Petition for Writ of Certiorari — Antares Aircraft L. P. v. Federal Republic of Nigeria

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91- 164 6

FIEED

APR 13 1992

OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

ANTARES AIRCRAFT L.P.,

Petitioner,

—against —

FEDERAL REPUBLIC OF NIGERIA and

NIGERIAN AIRPORTS AUTHORITY,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

DAVID F. DOBBINS

PATTERSON, BELKNAP, WEBB & TYLER

30 Rockefeller Plaza

New York, New York 10112

(212) 698-2500

Counsel of Record for Petitioner

Of Counsel:

LISA C. COHEN

JOHN N. LIEBER

QUESTION PRESENTED

Was the Second Circuit correct in concluding,

contrary to all other Circuit courts, that a foreign sovereign’s

deliberate misappropriation of the sole asset of a U.S.

business in the course of its commercial activities did not

cause a "direct effect in the United States" within the

meaning of Section 1605(a)(2) of the Foreign Sovereign

Immunities Act, 28 U.S.C. §§ 1602 er seqg., and, accord-

ingly, in depriving the federal courts of subject matter

jurisdiction to redress the act of misappropria‘t:on?

PARTIES

Petitioner is Antares Aircraft L.P., a limited

partnership located in New York.

Respondents are the Federal Republic of Nigeria and

the Nigerian Airports Authority. The Federal Republic of

Nigeria is a foreign sovereign under the terms of the FSIA.

The Nigerian Airports Authority is an instrumentality of the

Federal Republic of Nigeria and is therefore considered a

foreign sovereign for the purposes of the Foreign Sovereign

Immunities Act, 28 U.S.C. §§ 1602 er seq.

ill

TABLE OF CONTENTS

Page

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pe ES Sy 8s |. Vv

REPORTING OF OPINIONS IN THE CASE ...... 2

Samnmeeers Ur JURISDICTION .........06.% 2

EU MEMEEWIEED ff we tt et te 3

PREP, EASEMENT 2. ww ee 3

si 8 ey 5

a hee tt eh et 8

The Opinion Creates a Conflict with Other

Circuits and Effectively Overrules the

Consistent Rulings of the Second Circuit

in Holding that Financial Injury to a U.S.

Business Caused by a Foreign Sovereign’s

Conduct Overseas Does Not Cause a Direct

ee 8

A. The Opinion Creates a Conflict with

Every Other Circuit Ruling in Holding

that the Direct Effect of Harm to a

U.S. Concern Committed Overseas is

eee 4

B. The Opinion is Inconsistent with Other

Second Circuit Rulings as to the Situs

of a "Direct Effect" Within the Meaning

I ne a ee 14

} aR eee a ae age gare ery are 19

APPENDIX A

Decision of the United States Court

of Appeals for the Second Circuit,

a Al

APPENDIX B

Order and Judgment of the United

States Court of Appeals for

the Second Circuit, filed

a ek ie A ek ee Bl

APPENDIX C

Memorandum Opinion and Order of

the United States District Court

for the Southern District of New

York, Gated FeOruary 26, 199] 2... wee Ge

APPENDIX D

Final Judgment of the United States

District Court for the Southern

District of New York, filed

I NE tere gig yee lene we a D1

APPENDIX E

Order of the United States Court of

Appeals for the Second Circuit

denying petition for rehearing and

suggestion of rehearing en banc,

eB rere eer eer ree El]

TABLE OF AUTHORITIES

CASES Page

America West Airlines v. GPA Group, Ltd.,

O77 F.2e 79S CO Cit. TGP) nn cc ke 12, 13

Antares Aircraft, L.P. v. Federal Republic of

Nigeria, 948 F.2d 90 (2d Cir. 1991) ........ 4,3:%9, 3

Antares Aircraft, L.P. v. Federal Republic of Nigeria,

89 Civ. 6513 (S.D.N.Y. Feb. 26, 1991),

aff'd, 948 F.2d 90 (2d Cir. 1990) ........... re

Australian Gov’t Aircraft Factories v. Lynne,

743 F.2d 672 (9th Cir. 1984), cert. denied,

eet es eee Ge Ss o's ceo oy eal oe es 16

Callejo v. Bancomer, S.A.,

vue F206 0G) Ge Cie. TSGS) ww we 9-10, 12,

Crimson Semiconductor, Inc. v. Electronum,

629 F. Supp. 903 (S.D.N.Y. 1986) ........ 17

Exchange Nat’! Bank of Chicago v.

Empresa Minera del Centro del Peru S.A.,

303 ©. BeeD. Se G.D.NY. IGS) ww cs 17

Gould, Inc. v. Pechiney Ugine Kuhlmann,

Bos Fo S65 GO Cot. IGE) wo cc ces 10-11, 12

Harris Corp. v. National Iranian Radio

and Television,

ee BE Bib, be me. +) rere 11, 12

International Housing Ltd. v.

Rafidain Bank Iraq, 893 F.2d 8 (2d

ee oe a 16, 18

L’Europeenne de Banque v.

La Republica de Venezuela,

700 F. Supp. 114 (S.D.N.Y. 1988) ........ 17

Maritime Int’l Nominees Establish-

ment v. Republic of Guinea,

693 F.2d 1094 (D.C. Cir. 1982),

cert. denied, 464 U.S. 815 (1983) ......... 14

Martin vy. Republic of South Africa,

| Le Co A Sr 16

Ohntrup v. Firearms Center, Inc.,

516 F. Supp. 1281 (E.D. Pa. 1981),

aff'd, 760 F.2d 259 (3d Cir. 1985) ........ 11

Rio Grande Transp., Inc., In re,

516 F. Supp. 1155 (S.D.N.Y. 1981) ....... 17

Texas Trading & Milling Corp. v.

Federal Republic of Nigeria,

647 F.2d 300 (2d Cir. 1981),

cert. denied, 454 U.S. 1148 (1982) ........ 12, 15-16,

17-18

Transamerican Steamship Corp. v.

Somali Democratic Republic,

Per F.a8 DeedD.C. Git. IFES) ow ces 4,9

Vencedora Oceanica Navigacion, S.A. ¥.

Compagnie Nationale Algerienne de

Navigation,

730 F.2d 195 (Sth Cir. 1984) ............ 11-12, 13

Vili

Weltover Inc. v. Republic of Argentina,

941 F.2d 145 (2d Cir. 1991),

cert. granted, _U.S. _,

112 S. Ct. 858 (1992) ..........

Zedan v. Kingdom of Saudi Arabia,

849 F.2d 1511 (D.C. Cir. 1988) ....

Zernicek v. Brown & Root, Inc.,

826 F.2d 415 (Sth Cir. 1987),

cert. denied, 484 U.S. 1043 (1988) ..

STATUTES

am UB S PRR kk ke kes

LEGISLATIVE MATERIALS

House Judiciary Comm., Jurisdiction of

U.S. Courts in Suits Against Foreign

States, H.R. Rep. No. 1487, 94th

Cong., 2d Sess. (1976), reprinted in

POP Wc Nanos GU. 8 eee sd we ee ewes

Jurisdiction of U.S. Courts in Suits

Against Foreign States: Hearing on H.R.

11315 Before the Subcommittee on

Administrative Law and Government

Relations of the House Committee on the

Judiciary, 94th Cong., 2d Sess. (1976)

i oe oe. oe jee |

12, 14, 15,

12, 13

passim

Vill

PERIODICALS AND PUBLICATIONS

Comment, The Foreign Sovereign Immunities

Act: Inconsistencies in Application of

the Commercial Activity Direct Effect

Exception,

5 Emory Int’] L. Rev. 117, 211 (1991) .....

N.J. Evanoff, Direct Effect Jurisdiction

Under the Foreign Sovereign Immunities Act

of 1976: Ending the Chaos in the Circuit

Courts, 28 Houston L. Rev. 629 (1991) ....

Note, Effects Jurisdiction Under the

Foreign Sovereign Immunities Act

and the Due Process Clause,

SS N.Y.U.L. Rev. 474 (1980) ..........

Note, /nterpreting the Direct Effects

Clause of the FSIA’s Commercial

Activities Exception,

59 Fordham L. Rev. 91 (1990) ..........

No.

In The

Supreme Court of the United States

October Term, 1991

ANTARES AIRCRAFT L.P.,

Petitioner,

-against-

FEDERAL REPUBLIC OF NIGERIA and NIGERIAN

AIRPORTS AUTHORITY,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Second Circuit

Petition for a Writ of Certiorari

TO: The Honorable, the Chief Justice and Associate

Justices of the Supreme Court of the United States

REPORTING OF OPINIONS IN THE CASE

The opinion of the District Court dismissing Antares’

complaint has not been published in an official or unofficial

reporter. The text of that opinion is set forth in Appendix C to

this Petition.

The opinion of the Second Circuit affirming the complaint’s

dismissal is published at 948 F.2d 90 (2d Cir. 1991) (Appendix A

hereto).

STATEMENT OF JURISDICTION

Antares seeks review of a judgment of the United States

Court of Appeals for the Second Circuit in Antares Aircraft, L. P.

v. Federal Republic of Nigeria, 948 F.2d 90 (2d Cir. 1991)

(Appendix A). Antares’ petition for rehearing and suggestion of

hearing en banc was denied by the Second Circuit on January 13,

1992. (Appendix E). Jurisdiction is based upon 28 U.S.C.

§ 1254.

STATUTE INVOLVED

The following statute is involved in this petition:

The Foreign Sovereign Immunities Act, 28 U.S.C.

§ 1605(a)(2), which provides, in relevant part, that

A foreign state shall not be immune from

the jurisdiction of courts of the United

States or of the States in any case --...

(2) in which the action is based . . . upon

an act outside the territory of the United

States in connection with a commercial

activity of the foreign state elsewhere and

that act causes a direct effect in the United

States; ...

