The opinion
Case: 25-10619 Document: 48-1 Page: 1 Date Filed: 04/02/2026
United States Court of Appeals
for the Fifth Circuit
____________ United States Court of Appeals
Fifth Circuit
No. 25-10619
FILED
April 2, 2026
____________
Lyle W. Cayce
Neil McDougall, Clerk
Plaintiff—Appellant,
versus
Saudi Arabian Oil Company, doing business as Saudi Aramco,
Defendant—Appellee.
______________________________
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:24-CV-2564
______________________________
Before King, Southwick, and Haynes, Circuit Judges.
Per Curiam: *
Plaintiff–Appellant Neil McDougall sued Defendant–Appellee Saudi
Arabian Oil Company for fraud. The district court dismissed the case,
concluding that it lacked subject-matter jurisdiction under the Foreign
Sovereign Immunities Act and that neither the commercial-activity nor the
expropriation exceptions thereto could save McDougall’s claims. We agree
and AFFIRM.
_____________________
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
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I
In 2012, Neil McDougall, then residing in Ontario, Canada, received
an offer to work as a Planning/Analysis Specialist for Saudi Arabian Oil
Company (“Saudi Aramco”), an energy company owned by the Kingdom of
Saudi Arabia.
Importantly, the job offer was not sent by Saudi Aramco, but by
Aramco Services Company (“ASC”), Saudi Aramco’s subsidiary based in
Houston, Texas. The offer letter stated that Saudi Aramco “ha[d] asked
[ASC] to conditionally offer [McDougall] the position of Planning/Analysis
Specialist with Saudi Aramco.” The letter also required McDougall to “work
closely with the ASC processing staff to promptly satisfy [certain]
contingencies,” such as a background investigation and a physical
examination “satisfactory to Saudi Aramco,” “according to the timetable
established by ASC.” McDougall also alleges that, in addition to these
recruiting and human-resources functions, ASC also aids Saudi Aramco in
“oil distribution, oil refining, and research in Texas and the United States
more broadly.”
McDougall accepted the offer of employment and relocated to Saudi
Arabia. And for the next several years, McDougall’s employment contract
renewed automatically year-to-year. In March 2020, still in Saudi Aramco’s
employ, McDougall left Saudi Arabia to go on an employer-approved family
trip. But his return to the country was foreclosed when, due to COVID-19,
Saudi Arabia shut its borders to all but a few categories of travelers, of which
he was not one. Nor did Saudi Arabia approve McDougall’s request to enter.
In June 2020, still unable to enter Saudi Arabia, McDougall was terminated
because his services were “no longer needed.”
McDougall subsequently sued Saudi Aramco in Saudi court for
wrongful termination and prevailed. The final judgment, in the amount
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equivalent to $61,179.84, reflected only his lost salary for the remaining term
of his employment contract, from July 1, 2020, to October 31, 2020. Saudi
Aramco appealed the judgment but was unsuccessful.
During the Saudi litigation, McDougall attempted to obtain his
employment documents. These documents, he alleges, would have supplied
the foundation for another claim against Saudi Aramco—for his lost
employment benefits, including his medical, retirement, and life insurance
benefits. According to McDougall, not only did he have a right to these
documents under Saudi law, but Saudi Aramco’s counsel also represented to
McDougall’s counsel in Saudi court that they would be turned over. Saudi
Aramco allegedly failed to turn over these documents. Without them,
McDougall says, he cannot make his case for his lost benefits, which allegedly
amount to approximately $250,000.
McDougall then brought his document-recovery efforts stateside. He
first sought a pre-suit deposition in Harris County District Court pursuant to
Texas Rule of Civil Procedure 202. See Tex. R. Civ. P. 202. But his
petition was denied. He then filed the present suit in Dallas County District
Court, alleging (1) common law fraud; (2) fraud by nondisclosure; and (3)
constructive fraud. In this suit, however, he no longer seeks the production
of those documents. Instead, he seeks damages—in the amount of $250,000,
in addition to treble damages—for the allegedly fraudulent withholding of
those documents. Saudi Aramco timely removed the case to the Northern
District of Texas.
