Explain how the sovereign immunity doctrine is a risk for companies engaged in international business

Question

What will be an ideal response?

Answer 1

A risk for companies engaged in international business is the sovereign immunity doctrine, which allows a government expropriating foreign-owned private property to claim that it is immune from the jurisdiction of courts in the owner's country because it is a government rather than a private-sector entity. In these cases, the company whose property was expropriated often receives nothing because it cannot press its claims in its own country's courts, and courts in the host country are seldom amenable to such claims.
The sovereign immunity doctrine has been a highly controversial issue between the United States and certain foreign governments of developing nations. To give some protection to foreign businesses without impinging on the legitimate rights of other governments, the U.S. Congress in 1976 enacted the Foreign Sovereign Immunities Act (FSIA), which shields foreign governments from U.S. judicial review of their public, but not their private, acts. The FSIA grants foreign nations immunity from judicial review by U.S. courts unless they meet one of the FSIA's private exceptions. One such exception is the foreign government's involvement in commercial activity.