PRELIMINARY STATEMENT

Petitioner Antares Aircraft L.P. ("Antares") respectfully

requests that a writ of certiorari be granted in this case to review

a decision of the United States Court of Appeals for the Second

Circuit, dated October 28, 1991 (the “opinion"), and reported at

948 F.2d 90 (2d Cir. 1991). That opinion affirmed a decision of

the District Court for the Southern District of New York

(Martin, D.J.) dismissing Antares’ complaint against the Federal

Republic of Nigeria ("FRN") and one of its instrumentalities, the

Nigerian Airports Authority ("NAA"), for lack of subject matter

jurisdiction under the Foreign Sovereign Immunities Act

("FSIA"), 28 U.S.C. § 1602 er seg. Jurisdiction in the district

court was based on 28 U.S.C. § 1331 because the case arose out

of the FSIA, a law of the United States. Antares Aircraft, L.P. v.

Federal Republic of Nigeria, 948 F.2d 90 (2d Cir. 1991)

(Appendix A), aff’g 89 Civ. 6513 (S.D.N.Y. Feb. 26, 1991)

(Appendix C) (as yet unreported).

This case presents an issue of critical importance to the

protection of U.S. businesses in their conduct of commercial

activities overseas. In effect, the Second Circuit ruled that a U.S.

company is limited to the courts of a foreign country for redress

when that foreign country misappropriates the company’s assets --

even if the misappropriation is not an act of state but merely

wrongful commerical conduct. In most instances, such a ruling

in effect strips U.S. businesses of any meaningful protection

against unlawful seizures of their business assets. That is why

other courts considering the issue have reached contrary

conclusions.

The opinion holds that the direct financial injury to a U.S.

business, caused by a foreign sovereign’s wrongful commercial

conduct directed at a U.S. business, does not constitute a "direct

effect in the United States" within the meaning of the FSIA’s

“commercial activity" exception to sovereign immunity, 28

U.S.C. § 1605(a)(2). Specifically, the opinion rules that Antares

suffered a "direct effect" but that this effect was not "in the

United States," although Antares is a U.S. company with its sole

place of business in New York.

The ruling conflicts with every other Circuit that has

considered the question of where a U.S. concern suffers an

injury. Those Circuit courts have held that a direct effect

incurred by a U.S. concern is in the U.S. for purpose of the

FSIA. Thus, the Court of Appeals for the District of Columbia

found subject matter jurisdiction under the FSIA where the plain-

tiff, a U.S. concern, suffered financial injury in the U.S. due to a

foreign sovereign’s wrongful conduct overseas. Transamerican

Steamship Corp. v. Somali Democratic Republic, 767 F.2d 998

(D.C. Cir. 1985). The Fifth, Sixth and Eleventh Circuits all

agree with the D.C. Circuit: a U.S. concern suffers direct

economic injury in the U.S. even if the origin of the injury is

overseas.

Inasmuch as the Second Circuit has geographical jurisdiction

over New York City, the most important situs of foreign

commerce in this country, its refusal, in contrast to other courts,

to provide such protection causes a particularly unfair and chilling

impact on companies located there and doing business abroad.

Moreover, in addition to this disparate and unfair treatment, the

question of whether U.S. companies doing business abroad are to

be relegated to the local foreign courts for redress when the local

foreign sovereigns misappropriate their assets presents an

important issue of international law which should be resolved by

this Court.

The opinion sends a signal to foreign governments that the

law of this country is in disarray on the critical issue of subject

matter jurisdiction over disputes arising out of their commercial

mistreatment of U.S. firms. It should not be allowed to stand.

STATEMENT OF THE FACTS

The facts pleaded in this action set forth a deliberate scheme,

successfully carried out by NAA and FRN, to hold hostage in

Nigeria a commercial aircraft (the “Aircraft") for the purpose of

extracting U.S. funds from Antares, the New York-based limited

partnership that owns the Aircraft. In January 1989, NAA

physically possessed the Aircraft, preventing it from being moved

from the tarmac of a Lagos, Nigeria airport, under the pretense

that Antares’ lessee, Gam Air, owed parking fees. Yet, no

matter what steps Antares took to relieve this alleged debt, NAA

found excuse after excuse to continue holding the Aircraft.

First, Antares obtained orders from both the High Court of

Lagos State, Ikeja Division, and from the United States District

Court for the Southern District of New York declaring that

Antares owned the Aircraft free and clear of Gam Air’s debts.

But NAA refused to release the Aircraft. Faced with the rapid

deterioration of its sole asset due to the harsh Nigerian weather

conditions, Antares acceded to NAA’s demands and paid the sums

allegedly owed to free the Aircraft. But each time Antares paid

the "fees," NAA declared a new fee was owed.

Only one person with knowledge of the underlying facts

submitted testimony, J. Nelson Happy, Esq.' Mr. Happy

submitted an affirmation detailing the deliberate course of the

NAA to obtain U.S. funds from Antares by temporarily

expropriating the Aircraft. NAA and FRN accomplished this in a

classic extortionate manner -- demanding sums of money to

permit the Aircraft to leave Nigeria, only to announce new

demands once payments were made.

The scheme was carried out over a course of five months and

was resolved finally by Antares arranging for a final "final"

payment, which was held in escrow in Nigeria until the Aircraft

flew off in late May 1989. By that time, Antares had paid more

than $100,000 in "fees," and its Aircraft had suffered substantial

damage.

Antares subsequently commenced this action. Although NAA

and FRN purported not to deny the factual basis of the action,

they moved to dismiss on jurisdictional grounds that relied on a

different set of facts. In support of their motions, they submitted

conclusoiy affidavits from individuals who lacked personal

knowledge of the events. The relevant affidavit submitted by

NAA was from one of its "legal advisors," W.C. Madueke, who

attested that NAA was a separate legal entity from FRN but did

not contest Antares’ allegations as to NAA’s wrongful conduct.

FRN did not submit any affidavits addressing the dealings

between Antares, NAA and FRN, but it relied on Mr. Madueke’s

statement.’

' Mr. Happy is an American attorney who travelled to Nigeria on Antares’ behalf

after the Nigeman authorities took possession of the Aircraft. He represented

Antares in dealing with FRN and NAA until the Aircraft was permitted to depart.

? On issues not relevant here, NAA also submitted an affidavit of Oluwole Akanle,

a professor of law, and FRN submitted two affidavits of its counsel, Doris Shaw,

and another of the Director of FRN’s Federal Civil Aviation Authonty,

Mohammed Mashoid Adckunle.

Antares served discovery requests designed to elicit facts

concerning subject matter jurisdiction and the ties between FRN

and NAA. After receiving several extensions -- and after the

motion to dismiss was fully submitted -- both NAA and FRN

finally responded by refusing to permit discovery on the basis that

the district court lacked jurisdiction.

The district court relied on the Madueke affidavit and

dismissed Antares’ complaint on the ground that it lacked subject

matter jurisdiction over both FRN and NAA. On appeal, the

Second Circuit affirmed the district court’s decision. The opinion

held, in relevant part, that financial injury incurred in the U.S. by

a U.S. business due to a foreign sovereign’s conduct overseas is

not a "direct effect in the United States" pursuant to 28 U.S.C.

§ 1605(a)(2). This holding contradicts rulings of other Circuits,

and this Court should grant a writ of certiorari to correct it.

AR ENT

The Opinion Creates a Conflict with Other

Circuits and Effectively Overrules the Consistent

Rulings of the Second Circuit in Holding that

Financial Injury to a U.S. Business Caused by a

Foreign Sovereign’s Conduct Overseas Does Not

Cause a Direct Effect in the United States

The “commercial activity" exception to the FSIA gives a

U.S. court subject matter jurisdiction over an action against a

foreign state that:

(2) is based . . . upon an act outside the

territory of the United States in connection

with a commercial activity of the foreign

State elsewhere and thar act causes a direct

effect in the United States;

28 U.S.C. § 1605(a)(2) (emphasis supplied).

The opinion recognized that Antares "undoubtedly" suffered a

"direct effect" as a result of defendants’ activities. 948 F.2d at

95 (App. A7-A8). The opinion also recognized that Antares suf-

fered a direct financial injury in the U.S. as a result of

defendants’ conduct. Jd. However, the opinion reached the

illogical conclusion that the "direct effect" did not occur "in the

United States" because the “legally significant acts giving rise to

the claim" took place in Nigeria. Jd. at 95-96 (App. A8-A10).

This Court should review the opinion because of the

inconsistent application of the standard for determining whether a

plaintiff business has incurred a "direct effect in the United

States." The opinion’s conclusion conflicts not only with the

ruling of all other Circuits that have considered the issue, but also

with every other appellate and district court decision in the

Second Circuit that has ruled on the question.

A. The Opinion Creates a Conflict with

Every Other Circuit Ruling in Holding that

the Direct Effect of Harm to a U.S.

Concern Committed Overseas is not "in

the United States"

Other than this opinion, every Circuit that has considered the

question has held that the direct effect of harm to a U.S. concern

caused overseas is "in the United States." The opinion, however,

holds that the effect on Antares, though "direct," was not "in the

United States" within the meaning of the FSIA. Thus, the

opinion creates a direct conflict among the Circuits that can be

resolved only upon this Court’s review.

In a case with remarkable factual similarities to this one,

Transamerican Steamship Corp. v. Somali Democratic Republic,

767 F.2d 998 (D.C. Cir. 1985), the U.S. Court of Appeals for

the District of Columbia Circuit held that a financial injury

arising out of a foreign sovereign’s detention of a ship at its port

was a “direct effect in the United States" sufficient to confer

jurisdiction. There, as here, it was alleged that the foreign

sovereign directed that a deposit be made to a specific bank

account in the U.S. Yet, in Transamerican Steamship the D.C.

Circuit found jurisdiction over the foreign sovereign because,

even though the relevant misconduct occurred outside the United

States, U.S. banking resources were used and the plaintiff

experienced foreseeable financial injury in the United States. /d.

at 1004.

Likewise, the Fifth, Sixth and Eleventh Circuits have

recognized that the direct effect of financial injury to a U.S.

business abroad is "in the United States." In Callejo v.

Bancomer, S.A., 764 F.2d 1101 (5th Cir. 1985), the Court of

Appeals for the Fifth Circuit expressly found jurisdiction over a

foreign sovereign under the FSIA based on financial injury to

U.S. citizens residing and conducting business within the U.S.

