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Weltover, Inc. v. Republic Of Argentina

Published online by Cambridge University Press:  27 February 2017

Joseph D. Pizzurro
Joseph D. Pizzurro*
Affiliation:
Of the New York Bar
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Extract

Plaintiffs, two Panamanian corporations and a Swiss bank, brought an action against the Republic of Argentina and Banco Central de la República Argentina (Banco Central) for breach of obligations arising out of the issuance of certain bonds. The defendants moved to dismiss for lack of subject matter jurisdiction and lack of personal jurisdiction under the Foreign Sovereign Immunities Act of 1976 (28 U.S.C. §§1602-1611 (1988)) (FSIA). In the alternative, defendants moved for dismissal under the doctrine of forum non conveniens. The district court denied the motions and held that: (1) the acts of the defendants in issuing, and breaching the payment obligations under, certain bonds were commercial, and the failure to pay on those bonds, which contemplated payment in New York, constituted a direct effect in the United States even though the plaintiffs were non-U.S. entities; (2) the aggregate of the defendants’ contacts with the United States, together with the promise to pay the plaintiffs in New York, satisfied the minimum contacts requirement under the due process clause; and (3) the defendants had not made a sufficient showing to justify a dismissal of the case on the grounds of forum non conveniens.

Keywords

Sovereign immunitycommercial activity of foreign state having direct effect in the United Statesforum non conveniens
Type
International Decisions
Information
American Journal of International Law , Volume 85 , Issue 3 , July 1991 , pp. 560 - 564
Copyright
Copyright © American Society of International Law 1991

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References

1 The opinion of the court does not reflect whether this notice was by one or both of the defendants, or the form of the notice.

2 753 F.Supp. 1201, 1205.

3 589 F.Supp. 1465 (S.D.N.Y. 1984), aff’d, 762 F.2d 222 (2d Cir. 1985).

4 764 F.2d 1101 (5th Cir. 1985).

5 753 F.Supp. at 1206. Significantly, in both Braka and Callejo, the courts dismissed the complaints under the act of state doctrine, holding that the claims of holders of certificates of deposit issued by Mexican banks called into question the sovereign acts of the Mexican Government in imposing exchange control regulations. Apparently, no act of state defense was asserted in Weltover.

6 Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300, 312 (2d Cir. 1981), cert. denied, 454 U.S. 1148 (1982).

7 753 F.Supp. at 1206–07. The court also noted that its determination on this issue was supported by policy considerations in that the United States had a substantial interest in maintaining New York as an international financial center, a status which the court felt would be enhanced by its decision, since businesses would be confident that they would be able to utilize New York courts to enforce obligations payable in New York. Id. at 1207.

8 The court did not specify what those unrelated commercial activities were.

9 Although the court stated that the availability of an alternative forum is essential to a dismissal for forum non conveniens, it should be noted that other courts have stated that the availability of an alternative forum is a factor to be weighed but is not an absolute prerequisite to a dismissal. See, e.g., Travelers Indem. Co. v. S/S Alca, 713 F.Supp. 129, 132 (S.D.N.Y. 1989).

10 See Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947).

11 Under the FSIA, actions against foreign states are to be tried without a jury. 28 U.S.C. §1330(a) (1988).

12 A foreign plaintiff’s choice of forum is entitled to far less deference than that of a domestic plaintiff. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255–56 (1981). In such a case, there should be less of a burden on the defendant to justify a dismissal for forum non conveniens. The court in Weltover failed to address this distinction.

13 Although the court did list the fact that defendants had agreed to make payments on the Bonods in New York as one jurisdictionally significant contact with the United States, the court was of the view that, under the FSIA, it was not necessary that the plaintiff’s cause of action be related to the defendants’ contacts with the United States. 753 F.Supp. at 1207 n.10. However, the FSIA has been held not to incorporate this “doing business” standard for jurisdiction. See America West Airlines v. GPA Group, Ltd., 877 F.2d 793, 796 (9th Cir. 1989), summarized in 84 AJIL 262 (1990); Barkanic v. General Admin, of Civil Aviation of Peoples Republic of China, 822 F.2d 11, 13 (2d Cir.), cert. denied, 484 U.S. 964 (1987); Vencedora Oceanica Navigacion, S.A. v. Compagnie Nationale Algerienne de Navigation, 730 F.2d 195, 199–204 (5th Cir. 1984).

14 462 U.S. 611 (1983).

15 See Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 446–48 (D.C. Cir. 1990), summarized in 84 AJIL 922 (1990); see also Chuidian v. Philippine Nat’l Bank, 912 F.2d 1095, 1104 (9th Cir. 1990), summarized in 85 AJIL 342 (1991).

16 See Gregorian v. Izvestia, 871 F.2d 1515, 1530 (9th Cir.), cert. denied, 110 S.Ct. 237 (1989).