USX Corp. v. Adriatic Insurance

Opinions of the United

2003 Decisions States Court of Appeals

for the Third Circuit

9-25-2003

USX Corp v. Adriatic Ins Co

Precedential or Non-Precedential: Precedential

Docket No. 00-3424

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PRECEDENTIAL

Filed September 25, 2003

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-3424

USX CORPORATION; BESSEMER AND

LAKE ERIE RAILROAD COMPANY

v.

ADRIATIC INSURANCE COMPANY; AG GROUP, The

Successor in Interest to SECURITAS A.G.; AIU

INSURANCE COMPANY; ALLIANZ UNDERWRITERS

INSURANCE COMPANY; ALLIANZ VERSICHERUNGS A.G.;

ALLSTATE INSURANCE COMPANY, The Successor in

Interest to NORTHBROOK EXCESS & SURPLUS

INSURANCE COMPANY and NORTHBROOK INSURANCE

COMPANY; AMERICAN INSURANCE COMPANY;

AMERICAN REINSURANCE COMPANY; AON

CORPORATION, The Successor in Interest to UNION

INDEMNITY INSURANCE COMPANY OF NEW YORK;

ARKWRIGHT MUTUAL INSURANCE COMPANY; ATLANTA

INTERNATIONAL INSURANCE COMPANY; BIRMINGHAM

FIRE INSURANCE COMPANY; CENTENNIAL INSURANCE

COMPANY; CONTINTENTAL CASUALTY COMPANY;

CONTINTENTAL INSURANCE COMPANY; DANIELSON

NATIONAL INSURANCE, The Successor in Interest to the

MISSION INSURANCE COMPANY; EMPLOYERS MUTUAL

CASUALTY COMPANY; EUROPEAN GENERAL

REINSURANCE COMPANY OF ZURICH; EVANSTON

INSURANCE COMPANY; EXCESS INSURANCE COMPANY,

LTD.; FEDERAL INSURANCE COMPANY; FIREMAN’S

FUND INSURANCE COMPANY; FIRST STATE INSURANCE

COMPANY; GOVERNMENT EMPLOYEES INSURANCE

COMPANY; GRANITE STATE INSURANCE COMPANY;

HAFTPFLICHTVERBAND DER DEUTSCHEN INDUSTRIE

2

VERSICHERUNGSVEREIN A.G.; HARTFORD ACCIDENT

AND INDEMNITY COMPANY; INSURANCE COMPANY OF

THE STATE OF PENNSYLVANIA; INTERNATIONAL

INSURANCE COMPANY; LEXINGTON INSURANCE

COMPANY; NATIONAL CASUALTY COMPANY; NATIONAL

UNION FIRE INSURANCE COMPANY OF PITTSBURGH,

PA; NORTHBROOK EXCESS & SURPLUS INSURANCE

COMPANY; NORTHBROOK INSURANCE COMPANY;

ROTTERDAMSE ASSURANTIEKAS N.V.; ST. PAUL

SURPLUS LINE INSURANCE COMPANY; SENTRY

INSURANCE, A MUTUAL COMPANY, As Assumptive

Reinsurer of the GREAT SOUTHWEST FIRE INSURANCE

COMPANY; SWISS REINSURANCE COMPANY; TUDOR

INSURANCE COMPANY; TWIN CITY FIRE INSURANCE

COMPANY; UNITED STATES FIRE INSURANCE

COMPANY; VANLINER INSURANCE COMPANY, The

Successor in Interest to The GREAT SOUTHWEST FIRE

INSURANCE COMPANY; WESTCHESTER FIRE

INSURANCE COMPANY; ZURICH INSURANCE COMPANY;

ZURICH INTERNATIONAL LTD; CERTAIN OF THE

UNDERWRITERS AND INTERNATIONAL INSURERS

SUBSCRIBING TO LLOYD’S POLICY NOS. 77DD2126C,

78BH3189, 78BH3190, 78BH3191, PY021577,

PY021378/78DD1459C, 79BH1269, 79BH1270,

78DD1406C, 79BH1271, 79BH1272, 80DD19C/PY021379,

79BH5311, 79BH5312, PY135179, PY021379A,

80BH0659, 80BH0660, 80BH0661, 80BH0662,

PY172180/80DD2562C, PY172280/80DD2563C,

HA081280/LBM/1HB06910, 2KA42270/HA081281/LBN,

KY019382, KY019482, KY021982, AND KY021882;

ICAROM, Formerly known as INSURANCE CORPORATION

OF IRELAND; ICAROM plc, formerly known as

INSURANCE CORPORATION OF IRELAND

USX Corporation and Bessemer and Lake Erie

Railroad Company

Appellants

3

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civ. No. 95-00866)

Honorable Gustave Diamond, District Judge

Argued April 3, 2001

Reargued August 1, 2003

BEFORE: ROTH, STAPLETON, and GREENBERG,

Circuit Judges

(Filed: September 25, 2003)

Lawrence E. Flatley

George L. Stewart II

Traci Sands Rea

John A. Camp

Reed Smith

435 Sixth Avenue

Pittsburgh, PA 15219

J. Michael Jarboe

(argued on April 3, 2001,

and August 1, 2003)

Law Department of U.S. Steel

Corporation

600 Grant Street, 15th Floor

Pittsburgh, PA 15219

Attorneys for Appellants USX

Corporation and Bessemer and

Lake Erie Railroad Company

4

Martin R. Baach

Stephen H. Marcus

Geovette E. Washington (argued

on August 1, 2003)

Baach, Robinson & Lewis

One Thomas Circle, Suite 200

Washington, DC 20005-5803

Bernard D. Marcus

Robert L. Allman, II

Marcus & Shapira

One Oxford Centre, 35th Floor

301 Grant Street

Pittsburgh, PA 15219-6401

James P. Davenport (argued

on April 3, 2001)

Nussbaum & Wald

One Thomas Circle

Suite 200

Washington, DC 20005

Attorneys for Appellees Certain

Underwriters at Lloyd’s, London

and Certain Companies in the

London Market

William H. Briggs, Jr.

Leslie S. Ahari

Benjamin C. Eggert

Ross, Dixon & Bell

2001 K Street, N.W.

Washington, D.C. 20006-1040

Attorneys for Appellees Continental

Casualty Company and Continental

Insurance Company

5

Stephen A. Cozen (argued on

April 3, 2001, and August 1, 2003)

Jay M. Levin

Gaele McLaughlin Barthold

Cozen & O’Connor

1900 Market Street

The Attrium

Philadelphia, PA 19103

Attorneys for Appellees AIU

Insurance Company; Birmingham

Fire Insurance Company; Granite

State Insurance Company;

Insurance Company of the State of

Pennsylvania; Lexington Insurance

Company; National Union Fire

Insurance Company of Pittsburgh,

Pennsylvania; and Certain of the

Underwriters at Lloyd’s

Wendy L. Mager

Grayson Barber

Smith, Stratton, Wise, Heher

& Brennan

600 College Road East

Princeton, NJ 08540

Anthony W. Hinkle

Cipriana & Werner

1100 Two Chatham Center

112 Washington Place

Pittsburgh, PA 15219

Attorneys for Appellee Centennial

Insurance Company

R. Kenneth Willman

Willman & Arnold

705 McKnight Park Drive

P.O. Box 15276

Pittsburgh, PA 15237

Attorneys for Appellees Arkwright

Mutual Insurance Company and

Employers Mutual Casualty

Company

6

Richard S. Dorfzaun

David B. Fawcett, Jr.

Dickie, McCamey & Chilcote

Suite 400, Two PPG Place

Pittsburgh, PA 15222-5402

Attorneys for Appellee National

Casualty Company

Thomas V. Gebler, Jr.

Robb, Leonard & Mulvihill

Suite 2300 One Mellon Bank Center

Pittsburgh, PA 15219

Attorneys for Appellee Federal

Insurance Company

Roderick T. Dunne

Karbal, Cohen, Economou,

Silk & Dunn

200 South Michigan, 21st Floor

Chicago, IL 60604

James A. Mollica

Mollica & Murray

1305 Grandview Avenue

450 Trimont Plaza

Pittsburgh, PA 15211

Attorneys for Appellee Evanston

Insurance Company

Elit R. Felix II

Margolis Edelstein

The Curtis Center, 4th Floor

Independence Square West

6th and Walnut Streets

Philadelphia, PA 19106-3304

Attorneys for Appellees Allianz

Underwriters Insurance Company;

Atlanta International Insurance

Company; Tudor Insurance

Company; and Atlanta

International Insurance Company

7

Robert A. Arcovio

Judy Thomas

Margolis Edelstein

1500 Grant Building

Pittsburgh, PA 15219

Attorneys for Appellees American

Insurance Company and Fireman’s

Fund Insurance Company

C. Leon Sherman

C. Leon Sherman & Associates

20 Stanwix Street, Fifth Floor

Pittsburgh, PA 15222

George R. Hardin

Hardin, Kundla, McKeon, Poletto &

Polifroni

673 Morris Avenue

P.O. Box 730

Springfield, NJ 07081

Attorneys for Appellees

International Insurance Company;

United States Fire Insurance

Company; and Westchester Fire

Insurance Company

William Savino

Michael Cassell

Chris Fichtl

Rivkin, Radler

10th Floor

EAB Plaza

West Tower

Uniondale, NY 11566

Attorneys for Appellees American

Reinsurance Company; Government

Employees Insurance Co.; Sentry

Insurance Company, Assumptive

Reinsurer of the Great Southwest

Fire Insurance Company; and

Vanliner Insurance Company, the

Successor in Interest to the Great

Southwest Fire Insurance Company

8

Jeffrey Bouslog

Oppenheimer, Wolff & Donnelly

Plaza VII, Suite 3400

45 South Seventh Street

Minneapolis, MN 55402-1609

Kevin P. Lucas

Manion, McDonough & Lucas

600 Grant Street

Suite 882

Pittsburgh, PA 15219

Attorneys for Appellee St. Paul

Surplus Line Insurance Company

Louis C. Long

Meyer, Darragh, Buckler, Bebenek

& Eck,

2000 Frick Building

Pittsburgh, PA 15219

Attorneys for Appellee Zurich

Insurance Company

Arthur J. Liederman

Morrison, Mahoney & Miller

100 Maiden Lane

New York, NY 10038

Attorney for Appellees Adriatic

Insurance Company; Allianz

Versicherungs A.G.; European

General Reinsurance Company of

Zurich; Haftpflichtverband der

Deutschen Industrie

Versicherungsverein A.G.; and

Swiss Reinsurance Company

9

Allen D. Windt

Suite 230

27 West Atkins Avenue

Ardmore, PA 19003

Attorney for Appellee Excess

Insurance Company, Ltd.; First

State Insurance Company; Hartford

Accident & Indemnity Company;

and Twin City Fire Insurance

Company

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. INTRODUCTION

This matter comes on before this court on appeal from a

summary judgment entered for the defendants and from

orders denying motions to remand this insurance policy

coverage case to the state court in which it had been

initiated. This litigation, though not reaching trial, has been

protracted and has followed complex underlying

proceedings in other consolidated cases. Though, as will be

seen, we summarily will resolve the substantive issue

before us which we find not to be difficult, we nevertheless

set forth the background of the case in some detail.