Callejo involved a Mexican bank that had breached explicit

conditions of certificates of deposits in order to comply with new

Mexican government regulations mandating that all deposits in

Mexican banks must be repaid in Mexican pesos. The plaintiffs,

U.S. citizens, had purchased certificates calling for payment of

principal and interest in U.S. dollars. Significantly, the Court

dismissed as irrelevant whether the contract called for payment to

the plaintiffs in Mexico or the U.S., stating that "since the

Callejos were located in the United States, the effects of

Bancomer’s breach were inevitably felt by them there." Jd. at

1112 (emphasis supplied).’

Similarly, in Gould, Inc. v. Pechiney Ugine Kuhlmann, 853

F.2d 445 (6th Cir. 1988), the Sixth Circuit embraced the concept

that financial injury to a U.S. business supports FSIA jurisdiction.

Gould is among the very few cases that, like Antares’ lawsuit,

involves allegations of intentional commercial torts abroad by

foreign sovereign instrumentalities: the case concerned

misappropriation of trade secrets by French companies, which

had indirectly utilized those secrets through a joint venture with a

Japanese company. Jd. at 453. Thus -- as was the case in FRN

and NAA’s extortion from Antares -- the relevant wrongful acts

alleged had taken place outside this country. Nevertheless, the

Gould court resoundingly rejected defendants’ contentions that

corporate domicile in the U.S. cannot serve as a sufficient basis

for a finding that a commercial activity outside the U.S. has had a

direct effect in the U.S. After noting that the U.S. concern

would suffer financial loss in the U.S. based on the foreign

sovereign’s conduct abroad, the Court responded:

[sJurely, this is the kind of claim which

Congress intended district courts to

adjudicate when brought by American

nationais against foreign sovereigns; it is

unlikely that Congress intended to create

* In spite of its express finding of FSIA jurisdiction, the Fifth Circuit held that the

suit was barred by the act of state doctrine because it called into question the

validity of Mexico's exchange control regulations. Such a defense is not at issue

here.

havens abroad for thieves of this country’s

industrial secrets.

Id. at 453.

Harris Corp. v. National Iranian Radio and Television, 691

F.2d 1344 (11th Cir. 1982), like Gould and the Antares litigation,

also involved a wrongful taking from the U.S., rather than a

failure to pay money ino the U.S. There, the Eleventh Circuit

considered whether a wrongful demand for payment by a foreign

entity under a letter of credit guaranteeing performance by an

American corporation caused a "direct effect in the United

States." The Court held that it met the jurisdictional standard:

[t]he letter of credit arrangement -- which was

structured according to the wishes of the

[defendant Iranian entity] -- extends into this

country, and the appellants’ demands thus have

significant, foreseeable financial consequences

here.

Id. at 1351. See also Ohntrup v. Firearms Center, Inc., 516 F.

Supp. 1281, 1285-87 (E.D. Pa. 1981) (knowledge that product

would be sold in the U.S. satisfied requirement of direct effect

clause), aff'd, 760 F.2d 259 (3d Cir. 1985).

The difference between Gould and Harris’s strong

pro-jurisdiction holdings, on the one hand, and that of the

opinion, on the other, demonstrates the seriousness of the conflict

among the Circuits concerning the meaning of the phrase “in the

United States" in Section 1605(a)(2). Thus, if a U.S. business,

harmed overseas by the acts of a foreign sovereign, were to seek

relief in the D.C., Fifth, Sixth or Eleventh Circuits, it would

likely be able to prosecute its lawsuit to judgment. But if that

same business were to bring suit within the Second Circuit, the

complaint would be dismissed pursuant to the holding set forth in

the opinion. This conflict needs this Court’s resolution. See

Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale

Algerienne de Navigation, 730 F.2d 195, 203 (Sth Cir. 1984)

("for obvious reasons, it is highly desirable to avoid circuit

conflicts in the sensitive area of sovereign immunity").

In part, the conflict identified here is due to the larger

conflict of how the various Circuits approach the direct effect

clause of the FSIA’s commercial activity exception. As discussed

more fully below, the Second Circuit looks to whether the effect

is "sufficiently ’direct’ and sufficiently ’in the United States’ that

Congress would have wanted a U.S. court to hear the case," e.g.,

Weltover Inc. v. Republic of Argentina, 941 F.2d 145, 152 (2d

Cir. 1991), (quoting Texas Trading & Milling Corp. v. Federal

Republic of Nigeria, 647 F.2d 300, 313 (2d Cir. 1981), cert.

denied, 454 U.S. 1148 (1982)), cert. granted, _ U.S. _, 112 S.

Ct. 858 (1992). By contrast, other Circuits inquire whether the

conduct causing the effect is "substantial" and "foreseeable."

See, e.g., America West Airlines v. GPA Group, Lid., 877 F.2d

793, 798-800 (9th Cir. 1989); Zedan v. Kingdom of Saudi

Arabia, 849 F.2d 1511, 1515 (D.C. Cir. 1988); Callejo v.

Bancomer, S.A., 764 F.2d at 1104; Harris Corp. v. Nat’l Iranian

Radio and Television, 691 F.2d at 1351. See also Note,

Interpreting the Direct Effects Clause of the FSIA’s Commercial

Activities Exception, 59 Fordham L. Rev. 91 (1990).

This divergence originates in the Second Circuit’s decision to

discount as "a bit of a non-sequitur" Congress’ express direction

that the "direct effect" clause be interpreted in accordance with

Section 18 of the Restatement (Second) of Foreign Relations Law.

Texas Trading, 647 F.2d at 311. Several courts outside the

Second Circuit have undertaken to harmonize this reference in the

legislative history with the text of FSIA and expressed

Congressional purpose. E.g, Zernicek v. Brown & Root, Inc.,

826 F.2d 415, 417 (Sth Cir. 1987), cert. denied, 484 U.S. 1043

(1988); Maritime Int’l Nominees Establishment v. Republic of

Guinea, 693 F.2d 1094, 1110-11 (D.C. Cir. 1982), cert. denied,

464 U.S. 815 (1983). Nonetheless, the overwhelming impression

is one of interpretive disarray. N.J. Evanoff, Direct Effect

Jurisdiction Under the Foreign Sovereign Immunities Act of 1976:

Ending the Chaos in the Circuit Courts, 28 Houston L. Rev. 629,

655 (1991) (Court of Appeals decisions "[fail] to develop any

coherent standard for locating effects" pursuant to the “direct ef-

fect" clause). See also Callejo, 764 F.2d at 1107 (referring to the

FSIA as “a constant bane of the federal judiciary" (quoting

Vencedora Oceanica Navigacion v. Compagnie Nationale

Algerienne de Navigation, 730 F.2d 195, 205 (Sth Cir. 1984)

(Higgenbotham, J., dissenting))).

It is further evidence of this disordered state of affairs that,

while the Second Circuit standard has been styled more flexible

and permissive of jurisdiction than the “substantial and

foreseeable" test, see Note, /nterpreting the Direct Effects Clause,

supra, 59 Fordham L. Rev. at 105-06, 111; Comment, The

Foreign Sovereign Immunities Act: Inconsistencies in Application

of the Commercial Activity Direct Effect Exception, 5 Emory Int'l

L. Rev. 117, 211, 229-31 (1991), the positions have been

reversed in the present action. There is little question but that, in

this case, jurisdiction was warranted based on the substantial and

foreseeable standard. It cannot be gainsaid that defendants’

conduct created substantial harm to Antares.* Furthermore, the

impact in the U.S. was entirely foreseeable: defendants were

dealing directly with an attorney representing Antares over a

5-month period and were fully aware that Antares was a

U.S.-based entity. See Callejo, 764 F.2d at 1112. Unlike the

cases involving unintentional torts, e.g., America West Airlines,

Inc. v. GPA Group, Ltd.; Zernicek v. Brown & Root, 826 F.2d at

418-19, there was no fortuity in the fact that a U.S. person was

harmed. Thus, this case bears out the warning of one com-

mentator that "[b]ecause the Texas Trading approach offers little

real direction . . . it can lead to unpredictable results." Note,

Interpreting the Direct Effects Clause, supra, 59 Fordham L.

Rev. at 106. This Court’s review is required to restore the

“The effect on Antares in this case was, first and foremost, financial injury.

However, Antares also alleged in the Happy Affirmation at least one additional

legally significant act in the U.S. -- namely, that on one occasion defendants

demanded that a deposit to be made to a specific bank account in the United

States.

predictability in this area necessary for American businesses to

operate in the international arena.

Antares respectfully suggests that the petition for a writ of

certiorari be granted to review and reverse the opinion’s error.

B. The Opinion is Inconsistent with Other Second

Circuit Rulings as to the Situs of a "Direct

Until this opinion, every decision in the Second Circuit had

found that the direct effect of harm to a business occurs, at a

minimum, in the place where that business is organized or in its

principal place of business, no matter where the harm-causing

“legally significant acts" occurred. The illogic and unfairness of

the opinion is exacerbated by the fact that, under the ruling at

issue here, a foreign company can claim a “direct effect" if it can

show financial injury in the U.S., but a local New York business

cannot.

Ironically, the opinion purports to base its illogical conclusion

on a recent decision of another panel of the Second Circuit,

Weltover, Inc. v. Republic of Argentina, 941 F.2d 145, 152 (2d

Cir. 1991), cert. granted, _ U.S. _, 112 §.Ct. 858 (1992).°

The ratio decidendi of Weltover, however, conflicts with the

ruling in the instant case. The Welrover panel began its analysis

by recognizing and applying the bedrock principle that a "direct

effect" of harm to a business is incurred where that business is

located: "[c]learly a foreign sovereign’s improper commercial

acts cause an effect to the foreign corporate plaintiff in that

* This Court recently heard oral argument in Weltover on the issue of whether the

‘oreign sovereign’s acts constituted a commercial activity in the U.S. and, if so,

whether those acts caused a direct effect in the U.S. No outcome of that appeal will

affect Antares’ petition. But even if this Court were to affirm the Second Circuit's

opinion and reasoning in Wellover, the opinion herein requires review, if only

because of its inconsistency with Weliover. See infra.

plaintiff's place of incorporation or principal place of business."

Id.

