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America West Airlines, Inc. v. Gpa Group, Ltd

Published online by Cambridge University Press:  27 February 2017

Mark A. Barnett
Affiliation:
Of the District of Columbia Bar

Abstract

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Type
International Decisions
Copyright
Copyright © American Society of International Law 1990

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References

1 The commercial activity exception to sovereign immunity, as relevant to these two cases, states:

(a) 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 [1] upon a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [3] 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(1982).

2 The court noted that the identities of the parties were in dispute. It specifically explained that AWA’s contract was signed with GPA Leasing, a Netherlands Antilles corporation, but that AWA insisted that it had negotiated with GPA Corp., a Connecticut corporation. See 877 F.2d 793, 795 & n.1. The link between the two entities was that the person that signed the contract for GPA Leasing was also the President of GPA Corp. The court found no evidence that GPA Corp. was a party to the contract. Additionally, the court failed to explain the relationship between GPA Leasing and GPA Group, Ltd.

3 In another dispute over the identity of the parties, AWA alleged that both Airmotive and Aerlinte were subsidiaries of Aer Lingus, the national airline of Ireland. Airmotive, however, contended that Aerlinte is a completely separate entity from Aer Lingus. The court apparently accepted Airmotive’s allegations as to this relationship. In any event, the court did not cite any facts that would explain Aerlinte’s inclusion in the suit.

4 Section 1603(a) of the FSIA provides: “A ‘foreign state’, except as used in section 1608 of this title, includes a political subdivision of a foreign state or an agency or instrumentality of a foreign state as defined in subsection (b).” Subsection (b) of that section includes within its scope foreign corporations wholly owned by the country in which they are incorporated. 28 U.S.C. §1603(a) and (b) (1982).

5 877 F.2d at 797 (quoting Joseph v. Office of the Consulate General, 830 F.2d 1018, 1023 (9th Cir. 1987) (emphasis in original) (foreign government lease of building for consulate general is commercial activity), cert, denied, 108 S.Ct. 1077 (1988)).

6 647 F.2d 300 (2d Cir. 1981) (direct effect found where refusal to pay letters of credit issued by a U.S. bank and letters payable in United States), cert, denied, 454 U.S. 1148 (1982).

7 817 F.2d 517 (9th Cir.) (direct effect found in breach of contract claim where plaintiffs, U.S. residents, could specify place of payment), cert, denied, 108 S.Ct. 486 (1987).

8 House Comm. on the Judiciary, Jurisdiction of the United States Courts in Suits Against Foreign States, H.R. Rep. No. 1487, 94th Cong., 2d Sess. 19 (1976), reprinted in 1976 U.S. Code Cong. & Admin. News 6604, 6618.

9 877 F.2d at 798 (quoting Restatement (Second) of the Foreign Relations Law of the United States §18 (1965) (emphasis added by court)).

10 Id. (citing, inter alia, Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 452–53 (6th Cir. 1988) (financial injury to U.S. corporation must be foreseeable, not merely fortuitous); Zernicek v. Brown & Root, Inc., 826 F.2d 415, 417–18 (5th Cir. 1987) (personal injury to U.S. citizen abroad, where citizen returns to United States, is not sufficiently direct), cert, denied, 108 S.Ct. 775 (1988); Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1004 (D.C. Cir. 1985) (foreign detention of ship owned by U.S. national and bank transfers in United States meet direct effect test)).

11 Id. (citing Texas Trading, 647 F.2d at 311 & n.32).

12 The court cited two other cases that relied on the “substantial” and “foreseeable” effects test: Zedan v. Kingdom of Saudi Arabia, 849 F.2d 1511, 1515 (D.C. Cir. 1988) (effect is fortuitous where plaintiff, a U.S. citizen, works abroad, is unpaid, and returns to United States to sue), summarized in 82 AJIL 828 (1988); and Berkovitz v. Islamic Republic of Iran, 735 F.2d 329 (9th Cir.), cert, denied, 469 U.S. 1035 (1984).

13 877 F.2d at 800.

14 The hospital joined Dr. Merkel, Bajor and the organ bank as involuntary parties-plaintiff. Another hospital, South Chicago Community Hospital, intervened, asserting the same causes of action.

15 690 F.Supp. 682 (N.D. 111. 1988).

16 That definition states: “A ‘commercial activity’ means either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.” 877 F.2d 574, 577 (quoting 28 U.S.C. § 1603(d)).

17 Id. at 577–78 (quoting Segni v. Commercial Office of Spain, 835 F.2d 160, 164 (7th Cir. 1987) (emphasis added by Rush-Presbyterian court)).

18 Id. at 580 (quoting, presumably, Brief of the Hellenic Republic).

19 For example, the court noted that a government order for “a million pairs of army boots, or a million tons of cement,” is simply an order for boots or cement. The size of the transaction does not affect its nature. Id.

20 Id. at 581.

21 Id. at 582 (citing, inter alia, Gregorian v. Izvestia, 871 F.2d 1515, 1527 (9th Cir. 1989) (contract negotiation in United States and agreement that payments to be made in United States would satisfy legally significant act requirement); Zedan, supra note 12; Gould, supra note 10; and Callejo v. Bancomer, S.A., 764 F.2d 1101, 1111 (5th Cir. 1985) (long-term course of business with American sufficient to make effect in United States foreseeable)).

22 877 F.2d at 797 (citation omitted).

23 See supra note 10.

24 877 F.2d at 581-82 & n.9.

25 Zedan v. Kingdom of Saudi Arabia, 849 F.2d 1511 (D.C. Cir. 1988), summarized in 82 AJIL 828 (1988).

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