20-3499-cr
United States v. Bankasi




                                    In the
              United States Court of Appeals
                           for the Second Circuit


                              AUGUST TERM 2020

                                 No. 20-3499-cr

                           UNITED STATES OF AMERICA,
                                    Appellee,

                                       v.

                TURKIYE HALK BANKASI A.S., AKA HALKBANK,
                           Defendant-Appellant,

 REZA ZARRAB, AKA RIZA SARRAF, CAMELIA JAMSHIDY, AKA KAMELIA
  JAMSHIDY, HOSSEIN NAJAFZADEH, MOHAMMAD ZARRAB, AKA CAN
 SARRAF, AKA KARTALMSD, MEHMET HAKAN ATILLA, MEHMET ZAFER
   CAGLAYAN, ABI, SULEYMAN ASLAN, LEVENT BALKAN, ABDULLAH
                          HAPPANI,
                          Defendants.




                 Appeal from the United States District Court
                   for the Southern District of New York
                      ARGUED: APRIL 12, 2021
                     DECIDED: OCTOBER 22, 2021



Before: KEARSE, CABRANES, and BIANCO, Circuit Judges.




      This case presents two questions. First, whether a denial of a
motion to dismiss a criminal indictment based on the Foreign
Sovereign Immunities Act (“FSIA”) is immediately appealable under
the collateral order doctrine. Second, whether FSIA confers immunity
on foreign sovereigns from criminal prosecutions. We answer the first
question in the affirmative. As to the second, we hold that even if we
were to assume that FSIA confers immunity in the criminal context,
the offense conduct with which Defendant-Appellant Turkiye Halk
Bankasi A.S. is charged would fall under the commercial activity
exception to FSIA. Accordingly, we DENY the Government’s motion
to dismiss this appeal, and we AFFIRM the Decision and Order of the
United States District Court for the Southern District of New York
(Richard M. Berman, Judge).




                         SIDHARDHA KAMARAJU (Michael D. Lockard,
                         David W. Denton, Jr., Jonathan E. Rebold,
                         Thomas McKay, on the brief), Assistant
                         United States Attorneys, for Damian
                         Williams, United States Attorney for the




                                  2
                            Southern District of New York, New York,
                            NY, for Appellee.

                            SIMON A. LATCOVICH (Robert M. Cary, Eden
                            Schiffmann, James W. Kirkpatrick, on the
                            brief), Williams & Connolly, LLP,
                            Washington, D.C., for Defendant- Appellant.




JOSÉ A. CABRANES, Circuit Judge:

      This case presents two questions. First, whether a denial of a
motion to dismiss a criminal indictment based on the Foreign
Sovereign Immunities Act (“FSIA”) is immediately appealable under
the collateral order doctrine. Second, whether FSIA confers immunity
on foreign sovereigns from criminal prosecutions. We answer the first
question in the affirmative. As to the second, we hold that even if we
were to assume that FSIA confers immunity in the criminal context,
the offense conduct with which Defendant-Appellant Turkiye Halk
Bankasi A.S. (“Halkbank”) is charged would fall under the commercial
activity exception to FSIA. Accordingly, we DENY the Government’s
motion to dismiss this appeal, and we AFFIRM the Decision and
Order of the United States District Court for the Southern District of
New York (Richard M. Berman, Judge).

                       I.       BACKGROUND

      Halkbank is a commercial bank that is majority-owned by the
Government of Turkey.




                                     3
       In 2019 a grand jury returned a Superseding Indictment (the
“Indictment”) charging Halkbank with participating in a multi-year
scheme to launder billions of dollars’ worth of Iranian oil and natural
gas proceeds in violation of U.S. sanctions against the Government of
Iran and Iranian entities and persons. The oil and natural gas proceeds
were held in Halkbank accounts on behalf of the Central Bank of Iran
(“CBI”), the National Iranian Oil Company (“NIOC”), and the
National Iranian Gas Company (“NIGC”). 1

       The Indictment alleged that Halkbank knowingly facilitated
certain types of illegal transactions, including: (1) “allowing the
proceeds of sales of Iranian oil and gas deposited at Halkbank to be
used to buy gold for the benefit of the Government of Iran”; (2)
“allowing the proceeds of sales of Iranian oil and gas deposited at
Halkbank to be used to buy gold that was not exported to Iran”; 2 and


