United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 19, 2018 Decided July 3, 2018

No. 17-7067

EIG ENERGY FUND XIV, L.P., ET AL.,

APPELLEES

v.

PETROLEO BRASILEIRO, S.A.,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 1:16-cv-00333)

Catherine E. Stetson argued the cause for appellant. With 

her on the briefs were Adam K. Levin and Sean Marotta.

Daniel B. Goldman argued the cause for appellees. With 

him on the brief were Barry Coburn and Kerri Ann Law.

Before: HENDERSON and WILKINS, Circuit Judges, and 

SENTELLE, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

Dissenting opinion filed by Senior Circuit Judge 

SENTELLE.
2

KAREN LECRAFT HENDERSON, Circuit Judge: In 2012 and 

2013, an American investment fund sank $221 million into what 

seemed like a sure bet: buying equipment to extract a massive, 

newly discovered reserve of undersea crude oil off the coast of 

Brazil. Brazilian politicians and corporate executives also saw 

an opportunity and set up a scheme to make illegal use—

including payment of bribes and kickbacks—of investors’

money. The eventual revelation of the corruption produced the 

largest political scandal in modern Brazilian history. In light of 

the scandal, banks were no longer willing to make loans for the 

oil-extraction project, which collapsed, taking the American 

fund’s money with it.

Behind the project—and at least some of the corruption—

was Petroleo Brasileiro, S.A. (Petrobras), Brazil’s state-owned 

oil company. The jurisdiction of U.S. courts over claims 

against foreign states and their “instrumentalities,” like 

Petrobras, is limited by the Foreign Sovereign Immunities Act 

(FSIA), 28 U.S.C. §§ 1330, 1604–1606, so we must determine 

whether Petrobras’s alleged fraud “caused a direct effect in the 

United States,” id. § 1605(a)(2). If it did—as the district court 

held—then Petrobras is “liable in the same manner and to the 

same extent as a private individual under like circumstances.”

Id. § 1606. Otherwise, Petrobras “shall be immune from the 

jurisdiction of the courts of the United States.” Id. § 1604.

I. Background

In 2006 Petrobras discovered an estimated 50 billion 

barrels of undersea oil off the coast of Brazil.1 Although costly 

 1 The factual background is derived from the allegations of the 

plaintiffs’ first amended complaint, which we accept as true in 

reviewing the denial of a motion to dismiss. See Price v. Socialist 

People’s Libyan Arab Jamahiriya, 294 F.3d 82, 94 (D.C. Cir. 2002).
3

to extract, the sheer size of the deposit was tantalizing not only 

to the Brazilian state—which had a direct economic interest in 

the find through Petrobras, the state-owned oil company—but 

to investors around the world. Petrobras soon formed a foreigninvestment venture to build 28 specialized “drill ships” at a cost 

of more than $700 million apiece. The business plan for the 

venture, named Sete Brasil Participações, S.A. (Sete), called 

for equity investment of around 7.9 billion Brazilian Reais 

($2.19 billion at today’s exchange rates), with approximately 

4.6 per cent of that coming from Petrobras itself. The remainder 

of the ships’ cost was to be debt-financed through third-party 

lenders.

To attract foreign investment, Brazilian law provides tax 

incentives through special partnerships known as Fundos de 

Investimento em Participações, or FIPs. Petrobras created FIP 

Sondas to facilitate foreign investment in the Sete project.

Petrobras specifically targeted U.S. investors for Sete, Joint 

Appendix (JA) 25, including EIG Management Company, LLC 

(EIG), a Washington, D.C.–based private equity fund.

Petrobras disseminated in the United States, including to EIG, 

a presentation called “The Drilling Rigs Project: Petrobras’[s] 

Strategy for its Successful Implementation.” JA26. The 

presentation contained a “Cautionary Statement for US 

Investors,” referencing U.S. Securities and Exchange 

Commission rules governing oil and gas investment. JA26–27. 

Another document disseminated by Petrobras in the United 

States, titled “Pre-Salt Oil Rigs Project,” “discussed the Sete 

investment premise and touted that Sete would have 

‘management with extensive experience in the market.’” 