Appellants USX Corporation and Bessemer and Lake Erie

Railroad Company (“B&LE”), its subsidiary at the times

material to this action (together herein usually called

“USX”), have sought indemnification from the

approximately 50 appellees (“insurers”) under umbrella

liability insurance policies the insurers issued to USX.1

These policies were developed for a program which USX

initiated in the 1970s when, in consultation with its

domestic insurance broker, Marsh & McLennan, it

1. USX’s most recent corporate disclosure statement under Fed. R. App.

P. 26.1 indicates that B&LE is now a wholly owned subsidiary of Great

Lakes Transportation, LLC, a Delaware limited liability company.

10

determined to obtain insurance for catastrophic liabilities.

Ultimately USX obtained liability insurance in furtherance

of this program covering seven periods from May 12, 1977,

to April 1, 1983. From May 12, 1977, through December 1,

1979, the programs included between four and six layers of

insurance providing $128.1 million to $151 million of

coverage for liability imposed in excess of a $50 million self-

insured retention. From December 1, 1979, to April 1,

1983, the programs involved between six and seven layers

of insurance providing between $275 million and $325

million of coverage in excess of a $25 million self-insured

retention. The multi-layered umbrella policies included

broad comprehensive coverage based on London umbrella

insurance policies and provided:

Underwriters hereby agree, subject to the limitations,

terms and conditions hereinafter mentioned, to

indemnify the Assured for all sums which the Assured

shall be obligated to pay by reason of the liability:

(a) imposed upon the Assured by law . . . for damages

on account of:

(i) Personal Injuries

(ii) Property Damage

(iii) Advertising Liability,

caused by or arising out of each occurrence happening

anywhere in the world.

Joint App. at 133.2 The term “Personal Injuries” was

defined as:

bodily injury . . . mental injury, mental anguish, shock,

sickness, disease, disability, false arrest, false

imprisonment, wrongful eviction, detention, malicious

prosecution, discrimination, humiliation; also libel,

slander or defamation of character or invasion of rights

2. USX explains that the various policies issued were “in all respects

material to this dispute . . . identical to the 1971 London umbrella form.”

Br. at 10-11. In this opinion we refer to the original appendix filed in this

court as “Joint App.” and the appendix filed after the remand on the

jurisdictional issue that we describe below as “Juris. J.A.”

11

of privacy, except that which arises out of any

advertising activities.

Joint App. at 135. The policies, however, excluded coverage

for liability arising out of discrimination based on race,

creed, color or national origin. “Advertising liability”

included:

1) Libel, slander or defamation;

2) Any infringement of copyright or of title or of slogan;

3) Piracy or unfair competition or idea

misappropriation under an implied contract;

4) Any invasion of right of privacy;

committed or alleged to have been committed in any

advertisement, publicity article, broadcast or telecast

and arising out of the Named Assured’s advertising

activities.

Joint App. at 135-36. The term “occurrence” was defined

as:

an accident, or a happening, or an event, or a

continuous or repeated exposure to conditions, which

unexpectedly and unintentionally results in a personal

injury, property damage or advertising liability during

the policy period. All such exposure to substantially

the same general conditions existing at or emanating

from one premises location shall be deemed one

occurrence.

Joint App. at 136.

In 1982, B&LE pleaded nolo contendere to an indictment

in the United States District Court for the District of

Columbia for a violation of the Sherman Antitrust Act, 15

U.S.C. § 1, for participating in a conspiracy in restraint of

trade. The district court convicted and sentenced B&LE and

on appeal the court of appeals affirmed. United States v.

Bessemer & Lake Erie R.R. Co., 717 F.2d 593 (D.C. Cir.

1983). The criminal case was followed by massive civil

litigation in which numerous entities involved in the lower

Lake Erie iron ore transportation market (including five

steel companies, three dock companies and three trucking

12

companies) filed ten separate civil suits in various United

States district courts against several railroads (including

B&LE) which operated docks to receive iron ore and from

which to transport the ore to inland steel mill locations. The

complaints alleged that the railroads had agreed to restrain

trade by denying or preventing the introduction of self-

unloading vessels and by preventing non-railroad-owned

docks and trucking firms from participating in the

transportation of iron ore from the upper Great Lakes and

Eastern Canada to discharge ports on the lower Great

Lakes and the Detroit River.

The ten civil cases were consolidated and transferred to

the United States District Court for the Eastern District of

Pennsylvania in April 1984 and became known as MDL

587, the In re Lower Lake Erie Iron Ore Antitrust Litigation.

The court tried MDL 587 in two phases, a liability phase

followed by a damage phase. The jury in the liability phase

rendered verdicts determining that B&LE had participated

with the other railroads in a conspiracy to restrain trade in

nine of the ten cases in violation of sections 1 and 2 of the

Sherman Act, 15 U.S.C. §§ 1-2, and Ohio law. In eight of

the cases, the jury awarded substantial damages for losses

the MDL plaintiffs suffered, and thereafter the court

entered final judgments reflecting trebled damages under

the federal antitrust laws and double damages under Ohio

law. According to USX, the district court entered final

judgments totaling $638.5 million against B&LE which

ultimately satisfied them by paying over $592 million. The

cases against the defendants other than B&LE were settled

or dismissed before or during the trial leaving it as the sole

defendant. B&LE appealed to this court but on May 27,

1993, we affirmed the district court’s judgment against it.

In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d

1146 (3d Cir. 1993). B&LE filed a petition for certiorari but

the Supreme Court denied it and thus the underlying

litigation is over.

In particular certain of the facts related to the conspiracy

are as follows. The railroads owned docks which used

“huletts” or heavy cranes to unload ore from standard

freighters (“bulkers”) to railroad cars to be transported to

inland steel mills. As technology advanced self-unloaders

13

were developed that eliminated the need for huletts and

made the railroads’ unloading equipment obsolete.

Furthermore, use of self-unloaders would have permitted

unloading of ore at private docks the railroads did not own

and would have made it possible for ore to be shipped

inland in trucks rather than on railroad cars.

In the appeal in the civil antitrust suit we explained that

the railroads accomplished the restraint of trade and

delayed the introduction of self-unloaders:

[b]y charging the same rate for unloading a self-

unloader as for unloading a bulker, by refusing to

approve commodity line haul rates from private docks

which would have handled self-unloaders, and by

concertedly refusing to make dock property available

for use by private docks . . . .

In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d at

1168. The railroads charged tariffs that assessed the same

dock handling service charges for self-unloading vessels as

for conventional vessels, even though they provided much

greater services for the conventional vessels. Moreover, the

railroads charged certain shippers and competitors

transportation rates from railroad-owned docks to steel

mills that were much lower than the transportation rates

available from private docks to the steel mills. Certain

railroads also refused to sell or lease property for use as

private iron ore docks.

The policies did not include the usual provisions

providing for the insurers to defend the insured for claims

within the policies, and in fact, the insurers did not defend

B&LE in the In re Lower Lake Erie Litigation. USX, however,

did seek indemnity from the insurers after the judgment

against B&LE was entered. The insurers refused this

demand and consequently on March 31, 1995, USX filed a

coverage action in the Court of Common Pleas of Allegheny

County, Pennsylvania, naming most of the insurers who

had participated in its catastrophic liability insurance

program from May 12, 1977, to April 1, 1983, as

defendants. ICAROM plc (“ICAROM”), one of the named

defendants and the successor to the Insurance Corporation

of Ireland (“ICI”), removed that action to the United States

14

District Court for the Western District of Pennsylvania on

the grounds that it was an “agency or instrumentality of a

foreign state” within the meaning of 28 U.S.C. § 1603

(“section 1603”), a provision of the Foreign Sovereign

Immunities Act of 1976, 28 U.S.C. § 1602 et seq. (“FSIA”),

and thus could remove the action pursuant to 28 U.S.C.

§ 1441(d) (“section 1441(d)”) which provides that a foreign

state may remove a state court action to the district court.

Section 1441(d) compliments 28 U.S.C. § 1330(a) which

gives district courts jurisdiction over actions against foreign

states as defined in section 1603(a). An “agency or

instrumentality of a foreign state” is itself a foreign state

within sections 1441(d) and 1603.

On May 18, 1995, USX voluntarily dismissed its first

Common Pleas Court action without prejudice and initiated

the current action in the same court by filing a complaint

identical to its original complaint except that it excluded as

defendants any entity that was an “agency or

instrumentality of a foreign state” within the meaning of

section 1603 and did not include ICAROM. Br. of

Appellants at 6; Joint App. at 372. Three of the named

insurers then filed separate third-party complaints joining

ICAROM as a third-party defendant, asserting claims for

contribution against it.

