June 14 (Bloomberg) -- Foreign countries can be sued for unpaid taxes on the buildings they own, the U.S. Supreme Court ruled, clearing the way for New York City to press claims against India, Mongolia and possibly other nations.

The justices, voting 7-2, said the suits fell under an exception to the U.S. Foreign Sovereign Immunities Act, which shields other nations from many types of suits in U.S. courts.

New York City says foreign countries owe more than $100 million in back taxes. With interest, India owes more than $37 million and Mongolia more than $4 million, according to Connie Pankratz, a spokeswoman for the city's law department.

New York Mayor Michael Bloomberg, in a statement, called the decision a ``landmark victory'' and said it brought the city ``closer to finally ensuring that countries with missions and consulates in New York pay their fair share in city taxes.'' The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

A similar case against the Philippines is pending. Turkey settled the city's claims against it in 2003 for more than $5 million.

John J.P. Howley, the lead lawyer for India and Mongolia at the Supreme Court, didn't respond to an e-mail seeking comment.

Bush Support

The Bush administration backed India and Mongolia, saying the city's lawsuits have invited retaliation by foreign countries against U.S. property overseas.

The FSIA, as the law is known, contains an exception for disputes over ``rights in immovable property,'' such as ownership questions. The question for the Supreme Court was whether that language also covers fights over taxes due on property.

``The city's lawsuits here directly implicate rights in property,'' Justice Clarence Thomas wrote for the majority.

The ruling upheld a federal appeals court decision. Justices John Paul Stevens and Stephen Breyer dissented.

The case is Permanent Mission of India v. City of New York, 06-134.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: June 14, 2007 15:46 EDT