Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-07016/USCOURTS-caDC-03-07016-0/pdf.json

Parties Involved:
I.T. Consultants, Inc.
Appellee
Islamic Republic of Pakistan
Appellant
Khair Mohamed Junejo
Appellant

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 7, 2003 Decided December 16, 2003

No. 03-7016

I.T. CONSULTANTS, INC.,

APPELLEE

v.

THE ISLAMIC REPUBLIC OF PAKISTAN AND

KHAIR MOHAMED JUNEJO, MINISTER OF AGRICULTURE,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 01cv00241)

Nicholas H. Cobbs argued the cause and filed the briefs for

appellants.

Bruno A. Ristau argued the cause and filed the brief for

appellee.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

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Before: RANDOLPH and ROBERTS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROBERTS.

ROBERTS, Circuit Judge: The Foreign Sovereign Immunities Act (FSIA) renders foreign states immune from the

jurisdiction of the federal courts in many circumstances, but

includes an exception for suits based on the foreign state’s

commercial activity, if that activity ‘‘causes a direct effect in

the United States.’’ 28 U.S.C. §§ 1604, 1605(a)(2). We hold

in this case, in reliance on Republic of Argentina v. Weltover,

Inc., 504 U.S. 607 (1992), that a foreign sovereign’s failure to

make a contractually required deposit in a bank in the United

States meets the statute’s definition of a ‘‘direct effect,’’

without regard to whether the parties considered the place of

payment ‘‘important,’’ ‘‘critical,’’ or ‘‘integral.’’ We therefore

affirm the district court’s conclusion that such a failure can

provide the basis for subject matter jurisdiction over the

Republic of Pakistan. We also affirm the court’s ruling that

it can assert personal jurisdiction over Pakistan, but conclude

that the court improperly asserted personal jurisdiction over

the Pakistani government official involved in the transaction,

who was sued in his personal capacity.

I.

At the base of this dispute is an October 1995 contract

between appellee I.T. Consultants, Inc. (ITC) and appellant

the Republic of Pakistan. ITC was to receive $10 million for

manufacturing and installing geo-synthetic linings for a number of irrigation canals and watercourses in Pakistan. ITC

began its work, but Pakistan terminated the contract in 1997,

citing a shortage of funds. In September 1998, the parties

agreed to rescind the contract; under their agreement, Pakistan was to pay ITC approximately eleven percent of the total

contract price. No payment was ever made, however, and

ITC sued Pakistan in the District Court for the District of

Columbia in March 2000.

While that suit was pending, the parties held another round

of settlement negotiations; the Economic Coordination ComUSCA Case #03-7016 Document #791597 Filed: 12/16/2003 Page 2 of 11
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mittee (ECC) of the Government of Pakistan appointed an ad

hoc committee to negotiate with ITC. Those negotiations

yielded a Memorandum of Understanding (MOU) between

ITC and Pakistan’s Ministry of Food, Agriculture, and Labor

(MINFAL), signed on June 3, 2000. The MOU, contingent

on ECC approval, provided that Pakistan would pay ITC

compensation (in a mixture of U.S. and Pakistani currency:

$1,143,965 and 10,535,000 rupees) to extinguish all of ITC’s

claims under the contract and secure the dismissal of the

pending lawsuit. Memorandum of Understanding Between

I.T. Consultants and MINFAL (JA 16A). The MOU was

silent on the place of payment, but in a letter three weeks

later, ITC requested that the dollar-denominated portion of

the settlement (some eighty-seven percent of the total value)

be sent to an account at Riggs Bank in Alexandria, Virginia,

and the rupees to an account at a bank in Rawalpindi,

Pakistan. Letter from Farrakh A. Shah, President, ITC, to

Dr. Zafar Altaf, Secretary, MINFAL (June 24, 2000), at 2 (JA

19). The record contains a copy of this letter allegedly

returned to ITC, bearing the signature of Dr. Zafar Altaf, the

then-Secretary of MINFAL, and a handwritten notation —

the word ‘‘Okay’’ — in the margin next to the Riggs Bank

information. Id.

The ECC approved the MOU on September 4, 2000, but on

October 26, 2000, there was a leadership change at MINFAL

and Khair Mohamed Junejo became Secretary. Junejo ordered the payment to ITC stopped, explaining later that

‘‘[t]he payment was temporarily stopped with a view to referring the case back to [the] ECC for reconsideration with full

facts.’’ Def. Answers to First Set of Interrogs. at 2 (JA 110).