Saudi Aramco then moved to dismiss under Federal Rules of Civil
Procedure 12(b)(1), (2), and (5), arguing lack of subject-matter jurisdiction,
lack of personal jurisdiction, deficient service of process, and forum non
conveniens. The district court granted the motion, concluding that it lacked
subject-matter jurisdiction under the Foreign Sovereign Immunities Act
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(“FSIA”) and that neither the commercial-activity exception nor the
expropriation exception applied. McDougall timely appealed.
II
“We review a dismissal for lack of subject matter jurisdiction under
Rule 12(b)(1) de novo.” Flores v. Pompeo, 936 F.3d 273, 276 (5th Cir. 2019).
“A district court may dispose of a motion to dismiss for lack of subject matter
jurisdiction based ‘on (1) the complaint alone; (2) the complaint
supplemented by undisputed facts; or (3) the complaint supplemented by
undisputed facts plus the court’s resolution of disputed facts.’” Id. (quoting
Robinson v. TCI/US W. Commc’ns Inc., 117 F.3d 900, 904 (5th Cir. 1997)).
Where, as here, the district court dismissed the case based on the complaint
alone, we “accept as true all well-pleaded allegations set forth in the
complaint and construe those allegations in the light most favorable to [the]
plaintiff.” Burnett Specialists v. Cowen, 140 F.4th 686, 693 (5th Cir. 2025).
III
The FSIA “provides ‘the sole basis for obtaining jurisdiction over a
foreign state in [federal and state] courts.’” Janvey v. Libyan Inv. Auth., 840
F.3d 248, 257 (5th Cir. 2016) (quoting Argentine Republic v. Amerada Hess
Shipping Corp., 488 U.S. 428, 434 & n.2 (1989)). “It furnishes both the
immunity itself, which applies to any ‘foreign state,’ and the only exceptions
to that immunity.” Id.; see 28 U.S.C. §§ 1602–11. If an exception applies,
courts have jurisdiction over “any nonjury civil action against a foreign state
. . . as to any claim in personam . . . .” § 1330. But “[i]f no exception applies,
there is no other basis for personal or subject matter jurisdiction over a
foreign state.” Janvey, 840 F.3d at 257 (citing Verlinden B.V. v. Cent. Bank of
Nigeria, 461 U.S. 480, 489 (1983)); § 1604 (“[A] foreign state shall be
immune from the jurisdiction of the courts of the United States and of the
States exception as provided in sections 1605 and 1607 of this chapter.”).
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A “foreign state,” in turn, includes “a political subdivision of a
foreign state or an agency or instrumentality of a foreign state . . . .”
§ 1603(a). An “agency or instrumentality of a foreign state” means an entity
that is: (1) a separate legal person, corporate or otherwise; (2) 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 (3) neither a citizen of a U.S. state, as defined in §§ 1332(c) and
(e), nor created under the laws of any third country. § 1603(b); see also
Janvey, 840 F.3d at 258–59.
We apply a burden-shifting framework to determine subject-matter
jurisdiction under the FSIA. First, the party claiming to be a foreign state
“need only present a prima facie case that it is a foreign state.” Frank v.
Commonwealth of Antigua & Barbuda, 842 F.3d 362, 367 (5th Cir. 2016). If it
does so, it is “entitled to a presumption of immunity.” Janvey, 840 F.3d at
257; see also Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993). The burden
then shifts to the party opposing immunity to present evidence or, at the
pleading stage, point to parts of the complaint that plausibly demonstrate that
one of the exceptions to immunity applies. Frank, 842 F.3d at 367. If the party
opposing immunity bears this burden, then the foreign state “ha[s] the
ultimate burden of persuasion that the exception does not apply to [it] and
that [it is] entitled to immunity.” Janvey, 840 F.3d at 257–58.
