From sovereign wealth funds to state-owned real estate developers and every permutation in between, foreign state-owned commercial enterprises are increasingly part of the global market. It has long been the case that such entities enjoyed immunity under the Foreign Sovereign Immunity Act (FSIA) from civil suits, but the issue of whether state-owned commercial enterprises are immune from criminal prosecution has been fuzzier.

Sid Kamaraju

Recently, however, in appeals involving Turkiye Halk Bankasi A.S. (“Halkbank”), both the Supreme Court and the U.S. Court of Appeals for the Second Circuit have clarified that the FSIA and common law principles do not insulate foreign state-owned commercial enterprises from federal prosecution. In doing so, the courts have cleared the way for prosecutions of these ventures in U.S. courts, which may be particularly relevant given the increasing use of criminal enforcement of sanctions violations.

One aspect of the decision that folks may not have anticipated is what to do when a state-owned corporation receives a federal grand jury subpoena that calls for information that the company cannot produce under its home country law.