At around the same time — the exact order of these events is

unclear — Junejo learned of a development in ITC’s suit in

Washington: the district court had dismissed the suit without

prejudice on September 28, 2000, citing improper service of

process on Pakistan. See I.T. Consultants, Inc. v. Islamic

Republic of Pakistan, No. 00–0503 (D.D.C. Sept. 28, 2000).

Junejo concluded that Pakistan had ‘‘won’’ the lawsuit, but

admitted that at the time he did not understand the meaning

of the phrase ‘‘without prejudice.’’ On February 20, 2001, the

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ECC ratified the hold on the payment to ITC and instructed

MINFAL to examine certain legal issues (including governing

law, court jurisdiction, and arbitration) in relation to the

original contract with ITC. Decision of the ECC, Case No.

ECC–22/02/2001 (Feb. 20, 2001) (JA 133).

ITC filed the present action in the District Court for the

District of Columbia on January 31, 2001, naming Pakistan

and Junejo ‘‘in his personal capacity’’ as defendants. The

claim against Pakistan was for breach of the MOU; that

against Junejo was for tortious interference with the MOU.

Pakistan and Junejo moved to dismiss on grounds of, inter

alia, lack of subject matter jurisdiction and lack of personal

jurisdiction. The district court denied the motion in an order

on January 3, 2003, and subsequently issued an opinion. See

I.T. Consultants, Inc. v. Islamic Republic of Pakistan, No.

01–0241 (D.D.C. Feb. 12, 2003) (I.T. Consultants II). The

court first considered subject matter jurisdiction, concluding

that ‘‘if [ITC] can prove that payment was to be made at

[ITC’s] bank in Virginia in U.S. currency and that Pakistan

breached that obligation, these facts establish a direct effect’’

and confer subject matter jurisdiction under Section

1605(a)(2) of the FSIA. Id., op. at 6 (JA 160). Turning to

personal jurisdiction, the court determined that personal jurisdiction over Pakistan was proper under 28 U.S.C.

§ 1330(b), which provides that ‘‘[p]ersonal jurisdiction over a

foreign state shall exist as to every claim for relief over which

the district courts have [subject matter] jurisdiction’’ under

the FSIA, so long as service of process is proper. The court

also found that it had personal jurisdiction over Junejo:

because he was alleged to have caused the breach of Pakistan’s obligation to transfer U.S. dollars to the Riggs Bank in

Virginia, the court reasoned, he should reasonably have expected to be haled into court here. I.T. Consultants II, op. at

12 (JA 166) (citing Calder v. Jones, 465 U.S. 783, 790 (1984)).1

This interlocutory appeal followed.

1 The district court also rejected the defendants’ other two proposed grounds for dismissal — official immunity for Junejo under

the FSIA, and forum non conveniens. I.T. Consultants II, op. at

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II.

In ruling on the motion to dismiss on grounds of subject

matter and personal jurisdiction, the district court accepted

the allegations of the complaint as true. I.T. Consultants II,

op. at 4 (JA 158). Pakistan and Junejo of course dispute

these allegations — including allegations arguably pertinent

to the question of sovereign immunity — and could have

pressed the district court to resolve any relevant factual

disputes before ruling on sovereign immunity. See Phoenix

Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C.

Cir. 2000) (if defendant challenges factual basis for court’s

jurisdiction in FSIA case, court should ‘‘go beyond the pleadings and resolve any disputed issues of fact the resolution of

which is necessary to a ruling upon the motion to dismiss’’).

Instead, Pakistan sought a ruling on its immunity on the basis

of the allegations in the complaint. See Reply Mem. in Supp.

of Def. Mot. to Dismiss, at 1 (JA 83) (‘‘Assuming the truth of

all of plaintiff’s contentions, as the court must’’). Under such

circumstances, the district court properly proceeded to decision on the basis of those allegations. See Price v. Socialist

People’s Libyan Arab Jamahiriya, 294 F.3d 82, 91 (D.C. Cir.

2002).

