In order to minimize the risk of litigation arising from investments in the United States, sovereign wealth funds (“SWFs”) should take care to avoid inadvertent or unnecessary waiver of sovereign immunity–before they establish operational or investment management presence in the United States.
SWFs generally benefit from sovereign immunity in the United States under the Foreign Sovereign Immunities Act (“FSIA”). As an agency or instrumentality of foreign state, they are generally entitled to immunity from the jurisdiction of the U.S. courts. However, an SWF may lose or limit its sovereign immunity where the SWF: (1) is involved in “commercial activities” in or affecting the United States; or (2) waives sovereign immunity, either expressly or by implication. Continue Reading