Petition for Writ of Certiorari — La Fuerza Aerea Boliviana v. Transaero, Inc.

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Supreme Court, U.®.

(\) FILED

“961507 mar 21 1997

No. 96-__seacs ob THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

LA FUERZA AEREA BOLIVIANA,

An Instrumentality of the

REPUBLIC OF BOLIVIA,

A Foreign State,

Petitioner,

TRANSAERO, INC.,

Respondent.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

PETITION FOR WRIT OF CERTIORARI

GREGORY B. CRAIG

(Counsel of Record)

JOHN T. PARRY

WILLIAMS & CONNOLLY

725 Twelfth St., N.W.

Washington, D.C. 20005

(202) 434-5000

Attorneys for Petitioner

La Fuerza Aerea Boliviana

QUESTION PRESENTED

Is a foreign sovereign entitled to interlocutory review of

its claim that it is not amenable to suit under the Foreign

Sovereign Immunities Act?

(i)

TABLE OF CONTENTS

Page

See PONS os, hg oie oe

TAM OF AUTMONITINS ... 5 6 occ cee. V

RED aT oe te 1

a, REESE ISS ECE SNCS a ae ese eee 2

STATUTORY PROVISIONS INVOLVED ..... ...... 2

Pemenn Ot SOM ee. 2

REASONS FOR GRANTING THE WRIT ............ 7

I. THE SECOND CIRCUIT IS IN CONFLICT WITH

OTHER CIRCUITS ON THE NATURE OF FOREIGN

SOVEREIGN IMMUNITY AND THE AVAILABILITY

OF INTERLOCUTORY REVIEW .............. 7

A. Foreign Sovereign Immunity Is Immunity

REN a NR STEN SD a Re 8

B. A Foreign Sovereign Is Entitled To Interlocutory

Review When A District Court Denies Its Claim

I ase pgp ica 11

Il. THE SECOND CIRCUIT HAS UNDERMINED THE

UNIFORMITY OF FEDERAL LAW THAT WAS THE

EXPRESS PURPOSE OF THE FOREIGN SOVEREIGN

NE MU 0g i ve sk bal oe bo 15

lil. THE SECOND CIRCUIT’S DECISION CREATES

UNCERTAINTY FOR FOREIGN SOVEREIGNS

AND THUS HAS SIGNIFICANT FOREIGN

i SE SS . RR a ee a 17

CAPA, 6 65 a OR Oe Oe ee ee a 18

A. 6 6 0 0A EERE RA ERS OM la

Po 1 eer aM mete arene ites Su ae ar aor 8a

PE en ESS CARA RAE S MD RE OPEE ORES 10a

FT EG EE oh 6 ROARS SS Oe Ee 28a

RET ho eS ROE ba As ees ee 30a

PRT, 6 ERE OOS PARLE RO 35a

(iv)

(v)

TABLE OF AUTHORITIES

Page

CASES

In re Air Crash Disaster Near Roselawn, 96 F.3d

PORT Gee SUPE oe ek ee ee 16

Argentine Republic v. Amerada Hess Shipping Corp.,

Ne Thee CEOS Oe re ee eh 8

Arriba Ltd. v. Petroleos Mexicanos, 962 F.2d 528

(Sth Cir. 1992), cert. denied, 506 U.S. 956 (1992) 12

Behrens v. Pelletier, 116 S. Ct. 834 FO eacss ce 12

Bryant v. Sylvester, 57 F.3d 308 (3d Cir. 1995),

vacated on other grounds, 116 S. Ct. 899 ( 1996) . 14

Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

od scpteace CER PE OES OPES NSE END ae 13

Compania Mexicana de Aviacion, S.A. v. United

States Dist. Court, 859 F.2d 1354 (9th Cir.

ae, REE {ka oon bya R tees ae 8, 9,

Federal Ins. Co. v. Richard I. Rubin & Co., 12

F.3d 1270 (3d Cir. 1993), cert. denied, 114 S. Ct.

SUA koe cee Ce eee 9,

Foremost-McKesson, Inc. v. Islamic Republic of Iran,

905 F.2d 438 (D.C. Cir. 1990) ............. 9,

Goar v. Compania Peruana de Vapores, 688 F.2d 417

CR RE se ey ee ee nes

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

ae GS. SOE i eo kee 9,

McSurely v. McClellan, 697 F.2d 309 (D.C. Cir.

atin an SEE OEE Oy ete POOR

Mitchell v. Forsyth, 472 U.S. 511 (1985) .........

