Opinion ID: 770968
Heading Depth: 2
Heading Rank: 1

Heading: Subject Matter Jurisdiction And The Foreign Sovereign Immunity Act

Text: 27 Before proceeding to the other issues raised in these appeals, we must first address whether the district court would have subject matter jurisdiction over any case that Dead Sea properly removed, for original jurisdiction is absolutely essential to the maintenance of an action in federal court. See Avitts v. Amoco Prod. Co., 53 F.3d 690, 693 (5th Cir. 1995). If we conclude that the district court lacked subject matter jurisdiction, we have no choice but to remand the cases to state court. See 28 U.S.C. § 1447(c) (If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.). We review questions of federal subject matter jurisdiction de novo. See United States v. Teran, 98 F.3d 831, 833-34 (5th Cir. 1996). 28 The district court based its jurisdiction solely on Dead Sea's presence in the cases, concluding that Dead Sea was a foreign state entitled to remove to federal court and that its waiver of sovereign immunity conferred jurisdiction. Under the express provisions of 28 U.S.C. § 1330, the district courts are vested with original jurisdiction of civil actions against a foreign state as defined by § 1603(a), as to which the foreign state is not entitled to immunity under §§ 1605-1607. Furthermore, according to the federal removal statutes, a foreign state, as defined in 28 U.S.C. § 1603(a), may remove any civil action brought against it in a state court. See 28 U.S.C. § 1441(d). Section 1603 provides in pertinent part: 29 (a) A foreign state, . . . includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b). 30 (b) An agency or instrumentality of a foreign state means any entity -- 31 (1) which is a separate legal person, corporate or otherwise, and 32 (2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and 33 (3) which is neither a citizen of a State of the United States . . ., nor created under the laws of any third country. 34 28 U.S.C. § 1603. Dead Sea is not a political subdivision of a foreign state; therefore, to pass muster as a foreign state, it must be an agency or instrumentality of a foreign state as defined in subsection (b). Id. None of the parties question that Dead Sea meets the first and third requirements of that subsection; the only issue is whether a majority of Dead Sea's shares are owned by a foreign state, as required by (b)(2). 35 Indisputably a foreign state, the State of Israel owns 75.3% of Israel Chemicals Limited, an entity which owns 88.2% of Dead Sea Works Limited, which in turn owns 100% of Dead Sea. Through this tiered structure, there is no question that Israel indirectly owns a majority interest in Dead Sea. Plaintiffs insist, however, that indirect ownership is insufficient to qualify an entity for foreign state status. We disagree. Based on our reading of the statute, we discern nothing to support the proposition that indirect ownership of the requisite percentage precludes an entity from qualifying as a foreign state. 36 The plain language of the statute simply requires ownership by a foreign state. It draws no distinction between direct and indirect ownership; neither does it expressly impose a requirement of direct ownership. Indeed, we have previously indicated that indirect ownership is sufficient to confer foreign state status. In Linton v. Airbus Industrie, we stated: 37 [T]he resolution of the Airbus Defendants' claim of immunity turns on whether through tiering a foreign state's ownership interest can be attributed when that foreign state did not own a majority interest in the company that held the ownership interest in Airbus . . . .[Section 1603], however, erects no explicit bar to the methods by which a foreign state may own an instrumentality, merely requiring that the entity claiming immunity -- not its parent -- have a majority of [its] shares or other ownership interest . . . owned by a foreign state or a political subdivision thereof. There is no mention of voting or control majority, thus equitable or beneficial majority ownership is not expressly prohibited from serving. 38 30 F.3d 592, 598 n.29 (5th Cir. 1994) (citations omitted). Should any doubt remain concerning this Circuit's position on tiering or indirect ownership, we squarely hold today that indirect or tiered majority ownership is sufficient to qualify an entity as a foreign state, assuming that all other requirements are met. In so doing, we join at least two other Circuits that have considered the issue and reached the same conclusion. See In re Aircrash Disaster Near Roselawn, Ind. on Oct. 31, 1994, 96 F.3d 932, 941 (7th Cir. 1996); Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 426-27 (7th Cir. 1993); and Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 449-50 (6th Cir. 1988). But see Gates v. Victor Fine Foods, 54 F.3d 1457, 1462 (9th Cir. 1995). We hold, therefore, that Dead Sea is a foreign state for purposes of the FSIA and can create federal subject matter jurisdiction in actions that it properly removes to federal court. We turn next to consider the validity of Dead Sea's removals.