Can an American Hold the United Arab Emirates Responsible for a Smear Campaign?

Foreign governments can generally spy on, steal from, or even kill Americans with impunity, at least in the eyes of U.S. courts. The Supreme Court recognized the long-standing common-law principle of sovereign immunity as early as 1812, when it ruled that Napoleon Bonaparte could keep an American schooner his navy had captured at sea and

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Foreign governments can generally spy on, steal from, or even kill Americans with impunity, at least in the eyes of U.S. courts. The Supreme Court recognized the long-standing common-law principle of sovereign immunity as early as 1812, when it ruled that Napoleon Bonaparte could keep an American schooner his navy had captured at sea and turned into a warship. (When damage forced it to dock in Philadelphia, the schooner’s former owners hurried to court to try to seize back their ship.) The idea was to avoid judicial interference in foreign relations while also shielding the U.S. from costly foreign court battles. Now codified as the Foreign Sovereign Immunities Act, passed in 1976, the doctrine has recently thwarted legal claims against Ethiopia for hacking and surveilling a dissident living in Silver Spring, Maryland; against Qatar for hacking and humiliating the Republican fund-raiser Elliott Broidy; against China for giving the world COVID-19; and against Saudi Arabia for the killing of Jamal Khashoggi, among many other examples.

The same hurdle now stands before Hazim Nada, an American who fell victim to a shadowy campaign by the United Arab Emirates to destroy his profitable, Swiss-based oil-trading company—a story first told in The New Yorker last spring. About six years ago, Nada was puzzled to see a blizzard of bogus articles on blogs and in publications that linked him to terrorism or political Islam. His father, Youssef Nada, had once been a prominent figure in the Egyptian Muslim Brotherhood, but Hazim, who had visited Egypt only once, disdained politics and mostly rolled his eyes at his father’s Islamist zeal. As the scurrilous allegations multiplied, reputation-conscious banks cut off his company, Lord Energy. It quickly collapsed into bankruptcy, and only after its demise did Hazim learn the true story. An anonymous group who said that they were hackers showed him thousands of pages of e-mails and other files stolen from the computer systems of a Swiss private investigator, Mario Brero of Alp Services. The documents revealed that the U.A.E. had paid Alp millions of dollars for a successful multiyear disinformation campaign to put Nada out of business.

Nada, the documents showed, was the first in a long list of supposed enemies across Europe that the Emirates had paid Alp to go after. Many had real or imagined links to the Muslim Brotherhood—which the Emirati rulers consider a threat to stability—or to Qatar, a regional rival. In notes for Brero’s first meeting with representatives of the U.A.E., in the summer of 2src17, he wrote that “we would aim to discredit our targets by discreetly and massively diffusing the embarrassing and compromising information: in the eyes of the media/public/officials, they would appear as perverts, corrupts or extremists.” He boasted that “the power of ‘dark PR’ should not be underestimated: many experts argue that Hillary Clinton lost the Presidential elections due to ‘fake news’ relayed on social media and non-traditional media.”

Two years later, as Nada’s firm careened toward bankruptcy, the Emiratis were elated. “Excellent job,” Brero’s Emirati handler told him, in a phone call that the detective recorded and the hackers later obtained. “Everyone appreciates what you have done.” (Representatives of the U.A.E. and Alp Services did not respond to detailed questions last spring, and neither responded on Wednesday morning. Since the New Yorker article, a consortium of other news organizations, operating as the European Investigative Collaborations, has followed up with many other articles, adding details about Brero’s Emirati-funded campaigns against numerous other targets.)

