Schansman v. Sberbank

128 F.4th 70

• Court: Court of Appeals for the Second Circuit
• Decided: February 4, 2025
• Docket: 22-3097
• Status: Published

Opinion

22-3097-cv Schansman v. Sberbank

United States Court of Appeals for the Second Circuit _____________________________________

August Term 2023

(Argued: December 13, 2023 Decided: February 4, 2025)

No. 22-3097

_____________________________________

THOMAS SCHANSMAN, individually, as surviving parent of Quinn Lucas Schansman, and as the legal guardian on behalf of X.S., a minor; CATHARINA TEUNISSEN, individually and as the surviving parent and personal representative of the Estate of Quinn Lucas Schansman; NERISSA SCHANSMAN, as surviving sibling of Quinn Lucas Schansman; XANDER SCHANSMAN, individually, as a surviving sibling of Quinn Lucas Schansman, Plaintiffs-Appellees, — v. —

SBERBANK OF RUSSIA PJSC,

Defendant-Appellant,

WESTERN UNION COMPANY; WESTERN UNION FINANCIAL SERVICES, INC.; MONEYGRAM INTERNATIONAL, INC.; MONEYGRAM PAYMENT SYSTEMS, INC.; VTB BANK PJSC, Defendants.

1 Before: WALKER, CABRANES, and BIANCO, Circuit Judges. Defendant-Appellant Sberbank of Russia PJSC (“Sberbank”) appeals from the decision and order of the United States District Court for the Southern District of New York (Andrew L. Carter, Jr., Judge), entered on December 6, 2022, denying Sberbank’s motion to dismiss the second amended complaint on foreign sovereign immunity grounds. Plaintiffs-Appellees (“Plaintiffs”) are the surviving relatives of Quinn Lucas Schansman, a passenger aboard Malaysia Airlines Flight 17 (“MH17”) who was killed when the plane was shot down over eastern Ukraine by a surface-to-air missile launched from territory controlled by the Russian Federation-backed Donetsk People’s Republic (“DPR”). Plaintiffs brought claims against Sberbank, a commercial bank based in Russia, under the Anti-Terrorism Act (“ATA”), 18 U.S.C. § 2331 et seq., alleging that Sberbank knowingly provided material support to the DPR by facilitating money transfers from donors to the DPR via correspondent accounts in the United States, and that this material support proximately caused the downing of MH17. After the suit was filed, the Ministry of Finance of the Russian Federation acquired a majority share in Sberbank. Sberbank moved to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), arguing that it is immune under both the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., and the ATA. The district court denied the motion, and Sberbank appealed. For the reasons set forth below, we hold that: (1) Sberbank is presumptively immune under the FSIA; (2) the FSIA’s commercial activity exception applies to Sberbank’s conduct because the alleged claims are based upon quintessentially commercial activity—facilitating money transfers—that Sberbank carried on in the United States, and thus abrogates Sberbank’s sovereign immunity under the FSIA; (3) as a matter of first impression, the ATA’s immunity provisions apply not only to agencies, but also to “instrumentalities” of foreign states; and (4) as a matter of first impression, the commercial activity exception of the FSIA applies equally to an action brought under the ATA, and thus similarly abrogates Sberbank’s sovereign immunity under the ATA. Accordingly, we AFFIRM the

2 order of the district court and REMAND for further proceedings consistent with this opinion. Judge Walker concurs in part and concurs in the judgment in a separate opinion.

JAY S. AUSLANDER (Natalie Shkolnik and Michael Van Riper, on the brief), Wilk Auslander LLP, New York, New York, for Defendant-Appellant.

ANDRIANNA KASTANEK (Lee Wolosky, Jason P. Hipp, and Terri L. Mascherin, on the brief), Jenner & Block LLP, New York, New York, and Chicago, Illinois, for Plaintiffs-Appellees.

3 JOSEPH F. BIANCO, Circuit Judge:

Defendant-Appellant Sberbank of Russia PJSC (“Sberbank”) appeals from

the decision and order of the United States District Court for the Southern District

of New York (Andrew L. Carter, Jr., Judge), entered on December 6, 2022, denying

Sberbank’s motion to dismiss the second amended complaint on foreign sovereign

immunity grounds.

Plaintiffs-Appellees (“Plaintiffs”) are the surviving relatives of Quinn Lucas

Schansman, a passenger aboard Malaysia Airlines Flight 17 (“MH17”) who was

killed when the plane was shot down over eastern Ukraine by a surface-to-air

missile launched from territory controlled by the Russian Federation-backed

Donetsk People’s Republic (“DPR”). Plaintiffs brought claims against Sberbank, a

commercial bank based in Russia, under the Anti-Terrorism Act (“ATA”), 18

U.S.C. § 2331 et seq., alleging that Sberbank knowingly provided material support

to the DPR by facilitating money transfers from donors to the DPR via

correspondent accounts in the United States, and that this material support

proximately caused the downing of MH17.

After the suit was filed, the Ministry of Finance of the Russian Federation

acquired a majority share in Sberbank. Sberbank moved to dismiss for lack of

4 subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), arguing

that it is immune under both the Foreign Sovereign Immunities Act (“FSIA”), 28

U.S.C. § 1602 et seq., and the ATA. The district court denied the motion, and

Sberbank appealed. For the reasons set forth below, we hold that: (1) Sberbank is

presumptively immune under the FSIA; (2) the FSIA’s commercial activity

exception applies to Sberbank’s conduct because the alleged claims are based upon

quintessentially commercial activity—facilitating money transfers—that Sberbank

carried on in the United States, and thus abrogates Sberbank’s sovereign immunity

under the FSIA; (3) as a matter of first impression, the ATA’s immunity provisions

apply not only to agencies, but also to “instrumentalities” of foreign states; and

(4) as a matter of first impression, the commercial activity exception of the FSIA

applies equally to an action brought under the ATA, and thus similarly abrogates

Sberbank’s sovereign immunity under the ATA. Accordingly, we AFFIRM the

order of the district court and REMAND for further proceedings consistent with

this opinion.

5 I. BACKGROUND

A. Factual Background 1

On July 17, 2014, Quinn Schansman, a dual citizen of the United States and

the Netherlands, boarded MH17 from Amsterdam to Kuala Lumpur to join his

family on vacation in Indonesia. As the plane traveled over eastern Ukraine, it

was shot down by a surface-to-air missile launched from territory forcibly

controlled by the DPR, a terrorist group backed by the Russian Federation. 2 All of

the passengers died.

1 The factual allegations are taken from Plaintiffs’ second amended complaint, and we accept such allegations as true for purposes of our review of the district court’s denial of a Rule 12(b)(1) motion. See Donoghue v. Bulldog Invs. Gen. P’Ship, 696 F.3d 170, 173 (2d Cir. 2012) (“In conducting de novo review of the denial of a Rule 12(b)(1) motion to dismiss for lack of standing, we borrow from the familiar Rule 12(b)(6) standard, construing the complaint in the plaintiff’s favor and accepting as true all material factual allegations contained therein.”).

2 As of July 17, 2014, Ukraine had designated the DPR as a terrorist organization and the United States had imposed sanctions on the DPR, but the United States has not designated the DPR as a foreign terrorist organization under 8 U.S.C. § 1189(a)(1). See 31 CFR § 589.201 & 589.209; U.S. DEP’T OF THE TREASURY, BLOCKING PROPERTY OF CERTAIN PERSONS CONTRIBUTING TO THE SITUATION IN UKRAINE, https://home.treasury.gov/news/press-releases/jl2572 [https://perma.cc/UA5E-VPTB] (2014).

6 Plaintiffs, who are family members of Schansman, commenced this suit

against Sberbank on April 4, 2019. 3 Sberbank is headquartered in the Russian

Federation but has branches worldwide, including, during the timeframe relevant

to the second amended complaint, in the United States. During that time,

Sberbank also maintained correspondent accounts with banks in New York City

to effectuate the transfer of funds in U.S. dollars and advertised those

correspondent banking relationships on its website.

Plaintiffs allege that Sberbank provided banking and money transfer

services to the DPR, knowing or deliberately indifferent to the fact that the DPR

would use those services to finance lethal terrorist acts. Specifically, they allege

that the DPR fundraised on social media platforms and other websites and, as part

of those efforts, “brazenly” informed donors that they could send money to

accounts at Sberbank or bank cards issued by Sberbank. Joint App’x at 102. For

instance, in one blog post, the DPR’s self-proclaimed governor shared account

details to donate to a Sberbank bank card. In another video posted on YouTube,

3 Plaintiffs also named VTB Bank PJSC (“VTB”)—another bank headquartered in Russia—and several money transfer institutions in their second amended complaint. Plaintiffs and the money transfer institutions agreed to a resolution of the claims between them. As a result, Plaintiff’s claims were voluntarily dismissed. See D. Ct. Dkt. No. 366, 432. VTB did not assert a defense under the FSIA or the ATA.