ICAROM reacted by again filing a notice of removal

pursuant to section 1441(d), claiming that it was an agency

or instrumentality of a foreign state within the meaning of

section 1603. USX countered by filing a motion to remand

the action to the state court on the ground that ICAROM

was not an agency or instrumentality of a foreign state. By

an order dated July 18, 1995, the district court stayed all

proceedings, including discovery, pending disposition of the

jurisdictional issue that USX raised by its motion to

remand. The district court subsequently denied the motion

to remand as well as USX’s related motion to engage in

jurisdictional discovery by a comprehensive opinion and

order dated March 29, 1996, and entered April 1, 1996, as

it found that ICAROM was an agency or instrumentality of

a foreign state.

The court then lifted the stay and the parties engaged in

substantive discovery following which all parties filed

15

motions for summary judgment. On March 22, 2000, the

court issued a comprehensive opinion and order granting

the insurers’ motions for summary judgment and denying

USX’s motion for partial summary judgment. USX Corp. v.

Adriatic Ins. Co., 99 F. Supp. 2d 593 (W.D. Pa. 2000).

USX timely appealed from the orders of April 1, 1996,

and March 22, 2000, and, following briefing and oral

argument, we entered an order on May 1, 2001, without an

accompanying opinion, reversing the order of April 1, 1996,

but only to the extent that it denied USX’s motion for leave

to engage in discovery with respect to subject matter

jurisdiction. We did not, however, disturb the order for

summary judgment. In the same order we remanded the

case to the district court to allow discovery on the

jurisdictional issue and, even though we retained

jurisdiction, we authorized USX to move in the district

court at the completion of jurisdictional discovery for an

order vacating the final judgment in the case and

remanding the case to the state court. Our order further

provided for the parties to file supplemental briefs in this

court after completion of the remand proceedings.3 In fact,

the parties engaged in jurisdictional discovery on the

remand following which USX again moved to remand the

case to the state court. On September 11, 2002, the district

court issued another comprehensive opinion and order

denying the motion to remand.4 In that opinion the district

court deemed the notice of removal amended to correct any

asserted deficiency in it.

After the district court rendered its September 11, 2002

opinion and order but before the parties filed their

supplemental briefs and before we rescheduled oral

3. If the district court had vacated the final judgment and remanded the

case to the state court presumably the appeal would have become moot

and we would have dismissed it. We are not concerned here with

whether 28 U.S.C. § 1447(d) then would have precluded the insurers

from appealing.

4. The district court had issued yet another comprehensive opinion in

this case regarding a matter not in issue on this appeal on September

30, 1998. See USX Corp. v. Adriatic Ins. Co., 64 F. Supp. 2d 469 (W.D.

Pa. 1998).

16

argument, the parties filed a joint motion asking us to hold

the case in abeyance until the Supreme Court decided the

appeal in Dole Food Co. v. Patrickson, 123 S.Ct. 1655

(2003), as they anticipated, correctly as it turned out, that

Dole would resolve an aspect of the jurisdictional question

we were to consider on the appeal. We granted that motion

and then, after the Court decided Dole, the parties filed

their supplemental briefs and we scheduled and

entertained oral argument and now decide the case in this

opinion. Even though USX did not file an amended notice

of appeal to encompass the September 11, 2002 order, in

view of the unusual circumstance that we remanded the

case to the district court but retained jurisdiction, we will

treat the appeal as including that order though it is not

specifically listed in the notice of appeal.

II. DISCUSSION

There are two overarching issues on this appeal. First,

USX contends that the district court did not have subject

matter jurisdiction because the only asserted basis for

exercise of such jurisdiction is that ICAROM, a third-party

defendant, is a foreign state within the meaning of the FSIA

as “an agency or instrumentality” of the Republic of Ireland

whereas it is no such thing. Thus, in USX’s view the district

court should have granted its motion to remand and never

have addressed this case on the merits. It further contends

that the insurers are barred by waiver for reasons that we

will explain below from raising an aspect of their argument

supporting the district court’s exercise of jurisdiction.

Second, USX contends that if the district court had

jurisdiction it erred in granting the insurers summary

judgment on the merits. We, of course, consider the

jurisdictional issue first.

A. THE JURISDICTIONAL QUESTION

The district court’s ruling that ICAROM is an agency or

instrumentality of a foreign state for purposes of subject-

matter jurisdiction under the FSIA presents a question of

law subject to plenary review, and we exercise plenary

review over the denial of the motion to remand. Werwinski

v. Ford Motor Co., 286 F.3d 661, 665 (3d Cir. 2002); Fed.

17

Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1282 (3d

Cir. 1993). While we would review the district court’s

factual findings for clear error if they were disputed, In re

Texas E. Transmission Corp. PCB Contamination Ins.

Coverage Litig., 15 F.3d 1230, 1238 n.8 (3d Cir. 1994),

there are no disputes of historical fact here, and thus we

reject the insurers’ contention that we should review the

district court’s finding that ICAROM was an agency or

instrumentality of a foreign state deferentially for clear

error. Indeed, USX indicates that it “does not dispute the

District Court’s factual findings relating to ICI/ICAROM’s

alleged organ status.” Reply Br. at 9. We review the district

court’s decision to deem the notice of removal amended to

correct any asserted deficiency in it on an abuse of

discretion basis. See Scattergood v. Perelman, 945 F.2d

618, 627 (3d Cir. 1991). The district court exercised

jurisdiction pursuant to section 1441(d) which permits

foreign states as defined in the FSIA to remove actions

brought against them to the district court and we have

jurisdiction under 28 U.S.C. § 1291.

Section 1603, which is as we have indicated a provision

of the FSIA, provides:

For purposes of this chapter —

(a) A ‘foreign state’, except as used in section 1608 of

this title, includes a political subdivision of a foreign

state or an agency or instrumentality of a foreign state

as defined in subsection (b).

(b) An ‘agency or instrumentality of a foreign state’

means any entity—

(1) which is a separate legal person, corporate or

otherwise, and

(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

(3) which is neither a citizen of a State of the

United States as defined in section 1332(c) and (d)

of this title, nor created under the laws of any third

country.

18

(c) The ‘United States’ includes all territory and

waters, continental or insular, subject to the

jurisdiction of the United States.

Significantly section 1603(b)(2) is two-pronged as it

specifies that an entity may be an “agency or

instrumentality” by reason of being owned by a foreign

state or being its organ.

Originally the district court denied the motion to remand

on the basis of its finding that the Republic of Ireland

owned “a majority” of ICAROM’s shares, a conclusion it

reached because the court determined that the “tiered”

ownership through which Ireland owned ICAROM, i.e., the

ownership of an entity that in turn owned ICAROM, was

sufficient to establish Ireland’s ownership of ICAROM itself

for purposes of the FSIA. Following the remand the district

court adhered to that conclusion and, in addition, held that

ICAROM was an agency or instrumentality of Ireland as its

“organ,” a finding that it had not made in its April 1, 1996

opinion. Thus, as it originally had done, it determined that

it had jurisdiction and denied the motion to remand.

In Dole, however, after the district court denied USX’s

renewed motion to remand, the Supreme Court rejected the

“tiered” ownership theory under the FSIA as it held that a

subsidiary of an instrumentality is not itself an

instrumentality. The parties agree that Dole is controlling

here to the extent that the district court upheld its exercise

of jurisdiction predicated on the majority ownership prong

of section 1603(b)(2), and thus we cannot affirm its order

denying remand on the basis of that conclusion. The

insurers contend, however, that the district court did have

jurisdiction inasmuch as ICAROM is, as the district court

held, an organ of the Irish government and by reason

thereof is its agency or instrumentality. USX answers that

the insurers cannot rely on the organ prong of section

1603(b)(2) for determining if ICAROM is an agency or

instrumentality of Ireland as they have waived their right to

do so, and, in any event, ICAROM is not an organ of the

Irish government.

In view of the jurisdictional discovery and the

submissions of the parties we know a great deal about

19

ICAROM which, as we have indicated, formerly was known

as the Insurance Corporation of Ireland.5 ICI was

incorporated as a limited liability company in Dublin in

1935 and rapidly grew to become the largest liability and

marine insurer in Ireland. In the 1970s it expanded its

operations into foreign markets, including the London

Insurance Market. In 1981, Allied Irish Banks (“AIB”)

acquired 25% of ICI, and in 1983 purchased the remainder

of ICI and assumed its full control. By 1984, however, AIB

determined that ICI’s continued viability was in question,

due in part to losses associated with its London business.

In early 1985, AIB informed the Irish government of ICI’s

precarious position. At the time, AIB was one of the largest

banks in Ireland, and ICI was a leading insurer to corporate

Ireland. On March 15, 1985, the Irish government, hoping

to avoid ICI’s collapse and to minimize the general

economic repercussions that such a collapse could trigger,

took emergency action. AIB transferred all shares of ICI for

the nominal sum of IR 5 to Gebhard Limited (“Gebhard”), a

shelf company that an Irish law firm assisting the Irish

government had formed to acquire the ICI shares. Gebhard

then assumed a guarantee AIB previously had given to the

Institute of London Underwriters on behalf of ICI. The

agreement to assume the guarantee was subject to approval

by the Irish Minister for Industry, Trade, Commerce, and

Tourism (“the Minister”). Two high-ranking civil servants

held Gebhard’s only two shares6 in trust for the Minister.

That same day, ICI was placed into administration

pursuant to the Insurance Act of 1983 (“the 1983 Act”)

authorizing appointment of an administrator to take over

the management of insolvent insurers for the purpose of

placing them on sound commercial and financial footing, a

process similar to comparable American proceedings. The

statute authorizes the administrator to access the

Insurance Compensation Fund (“ICF ”), a mechanism used

to channel funds to finance insurers’ operations. The

Minister nominated William McCann, a partner in the

5. The district court in its comprehensive opinion of September 11, 2002,

set forth the facts related to ICAROM in great detail.

6. Under Irish law, a company such as Gebhard that is not a public

limited company (“plc”) must have at least two shareholders.

20

accounting firm of Gregg, Gardner & Company, as ICI’s

provisional administrator, and Ireland’s High Court made

his appointment permanent on March 25, 1985.

