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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2003
- **Citation:** 537 U.S. 1185

## Text

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

Page

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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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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0512%3A02. Public record. Not legal advice.