       1It is not disputed that the CBI, NIOC, and NIGC were all subject to U.S.
sanctions during the charged offense conduct or indictment period.
       2  The National Defense Authorization Act for Fiscal Year 2012 (the “2012
NDAA”), 

requires the imposition of sanctions on foreign
financial institutions following a determination by the President that the institution
has violated certain prohibitions on activities with respect to the Central Bank of
Iran or another Iranian financial institution designated under the International
Emergency Economic Powers Act (“IEEPA”). See generally U.S. Dep’t of the
Treasury, Frequently Asked Questions: Iran Sanctions, available at
https://home.treasury.gov/policy-issues/financial-sanctions/faqs/topic/1551 (last
accessed August 17, 2021) (FAQs 169-70). Government-owned foreign financial
institutions, like Halkbank, are prohibited from engaging in transactions for the
sale or purchase of petroleum or petroleum products to or from Iran. See id (FAQ
170). Under the terms of the 2012 NDAA, foreign countries could be exempted from
sanctions for purchasing Iranian oil so long as they significantly reduced their




                                          4
(3) “facilitating transactions fraudulently designed to appear to be
purchases of food and medicine by Iranian customers, in order to
appear to fall within the so-called ‘humanitarian exception’[3] to certain




purchases of such products from Iran, the so-called “significant reduction
exception.” See 

 (FAQ 235).

        Section 504 of the Iran Threat Reduction and Syria Human Rights Act of
2012, 

, et seq., (“ITRA”) narrowed the significant reduction
exception “to (a) exempt from sanctions only transactions that conduct or facilitate
bilateral trade in goods or services between the country granted the exception and
Iran, and (b) require that funds owed to Iran as a result of the bilateral trade be
credited to an account located in the country granted the exception and not be
repatriated to Iran,” or the “bilateral trade restriction.” See U.S. Dep’t of the
Treasury, Frequently Asked Questions: Iran Sanctions (FAQs 254-55). Under this
provision, as is relevant here, the proceeds of oil sales by Iran to another country,
like Turkey, are to be deposited in an escrow account in the purchasing country
and may only be used by Iran for further trade with that country (i.e., for trade
between Turkey and Iran). See 22 U.S.C. § 8513a(d)(4)(D). Subsequently, under the
Iran Freedom and Counter-Proliferation Act (“IFCA”), passed as part of the
National Defense Authorization Act for Fiscal Year 2013, 

sanctions may apply to foreign financial institutions that conduct or facilitate a
transaction for the sale, supply, or transfer of natural gas to or from Iran unless, as
with proceeds from Iran’s oil sales, any funds owed to Iran as a result of the trade
are credited to an account located in the purchasing country. See U.S. Dep’t of the
Treasury, Frequently Asked Questions: Iran Sanctions (FAQs 297, 313).
       3 The 2012 NDAA included an exception for transactions for the sale of food,
medicine, or medical devices to Iran. See 

 (FAQ 641) (“Transactions for the sale
of agricultural commodities, food, medicine, or medical devices to Iran involving
the [CBI] are excepted from the relevant sanctions under section 1245(d)(2) of the
NDAA 2012 and sections 561.203 and 561.204 of the Iranian Financial Sanctions
Regulations. . . . ”).




                                          5
sanctions against the Government of Iran, when in fact no purchases
of food or medicine actually occurred.” 4

       Through the charged scheme, Halkbank allegedly transferred
approximately $20 billion of otherwise restricted Iranian funds in
order to create a “pool of Iranian oil funds . . . held in the names of
front companies, which concealed the funds’ Iranian nexus.” 5 These
funds were then used to make international payments on behalf of the
Government of Iran and Iranian banks, including at least $1 billion in
dollar-denominated transfers that passed through the U.S. financial
system in violation of U.S. law.

       Further, Halkbank executives, acting within the scope of their
employment and for the benefit of Halkbank, are alleged to have
concealed the true nature of the transactions Halkbank made on behalf
of the Government of Iran from officials at the U.S. Department of the
Treasury (the “Treasury”). 6 To conceal these transactions, Halkbank



       4   Indictment ¶ 4.
       5   

.
       6 These executives included: (1) Halkbank’s former General Manager,
Suleyman Aslan; (2) Halkbank’s former Deputy General Manager for International
Banking, Mehmet Hakan Atilla, who was responsible for maintaining Halkbank’s
correspondent banking relationships, including with U.S. correspondent banks,
and for maintaining Halkbank’s relationships with Iranian banks, including the
Central Bank of Iran; and (3) the former head of Halkbank’s Foreign Operations
Department, Levent Balkan. These individual defendants are not parties to the
present appeal; the Government informs us that Aslan and Balkan were charged
separately and remain at large, while Atilla was convicted, following a jury trial, of




                                          6
officers allegedly conspired with Reza Zarrab, an Iranian-Turkish
businessman, and other Turkish and Iranian government officials,
some of whom are alleged to have received millions of dollars from
the proceeds of the scheme in exchange. 7

       Halkbank was charged in the six-count Indictment with:
conspiring to defraud the United States by obstructing the lawful
functions of the Treasury, in violation of 

 (Count One);
conspiring to violate or cause violations of licenses, orders,
regulations, and prohibitions issued under the International
Emergency Economic Powers Act (“IEEPA”), codified at 

 (Count Two); bank fraud, in violation of 

(Count Three); conspiring to commit bank fraud, in violation of 

 (Count Four); money laundering, in violation of 

(a)(2)(A) (Count Five); and conspiring to commit money
laundering, in violation of 

(h) (Count Six).

