Wye Oak Technology, Inc. v. Republic of Iraq

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 13, 2024 Decided July 16, 2024

No. 23-7009

WYE OAK TECHNOLOGY, INC.,

APPELLEE

v.

REPUBLIC OF IRAQ AND MINISTRY OF DEFENSE OF THE

REPUBLIC OF IRAQ,

APPELLANTS

Consolidated with 23-7013

Appeals from the United States District Court

for the District of Columbia

(No. 1:10-cv-01182)

Boaz S. Morag argued the cause for appellants/cross-

appellees. With him on the briefs was Nowell D. Bamberger.

Neal Kumar Katyal argued the cause for appellee/cross-

appellant. With him on the briefs were C. Allen Foster,

William E. Havemann, and Reedy C. Swanson.

2

Before: MILLETT and WALKER, Circuit Judges, and

GINSBURG, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge: In late-summer 2003, a small

American company named Wye Oak Technology, Inc. entered

into a contract with the Iraqi Ministry of Defense to rebuild

Iraq’s largely destroyed military, with the cost financed by

Iraq. Wye Oak performed successfully under the contract for

nearly five months. But Iraq refused to pay and gave the

promised money to someone else. When Wye Oak’s owner

flew to Iraq to try to obtain the payment due, he was shot and

killed by unidentified assailants. Wye Oak eventually closed

shop in Iraq with the payment dispute still unresolved.

Years later, Wye Oak sued Iraq in a United States federal

district court for breach of contract. After a decade of

litigation, the district court awarded Wye Oak more than $120

million in damages.

On appeal, Iraq does not dispute that it breached its

agreement with Wye Oak. It argues instead that it is

completely immune from suit and that, alternatively, the

district court’s damage award was too high. Wye Oak, for its

part, contends that the damage award was too low.

Whatever the merits of the damages dispute, we cannot

reach it. Iraq is immune from suit, so we have no jurisdiction.

We accordingly reverse the district court’s judgment and

remand for dismissal of the case.

3

I

A

Under the Foreign Sovereign Immunities Act (“FSIA”), a

foreign state is immune from civil suit in the United States

unless the suit falls under one of the Act’s enumerated

exceptions. 28 U.S.C. § 1604; Verlinden v. Central Bank of

Nigeria, 461 U.S. 480, 488–489 (1983).

The “most significant” of these exceptions is the

“commercial” exception. Republic of Argentina v. Weltover,

Inc., 504 U.S. 607, 611 (1992). It provides that a foreign state

is not immune when the action is based

[1] upon a commercial activity carried on in the

United States by the foreign state; or [2] upon an act

performed in the United States in connection with a

commercial activity of the foreign state elsewhere; or

[3] 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).

Only the third clause of the commercial exception is at

issue here. To establish a statutory exception to Iraq’s

sovereign immunity under that clause, Wye Oak must show

that its lawsuit is (1) based on an act by the foreign state outside

the United States; (2) that was taken in connection with

commercial activity; and (3) that caused a direct effect in the

United States. 28 U.S.C. § 1605(a)(2); Weltover, 504 U.S. at

611.

4

The first two elements of that test have already been

resolved in Wye Oak’s favor. In a prior appeal in this case, we

held that this lawsuit is based on an act that occurred outside

the United States because Iraq breached its contract with Wye

Oak to pay Wye Oak in Iraq for work performed in Iraq. Wye

Oak Tech., Inc. v. Republic of Iraq, 24 F.4th 686, 703 (D.C.

Cir. 2022) (Wye Oak II). We also held that the breach was

connected to a commercial activity because Iraq contracted

with a private entity, Wye Oak, for military reconstruction

services. Id.

Before us is the remaining jurisdictional question of

whether Iraq’s breach “cause[d] a direct effect in the United

States[.]” 28 U.S.C. § 1605(a)(2).

To answer that question in Wye Oak’s favor, we would

have to find an effect in the United States that had “no

intervening element, but rather, flow[ed] in a straight line

without deviation or interruption” from the breach in Iraq.