7 the DPR’s commander-in-chief held up a piece of paper listing the full account

number for that same account at Sberbank.

Plaintiffs allege that funds from DPR supporters in these Sberbank accounts

were “essential for [the DPR’s] procurement of weapons, ammunition, and other

instruments of violence, which the DPR used to intimidate and coerce the

Ukrainian government and civilian population, and to acquire and control

territory, including the territory from which the DPR launched the missile that

brought down the MH17 airplane.” Joint App’x at 104–05. Funds raised in these

efforts were allegedly used to purchase a wide array of military supplies for the

DPR, in part because the DPR itself, as a widely recognized terrorist group, did

not maintain a central bank account in its own name. One fundraising group, Save

Donbass, requested on its website that “Sberbank cardholders . . . make direct

payments to our card number,” which it provided; shared reports of transfers to

and from its Sberbank accounts in June and July 2014; and, the day before the

attack, reported that it had purchased armored vehicles and other supplies for the

DPR and its affiliates. Joint App’x at 116. Reflecting on the fundraising operation

as a whole, one of the DPR’s leading fundraisers described the solicitation of

donations from Russian citizens as “perhaps the largest crowdfunding campaign

8 in post-Soviet Russia,” claiming that the donations “ensured the survival” of the

DPR. Joint App’x at 108.

According to the second amended complaint, at least some of these

fundraising efforts were explicitly directed toward donors who sought to use U.S.

dollars. One fundraiser, for instance, explained that the only way donors could

transfer U.S. dollars to it was by routing funds through Sberbank’s correspondent

account at the Deutsche Bank Trust Company Americas in New York City. A

second fundraiser provided similar instructions for routing U.S.-dollar

contributions through Sberbank’s Deutsche Bank correspondent account or

Sberbank’s correspondent account at the Bank of New York Mellon in New York

City. A third fundraiser also provided online instructions for how to donate to a

Sberbank account using correspondent accounts at Citibank and JPMorgan Chase

Bank. Yet another fundraiser provided, in an English-language post, its Sberbank

account number as “the official account to collect funds.” Joint App’x at 134. A

financial report posted by a DPR-affiliated group on July 4, 2014—thirteen days

before Schansman boarded MH17—stated that “citizens from different countries

[had] transfer[red] money” to it in “significant amounts.” Joint App’x at 112.

According to that report, the DPR-affiliated group used 1,762,690 rubles (at the

9 time, approximately $51,000) to provide cash support and purchase military items

for the DPR. More specifically, Plaintiffs have identified two wire transfers on

June 9 and July 2, 2014 from individuals residing in Maryland and New Jersey to

the DPR using Sberbank’s correspondent accounts in New York City. 4

Plaintiffs allege that “by no later than April 2014,” Sberbank “had actual

knowledge that [it] was providing material support and financing to the DPR.”

Joint App’x at 107. In particular, they point to articles from that month in Forbes,

Reuters, and the Kyiv Post that specifically named Sberbank as one of the

intermediaries being used to fund the DPR’s violence. One article stated that

Sberbank was conducting an internal investigation into the allegations of terrorist

financing, and another stated that Sberbank had contacted Ukrainian officials to

discuss the allegations, making clear that Sberbank was aware of the reports.

Following the July 17, 2014 attack on MH17, the U.S. Department of the Treasury

imposed sanctions on Sberbank because of its financial assistance to the DPR. Still,

Sberbank allegedly continued to allow donors to use its correspondent accounts

in New York City to provide funds to the DPR for some time thereafter.

4 These two transfers totaled $300. Plaintiffs expect the completion of discovery to reveal additional transfers. 10 B. Procedural History

Plaintiffs filed their initial complaint on April 4, 2019, an amended

complaint on October 8, 2019, and the operative second amended complaint on

October 5, 2020. When Plaintiffs filed their initial complaint, the Central Bank of

the Russian Federation owned a majority stake of Sberbank’s total authorized

capital. On April 30, 2020, the Ministry of Finance of the Russian Federation

acquired that majority stake. 5

In the second amended complaint, Plaintiffs allege that Sberbank provided

material support and financing to the DPR by, inter alia, maintaining

correspondent accounts in New York and allowing transfers to a specific Sberbank

bank card that were then used to procure lethal weapons for the DPR. Sberbank

moved to dismiss the second amended complaint on the grounds that the court

lacked personal jurisdiction over it and that the complaint failed to state a claim

5 Sberbank moved to dismiss the initial complaint and the first amended complaint. In its briefing in support of those motions to dismiss, Sberbank disclaimed that it was an instrumentality of the Russian Federation. See D. Ct. Dkt. No. 98 at 21 n.6 (noting in its memorandum in support of its motion to dismiss the initial complaint that “Plaintiffs also allege Sberbank is directly majority-owned by the Russian Federation . . . apparently in an attempt to assert Sberbank is an instrumentality of Russia. If these false allegations were true, dismissal would be mandated for lack of subject matter jurisdiction over Sberbank as an instrumentality.”); D. Ct. Dkt. No. 115 at 21 (same, in memorandum in support of motion to dismiss first amended complaint). These motions were mooted by Plaintiffs’ amendments.

11 under the ATA. 6 The district court denied the motion to dismiss the second

amended complaint (and later denied Sberbank’s motion for reconsideration).

On November 17, 2021, Sberbank filed its answer to Plaintiffs’ second

amended complaint. In its answer, Sberbank, for the first time, objected to the

district court’s subject matter jurisdiction under the FSIA, arguing that because

Sberbank is majority-owned by the Russian Federation, it is an agency or

instrumentality of a foreign state. On December 30, 2021, with the district court’s

permission, Sberbank moved to dismiss the second amended complaint, pursuant

to Rule 12(b)(1), for lack of subject matter jurisdiction under the FSIA and the ATA.

That motion is the subject of the instant appeal. In its memorandum in support of

that motion, Sberbank argued that its current ownership by the Russian Ministry

of Finance entitles it to a presumption of immunity as an agency or instrumentality

and that the commercial activity exception does not apply. In addition, Sberbank

argued that, even if FSIA immunity was determined at the time Plaintiffs filed

their initial complaint, Sberbank is nonetheless immune because its then-majority

owner was the Central Bank of the Russian Federation, which Sberbank contends

6 In its motion to dismiss, Sberbank again denied that it was an instrumentality of the Russian Federation—its first such denial following the acquisition of a majority stake by the Russian Ministry of Finance.

12 is a political subdivision of the Russian Federation. Thus, according to Sberbank,

it was still an agency or instrumentality of a foreign state or political subdivision

thereof under the FSIA. Sberbank further argued that the ATA barred claims

against Sberbank regardless of when Sberbank acquired its agency or

instrumentality status.

In March 2022, the district court ordered jurisdictional discovery, granting

Plaintiffs’ request for discovery related to “[t]he degree of independence the

Central Bank of the Russian Federation . . . enjoys vis-à-vis the Russian Federation

and the Federation’s agencies of state power.” D. Ct. Dkt. Nos. 291, 298. 7 On

November 18, 2022, the parties reported that Sberbank had produced certain

documents but that they remained at an impasse regarding the scope of and

timeline for discovery on that issue.

C. District Court Decision

On December 6, 2022, with the discovery dispute pending, the district court

issued a written order denying the motion to dismiss under Rule 12(b)(1). See

7 The district court denied discovery for documents related to whether the Russian Central Bank’s core functions are predominantly governmental or commercial in nature, and documents related to the extent that Sberbank’s commercial activity was used to commit unlawful acts.

13 generally Schansman v. Sberbank of Russia PJSC, No. 19-CV-02985 (ALC) (GWG),

2022 WL 17540666 (S.D.N.Y. Dec. 6, 2022). As an initial matter, the district court

declined to consider the issue of whether Sberbank had waived its sovereign

immunity defense by failing to assert it at earlier stages of the briefing, noting that

Sberbank did raise the defense in its answer to the second amended complaint.

The district court then concluded, based on its reading of Dole Food Co. v.