       On August 10, 2020, Halkbank moved to dismiss the Indictment,
arguing that FSIA renders it immune from criminal prosecution
because it is majority-owned by the Turkish Government. 8 Halkbank


offenses charged separately. See United States v. Atilla, 

 (2d Cir. 2020);
Gov’t Br. at 4-5 n.2.
       7Zarrab pleaded guilty to the charges against him in relation to this scheme
on October 26, 2017.
       8  The parties do not dispute that Halkbank is an “instrumentality of a
foreign state” for purposes of FSIA. See Halkbank Br. at 8. Under FSIA, an
“instrumentality of a foreign state” includes “any entity” for which “a majority of
[its] shares or other ownership interest is owned by a foreign state.” 28 U.S.C.




                                          7
further argued that FSIA’s exceptions to immunity are applicable only
in civil cases—not in criminal cases—and that, in any event, even if
FSIA’s exceptions did apply in the criminal context, the conduct with
which Halkbank is charged does not fall within the ambit of FSIA’s so-
called “commercial activity” exception. Finally, even if FSIA did not
bar its prosecution, Halkbank argued that it was nevertheless entitled
to immunity from prosecution under the common law.

       Following briefing and oral argument, the District Court denied
Halkbank’s motion in a Decision and Order dated October 1, 2020. The
District Court principally concluded that Halkbank was not immune
from prosecution because FSIA confers immunity on foreign
sovereigns only in civil proceedings. The District Court went on to
conclude that, even assuming arguendo that FSIA did confer immunity
to foreign sovereigns in criminal proceedings, Halkbank’s conduct
would fall within FSIA’s commercial activity exception. The District
Court also rejected Halkbank’s contention that it was entitled to
immunity from prosecution under the common law, noting that
Halkbank failed to cite any support for its claim on this basis.
Halkbank timely appealed.

       On appeal, Halkbank moved to stay the District Court
proceedings pending resolution of this appeal, which the Government
opposed. The Government then moved to dismiss Halkbank’s appeal,
taking the position that the District Court’s denial of Halkbank’s


§ 1603(b)(2). For purposes of this opinion, we use foreign sovereign and foreign
state interchangeably.




                                       8
motion to dismiss the Indictment on the basis of foreign sovereign
immunity is not subject to interlocutory review by our Court.

      A motions panel of our Court granted Halkbank’s motion for a
stay and referred the decision on the Government’s motion to dismiss
to the merits panel.

                              II.   DISCUSSION

A. Appellate Jurisdiction

      As a threshold matter, we must consider whether we have
jurisdiction over this appeal, which is taken from the District Court’s
denial of Halkbank’s motion to dismiss the Indictment on the basis of
foreign sovereign immunity.

      The Government challenges our jurisdiction, asserting that the
District Court’s sovereign immunity determination is neither a final
judgment nor an order that qualifies for interlocutory appeal. We do
not agree.

      While Congress has limited our jurisdiction to “final decisions
of the district courts,” 9 we have recognized a narrow exception to the
final judgment rule that permits interlocutory appeals from certain
“collateral orders.” It is well established that, to qualify for
interlocutory appeal under the collateral order doctrine, a decision
must: (1) “conclusively determine the disputed question”; (2) “resolve
an important issue completely separate from the merits of the action”;

      9   

.




                                      9
and (3) “be effectively unreviewable on appeal from a final
judgment.” 10

       We have “consistently held that [a] threshold [foreign]
sovereign-immunity determination is immediately reviewable under
the collateral-order doctrine.” 11 But, as the Government points out, our
holding on this point concerned a sovereign immunity determination
in the civil, not criminal, context. Because the Supreme Court has made
clear that the collateral order doctrine is to be applied in criminal cases
with the “utmost strictness,” 12 the Government argues that a threshold
sovereign immunity determination in a criminal case cannot qualify
for the collateral order exception to the final judgment rule.

