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Overturn Property Tax Ruling on Libyan Mansion

September 21, 1985

PHILADELPHIA (AP) _ A federal appeals court ruled Friday that Libya is exempt from property taxes on a $1 million, 25-room mansion purchased for the head of its United Nations mission.

The unanimous decision by a three-judge panel of the 3rd U.S. Circuit Court of Appeals in Philadelphia overturned a September 1984 ruling by a federal judge in Newark, N.J.

The city of Englewood, N.J., where the mansion is located, sought to tax the building. The city said Libya is not exempt from taxes on residential property because the north African country does not maintain diplomatic relations with the United States.

The appeals panel said that since no commercial activity is conducted in the mansion, the Foreign Sovereign Immunities Act of 1976 provides Libya with immunity from state and federal courts. If a foreign government conducts a business, the building the business is liable to be taxed.

″The only purpose Libya has in holding the property, so far as this record discloses, is for use by the chief of its mission to the United Nations,″ the court said in its 14-page decision. ″That is activity directly related to the purposes of the mission...″

U.S. District Judge Frederick B. Lacey, whose ruling was overturned Friday, had cited a letter from the State Department’s office of Foreign Missions.

The letter said that when a foreign state is granted a tax exemption for a residential property owned by its mission, it is by virtue of a bilateral agreement with the United States.

The State Department sees no basis for an exemption because there is no such agreement in force between the United States and Libya, Lacey said.

The appeals court said the Foreign Sovereign Immunities Act superceded such reasoning.

Libya maintains no ambassador to the United Nations. The chief of its U.N. mission, Charge D’ Affaires Rajab Azzarouk, currently lives in New York City, said Robert W. Thabit, an attorney for Libya.

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