The Second Circuit panel in this case fastened on the

observation made in Welrover that, in determining the situs of a

“direct effect," "courts often look to the place where legally

significant acts giving rise to the claim occurred." Antares, 948

F.2d at 95 (quoting Welrover, 941 F.2d at 152). From this, the

panel drew the illogical and absurd conclusion that a “direct

effect" cannot be sustained by U.S. firms when the claim arose

out of wrongful acts taking place in a foreign country. Jd. at 95-

96 (App. A8-A10).

The mere statement of the proposition would seem to carry

its own refutation. Not surprisingly, the Welrover ruling belies it.

In Weltover, the plaintiffs were foreign firms. Thus, there

was no question but that a "direct effect" of defendant's actions

was incurred in each plaintiff's principal place of business or

place of incorporation. Rather, the issue in Weltover was whether

a "direct effect" of financial loss to a business could also be

incurred in a place orher than its principal place of business or

place of incorporation. It was only in determining which, if any,

additional places “a direct effect" should be found that the court

in Weltover considered the location of the "legally significant acts

giving rise to the claim." Jd.

Weltover is the latest in a long line of cases holding that, as a

matter of course, the direct effect of a harm to a business is

incurred in that firm’s place of business. That basic jurisdictional

principle was first articulated in Texas Trading & Milling Corp.

v. Federal Republic of Nigeria, 647 F.2d 300, 312 (2d Cir.

1981), cert. denied, 454 U.S. 1148 (1982), long recognized in the

Second Circuit and elsewhere as one of the leading decisions

interpreting the FSIA. There, the court began its analysis of the

commercial activities exception by emphasizing that, unlike

individuals, business entities by definition "can only suffer

financial loss." /d. The court found that the direct effect --

financial loss to the plaintiff corporations -- occurred "in the

United States" for two independent reasons. One was that "each

of the plaintiffs is an American corporation." Second, a legally

significant act was to occur in the U.S. Jd.°

Similarly, in Internationa! Housing Ltd. v. Rafidain Bank

Iraq, 893 F.2d 8 (2d Cir. 1989), the Second Circuit reaffirmed

the principle that, for purposes of the "direct effect" clause of the

commercial activity exception, "an injury to a corporation occurs

in some legally significant situs, for instance, the place of incor-

poration, or a place designated for performance of a contract."

Id. at 11-12 n.3 (citations omitted) (emphasis supplied). Unlike

the plaintiff here, both the plaintiffs in Jnternational Housing

were foreign companies. Therefore, as in Weltover, the court’s

inquiry in Jnternationa! Housing focused on the alternative

analysis of whether the acts giving rise to the claim were "in the

United States." Nonetheless, the Jnternational Housing court

took note of the obvious fact that a direct effect occurred where

the defendant benefited from the payments, that is, “at its situs in

Iraq." Id. at 12. Thus, International Housing again reaffirmed

the principle that a direct effect from a commercial injury upon a

business is suffered where that business is located.

Until this case, the district courts in the Second Circuit had

also uniformly ruled that a direct effect suffered by a U.S.

* The opinion in the instant case purports to rely on two personal injury cases to

bolster its conclusion, 948 F.2d at 95, neither of which is remotely opposite. In

Australian Gov't Aircraft Factories v. Lynne, 743 F.2d 672, 674-75 (9th Cir.

1984), cert. denied, 469 U.S. 1214 (1985), the Ninth Circuit denied jurisdiction

solely on the grounds that the disputed “effects” were not “direct,” not that they

were not “in the United States.” And in Martin v. Republic of South Africa, 836

F.2d 91 (2d Cir. 1987), the Second Circuit specifically endorsed the analysis that

financial injury to a U.S.-based business occurs “in the United States.” /d. at 94.

Both cases involved personal injuries to individuals who were abroad at the time

of the harm. Accordingly, neither case has relevance to a case involving financial

injury to a business. This distinction, ignored in the instant case, is basic to the

statutory exception from sovereign immunity for “commercial activities”. See,

e.g., Texas Trading, 647 F.2d at 312

business is ipso facto "in the United States." Crimson Semi-

conductor, Inc. v. Electronum, 629 F. Supp. 903, 907 (S.D.N.Y.

1986) (although all legally significant acts took place outside the

U.S., FSIA jurisdiction was found "because the breach had a

‘direct effect’ in the United States, namely, a financial loss

suffered by the beneficiary of the contract, a New York

corporation"); Exchange Nat’l Bank of Chicago v. Empresa

Minera del Centro del Peru $.A., 595 F. Supp. 502, 505

(S.D.N.Y. 1984) (where Peru was situs of legally significant act,

subject matter jurisdiction under the FSIA warranted because

"[t]he direct effect of defendants’ repudiation of the promissory

note was clearly felt in the United States where [plaintiff], an

American entity, suffered its monetary loss")’; In re Rio Grande

Transp., Inc., 516 F. Supp. 1155, 1163 (S.D.N.Y. 1981) (direct

effect of a tort committed overseas against a U.S. business was

"in the United States" within the meaning of § 1605(a)(2) because

plaintiff's ship “was the sole source of income of Rio Grande, a

New York corporation, and, accordingly, Rio Grande was unable

to earn freight or other monies for a considerable period of time

after the collision"). See also L’Europeenne de Banque v. La

Republica de Venezuela, 700 F. Supp. 114, 121 (S.D.N.Y. 1988)

("[e]ffects jurisdiction derives from a state’s interest in protecting

those within its borders and in governing events within its

borders" (quoting Note, Effects Jurisdiction Under the Foreign

Sovereign Immunities Act and the Due Process Clause, 55

N.Y.U.L. Rev. 474, 512 (1980))).

If the opinion is allowed to stand, all of these decisions are in

effect overruled because the "legally significant act" in each

occurred outside of the U.S. Thus, the opinion calls for a

dramatic but sub silentio reversal of the Second Circuit’s FSIA

jurisprudence that would severely narrow the application of the

"commercial activity" exception. Furthermore, as acknowledged

” Although the FSIA requirements for subject matter jurisdiction were satisfied, the

court found that personal jurisdiction was lacking.

in Texas Trading, such a restrictive interpretation of the direct

effect clause would do violence to Congress’ announced purpose:

Courts construing either term ["direct

effect" or "in the United States"] should be

mindful more of Congress’ concern with

providing "access to the courts” to those

aggrieved by the commercial acts of a

foreign sovereign, House Report at 6605,

than with cases defining "direct" or

locating effects under state statutes passed

for dissimilar purposes.

Texas Trading, 647 F.2d at 312-13 (citing House Judiciary

Comm., Jurisdiction of U.S. Courts in Suits Against Foreign

States, H.R. Rep. No. 1487, 94th Cong., 2d Sess. (1976),

reprinted in 1976 U.S.C.C.A.N. 6604, 6605). Indeed, the

legislative history makes clear that Congress’ primary purpose in

enacting the FSIA was to allow American businesspeople and

companies to have access to U.S. courts to resolve business

disputes with foreign sovereigns. See H.R. Rep. No. 1487,

supra, reprinted in 1976 U.S.C.C.A.N. at 6605; Jurisdiction of

U.S. Courts in Suits Against Foreign States: Hearing on H.R.

11315 Before the Subcommittee on Administrative Law and

Government Relations of the House Committee on the Judiciary,

94th Cong., 2d Sess. (1976) at 24-25.

Further, the opinion would lead to wildly anomalous results.

In straining to reach the result that *t did, the opinion

manufactures a dichotomy between business torts and contract

breaches. Where a contract is breached overseas, but the contract

contains provisions for some performance in the United States,

the FSIA’s jurisdictional standard may be satisfied -- even where

the plaintiff is not a U.S. business. See Weltover, 941 F.2d at

151-53; International Housing, 893 F.2d at 11. But under the

opinion’s reasoning, a commercial tort that directly affects a U.S.

business can never be the basis of an action under the FSIA as

long as it is committed overseas. By the same token, following

the opinion’s logic, there would be FSIA jurisdiction where a

the same amount of money from the U.S. bank account of the

same U.S. corporation.

It is unimaginable that Congress intended the outcome of an

FSIA jurisdictional dispute to turn on the question of wh -her a

transaction involved payment to a U.S. bank from a for -ign entity

or payment from a U.S. bank to such foreign entity. Such sense-

less distinctions further evidence that the opinion far departs from

the accepted and usual course of judicial proceedings and calls for

this Court’s review.

NCLUSION

For the reasons set forth above, Antares respectfully requests

that the petition for a writ of certiorari be granted.

Respectfully submitted,

David F. Dobbins

Patterson, Belknap,

Webb & Tyler

30 Rockefeller Plaza

New York, New York 10112

(212) 698-2500

Counsel of Record for Petitioner

Of Counsel:

Lisa C. Cohen

John N. Lieber

Sie

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APPENDICES

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 30—August Term, 199]

Argued Sept. 24, 1991 Decided Oct. 28, 1991

Docket No. 91-7342

ANTARES AIRCRAFT, L.P.,

Plaintiff-Appellant,

FEDERAL REPUBLIC OF NIGERIA,

and Nigerian Airports Authority,

Defendants-A ppellees.

mal

David F. Dobbins, New York City (Patterson, Belknap,

Webb & Tyler, of counsel), for plaintiff-appellant.

Doris K. Shaw, New York City (Warshavsky, Hoffman &

Cohen, P.C., of counsel, for defendant-appellee Federal

Republic of Nigeria.

David Wippman, Washington, D.C. (Jeffrey Dunoff,

Reichler & Soble, Washington, D.C. and James Reichler,

White Plains, N.Y., of counsel) for defendant-appellee

Nigerian Airports Authority.

—

Before LUMBARD, WINTER and ALTIMARI, Circuit Judges.

ALTIMARI, Circuit Judge:

Plaintiff-appellant Antares Aircraft, L.P. (‘‘Antares’’), a

Delaware limited partnership with its principal place of busi-

ness in New York, appeals from a judgment of the United

States District Court for the Southern District of New York

(John S. Martin, Jr., Judge), dismissing its claim against

defendants-appellants the Federal Republic of Nigeria

(‘‘FRN’’) and the Nigerian Airports Authority (‘‘NAA’’) for

lack of subject matter jurisdiction under the Foreign Sover-

eign Immunities Act of 1976 (‘‘FSIA’’). See 28 U.S.C.

§§ 1330, 1332(a)(2)-(4), 1441(d), and 1602-1611 (1988).