Princz v. Federal Republic of Germany, 26 F.3d 1166, 1172

(D.C. Cir. 1994) (quotation marks omitted); Weltover, 504 U.S.

at 618 (“[A]n effect is direct if it follows as an immediate

consequence of the defendant’s activity.”) (formatting

modified).

B

In the early 2000s, the United States led a multi-national

military coalition that toppled Saddam Hussein’s government

in Iraq. Wye Oak Tech., Inc. v. Republic of Iraq, No. 1:10-cv-

01182, 2019 WL 4044046, at *3 (D.D.C. Aug. 27, 2019) (Wye

Oak I). The coalition then handed over power to an interim

Iraqi government. Id.

5

As the United States worked to transition Iraq’s

governance to Iraqi politicians and voters, it also worked to

hand over military security to Iraqi armed forces. Wye Oak I,

2019 WL 4044046, at *3. The invasion, though, had left Iraq’s

military structure, equipment, and personnel in ruins.

In 2004, Wye Oak and its president, Dale Stoffel,

contacted the Iraqi Ministry of Defense with a plan to inventory

and assess Iraq’s existing military equipment, refurbish what

equipment it could, and sell the rest for scrap. Wye Oak II, 24

F.4th at 692. With the recommendation of U.S. military leaders

in Iraq, the Ministry agreed. Wye Oak I, 2019 WL 4044046, at

*4.

To implement that plan, the Ministry and Wye Oak signed

a Broker Services Agreement in August 2004. Wye Oak I, 2019

WL 4044046, at *4. The Agreement made Wye Oak the “sole

and exclusive Broker” for all matters related to refurbishing

Iraqi military equipment or selling it as scrap. J.A. 479 (Broker

Services Agreement). The Ministry agreed “not to conduct any

Military Refurbishment Services or arrange for the use, sale or

lease of any Refurbished Military Equipment provided for

under th[e] Agreement nor engage in any scrap sales, except

pursuant to an engagement with [Wye Oak] under th[e]

Agreement.” J.A. 479 (Broker Services Agreement). The

Agreement also set out a payment process under which Wye

Oak would submit invoices to the Ministry. The Ministry

would then “make full payment on such invoice[s] immediately

upon presentation * * * in the form and manner as directed by

[Wye Oak].” J.A. 481 (Broker Services Agreement).

Wye Oak performed as promised under the Agreement. In

Iraq, it worked with Dale’s other company, CLI Corporation,

to hire contractors, began its initial assessment of equipment,

and prepared for refurbishment and scrap operations. Wye Oak

6

I, 2019 WL 4044046, at *8. Back in the United States, Dale’s

brother David Stoffel managed some of the company’s

business affairs from West Virginia. Id. at *8. He created a

computer program to inventory and track all the equipment

Dale was handling abroad, oversaw Wye Oak’s electronic

communications, and communicated with the Iraq-based

members of Wye Oak to see what support they might need. Id.

at *15.

Several months into the agreement, Wye Oak presented

the Iraqi Ministry of Defense with three invoices detailing its

costs and the amount it charged for overhead and profit. Wye

Oak I, 2019 WL 4044046, at *9. Together, the invoices totaled

nearly $25 million. Id. Wye Oak designated the Ministry’s

Baghdad office as the place of payment. Wye Oak Tech., Inc.

v. Republic of Iraq, No. 1:10-cv-1182, 2022 WL 17820569, at

*6–7 (D.D.C. Dec. 20, 2022) (Wye Oak III); J.A. 489–491

(Invoices).

The Ministry agreed to pay. Wye Oak I, 2019 WL

4044046, at *9. But it gave the money to a Lebanese

businessman named Raymond Zayna instead. It did not pay a

penny to Wye Oak. See id. at *8, *13–14.