       It is true that the Supreme Court has “emphasized that one of
the principal reasons for . . . strict adherence to the doctrine of finality
in criminal cases is that the Sixth Amendment guarantees a speedy




       10Coopers & Lybrand v. Livesay, 

 (1978), superseded on other
grounds by Fed. R. Civ. P. 23(f).
       11  Funk v. Belneftekhim, 

 (2d Cir. 2017) (first alteration in
original) (internal quotation marks omitted).
       12  Midland Asphalt Corp. v. United States, 

 (1989) (internal
quotation mars omitted). Indeed, the Supreme Court has recognized just four
categories of orders that are immediately appealable in criminal cases: (1) denials
of motions to reduce bail; (2) denials of motions to dismiss on double-jeopardy
grounds; (3) denials of motions to dismiss under the Speech or Debate Clause, and
(4) orders for the forced medication of criminal defendants. See id.; Sell v. United
States, 

 (2003).




                                         10
trial.” 13 Still, that the Supreme Court has not yet held that a sovereign
immunity determination in a criminal case falls within the collateral
order doctrine does not necessarily foreclose that outcome. 14

        Indeed, where, as here, a sovereign immunity determination in
the criminal context plainly satisfies the criteria set forth by the
Supreme Court in Coopers & Lybrand, applied with the “utmost
strictness,” it qualifies for interlocutory review. First, the District
Court’s sovereign immunity determination conclusively determined
the issue         against Halkbank. 15 Second, Halkbank’s                   professed
entitlement to immunity is an issue distinct from the merits of the
charges at issue. 16 Third, an “appeal from [a] final judgment cannot
repair the damage caused to a sovereign that is improperly required
to litigate a case.” 17 Put another way, “the denial of immunity is
effectively unreviewable after final judgment because defendants


        United States v. MacDonald, 

 (1978) (internal quotation
       13

marks and alteration omitted).
       14  Our Circuit has also held that commitment orders, United States v.
Magassouba, 

 (2d Cir. 2008), and orders allowing the government
to try a juvenile as an adult, United States v. Doe, 

 (2d Cir. 1995), are
immediately appealable in criminal cases.
       15   See Funk, 

.
       16   See 

.
       17  EM Ltd. v. Banco Central de la Republica Argentina, 

 (2d Cir.
2015); see also Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co.,

 (2017) (observing that the “basic objective” of foreign sovereign
immunity is “to free a foreign sovereign from suit” so that it should be decided “as
near to the outset of the case as is reasonably possible” (emphasis in original)).




                                            11
must litigate the case to reach judgment and, thus, lose the very
immunity from suit to which they claim to be entitled.” 18

       In sum, we hold that a threshold sovereign immunity
determination is immediately appealable pursuant to the collateral
order doctrine—even in a criminal case. Accordingly, we have
jurisdiction to review the District Court’s sovereign immunity
determination.

B. Subject Matter Jurisdiction

       On appeal, Halkbank principally contends that the District
Court lacks subject matter jurisdiction because it has sovereign
immunity from criminal prosecution under § 1604 of FSIA, which
grants immunity to foreign sovereigns “from the jurisdiction of the
courts of the United States,” unless a statutory exception applies. 19

      i.     Standard of Review

           On appeal, “[w]e 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.” 20



       18   Funk, 

.
       19   

.
       20 Petersen Energía Inversora S.A.U. v. Argentine Republic & YPF S.A., 

 (2d Cir. 2018) (internal quotation marks omitted).




                                         12
     ii.      The Foreign Sovereign Immunities Act

       It is well established that Article III of the United States
Constitution grants federal courts jurisdiction to hear claims involving
“foreign States.” 21 Still, for most of our history, foreign sovereigns
enjoyed absolute immunity in U.S. courts as “a matter of grace and
comity” 22 in light of the “perfect equality and absolute independence
of sovereigns.” 23 Accordingly, federal courts “consistently . . . deferred
to the decisions of the political branches—in particular, those of the
Executive Branch—on whether to take jurisdiction over actions against
foreign sovereigns and their instrumentalities.” 24 In practice, the U.S.
Department of State would routinely make requests for immunity in
all actions against “friendly sovereigns.” 25

       Then, in 1952, the Acting Legal Adviser to the State Department,
Jack B. Tate, issued a letter announcing the State Department’s
adoption of a so-called “restrictive” theory of foreign sovereign
immunity. 26 Under this theory, the State Department would take the

       21   U.S. CONST. art. III, § 2, cl. 1.
       22   Verlinden B.V. v. Cent. Bank of Nigeria, 

 (1983).
       23   The Schooner Exchange v. McFaddon, 

 (1812).
       24   Verlinden, 

.
       25   Samantar v. Yousef, 

 (2010).
       26 Letter from Jack B. Tate, Acting Legal Adviser, Dep’t of State, to Acting
Attorney General Philip B. Perlman (May 19, 1952), reprinted in 26 Dep't of State
Bull. 984–85 (1952) and in Alfred Dunhill of London, Inc. v. Republic of Cuba, 

 (1976) (App’x 2 to opinion of White, J.).