Antares brought the underlying action to recover damages for

the alleged conversion of its aircraft in Nigeria, claiming that

the NAA, a Nigerian corporation established pursuant to

governmental decree and responsible for the operation and

management of all airports in Nigeria, wrongfully detained

its aircraft in Nigeria until Antares paid certain airport park-

ing and landing fees that its lessee allegedly owed to the

NAA. Antares paid these fees using funds from its New York

bank account. Antares attributed the NAA’s conduct to the

FRN by arguing that the NAA is not truly a separate entity,

but is owned and operated by the FRN and is essentially the

FRN’s agent.

The defendants moved to dismiss the complaint, contend-

ing that the district court lacked subject matter jurisdiction

under the FSIA because neither the FSIA’s ‘‘commercial

activity’’ exception, see 28 U.S.C. § 1605(a)(2), nor its

‘‘expropriation’’ exception, see 28 U.S.C. § 1605(a)(3),

applied. The district court granted the motion and dismissed

the case. The court reasoned that the ‘‘commercial activity”’

exception did not apply because the alleged conversion of

Antares’ aircraft in Nigeria did not have a ‘‘direct effect in

the United States’’ within the meaning of § 1605(a)(2).

Rather, according to the district court, the direct effect of the

defendants’ conduct occurred in Nigeria where the aircraft

was detained and suffered damage from exposure to the ele-

ments. The court thus rejected Antares’ contention that the

financial loss it suffered as a result of the defendants’ con-

duct overseas was alone sufficient to satisfy the ‘‘direct effect

in the United States’’ test of § 1605(a)(2). The court further

held that the ‘‘expropriation’’ exception did not apply

because the NAA did not conduct any commercial activity in

the United States, a necessary element of this exception. See

28 U.S.C. § 1605(a)(3).

Antares appeals from the judgment of dismissal, contend-

ing, among other things, that the district court erred in find-

ing that the financial loss Antares incurred in the United

States as a result of the alleged conversion of its aircraft in

Nigeria was not ‘‘a direct effect in the United States’’ within

the meaning of § 1605(a)(2) of the FSIA. Antares also argues

that the district court erred in determining that Antares failed

to allege facts sufficient to conclude that the NAA engaved in

commercial activity in the United States, and consequently, in

ruling that the ‘‘expropriation’’ exception did not apply. For

the reasons set forth below, we affirm the judgment of the

district court.

BACKGROUND

Plaintiff-appellant Antares is the owner of a DC-8-55 air-

craft, its sole asset. In February 1988, Antares leased the

plane to Gam Air, Ltd. (‘‘Gam Ajir’’), a Gambian corpora-

tion. Thereafter, Antares assigned its interest as lessor to

Expert Air, Ltd. (‘‘Expert Air’’), a Nigerian company. Prior

to November 1988, both Gam Air and Expert Air apparently

defaulted on their respective obligations under these agree-

ments. As a result of Expert Air’s default, it appears that

Antares regained possession of the aircraft.

In addition to its default, Gam Air also failed to pay the

pilots and crew of the aircraft in a timely fashion. In order to

recover the wages allegedly due, the pilots and crew of the

aircraft commenced an action in Nigeria against Gam Air

and Expert Air sometime after November 10, 1988. In con-

nection with that action, a Nigerian court issued an order of

attachment covering the aircraft. At that time, the aircraft

was at the Murtala Muhammed Airport in Lagos, Nigeria.

To protect its interest in the aircraft, Antares sought from

the Nigerian court, and was granted, the right to intervene as

a defendant in the action. Subsequently, the Nigerian court

lifted the order of attachment and Antares planned to fly the

aircraft to the United States. However, according to Antares,

the NAA refused to allow it to remove the aircraft until it

paid certain parking and landing fees allegedly incurred by

Gam Air and owed to the NAA. Negotiations ensued in

Nigeria between Antares’ representatives and the NAA con-

cerning the amount of fees due. Antares claims that, in order

to regain control of its aircraft, it was forced to make a series

of payments to the NAA from January 1989 until May 1989

totaling approximately $100,000. The bulk of these payments

were wired from Antares’ New York bank acccunt to the

NAA’s agent in Nigeria. Antares also claims that the NAA

directed that one payment be deposited into a California

bank account. That account did not, however, belong to the

NAA, but apparently belonged to Antares’ local Nigerian

counsel. In any event, after paying the outstanding parking

and landing fees, Antares flew the aircraft out of Nigeria in

May 1989.

Five months later, Antares commenced the underlying

action against the FRN and the NAA in the United States

District Court for the Southern District of New York to

recover damages stemming from the detention and alleged

conversion of the aircraft in Nigeria. The complaint alleged

that the NAA wrongfully detained the aircraft as part of a

scheme to extort payments from Antares. While Antares did

not claim that the FRN participated directly in this undertak-

ing, it sought to hold the FRN liable on the theory that the

FRN owned and operated NAA and that the NAA was, in

effect, an agent of the FRN, and not a separate corporate

instrumentality.

The defendants moved to dismiss the complaint pursuant

to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdic-

tion under the FSIA. Under the FSIA, federal and state

courts are without subject matter jurisdiction to entertain an

action against a ‘‘foreign state,’’ as defined in 28 U.S.C.

§ 1603(a), unless the claim falls under one of the statutory

exceptions set forth in 28 U.S.C. §§ 1605-1607. See 28

U.S.C. § 1604; Argentine Republic v. Amerada Hess Ship-

ping Corp., 488 U.S. 428, 434, 109 S.Ct. 683, 687, 102

L.Ed.2d 818 (1989); Shapiro v. Republic of Bolivia, 930 F.2d

1013, 1017 (2d Cir. 1991). The parties agreed that the alleged

actions qualify as the activities of a ‘‘foreign state,’’ and thus

the FRN and the NAA were entitled to immunity unless one

of the FSIA exceptions applied. The district court dismissed

the case after finding, among other things, that neither the

‘‘commercial activity’? exception, 28 U.S.C. § 1605(a)(2),

nor the ‘‘expropriation’’ exception, 28 U.S.C. § 1605(a)(3),

applied.

With regard to the ‘‘commercial activity’’ exception, the

court found that the detention and alleged conversion of the

aircraft in Nigeria did not cause a ‘‘direct effect in the United

States’’ within the meaning of the statute. According to the

district court, the direct effect of the NAA’s conduct

occurred in Nigeria where the plane was detained and where

it supposedly suffered damage from exposure to the elements.

Although the alleged conversion may have caused Antares

financial loss in the United States to the extent that it had to

pay the parking and landing fees out of its New York bank

account, the court concluded that this loss was an indirect

consequence of the defendants’ activity. The district court

thus rejected Antares’ claim that the financial loss it suffered

in the United States as a result of the defendants’ conduct

overseas was alone a sufficient jurisdictional nexus to this

country to satisfy § 1605(a)(2). The district court observed

that the statutory test was not satisfied even assuming, as

Antares alleged, that some of the funds transferred to the

NAA were first paid into a California bank account (appar-

ently belonging to Antares’ Nigeiian local counsel) at the

NAA’s request.

The district court also held that the ‘‘expropriation’’ excep-

tion did not apply because Antares failed to allege sufficient

facts from which it could be inferred that the NAA con-

ducted ‘‘commercial activity in the United States,’’ a neces-

sary elemeat of this exception. See 28 U.S.C. § 1605(a)(3).

The court pointed out that the NAA had submitted sworn

affidavits demonstrating the absence of commercial activity

in this country.

Because the district court found that none of the FSIA

exceptions applied, it dismissed the complaint against both

defendants. This appeal followed.

DISCUSSION

The FSIA provides the sole source of subject matter juris-

diction in cases involving foreign states. See Shapiro, 930

F.2d at 1017. Under the FSIA, a foreign state is entitled to

immunity from suit unless its conduct falls within one of the

statutory exceptions set forth in 28 U.S.C. §§ 1605-1607. See

28 U.S.C. § 1604; Amerada Hess, 488 U.S. at 434, 109 S.Ct.

at 687; Shapiro, 930 F.2d at 1017. ‘‘When one of these

exceptions applies, the foreign sovereign is stripped of immu-

nity, and, pursuant to 28 U.S.C. § 1330(a), subject matter

jurisdiction exists in the district court.’’ Weltover, Inc. v.

Republic of Argentina, 941 F.2d 145, 148 (2d Cir.1991).

It is undisputed that the activities of the NAA and the

FRN are those of a ‘‘foreign state’’ within the meaning of

the FSIA. See 28 U.S.C. § 1603(a)-(b). Therefore, unless one

of the FSIA exceptions applies, there is no subject matter

jurisdiction in the instant action. Under the FSIA, the foreign

state has the burden of proving that it is entitled to sovereign

immunity, i.e., that its conduct is not covered by a FSIA

exception. See, e.g., L’Europeenne de Banque v. La

Republica de Venezuela, 700 F.Supp. 114, 119

(S.D.N.Y.1988); Braka v. Bancomer, S.A., 589 F.Supp.

1465, 1467 (S.D.N.Y.1984), aff’d, 762 F.2d 222 (2d

Cir.1985); see also H.R.Rep. No. 1487, 94th Cong., 2d Sess.

7, reprinted in 1976 U.S.C.C.A.N. 6604, 6616. For purposes

of this appeal, the two relevant exceptions are the ‘‘commer-

cia! activity’’ exception, see 28 U.S.C. § 1605(a)(2), and the

‘*expropriation’’ exception, see 28 U.S.C. § 1605(a)(3).

A. The ‘‘Commercial Activity’’ Exception.

The ‘‘commercial activity’’ exception provides in relevant

part that subject matter jurisdiction exists in a case ‘‘in which

the action is based . . . upon an act outside the territory of

the United States in connection with a commercial activity of

the foreign state elsewhere and that act causes a direct effect

in the United States.’’ 28 U.S.C. § 1605(a)(2). The parties do

not dispute that the NAA’s detention of the aircraft in Nige-

ria and collection of allegedly outstanding parking and land-

ing fees were a commercial activity undertaken as part of its

management of the Murtala Muhammed Airport. The pri-

mary issue on appeal is thus whether the detention of

Antares’ aircraft in Nigeria caused a ‘‘direct effect in the

United States.’’ More precisely, the question presented is

whether the effect of the defendants’ conduct was ‘‘suffi-

ciently ‘direct’ and sufficiently ‘in the United States’ that

Congress would have wanted an American court to hear the

case?’’ Weltover, 941 F.2d at 152 (citation omitted). Antares

contends that a direct effect occurred in this country because

it suffered economic loss as a result of the aircraft’s deten-

tion, and was forced to transfer funds out of its New York

bank account to free the aircraft.