Wye Oak pursued various efforts to secure payment. Dale

flew back to the United States where he and David contacted

several American officials to try to enlist support for Wye

Oak’s efforts. Wye Oak I, 2019 WL 4044046, at *15. As a

result of that outreach, a Senator contacted the State

Department and asked for its assistance. Wye Oak III, 2022

WL 17820569, at *15. The State Department talked to the

Department of Defense. Id. The Department of Defense then

met with Wye Oak and appointed a representative to advise the

Ministry. Id.

7

In December, Dale flew back to Iraq to ensure Wye Oak’s

work remained on schedule and to try to resolve the payment

issue. Wye Oak I, 2019 WL 4044046, at *16. When Dale

arrived in Iraq, he attended a meeting with Ministry officials,

Zayna, and U.S. military officers. Id. Everyone agreed that

Zayna and the Ministry would give Wye Oak the money. See

id. at *16–17. Dale then went on a tour of Iraq to survey Wye

Oak’s progress. Id. at *17.

Days later, Dale received word that payment was ready in

Baghdad. He drove toward the city to receive it. Wye Oak III,

2022 WL 17820569, at *3. On the way, unknown assailants

attacked his car and shot him and a companion to death. Wye

Oak I, 2019 WL 4044046, at *17. All of Wye Oak’s personnel

then left Iraq permanently. Id. at *18.

Wye Oak kept managing its contractors in Iraq for a few

weeks after Dale’s death. But without payment, it soon had to

cease all work in Iraq. Wye Oak I, 2019 WL 4044046, at *18–

19. Back in the United States, David stopped developing his

software program and monitoring electronic communications

from Iraq. Wye Oak III, 2022 WL 17820569, at *12. Wye Oak

cancelled multiple planned business ventures, including plans

to subcontract some of its work to CLI, expand its U.S.-based

computer infrastructure and personnel, and build an

international support network focused on Eastern Europe. Id.

at *10–13.

C

1

Wye Oak sued Iraq in the Eastern District of Virginia for

breach of contract. Wye Oak Tech., Inc. v. Republic of Iraq,

No. 1:09-cv-793, 2010 WL 2613323, at *1 (E.D. Va. June 29,

8

2010), aff’d 666 F.3d 205. That court transferred the case to

the United States District Court for the District of Columbia.

Id.

The district court found Iraq liable after an eight-day bench

trial. Wye Oak I, 2019 WL 4044046, at *54. The court first

determined that Iraq bore responsibility for any breach of the

Agreement by its Ministry of Defense. Id. at *21. The district

court then held that it had jurisdiction under the commercial

exception’s second clause because it found that Wye Oak’s suit

was based on an act performed in the United States in

connection with a commercial activity of the foreign state

elsewhere. Id. at *21–24. The court did not address the

exception’s other clauses. Turning to the merits, the district

court found that Iraq had materially breached the agreement

when it failed to pay money due under the three invoices. Id.

at *24–28. It ordered Iraq to pay Wye Oak over $120 million.

Id. at *54; Wye Oak I, Order, No. 553 (Nov. 15, 2019).

Iraq appealed and this court vacated the district court’s

judgment. Wye Oak II, 24 F.4th at 703–704. We held that the

commercial exception’s second clause did not apply to Wye

Oak’s breach-of-contract suit. Id. at 702. That clause, we

explained, is triggered only when the foreign sovereign

engages in action inside the United States, while Wye Oak’s

suit was based solely on Iraq’s conduct in Iraq. Id.

We then concluded that it was “plausible” that Iraq might

lose immunity under the commercial exception’s third clause.

Wye Oak II, 24 F.4th at 703. We held that the first two elements

of that test were met because the suit was based on (1) an act

outside the United States that (2) related to Iraq’s commercial

activity. Id. We remanded the case to the district court to

develop a factual record to determine whether Iraq’s breach

9

had a “direct effect” inside the United States. Id. (quoting 28

U.S.C. § 1605(a)(2)).

3

The district court developed the needed factual record and

found that Iraq’s breach had direct effects within the United

States. Wye Oak III, 2022 WL 17820569.