On March 20, 1985, Gebhard changed its name to

Sealuchais Arachais Teoranta (“SAT”). SAT had no

employees and was simply a holding company, which, as

the Minister described in an address to Parliament, had no

“influence over the management of the company in

administration . . . because the company in administration

is managed by the administrator who has set aside the

board of the company in administration and is acting in

accordance with the law and the directions of the court.”

Juris. J.A. at 297.

On April 8, 1985, the Irish Parliament passed the

Insurance (Miscellaneous Provisions) Act of 1985 (“the 1985

Act”), retroactively authorizing the acquisition of SAT

(formerly Gebhard) effective as of March 15, 1985. The

1985 Act further provides that the Minister may hold the

shares of SAT as he or she sees fit and that SAT’s

shareholders must hold the shares in trust for the Minister

and pay all dividends or other monies received to the

Minister for the benefit of the Exchequer. Moreover, the

1985 Act provides that the Minister may require the

shareholders to transfer their shares back to the Minister

or his designee and that upon the death of a shareholder,

the shares automatically vest in the Minister without the

need for any transfer of shares. The 1985 Act authorizes

the Minister to appoint the directors of SAT after

consultation with the Minister of Finance and provides that

the directors hold office on terms and conditions the

Minister determines subject to being removed by him or her

at any time. Finally, the 1985 Act authorizes the Minister

to guarantee payment by ICI under certain insurance

policies issued by the Institute of London Underwriters and

requires the Minister to report to Parliament concerning

payments made under such guarantee.

Because Irish law requires a public limited company

(“plc”) to have at least seven shareholders, the government

arranged for legal title to six of ICI’s 120 million commons

shares to be vested in civil servants who hold the shares in

trust for the Minister. SAT retained the remaining

21

119,999,994 shares. Notwithstanding the 1985 Act’s

provisions allowing the Minister to acquire and hold its

shares as the Minister sees fit, the Minister never has

acquired direct legal title to the shares of SAT.

In 1990, the administrator negotiated the sale of ICI’s

ongoing insurance operations in Ireland (“the Irish

Business”), as well as ICI’s trade name and goodwill. The

administrator sought and obtained permission from the

government to test the market for such a sale and

subsequently initiated a competitive process to generate

tender offers from outside companies. When the field was

reduced to two competitors, the administrator made a

formal recommendation to the government which the

cabinet approved. ICI thereafter sold its trade name and the

Irish Business to Orkandale Holdings, Ltd. (“Orkandale”), a

subsidiary of Assurances Generales de France (“AGF ”). All

of ICI’s shares were transferred to Orkandale for a short

time during which Orkandale exercised a put option that

caused all of the assets, other than the Irish Business and

ICI’s trade name, as well as the ICI shares to revert to SAT.

These procedures allowed AGF to take advantage of ICI’s

tax losses in the range of 150 million. After it shed the Irish

Business and the ICI trade name, ICI was renamed

ICAROM. ICAROM has not underwritten new business but

rather has operated as a “runoff company,” the entire

purpose of which is to wind up its remaining liabilities, the

complete discharge of which is not expected to be

accomplished until 2040 or 2050.

According to USX, ICAROM is nothing more than a

private company in administration under the 1983 Act

authorizing such action for insolvent insurers. It points out

that the administrator, not the government, manages and

controls ICAROM’s day-to-day operations, ICAROM does

not have board or shareholder meetings, and no actions,

appointments, or other corporate business can be

conducted by shareholder vote. The administrator’s

management of ICAROM is subject only to approval by the

High Court. As USX emphasizes, the only other insurer to

have operated under administration pursuant to the 1983

Act is an Irish insurance company known as PMPA/Primor

(“PMPA”), in which the government never has claimed any

22

ownership interest. The ICF has provided the outside

funding of ICAROM and the government has not funded

ICAROM directly. The government has not incurred costs as

a result of the operation and administration of ICAROM

other than having foregone interest on a 32 million loan

that the Irish Exchequer agreed to provide interest-free as

part of a 1992 Financing Agreement for ICAROM’s benefit.7

Notwithstanding the circumstances to which USX

alludes, the record demonstrates that the government has

played a role in financing ICAROM and in overseeing the

administrator’s management of the company. The

administrator regularly consults with the Department of

Enterprise, Trade, and Employment on all significant

matters and all major decisions are made with the

department’s approval. The administrator delivers a formal

presentation annually to the Departments of Enterprise,

Trade, and Employment and Finance regarding the status

of ICAROM’s operations and prepares quarterly reports that

are forwarded to the same departments. The departments

supported the nomination of the current administrator

before the High Court and approved the current general

manager prior to his appointment by the administrator.

Although the government has not provided funding

directly to ICAROM, it has channeled funds into the ICF so

that they can be disbursed to ICAROM. Under a 1985

Financing Agreement, 100 million was advanced to the ICF

for the benefit of ICAROM. AIB provided 70 million, while

the government, through the Irish Central Bank, provided

a 30 million loan.8 Under the 1985 Agreement, interest on

the 30 million loan in the amount of 3.5 million per annum

was to be paid by AIB and other private banks. In fact,

interest rates fell and the interest due was less than the 3.5

million per annum set by the agreement. Although the

government was entitled to retain the extra funds

(approximately 2.1 million), it disbursed the excess interest

payments to ICAROM. In 1992, there was another

7. We believe that the government also has had costs in terms of the use

of time of its officials on ICAROM matters though our result does not

depend on these costs having been incurred.

8. ICAROM repaid in full the 100 million in September of 2000.

23

Financing Agreement executed whereby AIB made an

aggregate payment of 176 million, at a rate of 8.8 million

per year for 20 years, to the ICF, while the government,

through the Exchequer, contributed the one-time interest-

free loan of 32 million discussed above. The foregone

interest amounted to approximately 2.1 million per year.

ICAROM is expected to repay these advances in 2012.

Finally, ICAROM received, through the ICF, the proceeds

of four commercial loans from three separate financial

institutions in the amount of 65 million. The Irish

Department of Finance guaranteed that the ICF would have

sufficient funds to satisfy the obligations on these four

loans, as authorized by Irish statute, although it did not

directly guarantee them. Those loans have been fully

repaid, and the government has not been obligated to make

good on its guarantees.

1. Waiver

The first aspect of the jurisdictional dispute that we

address is whether the insurers waived the right to rely on

the “organ” basis of jurisdiction.9

ICAROM’s notice of removal states:

Removal of this action is expressly authorized by 28

U.S.C. § 1441(d), which provides, in pertinent part:

‘Any civil action brought in a State against a foreign

state as defined in section 1603(a) of this title may be

removed by the foreign state to the district court of the

United States for the district and division embracing

the place where such action is pending.’

ICAROM is a ‘foreign state’ within the meaning of 28

U.S.C. § 1603(a). That section defines a ‘foreign state’

as, inter alia, ‘an agency or instrumentality of a foreign

state as defined in subsection (b).’ Subsection (b) of

§ 1603, in turn defines ‘an agency or instrumentality of

9. We recognize that it could be argued that the insurers other than

ICAROM do not have standing to advance the jurisdictional argument

inasmuch as only ICAROM could have removed the case. We will not

linger on this point, however, inasmuch as ICAROM itself is defending

the district court’s denial of the motions to remand.

24

a foreign state’ as ‘any entity’ that (1) ‘is a separate

legal person, corporate or otherwise,’ (2) ‘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 (3) ‘is neither a citizen of a State of the

United States . . . nor created under the laws of any

third country.’ Id. § 1603(b).

ICAROM meets all of these criteria. It is a corporation

organized pursuant to the laws of the Republic of

Ireland. A majority of ICAROM’s shares or other

ownership interest is owned by the government of the

Republic of Ireland. ICAROM is neither a citizen of the

United States nor created under the laws of any third

country. ICAROM is therefore a ‘foreign state’ within

the meaning of 28 U.S.C. § 1603(a).

Joint App. at 492 (alteration in original). USX does not

contend that ICAROM does not satisfy the first and third

requirements of section 1603(b) for an entity to be an

“agency or instrumentality of a foreign state.”

Prior to our remand of the case ICAROM argued that it

satisfied the second element of section 1603(b) because

Ireland owned a majority of its shares and the district court

agreed with that contention. On the remand, as we have

indicated, the district court adhered to its earlier

conclusion that Ireland owned ICAROM through a “tiered”

arrangement within the FSIA’s definition of majority

ownership by a foreign state. Juris. J.A. at 37. Since that

time, however, as we also have indicated, the Supreme

Court has held that a subsidiary of an instrumentality is

not itself entitled to instrumentality status, so that “tiering”

arrangements cannot provide the basis for finding foreign

state status under the majority ownership prong of section

1603(b)(2). Rather, that prong applies “only if the foreign

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

Dole, 123 S.Ct. at 1662.

The district court, however, also considered ICAROM’s

alternative argument on the remand under the “organ”

prong of section 1603(b)(2), which ICAROM explicitly first

advanced at that time, and held that ICAROM qualified as

25

an organ of Ireland and thus was its agency or

instrumentality. In answer to USX’s argument that ICAROM

waived the right to invoke the “organ” prong by referencing

only the majority ownership prong in the notice of removal,

the district court deemed the notice amended under 28

U.S.C. § 1653, which provides that “[d]efective allegations of

jurisdiction may be amended, upon terms, in the trial or

appellate courts,” noting that the notice of removal “invoked

§ 1603 in its entirety” and that ICAROM’s “organ” argument

“is premised on the same facts that support its invocation

of the instrumentality prong.” Juris. J.A. at 37-40. ICAROM

does not dispute that it initially relied on the majority

ownership prong of section 1603(b)(2), but it argues that its

notice of appeal nevertheless referenced section 1603 as a

whole. It further contends that, in any event, even if it

belatedly advanced the organ prong argument it caused

USX no prejudice by doing so and its procedure was

reasonable inasmuch as before Dole it appeared that a

tiering arrangement would satisfy the majority ownership

prong of section 1603(b)(2) and, indeed, we so had held

with respect to ICAROM itself in In re Texas E.