Although the district court’s interlocutory ruling declining

to dismiss on grounds of Pakistan’s sovereign immunity is

thus not a conclusive determination of the immunity question,

but instead subject to change in light of further development

of the facts, we nonetheless have appellate jurisdiction to

review it. See id. (‘‘[A]n FSIA defendant can take an immediate appeal if the District Court rejects its argument that

the facts alleged in the plaintiff’s complaint do not bring the

case within one of the statute’s immunity exceptions.’’); see

also Behrens v. Pelletier, 516 U.S. 299, 307 (1996) (‘‘[A]n

order rejecting the defense of qualified immunity at either

the dismissal stage or the summary judgment stage is a ‘final’

judgment subject to immediate appeal.’’). We also have

13–16 (JA 167–70). ITC does not challenge the latter ruling in this

appeal, and we do not reach the former in light of our holding that

the district court lacks personal jurisdiction over Junejo.

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jurisdiction over Junejo’s appeal. See Jungquist v. Sheikh

Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1025–27 (D.C.

Cir. 1997).

A. Subject Matter Jurisdiction Under the FSIA

One of the key allegations taken as true is that ‘‘[p]ursuant

to the MOU, eighty seven percent (87%) of the payment (U.S.

$1.144 million) was to be made in United States currency by

[Pakistan] into [ITC’s] account at the Riggs Bank in Alexandria, Virginia.’’ Compl. ¶ 6 (JA 9). In particular, ‘‘[t]he

modality of payment was proposed by [ITC] in a letter dated

June 24, 2000, to the Chairman of the negotiating committee

who received the letter and approved the method of payment.’’ Id. Pakistan believes that even when these facts are

assumed, Pakistan’s failure to make the payment does not

constitute a direct effect that would support jurisdiction

under the FSIA. The question thus becomes whether this

case is distinguishable from Weltover, the Supreme Court’s

leading case on the FSIA’s direct effect requirement.

In Weltover, the Argentine government had issued bonds

(denominated in U.S. dollars) that permitted the bondholder

to specify one of four cities — London, Frankfurt, Zurich, or

New York — as the place where payment was to be made

when the bonds matured. On the maturity date, Argentina

was unable to meet its payment obligations, and attempted to

reschedule the payments unilaterally. Several bondholders

balked at this and demanded full payment, naming New York

as the place of payment. 504 U.S. at 609–10. Argentina

failed to make the payments and the bondholders sued,

asserting that subject matter jurisdiction existed under the

FSIA because Argentina’s failure to pay had a direct effect in

the United States. The Supreme Court agreed, noting that

‘‘[b]ecause New York was TTT the place of performance for

Argentina’s ultimate contractual obligations, the rescheduling

of those obligations necessarily had a ‘direct effect’ in the

United States: Money that was supposed to have been delivered to a New York bank for deposit was not forthcoming.’’

Id. at 619 (emphasis added).

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Pakistan argues that the instant case differs from Weltover

in two principal respects — in Weltover the provision for

payment in the United States was ‘‘part of a written contract

between the parties,’’ and the place of payment was critical to

the underlying agreement. Appellants Br. at 11. Pakistan

suggests that a case more directly on point is Goodman

Holdings v. Rafidain Bank, 26 F.3d 1143 (D.C. Cir. 1994), in

which this court distinguished Weltover and held that an Iraqi

government bank’s failure to honor certain letters of credit it

had issued did not support subject matter jurisdiction under

the FSIA. The Iraqi bank in Goodman Holdings did use

some United States banks to make payments on other letters

of credit, but we concluded that the failure to honor the

particular letters at issue in the case did not have a direct

effect in the United States because ‘‘[n]either New York nor

any other United States location was designated as the ‘place

of performance’ where money was ‘supposed’ to have been

paid.’’ Id. at 1146.

These attempts to distinguish this case from Weltover are

unpersuasive. First, Pakistan’s attempt to direct our attention to the presence or absence of a payment term in the

‘‘written contract between the parties’’ is inconsistent with

Pakistan’s recognition that we should accept the allegations of

the complaint — including the allegation that payment was to

be made in Virginia ‘‘[p]ursuant to the MOU’’ — as true. See

Appellants Br. at 9. For purposes of its motion to dismiss,

Pakistan has elected not to challenge what this court at oral

argument described as ‘‘the assumption the district court was

operating on — that there was a contract obliging Pakistan to

pay the bank in Virginia.’’2

 Having permitted that assump2 The district court treated the allegation that payment was to be

made in Virginia as true for purposes of the motion to dismiss. See

I.T. Consultants II, op. at 9 (JA 163) (‘‘Pakistan agreed to make

payment to plaintiff in a Virginia bank account’’); id. at 11 (JA 165)