Nixon v. Fitzgerald, 457 U.S. 731 SO ask we

Puerto Rico Aqueduct & Sewer Auth. v. Metcalf &

Eddy, Inc., 506 U.S. 139 (1993) ......... ia, 2,

Pullman Construction Industries, Inc. v. United

States, 23 F.3d 1166 (7th Cir. 1994) ...........

Republic of Argentina v. Weltover, Inc., 504 U.S.

WO NS 8k hk SAO Coe ee

(vi)

Richardson-Merrell, Inc. v. Koller, 472 U.S. 424

ON oc og ees Vals eee 13, 14

Saudi Arabia v. Nelson, 507 U.S. 349 (1993) ........ 9

Segni v. Commercial Office of Spain, 816 F.2d 344

CRC: ROG 8 kik kee cee ees 9, 12

Stena Rederi AB v. Comision de Contratos del

Comite, 923 F.2d 380 (Sth Cir. 1991) ........ 9, 12

In re Surinam Airways Holding Co., 974 F.2d 1255

eg eM, erty aes area ieee ieee 16

In re Texas Eastern Transmission Corp. PCB

Contamination Insurance Coverage Litigation, 15

as bad Ce el RSS ae bts ha ok ee 16

The Schooner Exchange v. M’Faddon, 11 U.S.

CET A REDE aD s&s hos a ee ee 9

Transaero, Inc. v. La Fuerza Aerea Boliviana, 24

FOG Sel GRE Gs Se ks eae eS 1, 5, 18

Transaero, Inc. v. La Fuerza Aerea Boliviana, 30

F.3d 148 (D.C. Cir. 1994), cert. denied, 115 S.

Ch TES AOD hike ls eh ae ees 5, 8, 12

Transaero, Inc. v. La Fuerza Aerea Boliviana, 38

Poe G68 te Ge. Re | whe owe ek Sa oe 6

Transaero, Inc. v. La Fuerza Aerea Boliviana, 99

PoE Soe Cae Ga. Sa a ke ee passim

United States v. Moats, 961 F.2d 1198 (Sth Cir.

SOP Sv kaye pa a Oe Ca a oe ee 14

Van Cauwenberghe v. Biard, 486 U.S. 517 (1988)... . 10

Velidor v. L/P/G Benghazi, 653 F.2d 812 (3d Cir.

1981), cert. dismissed, 455 U.S. 929 (1982) ....... 12

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

GRO TEOES) 6 < cite Le in ET Oe ae 9,15

Weldon v. United States, 70 F.3d 1 (2d Cir. 1995)..... 4

Williams v. Shipping Corp. of India, 653 F.2d 875

(4th Cir. 1981), cert. denied, 455 U.S. 982 (1982) .. 16

STATUTES AND RULES

Te ide CRE. 4 6 babe we ae hee a 2

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

SELSSE, MOUPMURE Sh 5-30 kd Pare RES ee ae 2

Oe Ee a er So ag

ce NE _ Seepaab RRO nla Jee BIA ne area ea ake 8

ede 8. SORES eG erence Sem eee ee 8

kl, 0 2 _ GPSS SOR es hg cbs cceeten une ee

Pee Ee ie ie a a passim

N.Y. U.C.C. Law § 2-725(1)3

MISCELLANEOUS

H.R. Rep. No. 94-1487 at 13 (1976), reprinted in

Ive VAs, COON, GOL s. cc ee 15

Wright, Miller & Cooper, Federal Practice and

RUT Y CHECKIN boi ee ee ee 16

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

No. 96-

LA FUERZA AEREA BOLIVIANA,

An Instrumentality of the

REPUBLIC OF BOLIVIA,

A Foreign State,

Petitioner,

TRANSAERO, INC.,

Respondent.

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

PETITION FOR WRIT OF CERTIORARI

Petitioner prays that a writ of certiorari issue to review

the judgment of the United States Court of Appeals for the

Second Circuit entered in this Case on November 6, 1996,

and further prays that this Court summarily reverse the

judgment of the Second Circuit.

OPINIONS BELOW

The opinion of the District Court is unreported and is

reproduced in the Appendix at 10a. The opinion of the

Court of Appeals dismissing the appeal for lack of appellate

jurisdiction is reported at 99 F.3d 538 and is reproduced in

the Appendix at la.

JURISDICTION

The order of the United States District Court for the

Eastern District of New York was entered on August 4,

1995. The judgment of the United States Court of Appeals

for the Second Circuit was entered on November 6, 1996.

A timely petition for rehearing and suggestion for rehearing

en banc was denied on January 9, 1997 (App. 8a). This

Court has jurisdiction pursuant to 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

This case addresses the immunity of foreign sovereigns

under the Foreign Sovereign Immunities Act, 28 U.S.C. §§

1330, 1602-1611. The relevant provisions of the Act—

§§ 1602, 1603, 1604, and 1608—are reproduced in the

Appendix at 35a-39a.

