Petition for Writ of Certiorari — Dead Sea Bromine Co., Ltd. v. Patrickson

ae

(CV) Pree US

°f 894 or -ozmy

No. 01- OPRICE 06 x

IN THE

Supreme Court of the United States

DEAD SEA BROMINE CO., LTD. and BROMINE

COMPOUNDS LIMITED,

Petitioners,

v.

GERARDO DENNIS PATRICKSON, et ai.,

Respondents.

On PETITION FOR A Writ oF CERTIORARI TO THE

Unitep States Court OF APPEALS FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

Georce W. BRANDT Peter R. PADEN

Lyons, BRANDT, Cook Counsel of Record

& HIRAMATSU Puitip E. KARMEL

1800 Davis Pacific Center ROBINSON SILVERMAN PEARCE

841 Bishop Street ARONSOHN & BERMAN LLP

Honolulu, Hawaii 96813 1290 Avenue of the Americas

(808) 524-7030 New York, New York 10104

(212) 541-1080

Attorneys for Petitioners

169813 g

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

\YZpe

i

QUESTION PRESENTED

The Foreign Sovereign Immunities Act (the “Act”)

establishes the ground rules for claims against a foreign state

and, also, an “agency or instrumentality of a foreign state.”

28 U.S.C. §§ 1330(a), 1603(a). The Act grants a foreign state or

its agency or instrumentality the right to remove an action against

it to federal court, immunity from suit absent an exception for

certain types of claims and, in those cases where a lawsuit can

be brought, certain substantive and procedural protections.

Id. §§ 1330(a), 1441(d). The term “agency or instrumentality

of a foreign state” is defined in pertinent part as “any entity. . .

a majority of whose shares or other ownership interest is owned

by a foreign state... .” Jd. § 1603(b)(2). Because the State of

Israel at all relevant times held a majority ownership interest in

Petitioners Dead Sea Bromine Company Ltd. and Bromine

Compounds Limited by owning virtually all of their parent

corporation’s stock, Petitioners assert that each of them is an

“agency or instrumentality of a foreign state” pursuant to

§ 1603(b)(2) and that the district court therefore had subject

matter jurisdiction under the Act.

The single question presented is whether the Act’s definition

of “agency or instrumentality” requires direct ownership by the

foreign state, or whether an entity that is majority owned by the

foreign state through one or more tiered subsidiaries is an entity

“a majority of whose shares or other ownership interest is owned

by a foreign state” within the meaning of 28 U.S.C. § 1603(b)(2).

LIST OF PARTIES AND CORPORATE

DISCLOSURE STATEMENT

Petitioners are Dead Sea Bromine Company Ltd. and its

wholly owned subsidiary, Bromine Compounds Limited, each

of which was joined as a third-party defendant in this action.

Dead Sea Bromine Company Ltd. is a wholly owned subsidiary

of Israel Chemicals Limited, a corporation organized under the

laws of Israel that has issued shares to the public. The majority

shareholder of Israel Chemicals Limited is The Israel

Corporation, which is organized under the laws of Israel and

has also issued shares to the public.

The Respondents are the plaintiffs below:

Gerrardo Dennis Patrickson

Rodolfo Bermudez Arias

Benigno Torres Hernandez

Fernando Jimenez Arias

Santos Leandros

Herman Romero Aguilar

Elias Espinoza Merelo

Hooker Era Celestino

Alirio Manuel Mendez

Carlos Humberto Riveral

The defendants in this litigation, who are also Respondents,

Dole Food Company, Inc.

Dole Fresh Fruit Company

Dole Fresh Fruit International, Limited

Pineapple Growers Association of Hawaii

Amvac Chemical Corporation

Shell Oil Company

Dow Chemical Company

ill

Occidental Chemical Corporation, individually and as

successor to Occidental Chemical Company,

Occidental Chemical Agricultural Products, Inc.,

Hooker Chemical and Plastics, Occidental Chemical

Company of Texas and Best Fertilizer Company

Standard Fruit Company

Standard Fruit and Steamship Company

Standard Fruit Company De Costa Rica, S.A.

Standard Fruit Company De Honduras, S.A.

Chiquita Brands, Inc.

Chiquita Brands International, Inc. _

United Brands Company, Inc., as successor to Chiquita

Brands International, Inc.

Maritrop Trading Corporation

Del Monte Fresh Produce, N.A.

Del Monte Fresh Produce Hawaii, Inc.

Del Monte Fresh Produce Company

Fresh Del Monte N.V.

iv

TABLE OF CONTENTS

Page

EY ene a a i

List of Parties and Corporate

Disclosure Statement ............ccceeeeeeses ii

Sh becws cds Cencndsedsccioedies iv

Table of Cited Authorities ..................... vi

See c ccndencounemavdadoects ox xiii

SE cutuscdencccctceécadscboetaddsks l

Statement of Jurisdiction ..................... l

Statutory Provisions Involved ................. l

Statement of the Case ....... 2.0.0... cece une 2

1. The Nature of the Case ................. 2

2. Statutory Background .................. 4

De EE Ken cnceccccentcccdeds 5

4. Proceedings in the District Court ......... 7

5. Proceedings in the Court of Appeals ...... 9

Reasons for Granting the Writ ................. ll

1. The Question Presented Is Important and

Asises Proquemtly. ..........ccccccccecs ll

Contents

Page

2. The Ninth Circuit’s Holding Creates a Direct

Conflict With Decisions Of The Fifth and

Seventh Circuits and Numerous Other Courts

That Have Addressed The Same Question. ... 17

3. The Ninth Circuit’s Holding Is Incorrect. ... 20

ee, oo cece ccctecdécsetdebencseeoeoeeus 24

vi

TABLE OF CITED AUTHORITIES

Page

FEDERAL CASES

In re Air Crash Disaster Near Roselawn, Ind.,

96 F.3d 932 (7th Cir. 1996) .......... 12, 18, 19, 23

Alejandre v. AT&T, 42 F. Supp. 2d 1317 (S.D. Fla.),

rev'd on other grounds, 183 F.3d 1277 (11th Cir.

DEE énbedGebdece Recdddscurcsevdeeonsuc 13

Allendale Mutual Insurance Co. v. Bull Data Syst.,

Inc., 10 F.34-425 (7th Cir. 1993) ............. 15

America West Airlines, Inc. v. GPA Group, Lid.,

877 F.2d 793 (9th Cir. 1989) ................ 16

Antoine v. Atlas Turner, Inc., 66 F.3d 105 (6th Cir.

SEE. Wannddacchousdesddess cdebesaseodces 15

Belgrade v. Sidex International Furniture Corp.,

2 F. Supp. 2d 407 (S.D.N.Y. 1998) ........... 8

Brown v. Valmet-Appleton, 77 F.3d 860 (Sth Cir.

SEE bhndubddeshctmébacunsendnecedeadens 15

In re Chase & Sanborn Corp., 835 F.2d 1341

(11th Cir. 1988), rev'd on other groundssub nom,

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33

GE Seb dewéccdcecedtccdeedeeeeccccecs 8

In Re Clearsky Shipping Corp., 1999 WL 1021825

RE oc kcduderecébsedesece 13

vil

Cited Authorities

Page

Delgado v. Shell Oil Co., 231 F.3d 165 (Sth Cir.