                                                13
position that foreign sovereigns were not immune from liability in U.S.
courts for acts that are “private or commercial in character (jure
gestionis)”; rather, foreign sovereigns would only enjoy immunity for
their “sovereign or public acts (jure imperii).” 27 The State Department’s
new position threw immunity determinations for foreign sovereigns
into “disarray.” 28 Indeed, foreign nations lobbied the State
Department          for    immunity,       with     the    result       that   “political
considerations sometimes led the Department to file suggestions of
immunity in cases where immunity would not have been available
under the restrictive theory.” 29 And, when foreign nations did not
request immunity from the State Department, the federal courts were
left to “determine whether sovereign immunity existed, generally by
reference to prior State Department decisions.” 30 As a result,
“sovereign immunity determinations were made in two different
branches, subject to a variety of factors [that] sometimes include[d]




       27   Saudi Arabia v. Nelson, 

 (1993).
       28   Republic of Austria v. Altmann, 

 (2004).
       29 

 (internal quotation marks omitted); see also Curtis A. Bradley & Jack L.
Goldsmith, Foreign Sovereign Immunity, Individual Officials, and Human Rights
Litigation, 13 GREEN BAG 2D 9, 19 (2009) (“[T]he pre-FSIA common law regime of
executive discretion in determining foreign sovereign immunity” was
“characterized by unprincipled conferrals of immunity based on the political
preferences of the presidential administration and case-by-case diplomatic
pressures.”)
       30   Altmann, 

 (internal quotation marks omitted).




                                            14
diplomatic considerations” and “the governing standards were
neither clear nor uniformly applied.” 31

       As discussed in a recent case, the consequent “inconsistent
application of sovereign immunity” attracted Congressional notice. 32
In 1976 Congress enacted FSIA to “endorse and codify the [State
Department’s] restrictive theory of sovereign immunity” and to
“transfer primary responsibility for deciding claims of foreign states
to immunity from the State Department to the courts.” 33 Under § 1604
of FSIA, foreign sovereigns are “immune from the jurisdiction of the
courts of the United States,” 34 with certain exceptions, including an
exception for the “commercial activity” of a foreign sovereign. 35 FSIA
also grants subject matter jurisdiction to federal district courts over
“any nonjury civil action against a foreign state . . . to which the foreign
state is not entitled to immunity.” 36

    iii.      FSIA in the Criminal Context


       31   Id. at 691 (internal quotation marks omitted).
       32   Samantar, 

.
       33Id. (internal quotation marks omitted); see also 

 (setting
forth Congressional findings and the purposes of FSIA).
       34 

 (“Subject to existing international agreements to which
the United States is a party at the time of enactment of this Act 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 1605 to 1607 of this chapter.”).
       35   

 § 1605(a)(2).
       36   Id. § 1330(a).




                                           15
       By enacting FSIA, Congress established a comprehensive
framework “governing claims of immunity in every civil action
against a foreign state or its political subdivisions, agencies, or
instrumentalities.” 37 By its terms, FSIA plainly confers immunity on
foreign sovereigns from civil actions—albeit with certain exceptions. 38
What is less clear, however, is whether Congress also intended for
FSIA to confer immunity on instrumentalities of foreign sovereigns in
criminal cases. 39

       Halkbank takes the position that § 1604 of FSIA confers
immunity on foreign sovereigns and their instrumentalities from
criminal prosecution. In particular, Halkbank argues that § 1604,
which confers immunity (with enumerated exceptions) on foreign
sovereigns “from the jurisdiction of the courts of the United States,”
must be read “in tandem” 40 with a separate provision of FSIA, §
1330(a), which grants district courts jurisdiction over “any nonjury

       37   Verlinden, 

.
       38   See 

(a).
       39Other circuits to consider FSIA’s availability in criminal cases have split.
Compare Southway v. Cent. Bank of Nigeria, 

 (10th Cir. 1999)
(concluding in the context of a civil Racketeer Influenced and Corrupt
Organizations Act (“RICO”) claim that if Congress intended defendants such as the
Republic of Nigeria “to be immune from criminal indictment under the FSIA,
Congress should amend the FSIA to expressly so state”), and United States v. Noriega,

 (11th Cir. 1997) (same, in a case involving head-of-state
immunity), with Keller v. Cent. Bank of Nigeria, 

 (6th Cir. 2002)
(considering FSIA in the context of civil RICO, but holding that FSIA does apply to
criminal cases).
       40   Argentine Republic v. Amerada Hess Shipping Corp., 

 (1989).




