The Permanent Mission of India to the United Nations has won a key legal battle against the City of New York, and as a result has obtained an exemption from a federal appeals court from paying millions of dollars in property taxes to the City.

In the judgment on Tuesday, the Second U.S. Circuit Court of Appeals in Manhattan Appeal said it had reversed an earlier judgment by a District Court that had ruled in favour of the plaintiff, the City of New York. The ruling will exempt the Mission from paying $45.7 million in back taxes and interest accrued since 2008.

As per the latest ruling, the Appeals Court found that a State Department notice was a lawful exercise of the Department's authority under the Foreign Missions Act. Thus, the Court ruled, the notice operated in this case to exempt the Appellants from the property taxes imposed by the City, and so “nullifies the City's existing tax liens against Appellants.”

Media reports quoted Aaron Stiefel, a lawyer representing India and Mongolia in the litigation as saying, “Certainly, we're thrilled with the result... It is a complete victory, we got everything we wanted.”

Opposing counsel city attorney Michael Cardozo said, “We are extremely disappointed... This provides a free ride for foreign countries owning certain properties in New York City while unnecessarily burdening local taxpayers.”

The State Department notice that the Court alluded to was issued during the appeals process, in June 2009, and held that pursuant to the Foreign Missions Act, it was designating as a “benefit” an exemption from property taxes on property owned by foreign governments and used to house the staff of permanent missions to the U.N.

That notice, the Court said, pre-empted “all inconsistent state and local laws,” and also applied to all property taxes that have been or will be assessed on such property.

The latter ruling would save the Indian Mission from having to pay past taxes as well. It was unclear whether New York City's had the right to tax other countries' U.N. mission properties,

With the argument principally turning on the jurisdiction of the State Department to provide such exemptions under the Foreign Missions Act, the Appeals Court added, “Under the circumstances of this case, the State Department acted within its power in designating this benefit as effective retroactively.”

  • From paying millions of dollars in property taxes
  • Indian Mission need not pay past taxes as well


    Relief for early tax-payers April 15, 2014