2000), cert. denied, 121 S. Ct. 1603 (2001) ....

adeeb bivedaceusedueenbsess ss 1, 3, 4, 12, 17, 18

Delgado v. Shell Oil Co., 890 F. Supp. 1315

(S.D. Tex. 1995), aff'd, 231 F.3d 165 (Sth Cir.

DED Gp dhocdoodesatas eeccessescedosecce 8

In re Delta America Re Insurance Co., 900 F.2d 890

OBiia Cle, 19BGD 2. cc cccccccccccccccccccccces 5

Dewhurst v. Telenor Invest AS, 83 F. Supp. 2d 577

CD DEB. BOG) ono ic cccvcccccccccccscccceees 16

GE Capital Corp. v. Grossman, 991 F.2d 1376

(Bite Cie. 1993) 2... ccccccccccvcccicccesens 5,8

Gardiner Stone Hunter Int. v. Iberia Lineas Aereas

de Espana, S.A., 896 F. Supp. 125 (S.D.N.Y.

EEE Seecccvecsecenccncceceseseeeesesses 16

Gates v. Victor Fine Foods, 54 F.3d 1457 (9th Cir.

BRED cc ccctecdccccccésscecccesseseses 10, 11, 22

Gilson v. Republic of Ireland, 682 F.2d 1022

(D.C. Cir. 1982), on remand, 606 F. Supp. 38

(D.D.C. 1984), aff'd, 787 F.2d 655 (D.C. Cir.

BD coscccccccccccccccescesecesacvess .. 16, 19

Gould, Inc. v. Pechiney Ugine Kuhimann, 853 F.2d

445 (6th Cir. 1988) ....... 2.66 e eee 8,11, 15

Hyatt Corp. v. Stanton, 945 F. Supp. 675 (S.D.N.Y.

ee esa su caueesebinnses 16

vill

Cited Authorities

Page

J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A.,

863 F.2d 315 (4th Cir. 1988) ..............5. 15

Lehman Brothers Commercial Corp. v. Minmetals

International Non-Ferrous Metals Trading Co.,

2001 WL 423031 (S.D.N.Y. April 25,2001).... 12

Lopez del Valle v. Gobierno de la Capital, 855

. SU. DO GUI, BEDE onc ccccccccccccess 15

Lyon v. Agusta §.P.A., 252 F.3d 1078 (9th Cir.

SEE cvtpebaldedutbudédetegcbddnwnbe vedkue 16

Millicom International Cellular, S.A. v. Republic of

Costa Rica, 995 F. Supp. 14 (D.D.C.1998) ..... 13,19

O'Connell Machinery Co., Inc. v. M.V. “Americana”,

566 F. Supp. 1381 (S.D.N.Y. 1983), aff'd, 734 F.2d

115 (2d Cir.), cert. denied, 469 U.S. 1086 (198

Outbound Maritime Corp. v. P.T. Indonesian

Consortium, 582 F. Supp. 1136 (D.Md. 1984)

peodebewesescundeeeseessupencdawienseens 14

Papanos v. Lufthansa German Airlines, No. 94-2667-

Be IED «a scpibadeasiabetbeccecs 8

Parex Bank v. Russian Savings Bank, 81 .. Supp. 2d

FD nb dvckenvencesivaccatcs 12

Pere v. Nuovo Pignone, Inc., 150 F.3d 477 (Sth Cir.

SOUND veped es cebbbck cdth ctbbiRb cbotetes 8

ix

Cited Authorities

Page

Reiss v. Societe Centrale du Groupe des Assurances

Nationales, 235 F.3d 738 (2d Cir.2000) ....... 15, 19

Rodriguez v. Shell Oil Co., 932 F. Supp. 177

(B.D. Tem. 1996) on cccccccvcccccsvcccvevens 3

Ruggiero v. Compania Peruana De Vapores, 639 F.2d

B72 (2nd Cle. 1961)... nec ccccccccvccesers 4, 17,21

Rutkowski v. Occidental Chemical Corp., 1988

WL 107342 (N.D. Ill. 1988) .... 66... eee eee 14

Southern Ocean Seafood Co. v. Holt Cargo Systems,

Inc., 1997 U.S. Dist. LEXIS 12159(E.D. Pa.

SEED bccdccccebésdectocsesastesesoctsséss 16

Straub v. A.P. Green, Inc., 38 F.3d 448 (9th Cir.

BED snccenvececbcsveccocesoncceseoscese 16

Talbot v. Saipam A.G., 835 F. Supp. 352 (S.D. Tex.

BREED cecncceccccecceccnecéeeestessosooes 13

Teledyne, Inc. v. Kone Corp., 892 F.2d 1404 (9th Cir.

—s PPPPPPPTTTTTTTTIT TIT TTT TTT 16

Theo H. Davies & Co. v. Republic of the Marshall

Islands, 174 F.3d 969 (9th Cir. 1999) ......... 16

Trump Taj Mahal Associates v. Costruzioni

Aeronautiche Giovanni Agusta S.P.A., 61F. Supp.

1143 (D.N.J. 1991), aff'd, 958 F.2d 365 (3d Cir.),

cert. denied, 506 U.S. 826 (1992) ......... 13, 14, 21

x

Cited Authorities

Page

USF&G Co. v. Braspetro Oil Services Co., 1999

WL 307666 (S.D.N.Y. 1999) ................ 16

Verlinden B.V. v. Central Bank of Nigeria, 461 U.S.

SE setkabaceds «.. adbabeiceeeeauhod: 4,5

STATE CASES

Linton v. Airbus Industrie, 934 S.W.2d 754

(Ct. Appeals Houston [14th Dist.] 1996) ....... - 22

FEDERAL STATUTES

ED cutacakec ded cated dcabn a |

UT i | 3 l

Se dicdescckbababedeccdacectcu. i, 4

A l

ee CED Ci dic codecs 6aeee etek: 1

Be Wee © EBDOED ov ccccccccsccc Nive eithe st omcilbes l

Sere OE Sh ca Ghacce ci coc Gkekias i, 1, 3, 4,7

SU in a 23

ee es WIE 6 o vbdn dace on tcéedekacau i, 1,3, 19

SO UB. GOGTIRD occccccccccccccccs 2, 4, 5, 18, 19

xi

Cited Authorities

Page

28 U.S.C. § 1GOS(OMZ) 2... cree scccccvcccees passim

PR UBL. 6 OBR occcccscvcccccvccscccccscces 4

TE UBL. 8 GRRE oc ccccccccccvecccscccss 4

LEGISLATIVE HISTORY

H.R. Rep. No. 94-1487, 94th Cong., 2nd Sess.,

reprinted in 5 U.S.C.C.A.N. 6604 (1976) ...... 21

MISCELLANEOUS

Black’s Law Dictionary (5th Ed. 1979) .......... 20

Comment: Litigating Claims Over Foreign

Government-Owned Corporations under the

Commercial Activities Exception to the Foreign

Sovereign Immunities Act, 20 J. IntL. L. Bus. 181

GE TEED cc cece cccccsccecccceccccccocess 19

Thad T. Dameris & Michael J. Mucchetti, Vectors to

Federal Court: Unique Approaches to Subject

Matter Jurisdiction in Aviation Cases, 62 J. Air

Be, Game, GE CIRO ED cc cccccvcccccccccscces 19, 20

John Fellas, Tiering of Ownership Interests Under

the FSIA, N.Y.L.J., Apr. 8, 1997 ..........45. 20

Jane H. Griggs, The Foreign Sovereign Immunities

Act: Do Tiered Corporate Subsidiaries Constitute

Foreign States?, 20 W. New Eng. L. Rev. 387

GREED Sin condcedccdesccnecccesaccvesecess 19

xii

Cited Authorities

Joseph W. Hardy, Jr., Wipe Away the Tiers:

Determining Agency or Instrumentality Status

Under the Foreign Sovereign Immunities Act,

31 Ga. L. Rev. 1121 (1997) .................

National Law Journal, Feb. 3, 1997 .............

