The United States Supreme Court has ruled by a vote of 7-2 that the real estate tax claims made by New York City against India and Mongolia can proceed to trial in the district court, despite the opposition from the US government and the foreign governments involved.

New York City says the governments of India and Mongolia owe it over $18 million in property taxes on buildings these countries use to house staff of their United Nations missions.

The Supreme Court has decided that US courts have jurisdiction to hear and resolve the dispute between the parties, but that it was now left up to the district court to decide whether India and Mongolia actually owe the taxes.

Michael Cardoza, New York City's corporate counsel who argued the case in Washington, DC, on April 24, said, "This is a critical decision for the rule of law. Without this ruling, the city had no other legal avenue under which it could obtain recourse."

He said the justices had taken "a proactive, groundbreaking stand in upholding the city's argument. Now India and Mongolia, as well as other countries, know the city means business in pursuing appropriate taxes that are owed."

The US government had opposed the city's position, and the US solicitor general had filed a brief in support of India and Mongolia's argument that the courts lacked jurisdiction over the city's claims. Sri Srinivasan of the US Solicitor General's Office represented the government at the oral argument, and John J P Howley, of the law firm of Kaye Scholer, LLP, argued on behalf of India and Mongolia.

Marjorie Tiven, commissioner, NYC Commission for the United Nations, Consular Corps and Protocol, hailing the verdict, saying, "New York City welcomes the diplomatic community and provides many services, such as public safety, at no cost to foreign governments."

But, she argued, "We do, however, expect them to pay their fair share of taxes for portions of property used for non-diplomatic purposes."