Stergiopoulos v. Iran. Order No. 39391/2021. 105 Rivista di diritto internazionale 620 (2022)

In Angela Stergiopoulos v. Iran, the Italian Supreme Court of Cassation held that state immunity does not bar exequatur proceedings against a foreign state when those proceedings seek the recognition and enforcement of a foreign judicial decision finding the state responsible for serious breaches of human rights.¹ Order 39391/2021 stems from the mass litigation by victims of the September 11 terrorist attack before the U.S. District Court for the Southern District of New York (SDNY). The Islamic Republic of Iran and a number of its instrumentalities were among the defendants, accused of facilitating the terrorists’ travel to the United States and providing them safe haven after the attack.² After being awarded both compensatory and punitive damages by the SDNY,³ the plaintiffs sought to recover by seizing Iranian assets in Europe. Courts in Luxembourg and the UK dismissed (or are likely to dismiss) such proceedings on state immunity grounds,⁴ in keeping with the approach of the International Court of Justice (ICJ) in Jurisdictional Immunities.⁵ However, the Court in Stergiopoulos found that state immunity must give way in these circumstances. Stergiopoulos confirms the Italian courts’ persisting inclination to champion a human rights limitation to state immunity in contrast to mainstream transnational case law. It also reveals several legal and policy risks arising out of that position. Yet the decision should be seen in the context of a new constellation of states prioritizing human rights enforcement over state immunity, including Brazil⁶ and, at least in the Court's view, the United States (especially given the availability under U.S. law of proceedings against states sponsors of terrorism accused of certain egregious violations of human rights).

The Court of Cassation was seized of the case after the Court of Appeals of Rome refused exequatur ⁷ in light of Article 64(a) and (g) of the Italian Act on Private International Law (IAPIL).⁸ Article 64(a) allows recognition and enforcement of a foreign judgment in Italy when the case could have been similarly adjudicated in accordance with Italian principles of jurisdictional competence (so-called “indirect jurisdiction test”). Article 64(g) bars the recognition of foreign decisions yielding effects contrary to Italian public policy. The Court of Appeals found that the SDNY decision at stake failed these tests, because it was handed down in a case in which jurisdiction was asserted under the terrorism exception to sovereign immunity of the U.S. Foreign Sovereign Immunities Act (FSIA) (para. IV).⁹ In the Court of Appeals’ view, it was highly problematic that the application of that exception was subject to the unilateral determination by the U.S. executive that a foreign state was a sponsor of terrorism (id.); this scheme resulted in discriminatory treatment of foreign states and an unjustifiable “presumption of liability” of states designated as sponsors of terrorism, all of which would be incompatible with Italian principles of due process and public policy (id.).

The Court of Cassation held the lower court's findings to be either immaterial or flawed. It recalled that the public policy clause under Article 64(g) has to do with the effects of a foreign judicial decision, not with how the foreign court arrived at that decision (para. V). In its view, a judgment awarding damages to the victims of a terrorist attack could not be considered as yielding effects contrary to the fundamental principles of the Italian legal order (id.). Had a defendant's essential procedural rights been breached in the foreign proceeding, IAPIL Article 64(b) and (c) would have precluded exequatur (id.). However, no claim under such provisions was made here.

The Court also considered the “indirect jurisdiction test” under Article 64(a) to be satisfied. In its opinion, the U.S. courts had adjudicated the lawsuit based on principles of jurisdictional competence recognized by Italian law, including both the law of state immunity and the Italian Code of Civil Procedure (paras. VII–XI). On immunities, the Court stressed that Italian case law and the FSIA converge on ruling out immunity for jure gestionis acts (i.e., private law transactions) and for “compensation claims arising from delicts” (para. VII). It then affirmed that state immunity for jure imperii acts (i.e., acts performed in the exercise of governmental authority) is a prerogative, not a full-blown right (id.). In particular, the Court found that the FSIA accords with the well-settled principle of Italian law that immunity can be discarded when a state is accused of “delicta imperii, that is crimes committed in violation of international jus cogens norms and harming universal values transcending the interests of individual state communities” (id.).¹⁰ In the Court's perspective, the territorial tort exception¹¹ and the terrorism exception under the FSIA reflect the same principle (id.). Accordingly, it stated that disposing of immunity of states bearing responsibility for the 9/11 terrorist attack would fall clearly within the scope of the human rights limitation to state immunity upheld by Italian courts. These findings by the Court are too sweeping. Most visibly, as recalled below, U.S. practice does not endorse a general human rights exception to sovereign immunity.

