S & Davis International v. Republic of Yemen

Citation218 F.3d 1292
Decision Date21 July 2000
Docket NumberNo. 99-10880,99-10880
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
Parties(11th Cir. 2000) S & DAVIS INTERNATIONAL, INC., Plaintiff-Appellee, v. YEMEN, THE REPUBLIC OF, MINISTRY OF SUPPLY AND TRADE, Defendant-Appellant.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 98-03141-CV-J-NW

Before EDMONDSON, HULL and WOOD*, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge:

S & Davis International, Inc. ("S & Davis") filed suit in the Northern District of Alabama to enforce an arbitration award against the General Corporation for Foreign Trade and Grains ("General Corporation") of Yemen. The suit arose from a breach of contract dispute. S & Davis also named the Ministry of Supply & Trade (the "Ministry") and The Republic of Yemen as defendants, asserting that the General Corporation was controlled by the government. The Ministry filed a motion to dismiss, claiming immunity under the Foreign Sovereign Immunities Act of 1976 ("FSIA"). The district court held there was sufficient subject matter jurisdiction and personal jurisdiction to proceed. The Ministry appeals. The district court's interlocutory order denying immunity is reviewable under 28 U.S.C. § 1291 and the "collateral order doctrine" established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949). We affirm. Due to the fact that the district court order did not contain any findings of fact and conclusions of law, we must include greater detail in our analysis for clarity on the issues.

I. FACTS

On May 14, 1996, the General Corporation, a Yemeni corporation, executed a contract with S & Davis, an Alabama corporation, to purchase 300,000 metric tons of wheat at a price of $274.88 per ton. The contract was prepared "according to the instructions of the Ministry of Supply & Trade," and "[a]ll aspects of the contract were reportedly being discussed with the Minister of Supply who appeared to [be] the principal in the transaction." Affidavit of Roy David, president and CEO of S & Davis. In addition to the signatures of the two named parties, A. M. Ali Othman, the Minister of Supply & Trade of Yemen, also signed the contract, indicating approval by the Ministry as required under Yemeni law.

The contract specified U.S. wheat No. 2 or better with point of origin from the U.S., Canada, Australia, South Africa, or Argentina. The wheat was to be shipped from Portland, Oregon and delivered to Yemen, with freight charges calculated from Portland. The purchase price was to be paid with a letter of credit issued by the Bank of Yemen with confirmation by a "U.S.A. prime bank."1

The contract was negotiated and signed in Yemen. However, the contract contained an arbitration agreement providing that any dispute was to be arbitrated by the Grain and Feed Trade Association ("GAFTA") in London, England.

On May 28, 1996, the General Corporation requested the name of S & Davis's appointed bank where the letter of credit was to be opened.2 S & Davis named Citizen's Bank in New York. On June 6, the General Corporation faxed S & Davis stating that because prices in the international wheat market had declined substantially, this had caused a delay in opening the letter of credit. The fax also asked S & Davis to discount the price by $10.00 per ton "in order to go ahead with final steps for start of implementation of the Contract."3

On June 18, the Central Bank of Yemen requested a bank reference for S & Davis in order to issue the letter of credit. On June 19, the Central Bank acknowledged receipt of a positive reference from Citizen's Bank and instructed sellers to send a copy to the General Corporation's U.S. bank, the Arab American Bank in New York. On July 2, 1996, in response to inquiries by S & Davis, the United States Embassy in Yemen advised the company that the General Corporation was a government parastatal4 which is required to finance its activities through the Central Bank of Yemen.

S & Davis provided a copy of a letter from A. M. Ali Othman, the Minister of Supply & Trade of the Republic of Yemen (the same Minister who had signed the contract), addressed to the General Corporation, dated July, 10, 1996, advising the company that the Minister had received information that S & Davis was "not internationally famous and, as such, it is difficult to have confidence in it." The letter stated, "We have previously directed you to terminate the contract . . ." and again repeated, "we gave our instruction to terminate the contract . . . ."

On September 14, the Embassy notified S & Davis that efforts to convince the Governor of the Central Bank of Yemen to open a letter of credit had failed. The General Corporation admits it was not able to obtain a letter of credit as required in the contract. After additional attempts through various political and diplomatic channels to open a letter of credit, on January 2, 1997, S & Davis declared the General Corporation had breached the contract and initiated GAFTA arbitration in London. Both parties agree that S & Davis had never purchased any wheat under the contract.

S & Davis sought damages against both the General Corporation and the Ministry of Trade, asserting that the General Corporation was not an independent organization with authority to contract. S & Davis maintains that the Ministry of Supply & Trade was a principal in the transaction, that it was the alter ego of the General Corporation, that it was in privity with the General Corporation and that through its interference it caused the breach of contract. S & Davis submitted an affidavit from a Yemeni solicitor, "by education, training and profession, . . . an expert in the laws of the Republic of Yemen," who stated, "[t]he Public Corporations established under the caption law bear no semblance to western business corporations. All the Yemeni Corporations, including the Public Corporation for Foreign Trade and Grains, are wholly owned by the Government of Yemen."

As further evidence, S & Davis asserts that the General Corporation is under the Ministry's control according to the Presidential Decree Issuing Act No. 35 for the Year 1991 concerning the Public Authorities, Establishments and Companies. S & Davis maintains that the General Corporation is a "public establishment" which provides services that are related to the production of goods and is completely owned by the State as indicated in the Decree. The Ministry maintains that the General Corporation is a "public company" which, under Decree No. 35, is owned by two or more public entities. However, neither party provided any evidence as to the specific type of company the General Corporation is or papers of incorporation indicating the exact status of the General Corporation.