This Court has not squarely confronted the issue of

whether there is a ‘‘direct effect in the United States’? when

an American corporation or partnership suffers a financial

loss in the United States as a result of a foreign state’s con-

duct abroad. See International Hous. Ltd. v. Rafidain Bank

Iraq, 893 F.2d 8, 11 n.3 (2d Cir.1989); Texas Trading & Mill-

ing Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 312

n. 35 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct.

1012, 71 L.Ed.2d 201 (1982). In addressing this issue, we

must first consider whether the detention of the aircraft

caused a sufficiently ‘‘direct effect’? to Antares. Where, as

here, the plaintiff is a legal person, as opposed to a natural

person, any injury it incurs is, as a matter of course, finan-

cial. See Weltover, 941 F.2d at 152; Texas Trading, 647 F.2d

at 312. ‘‘For the financial loss to be ‘direct,’ the corporate

entity must itself be placed in financial peril as an immediate

consequence of the defendant’s unlawful activity.’’ Weltover,

941 F.2d at 152. Undoubtedly, the detention of Antares’ air-

craft, its sole asset, for approximately five months had a

‘‘direct effect’? on Antares. The issue we must consider is

whether that ‘‘direct effect’? occurred ‘‘in the United States.’’

In determining where the effect of a defendant’s conduct is

felt directly, ‘‘courts often look to the place where legally sig-

nificant acts giving rise to the claim occurred.’’ Weltover, 941

F.2d at 152 (citing Zedan v. Kingdom of Saudi Arabia, 849

F.2d 1511, 1515 (D.C.Cir.1988) (for there to be a direct

effect in the United States, some legally significant event

must actually occur here)). For example, in Weltover, a for-

eign corporate plaintiff purchased bonds issued by a foreign

state. The plaintiff exercised a contractual option to have the

bonds paid in New York. The defendant foreign state failed

to make payment when the bonds became due and the plain-

tiff sued for breach of contract. We were required to deter-

mine, among other things, whether the defendants’ failure to

pay caused a direct effect ‘‘in the United States.’’ Eschewing

as ‘‘too facile’? an approach that would limit the effect of a

defendant’s conduct to the corporate plaintiff’s place of

incorporation or principal place of business, we held that the

direct effect on the foreign plaintiff of defendants’ failure to

pay on the bonds occurred in the first instance in New York,

because ‘‘the legally significant act,’’ i.e., defendants’ breach

of the contract, occurred in New York. Weltover, 941 F.2d at

153; see also Texas Trading, 647 F.2d at 312 (direct effect of

defendant’s breach of contract was ‘‘in the United States’’

because the plaintiffs were American and because payment

was to be made in the United States).

In the instant case, the ‘‘legally significant act’’—the deten-

tion and alleged conversion of the aircraft—occurred in Nige-

ria. In addition, all negotiations concerning the fees due took

place in Nigeria, and the bulk of the payments to the NAA

were wired directly to the NAA’s agent in Nigeria. Thus,

although Antares is an American partnership, the effect of

the defendants’ conduct abroad was not felt directly ‘‘in the

United States’’ but in Nigeria. That is, the direct effect of

detaining the plane was, as the district court found, the loss

of the use of the aircraft and the physical damage it suffered

in Nigeria, and not, as Antares alleges, the financial loss that

Antares suffered in the United States. See Australian Gov’t

Aircraft Factories v. Lynne, 743 F.2d 672, 675 (9th Cir.1984)

(direct effect of plane crash in Indonesia was in that country,

where the plane was destroyed and its functional use lost,

and not in the United States where the American corporate

plaintiff incurred financial loss as a result of the crash), cert.

denied, 469 U.S. 1214, 105 S.Ct. 1189, 84 L.Ed.2d 335

(1985); cf. Martin v. Republic of South Africa, 836 F.2d 91,

94-95 (2d Cir. 1987) (although plaintiff returned to the United

States disabled as a result of defendant’s conduct in South

Africa, the direct effect of that conduct occurred in South

Africa, not in the United States). The transfer of funds out

of Antares’ New York bank account, and the resultant finan-

cial loss to the partnership, are not by themselves sufficient

to place the effect of the defendants’ conduct ‘‘in the United

States’’ within the meaning of § 1605(a)(2). See Gregorian v.

Izvestia, 871 F.2d 1515, 1527 (9th Cir.), cert. denied, 493

U.S. 891, 110 S.Ct. 237, 107 L.Ed.2d 188 (1989); Zedan, 849

F.2d at 1515.

Antares contends, however, that the effect ‘‘in the United

States’’ was not limited to its financial loss. It claims that the

NAA directed it to make at least one payment into a Califor-

nia bank account. According to Antares, this contract, in

conjunction with its financial loss, places the direct effect of

the defendants’ conduct in the United States. We disagree.

Even assuming that the NAA directed that a portion of the

money be deposited into the American Bank account of a

third party, this effect would not alone, or together with

Antares’ general financial loss, constitute a sufficiently direct

effect in this country to satisfy the statute. See Rafidain

Bank, 893 F.2d at 12 (foreign defendant’s direction that

money be deposited into its New York bank account does not

satisfy ‘‘direct effect’’ test). But see Transamerican S.S.

Corp. v. Somali Democratic Republic, 767 F.2d 998, 1004

(D.C.Cir. 1985) (foreign sovereign’s seizure of American ves-

sel overseas causing American corporate plaintiff to transfer

large sum of money from its United States bank to foreign

Al0

sovereign’s United States bank, and causing plaintiff to incur

substantial debts in United States, caused direct effect in this

country). Thus, absent some legally significant act occurring

in this country, the mere financial loss suffered by an Ameri-

can plaintiff, such as Antares, as a result of a defendant’s

conduct abroad, is by itself insufficiert to cause ‘‘a direct

effect in the United States’’ within the meaning of

§ 1605(a)(2) of the FSIA. See Gregorian, 871 F.2d at 1527;

Zedan, 849 F.2d at 1515.

In sum, the NAA’s detention of Antares’ aircraft in

Nigeria, and Antares’ subsequent transfer of funds from its

New York bank, did not cause a ‘‘direct effect in the United

States’’ under § 1605(a)(2). Accordingly, subject matter juris-

diction in the instant case does not exist under the FSIA’s

‘‘commercial activity’’ exception.

B. The ‘‘Expropriation’’ Exception.

The FSIA’s ‘‘expropriation’’ exception provides that sub-

ject matter jurisdiction exists in a case:

in which rights in property taken in violation of interna-

tional law are in issue and that property or any property

exchanged for such property is present in the United

States in connection with a commercial activity carried

on in the United States by the foreign state; or that

property or any property exchanged for such property is

owned or operated by an agency or instrumentality of

the foreign state and that agency or instrumentality is

engaged in a commercial activity in the United States.

28 U.S.C. § 1605(a)(3). The district court found that the

‘‘expropriation’’ exception did not apply because Antares

failed to allege facts sufficient to support a finding that the

NAA engaged in commercial activity in this country. Antares

merely asserted to the district court that because the NAA

was an international airport authority, it must conduct com-

mercial activity in the United States. In contrast, the court

observed that the NAA had submitted in support of its

motion to dismiss a sworn affidavit from its legal counsel

All

that unequivocally stated, among other things, that the NAA

did not own or operate any businesses in the United States,

held no bank accounts in the United States, and had never

purchased goods or services or entered into contracts in this

country.

On appeal, Antares argues that the district court erred in

finding that the NAA did not engage in commercial) activity

in the United States. Specifically, Antares claims that the dis-

trict court improperly credited the NAA’s evidence and failed

to credit true Antares’ allegations concerning the NAA’s

commercial activity. Antares further argues that the court

erred by failing to consider the FRN’s commercial] activity in

this country in determining whether the ‘‘expropriation’’

exception applied. We find Antares’ arguments unpersuasive.

On a motion under Fed.R.Civ.P.12(b)(1) challenging the

district court’s subject matter jurisdiction, the court may

resolve disputed jurisdictional fact issues by references to evi-

dence outside the pleadings, such as affidavits. See, e.z.,

Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d

Cir.1986); Exchange Nat’l Bank of Chicago v. Touche Ross

& Co., 544 F.2d 1126, 1130-31 (2d Cir.1976); Weltover, Inc.

v. Republic of Argentina, 753 F.Supp. 1201, 1203 n. 2

(S.D.N.Y.), aff'd, 941 F.2d 145 (2d Cir.1991); Braka, 589

F.Supp. at 1468. In the instant case, Antares failed, in either

its complaint or in the affidavit submitted in opposition to

the defendants’ motions to dismiss, to allege any facts that

would support an inference that the NAA engaged in com-

mercial activity in the United States. Antares’ unsupported

assertion to the district court that, by its very nature, the

NAA must engage in commercial activity in this country,

even if taken as true, see Scheuer v. Rhodes, 416 U.S. 232,

236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974), is insuffi-

cient to support a finding of commercial activity in the face

of the NAA’s sworn affidavit evidence to the contrary. See

Braka, 589 F.Supp. at 1468.

Antares next argues that the district court erred in disre-

garding the FRN’s commercial activity in the United States in

determining whether the ‘‘expropriation’’ exception applied.

According to Antares, the FRN’s commercial activity in this

Al2

country should have been attributed to the NAA because

Antares alleged that the NAA was owned and controlled by

the FRN and was, in effect, an agent of the FRN. Antares’

argument is unavailing.

