Many foreign states are active players in global commerce. When these states establish or control a global enterprise, those entities often seek special treatment available under the Foreign Sovereign Immunities Act. Courts only allow such special treatment to enterprises that are considered an “organ of a foreign state,” a murky term undefined in the statute and undertheorized in the literature. In this Article, I argue that the analysis of when a particular enterprise should be considered an “organ” must focus on whether the denial of sovereign status to the enterprise has the potential for interference with the United States’ diplomatic relationship with the relevant foreign state.

This issue arose in a recent case in which the Supreme Court granted certiorari in 2007 on whether a Canadian power company was an “organ,” but has remained unresolved for the short term since the Court dismissed the case on jurisdictional grounds. Its importance will only increase, however, as a result of the increasingly tight web of globalization and the concurrent explosion in the number and variety of entities with significant ties to foreign sovereigns, such as Public/Private Partnerships and Sovereign wealth funds, will only increase litigation of this issue.

To measure the potential for interference with the conduct of foreign relations, courts must look at the extent to which the sovereign would be justifiably affronted if the entity were not treated as its organ. In creating a workable standard by which to measure this risk, I borrow heavily from the conceptually similar doctrines of the “arm of the state” in Eleventh Amendment jurisprudence and “alter ego” veil piercing in Corporate Law. Ultimately, my proposal synthesizes the existing precedent with those inquiries and provides a coherent approach to resolving the confusion surrounding how far the sovereign’s cloak should be spread over related entities.