Transmission Corp., 15 F.3d at 1238 n.8. It also contends

that the same set of facts underlie an analysis under both

the ownership and organ prongs of section 1603(b)(2).

Section 1653 gives both district and appellate courts the

power to remedy inadequate jurisdictional allegations, but

not defective jurisdictional facts. Newman-Green, Inc. v.

Alfonzo Larrain, 490 U.S. 826, 831-32, 109 S.Ct. 2218,

2222 (1989).10 Moreover, we have held that a district court

abused its discretion by not allowing plaintiffs to amend

their complaint to allege jurisdiction on diversity grounds

where diversity existed but had not been a necessary basis

for jurisdiction before the federal claims in the case were

dismissed. Scattergood, 945 F.2d at 627.

In this case, ICAROM stated all three elements of the

“agency or instrumentality” definition in its notice of

10. It is clear that USX, initially not contesting ICAROM’s foreign state

status under section 1603(b), tried to avoid creating a basis for federal

jurisdiction by dismissing its initial state court action and then bringing

a second state court action omitting ICAROM.

26

removal, including as part of the second element as defined

in section 1603(b)(2) both the majority ownership prong

and the organ prong. It then alleged that “ICAROM meets

all of these criteria.” Joint App. at 492. To be sure, in its

brief recitation of the facts supporting that allegation,

ICAROM noted that Ireland owned a majority of its shares,

thus directly referencing only the majority ownership prong

of section 1603(b)(2). Although jurisdiction under that

prong cannot be sustained after Dole, any possible defect in

the notice of removal is of the sort that we ordered the

district court to cure with respect to a complaint pursuant

to section 1653 in Scattergood which seems to us to be

persuasive authority in this parallel situation. Here,

reliance on the organ prong as a basis for jurisdiction was

not clearly required until the Supreme Court clarified that

tiering arrangements would not satisfy the majority

ownership prong of section 1603(b)(2). Moreover, although,

under Dole, Ireland does not own ICAROM for purposes of

the FSIA, its mistaken allegation to that effect bears on a

point central to the organ inquiry, namely, Ireland’s control

over ICAROM.

Thus, the same allegations contained in the notice of

removal, amended only to clarify that Ireland controls,

rather than owns, ICAROM through SAT, support the

crucial allegation of the notice, namely, that ICAROM

satisfies all the requirements to be an agency or

instrumentality of Ireland as set forth in section 1603(b). In

other words, although the allegation of ownership most

clearly relates to the majority ownership prong of section

1603(b)(2), it is also highly relevant to ICAROM’s organ

status. The district court’s amendment of the notice

pursuant to section 1653 therefore did not add new

jurisdictional facts and did not rely on a basis of

jurisdiction different from that originally alleged,11 namely

11. USX cites a number of cases disallowing amendments creating an

entirely new basis for jurisdiction. See, e.g., Blakeley v. United Cable

Sys., 105 F. Supp. 2d 574, 579-80 (S.D. Miss. 2000); Iwag v. Geisel

Compania Maritima, S.A., 882 F. Supp. 597, 601 (S.D. Tex. 1995); see

also 14C Charles Alan Wright et al., Federal Practice and Procedure

§ 3733, at 358-61 (3d ed. 1998) (“[A]mendment of the removal notice . . .

may correct an imperfect statement of citizenship, or state the previously

27

that ICAROM is an agency or instrumentality of Ireland

under section 1603. All it did was amend the ownership

allegation in light of an intervening clarification in the law.12

articulated grounds more fully, or correct the jurisdictional amount.

Completely new grounds for removal jurisdiction may not be added and

missing allegations may not be furnished, however.”) (footnote omitted).

These cases are inapposite, however, as new grounds for removal have

not been added and new factual allegations have not been made.

12. ICAROM submitted the affidavit of Brendan Murphy, its former

general manager, in opposition to USX’s original motion to remand

setting forth the history and purpose of the government’s involvement

with ICAROM and other facts that pertain not only to the majority

ownership analysis but to the organ analysis. The Supreme Court has

upheld removal where jurisdictional facts required to support the

removal were found in later-filed affidavits rather than in the notice of

removal. Willingham v. Morgan, 395 U.S. 402, 407 n.3, 89 S.Ct. 1813,

1816 n.3 (1969) (“This material should have appeared in the petition for

removal. However, for purposes of this review it is proper to treat the

removal petition as if it had been amended to include the relevant

information contained in the later-filed affidavits. See 28 U.S.C.

§ 1653.”). Other courts more recently have allowed consideration of facts

contained in later-filed affidavits, treating those facts as an amendment

of the notice of removal under section 1653. See, e.g., Cohn v. Petsmart,

Inc., 281 F.3d 837, 840 n.1 (9th Cir. 2002) (holding that the district

court did not err in construing an affidavit setting forth the facts

supporting the amount in controversy in a diversity case as an

amendment under section 1653 to the notice of removal which stated

summarily, without alleging any underlying facts, that the amount in

controversy exceeded $75,000); cf. Miller v. Principal Life Ins. Co., 189 F.

Supp. 2d 254, 257-58 (E.D. Pa. 2002) (holding that, even assuming that

the defendant’s initial removal petition was defective in that it did not

state that a codefendant was only a nominal defendant, Willingham

permitted treatment of an amended notice of removal filed more than 30

days after the filing of the original removal notice and after service of a

motion to remand as an amendment of the original notice under section

1653). Furthermore, this approach is consistent with 28 U.S.C.

§ 1446(a), which, borrowing language from the liberal pleading standard

of Fed. R. Civ. P. 8(a), was amended in 1988 to require only a “short and

plain statement of the grounds for removal.” See Charles Alan Wright et

al., 14C Federal Practice and Procedure § 3733, at 351-56 (3d ed. 1998)

(describing the amendment of section 1446(a) and stating: “[T]he better

rule is that detailed grounds for removal need not be set forth in the

notice. Rather, it should be sufficient if the court is provided the facts

28

ICAROM alleges now, as it did originally, that jurisdiction

exists under section 1441(d) because it is an agency or

instrumentality of the Republic of Ireland under section

1603.13 Thus, the district court’s determination to allow the

from which removal jurisdiction can be determined. Thus, the same

liberal rules employed in testing the sufficiency of a pleading should

apply to appraising the sufficiency of a defendant’s notice of removal.”

(footnotes omitted)). Accordingly, although we are mindful that courts

construe removal statutes strictly with all doubts resolved in favor of

remand, see Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.

1990), we are satisfied that sections 1446(a) and 1653, together with the

Supreme Court’s opinion in Willingham, permit a court to consider

jurisdictional facts contained in later-filed affidavits as amendments to

the removal petition where, as here, those facts merely clarify (or correct

technical deficiencies in) the allegations already contained in the original

notice. To the extent, if any, that cases like Fuller v. Exxon Corp., 131 F.

Supp. 2d 1323, 1327 (S.D. Ala. 2001), take a more restrictive view of

section 1653, we decline to adopt their reasoning.

13. We also point out that section 1653 need be invoked to permit an

amendment only after the expiration of the 30-day period within which

an action may be removed under 28 U.S.C. § 1446(b), during which time

a removal notice may be amended freely. See Shaw v. Dow Brands, Inc.,

994 F.2d 364, 368 (7th Cir. 1993). Under 28 U.S.C. § 1441(d), however,

“[w]here removal is based upon this subsection [governing removal by a

foreign state], the time limitations of section 1446(b) of this chapter may

be enlarged at any time for cause shown.” Because the 30-day time limit

on free amendments of the petition is derived from section 1446(b),

section 1441(d) would appear to allow a foreign state to amend its

removal petition freely during the 30-day time period and for cause at

any other time. Furthermore, it appears that an amendment for cause

under section 1441(d) likely could be on broader grounds than might be

permissible under 28 U.S.C. § 1653 although we do not rely on that

possibility here. See footnote 11 supra. We are satisfied that USX

suffered no prejudice as a result of the district court’s consideration of

the organ prong because ICAROM raised this argument shortly after

remand from this court so that USX had ample time to respond to it,

and because in part the same facts are relevant under either the

ownership or organ prong of section 1603(b)(2) although they could not

satisfy the ownership prong here. In this regard we observe that when we

asked at oral argument what prejudice that USX suffered by reason of

ICAROM’s possibly late identification of the organ prong of section 1603

as a basis for foreign state status and thus for district court jurisdiction,

USX’s attorney was not able to make a specific indication of what it

might be. Certainly USX had ample time to develop the facts with respect

to ICAROM’s organ status.

29

amendment amplifying the notice of removal clearly was

within its sound discretion.14

2. Analysis Under the Organ Prong

The FSIA does not define the term “organ” as used in

section 1603(b)(2) and we have not had occasion to

consider the meaning or application of that term under the

statute. Other courts have developed a flexible approach to

determine whether an entity qualifies as an organ of a

foreign state under the FSIA and thus is its agency or

instrumentality. The Court of Appeals for the Ninth Circuit

asks whether the entity “ ‘engages in a public activity on

behalf of the foreign government.’ ” EOTT Energy Operating

Ltd. P’Ship v. Winterthur Swiss Ins. Co., 257 F.3d 992, 997

(9th Cir. 2001) (quoting Patrickson v. Dole Food Co., 251

F.3d 795, 807 (9th Cir. 2001), aff ’d in part, dismissed in

part, 123 S.Ct. 1655 (2003)). In doing so, that court

considers factors including “ ‘the circumstances

surrounding the entity’s creation, the purpose of its

activities, its independence from the government, the level

of government financial support, its employment policies,

and its obligations and privileges under state law.’ ” Id.

