On June 8, the Supreme Court decided Republic of Iraq v. Beaty, No. 07-1090.
Foreign states ordinarily are immune from suit in American courts. The Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1602 et seq., includes a number of exceptions to this principle, including an exception involving claims against a state that is designated as a sponsor of terrorism. Iraq was designated as such a state beginning in 1990. But in 2003, shortly after the overthrow of the Saddam Hussein regime, Congress passed the Emergency Wartime Supplemental Appropriations Act (EWSAA)—one provision of which authorized the president to "make inapplicable" to Iraq any provision of law "that applies to countries that have supported terrorism." President George W. Bush promptly used this authority to declare the state-sponsored terrorism exception to the FSIA inapplicable to Iraq. The U.S. Court of Appeals for the District of Columbia Circuit held, however, that the president's authority under the EWSAA did not permit him to waive the FSIA exception and restore Iraq's immunity for prior acts. Acree v. Republic of Iraq, 370 F.3d 41 (D. C. Cir. 2004). In 2008, Congress repealed the state-sponsored terrorism exception to the FSIA, re-enacted a similar provision as part of another act, and again authorized the president to waive the provision as to Iraq, which he promptly did. But the Court of Appeals held that these measures did not apply to the present case, which was filed in 2003 and which therefore was governed by Acree.
The Supreme Court unanimously reversed, holding that the state-sponsored terrorism exception to the FSIA became inapplicable to Iraq upon the president's exercise of his authority under the EWSAA, and Iraq thereby regained its sovereign immunity. The Court found this result to be compelled by a "straightforward" reading of the relevant provision of the EWSAA, and it rejected the contorted reading of that provision on which the decision in Acree (which had not been appealed) was based. The Court also rejected the argument that the presidential restoration of Iraq's immunity applied only prospectively to claims arising after 2003, and not to their claims based on acts that occurred during and after the 1991 Gulf War, after Iraq had been declared a sponsor of terrorism. The Court pointed out that the general rule against retroactive application applies to laws that modify substantive rights and does not apply to an alteration of the rules of sovereign immunity, which "reflects current political realities and relationships" and on which parties do not rely in shaping their conduct.
Justice Scalia delivered the opinion for a unanimous Court.