Kelly Shaul, Tiered Entities and Sovereign Privileges

_ Under the Foreign Sovereign Immunities Act,

34 San Diego L. Rev. 1817 (Fall 1997) ........

The U.S. Foreign Sovereign Immunities Act,

648 PLI/Lrt 191 (Feb. 2001) ................

Webster’s Ninth New Collegiate Dictionary (10th Ed.

See Gidea cauwewvcdbgundewuedbideexcests

Page

xiii

TABLE OF APPENDICES

Appendix A — Opinion Of The United States Court

Of Appeals For The Ninth Circuit Dated And Filed

BE TA BEOe ode cccccceesiccccdccesscoeses

Appendix B — Order Of The United States District

Court For The District Of Hawaii Denying Dole

Defendants’ And Del Monte Defendants’ Motions

To Alter Or Amend Judgment Under Rule 59(e)

Dated And Filed June 16, 1999 ..............

Appendix C — Order Of The United States District

Court For The District Of Hawaii Dismissing

Action, Etc. Dated And Filed March 8, 1999 ...

Appendix D — Order Of The United States District

Court For The District Of Hawaii Denying Third

Party Defendants Dead Sea Bromine Co., Ltd. And

Bromine Compound Limited’s Motion For

Reconsideration Dated And Filed November 17,

BEE pbedeasdcnees svddudecsecdéeesuaecsess

Appendix E — Order Of The United States District

Court For The District Of Hawaii Denying

Plaintiffs’ Motion For Remand, Etc. Dated And

Filed September 9, 1998 .............---005-

Appendix F — Order Of The United States Court Of

Appeals For The Ninth Circuit Denying Petitions

For Rehearing Dated And Filed July 10, 2001

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Dead Sea Bromine Company Ltd. (“Dead Sea Bromine’”’)

and Bromine Compounds Limited (“BCL”) (collectively, the

“Dead Sea Companies” or “Companies’’) petition for a writ of

certiorari to review the judgment and opinion of the U.S. Court

of Appeals for the Ninth Circuit. The court below held that the

Companies are not agencies or instrumentalities of the State of

Israel under the Foreign Sovereign Immunities Act, in direct

conflict with the contrary holding of the U.S. Court of Appeals

for the Fifth Circuit in Delgado v. Shell Oil Co., 231 F.3d 165,

176 (Sth Cir. 2000), cert. denied, 121 S. Ct. 1603 (2001).

OPINIONS BELOW

The Ninth Circuit’s opinion is reported at 251 F.3d 795

(9th Cir. 2001) and is in the Appendix at la (hereinafter“A. _”’).

The district court’s principal opinion is at A.55a. It denied

rehearing in an order at A.49a; dismissed the action for forum

non conveniens in an order at A.34a; and denied rehearing of

that order in an order at A.27a.

STATEMENT OF JURISDICTION

The court of appeals entered judgment on May 30, 2001,

and entered its order denying timely petitions for rehearing

en banc on July 10, 2001. A.120a. The jurisdiction of this Court

is invoked under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The Foreign Sovereign Immunities Act (“FSIA” or “Act’”’)

is codified at sections 1330, 1332(a\(2) & (4), 1391(f), 1441(d),

1602-11 of title 28, United States Code. It provides, among other

things, that “[a}ny civil action brought in a State court against a

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

removed” to federal court. 28 U.S.C. § 1441(d). Section 1603(a)

of title 28, United States Code defines “foreign state” to include

2

any “agency or instrumentality of a foreign state,” which is in

turn defined as 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 ... nor created under the laws of any third

country.

28 U.S.C. § 1603(b) (italics added). The question presented

involves the language in italics.

STATEMENT OF THE CASE

1. The Nature of the Case

The plaintiffs are citizens and residents of Costa Rica,

Ecuador, Guatemala and Panama who claim to have worked on

banana farms in those countries and, during the course of such

employment, to have suffered personal injury from exposure to

dibromochloropropane (DBCP), a pesticide formerly used on

banana trees.

The plaintiffs filed this putative class action on October 3,

1997 in the Circuit Court of the First Circuit of the State of

Hawaii seeking monetary damages and injunctive relief.

The named defendants are alleged manufacturers of DBCP

(such as Shell Oil and Dow Chemical) and alleged operators of

the foreign banana farms (such as Dole, Chiquita and Del

Monte).

3

Defendant Dole Food Company, Inc. impleaded the Dead

Sea Companies, alleging that they manufactured and sold DBCP

to one or more defendants. The Dead Sea Companies thereafter

removed the action to the U.S. District Court for the District of

Hawaii. The removal was based on 28 U.S.C. § 1441(d), which

provides that any foreign state may remove claims asserted

against it to federal court. The FSIA defines “foreign state” to

include an “agency or instrumentality of a foreign state,”

28 U.S.C. § 1603(a), which is, in turn, defined in pertinent part

as “any entity . . . a majority of whose shares or other ownership

interest is owned by a foreign state... .” Jd. § 1603(b)(2).

The Dead Sea Companies contend that they are agencies or

instrumentalities under the Act because at all relevant times the

State of Israel owned a majority of their shares through a tiered

ownership structure.

This is not the first case in which the Dead Sea Companies’

status under the FSIA has been presented. It happened before in

a series of lawsuits brought in Texas state courts against the

same principal defendants as in this case by thousands of

individuals who alleged that they too had labored on banana

farms in Central America and other regions of the globe and

had thereby suffered injuries from exposure to DBCP. In those

cases, one or more of the defendants impleaded one or both of

the Dead Sea Companies, which thereupon removed the cases

to federal court. Ruling on plaintiffs’ motion to remand several

of those actions, which had been consolidated in the U.S. District

Court for the Southern District of Texas, Judge Sim Lake upheld

the Dead Sea Companies’ claim to being agencies or

inserumentalities of the State of Israel under this provision of

the FSIA. See Delgado v. Shell Oil Co., 890 F. Supp. 1315,

1318-19, 1340 n.33 (S.D. Tex. 1994); Rodriguez v. Shell Oil

Co., 932 F. Supp. 177, 180.6 (S.D. Tex. 1996). The U.S. Court

of Appeals for the Fifth Circuit expressly affirmed Judge Lake’s

FSIA rulings in Delgado v. Shell Oil Co., 231 F.3d 165, 176

(Sth Cir. 2000), cert. denied, 121 S. Ct. 1603 (2001).