                                           16
civil action against a foreign state.” 41 Thus, Halkbank urges that, the
absence of any express grant of criminal jurisdiction over foreign
sovereigns in § 1330(a), combined with § 1604’s general grant of
immunity to foreign sovereigns from the jurisdiction of U.S. courts,
necessarily leads to the conclusion that foreign sovereigns and their
instrumentalities are immune from criminal prosecution.

       As an initial matter, to the extent Halkbank’s challenge rests on
the idea that FSIA is the sole basis for the District Court’s subject
matter jurisdiction over this criminal prosecution, that premise is
incorrect. 42 It is true that we have held, in the civil context, that “FSIA
provides the sole basis for obtaining jurisdiction over a foreign state in
the courts of this country.” 43 But federal district courts have “original
jurisdiction, exclusive of the courts of the States, of all offenses against
the laws of the United States” pursuant to § 3231 of Title 18 of the U.S.
Code. 44 As one of our sister circuits recently observed, “[i]t is hard to
imagine a clearer textual grant of subject-matter jurisdiction”— “‘[a]ll’


       41   

(a) (emphasis added).
       42 In support of this proposition Halkbank relies on Amerada Hess, in which
the Supreme Court wrote that “the text and structure of FSIA demonstrate
Congress’ intention that the FSIA be the sole basis for obtaining jurisdiction over a
foreign state in our courts.” 

. But Amerada Hess was a civil case and
neither our Court nor the Supreme Court has ever extended this holding to a
criminal case.
       43  Barnet as Tr. of 2012 Saretta Barnet Revocable Tr. v. Ministry of Culture &
Sports of the Hellenic Republic, 

, 199 (2d Cir. 2020) (internal quotation
marks omitted).
       44   

 (emphasis added).




                                          17
means ‘all.’” 45 Indeed, § 3231 “contains no carve-out” that supports an
exemption for federal offenses committed by foreign sovereigns, and
“nothing          in   the   [FSIA’s]   text    expressly     displaces      [§] 3231’s
jurisdictional grant.” 46

       Although Halkbank argues that § 1604’s broad grant of
sovereign immunity cuts back on § 3231’s grant of criminal
jurisdiction, that logic is unavailing. Indeed, we agree with our sister
circuit that (in an analogy we now understand all too well in this time
of global pandemic) “granting a particular class of defendants
‘immunity’ from jurisdiction has no effect on the scope of the
underlying jurisdiction, any more than a vaccine conferring immunity
from a virus affects the biological properties of the virus itself.” 47

       We think that the District Court plainly has subject matter
jurisdiction over the federal criminal prosecution of Halkbank
pursuant to § 3231. However, we need not—and do not—decide
whether § 1604 of FSIA confers immunity on foreign sovereigns in the
criminal context. As we explain below, even assuming arguendo that
FSIA confers sovereign immunity in criminal cases, the offense




       45   In re Grand Jury Subpoena, 

 (D.C. Cir. 2019).
       46   

       47   

                                           18
conduct with which Halkbank is charged falls within FSIA’s
commercial activities exception to sovereign immunity. 48

     iv.        FSIA’s Commercial Activity Exception to Sovereign Immunity

       The Government submits that, even assuming that FSIA confers
immunity to foreign sovereigns in criminal cases, Halkbank’s charged
offense conduct would fall within FSIA’s exception to sovereign
immunity for commercial activity. We agree.

       Section 1605(a)(2) of FSIA, the statute’s 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 (1) “a commercial activity
carried on in the United States by the foreign state”; (2) “upon an act
performed in the United States in connection with a commercial
activity of the foreign state elsewhere”; or (3) “upon an act outside the
territory of the United States in connection with a commercial activity




          We also note that, although Halkbank takes the position that FSIA’s § 1604
           48

confers sovereign immunity in criminal cases, it also takes the position that FSIA’s
exceptions to sovereign immunity, which are set forth in § 1605, are not available in
criminal proceedings. Under this reasoning, a foreign sovereign could be liable
under FSIA’s commercial activity exception in the civil context, but immune from
criminal liability for the same commercial conduct. We are skeptical that Congress
intended for § 1604’s grant of immunity to sweep far more broadly in criminal cases
than in civil cases. Further, the text of § 1605 plainly states that FSIA’s exceptions to
foreign sovereign immunity apply “in any case.” 

(a) (emphasis
added). Just as “all” means “all,” so must “any” mean “any.”




                                           19
of the foreign state elsewhere and that act causes a direct effect in the
United States.” 49

       To fall within the commercial activity exception, Halkbank’s
activities need to qualify for at least one of the categories specified in
the three clauses of § 1605(a)(2).