Patrickson, 538 U.S. 468, 478 (2003), and Abrams v. Société Nationale Des Chemins De

Fer Francais, 389 F.3d 61, 64 (2d Cir. 2004), that the determination of whether

Sberbank is an agency or instrumentality of a foreign state that is presumptively

immune under the FSIA is based on Sberbank’s status at the time of the filing of

the suit—that is, when its majority owner was the Central Bank of the Russian

Federation. Applying the core functions test we articulated in Garb v. Republic of

Poland, 440 F.3d 579 (2d Cir. 2006), the district court concluded that the Central

Bank qualified as a political subdivision of the Russian Federation because its core

functions were predominantly governmental, not commercial. Specifically, the

district court found the Central Bank to be “a crucial market regulator within the

Russian [s]ystem. The Constitution of the Russian Federation states that the

[Central Bank] is ‘exclusively’ responsible for the issuance of rubles, and that

14 ‘protecting and ensuring the stability of the ruble shall be the core function of the

Central Bank of the Russian Federation.’” Schansman, 2022 WL 17540666, at *4

(quoting Art. 75 of the Constitution of the Russian Federation and D. Ct. Dkt. No.

260 at 20 (Declaration of Lyudmila Efimova)). The district court accordingly held

that Sberbank was an agency or instrumentality of the Russian Federation, making

it presumptively immune from suit under the FSIA.

However, the district court concluded that Sberbank was nonetheless

subject to the commercial activity exception to the FSIA because the gravamen of

the suit—Sberbank’s “provi[sion of] material support and financing to the DPR, in

part by operating correspondent accounts in New York”—concerned commercial

activity Sberbank carried on in the United States. Id. at *5 (citation omitted).

Looking “to the nature of the . . . act, rather than . . . to its purpose,” 28 U.S.C.

§ 1603(d), the district court determined that in these circumstances, the “use of

correspondent accounts and authorization of money transfers is classic

commercial behavior for an international bank and does not qualify as sovereign

conduct,” Schansman, 2022 WL 17540666, at *5.

Lastly, the district court declined Sberbank’s invitation “to read the ATA’s

sovereign immunity provision more broadly than the FSIA.” Id. at *6. Relying,

15 inter alia, on the Supreme Court’s guidance in Republic of Austria v. Altmann, 541

U.S. 677, 691 (2004), that “courts should decide claims of sovereign immunity in

conformity with [the FSIA’s] principles,” the district court concluded that

sovereign immunity assertions under the ATA are “functionally equivalent” to

those under the FSIA and thus, for the same reasons, denied sovereign immunity

under the ATA. Schansman, 2022 WL 17540666, at *6 (quoting Republic of Austria,

541 U.S. at 691; Ungar v. Palestinian Liberation Org., 402 F.3d 274, 283 (1st Cir. 2005)).

II. DISCUSSION

We are presented with four issues on appeal. The first is whether Sberbank

is presumptively immune under the FSIA, either because it was majority-owned

by the Russian Central Bank when this action commenced or because a majority

stake has since been acquired by the Russian Ministry of Finance. If Sberbank is

presumptively immune under the FSIA, the second issue is whether the FSIA’s

commercial activity exception applies to the suit. If the FSIA does not shield

Sberbank, the third issue is whether Sberbank is presumptively immune under the

provision of the ATA that immunizes foreign states and agencies from actions

brought under the ATA. If Sberbank is presumptively immune under the ATA,

the fourth and final issue is whether the FSIA’s commercial activity exception

16 applies to an action brought under the ATA. We review these questions of law de

novo. Peterson Energía Inversora S.A.U. v. Argentine Republic & YPF S.A., 895 F.3d

194, 203 (2d Cir. 2018) (“We review de novo a district court’s legal determinations

regarding its subject matter jurisdiction, such as whether sovereign immunity

exists, and its factual determinations for clear error.” (internal quotation marks

and citation omitted)).

A. Presumptive Immunity under the FSIA and Sberbank’s Post- Filing Acquisition by the Russian Ministry of Finance

Section 1603(a) of the FSIA provides presumptive immunity for a “foreign

state,” which includes “an agency or instrumentality of a foreign state.” 28 U.S.C.

§ 1603 (the “FSIA Definitional Provision”). As relevant here, the FSIA defines an

“[a]gency or instrumentality of a foreign state” as “[a]ny entity . . . which is a

separate legal person . . . and . . . is an organ of a foreign state or political

subdivision thereof, or a majority of whose shares or other ownership interest is

owned by a foreign state or political subdivision thereof.” 28 U.S.C. § 1603(b).

The parties agree that the majority of Sberbank’s shares were owned by the

Central Bank of the Russian Federation when the action was filed, but since

April 30, 2020, the Ministry of Finance of the Russian Federation has owned the

majority of Sberbank’s shares. Therefore, as a threshold matter, we must address

17 which owner is the relevant entity for our analysis under Section 1603(b)—that is,

whether Sberbank’s status as an agency or instrumentality of a foreign state is

determined only at the time of the action’s initial filing, or whether a post-filing

change in ownership may impact the district court’s jurisdiction.

Plaintiffs, relying primarily on Dole Food, initially argued on appeal that an

entity’s status as an agency or instrumentality must be determined at the time an

action is filed. Therefore our analysis would be limited to whether the Central

Bank is a foreign state or political subdivision thereof under the FSIA. In Dole Food,

the Supreme Court held that federal removal jurisdiction under Section 1441(d) of

the FSIA should be determined “at the time suit is filed” rather than “at the time

of the conduct giving rise to the suit.” 538 U.S. at 478–79. Sberbank argues that

Dole Food’s holding does not apply to “subsequent developments” that confer

immunity, such as a post-filing acquisition. Appellant’s Br. at 12.

After the filing of the parties’ briefs, but before oral argument, this Court

squarely decided this issue in another case. In Bartlett v. Baasiri, we addressed

“whether [the defendant] may raise a defense of immunity under [the FSIA] . . .

when it alleges that immunity arose after suit was filed.” 81 F.4th 28, 31 (2d Cir.

2023), cert. denied, 144 S. Ct. 1456 (2024) (internal citation omitted). We held that

18 the “most natural reading of the statute is one that gives foreign sovereigns

immunity even when they gain their sovereign status mid-suit,” reasoning that

the statute’s use of the present tense provides “present protection from the

inconvenience of suit as a gesture of comity.” Id. at 33 (internal quotation marks

and citation omitted). In reaching this conclusion, we also noted that foreign

states’ immunity under the FSIA is “not only from judgments, but from process,”

that the Supreme Court has instructed that immunity depends on “current

political realities,” and that this result is consistent with the common-law

approach that the FSIA codified. Id. at 33–34. Thus, we held that immunity under

the FSIA “may attach when a defendant becomes an instrumentality of a foreign

sovereign after a suit is filed.” 8 Id. at 30.

Although we noted the plaintiffs’ concern that “allowing post-filing changes

in sovereign status will encourage gamesmanship,” we found “[t]hose concerns

. . . absent” in Bartlett. Id. at 36–37. In particular, we distinguished TIG Insurance

Co. v. Republic of Argentina, 967 F.3d 778, 780–82 (D.C. Cir. 2020), in which

8 In so holding, we agreed with the view of the U.S. Department of State, expressed in its amicus brief, that “an entity that becomes an agency or instrumentality of a foreign state within the meaning of the FSIA during the pendency of litigation is entitled to immunity under that statute, subject to the act’s enumerated exceptions.” Brief for the United States as Amicus Curiae, Bartlett v. Baasiri, 81 F.4th 28 (2d Cir. 2023) (No. 21-2019), 2023 WL 4196930, at *5. 19 Argentina sought to prevent attachment of a property in the District of Columbia.

Argentina had offered the property for sale and then, after a creditor sought to

attach it under Section 1610(a), promptly removed the property from the market.

Id. Confronted with those facts, the D.C. Circuit adopted a “time of filing” rule for

purposes of determining sovereign immunity in an attachment action under that

section, to avoid the risk of “manipulation” that would follow if “a foreign

sovereign unilaterally [could] thwart an otherwise valid attachment simply by

removing property from the market.” Id. at 785. We concluded that this risk was

not present in Bartlett because the defendant bank’s change in ownership was the

result of its liquidation and subsequent public receivership after being designated

by the U.S. government as a terrorist organization, and “not any attempt by [the

foreign state] to avoid th[e] lawsuit.” 81 F.4th at 37.

Plaintiffs acknowledge that Bartlett “is inconsistent with the argument that

instrumentality status must be determined at the time of filing.” D. Ct. Dkt. No. 74

at 1. Nevertheless, they assert that, unlike in Bartlett, “the record here reflects . . .

gamesmanship.” Id. They allege that Sberbank’s “status is the product of Russia

manufacturing a change in ownership,” pointing to the Ministry of Finance’s

mid-litigation acquisition of a fifty-percent equity stake plus one share in

20 Sberbank, “precisely the amount needed to make [Sberbank] a FSIA

instrumentality and engineer a sovereign immunity defense.” Id. at 1–2. Plaintiffs

thus request that we either “hold that Bartlett does not extend to such strategic

acquisitions,” or “remand for further factual development as to gamesmanship.”