The original GAFTA panel held that the General Corporation breached the contract by failing to open a letter of credit but concluded that S & Davis had not shown entitlement to any damages. It also held that the General Corporation was a separate entity from that of the Ministry, and, therefore, the Ministry was not liable. The appellate arbitration panel affirmed the finding of a breach of contract but awarded S & Davis approximately $17 million in damages against the General Corporation. The amount was based on the difference between the contract price of $274.88 per ton and the value at the time of the breach, $217.18 per ton, estimating the cost of freight from Portland to Yemen, financing costs, and other costs for seller's performance and subtracting those total costs from the contract price.

On December 18, 1998, S & Davis filed this suit in federal district court to enforce the arbitration award, in addition to a claim for breach of contract and enforcement of the arbitration award against the Republic of Yemen asserting that the General Corporation is a political subdivision of the Republic, and an alternative claim for tortious interference with contractual relations against the Ministry of Supply & Trade for the amount of the arbitration award. The Ministry filed a motion to dismiss under Fed.R.Civ.Proc. 12(b)(1), lack of subject matter jurisdiction, 12(b)(2), lack of personal jurisdiction, and 12(b)(5), insufficient service of process. The Ministry claimed immunity under the FSIA, as a political subdivision of The Republic of Yemen.

S & Davis asserted that subject matter jurisdiction was allowed under the FSIA and the Convention on the Recognition and Enforcement of Foreign Arbitration Awards, 9 U.S.C. § 201 et seq. The district court held an oral hearing and on April 22, 1999, denied the Ministry's motion on all grounds. The Ministry timely filed a notice of appeal.

II. ANALYSIS
A. Appellate Jurisdiction

This court has jurisdiction over interlocutory orders denying claims of sovereign immunity under the FSIA. Honduras Aircraft Registry v. Government of Honduras, 129 F.3d 543, 545 (11th Cir. 1997) (citation omitted).

The denial of a motion to dismiss for lack of personal jurisdiction is not, in itself, immediately appealable under the "collateral order doctrine" established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949). See Van Cauwenberghe v. Biard, 486 U.S. 517, 526-27 (1988); Rein v. Socialist People's Libyan Arab Jamahiriya, 162 F.3d 748, 756 (2d Cir. 1998). We may, however, elect to exercise our "pendent appellate jurisdiction" if the personal jurisdiction issue is "inextricably intertwined" with an issue that is properly before this Court on interlocutory appeal. Swint v. Chambers County Comm'n, 514 U.S. 35, 51 (1995). This interlocutory appeal involves the denial of sovereign immunity based on the "commercial activity exception" to sovereign immunity which has a "direct effects" component. See 28 U.S.C. § 1605(a)(2). The "direct effects" component of the commercial activity exception to sovereign immunity is...

To continue reading

Request your trial
96 cases
  • Interim Healthcare, Inc. v. Interim Healthcare of Se. La., Inc.
    • United States
    • U.S. District Court — Southern District of Florida
    • 10 Junio 2020
    ...alleged in the complaint as true to the extent they are uncontroverted by the defendant's affidavits. S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1303 (11th Cir. 2000). "Once the plaintiff pleads sufficient material facts to form a basis for in personam jurisdiction, the burd......
  • Garb v. Republic of Poland
    • United States
    • U.S. District Court — Eastern District of New York
    • 24 Junio 2002
    ...Russian Ministry of Culture as political subdivision of Russia for purposes of service of process); S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1298 (11th Cir.2000) (characterizing Yemeni Ministry of Supply & Trade as political subdivision of Yemen for purposes of determining......
  • Garb v. Republic of Poland
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 3 Marzo 2006
    ...of Culture as a political subdivision of Russia for purposes of FSIA's service of process provision), S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1298 (11th Cir.2000) (characterizing Yemens Ministry of Supply & Trade as a political subdivision of Yemen), see also O'Connell Ma......
  • GSS Grp. Ltd. v. Nat'l Port Auth.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • 25 Mayo 2012
    ...imposes requirements substantially equivalent to minimum contacts, see 28 U.S.C. § 1605(a)(2); see also S & Davis Intern., Inc. v. Republic of Yemen, 218 F.3d 1292, 1304 (11th Cir.2000) (noting similarity of the standards), courts might well extend the current practice on the ground of its ......
  • Request a trial to view additional results
2 firm's commentaries
  • GLI International Arbitration First Edition - April 2015
    • United States
    • Mondaq United States
    • 5 Mayo 2015
    ...Corp. v. State Oil Company of the Azerbaijan Republic, 582 F.3d 393, 397 (2d Cir. 2009); S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1303-05 (11th Cir. FAA § 207 (incorporated by FAA § 302 so as to apply to Panama Convention awards). Encyclopaedia Universalis S.A. v. Ency......
  • Fried Frank International Arbitration Newsletter, June 2013
    • United States
    • Mondaq United States
    • 1 Julio 2013
    ...Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1121 (9th Cir. 2002) S & Davis Int'l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1303-05 (11th Cir. Fifth Circuit Rules that Chevron May Not Challenge Discovery in Aid of International Arbitration After It Has Sought and ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT