INSIGHT: Should Congress Amend the FSIA to Allow Covid-19 Suits Against China?

There is a growing chorus of voices declaring that China is at least partially responsible for the breadth of the Covid-19 global pandemic by either concealing critical information from the world or otherwise mishandling the outbreak within its own borders.

It is therefore unsurprising that there’s been a lot of talk about holding China responsible for the Covid-19 pandemic.

Missouri is the first state to bring a lawsuit against China to recover Covid-19-related losses. The case follows other private litigants who have initiated class actions against China (one in Florida and one in Nevada). More states, businesses, and individuals are likely to file similar lawsuits.

But is there any merit to these suits against China, which are likely going to exceed several trillions of dollars? State governments have used litigation to recover billions of dollars of health-care costs related to tobacco-related illnesses and the opioid crisis. But those lawsuits were against private actors.

Foreign governments stand on an entirely different footing. Under current law, plaintiffs may not overcome the steep hurdle of what’s called foreign sovereign immunity. For some time now, Congress has carefully limited lawsuits against foreign states through the Foreign Sovereign Immunities Act, or FSIA. The act is an integral component of U.S. foreign policy.

Beginning in the 1800s, U.S. courts refused to get involved in what were perceived to be conflicts best resolved by other branches of government. Prior to the 1970s, the U.S. State Department was charged with determining whether a foreign government would be immune from civil liability in U.S. courts.

Enacted in 1976, the FSIA was intended to shift that immunity determination to courts. The FSIA dictates that a foreign state (and its agencies, instrumentalities, and political subdivisions) are presumed to be immune from civil liability unless a case comes within the statute’s limited exceptions.

The China lawsuits invoke what are known as the “commercial activity” and “non-commercial tort” exceptions in the statute. But neither exception may apply to Covid-19.

Commercial Activity Exception

The commercial activity exception permits a lawsuit to proceed if the foreign state engages in commercial activity outside of the U.S. that causes “direct” harm in the U.S. A “commercial activity” as an activity in which private actors can engage. If, however, the activity constitutes a uniquely sovereign function, then the exception will not apply.

It’s difficult to see how the China lawsuits fit this exception. The core charge is that China’s attempt to manage and control Covid-19 were either grossly negligent or outright deceitful. Controlling public health crises is a quintessential government function.

Non-Commercial Tort Exception

The non-commercial tort exception applies only to wrongful conduct that occurs within the U.S. The China lawsuits make clear that all of the misconduct occurred in China. But even if the misconduct occurred here, China cannot be liable for discretionary government actions such as policy judgments related to controlling the spread of Covid-19.

From the allegations in the China lawsuits, it appears that all of the alleged misconduct involves discretionary acts by Chinese government officials.

Congress, of course, can change the statute to waive foreign governmental immunity in cases involving pandemics like Covid-19. In the past, Congress has amended the FSIA to permit private litigants to pursue foreign governments with respect to politically-charged issues that may (or may not) be akin to Covid-19.

FSIA Amendments

Prior to 1996, the FSIA prohibited private parties from suing foreign governments designated as sponsors of terrorism for terrorist acts. That all changed with the Flatow Amendment, which permitted victims of terrorism to sue terror states in U.S. courts.

In 2016, Congress amended the FSIA again through the Justice Against Sponsors of Terrorism Act (JASTA). JASTA permitted victims of terrorism to pursue any foreign government (not just designated terrorist states) for sponsoring terrorism. The practical effect of JASTA was to revive already-dismissed lawsuits against the Kingdom of Saudi Arabia for the Sept. 11, 2001, terrorist attacks.

So, if Congress has the political will, the FSIA barrier to suing foreign governments can be removed. With respect to China’s potential liability for Covid-19, there already are proposals to amend the FSIA. Sen. Tom Cotton (R-Ark.) has introduced legislation as has Sen. Josh Hawley (R-Mo.).

A case can be made to amend the FSIA. The harm caused by Covid-19 is breathtaking. Although time-consuming, litigation is supposed to facilitate discovering truth. There is thus an advantage to airing out China’s role in the spread of Covid-19 through the court process.

Equally, Covid-19 will not be the last international pandemic we face. Imposing liability on foreign governments for their role in a pandemic should encourage foreign actors to act responsibly in the future to avoid trillions of dollars of liability and years of disruptive litigation.

On the other hand, amending the FSIA could backfire. Foreign governments may retaliate and pass their own legislation aimed at holding the U.S. responsible for pandemic-related damages. Covid-19-related litigation may also interfere with U.S. foreign policy more generally by giving foreign governments leverage in trade or other negotiations.

In the end, in these very challenging times, it’s not surprising that U.S. lawmakers are looking at all possible remedies, and self-help through the litigation process has a rich American tradition. However, whether Covid-19 will be considered as grave a danger as international terrorism remains to be seen.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Ugo Colella is a partner and co-founder of Colella Zefutie LLC, a boutique law firm based in Washington, D.C., with offices in New York, New Jersey, and Northern Virginia.