Id. at 2. We decline to do so. This conclusory assertion of “gamesmanship” is

insufficient, under Bartlett, to overcome Sberbank’s change in ownership status

solely because it occurred after the lawsuit was filed. We similarly reject Plaintiffs’

request that we remand for further development of the record on the

“gamesmanship” issue, especially where no such request for discovery on that

issue was ever made in the district court. See Tannerite Sports, LLC v. NBCUniversal

News Grp., 864 F.3d 236, 252–53 (2d Cir. 2017) (“It is a well-established general rule

that an appellate court will not consider an issue raised for the first time on

appeal.”). In short, Bartlett governs here, and we consider Sberbank’s current

ownership by the Russian Ministry of Finance, rather than its ownership at the

time of filing, for purposes of our analysis under the FSIA.

Here, there is no dispute that the Ministry of Finance is a political

subdivision of the Russian Federation, a foreign state. As explained supra, Section

1603(b)(1)–(2) defines an agency or instrumentality of a foreign state

21 presumptively entitled to immunity as a “separate legal person, corporate or

otherwise, . . . a majority of whose shares or other ownership interest is owned by

a foreign state or political subdivision thereof.” Because the Russian Ministry of

Finance owns a majority of the shares of Sberbank and Sberbank is a “separate

legal person,” Sberbank is an agency or instrumentality of a foreign state as

defined in Section 1603. Thus, Sberbank is presumptively immune under the FSIA.

B. Application of the FSIA’s Commercial Activity Exception to Sberbank’s Alleged Conduct

Plaintiffs argue that, even if Sberbank is presumptively immune under the

FSIA, the FSIA’s exception for commercial activity applies. See 28 U.S.C

§ 1605(a)(2). They contend that Sberbank’s provision of material support and

financing to the DPR through commercial banking services to private customers,

using correspondent accounts in New York City, constitutes commercial conduct

in the United States, abrogating sovereign immunity. We agree.

Before 1976, when the FSIA was enacted, the courts had come to defer to the

positions of the Executive in determining whether to afford immunity to foreign

states. See H.R. Rep. No. 94-1487; Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S.

480, 486 (1983). In reaching those decisions, beginning in 1952, the U.S.

Department of State announced in the Tate Letter that it would begin to “follow

22 the ‘restrictive’ theory of foreign sovereign immunity in advising courts whether

they should take jurisdiction in any given case.” Rubin v. Islamic Republic of Iran,

583 U.S. 202, 208 (2018). That theory cabins immunity “to suits involving the

foreign sovereign’s public acts,” as opposed “to cases arising out of a foreign

state’s strictly commercial acts,” which are not immune. Verlinden, 461 U.S. at 487.

Congress’s purpose in enacting the FSIA was “to endorse and codify the restrictive

theory of sovereign immunity,” while shifting the responsibility for deciding

immunity claims from the Executive to the courts. Samantar v. Yousuf, 560 U.S.

305, 313 (2010) (citing 28 U.S.C. § 1602); see also Bartlett, 81 F.4th at 32.

Codifying the restrictive theory of sovereign immunity, the commercial

activity exception provides that a foreign state “shall not be immune from the

jurisdiction of courts of the United States or of the States in any case . . . in which

the action is based upon a commercial activity carried on in the United States by

the foreign state.” 28 U.S.C § 1605(a)(2). “Commercial activity” is defined as

“either a regular course of commercial conduct or a particular commercial

transaction or act.” Id. § 1603(d). The “commercial character” of a defendant’s

conduct, transaction, or act is determined “by reference to the nature of the course

23 of conduct or particular transaction or act, rather than by reference to its purpose.”

Id.

“[A] state engages in commercial activity . . . where it exercises ‘only those

powers that can also be exercised by private citizens,’ as distinct from those

‘powers peculiar to sovereigns.’” Saudi Arabia v. Nelson, 507 U.S. 349, 360 (1993)

(quoting Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614 (1992)). In other

words, it engages in commercial activity when it “acts, not as a regulator of a

market, but in the manner of a private player within it.” Anglo-Iberia Underwriting

Mgmt. v. P.T. Jamsostek, 600 F.3d 171, 176 (2d Cir. 2010) (quoting Weltover, 504 U.S.

at 614). It is thus the “nature of the course of conduct or particular transaction,”

not that action’s “purpose,” that determines commercial character. 28 U.S.C

§ 1603(d). “As this Court has recognized, however, that ‘is a standard more easily

stated than applied, . . . and its application may sometimes depend on the level of

generality at which the conduct is viewed.” Daou v. BLC Bank, S.A.L., 42 F.4th 120,

134 (2d Cir. 2022) (quoting Pablo Star Ltd. v. Welsh Gov’t, 961 F.3d 555, 561 (2d Cir.

2020)).

In Daou, for example, we held that a defendant, the central bank of Lebanon,

“engaged in at least one course of commercial activity: allowing . . . [c]ommercial

24 [b]anks to open checking accounts, which the [c]ommercial [b]anks then used to

write checks to [plaintiffs], and then denying requests by banks in the United

States to transfer the funds upon deposit of those checks. That is the sort of activity

in which any commercial bank could engage.” Id. The activity at issue here—

using correspondent accounts and authorizing money transfers—is of the same

kind.

The commercial activity exception, however, only applies where the action

is “based upon” the commercial activity in question. § 1605(a)(2). “[A]n action is

‘based upon’ the ‘particular conduct’ that constitutes the ‘gravamen’ of the suit.”

OBB Personenverkehr AG v. Sachs, 577 U.S. 27, 35 (2015) (quoting Nelson, 507 U.S. at

356–58). In Nelson, for instance, a case involving personal injury claims against the

Saudi government by an American doctor who was employed at a Saudi

government-owned hospital and detained and tortured for reporting safety

hazards in that hospital, the Supreme Court held that the action was not “based

upon” the commercial activity of recruiting and hiring the doctor because the

“gravamen” of his suit was his detention and torture, not his recruitment and

hiring. 507 U.S. at 356–63.

25 When assessing the “gravamen” of a suit, we need “not undertake . . . an

exhaustive claim-by-claim, element-by-element analysis” of each cause of action;

instead, we “zero[] in on the core of the[] suit.” Sachs, 577 U.S. at 34–35. Applying

this approach to Sachs, the Court declared that “the gravamen of Sachs’s suit”—

injuries she suffered at a government-owned train station in Innsbruck, Austria—

“plainly occurred abroad. All of her claims turn on the same tragic episode in

Austria.” Id. (emphasis added). The Court explicitly rejected Sachs’s assertion

that some of her claims were “based upon” commercial activity in the United

States because her Eurail purchase involved “commercial activity . . . in the United

States.” Id. at 30, 35–36 (“Sachs maintains that some of those claims are not limited

to negligent conduct or unsafe conditions in Austria, but rather involve at least

some wrongful action in the United States. . . . However Sachs frames her suit, the

incident in Innsbruck remains at its foundation.”). The Court emphasized its

opinion’s limited reach, noting it “consider[ed] here only a case in which the

gravamen of each claim is found in the same place.” Id. at 36 n.2.

Sberbank argues that the gravamen of Plaintiffs’ claims is the DPR’s attack

on MH17 because that is the conduct that actually injured Plaintiffs. We disagree.

Here, the gravamen of their claims is Sberbank’s alleged use of correspondent

26 accounts and authorization of money transfers in the United States to the DPR and

its affiliate groups. In other words, Sberbank’s commercial activity—its alleged

material support to the DPR in the form of payment facilitation—is the specific

unlawful conduct that forms the basis of this particular suit, and the attack on

MH17 is, as Plaintiffs describe it, merely the “activity’s downstream

consequence[].” Appellees’ Br. at 44.

Our conclusion is consistent with the D.C. Circuit’s analysis in Rodriguez v.

Pan American Health Organization, 29 F.4th 706 (D.C. Cir. 2022). Rodriguez was an

action brought by a group of Cuban physicians who alleged that Cuba had forced

them, without their consent, to participate in Brazil’s “Mais Médicos” (i.e., “More

Doctors”) program to provide medical services to impoverished Brazilians. Id. at

709. The physicians filed suit against the Pan American Health Organization

(“PAHO”) for facilitating the program, including, inter alia, serving as a financial

intermediary between Brazil and Cuba. Id. According to the physicians, PAHO’s

role included moving money, for a fee, between Brazil and Cuba, which sought to

avoid a direct intergovernmental agreement because doing so would have

required the approval of the Brazilian Congress. Id. at 709–10. Under this

arrangement, Brazil made payments to PAHO’s Citibank account in the District of

27 Columbia. Id. PAHO then forwarded 85% to Cuba, paid 10% to the physicians,

and retained 5% for its services. Id. PAHO, like Sberbank, asserted that “moving

money for a fee” only became “wrongful” due to activity that occurred

elsewhere—in that instance, alleged human trafficking and forced labor in Cuba

and Brazil. Id. at 715. According to PAHO, absent the alleged trafficking and

forced labor, PAHO would have merely acted as a typical financial intermediary.