(quoting Patrickson, 251 F.3d at 807). The court also has

stated that “[t]he Act’s legislative history suggests that

Congress intended the terms ‘organ’ and ‘agency or

instrumentality’ to be read broadly.” Gates v. Victor Fine

Foods, 54 F.3d 1457, 1460 (9th Cir. 1995). The Court of

Appeals for the Fifth Circuit looks to similar factors: “ ‘(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.’ ” Kelly v. Syria Shell Petroleum Dev. B.V., 213

14. Certain insurers contend that USX has waived the waiver issue by

not discussing the fact that the district court deemed the notice

amended under section 1653 and not arguing that it abused its

discretion in doing so. Supp. Br. at 30 & n.8. Inasmuch as USX’s brief

does discuss section 1653, albeit briefly, USX Br. at 29, it did not waive

this issue.

30

F.3d 841, 846-47 (5th Cir. 2000) (quoting Supra Med. Corp.

v. McGonigle, 955 F. Supp. 374, 379 (E.D. Pa. 1997)). That

court, however, does not apply those factors mechanically

and does not require that all five support a determination

that an entity is an organ. Id. These two courts of appeals

appear to be the only ones to have considered directly the

factors leading to a conclusion that an entity is an organ of

a foreign state.

A primary purpose of the FSIA is to make it difficult for

private litigants to bring foreign governments into court,

thereby avoiding affronting them. Patrickson, 251 F.3d at

806 (citing First Nat’l City Bank v. Banco Nacional de Cuba,

406 U.S. 759, 762, 92 S.Ct. 1808, 1810-11 (1972)). In

passing the FSIA, Congress adopted the so-called restrictive

theory of sovereign immunity, whereby a foreign state

(including its agencies and instrumentalities) is immune

from suit for its public or sovereign activities, but not for its

commercial or private activities. H.R. Rep. No. 94-1487, at

7 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6605. Even

when a case involves a foreign state’s private activities,

however, the FSIA provides the state with particularized

procedural treatment in some circumstances, for example,

regarding venue, 28 U.S.C. § 1391(f), rule of decision, id.

§ 1606, and execution, id. § 1610. Furthermore, as is

evident from this case, a foreign state defendant, when

named as a third-party defendant may remove the entire

case to a district court, even where it is merely one among

almost 50 otherwise non-foreign state defendants. The

court then must try the case without a jury. 28 U.S.C.

§ 1441(d).

The FSIA therefore provides for suit in federal court in a

potentially broad array of cases, with significant procedural

consequences, some of which a plaintiff likely will not

welcome. With respect to the jurisdictional provisions of the

FSIA, the legislative history states: “Such broad jurisdiction

in the Federal courts should be conducive to uniformity in

decision, which is desirable since a disparate treatment of

cases involving foreign governments may have adverse

foreign relations consequences.” H.R. Rep. No. 94-1487, at

13, 1976 U.S.C.C.A.N. at 6611. Thus, in considering the

scope of the FSIA the point has not been lost on us that the

31

presence of a foreign state third-party defendant has

resulted in the disposition in a district court of a case even

though it had been brought in a state court and

overwhelmingly involves domestic parties and state law

issues and, in the absence of the foreign state party, would

have remained in the state court.15

In deciding whether to adopt the Court of Appeals for the

Ninth Circuit’s standard for determining whether an entity

constitutes an organ of a foreign state, we therefore should

be mindful of the congressional goals of promoting

uniformity of decision and avoiding impairing foreign

relations because the consequences of the presence of

FSIA-predicated jurisdiction are so significant. Surely, a

bright-line rule of the sort the Supreme Court adopted with

respect to the majority ownership in Dole provides for the

greatest uniformity of decision. Nevertheless inasmuch as

the statute and legislative history are silent as to a

definition of the term “organ,” and that term inherently is

vague and does not have a well-established common law

meaning, Congress’s inclusion of the term within the

definition of “agency or instrumentality” of a foreign state

suggests the need for a more flexible approach under the

organ prong of section 1603(b)(2) than the Court adopted in

Dole with respect to the ownership prong of that section.

A flexible approach is particularly appropriate after Dole,

inasmuch as courts likely now will be asked to evaluate the

possible organ status of a wide variety of entities controlled

by foreign states through tiering arrangements and because

of the widely differing forms of ownership or control foreign

states may exert over entities. See Joseph W. Hardy, Jr.,

Note, Wipe Away the Tiers: Determining Agency or

Instrumentality Status Under the Foreign Sovereign

Immunities Act, 31 Ga. L. Rev. 1121, 1161, 1164-66, 1172-

73 (1997). Nonetheless, we must be vigilant to protect the

goal of uniformity and therefore in determining whether an

entity is an organ should consider factors similar, if not

identical, to those considered by the Courts of Appeals of

the Ninth and Fifth Circuits.

15. Of course, the same thing can happen when there is diversity of

citizenship even though, as here, the plaintiff initiated the action in a

state court.

32

We agree with the Court of Appeals for the Ninth Circuit

that for an entity to be an organ of a foreign state it must

engage in a public activity on behalf of the foreign

government. Requiring less would open the door to

situations in which a party only tangentially related to a

foreign state could claim foreign state status and avail itself

(and, incidentally, any other defendants in the case) of the

FSIA’s procedural provisions which, as we have indicated,

plaintiffs are not likely to welcome. This result would be

unfair to plaintiffs, who in some such cases might not have

reason to know of the slight relationship of their dealings

with the foreign states, and who, therefore, likely would not

have had the opportunity to consider this important fact

when negotiating contracts by, for example, negotiating for

waiver clauses, or when initiating suit by following the

special procedures required by the FSIA.16 Joseph W.

Dellapenna, Refining the Foreign Sovereign Immunities Act,

9 Willamette J. Int’l L. & Disp. Resol. 57, 93 (2001).

Requiring less would not further the goal of avoiding

adverse foreign relations. On the other hand, requiring

more would pose potential foreign relations problems.

One district court, taking a narrow view of the term

“organ,” cited a Supreme Court case interpreting the term

“agency or instrumentality” of the Federal government for

purposes of the Federal Tort Claims Act to support its

conclusion that organ status under the FSIA turns not on

“the degree to which an entity is subject to government

regulation aimed at assuring compliance with government

goals,” but on “the ‘power of the Federal Government to

control the detailed physical performance of the

contractor.’ ” See Edlow Int’l Co. v. Nuklearna Elektrarna

Krsko, 441 F. Supp. 827, 832 (D.D.C. 1977) (quoting United

States v. Orleans, 425 U.S. 807, 814, 96 S.Ct. 1971, 1976

(1976)). The court therefore concluded that the entity

16. Indeed, as this case demonstrates, a party might be dealing with an

entity that was not an organ of a foreign state at the time of its dealings.

Here USX obtained its insurance coverage for periods before Ireland

became involved in ICI and thus it was not dealing with an organ of

Ireland at that time. But we are holding that ICAROM was an organ

when USX sued it and it removed the case and its status at that time is

what matters. See Dole, 123 S.Ct. at 1662.

33

involved in that case, a “worker’s organization” founded

under the constitution and laws of the Socialist Federal

Republic of Yugoslavia (“SFRY”), was not an organ of the

SFRY despite the extent to which the state exercised

ultimate control over its policies and operations because its

“daily operations [were] virtually free of direct government

control.” Id. This narrow a construction of the term “organ”

could have potentially adverse effects on foreign relations

insofar as foreign states may place significant national

value in an entity yet not directly control its daily

operations. The Court of Appeals for the Ninth Circuit’s

definition finds a happy medium whereby an entity that

engages in activity serving a national interest and does so

on behalf of its national government qualifies for the

protections of the FSIA, including a federal forum.

In making this assessment, factors employed by both the

Courts of Appeals for the Ninth and Fifth Circuits are

relevant, although no one is determinative: (1) the

circumstances surrounding the entity’s creation; (2) the

purpose of its activities; (3) the degree of supervision by the

government; (4) the level of government financial support;

(5) the entity’s employment policies, particularly regarding

whether the foreign state requires the hiring of public

employees and pays their salaries; and (6) the entity’s

obligations and privileges under the foreign state’s laws.17

To this list, we should add an additional factor: (7) the

ownership structure of the entity. Under the organ prong,

as opposed to the majority ownership prong of section

1603(b)(2), a foreign state might own only 10% of an entity;

it might own directly 50% of the entity; or it might own

17. It is important to note with respect to the sixth factor that

characteristics such as the entity’s ability to sue and be sued in its own

name, to contract in its own name, and to own property in its own name

are not particularly significant with respect to a finding of organ status,

given that all entities claiming agency or instrumentality status must,

under 28 U.S.C. § 1603(b)(1), be a “separate legal person.” Congress

intended this term to encompass “a corporation, association, foundation,

or any other entity which, under the law of the foreign state where it was

created, can sue or be sued in its own name, contract in its own name

or hold property in its own name.” H.R. Rep. 94-1487, at 15, 1976

U.S.C.C.A.N. at 6614.

34

even 100% of a holding company that owns 100% of the

entity. On the other hand it is possible that a foreign state

might not own any portion of any entity that nevertheless

is its organ as section 1603(b)(2) does not require a foreign

state to have any ownership interest in an entity for it to be

its organ. Courts should consider how these different

ownership structures might influence the degree to which

an entity is performing a function “on behalf of the foreign

government.”18

Before applying these factors to this case, we reiterate

that USX “does not dispute the District Court’s factual

findings relating to ICI/Icarom’s alleged organ status.” USX

Supp. Reply Br. at 9. USX contends only that the district

court misapplied the relevant legal factors in considering

those facts.

a. The Circumstances Surrounding ICAROM’s Creation

It is undisputed that ICI was created as a purely

commercial, private company in 1935 for the for-profit

business purpose of selling insurance policies. USX relies

heavily on this fact, and on the fact that since being placed

in administration ICAROM has continued as a commercial

venture by selling off the Irish Business and by running off

liabilities. We believe, however, that USX misunderstands

the nature of this factor. First, while this factor certainly

would weigh more heavily in favor of organ status where

the entity originally was created for a government purpose,

see, e.g., Kelly, 213 F.3d at 848 (noting that the entity in

question was created by government decree to develop and

explore the government’s mineral resources); Corporacion

Mexicana de Servicios Maritimos, S.A. de C.V. v. M/T

Respect, 89 F.3d 650, 654-55 (9th Cir. 1996) (noting that

the entity in question was created by Mexican law to refine

18. Given this analysis, it is clear that the factual allegations of

ICAROM’s notice of removal, which include the assertion that Ireland

owns a majority of ICAROM’s shares, are relevant to the organ analysis

as well as to the majority ownership analysis on which ICAROM

originally focused. Even if we did not add “ownership structure” as a

seventh factor to consider in the organ analysis the allegation likely

would be relevant to the third factor, namely, the degree of supervision

by the government.