Be that as it may, the Court concluded that the law of state immunity as construed and applied in Italy would certainly have allowed Italian courts to assert jurisdiction in the case at hand (paras. IX, XI). To bolster this holding, it lingered on its earlier case law¹² to reiterate the view whereby

State immunity . . . solely protects the [governmental] function, and not behaviors that fall outside the typical exercise of governmental authority; its recognition is conditional on an assessment that the State conduct complained of was not extraneous to a legitimate exercise of such authority, with a view to avoiding a disproportionate sacrifice of the competing right of access to justice. (Para. XI)

The Court apparently took for granted that the exercise of jurisdiction by the SDNY was in line with the Italian Code of Civil Procedure's rules on jurisdictional competence for purposes of satisfying the “indirect jurisdiction test” (id.). This seems to cut directly against the Court's earlier decisions in Flatow and Eisenfeld,¹³ rejecting exequatur claims regarding another U.S. judgment against Iran for its involvement in terrorist attacks in the Gaza Strip and Jerusalem (again relying on the FSIA's terrorism exception). Surprisingly, given the similarities among the cases, Stergiopoulos did not even mention the Flatow and Eisenfeld precedents. As recalled further on, the most plausible explanation for the Court's different conclusion here is that the wrongful acts at issue in Stergiopoulos had a clear territorial nexus with the United States (the attack on the Twin Towers),¹⁴ whereas the crimes in Flatow and Eisenfeld occurred entirely outside U.S. territory.¹⁵

In the present case, the Court of Cassation concluded by vacating the underlying decision and remanding to the lower court, for it to rule on the residual issues that had not been adjudicated below (para. XII).¹⁶

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Italian jurisprudence has long championed a human rights limitation to state immunity. The main question of international law at stake in Stergiopoulos concerns the nature, scope, and prospects of that limitation. The Order comes on top of a wealth of Italian decisions asserting jurisdiction over foreign states accused of gross violations of human rights (usually Germany for crimes committed in World War II). Over the past decade, the main drama in this regard has been the conflict between the Italian Constitutional Court and the ICJ. In Judgment No. 238/2014, the Constitutional Court held that the customary norm on state immunity for jure imperii acts is contrary to the Italian Constitution insofar as it shields state conduct amounting to serious breaches of fundamental rights from judicial scrutiny, and cannot thus be applied by Italian judges under such circumstances.¹⁷ That holding famously contradicted the 2012 decision by the ICJ in Jurisdictional Immunities,¹⁸ which the Constitutional Court also found incompatible with the Italian Constitution.¹⁹ The Constitutional Court viewed its judgment as contributing to “a desirable—and desired by many—evolution of [customary] international law”²⁰ on state immunity. Stergiopoulos relies on that jurisprudence and upholds its applicability to the recognition and enforcement of foreign judgments delivered against states that have been held liable for egregious violations of human rights. Moreover, by underscoring the similarities between Italian case law and the FSIA, the Court of Cassation is apparently seeking to demonstrate that the practice supporting (at least some form of) a human rights limitation to state immunity is broader than the critics are ready to concede. Prompting the evolution of the customary law of state immunity in the face of a contrary decision by the ICJ remains an “uphill battle,”²¹ if that is indeed what the Court is up to. But at least the beginning of a trend is evident in transnational jurisprudence, including in Brazil,²² South Korea,²³ and Ukraine.²⁴

How might Italian courts push this trend forward with a view to generating a new customary international law norm? One viable strategy would be to narrow more explicitly the contours of the human rights limitation to state immunity, by clarifying that it applies solely to serious human rights violations that are suffered in the forum state's territory and/or by that state's nationals.²⁵ These qualifications would arguably alleviate the policy concerns arising from an otherwise unconditional human rights limitation, particularly by defusing the risk of a destabilizing flow of human rights cases against foreign states before domestic courts.²⁶ They would also bring this limitation closer to the territorial tort exception to sovereign immunity. Customary international law more clearly allows discarding state immunity on the basis of that exception, even for jure imperii acts.

But similarity does not mean equivalence. According to the predominant understanding of the tort exception, it applies only when the foreign state's harmful conduct takes place in whole or in part in the territory of the forum state.²⁷ By contrast, the Italian courts may be inclined to espouse an expanded exception—or an evolutionary interpretation thereof—in cases concerning serious breaches of human rights. To the extent this may be regarded as an iteration of the tort exception, that version would deem sufficient that only the harmful event (as distinguished from the conduct causing it) occurs in the forum's territory, or otherwise would make room for litigating transnational torts without a clear-cut territorial nexus against foreign states, such as on the basis of victim nationality.

The 9/11 litigation against Iran provided the Court of Cassation with an opportunity to clarify the scope of Italian immunities jurisprudence along these lines.²⁸ The U.S. proceedings concerned impugned Iranian acts that were wholly performed abroad, but which resulted in gross human rights breaches against U.S. nationals on U.S. soil. This is precisely the factual situation to which an expanded tort exception would apply. Instead of going that route, the Court insisted on a separate, “pure” human rights limitation—a new claimed limitation to the customary rules of state immunity, requiring a showing of altogether new state practice and opinio juris to support, rather than an attempted evolution of the status quo categories which may have been an easier lift. Apparently, the Court gave relevance to the occurrence of the harmful event in U.S. territory solely for the purposes of asserting jurisdiction over the exequatur claim under the IAPIL and the Italian Code of Civil Procedure.