A
Here, the prima facie case is met. We have already recognized that
“Saudi Aramco is a ‘foreign state’ for purposes of the FSIA.” Al-Qarqani v.
Saudi Arabian Oil Co., 19 F.4th 794, 800. (5th Cir. 2021). And the parties do
not dispute this. Saudi Aramco has therefore made its prima facie showing,
and the burden shifts to McDougall to plead adequate facts to plausibly
demonstrate that an exception applies.
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McDougall contends two exceptions are met: the commercial-activity
exception and the expropriation exception. The former states, in relevant
part, that a foreign state is not entitled to jurisdictional immunity if “the
action is based upon a commercial activity carried on in the United States by
the foreign state.” 1 § 1605(a)(2). The latter states, in relevant part, that a
foreign state is not immune if “rights in property taken in violation of
international law are in issue and that property . . . is present in the United
States in connection with a commercial activity carried on in the United
States by the foreign state.” § 1605(a)(3).
These exceptions share the requirement that there be a “commercial
activity carried on in the United States by the foreign state.” See
§§ 1605(a)(2), (3) (emphasis added). So we must first determine who, under
the pleaded facts, carried on the commercial-activity in the United States and
then determine whether that entity indeed constitutes a foreign state under
the FSIA.
The first step is easy enough. McDougall pleads repeatedly that ASC
carries on various commercial activities for Saudi Aramco. He alleges that
ASC conducts “oil sales and refinement,” “perform[s] research,” and
“recruit new employees from the United States and greater-Americas” on
Saudi Aramco’s behalf. And he further alleges that these activities are indeed
_____________________
1
To be sure, § 1605(a)(2) contains a total of three immunity-exception clauses.
These clauses differ on the type of activity (commercial or not), the location of the activity
(in the United States or not), and the actor (the foreign state or not) they require. But
McDougall argues that his fraud claims against Saudi Aramco “are rooted in an
employment relationship forged and managed through continuous U.S.-based commercial
conduct” by ASC, such as its recruiting efforts. Since only the clause we highlight above
requires a showing of a commercial activity in the United States, we construe his arguments
as relying on that clause of the commercial-activity exception and analyze them as such.
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“commercial.” On appeal, too, he argues that ASC’s U.S.-based
commercial conduct is the basis for his suit.
The question then becomes whether ASC is a “foreign state” under
the statute. As noted above, “the term ‘foreign state’ refers not only to the
state itself, viz., the ‘body politic that governs a particular territory,’ but also
to its ‘agenc[ies] or instrumentalit[ies].” 2 Janvey, 840 F.3d at 258 (internal
footnotes omitted). “An agency or instrumentality of a foreign state is a
separate entity, ‘corporate or otherwise,’ that is either (1) majority owned by
a foreign state or (2) an ‘organ’ of a foreign state.” 3 Id. “There is a distinction
between those agencies or instrumentalities that qualify because they are
‘organs’ of a foreign state and those that qualify because they are ‘majority
owned’ by one.” Id. at 258–59. “In some circumstances, however, an agency
or instrumentality may be both and thus qualify as either.” Id. at 259.
To qualify as a “majority owned” agency or instrumentality, “the
foreign state itself [must] own[] a majority of the corporation’s shares” or
other ownership interest. Id. (quoting Dole Food Co. v. Patrikson, 538 U.S.
468, 477 (2003)). In other words, “[i]t is not an agency or instrumentality on
the basis of majority ownership . . . if the ‘foreign state does not own a
majority of its shares but does own a majority of the shares of the corporate
parent one or more tiers above the subsidiary.” Id. (quoting Dole Food Co.,
538 U.S. at 471).
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2
“[T]he terms ‘agency’ and ‘instrumentality[]’ . . . are read together or treated
interchangeably.” Janvey, 840 F.3d at 258.