JA27–28. A third document “promoting investment in Sete” 

was sent to EIG by a putative Petrobras agent nearly a year after 

the first two documents circulated. JA28.
4

Petrobras and Sete executives also met with EIG 

executives in the United States at least twice. At one meeting, 

in Houston, Texas, Sete CEO João Carlos de Medeiro Ferraz

(Ferraz) “offered rosy descriptions of Sete and its business 

prospects.” JA29. At another, in Washington, D.C., Ferraz 

addressed a conference of EIG employees and investors and 

“informed [them] that Sete expected drillship charter revenue 

‘of almost $90 billion [in] the next 20 years.’” JA30 (second 

alteration in original). EIG employees twice traveled to Brazil 

to meet with Petrobras representatives, and Petrobras or Sete 

corresponded extensively with EIG leading up to EIG’s 

investment, through written memoranda, presentations, 

telephone calls and emails. 

EIG ultimately invested $221 million in FIP Sondas

between August 2012 and May 2013, on behalf of eight funds 

under its management. Six of the eight EIG funds were based 

in Delaware but the other two were based in the Cayman 

Islands, which Brazil has designated as a tax haven. Because 

investors from designated tax havens are ineligible for the tax 

incentives provided FIP investments, EIG formed EIG Sete 

Parent SARL (EIG Sete Parent), a Luxembourg corporation, 

which in turn formed EIG Sete Holdings SARL (EIG Sete 

Holdings), also a Luxembourg corporation. EIG’s investment 

in Sete therefore flowed from the eight funds to EIG Sete 

Parent, to EIG Sete Holdings, to FIP Sondas and, ultimately, to 

Sete itself.

Brazilian prosecutors’ “Operation Car Wash” became 

public in 2014. The multi-year investigation uncovered 

extensive corruption in the Brazilian government, including 

Petrobras, and in the private-sector oil industry, including Sete.

To date, prosecutors have obtained 93 convictions against

officials engaged in a bribery and kickback scheme going back 

to at least 1997. Among the guilty were senior executives at 
5

Sete, including Ferraz, EIG’s primary contact at Petrobras and 

Sete. A 30-year employee of Petrobras, Ferraz became the 

chief executive of Sete sometime before the spring of 2013, 

when he met with EIG in Houston. Ferraz was EIG’s primary 

contact regarding its Sete investment, first, while he was at 

Petrobras and, later, when he was Sete CEO. In testimony

given to an investigative panel of the Brazilian Congress in 

2015, Ferraz explained that “[t]he capital market in the United 

States, in particular, loves [Sete’s] type of business. They very 

much like the prospects of financing drilling rigs, despite the 

risks involved.” JA233. And so, Ferraz testified, “[t]here was 

great market interest [in Sete], particularly among US private 

equity groups” such as EIG. JA218. Another Sete executive, 

chief operating officer Pedro José Barusco, testified to the 

Brazilian Congress that he and Ferraz had taken “the initiative 

to create Sete Brasil” and that “the establishment of bribe 

amounts . . . was a continuity [sic] of what happened in 

Petrobras.” JA23, JA31 (compl.).

As the scandal of Operation Car Wash enveloped Sete and 

Petrobras, skittish lenders withdrew their support from the drill 

ships project. Because the project was highly leveraged by 

design, the loss of debt financing made it impossible to proceed

with construction. Facing insolvency, Sete declared 

bankruptcy. Investors, including EIG, were left with nothing 

but worthless shares.

EIG sued Petrobras and the other defendants in district 

court, alleging counts of fraud, aiding and abetting fraud and 

civil conspiracy to commit fraud.2 Petrobras moved to dismiss 

 2 Because Sete is not an “instrumentality” of the Brazilian 

government, it would not be immune from suit under the FSIA. See

Dole Food Co. v. Patrickson, 538 U.S. 468, 476 (2003) (only direct 

ownership by foreign state makes corporation an instrumentality 
6

for lack of subject matter jurisdiction under Federal Rule of 

Civil Procedure 12(b)(1).

3 Petrobras asserted that, as an 

instrumentality of the Brazilian state, it is immune from suit on 

EIG’s claims under the FSIA.

The district court denied Petrobras’s motion to dismiss, 

concluding that EIG’s claims fall within the FSIA’s 

commercial activity exception to foreign-state immunity. EIG 

Energy Fund XIV, L.P. v. Petróleo Brasileiro S.A., 246 F. 

Supp. 3d 52, 72 (D.D.C. 2017); see 28 U.S.C. § 1605(a)(2). 

