Sovereign Immunity: When Your Counterparty Can Say “No Thanks” to Court

The Limits of Legal Protection

Securitisation deals are built on one comforting assumption: if someone doesn’t do what they’re supposed to, you can take them to court and sort it out – sue, enforce, maybe even seize an account or two. But that assumption starts to wobble when one party is a sovereign state – or a company happily tucked under its wing. In those cases, the rules are different – and not in a good way.

Sovereign immunity is the legal equivalent of “you can’t touch me,” allowing states (and often the companies they control) to sidestep lawsuits and shrug off enforcement in foreign courts. If it’s not dealt with properly, it can turn a carefully structured deal into a polite request the state is free to ignore.

This article explores what sovereign immunity is, why it matters in securitisation, and how lawyers and structurers try to manage it – without causing a diplomatic stir in the process.