4

In its ruling below, the court of appeals rejected the analysis

and holding of Delgado v. Shell Oil Co. and held that the Dead

Sea Companies are not agencies or instrumentalities under the

FSIA. Thus, the Ninth and Fifth Circuits — ruling in functionally

identical DBCP litigations — have reached the opposite

conclusion as to whether the Dead Sea Companies are agencies

or instrumentalities under the FSIA and, hence, whether there

is federal jurisdiction over the lawsuits.

2. Statutory Beck ground

Congress enacted the FSIA in 1976 to establish uniform

“standards governing claims of immunity in every civil action

against a foreign state or its political subdivisions, agencies or

instrumentalities.” Verlinden B.V. v. Central Bank of Nigeria,

461 U.S. 480, 488 (1983). The entities to be accorded foreign

sovereign status under the Act are broadly defined to include

and instrumentalities. 28 U.S.C. § 1603(b); Ruggiero v.

Compania Peruana De Vapores, 639 F.2d 872, 878 (2d Cir.

1981).

The Act provides that all such foreign sovereign entities

shall be immune from the jurisdiction of courts in the

United States, subject to certain exceptions. 28 U.S.C. § 1604.

In fact, the exceptions describe a fairly wide range of cases in

which foreign states and their agencies and instrumentalities

may be sued, as, for example, where the claims arise out of

commercial activities conducted or having a direct effect in the

United States. Jd. § 1605(a)(2). Where such suits may be

maintained, the Act accords certain protections to the foreign

sovereign entities. Among other things, they are entitled to

federal court jurisdiction and a non-jury trial. Jd. §§ 1330(a),

1441(d).

5

The provision of a federal forum for such suits is designed

to protect the “foreign relations of the United States,” Verlinden

B.V. v. Central Bank of Nigeria, 461 U.S. at 493; to reduce the

potential for conflicting results, id. at 497; and to “avoid any

local bias . . . inherent in state court proceedings.” Jn re Delta

America Re Ins. Co., 900 F.2d 890, 893 (6th Cir. 1990).

Such suits may raise “foreign policy concerns” to the extent

they require a court in this country to “judgie} the acts of another

nation” regarding allegations that it, or its agencies or

instrumentalities, committed a tort, breached a contract, or

otherwise committed a legal wrong. GE Capital Corp. v.

Grossman, 991 F.2d 1376, 1381 (8th Cir. 1993). All of

these concerns are implicated in a judicial interpretation of the

reach of the Act’s definition of “agency or instrumentality” of a

foreign state.

3. Statement of Facts

It is undisputed that the Dead Sea Companies meet the

requirements of subparts (1) and (3) of 28 U.S.C. § 1603(b):

they are separate corporations organized under the laws of the

State of Israel, and their principal place of business is Beer Sheva,

Israel. The dispute presented to the district court and reviewed

on appeal centered upon whether the Companies satisfy either

of the disjunctive, alternative requirements of § 1603(b)(2).

Thus, the lower courts were asked to determine whether during

the relevant period the State of Israel had a majority ownership

interest in the Companies or whether the Companies were organs

of the State within the meaning of the FSIA. Since the majority

ownership prong of § 1603(b)(2) is the issue presented here,

the discussion below focuses on the facts pertinent to that issue.

The State of Israel created Dead Sea Bromine in 1955 to

develop and market the State-owned mineral resources of the

Dead Sea, a saline lake located between Israel and Jordan. These

minerals, which include bromine, potassium and magnesium,

6

are among Israel’s principal (among relatively few) natural

resources. SER738.' Dead Sea Bromine’s subsidiary, BCL,

formulates the bromine extracted by its parent into bromine-

based compounds that have a wide variety of industrial,

commercial and agricultural uses. SER738-39. During the

relevant time period, the Companies were subsidiaries of a

corporation owned by the State of Israel, and, consequently, the

Companies were, like their parent corporation, subject to Israel’s

Government Companies Law, which provided the State with

authority to control and direct their affairs. SER744. The State

exercised that authority on many occasions. SER855-1183.

The record establishes that the State of Israel held a

substantial majority ownership interest in Dead Sea Bromine

throughout the period 1968-95. (For purposes of the FSIA

analysis, this time period is over-inclusive, in view of plaintiffs’

allegation — in paragraph 24 of their Complaint — that they could

not have been exposed to DBCP manufactured or distributed

by the Companies prior to 1975. SER10.) For example, from

1968-75, the State held a 99% ownership interest in Dead Sea

Bromine. During this period, the State owned 99% of the shares

of Dead Sea Works Ltd. (“Dead Sea Works”), an Israeli

corporation whose principal offices are in Beer Sheva, Israel.

Dead Sea Works owned virtually all shares of Dead Sea Bromine

(99.9% of its shares), except for a single share owned directly

by the State. SER740, SER749-50, SER754.

1. This Petition cites to the Supplemental Excerpts of Record that

Petitioners filed with the court of appeals as “SER__.” The record on

the FSIA issue consists of declarations and exhibits that the Dead Sea

Companies submitted to the district court in opposition to plaintiffs’

motion to remand. Plaintiffs neither challenged the admissibility of the

Companies’ submissions nor presented any additional evidence pertinent

to the FSIA issue. No party requested that the district court hold an

evidentiary hearing and no hearing was held. The district court thus

made its rulings on a paper record that the court of appeals reviewed

below.

7

The State restructured its holdings in 1975 but retained a

98% ownership interest in Dead Sea Bromine. In that year, the

State transferred most of its shares in Dead Sea Works to Israel

Chemicals Ltd. (“ICL”), an Israeli corporation then owned

entirely by the State of Israel. ICL thereafter owned

approximately 98% of the shares of Dead Sea Works, which

continued to own 99.9% of the shares of Dead Sea Bromine.

The State continued to directly own the one other share of Dead

Sea Bromine. SER740-41, SER750, SER752, SER754.

Although the percentages of its ownership interest

fluctuated in the ensuing years,” the State of Israel continued to

maintain its majority ownership interest in Dead Sea Bromine,

through its ownership of virtually all the shares of ICL and ICL's

ownership of varying majority interests of Dead Sea Works,

until 1995, when the State’s interest in ICL, and hence, its

subsidiaries, fell below 50%.

The State also held a majority ownership interest in

BCL (Dead Sea Bromine’s subsidiary). The facts pertinent

to BCL are similar in character to those for Dead Sea Bromine,

see SER740, SER754-55, SER760-62, but they need not be

recited because the question presented may be addressed by

analyzing Dead Sea Bromine’s status alone. If it is an agency or

instrumentality under the Act, the court below erred in

dismissing the action for lack of subject matter jurisdiction.

