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

The federal diversity statute grants alienage jurisdiction to "foreign citizens" and "foreign statutes," allowing them to bring state-law claims against U.S. citizens in federal 'court. When the European Community (EC), an intergovernmental organization of European states, sued an American corporation for state-law violations, for the first time a federal court had to determine whether the EC qualified as a foreign state. The EC argued that it was essentially a foreign state for the purposes of alienage jurisdiction. Relying on the definition of foreign state in the Foreign Sovereign Immunities Act of 1976 (FSIA), which the diversity statute references, the court determined that the EC was a supranational organization that was independent of its member states, yet it could not properly be considered a foreign state. This Note argues that the definition of foreign state for alienage jurisdiction should be decoupled from the FSIA's definition because the FSIA's definition does not account for supranational organizations like the EC. The definition of foreign state in the diversity statute should provide a framework for federal courts to consider state- law claims of supranational organizations. This change would not only effectuate the policy justifications behind alienage jurisdiction, but it would also retain the definition of foreign state that Congress created for determining foreign sovereign immunity.