At the outset, the court rejected a number of Wye Oak’s

claimed direct effects. It ruled that Iraq’s failure to pay the

money it owed into Wye Oak’s Pennsylvania-based bank

account did not cause a “direct effect” in the United States

because nothing in the Agreement obligated Iraq to deposit the

money in the United States. Wye Oak III, 2022 WL 17820569,

at *5–8. The Agreement instead provided that Iraq would pay

Wye Oak “immediately” upon receiving an invoice “in the

form and manner as directed by [Wye Oak,]” J.A. 481, and

the invoices Wye Oak submitted specified payment in

Baghdad, J.A. 489–491 (Invoices); Wye Oak III, 2022 WL

17820569, at *7–8.

The court also found that Iraq did not “target” Wye Oak in

the United States for a commercial relationship because Iraq

did not take “any affirmative actions” in the United States to

identify Wye Oak or solicit a contractual commitment. Wye

Oak III, 2022 WL 17820569, at *8–9. Instead, Wye Oak

approached the Iraqi government in Iraq about doing business

for it in Iraq. Id. at *9. Regardless of whether Iraq might have

anticipated that Wye Oak would feel some loss from the breach

in the United States, the court held that was not enough to

support jurisdiction. Id. at *10.

As for Wye Oak’s argument that the breach interrupted its

subcontract with U.S.-based CLI, the court reasoned that the

10

Agreement did not require that subcontract, and so its loss was

not a direct effect of the breach. Wye Oak III, 2022 WL

17820569, at *10–11.

The district court, however, found that there were other

direct effects in the United States. It noted that Wye Oak

performed “a number of activities in the United States”— such

as the development of inventory-tracking software and

management of Wye Oak’s electronic communications—in

connection with its work under the Agreement. Wye Oak III,

2022 WL 17820569, at *12. Iraq’s breach ground this

domestic work to a halt. Id.

The court additionally found that the breach disrupted

Wye Oak’s “clear” plans to expand its operations in the United

States to support its work for Iraq, and that Iraq knew “from

the start of the relationship” how important this work was to

Wye Oak’s business. Wye Oak III, 2022 WL 17820569, at *12,

*14. The court added that Iraq’s failure to pay also stopped the

frequent trips Dale and other Wye Oak employees made

between the United States and Iraq and prevented Wye Oak

from building a broad network across Eastern Europe for

refurbishing Soviet-era military supplies. Id. at *13.

The court concluded by finding that Iraq’s breach directly

impacted U.S. diplomatic and military operations in the United

States. Wye Oak III, 2022 WL 17820569, at *15. When Iraq

did not pay, Wye Oak reached out to several U.S. officials in

the United States for assistance, and some of those officials

took steps—in the United States—to help. Id. at *15–16.

According to the court, the breach also interfered with U.S.

efforts to stand up a strong Iraqi military to replace the U.S.

military in Iraq. Id. at *17–18. This interference, the court

ruled, impacted policy decisions made in Washington about its

readiness to withdraw American troops from Iraq. Id.

11

Having found jurisdiction under the commercial

exception, the district court reentered its prior damages order

with the numbers adjusted to account for increased interest.

See Wye Oak III, Judgment, No. 553 (Dec. 20, 2022). Both

parties appealed.

II

We review the district court’s factual findings for clear

error. Wye Oak II, 24 F.4th at 700. We review its legal

interpretation and application of the FSIA de novo. Id.

III

Iraq loses its immunity to this lawsuit only if its breach of

contract caused a direct effect in the United States. It did not.

Iraq was the center of Wye Oak’s entire commercial

relationship with the Ministry, and Iraq is where the breach’s

direct effects occurred. As a result, the district court lacked

jurisdiction over this suit, and so its judgment is vacated, and

the case remanded with instructions to dismiss.1

1

We address only whether the commercial exception’s third

clause applies to this case. Our earlier decision held that its second

clause does not. Wye Oak II, 23 F.4th at 702. Wye Oak makes no

argument that that the first clause is relevant here, and the district

court did not rely on that clause either. That is unsurprising. In cases

like this that involve “a contract executed and performed outside the

United States,” our analysis generally focuses only on the third

clause, and nothing about the facts in this case warrants different

treatment. See Helmerich & Payne Int’l Drilling Co. v. Bolivarian

Republic of Venezuela, 784 F.3d 804, 817 (D.C. Cir. 2015), vacated

on other grounds, 581 U.S. 170.