4. Proceedings in the District Court

After plaintiffs filed this action in state court in Hawaii,

defendant Dole Food Company, Inc. filed a third-party complaint

under the FSIA. See 28 U.S.C. § 1441(d). The defendants

2. Further details concerning the State's ownership position in Dead

Sea Bromine are set forth in the record at SER740-41, SER750, SER752,

SER754.

thereafter filed a Supplemental Notice of Removal based upon

the foreign relations concerns raised by the complaint. Plaintiffs

moved to remand the action for lack of subject matter jurisdiction

in the federal court. The defendants moved to dismiss for forum

non conveniens.

The issue in controversy before the district court on the

Dead Sea Companies’ removal was whether the Companies were

“an organ of a foreign state or political subdivision thereof”

or an entity “a majority of whose shares or other ownership

interest is owned by a foreign state or political subdivision

thereof.” Jd. § 1603(b)(2). The Dead Sea Companies claimed

that they met both requirements, either one of which would be

sufficient to satisfy § 1603(b)(2).

On September 9, 1998, the district court held that the Dead

Sea Companies were not agencies or instrumentalities of Israel.

A.55a. The court agreed with the Companies’ position — which

every other court that has reached the issue has also endorsed’

~ that an entity is covered by the FSIA if it was an agency or

instrumentality of a foreign state during the time of the

alleged conduct that gave rise to the claims for relief asserted

against it. A.62a-64a. Nevertheless, the court held that during

this relevant time period, the Dead Sea Companies were neither

majority owned nor an organ of the State of Israel. As to the

“majority ... ownership interest” prong of § 1603(b)(2),

the court found that, although the State of Israel held an indirect

3. See Pere v. Nuovo Pignone, Inc., 150 F.3d 477, 480-81 (Sth Cir.

1998); GE Capital Corp. v. Grossman, 991 F.2d 1376, 1380-82

(8th Cir. 1993); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d

445, 449-50 (6th Cir. 1988); In re Chase & Sanborn Corp., 835 F.2d

1341, 1347 (11th Cir. 1988), rev'd on other grounds sub nom.

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989); Belgrade v. Sidex

International Furniture Corp., 2 F. Supp.2d 407, 412-14 (S.D.N.Y.

1998); Delgado v. Shell Oil Co,, 890 F. Supp. at 1340 n.33, aff'd, 231

_ F.3d 165 (Sth Cir. 2000); Papanos v. Lufthansa German Airlines,

No. 94-2667-CIV, slip op. at 7 (S.D.Fla. 1995).

9

majority ownership interest in the Companies, such an interest

was insufficient under the Act. A.71a. As to the “organ” prong

of § 1603(b)(2), the court held that neither of the Dead Sea

Companies was an organ because they were “not controlled

entirely by government appointees, do not employ only public

servants, . . . [and] are not entirely owned by the State of Israel.”

A.76a.

In the same decision, the district court held that it had federal

question jurisdiction because of foreign relations concerns and

held that it would conditionally dismiss the action under the

doctrine of forum non conveniens. A.83a.

On November 17, 1998, the district court denied

reconsideration of its opinion. A.49a. On March 8, 1999, the

district court dismissed the action for forum non conveniens.

A.34a. On June 16, 1999, the court denied plaintiffs’ motion

for reconsideration. A.27a . Plaintiffs’ notice of appeal and the

Dead Sea Companies’ notice of cross-appeal followed.

5. Proceedings in the Court of Appeals

In their appeal, plaintiffs argued that the district court did

not have subject matter jurisdiction and, in any event, should

not have dismissed the action for forum non conveniens. In their

cross-appeal, the Dead Sea Companies argued that the district

court erred in holding that they were not agencies or

instrumentalities under the Act.

The court of appeals heard argument on August 9, 2000

and rendered its decision on May 30, 2001. The court held that

the district court had neither federal-question nor FSIA

jurisdiction and ordered that the action be remanded to state

10

The Ninth Circuit’s ruling on the FSIA issue rested

principally on its prior decision in Gates v. Victor Fine Foods,

54 F.3d 1457, 1462 (9th Cir. 1995) (“Gates”). In Gates, the

Ninth Circuit had rejected the contention that any corporation

owned by an “organ” of a foreign state was itself an “agency or

instrumentality” under the FSIA. The Dead Sea Companies

argued that their corporate structure was materially different

than the one reviewed in Gates because the Companies’ ultimate

parent entity — unlike the “organ” in Gates — was owned by a

foreign state and, thus, a foreign state owned “a majority of

[their] shares or other ownership interest.” (By contrast, in Gates,

the foreign state had no ownership interest in the parent “organ”

that owned the subsidiary claiming FSIA status.) In its ruling

below, however, the court of appeals rejected the Companies’

argument and read Gates “as limiting an instrumentality to the

first tier of ownership: those entities owned directly by the

foreign state itself. . . . [Gates] held that a corporation wholly

owned by an instrumentality of a foreign government is not a

foreign instrumentality under the Act.” A.22a.

Although it placed principal reliance on and felt bound by

its decision in Gates, the court of appeals did address the

Companies’ contention that the phrase “other ownership

interest” in § 1603(b)(2) is sufficiently broad to encompass the

majority ownership interest that the State of Israel held in the

Companies. A.22a-23a. The court rejected the Companies’

argument on the ground that construing “other ownership

interest” in that way would, in its view, render the reference to

“shares” in § 1603(b)(2) superfluous. A.23a.

The court of appeals forthrightly acknowledged that its

interpretation of the FSIA conflicted with that of other circuit

courts: ;

The [Dead Sea] Companies point out that

several other circuits have disagreed with Gates and

11-

held that subsidiaries of a corporation owned by a

foreign state are in fact instrumentalities under the

FSIA. See, e.g., Delgado v. Shell Oil Co., 231 F.3d

165, 176 (5th Cir. 2000), cert. denied, 121 S. Ct.

1603 (2001); In re Air Crash Disaster Near

Roselawn, Ind., 96 F.3d 932, 941 (7th Cir. 1996);

Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d

445, 448-50 (6th Cir. 1988). They argue, not

implausibly, that federal courts should not care how

a foreign government structures its ownership

interests so long as it, in fact, owns a majority interest

in a particular corporation. But none of this matters,

because Gates decided this question, and we are

bound by its authority.

A.23a-24a (citation to Gould modified to full citation). The court

of appeals thus alluded to the strength of the Companies’

arguments, and to the authority upon which they rested, but

held that Gates precluded it from considering the issue anew.

REASONS FOR GRANTING THE WRIT

1. The Question Presented Is Important and Arises

Frequently.

The question presented — whether a subsidiary of a company

owned by a foreign state may itself claim to be an agency or

instrumentality of the foreign state under the FSIA, and, hence,

whether the federal courts have jurisdiction over a lawsuit

brought against such an entity — is one that has arisen repeatedly

and no doubt will continue to be the source of much litigation

and dispute until the law is settled by this Court. Until that time,

the uniformity of law pertaining to suits against foreign

sovereigns and related entities that the FSIA was designed to

achieve will not exist. Like the Dead Sea Companies in this

case, many enterprises owned and controlled by foreign states,

12

engaged in a broad range of commercial activities in and

affecting the United States, will — or will not — be entitled to the

protections of the FSIA depending on the particular circuit in

which claims are asserted against them.