Although EIG argued that each of the three clauses of the 

commercial-activity exception applied, the district court relied 

on the third clause only, which clause grants jurisdiction over 

claims “based upon . . . an act outside the territory of the United 

States in connection with a commercial activity of the foreign 

state elsewhere and that act causes a direct effect in the United 

States.” 28 U.S.C. § 1605(a)(2).

The district court reasoned that EIG’s injury “occurred at 

the time Petrobras successfully induced [it] to invest in the 

Petrobras-Sete project,” which injury “occurred, at least in part, 

in the United States.” 246 F. Supp. 3d at 72. Because the court 

concluded that EIG’s injury occurred in the United States, it 

rejected Petrobras’s argument that EIG’s structuring its

investment through its Luxembourg subsidiaries—that is, EIG 

Sete Parent and EIG Sete Holding—constituted an 

 

under FSIA). Sete’s bankruptcy, however, would likely have made it 

futile for the plaintiffs to include Sete as a defendant.

3 Petrobras also moved to dismiss under Rule 12(b)(6) for failure 

to state a claim upon which relief can be granted but the district 

court’s denial of Petrobras’s motion on that ground is not before us 

in this interlocutory appeal.
7

“intervening event[]” that made EIG’s U.S. injuries “indirect.”

Id.

Moreover, the district court found that “Petrobras did not 

merely establish Sete” but “‘installed its own former 

employees’—including the architects of Sete and the bribe 

scheme, Ferraz and Barusco—for the purpose of continuing the 

corrupt enterprise.” Id. (quoting Pl.’s am. compl. 12). 

Therefore, it was irrelevant to the court’s analysis that Sete, not 

Petrobras, made the misrepresentations that immediately 

preceded EIG’s decision to invest: “Sete’s deceptive conduct, 

occurring only after it grabbed the baton from Petrobras, is not 

the kind of ‘independent’ third-party action that breaks the 

causal chain between Petrobras’[s] own misrepresentations and 

[EIG’s] injury.” Id.

Petrobras timely appealed the denial of its motion under 

Rule 12(b)(1), invoking our interlocutory appellate jurisdiction 

under 28 U.S.C. § 1291. See Jungquist v. Sheikh Sultan Bin 

Khalifa Al Nahyan, 115 F.3d 1020, 1025 (D.C. Cir. 1997) (“It is 

well[ ]established that an appeal from a denial of a motion to 

dismiss a complaint on the ground of sovereign immunity 

under the FSIA satisfies the three requirements of the collateral 

order doctrine and may thus be brought on an interlocutory 

basis.”).

II. Analysis

A. Standard of review and burden of proof

“The Foreign Sovereign Immunities Act ‘provides the sole 

basis for obtaining jurisdiction over a foreign state in the courts 

of this country.’” Saudi Arabia v. Nelson, 507 U.S. 349, 355 

(1993) (quoting Argentine Republic v. Amerada Hess Shipping 

Corp., 488 U.S. 428, 443 (1989)). “Under the Act, a foreign 

state is presumptively immune from the jurisdiction of United 
8

States courts; unless a specified exception applies, a federal 

court lacks subject-matter jurisdiction over a claim against a 

foreign state.” Nelson, 507 U.S. at 355.

“Once the defendant has asserted the jurisdictional defense 

of immunity under the FSIA, the court’s focus shifts to the 

exceptions to immunity” provided in the Act. Phx. Consulting 

Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000). 

“‘In accordance with the restrictive view of sovereign 

immunity reflected in the FSIA,’ the defendant bears the 

burden of proving that the plaintiff’s allegations do not bring 

its case within a statutory exception to immunity.” Id. (quoting 

Transamerican S.S. Corp. v. Somali Democratic Republic, 767 

F.2d 998, 1002 (D.C. Cir. 1985)). Although the plaintiff bears 

the ultimate burden of proving its substantive claims, the 

foreign-state defendant bears the burden of establishing the 

affirmative defense of immunity. See Kilburn v. Socialist 

People’s Libyan Arab Jamahiriya, 376 F.3d 1123, 1131 (D.C. 

Cir. 2004); Princz v. Fed. Republic of Germany, 26 F.3d 1166, 

1171 (D.C. Cir. 1994).

If an FSIA defendant contests only the legal sufficiency of 

the plaintiff’s jurisdictional claims, our standard of review is 

akin to that applied under Rule 12(b)(6), under which dismissal 

is warranted if no plausible inferences can be drawn from the 

facts alleged that, if proven, would provide grounds for relief. 

