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Israel: Court Recognizes U.S. Foreign State Immunity in Employment Suit

(Feb. 2, 2016) On January 8, 2016, Israel’s National Labor Court accepted an appeal by the United States of a decision of the Jerusalem regional labor court. The regional court had rejected the U.S. claim of foreign sovereign immunity in a suit filed against the U.S. by a former employee (the respondent) of its consulate in Jerusalem. (Labor Appeal 1127-10-14 United States of America v. Andria Bachbat (U.S. v. Bachbat) (Jan. 8, 2016), Nevo Legal Database (by subscription) (in Hebrew) (National Labor Court, decision by Judge Sigal Davidov-Motola with the consent of public representatives of employees and employers).)

Facts

According to the appellant’s statement, which the respondent did not contest, the respondent was employed as the head of the department of International Narcotics and Law Enforcement Affairs (INL) in the American consulate in Jerusalem. As the most senior local employee in the department, the respondent was in charge of implementing projects with sensitive political and security aspects. Among other duties, he was responsible for handling projects with the Palestinian security forces, coordinating and monitoring the use of expensive equipment, and advising the Palestinian Authority on security and political matters. The respondent’s work also involved coordination with both Palestinian and Israeli government officials, and he had wide access to sensitive information. The respondent did not contest that his job was unique and that it had involved the exercise of “governmental authority.” (Id. ¶¶ 1-3.)

In March 2012, the consulate’s Regional Security Office (RSO) was informed that the respondent had been a member of a terrorist organization while he was a student, a fact he had not previously disclosed and had even contested in an RSO hearing conducted with him in April 2013. The RSO therefore decided to cancel the respondent’s security clearance and recommended his dismissal for constituting a security threat to the appellant and to the consulate. The respondent was fired shortly thereafter and received severance pay and additional social benefits. (Id. ¶ 4.)

Claims 

The respondent sued for late payment of severance pay as well as for additional compensation deriving from what he alleged was lack of good faith in firing him. He also sued for compensation for harm to his reputation based on “rumors.” (Id. ¶ 5.) According to the appellant, however, an Israeli local court did not have jurisdiction to impose punitive damages against a foreign state. Additionally, the respondent’s claim for harm to his reputation by the dismissal, the appellant argued, should have been quashed as the dismissal was a sovereign act deriving from security and professional considerations. (Id. ¶ 6.)

International Law on Sovereign Immunity 

Judge Davidov-Motola recognized that there is wide international agreement that sovereign immunity is not absolute. As such, it applies only to a foreign state’s actions undertaken as part of its governing role and does not apply to foreign states’ actions in the private or commercial sphere. (Id. ¶ 24.) However, in the judge’s view, determining when a state action should be considered “governmental” and when it should be considered private is complicated. (Id. ¶ 25.)

Israel’s Foreign States Immunity Law and the Labor Agreements Exception 

According to Israel’s Foreign States Immunity Law, 5769-2008 (the Law), a foreign state generally enjoys immunity from adjudication by Israeli courts in all cases except in criminal matters (§ 2) and commercially based law suits (§ 3). (Foreign States Immunity Law, 5769-2008 (SEFER HAHUKIM [BOOK OF LAWS] 5769 No. 2189, p. 76; U.S. v. Bachbat, ¶ 27.)

In regard to labor contracts, the Law specifically provides that a foreign state does not enjoy immunity in a suit brought by an employee or a job applicant; such cases are within the exclusive jurisdiction of a regional labor court. A foreign state similarly does not enjoy immunity in a suit over employment that was or was about to have been conducted fully or partially in Israel. It will also not enjoy immunity in a suit involving an employee or a job applicant who was an Israeli citizen or resident of Israel or of Judea and Samaria (the West Bank) at the time when the cause of action arose. (Foreign States Immunity Law, § 4(a); U.S. v. Bachbat, ¶ 28-29; for discussion of Israeli court decisions, the “labor agreement” exception under international law, and legislative history of the Israeli labor agreement’s exception under § 4, see U.S. v. Bachbat, ¶¶ 29-35.)

Security Exception and Exception for Employees Exercising Governmental Authority  

According to Davidov-Motola, it had not been proven that there existed an across-the-board rule that would prevent all employees who exercised governmental authority from suing. Although several foreign courts’ rulings have recognized sovereign immunity in employment suits involving security concerns, the judge opined, this has not been proven as an independent exception under customary international law. Concern that a hearing on the dismissal of an employee would harm the security interests of a foreign state does not automatically create sovereign immunity, she stated; rather, in determining sovereign immunity, such concerns, in addition to others, may be taken into consideration. (U.S. v. Bachbat, ¶¶ 36-37.)

Harm to Reputation 

Davidov-Motola rejected the respondent’s suit for damages for harm to his reputation. Under section 5 of the Law, she held, a foreign state does not enjoy immunity in a suit for a tort causing bodily harm or damage to property. This rule does not apply to lawsuits for harm to a person’s reputation or for economic damages, the judge stated, adding that section 5 of the Law reflected both the legislature’s clear intention as well as rules of international law on foreign sovereign immunity.  (Id. ¶¶ 45-46.)

Conclusion

The respondent did not contest that as a senior official at the consulate he held a sensitive job that required special trust and the receipt of classified information. During his employment he dealt with issues of foreign affairs and security and exercised governmental powers that are essential to the essence of the sovereign activity of the appellant. He also did not contest that the reason for cancellation of his security clearance, which resulted in his dismissal, involved the appellant’s considerations of national security in accordance with the determination of the security department of the consulate. Under these circumstances, the appellant enjoyed immunity in accordance with section 4 of the Law, which adopted the rules of customary international law on sovereign immunity in connection with labor contracts. The Court determined that the appellant enjoyed immunity both from the claim for unlawful dismissal as well as from the claim of harm caused to the respondent’s reputation as a result of the dismissal. (Id. ¶¶ 47-48.)