STATEMENT OF THE CASE

In 1981 and 1982, La Fuerza Aerea Boliviana—the

Bolivian Air Force—purchased $598,115.76 in aviation

equipment from the respondent, Transaero, Inc. A one

paragraph credit agreement drafted by Transaero provided

for interest of 1.75% per month (a rate of 21% per annum)

on purchases not paid for within 120 days of shipment.

The Air Force does not dispute that its payments were

late. The delay is attributable, at least in part, to the poli-

tical and economic chaos that afflicted Bolivia in the early

1980s. During the period in which Transaero sold its pro-

ducts to the Air Force, for example, Bolivia was ruled by

three successive military governments. In October 1982,

Bolivia regained a civilian government, but the country

remained in turmoil. The economy collapsed; payments to

foreign creditors were suspended; and inflation soared to a

yearly rate of 28,000% for the first nine months of 1985.

In the midst of these difficulties, the Government of

Bolivia sought to satisfy its debt to Transaero. On October

30, 1984, the Air Force paid Transaero $381,688.29 against

the outstanding balance, leaving $216,427.47 in unpaid prin-

cipal. In December 1985, the Air Force entered into nego-—

tiations aimed at settling the account. The Economic Coun-

selor at the U.S. Embassy in La Paz negotiated on behalf of

Transaero, and the Bolivian Ministry of Finance negotiated

on behalf of the Air Force. Bolivia offered to pay the

balance of the principal ($216,427.47) plus an additional

$50,000 to compromise the accrued interest. Transaero

accepted the offer and the Air Force made the payment on

January 6, 1986, thinking it had settled the matter.

Five months later, Transaero demanded payment of an

additional $626,565.27 in interest, including interest that

purportedly had accrued since the settlement. The Air Force

declined to pay this sum.

On September 8, 1988, Transaero filed suit in the Eas-

tern District of New York, seeking $983,696.60 in allegedly

unpaid principal and interest—even though Bolivia already

had paid the principal in full.'

Transaero served the Complaint by registered mail sent

to an office address in La Paz and did not comply with 28

U.S.C. § 1608(a)’s requirements for service on foreign states

' The Complaint was filed more than 6 years after the Air Force’s last

purchase of equipment. See N.Y. U.C.C. Law § 2-725(1) (four-year

statute of limitations on sales of goods).

or their political subdivisions.» The Air Force did not

appear to defend the case, and the District Court entered a

default judgment against it on April 28, 1989, in the amount

of $983,696.60.

In June 1992, Transaero registered and sought to enforce

the judgment in the District Court for the District of

Columbia. The Air Force moved to dismiss the proceed-

ings, arguing that the Eastern District of New York had

lacked personal and subject matter jurisdiction because

Transaero had not complied with the service requirements of

28 U.S.C. § 1608(a). In an unreported decision issued on

September 25, 1992, the District Court denied the motion

and ruled that service was properly made under 28 U.S.C.

§ 1608(b) because the Bolivian Air Force was merely an

"agency or instrumentality" of the government of Bolivia.

The Air Force filed an interlocutory appeal with the

Court of Appeals for the District of Columbia Circuit.

While the appeal was pending, the Air Force asked the

Eastern District of New York to set aside the default

judgment on the ground that it had been procured by fraud-

ulent misrepresentations.? The court denied the motion.

? In subsequent proceedings, the highest ranking member of the Bolivian

Air Force declared under penalty of perjury that the Air Force did not

learn of Transaero’s suit until February 1992. See App. 33a-34a.

> The Air Force’s counsel believed it had a duty of professional

responsibility to raise the issue of fraud once it became aware of the

issue, and to do so “in the very court that rendered the judgment.”

Weldon v. United States, 70 F.3d 1, 4 (2d Cir. 1995). In its moving

papers, the Air Force maintained its claim that the District Court lacked

subject matter jurisdiction and expressly preserved its jurisdictional

defense under the Foreign Sovereign Immunities Act—i.e. , that the plain-

tiff had failed to comply with the Act and that the District Court’s default

judgement was void and unenforceable—which were issues on appeal at

that moment before the D.C. Circuit. See App. 30a-31a.

The Second Circuit affirmed but remanded for the purpose

of "assessing the factual accuracy" of Transaero’s interest

claims and, "if necessary, recalculating the award."

Transaero, Inc. v. La Fuerza Aerea Boliviana, 24 F.3d 457,

463 (2d Cir. 1994). In a petition for rehearing, the Air

Force sought a stay of the mandate until the D.C. Circuit

ruled on jurisdiction.