       We begin this inquiry by identifying an “act of the foreign
sovereign [s]tate” that is “‘based upon’ the ‘particular conduct’ that
constitutes the ‘gravamen’ of the suit.” 50 Here, the Indictment alleges
that Halkbank “participated in the design of fraudulent transactions
intended to deceive U.S. regulators and foreign banks” in order to
launder approximately $1 billion in Iranian oil and gas proceeds
through the U.S. financial system. 51 The Indictment further alleges that
Halkbank lied to Treasury officials regarding the nature of these
transactions in an effort to hide the scheme and avoid U.S. sanctions.
This conduct plainly constitutes the “gravamen” of the charges against
Halkbank.




       49   

(a)(2).
       50Petersen Energía, 

 (quoting OBB Personenverkehr AG v. Sachs,

 (2015)); see also Barnet, 961 F.3d at 200 (“We first must identify [the]
predicate act that serves as the basis for plaintiff’s claims.”) (internal quotation
marks omitted).
       51   Indictment ¶¶ 1, 64.




                                          20
       We next consider whether the identified act took place inside or
outside the United States, and whether the act constitutes commercial
activity within the meaning of FSIA.

       FSIA defines “commercial activity” in a circular manner, as
meaning “either a regular course of commercial conduct or a particular
commercial transaction or act.” 52 But FSIA does go on to provide that
“[t]he commercial character of an activity shall be determined by
reference to the nature of the course of conduct or particular
transaction or act, rather than by reference to its purpose.” 53 In
applying this provision of FSIA, we have held that “purpose is the
reason why the foreign state engages in the activity and nature is the
outward form of the conduct that the foreign state performs or agrees
to perform.” 54 Put another way, “the issue is whether the particular
actions that the foreign state performs . . . are the type of actions by
which a private party engages in trade and traffic or commerce.” 55
Whether a foreign state acts in the manner of a private party to engage


       52   

(d).
       53   

       54Pablo Star Ltd. v. Welsh Government, 

 (2d Cir. 2020)
(emphasis added) (other emphases and internal quotation marks omitted).
       55 Republic of Argentina v. Weltover, Inc., 

 (1992) (emphasis in
original) (internal quotation marks omitted). We note that such commercial activity
has “been held to include criminal acts if those actions are ones in which private
parties could engage and if they are committed in the course of business or trade,
including illegal contracts to steal money, bribery, forgery, and mail, wire, and
securities fraud.” Restatement (Fourth), The Foreign Relations Law of the United
States § 454 rn. 3.




                                          21
in commercial activity is thus “a question of behavior, not
motivation.” 56

      Here, Halkbank’s alleged offense conduct qualifies as
commercial activity under all three categories set forth in § 1605(a)(2).

      As to the first two clauses of § 1605(a)(2), Halkbank’s activities
in the United States—that is, Halkbank’s communications with
Treasury officials, including communications made in meetings and in
conference calls, in furtherance of its efforts to evade U.S. sanctions—
qualify under both. Although Halkbank is majority-owned by the
Government of Turkey, such communications are plainly the type of
activity in which banks, including privately owned correspondent
banks, routinely engage. 57 Just as in Pablo Star, where we observed that
“[l]iterally anyone can do” 58 copyright infringement, so, too, can
literally any bank violate sanctions. Halkbank’s interactions with the
Treasury were therefore “commercial activity carried on in the United
States” or, in the alternative, “act[s] performed in the United States in
connection with a commercial activity . . . elsewhere”—specifically, its
banking activities in Turkey on behalf of the Government of Iran. 59

      As to the third clause of § 1605(a)(2), Halkbank’s activities
outside the United States—Halkbank’s participation in schemes to

      56   Nelson, 

.
      57   Cf. Weltover, 

.
      58   Pablo Star, 

.
      59   

(a)(2).




                                            22
launder        Iranian     oil    and   gas   proceeds      through      non-U.S.
transactions 60—also qualify as commercial activities for the same
reasons. In addition, such activities were Halkbank’s “commercial
activit[ies] . . . elsewhere” that nevertheless caused a “direct effect” in
the United States by causing victim-U.S. financial institutions to take
part in laundering over $1 billion through the U.S. financial system in
violation of U.S. law. 61

       With respect to the third clause, Halkbank argues that its
activities outside the United States were “sovereign, not commercial”
because the Government of Turkey has designated Halkbank as its
“sole repository of proceeds from the sale of Iranian oil to Turkey’s
national oil company and gas company,” consistent with applicable
U.S. laws. 62 But we rejected a similar argument in Pablo Star. In that
case, we were faced with a copyright dispute over the Welsh
Government’s use of the likeness of the poet Dylan Thomas in its
promotional materials. The Welsh Government urged us to
characterize its activities as promoting Welsh culture and tourism


       60These transactions included purchases of gold using Iranian oil and gas
proceeds as well as transactions fraudulently disguised as purchases of food and
medicine, which would have fallen under a “humanitarian exception” to the U.S.
sanctions regime. Indictment ¶ 4.
       61   

(a)(2).
       62 Halkbank Br. at 40-41 (internal quotation marks omitted); see also supra
note 2, at 5 (explaining that the ITRA amended the 2012 NDAA to require the
proceeds of Iranian oil sales between Iran and another country, like Turkey, to be
deposited in a specified account in that country to only be used for trade with that
country).