12

A

The only jurisdictional question left in this case is whether

Iraq’s breach caused a direct effect in the United States. See

28 U.S.C. § 1605(a)(2). A “direct effect” is one that “follows

as an immediate consequence” of the breach. Weltover, 504

U.S. at 618 (quotation marks omitted). Here, all of the

immediate consequences of Iraq’s breach were felt in Iraq, not

the United States.

From the start, Wye Oak and the Ministry fully anchored

their relationship in Iraq. Wye Oak approached the Iraqi

Ministry of Defense, in Iraq, about doing business there. Wye

Oak III, 2022 WL 17820569, at *9. Wye Oak and the Iraqi

government negotiated the scope of that work and executed

their Broker Services Agreement in Iraq. Id. The work

involved rebuilding Iraqi military equipment for use by Iraq’s

armed forces. Wye Oak I, 2019 WL 4044046, at *5–6; J.A. 479

(Broker Services Agreement). The equipment was already in

Iraq, and the maintenance and refurbishment work were to be

performed there as well. Wye Oak I, 2019 WL 4044046, at *8;

J.A. 479 (Broker Services Agreement). Wye Oak’s personnel

travelled to Iraq to visit its military bases and to assess their

stores of weapons and equipment. See Wye Oak III, 2022 WL

17820569, at *13. Wye Oak hired contractors to come to Iraq

to work at those bases. Wye Oak I, 2019 WL 4044046, at *8.

And Iraq used the refurbished equipment in Iraq to help defend

its people. Id. at *18–19.

The breach occurred in Iraq too. When the time came for

payment, Wye Oak chose Iraq as the place where the Ministry

should pay. J.A. 489–491 (Invoices). The Ministry in Iraq

chose not to do so, and instead paid someone else in Iraq.

Those withheld dollars—which should have changed hands in

13

Baghdad—were meant to fund Wye Oak’s ongoing work in

Iraq.

B

Wye Oak counters that, despite these extensive ties to Iraq,

there still were three alleged “direct effects” in the United

States: the missed payment, stymied business activities for the

Pennsylvania-based Wye Oak operation, and diplomatic and

military reactions to the contract breach. None qualifies as a

direct effect in the United States within the meaning of the

FSIA’s commercial exception.

1

Wye Oak’s first argument is that the missing funds from

Iraq’s refusal to pay are a direct effect in the United States. But

Wye Oak has shown no such domestic harm because Wye Oak

asked for the payment to be made in Iraq, not in the United

States, and not to a United States bank.

Generally, if a foreign state is obligated to pay money due

under a contract into a U.S. bank account—and does not—then

those missing funds are considered a direct effect in the United

States. See Helmerich, 784 F.3d at 818.

On the other hand, we have repeatedly held that when a

foreign state merely has the discretion to pay in the United

States, the missing funds do not have a direct effect in the

United States. That is because, when the foreign state is not

“supposed” to send money into the United States, its failure to

pay the plaintiff has no “immediate consequence” there.

Peterson v. Royal Kingdom of Saudi Arabia, 416 F.3d 83, 90–

91 (D.C. Cir. 2005) (internal quotation marks omitted); see

Helmerich, 784 F.3d at 818; Goodman Holdings v. Rafidain

14

Bank, 26 F.3d 1143, 1146 (D.C. Cir. 1994) (no direct effect

when “[n]either New York nor any other United States location

was designated as the place of performance where the money

was supposed to have been paid”) (quotation marks omitted);

Odhiambo v. Republic of Kenya, 764 F.3d 31, 39 (D.C. Cir.

2014) (There is “no direct effect where the foreign sovereign

might well have paid its contract partner through a bank

account in the United States but might just as well have done

so outside the United States.”) (quotation marks omitted).