The D.C. Circuit rejected PAHO’s argument and concluded that the alleged

financial activity itself gave rise to a cause of action—the prohibition on financially

benefitting from participation in human trafficking. Id. at 716. It held:

At least with regard to alleged illegal financial activity, we consider the “gravamen” of that alleged wrongful conduct rather than any harm that may result elsewhere. The “gravamen” of a suit consists of “those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case,” or, phrased differently, “the core” of a claim. If the conduct is itself wrongful—as opposed to wrongful based only on other conduct—it constitutes the “core” of the claim.

Id. (emphasis in original) (quoting Nelson, 507 U.S. at 357, and Sachs, 557 U.S. at

35). The D.C. Circuit concluded that because the physicians alleged that PAHO

committed a financial crime in the United States, the “financial benefit” was itself

“wrongful conduct” occurring in the United States. Id. It further explained that

28 the “financial benefit” that occurred in the United States was that “PAHO

received, forwarded and retained the Mais Médicos money through its

Washington, D.C. bank account.” Id. Accordingly, it concluded that PAHO’s

conduct of “moving money for a fee” constituted “commercial activity carried on

in the United States.” Id. at 717.

Sberbank argues that “[u]nlike in Rodriguez, where the defendant’s alleged

crime accrued the moment it received the completed funds transfers at its own

bank account in the United States, here the alleged predicate crimes and ATA

cause of action cannot have accrued until the[] . . . DPR supporters received . . .

funds in their overseas accounts with Sberbank’s alleged knowledge. Even

focusing on the ‘act of international terrorism,’ Plaintiffs’ claims are based on

alleged overseas activity.” Reply Br. at 26. We are unpersuaded. To be sure, the

mere delivery of funds into and out of Sberbank’s accounts in New York City does

not, standing alone, constitute wrongful conduct that would subject Sberbank to

liability. However, if Sberbank, as Plaintiffs allege, transferred funds from U.S.-

based accounts to overseas accounts affiliated with the DPR, knowing that the

DPR perpetrated acts of terrorism, such conduct plausibly falls within the ambit

of the ATA’s prohibitions on financing terrorism. See 18 U.S.C. §§ 2339A, 2339C.

29 Here, like in Rodriguez, Plaintiffs allege Sberbank committed a financial crime—

transferring funds to groups engaged in terrorist activity—and that the wrongful

conduct occurred in the United States.

Sberbank contends, however, that the “only evidence of transfers to the DPR

through Sberbank’s U.S. correspondent accounts consists of bank records

purporting to establish two transfers totaling $300.” Appellant’s Br. at 55.

Sberbank argues that Plaintiffs do not allege that the $300 transferred “actually

allowed” the DPR to acquire the arsenal of military equipment that it used to

capture Ukrainian territory and, ultimately, shoot down MH17 using a surface-to-

air missile. Id. In sum, according to Sberbank, “[t]hose two transfers . . . cannot

possibly constitute the ‘core’ of the lawsuit.” Id. at 56.

We disagree. As alleged in the second amended complaint, Sberbank’s

commercial activity of facilitating transfers in the United States to the DPR and its

affiliated groups with either knowledge of or deliberate indifference to the DPR’s

perpetration of terrorism is what this lawsuit is “based upon.” See Rodriguez, 29

F.4th at 716–17. In particular, Sberbank’s summary of the claims understates

Plaintiffs’ allegations regarding the DPR’s large-scale international crowdfunding

effort. As Plaintiffs argue, the two transfers discussed in the second amended

30 complaint are merely identified as non-exhaustive examples, and Plaintiffs have

not had the benefit of meaningful discovery. Beyond those two transfers, Plaintiffs

allege that multiple DPR fundraisers provided information for donors to donate

U.S. dollars using Sberbank’s correspondent accounts at four banks in the United

States, and, less than two weeks before the MH17 attack, a DPR-affiliated group

publicly reported that it had raised “significant amounts” from donors in multiple

countries, much of which it had used to provide cash support to, and purchase

military equipment for, the DPR. Plaintiffs also allege, based on multiple press

reports, that Sberbank had learned of this extensive fundraising effort by April

2014 and failed to stop it. Although Plaintiffs’ particular injury—much like the

physicians’ alleged human trafficking in Rodriguez—would not have occurred

absent the act of a third party abroad, Sberbank’s wrongful conduct of providing

material support to the DPR in the United States nonetheless is the gravamen of

this suit. See 29 F.4th at 717. Accordingly, we hold that the commercial activity

exception applies here to abrogate Sberbank’s sovereign immunity under the

FSIA.

31 C. Presumptive Immunity under the ATA

Because we hold that Sberbank is not shielded by sovereign immunity

under the FSIA, we now turn to its novel argument that the ATA provides it with

immunity where the FSIA does not. Specifically, Sberbank argues that it is also

immune under the ATA, and that a cause of action brought under the ATA is not

subject to the FSIA’s commercial activity exception. We first address its argument

that it is presumptively immune under the ATA. Then, we turn to its argument

that the commercial activity exception does not apply in this ATA action.

In 1992, sixteen years after Congress enacted the FSIA, it passed the “core

provisions” of the ATA. See Freeman v. HSBC Holdings PLC, 57 F.4th 66, 75 (2d Cir.

2023), cert. denied, 144 S. Ct. 83 (2023) (citing Pub. L. No. 102-572, § 1003, 106 Stat.

4521–24 (1992), codified at 18 U.S.C. §§ 2331–2338). These provisions include

Section 2333(a) of the ATA (the “ATA Cause of Action”), which creates a civil

remedy for those injured “by reason of an act of international terrorism,” and

which provides the legal basis for Plaintiffs’ cause of action here. In addition, the

ATA provides that no claim under Section 2333 may proceed against “a foreign

state, an agency of a foreign state, or an officer or employee of a foreign state or an

32 agency thereof.” 18 U.S.C. § 2337(2) (the “ATA Immunity Provision”). 9 Unlike the

FSIA, the ATA provides no further explanation of what a “foreign state” includes.

Sberbank argues that the FSIA Definitional Provision should be applied to

the ATA Immunity Provision’s reference to “a foreign state.” Sberbank suggests

that “[a]lthough the ATA immunizes ‘foreign state[s],’ it does not separately

define that term,” while, in contrast, the FSIA defines that term in “meticulous[]”

detail. Appellant’s Br. at 21. Accordingly, Sberbank argues, we should treat the

FSIA Definitional Provision as a guiding provision that the ATA Immunity

Provision merely incorporates by reference. In other words, Sberbank would have

us read the term “foreign state” in the ATA Immunity Provision as referring to the

FSIA Definitional Provision, under which Sberbank, as an instrumentality of the

Russian Federation, would be presumptively immune.

Plaintiffs, however, contend that the ATA Immunity Provision is narrower

than the FSIA Definitional Provision and should therefore be given independent

meaning. They point to the ATA’s text, which “immunizes a ‘foreign state’ and its

‘agenc[ies],’” but does not mention instrumentalities. Appellees’ Br. at 34 (quoting

§ 2337). In contrast, they note the FSIA Definitional Provision covers “an agency

9 The ATA Immunity Provision is subject to an express exception at 28 U.S.C. § 1605B(c), discussed infra. 33 or instrumentality of a foreign state.” 28 U.S.C. § 1603(a) (emphasis added).

Plaintiffs suggest that if the term “foreign state” has the same meaning under the

FSIA and the ATA, then the inclusion of “an agency of a foreign state” in the ATA

Immunity Provision would be superfluous, because the term “foreign state” in the

FSIA already incorporates agencies. Additionally, Plaintiffs argue that the

description of “foreign state” in the FSIA is limited to that statute because FSIA

Section 1603(a) describes “foreign state” only “[f]or purposes of [Chapter 97].”

Appellees’ Br. at 34 (quoting 28 U.S.C. § 1603). The ATA is not a part of Chapter 97;

thus, according to Plaintiffs, the FSIA Definitional Provision does not apply to the

ATA.

Sberbank argues that a later amendment to the FSIA and the ATA provides

further support for its proposed construction. In 2016, Congress amended the

FSIA and the ATA with the Justice Against Sponsors of Terrorism Act (“JASTA”).

