US Congress on 27 September 2016 which legislation in In Re Terrorist Attacks on September 11, 2001 (03?MDL?1570 (GBD)) has kept Saudi Arabia on Trial for 9/11 Terror attacks. The relevant provisions of JASTA have been reproduced hereunder:

“SEC. 3: RESPONSIBILITY OF FOREIGN STATES FOR INTERNATIONAL TERRORISM AGAINST THE UNITED STATES.

(a) IN GENERAL.—Chapter 97 of title 28, United States Code, is amended by inserting after section 1605A the following:

 ‘‘§ 1605 B. Responsibility of foreign states for international terrorism against the United States

 ‘‘(a) DEFINITION.—In this section, the term ‘international terrorism’—

‘‘(1) has the meaning given the term in section 2331 of title 18, United States Code; and

‘‘(2) does not include any act of war (as defined in that section).

 ‘‘(b) RESPONSIBILITY OF FOREIGN STATES.—A foreign state shall not be immune from the jurisdiction of the courts of the United States in any case in which money damages are sought against a foreign state for physical injury to person or property or death occurring in the United States and caused by—

‘‘(1) an act of international terrorism in the United States; and

‘‘(2) a tortious act or acts of the foreign state, or of any official, employee, or agent of that foreign state while acting within the scope of his or her office, employment, or agency, regardless where the tortious act or acts of the foreign state occurred.

 ‘‘(c) CLAIMS BY NATIONALS OF THE UNITED STATES.—Notwithstanding section 2337(2) of title 18, a national of the United States may bring a claim against a foreign state in accordance with section 2333 of that title if the foreign state would not be immune under subsection (b).

 XXX”

 Considering the provisions of law, only time will tell whether China can be stripped of its sovereign immunity in view of the wide ramifications Covid?19 has had over the United States including loss of business, lives, etc. 

EFFECTS DOCTRINE

Effects doctrine allows US Courts to assume jurisdiction over acts that take place outside the territory of the state and over the activities of non-nationals. This doctrine asserts that the activities outside the US State may be regulated and controlled because of their impact on territories within the State.

This doctrine has been mainly applied by the US Courts in anti?trust cases which substantially and/or directly affect, or interfere with American trade/marketplace.

However, there is confusion on what standard is to be applied while testing the “effect” for the application of this doctrine. In United States v. General Electric Co. 82 F. Supp. 753, (D.N.J. 1949), the Court required, that the effects be direct and substantial. Whereas, in Occidental Petroleum Corp. v. Buttes Gas & Oil Co. 331 F. Supp. 92 (C.D. Cal. 1971), the Court held that the "effects" were sufficient if they were either direct or substantial. On the other hand, in United States v. Aluminium Co. of America, 148 F.2d 416 (2nd Cir. 1945) it required evidence that the violators had intended to affect, and had actually affected foreign commerce.

Needless to say that the spread of Covid?19 has crumpled not only the American market place but has also had an unprecedented impact on the world economy.

Since this doctrine is mainly applied in anti?trust laws it would be interesting to see whether this doctrine can be applied to the alleged act/s and omissions of China and its effect on US economy.

 RECENT DEVELOPMENTS

Members of the Congress, Senator Tom Cotton (R-Arkansas) and Representative Dan Crenshaw (R-Texas) have already drafted Cotton, Crenshaw Bill which if enacted may provide for a civil action against China for deliberate concealment or distortion of information with respect to an international public health emergency, and for other purposes. Among other amendments, the proposed amendment in above-quoted Section 3 is as under:

‘‘§ 1605C. Responsibility of foreign states for deliberate concealment or distorting information about international public health emergencies of international concern

‘‘(a) RESPONSIBILITY OF FOREIGN STATE.—A foreign state shall not be immune from the jurisdiction of the courts of the United States in any case in which money damages are sought against a foreign state for physical injury or death, or injury to property or economic interests, occurring in the United States and caused by—

‘‘(1) the spread of COVID–19; and 

‘‘(2) a tortious act or acts, including acts intended to deliberately conceal or distort the existence or nature of COVID–19, of the foreign state, or of any official, employee, or agent of that foreign state while acting within the scope of his or her office, employment, or agency, regardless where the tortious act or acts of the foreign state occurred.

XXX”

U.S. Senator Josh Hawley (R-Mo.) has also announced a Bill which may be cited as the Justice for Victims of Coronavirus Act to hold the Chinese Communist Party (CCP) responsible for causing the COVID-19 global pandemic.

Even if the US allows people to initiate a civil action against China, it must be kept in mind that sovereign immunity is reciprocal in nature and by allowing action against China, the US may open itself to various lawsuits in China.

The way ahead is to investigate the cause and spread of coronavirus and preparedness for and responses to the pandemic. Also, if proved, on a global level, China may be held responsible for concealing or distorting information about Covid?19.