At Wye Oak’s direction, Iraq was obligated to pay Wye

Oak in Baghdad, not the United States. Wye Oak III, 2022 WL

17820569, at *7. Wye Oak submitted three invoices. Each one

instructed the Ministry to pay Wye Oak “at [the Ministry’s]

Baghdad[,] Iraq office[.]” J.A. 489, 490, 491 (Invoices).

Wye Oak disputes this characterization of Iraq’s

obligation. A month after Iraq paid Zayna instead of Wye Oak,

Dale emailed Zayna to tell him to pay Wye Oak via its

Pennsylvania-based bank account. Wye Oak argues that this

instruction changed Iraq’s payment obligation to the United

States.

But Iraq agreed to pay “pursuant to” the instructions in

Wye Oak’s invoices. J.A. 481 (Broker Services Agreement).

Once it received those invoices, it was obligated to pay

“immediately” and “in the form and manner” Wye Oak had

instructed. J.A. 481 (Broker Services Agreement); J.A. 489

(Invoice) (“Pay Immediate Upon Receipt”); J.A. 490, 491

(Invoices) (same). Iraq never agreed to honor any changes to

those instructions made weeks later by Wye Oak to a third party

in an email. See Wye Oak III, 2022 WL 17820569, at *7 (“[The

Agreement] specified that Wye Oak would be paid pursuant to

the pro forma invoices it submitted.”).

15

Nor, in any event, does the email show that Iraq agreed to

modify the process for receiving payment instructions. Even

assuming Zayna could speak for the Ministry, see Wye Oak III,

2022 WL 17820569, at *2 n.2 (declining to resolve whether

Zayna was Iraq’s agent), Zayna responded to Dale’s email by

refusing to send the money to the United States, id. at *2. He

instead told Dale that he had set up an Iraqi bank account for

payment. J.A. 566 (“Come to Baghdad, I already opened an

account for you in North bank a month ago and you already get

paid a small amount, I’ll feed t[h]is account as much[ ]as you

need to proceed with this project.”). So, to the extent Dale and

Zayna’s email exchange has any relevance, it corroborates that

payment would be in Iraq.

Because Iraq, not the United States, was the place

designated by Wye Oak “where the money was ‘supposed’ to

have been paid[,]” Iraq’s missed payments did not have a

“direct effect” in the United States. Goodman Holdings, 26

F.3d at 1146; see Peterson, 416 F.3d at 90–91.

2

Wye Oak next argues that Iraq’s breach interrupted the

flow of commerce between the United States and Iraq. That

argument fails as well because, for a breach of contract, a halt

in commerce between the United States and another country

counts as a direct effect in the United States only if the contract

“establishe[d] or necessarily contemplate[d] the United States

as a place of performance[.]” Odhiambo, 764 F.3d at 40.

Nothing in Wye Oak’s Agreement with Iraq established or

“necessarily contemplate[d]” performance in the United States.

Odhiambo, 764 F.3d at 40. Quite the opposite. The contract

was for the rehabilitation or scrapping of military equipment

entirely in Iraq. The Agreement appointed Wye Oak as the

16

Ministry’s “sole and exclusive Broker” for “the provision of

Military Refurbishment Services with respect to all of the

various military bases, offices and properties owned by, or

under the control of, the Ministry and/or the Republic of

Iraq[.]” J.A. 479 (Broker Services Agreement). There are no

relevant domestic direct effects when “all activities covered by

the contract would have occurred outside the United States[.]”

Cruise Connections Charter Mgmt. 1, LP v. AG of Canada, 600

F.3d 661, 665 (D.C. Cir. 2010) (citing United World Trade,

Inc. v. Mangyshlakneft Oil Prods. Ass’n, 33 F.3d 1232, 1237–

1239 (10th Cir. 1994)).