35

and distribute property of the Mexican government), it

should not be applied so mechanically as to ignore the

possibility that a foreign state later may acquire an initially

private company and use it for government purposes.

Furthermore, that ICAROM’s activities may have been

predominantly (or entirely) commercial has little bearing on

this factor (although it is relevant to the second factor). In

any event, a foreign state receives the benefit of the FSIA’s

procedural provisions in actions arising out of its

commercial activities, so that too heavy a focus on the

commercial nature of an entity’s activities would tend to

confuse the question of the level of protection provided by

the FSIA (full immunity or not) with the antecedent

question we face here, namely, whether the entity comes

within the purview of the FSIA at all.

As the district court found, the Irish government

indirectly acquired ICI to serve the important national

interest of protecting the Irish insurance and banking

industries from financial disaster, which in turn helped to

maintain stability in the Irish economy. Juris. J.A. at 41-

42. The government did not seek any profit-making

opportunity, but rather acquired ICI to further this

important governmental interest. To advance this purpose,

the Minister acted in accordance with special legislation

adopted by the Irish Parliament. That legislation further

provided that the Minister may hold the shares of SAT as

he or she sees fit; SAT’s shareholders must hold the shares

in trust for the Minister and are bound to pay all dividends

or other monies received to the Minister for the benefit of

the Exchequer; the Minister may require the shareholders

to transfer their shares back to the Minister or to his or her

designee; upon the death of a shareholder, the shares

automatically vest in the Minister without the need for any

transfer of shares; the Minister appoints the directors of

SAT after consultation with the Minister of Finance; and

the directors hold office on terms and conditions

determined by the Minister who may remove them at any

time. Moreover, the legislation authorized the Minister to

guarantee payment by ICI itself under certain insurance

policies.

USX argues that the 1985 Act is irrelevant to ICAROM’s

status as an organ because the Act authorized the creation

36

and acquisition of SAT, not ICI, and the organ status of

SAT is not at issue here. We do not believe, however, that

the Supreme Court’s holding in Dole requires us to blind

ourselves to the true nature of the 1985 Act, thus

effectively extending Dole’s antitiering holding to the organ

prong of section 1603(b)(2). When the Irish Parliament

passed the 1985 Act, SAT was a holding company with no

purpose other than holding all but six shares of ICI. The

shares were held in trust for the Minister, who could hold

or dispose of them as he or she saw fit. Thus, although the

legislation nominally authorized only the acquisition of SAT,

in substance the transaction authorized the acquisition of

ICI, albeit indirectly.

In USX’s view, ICAROM is attempting to circumvent Dole

by relying on the 1985 Act under the organ prong. See USX

Reply Br. at 12. The Court’s decision in Dole, however,

turned on a discrete question of statutory interpretation.

The Court noted that the majority ownership prong of

section 1603(b)(2) “speaks of ownership,” and that the

prong’s insistence on ownership of “shares” demonstrated

“that Congress intended statutory coverage to turn on

formal corporate ownership.” Dole, 123 S.Ct. at 1660.

Because, under basic tenets of corporate law, a parent

corporation does not “own,” i.e., have legal title to, the

assets of its subsidiary, a parent company does not own

shares of a company held by its subsidiary. Id. at 1660-61.

As the Court noted, however, “[c]ontrol and ownership

. . . are distinct concepts.” Id. at 1661. The Court rejected

a control test under the majority ownership prong because

the statutory language of the majority ownership prong of

section 1603(b)(2) makes clear that ownership, not control,

is required. Id. at 1661-62. On the other hand, the organ

prong does not speak of ownership. We find that, although

Congress favored ownership over control in the majority

ownership prong, its use of the word “organ” suggests an

emphasis on control under the organ prong. Thus,

although the 1985 Act in terms authorized the acquisition

of SAT, not ICI, by that time SAT owned ICI and Dole does

not prohibit us from examining the substance of the

transaction, whereby full control of ICI effectively was

transferred to the government, even if legal title to the

37

shares of ICI was not.19 Because an act of Parliament

authorized the government’s assumption of control over ICI

and because of the extent of the government’s involvement

and authority in facilitating the transaction, this factor

weighs in favor of a finding of organ status.

b. The Purpose of ICAROM’s Activities

As just discussed, the acquisition of ICI served an

important governmental interest, namely protecting the

Irish insurance and banking industries from financial

disaster and maintaining stability in the Irish economy. To

be sure, as USX points out, at least since 1990 ICAROM’s

purpose has been solely to run off claims arising under old

policies, as would a private insolvent insurance company

engaged in winding down its business. This observation,

however, does not take into account the fact that the

government played an integral role in the 1990 transaction

that has led ICAROM to operate in this way. In 1990, the

administrator consulted with and obtained approval from

the government, which played an active role in the bidding

process, before disposing of the Irish Business and

positioning ICAROM to operate as a runoff company.

Furthermore, the administrator still consults with the

Minister regarding major decisions and gives regular,

detailed reports on the status of ICAROM. Thus, although

ICAROM is operating solely as a runoff company, it does so

only because the government positioned it to do so and only

under the supervision of the government, as the district

court found. See Juris. J.A. at 42, 44. Moreover, in doing

this it is carrying out the undertaking of the government

when it intervened in the first instance so that a public

financial crisis would be avoided. This factor therefore also

favors a finding of organ status.

c. The Degree of Supervision by the Government

As suggested by the above discussion, the government

has played and continues to play an active role in

19. For the same reason, we are able to consider ownership structure as

a factor unto itself under the organ prong without running afoul of Dole

even where that structure involves tiering.

38

supervising ICAROM’s operations though, as the district

court found, the government does not control them on a

day-to-day basis. Id. at 42. Rather, those responsibilities lie

with the administrator, subject only to approval of the High

Court, as would be the case for any private insurer in

administration under the 1983 Act. Nonetheless, the record

supports the district court’s finding that the government

exercises “a substantial level of oversight and control over

all major decisionmaking affecting Icarom’s ongoing

financial affairs.” Id. at 44. In addition to the reports and

consultation already discussed, the government was

involved heavily in the 1990 transaction, which positioned

ICAROM as a runoff company. ICAROM’s current

administrator testified that “in all aspects of dealing with

the government . . . they are very much the boss.” Id. at

1456. A representative of the Minister testified that the

Minister requires frequent consultation so that he or she

may “answer in Parliament as owners of . . . Icarom.” Id. at

1294. The government’s supervision of ICAROM is therefore

substantial, and this factor likewise cuts in favor of a

finding of organ status.

d. The Level of Government Financial Support

UXS argues that the government has not provided

financial support to ICAROM for its funding has come from

the ICF. Furthermore, the only cost to the government in

supporting ICAROM, according to USX, has been the

foregone interest on the 32 million loan from 1992. As the

district court found, however, this understanding of the

government’s financial relationship to ICAROM ignores the

fact that the government, despite not directly funding

ICAROM, has “arranged and provided financial support” for

ICAROM and, in doing so, has subjected itself to

substantial risk. Juris. J.A. at 42. USX’s observation that

the government never has had to make good on its

guarantees is beside the point. The government has

assured ICAROM’s solvency by indirectly lending it money

despite the risk of ICAROM not repaying. Furthermore, the

government has guaranteed substantial loans made by

private lenders to ICAROM.20 Finally, the government has

20. That the government guaranteed that the ICF would have sufficient

funds to satisfy any obligations under these loans rather than

39

lost the use of approximately 32 million in foregone

interest, which, as the district court noted, amounts to

approximately 9% of the total funding obtained to keep

ICAROM operating during the relevant time period. The risk

the government assumed in arranging financing for

ICAROM and its foregoing interest demonstrate that the

government provided significant financial support to

ICAROM. This factor therefore also weighs in favor of a

finding of organ status.

e. ICAROM’s Employment Policies

The government does not require ICAROM to hire public

employees, nor does it pay its employees’ salaries. Although

tending to ICAROM has “consumed a significant amount of

[the government’s] civil servants’ time and effort,” as the

district court found, this observation is of little relevance,

as it says nothing about the status of ICAROM’s employees.

More relevant is the fact that the government approved

both the current administrator before the High Court

appointed him and the current general manager before the

administrator appointed him. Nonetheless, Irish civil

servants do not work for ICAROM. ICAROM pays three full-

time employees who participate in the company’s private

pension plan, not a government plan. The employment

policies factor therefore weighs against a finding of organ

status.

f. Other Obligations and Privileges Under Irish Law

ICAROM has no special obligations or privileges under

Irish law and this factor weighs against a finding of organ

status as in some situations an organ would have such

obligations or privileges.

g. The Ownership Structure of ICAROM

Although the government does not directly own ICAROM,

it indirectly has complete control over ICAROM’s shares.

guaranteeing the loans directly is a distinction of little difference

inasmuch as in either case the government ultimately bears the risk of

default.

40

Six of ICAROM’s shares are held in trust for the Minister by

civil servants. SAT holds all other shares of ICAROM, and

the only two shareholders of SAT are also civil servants who

hold those shares in trust for the Minister.21 It is

unsurprising, then, that the Irish government believes, as it

apparently always has, that it is the owner of ICAROM. This

position has been stated in the Certificate of Ownership,

see Juris. J.A. at 1230-31 (“[O]n 15 March 1985 the

Government of Ireland decided to acquire ICI . . . . This

legislation . . . was enacted for the purpose of enabling

Ireland to own the shares of ICI through the Minister . . . .