As relevant here, the JASTA amendments added (1) a new provision to the FSIA,

codified at 28 U.S.C. § 1605B (the “FSIA JASTA Amendment”), and (2) a new

provision to the ATA, codified at 18 U.S.C. § 2333(d)(2) (the “ATA JASTA

Amendment”). See Pub. L. No. 114-222, 130 Stat. at 852–56; see also Freeman, 57

F.4th at 75. The FSIA JASTA Amendment expressly abrogated the blanket

34 sovereign immunity of the ATA, providing that “[n]otwithstanding [the ATA

Immunity Provision], a national of the United States may bring a claim against a

foreign state in accordance with [the ATA Cause of Action] if the foreign state

would not be immune under subsection (b).” 10 28 U.S.C. § 1605B; see also Pub. L.

114-222, 130 Stat. 852 (2016).

Sberbank argues this use of the term “foreign state” demonstrates that the

ATA, FSIA, and JASTA define the term identically to one another, and that its

definition includes instrumentalities. Appellant’s Br. at 25 (“JASTA, moreover, . . .

must use the same definition of ‘foreign state’ as the ATA, because the JASTA

exception expressly refers to and partially repeals the immunity of a ‘foreign state’

under the ATA, and the Supreme Court ‘does not lightly assume that Congress

silently attaches different meanings to the same term in the same or related

statutes.’” (quoting Azar v. Allina Health Servs., 587 U.S. 566, 574 (2019))). In

response, Plaintiffs argue that the FSIA JASTA Amendment shows that if Congress

had wanted to expressly incorporate the FSIA Definitional Provision, it would

have.

10 Subsection (b), in turn, specifically abrogated immunity for certain injuries “occurring in the United States and caused by . . . an act of international terrorism in the United States.” 28 U.S.C. § 1605B(b).

35 The narrow question of whether the ATA Immunity Provision for foreign

states excludes instrumentalities that the FSIA Definitional Provision would

otherwise cover is an issue of first impression in this Court. However, the

Supreme Court, in cases both before and after the enactment of the ATA, has

explained clearly that the FSIA governs all sovereign immunity determinations in

civil cases. In Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989),

the Supreme Court considered a claim brought under the Alien Tort Statute

(“ATS”) based on the alleged bombing of the plaintiffs’ oil tanker by Argentina

during the Falkland Islands war, in violation of international law. Rejecting

Argentina’s claim of sovereign immunity based on the FSIA, this Court held that

the ATS provided “a jurisdictional grant based on international law” independent

of the FSIA and that Congress did not intend for the FSIA to disturb “existing

remedies in United States courts [under the ATS] for violations of international

law.” Amerada Hess Shipping Corp. v. Argentine Republic, 830 F.2d 421, 425–26 (2d

Cir. 1987).

The Supreme Court reversed. Noting “the comprehensiveness of the

statutory scheme in the FSIA,” it held that “the FSIA provides the sole basis for

obtaining jurisdiction over a foreign state in federal court.” Argentine Republic, 488

36 U.S. at 437, 439; see also Nelson, 507 U.S. at 355. First, it observed that the statutory

structure—the FSIA created a new chapter 97 to Title 28, entitled “Jurisdictional

Immunities of Foreign States”—indicates that the FSIA is the relevant statute with

respect to foreign state immunity in civil cases. Argentine Republic, 488 U.S. at 434.

Second, it pointed to Congress’s provisions in the text of the FSIA. It noted, inter

alia, that the FSIA itself provides that “[c]laims of foreign states to immunity

should henceforth be decided by courts of the United States in conformity with the

principles set forth in this chapter.” Id. at 437 (emphasis added in Amerada Hess)

(quoting 28 U.S.C. § 1602). It also cited the House and Senate Reports, which

explained that the FSIA was “intended to preempt any other State and Federal law

(excluding applicable international agreements) for according immunity to foreign

sovereigns.” Id. at 438 (quoting H.R. Rep. No. 94–1487, at 12 (1976); S. Rep. No.

94–1310, at 11 (1976)). In the Supreme Court’s view, Congress “very likely . . .

thought that should be sufficient.” Id. at 437–38.

The Supreme Court’s analysis of the FSIA’s preemptive effect in Amerada

Hess applies in this context as well. As the Amerada Hess Court observed, Section

1604 provides broadly that “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

37 1605 to 1607 of this chapter,” only “[s]ubject to existing international agreements

to which the United States [was] a party at the time of the enactment of this Act.”

Id. at 434 (quoting § 1604). Further, the FSIA specifically provides that “the district

courts shall have original jurisdiction . . . of any nonjury civil action against a

foreign state . . . as to any claim for relief in personam with respect to which the

foreign state is not entitled to immunity under sections 1606–1607 of this title or

under any applicable international agreement.” Id. (emphases added) (quoting

§ 1330(a) (as amended by the FSIA)). In light of the express provisions and the

“comprehensiveness of the [FSIA’s] statutory scheme,” id. at 437, we view the FSIA

Definitional Provision as preempting any alternative grounds for determining

sovereign immunity in a civil case brought under the ATA.

Although Amerada Hess predated the ATA, the Supreme Court reiterated its

holding after the ATA was enacted, in Altmann, 541 U.S. at 691. The Court in

Altmann addressed claims by the niece of a Jewish art collector, who fled Austria

in 1938, alleging that the Republic of Austria and the state-owned Austrian Gallery

had wrongfully taken possession of six paintings by Gustav Klimt during or after

World War II. Id. at 680. Her claims arose under Austrian, international, and

California law, and she asserted jurisdiction under the FSIA. Id. at 685–86. The

38 Supreme Court explained that Congress enacted the FSIA in 1976 “to remedy the[]

problems” of then-prevailing “governing standards [that] were neither clear nor

uniformly applied.” Id. at 691 (internal quotation marks and citation omitted). The

result was “the FSIA, a comprehensive statute containing a set of legal standards

governing claims of immunity in every civil action against a foreign state or its

political subdivisions, agencies, or instrumentalities.” Id. (emphasis added)

(internal quotation marks and citation omitted). The Court emphasized the

language of the FSIA’s preamble that it had previously quoted in Amerada Hess,

stating that the FSIA should be applied “henceforth” to all claims of sovereign

immunity in civil actions. Id.

Altmann, like Amerada Hess, unequivocally states that the FSIA

comprehensively governs sovereign immunity in civil cases. We acknowledge

that neither case involved the ATA, and Altmann was decided after its enactment.

Indeed, the Supreme Court has recently cautioned that “general language in

judicial opinions” should be read “as referring in context to circumstances similar

to the circumstances then before the Court and not referring to quite different

circumstances that the Court was not then considering.” Turkiye Halk Bankasi A.S.

v. United States, 598 U.S. 264, 278 (2023) (internal quotation marks and citation

39 omitted) (warning against applying the language in Amerada Hess to criminal

cases). Here, however, we remain squarely in the realm of the “circumstances that

the Court was . . . then considering”—i.e., jurisdiction over civil, as opposed to

criminal, liability. Id.

Plaintiffs argue that this reading of the statutes renders the inclusion of

“agency” in the ATA Immunity Provision superfluous. To be sure, a construction

of a statute that renders language in it redundant is typically “a result . . . to be

avoided.” Filler v. Hanvit Bank, 378 F.3d 213, 220 (2d Cir. 2004). This canon of

construction, however, is a general presumption, not an “absolute rule.” Marx v.

Gen. Revenue Corp., 568 U.S. 371, 385 (2013). The presumption against surplusage

“assists only where a competing interpretation gives effect to every clause and

word of a statute.” Microsoft Corp. v. I4I Ltd. P’ship, 564 U.S. 91, 106 (2011) (internal

quotation marks and citation omitted).

Plaintiffs’ competing interpretation, however, would have us disregard the

FSIA’s extensive language describing its general applicability. See 28 U.S.C.

§§ 1330(a), 1604. It also would require us to read the word “foreign state” in

Section 1605B of the FSIA JASTA Amendment—a section that expressly refers to

the ATA Immunity Provision—to mean less in Section 1605B than it does in

40 Section 1603. Cf. Azar, 587 U.S. at 574. Considering the Supreme Court’s guidance

and our understanding of the text and structure of the statutory scheme, Plaintiffs’

reliance on the general presumption against surplusage is insufficient to bear the

weight of their argument.