Two months later, the D.C. Circuit ruled that the Bolivi-

an Air Force was a "foreign state or political subdivision" of

the Republic of Bolivia, and that Transaero had not met the

service requirements of 28 U.S.C. § 1608(a). Transaero,

Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148 (D.C. Cir.

1994). The court concluded, "The Eastern District of New

York lacked personal jurisdiction, and the default judgment

registered in the District of Columbia was therefore void and

unenforceable." Jd. at 154. This Court denied Transaero’s

petition for a writ of certiorari. 115 S. Ct. 1101 (1995).

After learning of the D.C. Circuit’s decision, the Second

Circuit issued an opinion on rehearing. While noting that,

"[aJt oral argument on the appeal, both sides took the

position that the adequacy of the notice that initiated the

Eastern District suit would be resolved by the then-pending

appeal in the D.C. Circuit," the court refused to take any

action as a result of the D.C. Circuit’s ruling:

[Without expressing any views as to (a) the validity

of Transaero’s service upon BAF in initiating the

Eastern District suit or (b) whether the default judg-

ment is impaired by the allegedly late notice of its

entry, we decline to grant the petition for rehearing

just because the D.C. Circuit has ruled that the de-

fault judgment is not enforceable in the District of

Columbia. We need not decide whether BAF is enti-

tled to pursue a new Rule 60(b) motion in the Eastern

District, now that the D.C. Circuit has declared the

default judgment to be void.

Transaero, Inc. v. La Fuerza Aerea Boliviana, 38 F.3d 648,

649-50 (2d Cir. 1994).

Following the Second Circuit’s suggestion and in

reliance upon the D.C. Circuit’s ruling, the Air Force filed

a motion in the Eastern District of New York to set aside the

default judgment and dismiss the Complaint. The District

Court denied the motion, ruling that the Air Force had

waived the claim because "[a]t no time . . . did the Air

Force object to the lack of personal jurisdiction." App. 18a.

In a Motion for Reconsideration, the Air Force directed the

court’s attention to its express preservation of its juris-

dictional defenses, but the court denied the motion in a

single sentence. App. 28a.

The Air Force sought to take an interlocutory appeal to

protect its immunity, but the Second Circuit dismissed the

appeal for lack of jurisdiction. Transaero, Inc. v. La Fuerza

Aerea Boliviana, 99 F.3d 538 (2d Cir. 1996); App. la. The

court recognized that "the right not to be sued at all" may be

lost if there is no provision for interlocutory review, id. at

541; App. 6a, but held that the Bolivian Air Force did not

possess such immunity. Instead, the court characterized the

Air Force’s immunity, if any, as the right "not to be subject

to a binding judgment," and ruled:

Because BAF’s right not to be subject to a binding

judgment may be effectively vindicated following

final judgment, the denial of the claim of lack of

jurisdiction is not an immediately appealable colla-

teral order.

sii

Id.; App. 7a.‘

REASONS FOR GRANTING THE WRIT

This case presents a single issue: whether a foreign

sovereign is entitled to immediate interlocutory review of a

district court’s denial of the sovereign’s claim that it is not

amenable to suit under the Foreign Sovereign Immunities

Act. The Bolivian Air Force does not seek a ruling from

this Court on the merits of its claim; it seeks only the right

to have that claim heard on interlocutory review before it is

subjected to further proceedings in the district court.

The Second Circuit’s ruling that foreign sovereigns have

no right to immediate interlocutory review of a denial of

immunity under the Foreign Sovereign Immunities Act

creates a conflict among the circuits over the nature of

foreign sovereign immunity and the availability of interlocu-

tory review for denials of that immunity, undercuts the Act’s

purpose of creating a uniform body of federal law on the

issue of foreign sovereign immunity, and effectively strips a

foreign sovereign of the immunity from suit guaranteed to it

by the Act. Petitioner asks that this Court exercise its power

to undo these errors by granting the petition for writ of

certiorari and summarily reversing the decision of the

Second Circuit.

I. THE SECOND CIRCUIT IS IN CONFLICT WITH

OTHER CIRCUITS ON THE NATURE OF FOR-

EIGN SOVEREIGN IMMUNITY AND THE AVAIL-

ABILITY OF INTERLOCUTORY REVIEW.

The Second Circuit failed to recognize that the immunity

granted to foreign sovereigns under the Foreign Sovereign

Immunities Act is immunity from the jurisdiction of U.S.

* In both its ruling and its denial of rehearing, the Second Circuit

ignored the Air Force’s alternative request for mandamus relief.

courts, i.e., that sovereign immunity is not merely immunity

from judgment but also immunity from suit. The Second

Circuit’s contrary ruling on that point led to the equally

erroneous conclusion that a foreign sovereign-in this case,

the Bolivian Air Force—has no right to interlocutory review

of a denial of immunity. Both rulings conflict with the

decisions of every other circuit to address these issues.