[A]s successor to the then Minister for Industry, Trade,

Commerce and Tourism, I on behalf of Ireland, acquired

ownership of the company now called ICAROM PLC . . . .”),

as well as in the testimony of an employee of the Minister,

see id. at 1294 (“The position of Ireland is that we own

Icarom.”), and of the current administrator, see id. at 1342

(“[T]he Republic of Ireland owns ICAROM through SAT

. . . .”), and current general manager of ICAROM, see id. at

1327 (“Icarom is owned by the Irish government.”).

USX attempts to dismiss the significance of Ireland’s

indirect ownership of ICAROM by pointing out that the

administrator with the approval of the High Court, not the

Minister, in most respects runs ICAROM on a day-to-day

basis and that the Irish government never has claimed to

own PMPA/Primor, the only other insurer to be in

administration. This argument is entirely off the mark.

ICAROM does not argue that it is an organ because it is in

administration (and therefore must report to the

government through the High Court), but rather because

Ireland owns it for a purpose set forth by the Irish

government. Ireland never has owned or controlled

PMPA/Primor, either directly or indirectly, nor has it

claimed that PMPA/Primor serves any national interest.

Because Ireland has complete control over all shares of

ICAROM, albeit through a tiered arrangement involving civil

21. ICAROM points out that it is not uncommon for the Irish government

to provide for statutory ownership of state-owned corporations in this

manner.

41

servants who hold their interests in trust for the Minister,

this factor weighs in favor of a finding of organ status.22

3. Conclusion Under the Organ Prong of section

1603(b)(2)

Five factors therefore favor a finding of organ status,

while only two disfavor such a finding. Weighing these

factors qualitatively as well as quantitatively, we hold that

in these circumstances ICAROM clearly is an organ of the

Republic of Ireland for purposes of section 1603(b)(2). This

holding is consistent with cases from other jurisdictions

interpreting the organ prong of the section.

Significantly, in EOTT, in which ICAROM was a party, the

Court of Appeals for the Ninth Circuit declined to decide

whether it is an organ of Ireland but remanded the case to

the district court to do so. The court of appeals,

nevertheless, observed that certain characteristics favored a

finding that ICAROM was an organ of Ireland, for example,

Ireland did not acquire ICAROM for profit-making purposes,

the acquisition was accomplished to further the public

interest, Ireland placed its economic and political resources

behind ICI, the administrator reports to the Minister, SAT

is composed entirely of government employees serving at

the behest of the Minister, and ICAROM apparently has

been operated as a runoff company.23 257 F.3d at 998-99.

The only factors that the court identified as weighing

against a finding of organ status was the status of ICAROM

employees, none of whom are public servants, and

ICAROM’s status under Irish law insofar as ICAROM is

subject to suit in Ireland. This second factor should not be

considered part of the organ analysis, because an entity

must be a separate legal person to fall within the FSIA, and

Congress intended that the right to sue and be sued be one

factor to consider in deciding whether an entity is a

22. As discussed above, consideration of this factor is not inconsistent

with Dole, a case in which the Supreme Court was confronted with a

discrete question of statutory interpretation that does not arise under

the organ prong of section 1603(b)(2).

23. The court found the final point to be unclear from the record before

it, although it has been clarified in the record before us.

42

separate legal person.24 Thus, the court of appeals

effectively found that the only factor weighing against a

finding of organ status is the status of ICAROM employees.25

In EIE Guam Corp. v. Long Term Credit Bank of Japan,

Ltd., 322 F.3d 635, 640-41 (9th Cir. 2003), the same court

held that the Resolution and Collection Corporation

(“RCC”), a Japanese corporation in the business of

purchasing, administering, collecting, and disposing of

nonperforming loans purchased from failing institutions,

was an organ of the Japanese government. The court so

held even though RCC’s employees were not civil servants,

RCC was a private company engaged in a primarily

commercial concern, the government authorized 29 other

Japanese companies to collect distressed loans, and RCC

was not a public corporation, a designation reserved for

corporations established by the Japanese government by

special law as instruments for activities required by the

state. Id. The court found that such considerations were

outweighed by the fact that the Japanese Diet created the

RCC pursuant to legislation for the purpose of carrying out

“Japanese national policy related to revitalization of the

Japanese financial system.” Id. RCC also was funded by the

government, collected nonperforming loans at the request of

the Deposit Insurance Corporation of Japan (“DICJ”), and

engaged in certain unspecified activities that were exclusive

to RCC and DICJ. Id. Although this case may involve less

direct government financial support than was present in

EIE, it also appears to involve more supervision of the

entity’s activities as well as complete, although indirect,

control of the entity’s shares. Here, then, as in EIE, it is

appropriate to conclude that organ status is warranted.

24. See footnote 17, supra.

25. USX argues vigorously that ICAROM should be bound by a letter that

it wrote in EOTT to the court indicating that it was not an organ of

Ireland. We reject that argument as the court of appeals nevertheless

later considered the possibility that it was an organ and ICAROM

changed its position and argued for organ status. It seems to us that if

the court in which the letter was written did not regard it as binding on

ICAROM then neither should we. We are told by the briefs that EOTT

was settled after the remand to the district court so that the district

court did not determine ICAROM’s organ status in that litigation.

43

Kelly involved Al Furat Petroleum Company (“Al Furat”),

which was owned 50% by Syrian Petroleum Company

(“SPC”) (which was 100% owned by the Syrian government),

and otherwise owned by two private companies. 213 F.3d at

847. The Court of Appeals for the Fifth Circuit held that Al

Furat was an organ of the Syrian government because a

government decree created it for the national purpose of

exploring Syria’s mineral resources; SPC appointed four of

the eight Al Furat board members, generally filling those

positions with high-level Syrian government officials; and Al

Furat had the exclusive right to explore and develop Syria’s

identified petroleum reserves. Id. at 848. The Kelly court,

however, did not discuss any other factors. In this case,

Ireland acquired ICI to fulfill a national purpose, and

although ICAROM has an administrator rather than a

board, the current administrator was not appointed until

approved by the Minister. Furthermore, Ireland fully

controls the shares of ICAROM and has put itself at

substantial financial risk in financing ICAROM.

In Patrickson, however, the court held that two Israeli

chemical companies indirectly owned by the Israeli

government were not organs under the FSIA. 251 F.3d at

807-08.26 The court found that, although Israel created the

companies to exploit government-owned Dead Sea

resources and although the government had the right to

approve the appointment of directors and officers and

changes in capital structure, and despite the facts that the

companies were obliged to present an annual budget and

financial statement to various government ministries and

the government could constrain the use of the companies’

profits and the salaries of directors and officers, these

privileges were “not considerably different from the control

a majority shareholder would enjoy under American

corporate law.” Id. at 808. The companies were not run by

government appointees, their employees were not civil

servants, they were not wholly owned by the government,

they could sue and be sued, and they did not exercise any

regulatory authority. Id. The court therefore affirmed the

district court’s finding that the companies were

26. On the further appeal of the case in Dole the Supreme Court did not

consider whether the companies were organs of Israel.

44

“independent commercial enterprises, heavily regulated, but

acting to maximize profits rather than pursue public

objectives.” Id.

The companies in Patrickson must be distinguished from

ICAROM in certain important respects. First, Ireland

completely controls the shares of ICAROM. ICAROM’s

administrator, although approved by the High Court under

the 1983 Act, was the candidate supported by the Minister.

Most importantly, while the companies in Patrickson were

created for purposes of exploiting Dead Sea resources for

profit, a venture that would have been appropriate for

undertaking by a private company, Ireland indirectly

acquired ICAROM (which then still was ICI) in furtherance

of the important national and inherently public interest of

protecting the Irish insurance and banking industries from

financial disaster and to maintain stability in the Irish

economy. We are not aware of anything in the record to

support a conclusion that if the government had not

intervened to prevent ICI’s financial collapse that any

private entity would have done so. In this regard, it is

telling that when AIB recognized that ICI faced collapse it

turned to the government for help and not to the rest of the

banking and insurance industries.

Moreover, the government played an integral part in

arranging ICAROM’s financing and in positioning ICAROM

to continue as a runoff company, rather than as an ongoing

concern engaged in the sale of insurance policies for profit.

The government did all of this to protect the insurance and

banking industries for the benefit of the Irish economy.

Thus, while the relevant factors in Patrickson favored a

finding that the companies were commercial enterprises

involved in for-profit activities, the relevant factors suggest

in this case that Ireland acquired ICAROM to fulfill a

specific national purpose to avoid financial disruption, and

that ICAROM therefore engages in a public activity on

behalf of the Irish government. The district court thus did

not err in finding that ICAROM is an organ of the Republic

of Ireland for purposes of section 1603(b)(2) and therefore

the case properly was removed under section 1441(b) and

the district court was correct in denying the motions to

remand.

45

B. THE MERITS

In considering the merits of this case we exercise plenary

review both because this is an appeal from an order for

summary judgment, Northview Motors, Inc. v. Chrysler

Motors Corp., 227 F.3d 78, 87 (3d Cir. 2000), and because

we are concerned with the interpretation of insurance

policies. Medical Protective Co. v. Watkins, 198 F.3d 100,

103 (3d Cir. 1999). We have considered the district court’s

opinion on the motion for summary judgment and are in

full agreement with the result the court reached and cannot

add significantly to the opinion. Accordingly, we will affirm

the order for summary judgment without discussion except

to take note of the district court’s recognition of our opinion

in Bensalem Township v. International Surplus Lines

Insurance Co., 38 F.3d 1303, 1309 (3d Cir. 1994),

emphasizing the significance of the reasonable expectations

of the insured in ascertaining the meaning of an insurance

policy. USX, 99 F. Supp. 2d at 610. We think it plain that

USX could not reasonably have expected when it obtained

its insurance policies or at any later time to have the

coverage it sought in this case for the consequences of its

wrongful activities. While we are aware that USX obtained

and paid for broad coverage it should have recognized that

there was some limit to it and we regard its substantive

contentions, though complex, as not meritorious.

III. CONCLUSION

For the foregoing reasons we will affirm the orders of

April 1, 1996, March 22, 2000, and September 11, 2002.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit