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

• Decision Date: 21 July 1993
• Docket Number: Docket No. 91-7342
• Citation: 999 F.2d 33
• Parties: ANTARES AIRCRAFT, L.P., Plaintiff-Appellant, v. FEDERAL REPUBLIC OF NIGERIA, Nigerian Airports Authority, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

Page 33

999 F.2d 33

ANTARES AIRCRAFT, L.P., Plaintiff-Appellant, v. FEDERAL REPUBLIC OF NIGERIA, Nigerian Airports Authority,

Defendants-Appellees.

Docket No. 91-7342.

United States Court of Appeals, Second Circuit.

Submitted Aug. 17, 1992.

Decided Oct. 28, 1991.

Vacated June 29, 1992.

Decided July 21, 1993.

David F. Dobbins, New York City (Patterson, Belknap, Webb & Tyler, of counsel), for plaintiff-appellant.

Stephen D. Hoffman, New York City (Robert M. Klingon, Sive, Paget & Riesel, of counsel), for defendant-appellee Federal Republic of Nigeria.

Paul S. Reichler, Washington, DC (David K. Schorr, Reichler & Soble, of counsel), for defendant-appellee Nigerian Airports Authority.

Before: LUMBARD, WINTER and ALTIMARI, Circuit Judges.

WINTER, Circuit Judge:

Antares Aircraft, L.P. brought this action for damages against appellees Federal Republic of Nigeria ("FRN") and Nigerian Airports Authority ("NAA") for the purportedly wrongful detention of Antares' aircraft. The district court granted appellees' motion to dismiss the complaint for lack of subject matter jurisdiction, and we affirmed. Antares Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d 90 (1991), vacated, --- U.S. ----, 112 S.Ct. 3020, 120 L.Ed.2d 892 (1992). The Supreme Court vacated our decision and remanded for further consideration in light of Republic of Argentina v. Weltover, Inc., --- U.S. ----, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992). Upon reconsideration, we again affirm because there was no "direct effect" of appellees' legally significant conduct in the United States, and the "commercial activity" exception of the Foreign Sovereign Immunities Act of 1976 ("FSIA"), see 28 U.S.C. §§ 1602-1611 (Supp. II 1990), does not apply. See 28 U.S.C. § 1605(a)(2).

We assume familiarity with our previous decision, Antares, 948 F.2d at 92-93. Antares Aircraft is a Delaware limited partnership with its principal place of business in New York. The partnership's sole asset is a DC-8-55 aircraft registered in Nigeria. Purportedly because a former lessee of the plane had not paid certain airport landing and parking fees, the airplane was detained at the Murtala Muhammed Airport in Lagos, Nigeria. NAA, the airport authority, refused to release the airplane until the outstanding obligations were paid. After Antares' representatives negotiated with NAA in Nigeria, Antares sent payments totaling roughly $100,000 from a New York bank account. Id. at 93. Most of the money was sent to Nigeria and paid in Nigerian currency. Appellees claim that one of the payments went to a California bank to pay Antares' local counsel. Id. On May 23, 1989, after roughly five months, the plane was released. Id. at 93, 95. Meanwhile, it had suffered physical damage as a result of exposure to the elements.

Thereafter, Antares filed this action against FRN and NAA in the Southern District of New York to recover damages for the alleged conversion of its plane. The FSIA bars lawsuits in state or federal courts against foreign states unless one of its exceptions applies. Appellees moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. See 28 U.S.C. § 1603(a) (definition of "foreign state"); Antares, 948 F.2d at 93; see also Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-39, 109 S.Ct. 683, 687-91, 102 L.Ed.2d 818 (1989). Finding that none of the FSIA's exceptions were applicable, the district court dismissed the action for lack of subject matter jurisdiction.

On appeal, we rejected Antares' claim that either the "commercial activity" or the "expropriation" exceptions to the FSIA provided a ground for subject matter jurisdiction. We reasoned that the "direct effect" of appellees' legally significant conduct occurred in Nigeria and that appellees did not engage in "commercial activity in the United States." See 28 U.S.C. § 1605(a)(2), (a)(3); Antares, 948 F.2d at 95-97.

With regard to the "commercial activity" exception, our opinion relied upon Weltover, Inc. v. Republic of Argentina, 941 F.2d 145 (2d Cir.1991), aff'd, --- U.S. ----, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992). In Weltover, plaintiffs, a Swiss bank and two Panamanian corporations, owned approximately $1.3 million worth of bonds issued by the Republic of Argentina. Like bonds issued by a private entity, they had a repayment schedule including periodic interest and principal repayment at maturity. The bonds were U.S. dollar-denominated, and New York was the designated place of performance and where interest payments had been made. New York was also the location of Argentina's appointed financial agent. At the bonds' maturity in May 1986, Argentina attempted unilaterally to reschedule the bond payments. Plaintiffs rejected the rescheduling and brought suit in the Southern District of New York.

We held that the district court had jurisdiction under the "commercial activity" exception of the FSIA, see Weltover, 941 F.2d 145, 153, aff'd, --- U.S. ----, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992), because the "legally significant act," the breach, had a "direct effect in the United States," namely, payment was to take place in New York but did not. In 1992, the Supreme Court granted certiorari in Weltover and thereafter affirmed, holding, inter alia, that the "direct effect" of Argentina's breach of contract was in the the United States. The Court vacated our Antares decision and remanded it for further consideration in light of its decision. Because we find nothing in the Supreme Court's decision in Weltover that undermines our holding in Antares, ¹ we again affirm.

According to Section 1604 of the FSIA, a "foreign state shall be immune from the jurisdiction of the courts of the United States and of the States" unless the foreign state's conduct falls within one of the statutory exceptions. 28 U.S.C. §§ 1604, 1605-07; Amerada Hess, 488 U.S. at 434, 109 S.Ct. at 687-88; Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 485 n. 5, 493-94, 103 S.Ct. 1962, 1967 n. 5, 1971-72, 76 L.Ed.2d 81 (1983). The parties do not dispute that the NAA and the FRN qualify as "foreign states" and are immune absent an applicable statutory exception. The only exception at issue on this remand from the Supreme Court is that for "commercial activity," see 28 U.S.C. § 1605(a)(2).

The "commercial activity" exception provides for jurisdiction in cases "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 following is not in dispute. The "act outside the territory of the United States" was the allegedly wrongful detention of the plane in Nigeria. The detention of the aircraft and collection of fees were "in connection with a commercial activity of the foreign state." See Antares, 948 F.2d at 94. The final element of the "commercial activity" exception poses the issue remaining on this remand, namely, in light of Weltover, did the detention of the aircraft cause "a direct effect in the United States?"

In Weltover, the Court endorsed our view that "an effect is 'direct' if it follows 'as an immediate consequence of the defendant's ... activity.' " --- U.S. at ----, 112 S.Ct. at 2168 (quoting Weltover, 941 F.2d at 152); see also Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534 (11th Cir.1993) (finding plaintiff's accident and injury in Georgia to be "immediate consequence" of French carmaker's allegedly defective design and manufacture). The Court did, however, reject our analytic approach of inquiring into what Congress "would have wanted." The Court held, rather, that the proper "question ... is not what Congress 'would have wanted' but what Congress enacted in the FSIA." --- U.S. at ----, 112 S.Ct. at 2168 (quoting Weltover, 941 F.2d at 153). ² The Court also rejected as "too remote and attenuated," id., any suggestion that the ground for the "direct effect in the United States" was a diminution in New York's status as "a world financial leader." 941 F.2d at 153. Nevertheless, the Court had "little difficulty concluding that Argentina's unilateral rescheduling of the maturity dates on the [bonds] had a 'direct effect' in the United States" because New York was the contractually designated "place of performance." --- U.S. at ----, 112 S.Ct. at 2168.

Although the Court did not expressly adopt our "legally significant acts" test, it used a similar analysis. Weltover involved a breach of contract, and the Court found decisive the fact that the contractually designated place of performance was New York. The "legally significant" act was thus the breach that occurred in the United States. In tort, the analog to contract law's place of performance is the locus of the tort, here Nigeria. However, the analogy is not precise. Although a contractual provision designating the United States as the place of performance is sufficient to vest jurisdiction under the FSIA, a foreign tort is not necessarily sufficient to deprive federal courts of jurisdiction because the foreign tort may have had sufficient contacts with the United States to establish the requisite "direct effect" in this country.

However, in the instant matter, all legally significant acts took place in Nigeria. The aircraft was registered in Nigeria. There is no evidence that the use of the aircraft was related to substantial commerce with the United States. The detention of, and physical damage to, the plane happened in Nigeria. The alleged conversion thus occurred in Nigeria. Moreover, the negotiations over, and the payment of, the outstanding fees occurred in Nigeria and utilized Nigerian currency.

That the money came from a bank account in New York is a fact but one without legal significance to the alleged tort. The Nigerian authorities were indifferent to the geographic location of the source of the money used to pay the...