Because of the importance of these issues—and to resolve

these conflicts—this Court should grant certiorari.

A. Foreign Sovereign Immunity Is Immunity From

Suit.

The Second Circuit made the threshold mistake of

treating the Bolivian Air Force no differently than it would

an ordinary private litigant. In fact, the Air Force is a

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

See Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d

148, 151-53 (D.C. Cir. 1994), cert. denied, 115 S. Ct. 1101

(1995). As a result, Transaero can only overcome the Air

Force’s claim of immunity by complying with the requisite

service of process provisions in the Foreign Sovereign

Immunities Act. See 28 U.S.C. § 1608(a). Transaero failed

to comply with those provisions when it served the Air Force

with its Complaint. Accordingly, the District Court did not

have subject matter jurisdiction over the Air Force ab initio.

The Foreign Sovereign Immunities Act "provides the

sole basis for obtaining jurisdiction over a foreign state in

the courts of this country." Argentine Republic v. Amerada

Hess Shipping Corp., 488 U.S. 428, 443 (1989). The lan-

guage of the statute, in turn, is crystal clear: "a foreign state

shall be immune from the jurisdiction of the courts of the

United States . . . except as provided.” 28 U.S.C. § 1604

(emphasis added); see also 28 U.S.C. §§ 1602, 1605. This

Court has made clear that the language of the statute means

exactly what it says: "Under the Act, a foreign state is

presumptively immune from the jurisdiction of United States

courts." Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993)

(emphasis added); see Verlinden B.V. v. Central Bank of

Nigeria, 461 U.S. 480, 493 (1983) (the Act "comprehensive-

ly regulat[es] the amenability of foreign nations to suit in the

United States") (emphasis added).

For that reason, "[{a]t the threshold of every action in a

district court against a foreign state," the court must make an

affirmative determination that it has personal and subject-

matter jurisdiction. Jd. at 493-94.

With the conspicuous exception of the Second Circuit in

this case, every Circuit that has addressed the issue agrees

that foreign sovereign immunity "is an immunity from suit

rather than a mere defense to liability; it is effectively lost if

a case is erroneously permitted to go to trial." Compania

Mexicana de Aviacion, S.A. v. United States Dist. Court,

859 F.2d 1354, 1358 (9th Cir. 1988).° The Second Cir-

* See Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d

438, 443 (D.C. Cir. 1990) ("‘sovereign immunity is an immunity from

trial and the attendant burdens of litigation, and not just a defense to

liability on the merits’"); Federal Ins. Co. v. Richard I. Rubin & Co., 12

F.3d 1270, 1281 (3d Cir. 1993) ("we adopt the prevalent view that

sovereign immunity is an immunity from trial and the attendant burdens

of litigation on the merits, and not just a defense to liability on the

merits"), cert. denied, 114 §. Ct. 2101 (1994); Stena Rederi AB v. Comi-

sion de Contratos del Comite, 923 F.2d 380, 385 (Sth Cir. 1991) ("the

FSIA ‘is an immunity from suit rather than a mere defense to liability;

it is effectively lost if a case is erroneously permitted to go to trial’”);

Gould Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 (6th Cir.

1988) ("sovereign immunity is immunity from suit, not just from liabil-

ity"); Segni v. Commercial Office of Spain, 816 F.2d 344, 347 (7th Cir.

1987) (‘sovereign immunity in modern international law . . . promote[s]

the functioning of all governments by protecting a state from the burdens

of defending law suits abroad which are based upon its public acts’")

(quoting testimony of the State Department Legal Advisor). See also The

cuit’s contrary decision—unlimited by any qualifying or

distinguishing language—raises the possibility of other

circuits following its lead, thereby throwing the law of

foreign sovereign immunity into even greater turmoil.

The Second Circuit based its holding that foreign

sovereign immunity consists only of the right "not to be

subject to a binding judgment," 99 F.3d at 541; App. 7a, on

this Court’s decision in Van Cauwenberghe v. Biard, 486

U.S. 517 (1988). But the petitioner in Van Cauwenberghe

was a private person, a Belgian real estate broker accused of

fraud who asserted an immunity from service of process

under the doctrine of specialty. Jd. at 525. This Court held

that he had no immunity from suit, and that his rights could

be vindicated on an appeal after final judgment. Jd. at 525-

26. In so doing, however, this Court distinguished between

two kinds of immunity—"a right not to stand trial" at all,

and a right to prevail at trial. Jd. at 524. Van Cauwen-

berghe asserted the second kind of immunity, while the Boli-

vian Air Force is entitled to the first by statute.

