Sovereign immunity represents the principle that a state cannot be subjected to suit without its consent. In bankruptcy proceedings, it is sometimes necessary for a debtor to file an adversary proceeding against a creditor to determine the dischargeability of a debt. When the creditor is a state, the exercise of sovereign immunity by that state can pose an obstacle to the total discharge of debts contemplated by the bankruptcy system. Courts have found unconstitutional recent attempts by Congress to abrogate states' sovereignty in § 106(a) of the Bankruptcy Code. In response, some courts have adopted a "uniform laws" theory. This theory suggests that states waived their sovereign immunity in the bankruptcy realm when they ratified the Constitution. However, sovereign immunity is a vital part of the nation's constitutional structure, and the arguments advanced by the "uniform laws" theory in favor of an original waiver of sovereign immunity are not sufficiently compelling to justify abandoning such an important principle. The theory that bankruptcy proceedings should be exempt from sovereign immunity under the "uniform laws" clause of Article I runs contrary to essential principles of federalism and state sovereignty and should be abandoned.
Notes and Comments,
Sovereign Impunity: The "Uniform Laws" Theory Tries (and Fails) to Take a Bankruptcy-sized Bited out of the Eleventh Amendment,
77 Wash. L. Rev.
Available at: https://digitalcommons.law.uw.edu/wlr/vol77/iss2/5