Price, 294 F.3d at 93 (citing Browning v. Clinton, 292 F.3d 235, 

241–42 (D.C. Cir. 2002)). “A claimant need not set out all of 

the precise facts on which the claim is based in order to survive 

a motion to dismiss.” Id. at 93.

B. Petrobras’s alleged fraud caused

a direct effect in the United States

Petrobras is subject to the jurisdiction of U.S. courts if it 

“caused a direct effect in the United States.” 28 U.S.C. 
9

§ 1605(a)(2). Under the direct-effect exception to foreign-state 

immunity, a plaintiff must make three showings: that the 

“lawsuit is (1) ‘based upon . . . an act [of a foreign state] outside 

the territory of the United States’; (2) that was taken ‘in 

connection with a commercial activity’ of [the foreign state] 

outside this country; and (3) that ‘cause[d] a direct effect in the 

United States.’” Republic of Argentina v. Weltover, Inc., 504 

U.S. 607, 611 (1992) (quoting 28 U.S.C. § 1605(a)(2)). Petrobras 

does not contest that the first two of these elements are 

satisfied; we need concern ourselves, then, with the third only.

A “direct” effect is one that “follows ‘as an immediate 

consequence of the defendant’s . . . activity.’” Id. at 618 

(quoting Weltover, Inc. v. Republic of Argentina, 941 F.2d 145, 

152 (2d Cir. 1991)). Although “jurisdiction may not be 

predicated on purely trivial effects in the United States,” there 

is no “unexpressed requirement of ‘substantiality’ or 

‘foreseeability.’” Id.

We believe EIG has made out a prima facie case for 

jurisdiction by alleging that Petrobras specifically targeted U.S. 

investors for Sete, JA25; that Petrobras intentionally concealed 

the ongoing fraud at Petrobras and at Sete, JA26–27; and that 

money invested in Sete was used to pay bribes and kickbacks, 

JA32–34. See Atlantica Holdings, Inc. v. Sovereign Wealth 

Fund Samruk-Kazyna JSC, 813 F.3d 98, 110 (2d Cir. 2016) 

(defendant’s misrepresentations about investment cause direct 

effect in United States when defendant “contemplated 

investment by United States persons” and “at least some 

investors . . . suffered an economic loss in this country as a 

result of those misrepresentations.”). The burden is therefore 

on Petrobras to establish an affirmative defense to jurisdiction. 

Princz, 26 F.3d at 1171.
10

Petrobras raises two defenses to jurisdiction: that it did not 

cause EIG’s injuries because intervening acts—third-party 

lenders’ decisions not to lend to Sete—“broke the chain of 

causation,” Appellant’s Br. 31–35; and that Petrobras’s alleged 

fraud did not cause a direct effect in the United States because 

EIG’s injury occurred, again, not in the United States, its 

investment having been funneled through corporate 

subsidiaries in Luxembourg, id. at 20–31. Both arguments fail.

1. No intervening act “broke the chain of causation”

Petrobras’s “chain of causation” argument fails for two 

reasons. First, EIG was injured by Petrobras’s alleged fraud 

even before the lenders withdrew; additionally, Petrobras’s 

argument would protect it from liability even for the portion of 

EIG’s damages incurred before the lenders withdrew. Petrobras 

effectively proposes a highly restrictive causation requirement

under which contributing factors readily and predictably 

caused by the defendant’s same act would preclude 

jurisdiction.