That is how the Seventh Circuit interpreted Van Cau-

wenberghe in Pullman Construction Industries, Inc. v. United

States, 23 F.3d 1166, 1169 (7th Cir. 1994). In fact, the

Seventh Circuit explicitly cited the Foreign Sovereign Immu-

nities Act as an example of immunity from suit. See id.

("The eleventh amendment and the FSIA create genuine

rights not to be sued in federal court."). The Second Cir-

cuit’s reading of Van Cauwenberghe thus creates an addi-

tional conflict among the circuits over the meaning of that

decision.

Schooner Exchange v. M’Faddon, 11 U.S. (7 Cranch) 116, 136 (1812)

(Marshall, C.J.) (sovereigns are equal entities under international law and

have no authority over one another).

The Bolivian Air Force asked the District Court to

vacate the default judgment, based on the assumption that the

D.C. Circuit’s opinion was binding with respect to the juris-

dictional issues that it decided. The denial of that motion is

not only a refusal to accord the proper res judicata effect to

the decision of a U.S. Court of Appeals; it is also—at its

very core—a denial of the Air Force’s claim that it is not

amenable to suit under the Act and a finding that U.S. courts

have jurisdiction over the Bolivian Air Force whether or not

Transaero complied with the requirements of the Act. The

District Court’s assertion of jurisdiction—in the face of the

D.C. Circuit’s finding to the contrary—denies to the Bolivian

Air Force the immunity from suit that is guaranteed to it by

the Foreign Sovereign Immunities Act.

B. A Foreign Sovereign Is Entitled To Interlocutory

Review When A District Court Denies Its Claim

Of Immunity.

The District Court’s disregard for the D.C. Circuit’s

ruling and its assertion of jurisdiction over the Bolivian Air

Force were simple, clear-cut errors of law, and the Air

Force noticed an interlocutory appeal seeking a review and

correction of that decision. But the Second Circuit com-

pounded the error by ruling that the District Court’s asser-

tion of jurisdiction over a foreign sovereign is not an

appealable interlocutory order. The Second Circuit rested its

ruling on the assertion that the immunity of foreign sover-

eigns "may be effectively vindicated following final judg-

ment." 99 F.3d at 541; App. 7a.

The Second Circuit’s decision to deny a foreign

sovereign an interlocutory review on this issue conflicts with

every other circuit to consider the issue. Prior to the Second

Circuit’s decision, there was unanimity that threshold

determinations of jurisdiction—that is, whether a foreign

sovereign is immune from suit—are immediately subject to

interlocutory appeal.° The D.C. Circuit reached the same

conclusion in this very case. See Transaero, 30 F.3d at 149-

150. Although this Court has never ruled on the issue expli-

citly, it has heard at least one foreign sovereign immunity

case on interlocutory review. See Republic of Argentina v.

Weltover, Inc., 504 U.S. 607 (1992).

It is not just in the context of foreign sovereigns that

denials of immunity from suit are subject to interlocutory

review. Denials of Eleventh Amendment immunity are also

subject to interlocutory review. See Puerto Rico Aqueduct

& Sewer Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139

(1993). So, too, are denials of individual officials’ claims of

absolute and qualified immunity, see Nixon v. Fitzgerald,

457 U.S. 731 (1982); Mitcheil v. Forsyth, 472 U.S. 511,

530 (1985), both after a motion to dismiss and after

summary judgment, see Behrens v. Pelletier, 116 S. Ct. 834

(1996). The Second Circuit’s decision flies in the face of

these precedents as well. In fact, this case is almost

indistinguishable from Metcalf & Eddy; in both cases, the

Court of Appeais denied interlocutory review of immunity

claims and created a conflict with every other circuit to

address the issue. This Court should apply Metcalf & Eddy

and summarily reverse the Second Circuit.

® See Foremost-McKesson, 905 F.2d at 439, 443 (D.C. Cir. 1990);

Velidor v. L/P/G Benghazi, 653 F.2d 812, 814 (3d Cir. 1981), cert.

dismissed, 455 U.S. 929 (1982); Arriba Ltd. v. Petroleos Mexicanos , 962

F.2d 528, 532 (Sth Cir. 1992) ("the interlocutory denial of a claim of

foreign sovereign immunity is appealable under the collateral order

doctrine"), cert. denied, 506 U.S. 956 (1992); Stena Rederi AB, 923

F.2d at 384 (Sth Cir. 1991); Gould Inc., 853 F.2d at 450-51 (6th Cir.