3
As noted above, there is an additional requirement that the agency or
instrumentality be “neither a citizen of a State of the United States as defined in section
1332(c) and (e) of [title 28], nor created under the laws of any third country.” § 1603(b)(3).
But we need not reach that requirement.
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Here, Saudi Aramco is “majority-owned by [Saudi Arabia] itself and
thus is an agency or instrumentality of” Saudi Arabia. See Al-Qarqani, 19
F.4th at 800. ASC, “however, does not qualify on that basis because it is not
majority owned by [Saudi Arabia] directly, but by [Saudi Aramco].” See
Janvey, 840 F.3d at 259. ASC is “merely a subsidiary of [Saudi Aramco], and
that is not sufficient.” See id.
ASC could still qualify as an agency or instrumentality if it is an
“organ” of Saudi Arabia. “There is no clear test for determining whether an
entity is an organ of a state,” but “the following factors are useful”: (1)
whether the foreign state created the entity for a national purpose; (2)
whether the foreign state actively supervises the entity; (3) whether the
foreign state requires the hiring of public employees and pays their salaries;
(4) whether the entity holds exclusive rights to some right in the [foreign]
country; and (5) how the entity is treated under foreign state law.” Id.
McDougall has not pleaded any facts that would allow us to conclude
that any one of these factors is met. By failing to do so, he has failed to carry
his burden of plausibly demonstrating that one of the exceptions to immunity
applies. See Frank, 842 F.3d at 367. And therefore, under these pleaded facts,
ASC is neither an organ nor majority-owned agency or instrumentality of
Saudi Arabia.
* * *
McDougall has not demonstrated that ASC is an agency or
instrumentality of Saudi Arabia—essential elements to the two exceptions he
contends are satisfied. Accordingly, the district court did not err in
concluding that the exceptions are not met and that the FSIA confers
immunity on Saudi Aramco here. We need not reach the other elements of
the exceptions.
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B
McDougall raises one additional point of error regarding the district
court’s treatment of the commercial-activities exception. He argues that the
district court “committed reversible error by applying a minimum contacts
analysis to determine subject-matter jurisdiction under the Foreign
Sovereign Immunities Act.” As the argument goes, the Supreme Court in
CC/Devas (Mauritius) Ltd. v. Antrix Corp. Ltd., 145 S. Ct. 1572 (2025), held
that the FSIA does not impose a minimum-contacts requirement, but “[i]n
direct contravention of that standard, the [d]istrict [c]ourt here evaluated
jurisdiction by searching for the ‘particular conduct that constitutes the
gravamen of the suit’ and where that conduct occurred.”
This argument misapplies CC/Devas and misunderstands the district
court’s decision. To start, CC/Devas dealt with an entirely different
subsection of the FSIA from the one at issue here—§ 1330(b) (the personal
jurisdiction subsection), not § 1330(a) (the subject-matter jurisdiction
subsection). See 145 S. Ct. at 1579–82. It held only that, under § 1330(b),
“personal jurisdiction over a foreign sovereign is ‘automatic’ whenever (1)
‘an exception to immunity applies’ and (2) ‘service of process has been
accomplished.’” Id. at 1580. It did not speak to how to evaluate whether an
exception to immunity applies to confer subject-matter jurisdiction to federal
courts. Nor did the district court even purport to decide the issue of personal
jurisdiction or undertake a minimum contacts analysis; the words “minimum
contacts” do not appear once in the district court’s opinion.
More fundamentally, the district court was in fact required to
“search[] for the ‘particular conduct that constitutes the gravamen of the
suit.’” See Sachs, 577 U.S. at 35. Indeed, the Supreme Court has instructed
that, to determine what the action is “based upon” under the commercial-
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activities exception, courts must consider the “particular conduct that
constitutes the gravamen of the suit.” Id.
McDougall is correct that the district court searched for such conduct.
We thus decline to fault the district court for following the Supreme Court’s
express instructions.
IV
For the foregoing reasons, we AFFIRM the judgment of the district
court.
10