Senate Majority Leader Mitch McConnell and his Republican allies in Congress do not much like plaintiff’s attorneys. McConnell infelicitously warned of a “lawsuit pandemic” on the day when deaths from the actual pandemic passed 56,000. He is now holding up further congressional action that would support workers and state governments to limit business liability for transmitting the coronavirus to employees or customers.

But Republican party leaders are making an exception for coronavirus lawsuits against the Chinese government. The attorney general of Missouri filed such a lawsuit in federal court, and several class-action suits by private parties have followed, including one brought by a former business executive of the Trump Organization. None of them can succeed, however, because China is protected by sovereign immunity, the doctrine that foreign states generally cannot be sued in U.S. courts.

Jarrett Blanc
Jarrett Blanc is a senior fellow in the Geoeconomics and Strategy Program at the Carnegie Endowment for International Peace.
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Nevertheless, a parade of prominent legislators are promising to lift China’s sovereign immunity, alongside other proposals to appear tough on Beijing. It’s the appearances that matter most, since the proposals are primarily distractions from the absence of serious ideas about the U.S.-China relationship. For example, President Donald Trump continues to threaten to issue new tariffs, still laboring under the false impression that they are paid by Chinese exporters and not by American consumers already hard-pressed by the recession. Senator Lindsey Graham and White House officials have called for the United States to stop payments on debt owed to China, despite the global economic tumult that forcing the U.S. government to default on its debts would trigger.

Like these ideas, withdrawing China’s sovereign immunity to lawsuits would be more damaging to the United States than to China, which will never pay a cent in reparations. Yet meritless lawsuits against foreign countries have potentially far-reaching national security consequences. Their primary foreign policy impact is less to right wrongs or change target country policies than to hamstring the president’s ability to reach negotiated, diplomatic outcomes by constraining the executive’s choices in favor of confrontation. These lawsuits are emotive outbursts in a realm where success is produced by levelheaded flexibility, compromise, and trade-offs.

Unpromising Precedents

Since 1996, U.S. citizens have been allowed to sue countries designated as state sponsors of terrorism in federal court. In most cases, those countries dispute the courts’ legitimate jurisdiction and ignore the lawsuits. As a result, the plaintiffs often win default judgments that can quickly mount into tens of billions of dollars.

Plaintiffs have generally been unable to recover these judgments due to the defendants’ lack of assets in the United States, but the judgments still have a profound effect. They become de facto financial sanctions against the defendant countries, which are left unable to access the U.S. financial system in even incidental ways because of the risk that their funds would be identified by plaintiffs’ attorneys and seized.

Denying access to the U.S. financial system is one of the most important aspects of U.S. sanctions. When lawsuits were limited to state sponsors of terrorism—already subject to other financial sanctions—the effects were largely redundant. But when states not designated as terrorist sponsors are drawn into similar lawsuits, control over one of the most powerful coercive economic tools in the U.S. arsenal shifts from the executive toward the judicial branch.

In several cases, states designated as sponsors of terrorism have altered their relationship with the United States and escaped burdensome sanctions. Under former dictator Muammar Qaddafi, Libya agreed to pay billions for its unquestionable responsibility for terrorist attacks in the 1980s and saw its sovereign immunity restored. Qaddafi was unconstrained by either fiscal or political limits, so this precedent is not broadly applicable, but it might work for North Korea if Washington and Pyongyang ever reach a deal on more central disagreements. Meanwhile, a new government in Sudan is trying to reach settlements as well, but cannot afford to pay even “pennies on the dollar” of the judgments against the previous regime. And Cuba was largely able to avoid payment after being removed from the list of state sponsors of terrorism as a result of technicalities. These are all relatively straightforward instances of countries desperate to negotiate new relationships with the United States.

After the United States overthrew Saddam Hussein in Iraq, the new government of Washington’s creation struggled under terrorism judgments against Hussein until then president George W. Bush pocket vetoed the 2008 National Defense Authorization Act to restore Baghdad’s sovereign immunity. But that scenario, dependent on U.S.-led regime change, presents a very limited model for the resolution of judgments against foreign governments.

None of these examples provide clear guidance on dealing with Iran, which faces more than $55 billion in U.S. court judgments, including $16 billion for false claims of complicity in the 9/11 attacks. No Iranian government will agree to payments on most of these lawsuits. A president seeking to negotiate incremental improvements in the relationship with Iran—for example, restrictions on its nuclear or ballistic missile programs—might wish to offer limited access to the U.S. financial system or other exceptions. But latitude to negotiate such a compromise will be severely limited by outstanding court judgments that the president does not have authority to resolve.