Numerous courts have confronted and rejected the argument

that tiering is not acceptable under the Act, holding that a

subsidiary of an entity owned by a foreign state is entitled to

“agency or instrumentality” status because such an ownership

structure meets the “majority ownership” requirement of

28 U.S.C. § 1603(b){2):

Delgado v. Shell Oil Co., 231 F.3d 165, 176 (Sth Cir.

2000) (holding Dead Sea Companies agencies or

instrumentalities of the State of Israel because “indirect

or tiered majority ownership is sufficient to qualify an

entity as a foreign state”);

In re Air Crash Disaster Near Roselawn, Indiana, 96

F.3d 932, 935-41 (7th Cir. 1996) (holding a French

aircraft manufacturing corporation to be an “agency or

instrumentality” where the French and Italian

governments held a majority ownership interest in the

corporation through tiered subsidiaries) (“Air Crash”);

Lehman Brothers Commercial Corp. v. Minmetals

International Non-Ferrous Metals Trading Co., 2001

WL 423031, *2-4 (S.D.N.Y. April 25, 2001) (holding

that FSIA applied to a metals trading company that is a

subsidiary of a trading conglomerate that is a subsidiary

of a holding corporation owned by the People’s

Republic of China);

Parex Bank v. Russian Savings Bank, 81 F. Supp.2d

506, 508 (S.D.N.Y. 2000) (holding that FSIA applied

to a Russian bank over 60% of whose shares were

13

owned by the Russian Central Bank, which is owned

by the Russian Government),

In Re Clearsky Shipping Corp., 1999 WL 1021825

(E.D.La. Nov. 8, 1999) (holding that FSIA applied to a

telecommunications company a majority of whose

shares were owned by corporations owned by the

Cuban government),

Alejandre v. AT&T, 42 F. Supp.2d 1317, 1336

(S.D. Fla.) (holding that FSIA applied to a

telecommunications company a majority of whose

shares were owned by corporations owned by the

Cuban government), rev ‘d on other grounds, 183 F.3d

1277 (11th Cir. 1999),

Millicom International Cellular, S.A. v. Republic of

Costa Rica, 995 F. Supp. 14, 18 n.5 (D.D.C. 1998)

(holding that a telecommunications and data

transmission service provider was an “agency or

instrumentality” of Costa Rica because it was a

subsidiary of the State-owned telecommunications

monopoly),

Talbot v. Saipam A.G, 835 F. Supp. 352, 353 1.2

(S.D. Tex. 1993) (holding that a vessel-owning

corporation was an “agency or instrumentality” of Italy

where the Italian government owned most of the shares

in two corporations that collectively owned 81.05% of

the vessel-owning corporation’s shares),

Trump Taj Mahal Associates v. Costruzioni

Aeronautiche Giovanni Agusta S.P-A., 761 F. Supp.

1143, 1149 (D.N_J. 1991) (holding that a helicopter

manufacturing corporation was am “agency or

instrumentality” where the ltahan government owned

—S ee ae ee ne eee ae” ae a ee ee

14

shares in a holding company that owned shares of

another holding company that owned 98.9% of the

shares of the helicopter manufacturing corporation),

aff'd, 958 F.2d 365 (3d Cir.), cert. denied, 506 U.S.

826 (1992);

Rutkowski v. Occidental Chemical Corp., 1988 WL

107342 (N.D. Ill. 1988) (holding that a tiered subsidiary

of the province of Quebec was an “agency or

instrumentality” because of the Act’s focus on

substance rather than corporate form);

Outbound Maritime Corp. v. P.T. Indonesian

Consortium, 582 F. Supp. 1136, 1143-45 (D.Md. 1984)

(holding a joint venture, a majority of which was owned

by a corporation wholly owned by Indonesia, was an

“agency or instrumentality”); and

O'Connell Machinery Co., Inc. v. M.V. “Americana”,

566 F. Supp. 1381 (S.D.N.Y. 1983) (holding that a

shipping entity was an “agency or instrumentality” of

the Italian government where a holding company

owned by the government, through a subsidiary or

subdivision, owned a majority of its shares), aff'd, 734

F.2d 115 (2dCir.), cert. denied, 469 U.S. 1086 (1984).

The Ninth Circuit’s decision conflicts with the holding of

each of the foregoing cases. It is also in conflict with the

decisions of numerous other courts that have been presented

with similar fact patterns and stated, or assumed without

extended discussion, that a subsidiary corporation is an “agency

or instrumentality” under the FSLA. These cases all accepted

tiered subsidiaries as agencies or instrumentalities under the

Act and illustrate further the frequency with which the

15

Reiss v. Societe Centrale du Groupe des Assurances

Nationales, 235 F.3d 738, 746 (2d Cir. 2000) (“agency

or instrumentality” status given to second tier

subsidiary of Republic of France),

Brown v. Valmet-Appleton, 77 F.3d 860, 862-63

(Sth Cir. 1996) (“agency or instrumentality” status

given to a paper machinery corporation that was wholly

owned by a corporation that was 70% owned by the

Republic of Finland),

Antoine v. Atlas Turner, Inc., 66 F.3d 105, 107,

109 (6th Cir. 1995) (“agency or instrumentality” status

given to subsidiary of a corporation owned by Canadian

government),

Lopez del Valle v. Gobierno de la Capital, 855 F. Supp.

34, 35-36 (D.P.R. 1994) (“agency or instrumentality”

status given to entity indirectly owned by Venezuelan

government through a holding company),

Allendale Mut. Ins. Co. v. Bull Data Syst., Inc.,

10 F.3d 425, 426-27 (7th Cir. 1993) (“agency or

instrumentality” status given to two corporations

owned by an entity 90% of which was owned by the

Republic of France);

J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A.,

863 F.2d 315, 317 (4th Cir. 1988) (“agency or

instrumentality” status given to four corporations

owned by a company that was in turn owned by the

Republic of France);

Gould Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d. 445,

448-50 (6th Cir. 1988) (“agency or instrumentality”

status given to subsidiary of a French corporation,

majority owned by the Republic of France); and

16

* Gilson v. Republic of Ireland, 682 F.2d 1022, 1026

(D.C. Cir. 1982), on remand, 606 F. Supp. 38 (D.D.C.

1984), aff'd, 787 F.2d 655 (D.C. Cir. 1986) (“agency

or instrumentality” status given to subsidiary of

corporation owned by Republic of Ireland).

Finally, following the Ninth Circuit’s decision in Gates,

several district courts confronted with a subsidiary of an entity

owned by a foreign state have held, like the Ninth Circuit below,

that a tiered ownership structure does not satisfy the Act’s

definition of “agency or instrumentality.” See Dewhurst v.

Telenor Invest AS, 83 F. Supp.2d 577 (D.Md. 2000); USF&G

Co. v. Braspetro Oil Services Co., 1999 WL 307666 (S.D.N.Y.

1999); Southern Ocean Seafood Co. v. Holt Cargo Systems, Inc.,

1997 U.S. Dist. Lexis 12159 (E.D. Pa. 1997); Hyatt Corp. v.

Stanton, 945 F. Supp. 675 (S.D.N.Y. 1996); Gardiner Stone

Hunter Int. v. Iberia Lineas Aereas de Espana, S.A.,896 F. Supp.