1988); Segni, 816 F.2d at 347 (7th Cir. 1987) ("A foreign government

should not be put to the expense of defending [a] lawsuit without an

opportunity to obtain an authoritative determination of its amenability to

suit at the earliest possible opportunity."); Compania Mexicana de Avia-

cion, 859 F.2d at 1356 (9th Cir. 1988).

—$<—$<$<$$<$<$<$—<——____ ea anne

Even if this were an open issue, an independent applica-

tion of the collateral order doctrine of Cohen v. Beneficial

Industrial Loan Corp. , 337 U.S. 541 (1949), would demon-

strate that the Courts of Appeals have appellate jurisdiction

over a district court’s denial of foreign sovereign immunity.

As this Court has said:

To fall within the [Cohen] exception an order must

satisfy three conditions: It must "conclusively determine

the disputed question," "resolve an important issue

completely separate from the merits of the action," and

"be effectively unreviewable on appeal from a final

judgment.”

Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 431

(1985) (quoting Coopers & Lybrand v. Livesay, 437 U.S.

463, 468 (1978)). All three criteria are satisfied here.

First, the Order conclusively determines a disputed

question. By denying the Bolivian Air Force’s motion, the

District Court, in effect, barred it from asserting the

immunity from suit codified in the Foreign Sovereign Immu-

nities Act. That determination is conclusive because the

necessary result of that court’s ruling is to require the Air

Force to defend itself in court—thus ending the Air Force’s

immunity. See Metcalf & Eddy, Inc., 506 U.S. at 145

(denials of immunity from suit "purport to be conclusive

determinations").

Second, the Order effectively resolves an important issue

—whether the Bolivian Air Force is amenable to suit under

the Act—that is completely separate from the merits of the

action. This issue has nothing to do with the Air Force’s

liability, if any, on the merits. See id.

Third, the District Court’s denial of the Bolivian Air

Force’s immunity is effectively unreviewable on appeal from

a final judgment. Contrary to the Second Circuit’s assertion,

it is not just the question of the Air Force’s "right not to be

subject to a binding judgment," 99 F.3d at 541; App. 7a,

that is at stake; it is the Air Force’s right under federal and

international law not to be sued ai all. See pp. 8-11, supra.

The District Court’s Order allows the lawsuit against the

Air Force to go forward and forces the Air Force to defend

itself in a court that has no personal or subject matter

jurisdiction over it. That result is "effectively unreviewable

on appeal." See Metcalf & Eddy, Inc., 506 U.S. at 145

(immunity from suit "is for the most part lost as litigation

proceeds past motion practice"). By the time the District

Court enters its "final order" in this matter, the immunity

from suit that was guaranteed to the Air Force by inter-

national law and by the Foreign Sovereign Immunities Act,

and that was recognized by the D.C. Circuit, will have been

shattered. See Bryant v. Sylvester, 57 F.3d 308, 316 (3d

Cir. 1995) ("failure to afford immediate appeal" renders

asserted immunity "worthless"), vacated on other grounds,

116 S. Ct. 899 (1996); Federal Ins. Co., 12 F.3d at 1282

("providing review only after trial would destroy the legal

and practical value of [defendants’ foreign] sovereign immu-

nity defense"); United States v. Moats, 961 F.2d 1198, 1203

(5th Cir. 1992) ("the risk of harm from having to defend the

lawsuit remains constant and is an irreparable loss"); Mc-

Surely v. McClellan, 697 F.2d 309, 317 & n.13 (D.C. Cir.

1982) (compelling defendant to litigate before denial of

immunity claim is reviewed on appeal is an “irretrievable

loss of immunity from suit"). No court will be able to

restore the Air Force’s immunity.’

” The Second Circuit’s reliance on Richardson-Merrell, 472 U.S. 424,

see 99 F.3d at 541; App. 7a—a suit entirely between private parties with

no claim of immunity of any kind—completely misses the point. It is not

the mere expense of litigation of which the Bolivian Air Force complains.

It is the irrevocable denial of its immunity from suit that is at issue. The

ME TES INT SO FL &,

ea ar a ee me ae Se ee

In sum, a district court’s denial of foreign sovereign

immunity meets the requirements of the collateral order

doctrine. The Second Circuit’s refusal to hear the Bolivian

Air Force’s appeal on this issue creates a needless and harm-

ful conflict with the decisions of other circuits and raises the

possibility of further applications of this misguided holding,

both in the Second Circuit and in the other circuits that have

yet to address the issue.

If. THE SECOND CIRCUIT HAS UNDERMINED THE

UNIFORMITY OF FEDERAL LAW THAT WAS

THE EXPRESS PURPOSE OF THE FOREIGN

SOVEREIGN IMMUNITIES ACT.