The text, structure, purpose, and history of the FSIA lead us to the same

conclusion. Accordingly, we hold that a “foreign state” for purposes of the ATA

Immunity Provision, 18 U.S.C. § 2337(2), is any “foreign state” under the FSIA

Definitional Provision, 28 U.S.C. § 1603, which “includes . . . an agency or

instrumentality of a foreign state.” 11 Applying that holding, we afford Sberbank,

an instrumentality of the Russian Federation due to its majority ownership by the

Russian Ministry of Finance, presumptive immunity from suit even where, as

here, that suit is brought under the ATA.

11 Only one of our sister circuits has addressed this precise issue regarding the interaction of the FSIA and ATA provisions and it reached the same conclusion that we do today. The First Circuit, in Ungar, 402 F.3d at 282, addressed a suit on behalf of victims of a terrorist attack in Israel by members of Hamas. Id. at 275. In addressing the question of whether the identical term “foreign state” should be read differently between the two statutes, the First Circuit turned to general principles of interpretation, the specific text and history of the FSIA and ATA, and the Supreme Court’s guidance in Amerada Hess and Altmann. The First Circuit concluded that “an assertion of sovereign immunity under the ATA [is] functionally equivalent to an assertion of sovereign immunity under the FSIA.” Id. at 283 (citations to statutes omitted).

41 D. Application of the FSIA’s Commercial Activity Exception to this ATA Action

Our in pari materia reading of these provisions is a pyrrhic victory for

Sberbank. While Sberbank asks us to rely on the FSIA’s status as “the sole basis

for obtaining [civil] jurisdiction over a foreign state” to determine whether

Sberbank is presumptively immune, Appellant’s Br. at 20 (internal quotation

marks and citation omitted), it would have us set aside the FSIA’s detailed

statutory immunity scheme when it comes to applying its exception for

commercial activity. We decline to follow Sberbank down this narrow path.

Sberbank makes several arguments contending that the ATA Immunity

Provision incorporates the FSIA’s definition of “foreign state” but not its

commercial activity exception. First, Sberbank argues that Congress has never

amended the commercial activity exception under the FSIA to reference the ATA,

nor has it included language in the ATA referencing the commercial activity

exception. This argument is unpersuasive for the simple reason that a

“comprehensive[] . . . statutory scheme” such as the FSIA applies by definition to

circumstances within its ambit, regardless of whether it specifically refers to the

causes of action that might implicate it. Amerada Hess, 488 U.S. at 437. Although

the ATA does not reference the FSIA’s commercial activity exception, that is

42 because it does not need to. The “declaration of purpose” Congress enacted in the

FSIA’s preamble was for future “[c]laims of foreign states to immunity [to]

henceforth be decided by courts of the United States and of the States in

conformity with the principles set forth in this chapter.” 28 U.S.C. § 1602; accord

H.R. Rep. No. 94–1487, at 12 (1976); S. Rep. No. 94–1310, at 11 (1976). Central to

this new statutory scheme was the codification of the restrictive theory of

sovereign immunity, that is, the doctrine that “states are not immune from the

jurisdiction of foreign courts insofar as their commercial activities are concerned.”

§ 1602; see also Samantar, 560 U.S. at 313. Making its broad applicability crystal

clear, the FSIA expressly states that no foreign state is immune “in any case” where

the commercial activity exception applies. § 1605(a). To ensure that courts applied

the restrictive theory to all civil claims, regardless of the cause of action, Congress

“very likely . . . thought that should be sufficient.” Amerada Hess, 488 U.S. at

437-38.

Second, Sberbank argues that the FSIA is a general statute governing claims

against foreign sovereigns, while the ATA is a specific statute governing claims

against foreign sovereigns for acts of international terrorism. Thus, under

traditional canons of statutory construction, the ATA’s latter-enacted and more

43 specific sovereign immunity provision displaces the FSIA’s general exception to

sovereign immunity. Here, however, on the issue of sovereign immunity, we are

faced with a “comprehensive statute containing a set of legal standards governing

claims of immunity in every civil action against a foreign state or its political

subdivisions, agencies, or instrumentalities.” Altmann, 541 U.S. at 691 (internal

quotation marks and citation omitted); see also Amerada Hess, 488 U.S. at 439 (“The

FSIA provides the sole basis for obtaining jurisdiction over a foreign state in federal

court.” (emphasis added)). We will not set aside that statute’s detailed framework

and careful balancing of the equities in claims of sovereign immunity based on the

argument that the ATA silently repealed that framework, for the same reasons that

we decline to find that an instrumentality presumptively immune under the FSIA

loses its presumptive immunity when the action is brought under the ATA.

Third, Sberbank relies on the ATA JASTA Amendment, 18 U.S.C.

§ 2333(d)(2). This amendment provides liability in certain circumstances “for an

injury arising from an act of international terrorism committed, planned, or

authorized by an organization that had been designated as a foreign terrorist

organization.” Id. Sberbank argues that this inclusion by Congress of an express

exception in the ATA, in contrast to the ATA’s silence regarding the FSIA’s

44 commercial activity exception, indicates its intent to afford ATA defendants

sovereign immunity even for their commercial activity. As Plaintiffs note, though,

there is no evidence that in enacting JASTA to expand the rights of terrorism

victims, Congress intended to restrict ATA actions. However, this illogical result

would follow from holding that the ATA JASTA Amendment evinces Congress’s

intent to create one, and only one, exception to ATA sovereign immunity. In short,

Sberbank’s statutory interpretation would run afoul of Congress’s stated intent in

enacting JASTA, which was “to provide civil litigants with the broadest possible

basis, consistent with the Constitution of the United States, to seek relief against

persons [and] entities . . . that have provided material support . . . to foreign

organizations or persons that engage in terrorist activities against the United

States.” Kaplan v. Lebanese Canadian Bank, SAL, 999 F.3d 842, 855 (2d Cir. 2021)

(emphases in Kaplan) (quoting JASTA, Pub. L. No. 114-222, § 2(b), 130 Stat. at 853

(“Purpose”)); see also Doe v. Bin Laden, 663 F.3d 64, 68–69 (2d Cir. 2011) (rejecting

“Afghanistan’s proposed narrow reading” of the noncommercial tort exception,

28 U.S.C. § 1605(a)(5), which Afghanistan argued followed from the state-

sponsored-terrorism exception in Section 1605A, because, if the narrow reading

were correct, “the enactment of the terrorism exception would therefore have

45 constituted a repudiation of the then-prevailing interpretation of the

noncommercial tort exception,” which “runs against all canons of

interpretation”). 12

In its briefs and at argument, Sberbank further emphasizes the “potential

foreign policy friction that may” ensue from reading the ATA together with the

FSIA’s commercial activity exception. Appellant’s Br. at 45. Specifically, it points

to the fact that JASTA was enacted over the President’s veto. However, that

concern provides additional support for not construing JASTA in a manner, as

urged by Sberbank, that would stray from Congress’s carefully crafted legislative

12 In an attempt to distinguish Doe, Sberbank contends that its “position is not that JASTA impliedly repealed the commercial activity exception,” but instead “that the commercial activity exception never applied under the ATA in the first place.” Reply Br. at 20 (emphasis in original). To be sure, before the ATA JASTA Amendment, no court had held that the FSIA’s commercial activity exception applied to a case brought under the ATA. However, in this case, that is a distinction without a difference. The crux of Sberbank’s argument is the ATA JASTA Amendment. Absent that amendment, there would be little reason to construe the ATA as rejecting the commercial activity exception. Without the amendment, therefore, and interpreting the statutes congruently, as Sberbank’s reading requires, the commercial activity exception would apply with equal force to an action brought under the ATA. If the ATA JASTA Amendment is the first indication Congress gave of its intent not to extend the commercial activity exception to ATA cases, that argument “would not so much be a reading of the statute as it would be a decision that the [ATA JASTA Amendment] amounts to a partial repeal by implication of the [commercial activity] exception” in the ATA context. Doe, 663 F.3d at 68. In any event, we decline to find that the ATA JASTA Amendment constituted an implicit repeal, or rejection, of the application of this exception to foreign sovereign immunity under the ATA. 46 compromises. On the issue before us, Congress has spoken clearly through the

FSIA’s “comprehensive set of legal standards,” which “govern[] claims of

immunity in every civil action against a foreign state or its . . . instrumentalities.”

Verlinden, 461 U.S. at 488; see also Amerada Hess, 488 U.S. at 437. Congress balanced

the relevant policy concerns in the FSIA with awareness of “the potential

sensitivity of actions against foreign states,” and emphasized “the importance of

developing a uniform body of law in this area.” Verlinden, 461 U.S. at 489 (quoting

H.R. Rep. No. 94-1487, at 32). Of those carefully calibrated legal standards

Congress adopted in the FSIA, the most notable—the one it specifically selected to

explain in the preamble to the statute—is the commercial activity exception. 28

U.S.C. § 1602. We decline to disturb that comprehensive framework absent any

specific indication in the text of the FSIA or the ATA that it does not apply in these

circumstances.