First, § 1605(a)(3) specifically distinguishes between when

the commercial activity of the ‘‘foreign state’’ is relevant and

when such activity of the ‘‘agency or instrumentality of a for-

eign state’’ is to be considered in determining the existence of

subject matter jurisdiction. Under the statute, assuming that

rights in property have been taken in violation of interna-

tional law, then the ‘‘expropriation’’ exception applies if (1)

the property taken or any property exchanged therefore ‘‘is

present in the United States in connection with a commercial

activity carried on in the United States by the foreign state,’’

or (2) such property ‘‘is owned or operated by an agency or

instrumentality of the foreign state and that agency or instru-

mentality . . . [must] engage[ ] in commercial activity in the

United States.’’ 28 U.S.C. § 1605(a)(3) (emphasis added).

Although the term ‘‘foreign state’’ encompasses its agencies

and instrumentalities, see 28 U.S.C. § 1603(a), the reverse is

not the case. Since Antares has not alleged that any property

at issue is present in the United States in connection with the

FRN’s commercial activity here, the plain language of the

statute focuses the inquiry on, among other things, the com-

mercial] activity of the ‘‘agency or instrumentality’’—here the

NAA—and not on that of the FRN. In addition, Antares’

claims to the contrary notwithstanding, we see no reason to

depart from the general rule that ‘‘government instrumentali-

ties established as juridical entities distinct and independent

from their sovereign should normally be treated as such.”’

See First Nat’l City Bank v. Banco Para El Comercio Exte-

rior de Cuba, 462 U.S. 611, 626-27, 103 S.Ct. 2591, 2599-

600, 77 L.Ed.2d 46 (1983); Dayton v. Czechoslovak Socialist

Republic, 672 F.Supp. 7, 10 (D.D.C.1986), aff’d, 834 F.2d

203 (D.C.Cir.1987), cert. denied, 486 U.S. 1054, 108 S.Ct.

2820, 100 L.Ed.2d 921 (1988).

Moreover, even assuming that the NAA was an agent of

the FRN, as opposed to an independent corporate entity, it

would be inappropriate to attribute the FRN’s commercial

Al3

activity in the United States to the NAA for purposes of

establishing subject matter jurisdiction under the FSIA based

on the NAA’s alleged expropriation of Antares’ property in

Nigeria. Under general principles of agency law, although the

jurisdictional contacts of an agent may properly be imputed

to the principal, the reverse is not true. Cf. Gilson v. Repub-

lic of Ireland, 606 F.Supp. 38, 44 (D.D.C.1984), aff’d, 787

F.2d 655 (D.C.Cir.1986); Grove Valve & Regulator Co. vy.

Iranian Oil Servs., Ltd., 87 F.R.D. 93, 96 (S.D.N.Y.1980)

(Weinfeld, J.). The district court therefore did not err in

refusing to attribute the FRN’s commercial activity in the

United States to the NAA in determining that the NAA did

not engage in commercial activity in this country. Accord-

ingly, the court correctly concluded that it had no subject

matter jurisdiction regarding either defendant in this action.

CONCLUSION

We have examined each of Antares’ remaining contentions

and find them to be without merit. Based on the foregoing,

the judgment of the district court dismissing this case for lack

of subject matter jurisdiction is affirmed.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Filed October 28, 1991

At a Stated Term of the United States Court of Appeals

for the Second Circuit, heid at the United States Courthouse

in the City of New York, on the 28th day of October, one

thousand nine hundred and ninety-one.

PRESENT: HON. J. EDWARD LUMBARD

HON. RALPH K. WINTER

HON. FRANK X. ALTIMARI

Circuit Judges,

ANTARES AIRCRAFT, L.P.,

Plaintiff-Appellant,

—Y,.—

FEDERAL REPUBLIC OF NIGERIA, and

NIGERIAN AIRPORTS AUTHORITY,

Defendants-A ppellees.

Appeal from the United States District Court for the

Southern District of New York.

This cause came on to be heard on the transcript of record

from the United States District Court for the Southern Dis-

trict of New York and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby

ORDERED, ADJUDGED and DECREED that the judgment of

said district court be and it hereby is affirmed in accordance

with the opinion of this court with costs to be taxed against

the appellant.

ELAINE B. GOLDSMITH, Clerk

By: /s/ EDWARD J. GUARDARO

Edward J. Guardaro,

Deputy Clerk

A TRUE COPY

ELAINE B. GOLDSMITH

/s/ ELAINE B. GOLDSMITH

Clerk

APPENDIX C

UNITED STATES DISTRICT COURT

SOUTHERN. DISTRICT OF NEW YORK

89 Civ. 6513 (JSM)

ANTARES AIRCRAFT L.P.,

Plaintiff,

—against—

FEDERAL REPUBLIC OF NIGERIA, NIGERIAN AIRPORTS

AUTHORITY and TOTAL NIGERIA LTD.,

Defendants.

MEMORANDUM OPINION AND ORDER

JOHN S. MARTIN, JR., United States District Judge:

Plaintiff Antares Aircraft L.P. (‘‘Antares’’), commenced

this action against the Federal Republic of Nigeria (‘‘FRN’’),

the Nigerian Airports Authority (‘‘NAA’’) and Total Nigeria

Ltd. (‘‘Total Nigeria’) to recover damages for the alleged

conversion of its aircraft in Lagos, Nigeria.' Subject matter

jurisdiction in this Court is asserted under the Foreign Sover-

eign Immunities Act, 28 U.S.C. §§ 1330, 1602-1611. Both the

FRN and the NAA have moved for an order dismissing the

complaint pursuant to Fed.R.Civ.P. 12(b)(1) on the ground

that this Court lacks subject matter jurisdiction by virtue of

sovereign immunity and on the ground of forum non conve-

niens. In addition, the NAA moves for an order dismissing

the complaint pursuant to Fed.R.Civ.P. 12(b)(2) on the

1 Total Nigeria was subsequently dismissed as a defendant in this

action by Stipulation of Discontinuance dated April 13, 1990.

ground that the plaintiff lacks personal jurisdiction over the

NAA. For the reasons set forth below, the defendants’

motion to dismiss for lack of subject matter jurisdiction is

granted.

I. BACKGROUND

Antares, a limited partnership with its principal place of

business in New York, claims that its aircraft was unlawfully

detained by the NAA in Lagos, Nigeria. Specifically, Antares

alleges that the NAA, a Nigerian corporation responsible for

the operation and management of all airports in Nigeria,

wrongfully imposed parking and landing fees upon its air-

craft at the Murtala Muhammed Airport; blocked the

removal of the aircraft until the parking and landing fees

were paid; and refused to deregister the aircraft. Antares

claims that it was not until it wired funds from New York to

a bank designated by the NAA and later wired funds to the

NAA’s agent in Nigeria, that Antares finally regained control

of its aircraft. Antares does not contend that the FRN took

part in the wrongful venture, but seeks to attribute the acts

of the NAA to the FRN, alleging that the NAA is owned and

operated by the FRN and acts as an agent of the FRN.*

II. DISCUSSION

The NAA asserts that as an instrumentality of the FRN, it

is entitled to avail itself of sovereign immunity as set forth in

the Foreign Sovereign Immunities Act (‘‘FSIA’’), 28 U.S.C.

§§ 1330, 1602-1611 and thus, the complaint against it should

be dismissed. We agree.’

2 The FRN states that the deregistration of the aircraft was performed

by the Federal Civil Aviation Authority of the Federal Republic of Nigeria

(the ‘‘FCAAN’’), not the NAA. The FRN concedes that it controls the

FCAAN.

3 The FRN argues that because the NAA is a wholly separate juridical

eutity, its acts cannot be attributed to the FRN. Because we hold today that

the NAA is not liable in this action by virtue of sovereign immunity, we need

not address the issue of whether the entities are in fact truly separate.

Under the FSIA, foreign sovereigns and their instrumental-

ities are immune from the jurisdiction of U.S. federal and

state courts unless the plaintiff’s cause of action falls under

one of the specified statutory exceptions set forth in 28

U.S.C. §§ 1605-1607. Filus v. Lot Polish Airlines, 907 F.2d

1328, 1330 (2d Cir. 1990). As the parties do not dispute that

the NAA is an instrumentality of the FRN as defined in 28

U.S.C. § 1603, the question presented is whether the alleged

conduct is encompassed by one of the statutory exceptions to

the FSIA. Antares contends that the acts complained of fall

into three of the exceptions set forth in § 1605(a). These are,

respectively, the commercial activities exception, the expropri-

ation exception and the non-commercial tort exception. As

set forth below, none of these exceptions can be invoked

here.

A. Commercial Activities Exception

§ 1605(a)(2) provides that a foreign state, or its instrumen-

tality, cannot avail itself of immunity under the FSIA when

an action against it is based ‘‘upon an act outside the terri-

tory of the United States in connection with a commercial

activity of the foreign state elsewhere and that act causes a

direct effect in the United States.”’ 28 U.S.C. § 1605(a)(2).

As it is conceded that the activities supposedly engaged in by

the NAA were commercial in nature, the issue to be resolved

is whether the alleged conversion of Antares’ aircraft in Nige-

ria caused a direct effect in the U.S. Antares asserts that the

forced transfer of funds from its New York bank account to

Nigeria constitutes a direct effect for purposes of the FSIA.

In addition, Antares argues that the NAA’s purported desig-

nation of a California bank account as a depository for the

parking and landing fees is a further indication that the direct

effects test has been satisfied.

The question of whether payment of money from a U.S.

bank account as a result of tortious activity abroad satisfies

4 The discussion which follows is equally applicable to the FRN, if in

fact the refusal to deregister the aircraft was performed by the FCAAN, not

the NAA.

the direct effects test remains an open one in this circuit.

Although some courts utilize a ‘‘substantial and foreseeable’’

test to facilitate the analysis of what constitutes a direct

effect in the U.S., the Second Circuit has not adopted this

approach. In Texas Trading & Milling Corp. v. Federal

Republic of Nigeria, 647 F.2d 300, 313 (2d Cir. 1981), cert.

denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301

(1982), the Court determined that a breach of an agreement

by the Federal Republic of Nigeria which required payment

in the U.S. and caused financial loss in the U.S., was a direct

effect for the purposes of the FSIA. In reaching this conclu-

sion, the Court rejected the ‘‘substantial and foreseeable’’

test and instead considered whether the effect was ‘‘suffi-

ciently ‘direct’ and sufficiently ‘in the United States’ that

Congress would have wanted an American court to hear the

case.’’ Texas Trading, 647 F.2d at 311 n.32, 313. However,

as both the breach and the financial loss occurred in the

U.S., the Court did not address the issue presented here—

whether there is a direct effect when an American corpora-

tion injured overseas suffers financial injury in the U.S. Jd.

at 312 n.35.

