The Afghan Fund: the Limits of Sovereign Immunity & Recognition Law, lawfaremedia.org

Since the Taliban took control of Afghanistan in 2021, the United States has frozen approximately $7 billion worth of assets belonging to Afghanistan’s central bank, Da Afghanistan Bank (DAB). In September 2022, the United States transferred half of these assets to a new “Afghan Fund”—a Swiss-based organization designed to oversee targeted injections into the Afghan economy. The other half of assets remains frozen and potentially subject to execution by U.S. plaintiffs with default judgments against Afghanistan. Most legal commentary on the issue so far has focused on this second half of assets, the execution of which by U.S. courts would almost certainly violate sovereign immunity. The limited commentary on the Afghan Fund has suggested that it complies with both sovereign immunity and recognition law. […]

Sovereign immunity is the legal doctrine that protects countries and their property from interference abroad. The concept flows from the principle of sovereign equality of states enshrined in Article 2(1) of the UN Charter. However, sovereign immunity is rooted primarily in customary international law. The closest treaty on point is the UN Convention on Jurisdictional Immunities of States and Their Property (UNCSI), which is not in force but is understood to codify customary international law. The UNCSI specifies that a state “enjoys immunity, in respect of itself and its property, from the jurisdiction of the courtsof another state” (emphasis added). In Jurisdictional Immunities of the State (Germany v. Italy), the International Court of Justice (ICJ) interpreted the customary law of sovereign immunity “as the right of a State not to be the subject of judicial proceedings in the courts of another State.”[…]

According to the Afghan Fund’s statute, the organization seeks to “protect, preserve, and disburse assets for the benefit of the Afghan people.” In other words, the organization is not simply stewarding DAB reserves. It plans to make irreversible spending decisions on behalf of the Afghan public. Such disbursements could involve servicing Afghanistan’s debts to international financial institutions and paying for critical imports. The Taliban-led Afghan government is excluded from participating in these spending decisions. Indeed, one goal of the fund is to keep DAB reserves “out of the hands of the Taliban.” […]