Accordingly, we conclude that the FSIA’s commercial activity exception

applies to sovereign immunity under the ATA and, for the reasons outlined supra

with respect to the FSIA, the alleged conduct by Sberbank that forms the basis of

the claims in this suit falls within that exception and similarly abrogates

Sberbank’s presumptive sovereign immunity under the ATA.

47 III. CONCLUSION

In sum, we hold:

1. Sberbank is presumptively immune under the FSIA.

2. The FSIA’s commercial activity exception applies to Sberbank’s conduct

because the alleged claims are based upon quintessentially commercial

activity—facilitating money transfers—that Sberbank carried on in the

United States, and thus abrogates Sberbank’s sovereign immunity under the

3. As a matter of first impression, the ATA’s immunity provisions apply not

only to agencies, but also to “instrumentalities” of foreign states.

4. As a matter of first impression, the commercial activity exception of the

FSIA applies equally to an action brought under the ATA, and thus similarly

abrogates Sberbank’s sovereign immunity under the ATA.

For the foregoing reasons, we AFFIRM the order of the district court and

REMAND for further proceedings consistent with this opinion.

48 22-3097 Schansman v. Sberbank

WALKER, Circuit Judge, concurring in part and concurring in the judgment:

I concur in much of the opinion but write separately to register my disagreement as to Part II.C, holding that Sberbank of Russia PJSC (“Sberbank”) enjoys presumptive immunity under the Anti-Terrorism Act (“ATA”), 18 U.S.C. § 2331 et seq. Though it does not affect the outcome of this appeal, I would instead hold that the ATA immunizes only foreign states and their agencies, not instrumentalities like Sberbank. The plain text of the ATA’s immunity provision makes clear that it was intended to cover a set of entities distinct from those embraced by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq. By declining to give effect to these differences, we risk writing into the ATA a new immunity that Congress did not intend and undermining others that it did.

The FSIA immunizes any “foreign state,” which it defines as including a “political subdivision of a foreign state or an agency or instrumentality” thereof. 28 U.S.C. § 1603(a). An “agency or instrumentality” is in turn defined, “for the purposes of [chapter 97],” as “any . . . separate legal person, corporate or otherwise,” that “is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof.” 28 U.S.C. § 1603(b). By contrast, the ATA immunizes a narrower set of foreign entities: only a “foreign state” and “an agency” thereof, “or an officer or employee of a foreign state or an agency thereof” acting in their official capacity. 18 U.S.C. § 2337(2).

The ATA does not itself define “foreign state” or “agency of a foreign state.” However, “agency” is defined elsewhere in Title 18—which houses the ATA, but not the FSIA—to include “any corporation in which the United States has a proprietary interest.” 18 U.S.C. § 6. By analogy, an “agency of a foreign state” must include any corporation in which a foreign state has a proprietary interest. Sberbank is majority owned by the Russian Ministry of Finance, which is itself an agency of Russia. Thus, Sberbank cannot constitute a “corporation in which a foreign state has a proprietary interest” but rather one in which an agency of a 1 foreign state has a proprietary interest. 18 U.S.C. § 6. Sberbank therefore is not an “agency of a foreign state” under the ATA but an instrumentality to which the ATA does not attach immunity. 18 U.S.C. § 2337(2).

If Congress had intended “foreign state” as used in the ATA to incorporate the definitional language found in the FSIA, a law enacted sixteen years earlier and located in a different title of the United States Code, it would have done so explicitly. Contrary to the majority’s conclusion, grafting the FSIA’s definitional language onto the ATA does in fact come with consequences. Cf. Marx v. Gen. Revenue Corp., 568 U.S. 371, 385 (2013) (the presumption against surplusage “assists only where a competing interpretation gives effect to every clause and word of a statute” (cleaned up)). It would render superfluous the words “an agency of a foreign state.” 18 U.S.C. § 2337(2). More significantly, it could also undermine the ATA’s immunity coverage of individual officers and employees of foreign entities. 18 U.S.C. § 2337(2) (extending immunity to “a foreign state, an agency of a foreign state, or an officer or employee of a foreign state or an agency thereof” (emphasis added)). The Supreme Court has made clear that, unlike the ATA, the FSIA does not immunize individual foreign officials. Samantar v. Yousuf, 560 U.S. 305, 319 (2010) (“Reading the FSIA as a whole, there is nothing to suggest we should read ‘foreign state’ in § 1603(a) to include an official acting on behalf of the foreign state, and much to indicate that this meaning was not what Congress enacted.”). The majority’s holding, which substitutes the FSIA’s language pertaining to immunity reach, could thus have the effect both of extending and reducing the immunity conferred by the ATA. It would grant ATA immunity to instrumentalities and deny it to individual officials of foreign states.

Giving full effect to the textual idiosyncrasies of the ATA could also ease an administrability problem acknowledged by the majority, which this court wrestled with in Bartlett v. Baasiri, 81 F.4th 28 (2d Cir. 2023). Bartlett held that for the purposes of FSIA immunity, a defendant’s status as an instrumentality of a foreign state is measured at the time of a court’s decision, not the time of filing. Id.

2 at 30. Thus, FSIA immunity “may attach when a defendant becomes an instrumentality of a foreign sovereign after a suit is filed.” Id. In Bartlett, we acknowledged that this rule could lead to “gamesmanship”: allowing foreign entities to manufacture immunity by manipulating ownership after a suit is filed. Id. at 36. Giving effect to the textual differences between the ATA and FSIA could lessen this perverse incentive. A foreign defendant, like Sberbank here, that is privately owned when a suit is filed but is subsequently acquired by a foreign agency would be entitled to immunity under the FSIA, but not the ATA. And it is more difficult for a nation to transform an entity into an agency than an instrumentality in response to litigation. The former involves an entity’s direct absorption into a national government; the latter requires only the turning over of a majority of shares to a pre-existing agency. Excluding instrumentalities from the ambit of ATA immunity could therefore limit the opportunities for this evasive maneuver.

Finally, I cannot agree with the majority that this question is within the realm of circumstances contemplated by the Supreme Court in Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (1989), or Republic of Austria v. Altmann, 541 U.S. 677 (2004). Op. at 40; see Turkiye Halk Bankasi A.S. v. United States, 598 U.S. 264, 278 (2023) (“general language in judicial opinions” should be read “as referring in context to circumstances similar to the circumstances then before the Court”). First, as the majority points out, neither case concerned the ATA. Although Altmann was decided after the ATA was enacted, the great majority of its language reaffirming the FSIA’s general applicability comes in the form of direct quotes from Amerada Hess, decided before the ATA’s time. Altmann, 541 U.S. at 691, 699 (quoting Amerada Hess, 488 U.S. 434-35, 488). Nothing in Altmann indicates that the ATA was even on the Court’s radar. Applying general language from those decisions in the ATA context, apart from being countertextual, could lead to the unintended consequences described above.

3 Second, the ATA’s idiosyncrasies suggest that it should be treated like the criminal statute in Turkiye Halk instead of a run-of-the-mill civil claim over which the FSIA exclusively governs. In Turkiye Halk, the Supreme Court made clear that “Amarada Hess’s rationale does not translate to the criminal context,” because its holding as to the FSIA’s “‘comprehensiveness’” was limited to civil matters. 598 U.S. at 278 (quoting Amerada Hess, 488 U.S. at 437)). The FSIA “says nothing about criminal matters—a distinct legal regime housed in an entirely separate title of the U.S. Code.” Id. Here, the ATA resembles a similarly distinct regime. Although Plaintiff’s ATA claim provides only for civil liability, § 2333 and the ATA in general are intimately bound up with criminal law. The ATA is housed in Title 18 of the U.S. Code, covering federal crimes and criminal procedure. It amended Title 18’s section setting forth criminal penalties for acts of terrorism. And civil ATA claims like Plaintiff’s are predicated on criminal conduct. See Antiterrorism Act of 1990, Pub. L. 101-519, § 132, 104 Stat. 2240, 2250 (1990) (amending 18 U.S.C. § 2332, “Criminal Penalties,” which defines “international terrorism” as “activities that . . . are a violation of the criminal laws of the United States . . . or that would be a criminal violation if committed within the jurisdiction of the United States”); Terrorism Civil Remedy, Pub. L. 102-572, Title X, § 1003(a)(4), 106 Stat. 4506, 4522 (1992) (creating a civil claim under 18 U.S.C. § 2333 for an injury arising from “an act of international terrorism”). I therefore disagree that the FSIA’s general applicability to civil claims overrides these specific textual differences in the ATA’s immunity provision.