True, the same Ministry official who signed the

Agreement also gave Wye Oak a letter that represented that

Wye Oak’s work was to be undertaken “with the assistance and

cooperation of the United States Mi[l]itary and all coalition

partners as may[ ]be required by law, statute or as described in

[the Agreement.]” J.A. 486 (Letter from Ministry to Wye Oak)

(emphasis omitted). But that language does not appear in the

Agreement. And nothing in the terms or subject of the

Agreement itself shows that it necessarily contemplated

performance in the United States. See Odhiambo, 764 F.3d at

40; contrast EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro,

S.A., No. 22-7118, slip op. at 12 (D.C. Cir. June 11, 2024)

(foreign fraud caused direct effect in United States because the

plaintiffs’ presence in the United States was the reason the

foreign state targeted them, “not mere happenstance”)

(quotation marks omitted).

Anyhow, the letter must be read in the context of a

military-rehabilitation service to be performed on Iraqi

equipment in Iraq. See J.A. 1409 (Wye Oak’s witness

describing the letter as “a letter of introduction” that was meant

to “ensure safe passage, or at least uninterrupted passage to

[Iraqi] bases”). Given that setting for the contract’s

17

performance, the letter’s reference most logically refers to the

support and assistance of the United States military and its

coalition partners in Iraq by, for example, providing access to

coalition-run facilities. See Wye Oak I, 2019 WL 4044046, at

*8; J.A. 479–480 (Broker Services Agreement) (directing Wye

Oak to begin work at multiple coalition-run facilities in Iraq).

Iraq, after all, was a place of ongoing hostilities and military

operations, making the support of the United States military in

Iraq critical to Wye Oak’s Iraqi operations.

Given all of that, Wye Oak’s references to scattered

commercial interchanges that dried up after Iraq’s breach come

up short. For example, David Stoffel decided to stop his work

in West Virginia after months of not being paid. But Iraq never

agreed to, or necessarily contemplated, his work in the United

States in the first place. See Odhiambo, 764 F.3d at 40. The

same goes for Wye Oak’s planned American-based expansion:

That was a unilateral business judgment made by Wye Oak that

fell outside the scope of the Agreement. See Cruise

Connections, 600 F.3d at 665.

As for any subcontracts Wye Oak planned to sign for work

done abroad, their failure is not a direct effect in the United

States for two reasons. First, they were not contemplated by

the Agreement. Second, they were to be performed outside the

United States. While some of the envisioned subcontractors

were U.S. companies, “harm to a U.S. citizen, in and of itself,

cannot satisfy the direct effect requirement.” Cruise

Connections, 600 F.3d at 665.

To be sure, one result of Iraq’s breach is that Wye Oak

eventually stopped operations in Iraq. Its U.S.-based personnel

correspondingly stopped traveling to Iraq and no longer

worked in the United States to support those Iraqi operations.

But those “decision[s] to cease business” in the United States

18

did not “flow immediately” from Iraq’s breach. Helmerich,

784 F.3d at 818–819. They were orthogonal to the disrupted

Iraq-based work, especially since the Agreement simply never

established or contemplated any travel or performance in the

United States to begin with. See Cruise Connections, 600 F.3d

at 665; Odhiambo, 764 F.3d at 40.

3

Lastly, Wye Oak argues that the breach had diplomatic and

military impacts in the United States. That argument fares no

better.

Wye Oak is correct that some American government

officials took steps in the United States to assist Wye Oak. For

example, at Wye Oak’s urging, a Senator contacted the State

Department to see if it could help get Wye Oak paid. See Wye

Oak III, 2022 WL 17820569, at *15. The State Department

then spoke with the Department of Defense. Id. The

Department of Defense, in turn, met with Wye Oak and

appointed a representative to advise the Iraqi Ministry on

“acquisition logistics and basing” and to make weekly reports

back to the Department on the Ministry’s progress. Id.; J.A.

1315–1316, Trial Tr. 91:19–92:5; 94:21–95:18 (Dec. 19,

2018).