We rejected a similar argument in Kilburn, 376 F.3d at

1129. The Lebanese terrorist group Hezbollah abducted Peter 

Kilburn, a U.S. citizen, in Beirut in 1984 and subsequently sold 

him to the Arab Revolutionary Cells (ARC), a terrorist group 

based in Libya. ARC tortured and killed Kilburn, whose 

brother brought suit against Hezbollah’s and ARC’s state 

sponsors, Iran and Libya, respectively. Id. at 1125. The Kilburn

plaintiff invoked the “terrorism exception” to foreign-state 

immunity, which applies to a lawsuit against a foreign state 

“for personal injury or death that was caused by an act of 

torture, extrajudicial killing, aircraft sabotage, hostage taking, 
11

or the provision of material support or resources [for such an 

act].” 28 U.S.C. 1605(a)(7) (2002) (emphasis added).4

Libya argued that it was not the “but-for” cause of 

Kilburn’s kidnapping, torture and killing. Kilburn, 376 F.3d at 

1127. In other words, Libya argued that Kilburn would have 

suffered the same fate regardless of Libya’s involvement 

because ARC got involved only after Hezbollah had already 

kidnapped Kilburn. We disagreed, interpreting the terrorism 

exception’s “caused by” language to impose “the base-line 

standard of proximate cause” and rejecting Libya’s argument 

that multiple but-for causes break the chain of causation for any 

one of them. Id. at 1129 (“Such a case, in which application of

a ‘but for’ standard to joint tortfeasors could absolve them all, 

is precisely the one for which courts generally regard ‘but for’ 

causation as inappropriate.”). Although Kilburn’s death at the 

hands of ARC might not have occurred had he not been 

kidnapped by Hezbollah, that fact did not mean that Libya, 

ARC’s state sponsor, was immune from suit for wrongful 

death. Id. at 1129. Similarly, Petrobras cannot oust the court of 

jurisdiction in a lawsuit resulting from its alleged fraud simply 

because Sete’s third-party lenders might also have injured EIG 

by cutting off funds.

Second—and crucially—the lenders withdrew for the 

same reason that EIG’s investment became worthless: 

Petrobras’s alleged fraud plainly made Sete unsuitable for 

 4 Since Kilburn was decided, the terrorism exception has been 

relocated from 28 U.S.C. § 1605(a)(7) to 28 U.S.C. § 1605A but the 

relevant language remains substantially identical to that considered 

in Kilburn. See National Defense Authorization Act for Fiscal Year 

2008, Pub. L. 110-181 § 1083(a), (b)(1)(A)(iii), 122 Stat. 3, 338–341. 

For consistency, we quote and cite the version included in the 2002 

edition of the U.S. Code.
12

investment. The lenders’ withdrawal and EIG’s tanking 

investment are, in other words, two “effects” with the same 

cause. The lenders’ withdrawal was not an intervening cause in 

any legally significant way because that action itself was 

caused by the same alleged fraud that caused EIG’s injury.

EIG’s allegation that Petrobras committed fraud 

distinguishes this case from a Second Circuit case Petrobras 

relies on. In Virtual Countries, Inc. v. Republic of South Africa, 

300 F.3d 230, 232–33 (2d Cir. 2002), South Africa issued a 

press release asserting its ownership of the domain name 

“southafrica.com.” Virtual Countries, a U.S. company, sought 

a declaratory judgment that it owned the domain name and an 

injunction preventing South Africa from litigating the issue in 

an international tribunal. Id. at 234. The asserted basis for FSIA 

jurisdiction was that South Africa’s issuance of the press 

release was a commercial act that caused a direct effect in the 

United States by virtue of Virtual Countries’ financial losses 

stemming from negative investor reaction to the press release. 

Id. at 235. The Second Circuit held that the press release caused 

no direct U.S. effect because investors “formed their own 

independent assessments of [South Africa’s] intentions and the 

possible effect of those intentions on Virtual Countries and 

people who would do business with it,” rendering any U.S. 

effect “indirect.” Id. at 237.

Here, by contrast, EIG’s alleged injury—being 

fraudulently induced to invest in Sete—occurred well before 

Operation Car Wash came to light, and certainly before the 

lenders reacted to the revelation of Petrobras’s alleged fraud. 

At this preliminary stage of the litigation, EIG need not 

precisely measure the amount of its damages. It is enough that 

Petrobras’s alleged fraud necessarily made EIG’s investment 

less valuable, even if only to the extent that EIG’s money was 

used to pay bribes and kickbacks rather than to pay 
13

shipbuilders.5 The lenders’ withdrawal did not cause EIG’s 

alleged damages, it simply confirmed them.