                                         23
pursuant to a statutory mandate—activity that it asserted was
distinctly “sovereign” in nature that would qualify for immunity
under FSIA. 63 We declined to do so, observing that the Welsh
government’s broad characterization of its activities “conflate[s] the
act with its purpose.” 64

       Here, Halkbank’s broad characterization of its activities as
sovereign in nature also “conflates the act with its purpose.” The
gravamen of the Indictment is not that Halkbank is the Turkish
Government’s repository for Iranian oil and natural gas proceeds in
Turkey, i.e., the purpose for which it held these funds. Rather, it is
Halkbank’s participation in money laundering and other fraudulent
schemes designed to evade U.S. sanctions that is the “core action taken
by [Halkbank] outside the United States.” 65 And because those core
acts constitute “an activity that could be, and in fact regularly is,
performed by private-sector businesses,” those acts are commercial,
not sovereign, in nature. 66

       Halkbank also argues that its activities elsewhere did not have
a “direct effect” in the United States. That is plainly not the case. We
find a direct effect if “an effect simply followed as an immediate


       63   Pablo Star, 

.
       64Id. This reflects a fundamental issue with the nature-purpose distinction,
which is that its “application may sometimes depend on the level of generality at
which the conduct is viewed.” 

.
       65   Barnet, 

 (internal quotation marks omitted).
       66   Pablo Star, 

.




                                           24
consequence of the defendant’s activity.” 67 That effect “need not be
substantial or foreseeable.” 68 Again, Halkbank’s activities outside the
United States led to approximately $1 billion being laundered through
the U.S. financial system.

       In sum, even assuming arguendo that FSIA confers immunity on
the instrumentalities of foreign sovereigns in the criminal context,
Halkbank’s charged offense conduct would fall within FSIA’s
commercial activity exception to sovereign immunity.

C. Common Law Immunity

       Halkbank argues that even if FSIA does not confer foreign
sovereign immunity in criminal cases, it is nevertheless immune from
criminal prosecution under common law. We do not agree.

       Assuming arguendo that FSIA does confer sovereign immunity
in criminal cases—a holding we do not reach today—its enactment
displaced any pre-existing common-law practice. 69 Further, even
assuming that FSIA did not supersede the pertinent common law, any
foreign sovereign immunity at common law also had an exception for




       67   Barnet, 

 (internal quotation marks and alteration omitted).
       68   Peterson Energía, 

.
       69  See, e.g., Samantar, 

; Amerada Hess, 

(recognizing the “general rule that the [FSIA] governs the immunity of foreign
states in federal court” (internal quotation marks omitted)).




                                            25
a foreign state’s commercial activity, 70 just like FSIA’s commercial
activity exception.

       Finally, in any event, at common law, sovereign immunity
determinations were the prerogative of the Executive Branch; thus, the
decision to bring criminal charges would have necessarily manifested
the Executive Branch’s view that no sovereign immunity existed. 71


                                III.    CONCLUSION

       To summarize, we hold as follows:

       (1) We have jurisdiction over the instant appeal pursuant to the
             collateral order doctrine;

       (2) Even assuming FSIA applies in criminal cases—an issue that
             we need not, and do not, decide today—the commercial
             activity exception to FSIA would nevertheless apply to
             Halkbank’s charged offense conduct; thus, the District Court
             did not err in denying Halkbank’s motion to dismiss the
             Indictment; and


       70  See, e.g., Verlinden, 

. Under the restrictive view of
immunity under customary international law, “states are generally required to
afford immunity from jurisdiction to adjudicate to foreign states in respect to claims
arising out of government activities . . . but not in respect to claims arising out of
activities of a kind carried on by private persons . . . including commercial
activities.” Restatement (Fourth), The Foreign Relations Law of the United States
§ 454 cmt. h.
       71   See Verlinden, 

.




                                              26
      (3) Halkbank, an instrumentality of a foreign sovereign, is not
         entitled to immunity from criminal prosecution at common
         law.

      For the foregoing reasons, we DENY the Government’s motion
to dismiss this appeal, and we AFFIRM the District Court’s Decision
and Order dated October 1, 2020.




                                   27