The Second Circuit again addressed the issue of what con-

stitutes a direct effect in International Housing Ltd. v. Rafi-

dain Bank Iraq, 893 F.2d 8, 11-12 (2d Cir. 1989) and held

that payment of funds into defendant’s bank account in the

U.S. upon directions from the defendant did not satisfy the

direct effects test. Additionally, the Court concluded that

since the plaintiff was not a U.S. corporation, it suffered no

direct’ financial injury in the U.S. The Court expressly

declined to address, however, the question of whether finan-

cial loss suffered by a U.S. corporation in the United States

would, by itself, be sufficient for FSIA jurisdiction. /nterna-

tional Housing, 893 F.2d at 11 n.3.

However that question might be answered in a breach of

contract case including a U.S. plaintiff, in the tort context

courts are generally unwilling to find direct effects in the

U.S. when the tort complained of occurred outside the U.S.

In Martin v. Republic of South Africa, 836 F.2d 91, 95 (2d

Cir. 1987), the Second Circuit held that an American citizen,

who incurred medical expenses in the U.S. after suffering an

injury abroad, did not satisfy the direct effects test. The

Court stated that ‘‘[uJnlike Texas Trading, where no injury

was sustained until American companies were denied pay-

ment in the United States from a New York bank, the injury

to appellant occurred in South Africa where he became quad-

riplegic.’” Martin, 836 F.2d at 94. Accordingly, since the

plaintiff’s injury in the U.S. was an indirect consequence of

the defendants’ actions in South Africa, the Court held that

the direct effects test was not met. Jd. at 95.

Similarly, in the instant action, although the plaintiff may

have been financially injured in the U.S., the alleged conver-

sion of the aircraft occurred in Nigeria. Moreover, it is undis-

puted that the parking and landing fees at issue were incurred

at the Murtala Muhammed Airport in Lagos, Nigeria, by a

Nigerian registry aircraft, which was flown to Nigeria while

under a lease from a Nigerian company. In addition, all com-

munications involving the parties to this action took place in

Nigeria, the parties reached an agreement as to the fees in

Nigeria and payments for the fees were received by the NAA

in Nigeria. Although Antares may have been financially

impacted in the U.S. by the forced transfer of funds from its

account, this is an indirect consequence of the alleged tor-

tious activity in Nigeria and does not constitute a direct effect

under the FSIA.

In support of its argument that the NAA’s designation of a

California bank as a depository further demonstrates a direct

effect under the FSIA, Antares relies primarily upon Trans-

american Steamship Corp. v. Somali Democratic Republic,

767 F.2d 998 (D.C. Cir. 1985). The Court in Transamerican

held that a foreign agency’s detention of a ship at its port in

Somali and demand for payment in the United States were

direct within the meaning of the FSIA. The Court found that

‘*fa]Jt the Agency’s insistence, a significant transaction was

effectuated in the United States, with an American corpora-

tion transferring $28,000 from a New York bank to the

Somali government’s D.C. bank.’’ Transamerican, 767 F.2d

at 1004. In light of this strong connection between the activ-

ity at issue and the U.S., the Court held that the detention

and subsequent demand were both direct and substantial

under the FSIA. Td.

This case is readily distinguishable from the case at bar as

it has not been established that the NAA either demanded to

be paid in the U.S. or actually obtained funds in the U.S.

Even if a California bank was designated as a depository for

the requested fees, it is undisputed that the bulk of the funds

were received by the NAA in Nigeria. Moreover, in reaching

its decision, the D.C. Circuit utilized the ‘‘substantial and

foreseeable’’ test which has not been employed by this cir-

cuit. Clearly, the connection here is not ‘‘sufficiently direct

and sufficiently in the U.S. that Congress would have wanted

an American court to hear the case.’’ Texas Trading. Accord-

ingly, the complained of conduct does not suffice to confer

jurisdiction under the commercial activities exception set

forth in 28 U.S.C. § 1605(a)(2).

B. Expropriation Exception

Antares further alleges that the NAA’s activities fall under

§ 1605(a)(3) which provides for jurisdiction if ‘‘rights in

property taken in violation of international law are in issue

and . . . that property or any property exchanged for such

property is owned or operated by an agency or instrumental-

ity of the foreign state and that agency or instrumentality is

engaged in a commercial activity in the United States.’’ 28

U.S.C. § 1605(a)(3).

This exception does not apply as Antares has failed to

establish that the NAA engages in any commercial activity in

the U.S. Although it is suggested that the NAA may have

commercial ties to this country by virtue of the fact that it is

an international airport, this bare allegation is insufficient to

support a finding of commercial activity. As stated in the

Affidavit of W.C. Madueke, the NAA, which operates exclu-

sively in Nigeria, is neither registered nor licensed to do busi-

ness in the U.S. and in fact conducts no business in the U.S.;

it does not own or rent property in the U.S.; and it does not

buy or sell goods in the U.S. Accordingly, the expropriation

exception does not apply.’

C. Non-Commercial Tort Exception

Finally, Antares claims that the NAA’s activities fall under

the exception set forth in § 1605(a)(5) which states in perti-

nent part that foreign sovereigns, or their instrumentalities,

are not immune in actions ‘‘in which money damages are

sought against a foreign state for . . . damage to or loss of

property, occurring in the United States and caused by the

tortious act or omission of [a] foreign state. . . .’’ 28 U.S.C.

§ 1605(a)(5).

It is well-recognized that for the non-commercial tort

exception to apply, the entire tort must occur in the U.S.

Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370,

379 (7th Cir. 1985); Persinger v. Islamic Republic of fran,

729 F.2d 835, 842 (D.C. Cir. 1984), cert. denied, 469 U.S.

881, 105 S.Ct. 247, 83 L.Ed.2d 185 (1984). In Frolova, the

Court engaged in a lengthy analysis of the statute’s legislative

history and concluded that ‘‘Congress intended that the tor-

tious act or omission, as well as the injury, occur in the

United States.’’ Frolova, 761 F.2d at 379. In the present case,

as it undisputed that the alleged conversion of the aircraft

took place in Nigeria and the subsequent financial loss

occurred in the U.S., this exception is clearly unavailable.

III. CONCLUSION

In sum, as the alleged activities of the defendants do not

fall under any of the statutory exceptions set forth in 28

U.S.C. §§ 1605-1607, the defendants are immune from suit in

5 Antares argues that if in fact the deregistration of the aircraft was

performed by the FRN, not the NAA, this exception is clearly applicable as it

is conceded that the FRN engages in commercial activity in the U.S.

Although this prong of the exception may be satisfied, it is obvious that a

failure to deregister an aircraft is not a taking or expropriation of property.

Thus, even if the deregistration of the aircraft was performed under the

authority of the FRN, this exception still cannot be invoked.

this Court by virtue of sovereign immunity under the FSIA.

Therefore, the defendants’ motion to dismiss the complaint

under Fed.R.Civ.P. 12(b)(1) for lack of subject matter juris-

diction is granted. Accordingly, we need not address the

defendants’ motion to dismiss on the ground of forum non

conveniens or the NAA’s motion under Fed.R.Civ.P. 12(b)(2)

for lack of personal jurisdiction.

SO ORDERED.

Dated: February 26, 1991

/s/ JOHN S. MARTIN, JR.

JOHN S: MARTIN, JR., U.S.D.J.

APPENDIX D

; UNITED STATES DISTRICT COURT

. SOUTHERN DISTRICT OF NEW YORK

— 89 CivIL 6513 (JSM)

Filed April 18, 1991

ANTARES AIRCRAFT L.P.,

Plaintiff,

—against—

FEDERAL REPUBLIC OF NIGERIA, NIGERIAN AIRPORTS

AUTHORITY ANDEO, TOTAL NIGERIA LTD.,

Defendants.

FINAL JUDGMENT

Defendants Federal Republic of Nigeria (‘‘FRN’’) and

Nigerian Airports Authority (‘‘NAA’’) having moved to dis-

miss the complaint pursuant to F.R.Civ.P. 12(b)(1) on the

ground that this Court lacks subject matter jurisdiction by

virtue of sovereign immunity and on the ground of forum

non conveniens, in addition, defendant Nigerian Airport

Authority having moved to dismiss the complaint pursuant to

F.R.Civ.P. 12(b)(2) on the ground that the plaintiff lacks

personal jursidiction over NAA, and the said motion having

come before the Honorable JOHN S. MARTIN, U.S.D.J., and

the Court thereafter on March 1, 1991, having handed down

its memorandum opinion and order (#67574); granting defen-

dants’ motion to dismiss the complaint under F.R.Civ.P.

12(b)(1) for lack of subject matter jurisdiction, it is,

ORDERED, ADJUDGED AND DECREED: That defendants’

motion to dismiss the complaint under F.R.Civ.P. 12(b)(1)

for lack of subject matter jurisdiction be and it is hereby

granted, and it is further,

ORDERED, that the complaint be and it is hereby dismissed

for lack of subject matter jurisdiction.

DATED: NEW YORK, NEW YORK /s/ JOSEPH F. CLOIDT

April 18, 1991 Acting Clerk

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Filed January 13, 1992

Docket Number 91-7342

ANTARES AIRCRAFT L.P.,

Plaintiff-Appellant,

—yY.—

FEDERAL REPUBLIC OF NIGERIA, NIGERIAN AIRPORTS

AUTHORITY and TOTAL NIGERIA, LTD.,

Defendant-A ppellees.

A petition for rehearing containing a suggestion that the

action be reheard in banc having been filed herein by

Appellant ANTARES AIRCRAFT L.P.

Upon consideration by the panel that heard the appeal, it

Ordered that said petition for rehearing is DENIED.

It is further noted that the suggestion for rehearing in banc

has been transmitted to the judges of the court in regular

active service and to any other judge that heard the appeal

and that no such judge has requested that a vote be taken

thereon.

/s/ ELAINE B. GOLDSMITH

ELAINE B. GOLDSMITH

Clerk

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.