2. The path of EIG’s losses through

Luxembourg is irrelevant

Petrobras’s remaining argument is that any effect its 

actions had in the United States was mediated through 

Luxembourg—where EIG created corporate subsidiaries 

through which it funneled its Sete investment—and therefore 

was not “direct.” Petrobras, EIG and the district court have all 

cast this as a debate over the locus of Petrobras’s alleged tort, 

which we have previously identified as one factor in 

determining whether a tort causes a direct effect in the United 

States. See Bell Helicopter Textron, Inc. v. Islamic Republic of 

Iran, 734 F.3d 1175, 1184 (D.C. Cir. 2013). But the third clause 

of the commercial activity exception turns on the requisite site

of the direct effects of the defendant’s alleged tort, not its

“locus” as a matter of tort law. It may well be—although we 

need not decide today—that a U.S. locus is sufficient (but not 

necessary) to establish jurisdiction under the FSIA. The 

 5 Federal securities law, by analogy, allows a plaintiff to recover 

damages for securities that are devalued as a result of the defendant’s 

fraudulent statements or omissions, but only as measured by “the 

depreciation in value of such security resulting from such [statement 

or omission] as to which [the defendant’s] liability is asserted.” 15 

U.S.C. § 77k(e). This “loss-causation rule” ensures that securities 

law does not become an insurance policy to protect against bad 

investments. But the law also provides that the market’s reaction to 

corporate fraud is a sound measure of loss causation. See id.

(authorizing damages measured by “the difference between the 

amount paid for the security [and] the value thereof as of the time 

such suit was brought,” subject to adjustment if defendant establishes 

portion of difference is not attributable to fraud).
14

inverse, however, is not true: a foreign locus does not always 

mean that a tort causes no “direct effect” in the United States.

To our knowledge no court has held otherwise. In 

Atlantica, 813 F.3d 98, 109 n.5, the Second Circuit observed 

that “for FSIA purposes, we have found a direct effect (at least) 

at ‘the locus of the tort,’” and noted, id. at 113 n.7, that an earlier 

Second Circuit case, Antares Aircraft, L.P. v. Federal Republic 

of Nigeria, 999 F.2d 33, 36 (2d Cir. 1993), expressly reserved 

the question whether a foreign tort can cause a direct effect in 

the United States. Petrobras repeatedly quotes the Second 

Circuit’s statement in Antares Aircraft that “[i]n tort, the analog 

to contract law’s place of performance is the locus of the tort.”

999 F.3d at 36. But the court went on to say that “the analogy 

is not precise” and, “[a]lthough a contractual provision 

designating the United States as the place of performance is 

sufficient to vest jurisdiction under the FSIA, a foreign tort is 

not necessarily sufficient to deprive federal courts of 

jurisdiction.” Id. (emphasis in original).

Odhiambo v. Republic of Kenya, 764 F.3d 31, 42–43 (D.C. 

Cir. 2014), is also inapposite because, as a contract case, “the 

analogy is not precise” to a tort case like this one. In Odhiambo

we rested our rejection of FSIA jurisdiction on the lack of a 

place-of-performance clause in the contract between the 

plaintiff and the sovereign defendant. We reasoned that if a 

“pay wherever you are” contract can support jurisdiction of a 

foreign state, a plaintiff could then unilaterally create 

jurisdiction simply by traveling to the United States. Id. at 40–

41. The investment agreement between EIG and Sete does not 

designate a U.S. place of performance, but EIG’s argument 

is—in part—that it would never have signed the investment 

agreement (which it did in Washington, D.C.) if Petrobras and 

Sete had not fraudulently induced it to do so. JA14. More to the 

point, EIG alleges that its United States presence was not mere 
15

happenstance to Petrobras and Sete, but that Petrobras and Sete 

“specifically targeted” U.S. investors. JA25. Accepting these 

allegations as true, Odhiambo’s concern over plaintiffs 

unilaterally creating U.S. jurisdiction is misplaced here.

For the same reason, we are untroubled by the Second 

Circuit’s assertion in Antares Aircraft that “some financial loss 

from a foreign tort cannot, standing alone, suffice to trigger the 

exception,” 999 F.2d at 36, because EIG’s financial loss does 

not “stand[] alone.” Rather, its financial loss is alleged to have 

resulted from the years-long scheme to part EIG from its 

money under false pretenses with the goal of enriching corrupt 

Brazilian executives and officials. See JA25. At least some of 

the misstatements and omissions in service thereof took place 

in the United States, where the ultimate consequences of the 

fraud were later felt. JA15, 17.

