Diplomats May Be Made To Honor Parking Tickets
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WASHINGTON — The U.S. Supreme Court may soon give New York City a legal basis for forcing foreign countries to pay parking fines owed by diplomats.
Parking tickets are not at issue in a suit the city brought against two foreign countries, whose appeal the federal high court heard yesterday. The case is over unpaid taxes the city says Mongolia and India owe on diplomatic properties. But several justices seemed to accept the premise that a ruling for New York could give the city a way to hold countries responsible for the parking tickets their diplomats regularly receive and ignore while on detail to the United Nations.
Such a ruling would give not only New York but any American city that is home to a foreign consulate office a greater ability to sidestep the immunity that foreign countries enjoy from most lawsuits.
This prospect worries the solicitor general’s office. A government attorney, Sri Srinivasan, told the court yesterday that New York’s arguments could “eviscerate” the Foreign Sovereign Immunities Act. The Justice Department has warned that allowing cities to pursue tax cases against foreign countries could prompt retribution against American interests overseas, according to a brief.
For more than a decade, the city has tried to collect property taxes on diplomatic buildings that it says lost tax-exempt status when they either were rented out or used to house support staff such as drivers and guards. India, with a permanent mission to the United Nations on 43rd Street, and Mongolia, which owns a building on 77th Street, together owe about $18 million in back taxes, the city says.
American courts only have jurisdiction to hear suits against foreign countries in limited instances. One involves suits over “rights in immovable property.” The central question of the case is whether that instance only allows suits, as Mongolia and India argue, in which actual ownership of the property is disputed — or, as the city argues, whether the liens the city obtained in response to the unpaid property taxes give American courts jurisdiction.
Mongolia and India claim the city’s liens on their property are an end run around their immunity. If the Supreme Court accepts the city’s legal maneuvering, the lawyer for the two countries, John Howley of Kaye Scholer said, the city would gain leverage against diplomats in other ways, too.
“The city of New York tomorrow could pass a law that said if you don’t pay your parking tickets, that is automatically converted into a lien on the property,” Mr. Howley said. “Then their position is they could sue us for parking tickets.”
Justice Ginsburg and Justice Souter each asked the city’s corporation counsel, Michael Cardozo, whether he believed the city has that authority.
“Well, let’s take the parking ticket that your colleague raised,” Justice Ginsburg said. Could the city, she asked, transform that parking ticket into a lien?
Mr. Cardozo said the city could.
While hypothetical questions often arise during arguments before appellate courts, the question took on added significance given the city’s long-time efforts, including lobbying Congress, to force or shame diplomats into obeying parking regulations.
Only Justice Breyer expressed some worry about the practical results that could follow from giving the city greater leeway to take foreign countries to court.
“The problem that actually is bothering me with your side of the case,” Justice Breyer told Mr. Cardozo, is that it makes foreign governments vulnerable to a range of liabilities, including routine slip and fall cases, as long as a plaintiff first secures a lien on the diplomatic property.
“It seems to me anything at all can be reduced to a lien,” Justice Breyer said. “Once I go down your road, where is the stopping place?”
After oral arguments, Mr. Cardozo declined in an interview to say whether City Hall has made an effort to pass a law to allow the city to go after diplomatic properties in response to unpaid parking tickets.
But one lawyer who is not involved in the case said a win for the city would not put foreign diplomats on notice that unpaid parking tickets could lead to a suit against their nation’s diplomatic property.
“When you speak of parking tickets, you don’t have a foreign sovereign acting,” a former liaison to the United Nations under Mayor Koch and a partner at the law firm Bryan Cave, Andrew Odell, said.
“You have an individual acting,” he said, adding that the Vienna Convention would protect individual diplomats from paying parking tickets.