Congress enacted the Foreign Sovereign Immunities Act

with the express purpose of creating a uniform body of

federal law on the substantive and procedural issues relating

to foreign sovereign immunity. The Second Circuit’s ruling

undercuts that uniformity by creating conflict among the

circuits, and raises the possibility that other circuits that have

not addressed these issues will follow suit or will craft their

own rules, further undermining the purpose of the Act.

This Court has recognized that Congress passed the Act

to “reduc[e] the potential for a multiplicity of conflicting

results" on issues relating to foreign sovereign immunity.

Verlinden B.V., 461 U.S. at 497. The legislative history

evidences this concern on the part of Congress. Thus, the

House report on the Act declares that "broad jurisdiction in

the Federal courts should be conducive to uniformity in deci-

sion, which is desirable since a disparate treatment of cases

involving foreign governments may have adverse foreign

relations consequences." H.R. Rep. No. 94-1487 at 13

(1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6611; see

Air Force has a right not to be subject to any further delay or expense

in the vindication of its immunity.

also id. at 32, 1976 U.S.C.C.A.N. at 6631. Numerous

lower courts also have recognized uniformity of decision as

a chief purpose of the Foreign Sovereign Immunities Act.

As the Third Circuit has observed,

enactment of the FSIA was in response to unique

policy considerations touching on the international

relations of the United States [such as] Congress’

deliberate intent to circumvent much of the potential

for interference with the federal government’s foreign

relations caused by lack of uniformity and local bias

in civil caselaw....

In re Texas Eastern Transmission Corp. PCB Contamination

Insurance Coverage Litigation, 15 F.3d 1230, 1239 (3d Cir.

1994).°

The Second Circuit appears to have been unaware of

Congress’ desire for uniformity in the application of the

Foreign Sovereign Immunities Act. Certainly, its decision

has the result of undermining this purpose. This Court

should grant certiorari, summarily reverse the Second

Circuit, and thereby restore uniformity to the law of foreign

sovereign immunity.

® See also In re Surinam Airways Holding Co., 974 F.2d 1255, 1259

(11th Cir. 1992); In re Air Crash Disaster Near Roselawn, 96 F.3d 932,

937 (7th Cir. 1996) ("Congress sought to promote uniformity in cases

involving foreign governments‘); Goar v. Compania Peruana de Vapor-

es, 688 F.2d 417, 420 (Sth Cir. 1982) (Wisdom, J.) ("Congress chose to

treat jurisdiction of actions against foreign sovereigns in a uniform and

comprehensive manner.”); Williams v. Shipping Corp. of India, 653 F.2d

875, 879 (4th Cir. 1981) ("Both the statutory language and the legislative

history evince the congressional desire to achieve uniformity of decisional

law in the area of suits against foreign sovereigns."), cert. denied, 455

U.S. 982 (1982); 14 Wright, Miller & Cooper, Federal Practice and

Procedure § 3662, at 394 (2d ed. 1985) (Congress intended to create

uniformity of decision in actions involving foreign governments).

Ill. THE SECOND CIRCUIT’S DECISION CREATES

UNCERTAINTY FOR FOREIGN SOVEREIGNS

AND THUS HAS SIGNIFICANT FOREIGN

POLICY IMPLICATIONS.

The Second Circuit’s decision subjects the Bolivian Air

Force—which has been found by the District of Columbia

Circuit to be a foreign sovereign—to the jurisdiction of U.S.

courts in violation of the Foreign Sovereign Immunities Act,

and further allows the imposition on that sovereign of an

exorbitant money judgment to which the Air Force has

substantial defenses that it had no opportunity to raise.

But the damage from the Second Circuit’s ruling goes

beyond the harm that it will cause to the Republic of Bolivia.

As we have said, the issue for this Court is not whether the

Bolivian Air Force’s claim of immunity is valid. Rather, the

issue is how the federal courts will treat a claim of immunity

by a foreign sovereign after a district court decides that such

a Claim is invalid. Whether a foreign sovereign’s immunity

should be erased before an appeals court can review and, if

necessary, correct the district court’s decision is a question

with profound implications for the power of federal courts

over foreign sovereigns.

For example, if the Second Circuit’s decision is allowed

to stand, a plaintiff's choice of forum could be the determin-

ant of a foreign sovereign’s amenability to suit. Such a

result would create uncertainty for foreign sovereigns as to

the nature and extent of their immunity in U.S. courts, an

uncertainty that itself has substantial foreign policy

implications.

CONCLUSION

For the reasons stated, the petition for writ of certiorari

should be granted and the decision of the Second Circuit

should be summarily reversed.

Respectfully submitted,