125, 130 (S.D.N.Y. 1995).

4. One could add to this list Ninth Circuit cases in which that circuit

court accepted tiered subsidiaries as agencies or instrumentalities under

the Act. Although these cases no longer state the law in the Ninth Circuit,

they further illustrate the frequency with which the tiering issue has

arisen. See Lyon v. Agusta S.P.A., 252 F.3d 1078, 1081 (9th Cir. 2001)

(“agency or instrumentality” status assumed for airplane manufacturing

corporation owned by four aerospace corporations owned by the

Republic of Italy); Theo H. Davies & Co. v. Republic of the Marshall

Islands, 174 F.3d 969, 971-73 (9th Cir. 1999) (“agency or

instrumentality” status given to second tier subsidiary of the Republic

of Marshall Islands); Straub v. A.P. Green, Inc., 38 F.3d 448, 451

(9th Cir. 1994) (“agency or instrumentality” status given to second tier

subsidiary of the province of Quebec); Teledyne, Inc. v. Kone Corp.,

892 F.2d 1404, 1406-7, 1411-12 (9th Cir. 1989) (“agency or

instrumentality” status given to subsidiary of a corporation 81% of whose

shares were owned by Republic of Finland); America West Airlines,

Inc. v. GPA Group, Lid., 877 F.2d 793, 795 n.2, 796-800 (9th Cir. 1989)

(“agency or instrumentality” status given to wholly owned subsidiary

of Aer Lingus, a corporation owned by the Republic of Ireland).

17

Not only does the “subsidiary” issue arise frequently, it is

important since the FSIA is one of the basic statutes granting

the federal courts subject matter jurisdiction over civil actions.

See Ruggiero v. Compania Peruana De Vapores, 639 F.2d at

875-78. The issue is often critical, since, as in the instant case,

it may determine whether the action should be resolved in federal

or state court. Continued litigation in the lower courts will not

move the issue to final resolution. Moreover, the confusion that

currently exists in the case law jeopardizes the important foreign

policy and foreign relations concerns that gave rise to the FSIA.

See supra at 4-5. At present, numerous significant enterprises

closely connected to foreign sovereign states confront a major

uncertainty as to whether they enjoy the protections of the Act

for claims asserted against them in the United States. Since the

issue arises frequently and is important, it is worthy of this

Court’s review.

2. The Ninth Circuit’s Holding Creates a Direct

Conflict With Decisions Of The Fifth and Seventh

Circuits and Numerous Other Courts That Have

Addressed The Same Question.

The decision below directly conflicts with the Fifth Circuit’s

decision that the Dead Sea Companies are agencies or

instrumentalities of the State of Israel under the FSIA.

See Delgado v. Shell Oil Co., supra. The court of appeals

acknowledged the conflict in its opinion. A.23. The issue in

Delgado, \ike that in this case, focused on the language of

§ 1603(b)(2). The Fifth Circuit, noting Israel’s undisputed

majority ownership of the Dead Sea Companies through its

direct ownership of their ultimate parent corporation, held that

the Companies were “agencies or instrumentalities” under the

Act, on the ground that:

The plain language of the statute simply requires

“ownership” by a foreign state. It draws no

231 F.3d at 176. By contrast, the court of appeals below squarely

held that § 1603(b)(2) “does not include the indirect ownership

of shares. . . .” A.23a. That two Circuits interpreting the identical

statutory provision in functionally identical lawsuits have

reached opposite conclusions whether the protections of the

FSIA apply to the Dead Sea Companies creates a clean legal

issue ideally suited for this Court’s review, since the facts relating

to the State’s majority ownership of the Companies through a

The Ninth Circuit’s interpretation of the FSIA also conflicts

with the Seventh Circuit’s holding and extensive analysis of

the subsidiary issue in Air Crash, which the court of appeals

also acknowledged in its opinion below. A.23a. Although the

end result of the holding in Air Crash is the same as in Delgado,

the statutory exegesis took a different route. In Air Crash, the

Seventh Circuit focused on the interrelationship between

§ 1603(a) (defining “foreign state” as including an “agency or

instrumentality”) and § 1603(b) (defining “agency or

instrumentality”), and concluded that the two sections should

be interpreted recursively. See 96 F.3d at 941. This “recursive”

conclusion that both of the Dead Sea Companies are “agencies

or instrumentalities.”

The Air Crash analysis starts with the first-tier of ownership

and proceeds from there. To illustrate, consider ICL (Dead Sea

Bromine’s grandparent), which, under any interpretation of the

Act, would be an “agency or instrumentality” under § 1603(b)

because the State directly owned 100% of its shares. Under the

reasoning of Air Crash, ICL is, therefore, a “foreign state”

19

pursuant to § 1603(a), since a “foreign state” is defined as

including any “agency or instrumentality.” Dead Sea Works

(Dead Sea Bromine’s parent, whose shares were owned by ICL),

by virtue of being directly owned by ICL (a “foreign state” under

§ 1603(a)) would also be an “agency or instrumentality” pursuant

to § 1603(b) and, therefore, a “foreign state” pursuant to

§ 1603(a). For the same reason, Dead Sea Bromine and BCL

would also be directly owned by a “foreign state” and be an

“agency or instrumentality” under the Act. See Air Crash,

96 F.3d at 939-41; Millicom International Cellular, S.A. v.

Republic of Costa Rica, 995 F. Supp. at 18.

The Ninth Circuit is the only circuit court of appeals to

have rejected tiered ownership under § 1603(b)(2). Although

the Fifth and Seventh Circuits are the only other circuit courts

to have analyzed the issue at any length, the Ninth Circuit’s

interpretation is also in conflict with the many other decisions

cited supra at 12-16, including those of the D.C., Second, Fourth

and Sixth Circuits in Gilson, Reiss, J.J. Rvan & Sons, Inc., and

Gould Inc., respectively, all of which endorsed or accepted

majority-owned subsidiary entities as falling within the purview

of the Act.

Thus, this Court’s answer to the question of how subsidiary

corporations should be treated under the Act would resolve a

stark conflict among the circuits, and numerous lower courts,

concerning a pivotal and frequently presented jurisdictional

issue. The issue has been addressed as well by numerous law

review commentators, who are also at odds as to the status of

subsidiaries under the Act.’ A quarter of a century after the FSIA’s

5. See Comment: Litigating Claims Over Foreign Government-

Owned Corporations under the Commercial Activities Exception to the

Foreign Sovereign Immunities Act, 20 J. Inn. L. Bus. 181 (Fall 1999);

Jane H. Griggs, The Foreign Sovereign Immunities Act: Do Tiered

Corporate Subsidiaries Constitute Foreign States?, 20 W. New Enc. L.

Rev. 387 (1998); Thad T. Dameris & Michael J. Mucchetti, Vectors to

(Cont’d)

20

enactment in 1976, the subsidiary issue has been fully analyzed

by the lower courts and legal scholars and is now ripe for review

by this Court.

3. The Ninth Circuit’s Holding Is Incorrect.

Quite apart from being inconsistent with the case law of

other circuits, the court of appeals decision below is not

consistent with the language, structure or history of the Act.