On January 24, 2src24, Nada, who is now forty-one, filed a lawsuit against the U.A.E. in the U.S. district court in Washington, D.C. He is attempting to circumvent the sovereign-immunity defense by arguing that, in their campaign against him, the U.A.E.’s rulers were acting more like a private business than like a normal government. The Foreign Sovereign Immunities Act specifically carved out an exception for commercial activity by a foreign state that either occurs in the U.S. or has a direct effect there. Thus, when Missouri’s attorney general sued China over its role in the COVID-19 pandemic, sovereign immunity did not block all the suit’s claims. The U.S. Court of Appeals for the Eighth Circuit ruled earlier this month that one count could go forward: the allegation that China had hoarded personal protective equipment, because that is a commercial activity with effects on American drug stores and hospitals.

Legal scholars said that Nada’s suit raises questions about the definitions of commercial activity and impact in the U.S. In the stolen Alp documents, the primary motive of the Emirati rulers appears to be a misguided paranoia about Nada’s potential Brotherhood ties—regardless of any financial interest. And Alp Services carried out much of its campaign from Europe: Brero is based in Geneva; Nada lives primarily in Como, Italy; and Lord Energy was headquartered in nearby Lugano, Switzerland.

Yet Nada’s case is novel. He is represented by the law firm Clare Locke, known for representing Dominion Voting Systems in the recent defamation suit against Fox News that settled for a payment of more than seven hundred and eighty-seven million dollars. In their complaint, the lawyers note that Nada is an American citizen, born in Silver Spring, Maryland, and educated at Rutgers. In addition to Como, he keeps a home in Houston, where Lord Energy had an American subsidiary.

The complaint notes that the rulers of the U.A.E. conducted their campaign by hiring a commercial firm specializing in corporate intelligence. When Nada first learned that a Swiss private detective was inquiring about Lord Energy, he assumed that the client was a rival oil trader, because such firms and such tactics are common in that business.

The lawsuit argues that—in addition to their paranoia about political Islam—the Emiratis wanted to crush Lord Energy for commercial reasons. The U.A.E. draws its vast wealth from oil exports, and Nada’s lawsuit alleges that Lord Energy had slashed the profits of the Emirati state oil company by introducing competition into the markets for light, sweet crude. “The UAE and its officials instructed Alp to target Hazim and his companies because they viewed Hazim and Lord Energy as serious competitive threats,” the lawsuit asserts. And by driving Lord Energy out of business, the complaint claims, the Emirati campaign against Nada raised prices, including in American markets.

The U.A.E. “entered into valid, private, commercial contracts to hire a private investigative firm—Alp—to conduct a ‘dark’ public relations campaign that spanned years against the UAE’s commercial competitors Hazim and Lord Energy,” the complaint argues, and that its rulers directed a conspiracy “to engage in activities typically carried out by private commercial actors.” Among them were “writing articles published by private media outlets and on internet blogs, the majority of which were located in the U.S. . . . alerting private financial risk watchdogs of targets’ supposed ties to terrorism; emailing private financial institutions and journalists directly to alert them to targets’ alleged ties to terrorism; and writing and publishing academic papers that lent credibility to the enterprise’s fraudulent claims.” All this, the complaint asserts, “directly affected U.S. citizens and businesses” and also “certain U.S. markets for physical crude oil and financial instruments pegged to crude oil.” Alleging a conspiracy to commit fraud, to spread false and derogatory information about Lord Energy, and to manipulate markets, the suit seeks more than $2.7 billion in damages and compensation.

Chimène Keitner, a law professor at the University of California, Davis, and a leading authority on sovereign immunity, told me that Nada’s suit faces long odds. So far, she said, courts have only granted exceptions to sovereign immunity for commercial activity with a clearer connection to the U.S. than oil markets and online publications. “You can sue the private investigator, but I don’t see how you can sue the country under the law as it exists today.”

But David Kaye, a law professor at University of California, Irvine, and the former United Nations Special Rapporteur for freedom of opinion and expression, called the argument “creative.” “Sovereign immunity can be a serious bar to going after bad state behavior,” he said. “If this works, it dents the armor a little bit, and that could be very valuable in the broader context of claims against states doing repressive things beyond their borders and getting away with it.” ♦

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