Other aspects of the Court's reasoning weaken the authority of this Order within the “human rights versus state immunity” debate. In particular, the Court mistakenly assumed that Italian case law effectively converged with the exceptions to sovereign immunity envisaged by the FSIA (para. VII). In reality, the U.S. Supreme Court has consistently resisted expanding the scope of FSIA exceptions to hew toward the demands of human rights. In interpreting the FSIA, the U.S. Supreme Court has been leery of opening the door to a de facto general human rights derogation from sovereign immunity.²⁹ For instance, it recently unanimously construed a renvoi to international law in the FSIA's expropriation exception³⁰ narrowly “as referencing the international law of expropriation rather than of human rights.”³¹ In so doing it explicitly noted “international law's preservation of sovereign immunity for violations of human rights law,”³² citing the ICJ judgment in Jurisdictional Immunities in support.³³ This is in stark contrast to the approach blazed by Italian case law. The Court of Cassation seems to assume away this divergence.

However, if it is true that the FSIA does not contemplate a general human rights exception to sovereign immunity, it is also true that specific elements of U.S. legislative and judicial practice provide arguments in favor of Italian jurisprudence. Over the years, the FSIA's terrorism exception has stirred an impressive number of damages awards relating to extraterritorial gross human rights violations, such as hostage taking and extrajudicial killing. Albeit confined to human rights breaches occasioned by state sponsored terrorism, this case law points in the same direction headed by Italian courts. This explains why in Stergiopoulos the Italian judiciary proved ready to uphold the enforceability of a U.S. judgment arising from the terrorism exception, whereas other jurisdictions had refrained from doing so. Another key aspect of U.S. immunity practice that may well catch the attention of Italian courts in the coming years concerns precisely the FSIA's expropriation exception. This exception is “unique”³⁴ worldwide and clearly applies to jure imperii acts of foreign states, including wartime criminal takings by their armed forces.³⁵

It is also significant that this Order involves an exequatur claim, which creates novel problems. Exequatur proceedings in Italy do not entail a thorough review of the merits of the foreign decision. This is entirely reasonable in view of the need to ensure the free circulation of judgments. Yet such openness can become a double-edged sword in the enforcement of foreign decisions denying state immunity in relation to human rights violations. These judgments usually deal with highly sensitive cases. It may well happen that they were handed down in proceedings against foreign states that had been influenced by the local executive or legislature in pursuance of purely political goals. Without critical reflection, the Italian approach to exequatur might amount to a mere rubber stamp for questionable foreign judicial practices.

This issue had been raised by the Court of Appeals of Rome, which questioned the overall fairness of the proceedings before the SDNY in light of the unilateral designation of Iran as a sponsor of terrorism by the U.S. executive—and thus the consistency of these proceedings with Italy's (procedural) public policy. The Court of Cassation overturned this finding on the ground that the lower tribunal had misconstrued the public policy clause under IAPIL Article 64(g). Yet the Court highlighted the possibility of denouncing fair trial violations for the purposes of denying exequatur by relying on IAPIL Article 64(b) and (c), which bar the recognition and enforcement of foreign judgments rendered in violation of the essential rights of defense.³⁶ Time will tell whether this will prove a sufficient bulwark in order to police use of the Italian forum to enforce potentially bogus judgments by foreign courts.

Arguably, such policing is not needed with regard to the U.S. executive's involvement in the application of the terrorism exception. The designation of a state as a sponsor of terrorism does not prevent that state from challenging the plaintiffs’ allegations regarding the wrongful acts at stake. However, a too liberal approach to exequatur may lead to perverse results in other situations (such as an exequatur claim filed in Italy with a view to enforcing a judgment arising out of bogus proceedings entertained against the U.S. in a hostile country).³⁷ A scrupulous application of the “essential rights of defense” clauses of the IAPIL will therefore be crucial in future litigation so that Italy does not become a convenient forum for abuses of process and political clashes between foreign countries.

The Stergiopoulos decision extends the Italian jurisprudence lifting state immunity for human rights breaches to exequatur proceedings. Doing so has invited the challenge of articulating the fair trial concerns raised by these kinds of proceedings. Generally, the decision should be seen in the context of a growing number of domestic courts which have recently similarly rejected the ICJ's position in Jurisdictional Immunities. That practice in other jurisdictions is likely to encourage the Italian judiciary to continue carrying its own position forward. The decision also arguably demonstrates a partial convergence of the Italian and U.S. approaches to state immunity and human rights—a convergence that the Court might have overstated but that nevertheless exists. Insofar as national courts wish to continue to push back against the ICJ in this vein, they should consistently seek to justify their findings on the basis of international law—especially, as argued here, in reliance on an evolutionary interpretation of the tort exception to state immunity, something that the Court in Stergiopoulos failed to do.