Its erroneous decision should be vacated and reversed.

Although the district court's undisputed finding below was

that the State of Israel had “indirect ownership of [the] Dead

Sea (Companies}” through its direct ownership of their parent

corporation, A.65a (emphasis added), the court of appeals (like

the district court) held that such an ownership interest does not

meet the requirements of the Act. Yet the plain language of §

1603(b)(2) (““a majority of whose shares or other ownership

interest is owned by a foreign state”) makes no reference to any

requirement that the “ownership interest” be “direct.” That

section requires only that the foreign state have a “majority . .

ownership interest” in the entity. The word “interest” is the “most

general term that can be employed to denote a right, claim, title,

or legal share in something.” Black's Law Dictionary at 729

(Sth Ed. 1979). “More particularly it means a right to have the

advantage accruing from anything; any right in the nature of

property, but less than title.” /d. Thus, the fact that the State of

(Cont'd)

Federal Court: Unique Approaches to Subject Matter Jurisdiction in

Aviation Cases, 62 J. Am L. & Com. 959 (1997); Joseph W. Hardy, Jr.,

Wipe Away the Tiers: Determining Agency or Instrumentality Status

Under the Foreign Sovereign Immunities Act, 31 Ga. L. Rev. 1121 (1997);

Kelly Shaw, Tiered Entities and Sovereign Privileges Under the Foreign

Sovereign Immunities Act, 34 San Dwoo L. Rev. 1817 (Fall 1997); John

Fellas, Tiering of Ownership Interests Under the FSIA,N.Y.L.J., Apt. 8,

1997, at 1; see also The U.S. Foreign Sovereign Immunities Act, 648

PLI/Lir 191 (Feb. 2001); National Law Journal, Feb. 3, 1997, at B7.

21

Israel did not have title to the shares of the Dead Sea Companies

is irrelevant: the State held a majority ownership “interest” in

the companies by owning their parent company. This ownership

gave the State the right to receive the profits generated by

the Dead Sea Companies; to approve their capital structure or

any decision to privatize them; to appoint their management;

to approve the appointment of their directors, legal advisors

and accountants; to approve their budgets and business plans;

and to contro! their affairs in numerous other respects. SER855-

1183. Clearly, the State held a controlling, majority ownership

“interest” in the Companies. See Trump Taj Mahal Associates

v. Costruzioni Aeronautiche Giovanni Agusta S.p.A., 761

F. Supp. at 1150 (foreign state has a majority “ownership

interest” in a subsidiary of a state-owned corporation).

The Act’s legislative history is in accord with the

interpretation urged here by the Companies. The key House

Report (H.R. Rep. No. 94-1487, 94th Cong., 2 Sess., reprinted

in 5 U.S.C.C.A.N. 6604 (1976)) makes plain that Congress

intended to cast the agency or instrumentality net broadly.

See Ruggiero v. Compania Peruana De Vapores, 639 F.2d at

873-75. The Act was crafted to cover a myriad of governmental,

social and economic systems. The Report notes the widely

varying types of enterprises that Congress had in mind (including

trading enterprises, shipping lines, airlines, steel companies, and

mining enterprises) and reflects its understanding that these

entities would be engaged in commercial activities for profit.

H.R. Rep. No. 94-1487 at 16. If one thing is clear from the

numerous cases cited above, it is that sovereign states commonly

employ a tiered corporate structure to engage in and

manage such enterprises. It would fundamentally undermine

Sens Sas © Ea Oe ee ee ae

by reading into it the restrictive interpretation adopted by the

Ninth Circuit.

22

The Congressional policy concerns underlying the FSIA

are in no way diminished by the fact that the foreign sovereign

has chosen to hold and control its entities through a tiered

“FSIA specifically provides that ‘corporate form’ — in and of

itself — be immaterial.” O ‘Connell Machinery Co., Inc. v. M.V.

“Americana”, 566 F. Supp. 1381, 1385 (S.D.N.Y. 1983), aff'd,

734 F.2d 115, 116 (2d Cir. 1984). The foreign sovereign’s

internal, administrative decision as to how its ownership interest

is held or structured under its form of government and its legal

and economic systems is immaterial to the purposes and

objectives of the statute.

The Ninth Circuit did not articulate any policy rationale as

to why a company that is 100% owned by a foreign state should

be entitled to remove a case to federal court but a wholly owned

subsidiary of that company should not be so entitled. The plain

language of the FSIA makes both companies an “agency or

instrumentality” of the foreign state if the state holds a majority

ownership interest in the companies. Indeed, under the Ninth

Circuit’s approach, a company that is 51% owned by a foreign

state would be entitled to the Act’s protections, but a second

tier subsidiary in which the state had a 100% interest would

not. Because there is “no policy reason why tiering through an

intermediary majority owned by a foreign state should not be

permitted under the FSIA,” Linton v. Airbus Industrie,

934 S.W.2d 754, 762 (Ct. Appeals Houston [14th Dist.} 1996),

there is no reason to depart from the plain language of the statute,

which requires only that a foreign state have a majority

“ownership interest” for the FSIA to apply.

Although the Ninth Circuit below relied principally on a

broad interpretation of its prior decision in Gates, it also opined

that the Dead Sea Companies’ interpretation of “other ownership

interest” was not persuasive because it would swallow and make

superfluous the reference in § 1603(b)(2) to “shares.” A.23a.

The Ninth Circuit's argument is not logical. The word “other,”

23

in this context, means “different.” Webster's Ninth New

Collegiate Dictionary at 835 (illustrating this meaning with the

sentence “any other color would have been better”). A plain

language interpretation of “other ownership interest” does not

render the reference to “shares” superfluous because shares are

not included in that which is referred to by “other ownership

interest.”

Finally, apart from all of these arguments, the Seventh

Circuit’s “recursive” interpretation of the Act in Air Crash,

see supra at 18-19, provides an entirely different rationale for

rejecting the Ninth Circuit's interpretation. The Seventh Circuit’s

interpretation of the Act is consistent with, and indeed compelled

by, the plain language of § 1603, and should be endorsed by

this Court.

24

CONCLUSION

The petition should be granted so that the Court may answer

the question presented. The issue arises frequently. It has given

rise to conflicting holdings by several of the circuit courts and

by numerous district courts. It has been analyzed by the law

reviews. It involves the subject matter jurisdiction of the federal

courts under the Foreign Sovereign Immunities Act of 1976

and is therefore important. It is squarely presented in this case

and is worthy of this Court’s review.

Dated: New York, New York

October 5, 2001

Respectfully submitted,

Peter R. PADEN

Counsel of Record

Puiu E. KARMEL

ROBINSON SILVERMAN PEARCE

ARONSOHN & BERMAN LLP

1290 Avenue of the Americas

New York, New York 10104

(212) 541-1080

Georce W. BRANDT

Lyons, BRANDT, Cook & HirAMATSU

1800 Davis Pacific Center

841 Bishop Street

Honolulu, Hawaii 96813

(808) 524-7030

Attorneys for Petitioners

Dead Sea Bromine Co. Lid.

and Bromine Compounds Limited

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