Neither the Second Circuit precedent nor—more on 

point—our own Bell Helicopter and Odhiambo nor any other 

case on which Petrobras relies holds that a tort’s foreign locus, 

without more, means that it causes no direct effect in the United 

States. Assuming arguendo that Luxembourg was the locus of 

Petrobras’s alleged fraud, we must nevertheless determine 

whether the alleged fraud “cause[d] a direct effect in the United 

States.” The key to Petrobras’s theory that EIG was injured (if 

at all) in Luxembourg is that EIG “booked the loss” from its 

Sete investment in Luxembourg and only somewhere down the 

line was that loss felt, indirectly, in the United States. Three 

flaws doom Petrobras’s argument.

First, the legal significance of corporate form in an FSIA 

action is not as settled as Petrobras suggests. On this point

Petrobras’s reliance on Dole Food Co. v. Patrickson, 538 U.S. 

468, 474 (2003), is misplaced. To determine whether a foreignstate defendant is immune from suit, the Congress indeed 
16

“elected to hew to ‘the general rules regarding corporate 

formalities,” Reply Br. 8 (quoting Dole Food, 538 U.S. at 476),

including the principle that “the corporation and its 

shareholders are distinct entities.” Dole Food, 538 U.S. at 476. 

Thus, the Supreme Court concluded that “[a] corporation is an 

instrumentality of a foreign state under the FSIA only if the 

foreign state itself owns a majority of the corporation’s shares.”

538 U.S. at 477. But Petrobras asks us to fashion the Dole Food

principle of corporate formalism—which narrowed the scope 

of foreign-state immunity—into a limitation on what entity can 

be an FSIA plaintiff, with the effect of broadening the scope of 

foreign-state immunity. We decline the invitation.

The second flaw in Petrobras’s focus on the Luxembourg 

subsidiaries is that it requires an unrecognized identity between 

corporate citizenship and the locus of an investment loss. In 

Weltover, the Supreme Court expressly rejected the argument 

that a plaintiff’s foreign citizenship necessarily determines

FSIA jurisdiction. 504 U.S. at 619 (FSIA jurisdiction 

established notwithstanding plaintiffs were “all foreign 

corporations with no other connections to the United States”) 

(citing Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 

489 (1983) (FSIA “allow[s] a foreign plaintiff to sue a foreign 

sovereign in the courts of the United States, provided the 

substantive requirements of the Act are satisfied.”)). In 

Atlantica, 813 F.3d at 111, a case upon which Petrobras heavily 

relies, most of the plaintiffs were not U.S. citizens. The Second 

Circuit nevertheless held that FSIA jurisdiction extended to the 

foreign plaintiffs’ claims even though they did not show—and 

apparently could not show—any harm to themselves in the 

United States, but only to their U.S.-citizen co-plaintiffs. 813 

F.3d at 112 (“[H]ad all of the Plaintiffs been foreigners, they 

could have successfully premised FSIA jurisdiction on the 

effect that [the defendant’s] alleged misrepresentations had on 

non-party United States investors, provided that Plaintiffs 
17

could adequately establish the existence of United States 

investors so affected.”).

The third defect in Petrobras’s “locus” argument is that, 

although EIG may have “booked the loss” in Luxembourg—a 

questionable proposition as there is no record support that EIG 

Luxembourg maintains any Luxembourg accounts as it has no 

employees there and receives its mail at a U.S. address —

presumably EIG would have booked a loss in the same amount 

in the United States. See Fin. Accounting Standards Board, 

Statement of Financial Accounting Standards No. 157: Fair 

Value Measurements (Sept. 2006) (requiring “mark-tomarket” accounting reflecting fair market value of investment 

assets). Petrobras cannot avoid U.S. jurisdiction because the 

effects of its fraud ricocheted halfway around the globe before 

coming to rest in EIG’s Washington, D.C. office. In Weltover, 

the Supreme Court upheld FSIA jurisdiction even though the 

only connection between the defendant’s actions and the 

United States was that “[m]oney that was supposed to have 

been delivered to a New York bank for deposit was not 

forthcoming.” Weltover, 504 U.S. at 619. There is no basis to 

treat EIG’s investment loss differently from the failure to 

deposit scheduled interest payments in New York bank 

accounts.

For the foregoing reasons, we conclude that Petrobras’s 

commercial activity in Brazil caused a direct effect in the 

United States, including a direct effect on EIG. Accordingly, 

Petrobras is not immune from EIG’s suit and the district court’s 

order denying dismissal is affirmed.

So ordered.
SENTELLE, Senior Circuit Judge, dissenting: While Irespect

my colleagues’ careful and well-constructed opinion, I

nonetheless remain unconvinced that the courts of the United

States have jurisdiction over this matter under the Foreign

Sovereign Immunities Act. 28 U.S.C. §§ 1330, 1604-1606. 