A new wave of complicated cases may soon emerge as a result of the Justice Against Sponsors of Terrorism Act (JASTA), which allows terrorism lawsuits against governments that are not designated as state sponsors and provides no waiver authority to the president. The only law passed over former president Barack Obama’s veto, JASTA is targeted mainly at Saudi Arabia’s alleged involvement in the 9/11 attacks. Given the Saudis’ security dependence on the United States, they will likely seek to limit any exposure to liability and to avoid any finding of guilt, but their priority will be to avoid too deep a rift in the bilateral relationship.

The Case of China

So what does this mean for current tensions with China? Past experience suggests lawsuits—potentially claiming hundreds of billions or trillions of dollars in damages—are not likely to play out well. China will not accept the jurisdiction of U.S. courts to apportion blame for the harms of the coronavirus pandemic. The result will almost certainly be enormous default judgments, probably countered by similar claims against the United States in Chinese courts. Unlike the small, isolated states targeted in the past, China has the means to push back on U.S. interests and assets.

This will not lead to payouts for any U.S. plaintiffs, but it could lead to the messiest possible version of economic decoupling as the United States and China avoid exposure to reciprocal asset seizures. U.S. presidents would be disempowered to manage this process to advantage national interests. Instead, this powerful form of financial sanction would rest under the control of judges who are required to make their decisions on the merits of specific cases and are not institutionally situated or even permitted to consider broader national interests. And even this does not begin to address the fact that the United States has other priorities with China, including areas of potential cooperation like climate change and nuclear nonproliferation and areas of competition like regional security. Hundreds of billions or trillions in judgments the president cannot negotiate away would make sensible diplomacy on these interests impossible. (Almost all foreign policy legislation provides waivers to allow the president to act in the national interest, but the China proposals, like JASTA, do not.)

Obama’s JASTA veto message spoke clearly to this danger, finding it would “reduce the effectiveness of our response to indications that a foreign government has taken steps outside our borders to provide support for terrorism, by taking such matters out of the hands of national security and foreign policy professionals and placing them in the hands of private litigants and courts.” Coronavirus lawsuits against China would do the same but across almost all areas of U.S. national security interests, not just terrorism.

After passing JASTA, McConnell and then House speaker Paul Ryan woke up to this danger. As McConnell acknowledged: “No one had really focused on the potential downside in terms of our international relationships. And I think it was just a ball dropped.” Repeating the same mistake makes no more sense now, unless these are not mistakes but intentional policy aims.

At best, passing such critical national security powers to the courts can only be seen as an abdication of the powers of Congress, in line with its decades-long ceding of war authorities to the president. If Congress believes that payment for coronavirus losses is the overriding goal of U.S. diplomacy with China, it should pass explicit financial sanctions, rather than outsource them to private lawsuits. But Congress will not do so, of course, because it would be a manifestly ridiculous failure of prioritization and judgment and a rejection of broad public opposition to further hostile entanglements abroad.

Instead, lifting sovereign immunity amounts to demagogic subterfuge. It sounds like a way to end impunity for bad acts. The plaintiffs in these lawsuits are sympathetic, whether they have lost loved ones to terrorism, been tortured by brutal regimes, or suffered from a pandemic that Beijing no doubt made worse. But sovereign immunity is ultimately less about the other country’s exemption from prosecution than about U.S. democratic sovereignty and the ability of the elected president to carry out foreign policy.

Boxed-In Diplomacy

Lawsuits against sovereign powers correspond roughly to the national security theory espoused by General Jack Ripper in the movie Dr. Strangelove: “I suppose it never occurred to you that while we’re chatting here so enjoyably, a decision is being made by the president and the joint chiefs in the war room at the Pentagon. And when they realize there is no possibility of recalling the wing, there will be only one course of action open: total commitment.”

And this, finally, explains the apparent paradox of Republicans sidelining their skepticism about plaintiff’s attorneys. Allowing lawsuits against China is of a piece with another long-term, ideologically driven effort by hawks in Washington to free the president to use the military or other coercive tools without oversight while making diplomatic tools prohibitively difficult to access. Because there is no longer a possibility of prioritized negotiations, the president has no choice but crisis, enmity, and conflict.

The self-destructive outcomes of these proposals to punish China—worsening a recession through tariffs, risking a depression with possible default, or paralyzing diplomacy using the courts—lay bare their obvious risks. The world is depending on scientific cooperation, and the United States is relying on medical equipment supply chains that run through China. Even effectively pushing back on China would require careful alliance management, but potential allies are less likely to cooperate with Washington if it undermines principles like sovereign immunity that they deem important.

China is too powerful a country to be judged and punished in U.S. courts. When the world begins to emerge from the current crisis, the United States needs to have a serious discussion about its future political and economic relations with China. But this is not the way to proceed. Grandstanding about reparations is a distraction from the urgent debate a healthy democracy should have, especially in a presidential election year. Whoever is president in January 2021 will need to use diplomacy to pursue U.S. national interests. Tying their hands would make that critical job even harder.