Source: http://www.chanrobles.com/usa/us_supremecourt/461/480/case.php
Timestamp: 2020-01-24 04:58:48
Document Index: 163344416

Matched Legal Cases: ['§ 1330', '§ 1330', '§ 1604', '§ 1605', '§ 1605', '§ 1605', '§ 1605', '§ 1330', '§ 1605']

1. For the most part, the Act codifies, as a matter of federal law, the restrictive theory of foreign sovereign immunity under which immunity is confined to suits involving the foreign sovereign's public acts, and does not extend to cases arising out of its strictly commercial acts. If one of the specified exceptions to sovereign immunity applies, a federal district court may exercise subject matter jurisdiction under § 1330(a), but if the claim does not fall within one of the exceptions, the court lacks such jurisdiction. Pp. 461 U. S. 486-489. chanrobles.com-red
The contract provided that the Nigerian Government was to establish an irrevocable, confirmed letter of credit for the total purchase price through Slavenburg's Bank in Amsterdam. According to petitioner's amended complaint, however, respondent Central Bank of Nigeria, an instrumentality of Nigeria, improperly established an unconfirmed letter of credit payable through Morgan Guaranty Trust Co. in New York. [Footnote 1] chanrobles.com-red
Verlinden then sued Central Bank in the United States District Court for the Southern District of New York, alleging that Central Bank's actions constituted an anticipatory breach of the letter of credit. Verlinden alleged jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1330. [Footnote 4] Respondent moved to dismiss for, among other reasons, lack of subject matter and personal jurisdiction. chanrobles.com-red
The District Court nevertheless dismissed the complaint, holding that a foreign instrumentality is entitled to sovereign immunity unless one of the exceptions specified in the Act applies. chanrobles.com-red
The Court of Appeals for the Second Circuit affirmed, but on different grounds. 647 F.2d 320 (1981). The court agreed with the District Court that the Act was properly construed to permit actions brought by foreign plaintiffs. The court held, however, that the Act exceeded the scope of Art. III of the Constitution. In the view of the Court of Appeals, neither the Diversity Clause [Footnote 6] nor the "Arising Under" Clause [Footnote 7] of Art. III is broad enough to support jurisdiction over actions by foreign plaintiffs against foreign sovereigns; accordingly it concluded that Congress was without power to grant federal courts jurisdiction in this case, and affirmed the District Court's dismissal of the action. [Footnote 8] chanrobles.com-red
For more than a century and a half, the United States generally granted foreign sovereigns complete immunity from suit in the courts of this country. In 11 U. S. 136, the United States had impliedly waived jurisdiction over certain activities of foreign sovereigns. Although the narrow holding of The Schooner Exchange was only that the courts of the United States lack jurisdiction over an armed ship of a foreign state found in our port, that opinion came to be regarded as extending virtually absolute immunity to foreign sovereigns. See, e.g., Berizzi Brothers Co. v. S.S. Pesaro,@ 271 U. S. 562 (1926); Von Mehren, The Foreign Sovereign Immunities Act of 1976, 17 Colum. J. Transnat'l L. 33, 39-40 (1978).