None of these diplomatic actions amounts to a direct effect

of Iraq’s breach. A direct effect cannot have any “intervening

element” between it and the breach. Princz, 26 F.3d at 1172

(quotation marks omitted). These effects had at least three

intervening and independent elements: Wye Oak’s decision to

seek out the officials; the officials’ own decisions to act based

on Wye Oak’s overtures; and the government’s response to

those overtures. See id.; Helmerich, 784 F.3d at 818–819. The

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Agreement did not contemplate any of those actions. See

Odhiambo, 764 F.3d at 40.

Nor can we brush off those intervening elements as just

additional, but-for causes for diplomatic actions that were

inevitably triggered by Iraq’s breach. See EIG Energy, slip op.

at 13 (holding that the mere existence of “multiple but-for

causes of an injury do[es] not break the chain of causation for

any one of them”) (quotation marks omitted). Iraq broke its

promise to hand over the money in Baghdad. But then Dale

chose to fly back to the United States and petition U.S. officials

for support. Those officials independently opted to listen, and

their subsequent actions were far from a necessary

consequence of Iraq’s failure to pay. See Odhiambo, 764 F.3d

at 44 (Pillard, J., concurring in part) (“[I]n cases in which

parties engage in commercial activities abroad and a plaintiff

thereafter unilaterally decides to relocate to the United States

where he then seeks to enforce claims relating to the foreign

commercial activity, the direct-effects requirement is not

satisfied.”) (citing Peterson, 416 F.3d 83 and Zedan v.

Kingdom of Saudi Arabia, 849 F.2d 1511 (D.C. Cir. 1988)).

Wye Oak next asserts that its mission’s failure hurt U.S.

readiness to withdraw from Iraq, which impacted how

American decisionmakers in Washington approached winding

down the conflict. That argument does not hold up either.

Wye Oak’s work no doubt was an important piece of

rebuilding Iraqi military capability. Wye Oak III, 2022 WL

17820569, at *17. And Iraq’s rehabilitated military was

important to U.S. strategy because the United States anticipated

standing down its own troops as Iraq’s stood up. Id.

But that is not enough. In Princz v. Federal Republic of

Germany, 26 F.3d 1166 (D.C. Cir. 1994), a Holocaust survivor

20

argued that his forced labor in German war factories had direct

effects in the United States because he was contributing to the

Nazi war effort, id. at 1168, 1172–1173. He reasoned that his

work incrementally moved the needle in making the Nazis a

more formidable foe. See id. at 1172. We rejected that

argument, holding that too “[m]any events and actors

necessarily intervened between” his work and “any effect felt

in the United States” for it to constitute a direct effect. Id.

So too here. There were too many discretionary steps

made by too many actors reacting to too many considerations

and circumstances over multiple years to be able to trace the

timing of the eventual withdrawal of American troops from

Iraq directly (or even indirectly) to Iraq’s failure to pay many

years earlier on Wye Oak’s contract. See Weltover, 504 U.S.

at 618 (holding an effect was not direct because it was “too

remote and attenuated”). Courts are particularly ill-equipped

to sort through, in the first instance, causally intertwined

matters involving complex and diplomatically sensitive

pronouncements about strategic military decisionmaking in

overseas hostilities. See Chicago & Southern Air Lines, Inc. v.

Waterman S.S. Corp., 333 U.S. 103, 111 (1948) (Foreign-

policy decisions “are delicate, complex, and involve large

elements of prophecy”; the judiciary often lacks the “aptitude,

facilities [and] responsibility” to evaluate them.); Gilligan v.

Morgan, 413 U.S. 1, 10 (1973) (“[It] is difficult to conceive of

an area of governmental activity in which the courts have less

competence” than “[t]he complex[,] subtle, and professional

decisions as to the composition, training, equipping, and

control of a military force[.]”).

In sum, the record in this case does not show the type of

direct effects in the United States from Iraq’s breach of the

Agreement that would trigger the FSIA’s commercial

exception.

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IV

Because the FSIA’s commercial exception does not apply

in this case, Iraq is immune from suit. The district court

accordingly lacked jurisdiction. We vacate its judgment and

remand for dismissal of the case.

So ordered.