(‘‘[T]he foreign sovereign in this case agreed to TTT deposit the

money in plaintiff’s bank located in the United States.’’). Accord

Hanil Bank v. Pt. Bank Negara Indonesia, 148 F.3d 127, 132, 134

(2d Cir. 1998) (affirming denial of motion to dismiss on sovereign

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tion, it is no use for Pakistan to quibble over how that

payment obligation arose, or whether it arose by means

different from those in Weltover, where the payee’s specification of place of payment was also not contemporaneous with

the signing of the underlying agreement giving rise to the

obligation to pay.

Second, we reject the suggestion that the degree of importance the parties attach to the place of payment is relevant to

the question whether a failure to pay has a direct effect.

Neither Weltover nor the subsequent case law of this circuit

suggests that only ‘‘important’’ contractual terms may give

rise to a direct effect. Any attempt to rank the various terms

of a contract in order of their importance to the parties would

require the court to delve deeply into the facts before making

a threshold finding of jurisdiction — an undesirable prospect — and would be ultimately standardless. For example,

under Pakistan’s reasoning, a contract that specified New

York as the place of payment would not create a direct effect

if the parties did not consider that term important, even if the

amount to be paid was $100 billion. And conversely, if the

parties to a different contract believed that payment in New

York was extremely important, Pakistan’s reasoning would

support a finding of a direct effect even if the amount due

under the contract was merely $1000. And what are we to do

if we determine that place of payment was important for one

party, but not the other? Pakistan’s proposed analysis founders because it bears no relation to the statutory term it

purports to illumine — ‘‘direct effect.’’

The facts of this case differ in significant respects from

those on which this court relied in Goodman Holdings when

it found Weltover distinguishable. In Goodman Holdings,

the nexus with bank accounts in the United States was the

fact that the Iraqi sovereign defendant might have used those

accounts to make the payments due to its creditor (an Irish

corporation), as it had sometimes done before. The ‘‘immediate consequence’’ that Weltover requires was not present, the

immunity grounds although defendant denied that it expressly

agreed to New York as place of payment).

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court found, because the payments could have been made

from the defendant’s other accounts — outside the United

States — and there was no requirement that the payments be

made into an account in New York or anywhere else in the

United States. Goodman Holdings, 26 F.3d at 1146–47. In

short, the transaction at issue in Goodman Holdings could

have occurred without the involvement of a United States

bank at any stage. Similarly, in United World Trade, Inc. v.

Mangyshlakneft Oil Prod. Ass’n, 33 F.3d 1232 (10th Cir.

1994), the parties’ contract provided for payment in U.S.

dollars to a bank in Paris; the Tenth Circuit found that even

though a bank in the United States might have been involved

in converting the payment to U.S. currency, that aspect of the

transaction was ‘‘simply too attenuated from the defendants’

actions to be considered a ‘direct effect.’ ’’ Id. at 1238. In

this case, by contrast — assuming, as we do at this stage, that

the agreement between the parties did provide for payment

in Virginia — the involvement of a U.S. bank was immediate

and unavoidable. We conclude that Pakistan’s failure to meet

its payment obligation under such a contract would qualify as

an act that ‘‘causes a direct effect in the United States’’ under

the FSIA. 28 U.S.C. § 1605(a)(2).

B. Personal Jurisdiction over Pakistan

Once subject matter jurisdiction exists under the FSIA,

personal jurisdiction over a foreign state defendant is established. As a statutory matter, 28 U.S.C. § 1330(b) provides

that ‘‘[p]ersonal jurisdiction over a foreign state shall exist as

to every claim for relief over which’’ subject matter jurisdiction exists under the FSIA, so long as the defendant was

properly served. See Practical Concepts, Inc. v. Republic of

Bolivia, 811 F.2d 1543, 1548 n.11 (D.C. Cir. 1987) (R. B.