Until 1952, the State Department ordinarily requested immunity in all actions against friendly foreign sovereigns. chanrobles.com-red
An additional complication was posed by the fact that foreign nations did not always make requests to the State Department. In such cases, the responsibility fell to the courts to determine whether sovereign immunity existed, generally by reference to prior State Department decisions. See generally Lowenfeld, Claims Against Foreign States -- A Proposal for Reform of United States Law, 44 N.Y.U.L.Rev. chanrobles.com-red
For the most part, the Act codifies, as a matter of federal law, the restrictive theory of sovereign immunity. A foreign state is normally immune from the jurisdiction of federal and state courts, 28 U.S.C. § 1604, subject to a set of exceptions specified in §§ 1605 and 1607. Those exceptions include actions in which the foreign state has explicitly or impliedly waived its immunity, § 1605(a)(1), and actions based upon commercial activities of the foreign sovereign carried on in the United States or causing a direct effect in the United States, § 1605(a)(2). [Footnote 11] When one of these or the other specified exceptions applies, "the foreign state shall be liable in chanrobles.com-red
On its face, the language of the statute is unambiguous. The statute grants jurisdiction over "any nonjury civil action against a foreign state . . . with respect to which the foreign chanrobles.com-red
Testimony of Bruno A. Ristau, Hearings on H.R. 11315, at 31. As the language of the statute reveals, Congress protected against this danger not by restricting the class of potential plaintiffs, but rather by enacting substantive provisions requiring some form of substantial contact with the United States. See 28 U.S.C. § 1605. [Footnote 15] If an action satisfies the chanrobles.com-red
This Court's cases firmly establish that Congress may not expand the jurisdiction of the federal courts beyond the bounds established by the Constitution. See, e.g., Hodgson v. Bowerbank, 5 Cranch 303 (1809) [memorandum opinion -- omitted]; Kline v. Burke Construction Co., 260 U. S. 226, 260 U. S. 234 (1922). Within Art. III of the Constitution, we find two sources authorizing the grant of jurisdiction in the Foreign Sovereign Immunities Act: the Diversity Clause and the "Arising Under" Clause. [Footnote 17] The Diversity Clause, which provides that the judicial power extends to controversies between "a State, or the Citizens thereof, and foreign States," covers actions by citizens of chanrobles.com-red
The controlling decision on the scope of Art. III "arising under" jurisdiction is Chief Justice Marshall's opinion for the Court in @ 22 U. S. 818. The rule was laid down that
Osborn thus reflects a broad conception of "arising under" jurisdiction, according to which Congress may confer on the federal courts jurisdiction over any case or controversy that might call for the application of federal law. The breadth of that conclusion has been questioned. It has been observed that, taken at its broadest, Osborn might be read as permitting "assertion of original federal jurisdiction on the remote possibility of presentation of a federal question." Textile Workers v. Lincoln Mills, 353 U. S. 448, 353 U. S. 482 (1957) (Frankfurter, chanrobles.com-red
To promote these federal interests, Congress exercised its Art. I powers [Footnote 19] by enacting a statute comprehensively regulating the amenability of foreign nations to suit in the United States. The statute must be applied by the district courts in every action against a foreign sovereign, since subject matter jurisdiction in any such action depends on the existence of one of the specified exceptions to foreign sovereign immunity, 28 U.S.C. 1330(a). [Footnote 20] At the threshold of every action chanrobles.com-red
In rejecting "arising under" jurisdiction, the Court of Appeals also noted that 28 U.S.C. § 1330 is a jurisdictional provision. [Footnote 22] Because of this, the court felt its conclusion compelled by prior cases in which this Court has rejected congressional chanrobles.com-red
attempts to confer jurisdiction on federal courts simply by enacting jurisdictional statutes. In @ 4 U. S. 451-453 (1852), the Court, while upholding a statute granting jurisdiction over vessels on the Great Lakes as an exercise of maritime jurisdiction, rejected the view that the jurisdictional statute itself constituted a federal regulation of commerce upon which "arising under" jurisdiction could be based.
In contrast, in enacting the Foreign Sovereign Immunities Act, Congress expressly exercised its power to regulate foreign commerce, along with other specified Art. I powers. See n19, supra. As the House Report clearly indicates, the primary purpose of the Act was to "se[t] forth comprehensive rules governing sovereign immunity," H.R.Rep. No. 941487, p. 12 (1976); the jurisdictional provisions of the Act are simply one part of this comprehensive scheme. The Act thus does not merely concern access to the federal courts. Rather, it governs the types of actions for which foreign sovereigns chanrobles.com-red
A conclusion that the grant of jurisdiction in the Foreign Sovereign Immunities Act is consistent with the Constitution does not end the case. An action must not only satisfy Art. III, but must also be supported by a statutory grant of subject matter jurisdiction. As we have made clear, deciding chanrobles.com-red
In several related cases involving contracts between Nigeria and other cement suppliers, the Court of Appeals held that statutory subject matter jurisdiction existed under the Act. In those cases, the court held that Nigeria's acts were commercial in nature and "cause[d] a direct effect in the United States," within the meaning of 28 U.S.C. § 1605(a). Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 310-313. Each of those actions involved a contract with an American supplier operating within the United States, however. In the present case, the District Court found that exception inapplicable, concluding that the repudiation of the letter of credit "caused no direct, substantial, injurious effect in the United States." 488 F.Supp. at 1299-1300.