While I agree with my colleagues that plaintiffs-appellees have

established that the acts of the Brazilian agency may have

“effects” in the United States, the controlling issue in the case is

whether they have shown direct effects. As that is the sole

controlling issue in the case, I will not belabor or contest the

majority’s statement of the facts, but will deal only with that

issue.

As the majority correctly reasons, Petrobras, an

instrumentality of the government of Brazil, “‘is presumptively

immune from the jurisdiction of United States courts; unless a

specified exception applies, a federal court lacks subject-matter

jurisdiction over a claim against a foreign state.’” Maj. Op. at 7-

8 (quoting Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993)). 

The statutory exception relied upon by appellee and the majority

arises from a provision of the Foreign Sovereign Immunities

Act, 28 U.S.C. § 1605(a)(2). In relevant part, that statute

provides jurisdiction to the courts of the United States over a

case involving a commercial activity that “causes a direct effect

in the United States.” Id. (emphasis added). While the court

sets forth an impressive analysis of the causation of the effects,

that is not sufficient. The statute requires a direct effect. It is

“one of the most basic” canons of statutory interpretation that “a

statute should be construed so that effect is given to all its

provisions.” Corley v. United States, 556 U.S. 303, 314 (2009). 

The adjective “direct” is as much a provision of the statute as the

noun “effects.” We must assume that Congress intended each

word to carry its plain and usual meaning. The failure of Sete

as described in the majority opinion obviously had effects. 
2

Were those effects direct ones in the United States? It is not

apparent that they were.

As the majority notes, the EIG Funds formed EIG Sete

Parent SARL as a Luxembourg corporation. The Luxembourg

corporation formed EIG Sete Holdings SARL, also a

Luxembourg corporation. EIG Sete Holdings invested $221

million in FIP Sondas, a Brazilian partnership, which ultimately

invested the funds in Petrobras. Thus, the investments, the loss

of which constituted the harmful effects of the failure of Sete,

flowed from the EIG Funds to EIG Sete Parent, to EIG Sete

Holdings, to FIP Sondas, and only ultimately to Sete itself. The

effects in the United States of the alleged tortious conduct in

Brazil, therefore, were at least three steps removed. This does

not seem to comport with normal understandings of “direct,”

which is defined as “stemming immediately from a source.” 

Direct, MERRIAM-WEBSTERDICTIONARY, http://www.MerriamWebster.com/dictionary/direct (last visited June 19, 2018).

None of the cases cited by appellee or relied upon by the

majority provide a basis for concluding that those effects were

“direct” in the United States. Odhiambo v. Republic of Kenya,

764 F.3d 31 (D.C. Cir. 2014), as the majority discusses,

concerned a rejection of FSIA jurisdiction on the lack of a place

of performance clause in a contract. Maj. Op. at 14. While the

majority is correct that this does not mandate the rejection of

jurisdiction in the present case, it certainly does nothing to

establish the directness of effects warranting the assumption of

jurisdiction under § 1605(a)(2). 

Similarly, as the majority again notes, the Second Circuit’s

assertion that “some financial loss from a foreign tort cannot,

standing alone, suffice to trigger the exception,” Antares

Aircraft, LV v. Fed. Rep. of Nigeria, 999 F.2d 33, 36 (2d Cir.

1993), may not mandate rejection of jurisdiction on the present
3

facts. Nonetheless, it is certainly consistent with a conclusion 

that the exception does not apply in this case. 

Neither the cases discussed above, nor any of the other

cases relied upon by the majority, mandate a conclusion that a

loss suffered by a Luxembourg entity, owned by another

Luxembourg entity, in turn owned by United States entities,

constitutes a direct effect in the United States. Implications of

a holding to that effect seem to me to be inconsistent with

Congress’s express language in the relevant exception. Where

do we cut off the chain between an effect and a direct effect to

give meaning to the congressional expression? If the plaintiff in

this case were not EIG but a shareholder of EIG, would that

shareholder’s loss be direct? I think not. It seems unlikely that

Congress would have included as plain a word as “direct” in the

creation of an exception to foreign sovereign immunity unless

it had more apparent content than the majority’s interpretation

would allow.

In the end, for the reasons set forth above, I respectfully

dissent.