Supranational Diversity: Why Federal Courts Should Have Diversity Jurisdiction Over Cases Involving Supranational Organizations Like the European Union

The federal diversity statute grants alienage jurisdictionto "foreign citizens" and "foreign statutes," allowing them to bring state-law claims against U.S. citizens in federal'court. When the European Community (EC), anintergovernmental organization of European states, suedan American corporation for state-law violations, for thefirst time a federal court had to determine whether the ECqualified as a foreign state. The EC argued that it wasessentially a foreign state for the purposes of alienagejurisdiction. Relying on the definition of foreign state inthe Foreign Sovereign Immunities Act of 1976 (FSIA),which the diversity statute references, the courtdetermined that the EC was a supranational organizationthat was independent of its member states, yet it could notproperly be considered a foreign state.This Note argues that the definition of foreign state foralienage jurisdiction should be decoupled from the FSIA'sdefinition because the FSIA's definition does not accountfor supranational organizations like the EC.

Thedefinition of foreign state in the diversity statute shouldprovide a framework for federal courts to consider state-law claims of supranational organizations. This changewould not only effectuate the policy justifications behindalienage jurisdiction, but it would also retain thedefinition of foreign state that Congress created fordetermining foreign sovereign immunity.