Ginsburg, J.) (in FSIA cases, ‘‘subject matter jurisdiction plus

service of process equals personal jurisdiction’’) (internal quotation marks and citation omitted). And as a constitutional

matter, there is no constitutional matter. The law of this

circuit, under Price, is that ‘‘foreign states are not ‘persons’

protected by the Fifth Amendment.’’ 294 F.3d at 96. We

therefore do not need to examine whether Pakistan has the

minimum contacts that would otherwise be a prerequisite for

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personal jurisdiction under the Due Process Clause of the

Fifth Amendment.

C. Personal Jurisdiction over Junejo

Personal jurisdiction over Junejo is not as easy. Junejo is

quite obviously a ‘‘person’’ entitled to the protections of the

Due Process Clause, so the traditional minimum contacts

requirement applies. See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In addition, for personal

jurisdiction in the District Court for the District of Columbia

to be proper, Junejo must be covered by the District of

Columbia’s long-arm statute. See United States v. Ferrara,

54 F.3d 825, 828 (D.C. Cir. 1995).

ITC conceded below that personal jurisdiction over Junejo

does not lie under the District’s long-arm statute, D.C. Code

§ 13–423(a)(4). See Pl. Supplemental Br. at 11 n.5 (JA 106)

(‘‘The District of Columbia long-arm statute TTT cannot serve

as a predicate[ ] for personal jurisdiction over Mr. Junejo in

this case.’’). ITC argued instead that Junejo was an ‘‘agency

or instrumentality’’ of Pakistan, and that the FSIA itself thus

provided the basis for personal jurisdiction over him, just as

it automatically provides personal jurisdiction ‘‘over a foreign

state.’’ Id. at 11 (JA 106) (citing 28 U.S.C. §§ 1330(b),

1603(a)). The district court properly rejected this argument

as inconsistent with the fundamental precept of Anglo–American jurisprudence that you cannot have your cake and eat it,

too: ITC cannot simultaneously sue Junejo in his personal

capacity and treat him as ‘‘a foreign state’’ for purposes of

personal jurisdiction. See I.T. Consultants II, op. at 10 (JA

164); see also Jungquist, 115 F.3d at 1027 (‘‘Individuals

acting in their official capacities are considered ‘agenc[ies] or

instrumentalit[ies] of a foreign state’ ’’ (alterations in original)

(emphasis added)). That conclusion — coupled with ITC’s

concession that the District’s long-arm statute does not reach

Junejo — should have been dispositive on the question of

personal jurisdiction over Junejo in the District Court for the

District of Columbia.

The district court, however, considered the constitutional

question of whether Junejo ‘‘has sufficient ‘minimum contacts

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with [this forum] such that the maintenance of the suit does

not offend traditional notions of fair play and substantial

justice,’ ’’ I.T. Consultants II, op. at 11 (JA 165) (quoting

International Shoe, 326 U.S. at 316) (other quotation marks

omitted; bracketed language added by district court), assuming that the District’s long-arm statute allows the exercise of

personal jurisdiction to the full extent permitted by the

Constitution. See id. at 12 n.5 (JA 166); but see GTE New

Media Servs. Inc. v. Bellsouth Corp., 199 F.3d 1343, 1347

(D.C. Cir. 2000) (‘‘The drafters of [subsection (a)(4) of Section

13–423] apparently intended that [it] would not occupy all of

the constitutionally available space.’’) (quotation omitted).

The court concluded that the ‘‘minimum contacts’’ test was

satisfied, and that it could exercise personal jurisdiction over

Junejo, because of the allegation that Junejo took steps that

‘‘had the direct effect in the United States of Pakistan’s

breaching its obligation to transfer U.S. dollars to the Riggs

Bank in VirginiaTTTT’’ I.T. Consultants II, op. at 12 (JA

166). But that allegation says nothing about Junejo’s contacts with the District of Columbia, as opposed to the Eastern

District of Virginia. Nothing in the record supports the

exercise of personal jurisdiction over Junejo by the court

below.3

III.

For the foregoing reasons, we affirm the district court’s

denial of the motion to dismiss for lack of subject matter and

personal jurisdiction with respect to Pakistan. We reverse

the denial of the motion to dismiss for lack of personal

jurisdiction over Junejo. The case is remanded for further

proceedings.

3 Indeed, counsel for ITC all but abandoned ITC’s claims against

Junejo at oral argument before this court, announcing at the outset

that ‘‘I will not spend my precious time on Junejo; Junejo has long

ago been canned, and I have no idea where he is.’’

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