Corzo v. Banco Central De Reserva Del Peru

• Decision Date: 08 February 2001
• Docket Number: No. 00-55084,00-55084
• Citation: 243 F.3d 519
• Parties: (9th Cir. 2001) RENATO E. CORZO; DC LTD., Plaintiffs-Appellants, v. BANCO CENTRAL DE RESERVA DEL PERU, Defendant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

Page 519

243 F.3d 519 (9th Cir. 2001)

RENATO E. CORZO; DC LTD., Plaintiffs-Appellants, v. BANCO CENTRAL DE RESERVA DEL PERU, Defendant-Appellee.

No. 00-55084

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted February 8, 2001

Filed March, 12, 2001

Vincent B. Moneymaker, Law Firm of Richard M. Money-maker, Los Angeles, California, for the plaintiffs-appellants.

Daniel S. Floyd, Gibson, Dunn & Crutcher LLP, Los Angeles, California, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California

Consuelo B. Marshall, District Judge, Presiding. D.C. No.CV-99-02900-CBM

Before: Edward Leavy, Stephen S. Trott, and Barry G. Silverman, Circuit Judges.

Opinion by Judge Trott; Concurrence by Judge Silverman

TROTT, Circuit Judge:

Plaintiffs Renato Corzo and DC Ltd. (collectively, "Corzo") appeal the judgment of the district court dismissing their case against the Banco Central de Reserva del Peru ("the BCRP") for lack of jurisdiction. The district judge determined that, as an arm of the Peruvian government, the BCRP was presumptively entitled to sovereign immunity under the Foreign Sovereign Immunities Act, 28 U.S.C. S 1602-1611 ("the FSIA"), and that none of the FSIA's exceptions to sovereign immunity were applicable. The district court accordingly dismissed the case for lack of jurisdiction.

We have appellate jurisdiction pursuant to 28 U.S.C. S 1291. We agree with the district court's decision, and therefore AFFIRM.

BACKGROUND

This case arises out of a lawsuit brought in Peru by Novotec S.A. ("Novotec"), Corzo's predecessor in interest, against the BCRP. Novotec is a Peruvian company that assembles and exports computers made largely from components imported from the United States. The BCRP is the monetary authority of Peru. The parties agree that it is an arm of the Peruvian government presumptively immune from suit in the United States unless jurisdiction lies under one of the FSIA's exceptions to foreign sovereign immunity.

Before the Peruvian lawsuit, Novotec and the BCRP had a longstanding commercial relationship, with much of themoney for Novotec's operations coming from the so-called "FENT Fund," a line of credit which the BCRP had established to foster nontraditional Peruvian industries. However, the underlying lawsuit in this case had nothing to do with the FENT Fund. Rather, it was based on the BCRP's denial in 1989 of an application for compensation for losses Novotec had suffered when the exchange rate between Peruvian and U.S. currency shifted unfavorably. Because Novotec exported goods assembled from imported components, it suffered significant losses when the value of Peruvian currency declined between the time it purchased the imported components and the time it exported the completed goods. Recognizing that the devaluation of Peru's money adversely affected companies such as Novotec, the BCRP in 1988 instituted a policy by which exporters who suffered exchange rate related losses could apply to receive compensation. If the BCRP granted an application for exchange rate compensation, the exporter would receive the difference between the price paid for the imported goods and the price received for the exports.

This policy, however, lasted less than a year. Just one month before it was discontinued, Novotec submitted an application for compensation, claiming that it had lost nearly $400,000 from April to November of 1988 as a result of exchange rate fluctuations. The BCRP denied Novotec's application. Novotec then sued the BCRP in Peru, seeking recovery of the original compensation it had been denied, plus interest and damages. Novotec prevailed in a Peruvian trial court, and the case made its way through the Peruvian appellate system. Eventually, the case reached the Supreme Court of Peru, which affirmed the judgment in favor of Novotec on May 14, 1997.

After the Supreme Court had affirmed the judgment, Novotec assigned its interest in it to Corzo. However, this transaction turned out to be a particularly bad deal for Corzo, because on January 16, 1998, the Peruvian Supreme Court declared its previous judgment in favor of Novotec "null and void." The court indicated first that it thought that the BCRP had been denied due process. It also issued the admittedly perplexing explanation that the original judgment had been issued "by mistake, without the justices having been aware that the document they were signing included a decision with the opposite outcome they wished for that judgment."

According to Corzo's experts, the Peruvian Supreme Court's "King's X" was unprecedented and extra-legal under Peruvian law. The court's actions also apparently caused quite a scandal in the Peruvian government, as is evidenced by a document in the record called a "Resolution of the National Council of the Judiciary." This Resolution alleged that the justices of the Peruvian Supreme Court had "committed a grave act that compromises the dignity of their post and demerits the exercise of their position by the fact that they have issued a fraudulent judgment," and called for "disciplinary sanctions" and "eventual penal responsibility" for the "presumed commission of the crime of prevarication."

Despite this outcry, the drama in Peru apparently did not play out to Corzo's liking, because in March of 1999, he filed a "Complaint to Domesticate a Foreign Judgment " in United States District Court in Los Angeles, California. The complaint alleged that Novotec, and therefore Corzo, had a valid and final judgment against the BCRP in Peru, and sought to attach the BCRP's assets in the United States. The BCRP objected, claiming it was immune from suit under the FSIA, and that the district court therefore had no jurisdiction over it. After extensive briefing and a hearing, the district judge concluded that the BCRP was in fact entitled to sovereign immunity and dismissed the case for lack of jurisdiction. Corzo now appeals, claiming that jurisdiction lies under the (1) "waiver" and (2) "commercial activity" exceptions to foreign sovereign immunity, and also that comity requires us to enforce the judgment of the courts of Peru. We reject these arguments for the reasons discussed below.

DISCUSSION

The FSIA provides the sole means by which courts of the United States can assert jurisdiction over foreign sovereigns. See Saudi Arabia v. Nelson, 507 U.S. 349, 354 (1993). The Act conflates the usually distinct questions of sovereign immunity, subject matter jurisdiction, and personal jurisdiction. See, e.g., Randolph v. Budget Rent-A-Car, 97 F.3d 319, 323 (9th Cir. 1996). Jurisdiction exists only if immunity does not. See id. Under the FSIA, foreign sovereigns are presumptively immune from suit in the United States, unless one of several exceptions applies. 28 U.S.C. S 1604. The existence of sovereign immunity and subject matter jurisdiction under the FSIA are questions of law which we review de novo. Budget Rent-A-Car, 97 F.3d at 323.

A. Waiver

The FSIA's waiver exception reads as follows:

A foreign state shall not be immune from the juris diction of courts of the United States or of the States in any case (1) in which the foreign state has waived its immunity either explicitly or by implication, not withstanding any withdrawal of the waiver which the foreign state may purport to effect except in accor dance with the terms of the waiver.

28 U.S.C. S 1605(a)(1). Corzo argues that the BCRP has either expressly or impliedly waived its immunity from suit in the United States. To support his claim that the BCRP has explicitly waived its sovereign immunity, Corzo submitted several expert opinions which concluded that, under the Peruvian Constitution and the BCRP's own Organic Law, the BCRP was not immune from suit. In support of his implied waiver argument, Corzo argues that the BCRP's submission to litigation in Peru constitutes an implied waiver of any sovereign immunity it may have had with respect to this case, including immunity from suit in the United States. Because both the explicit and implicit waiver arguments are based on the same faulty premise, they can be discussed, and rejected, at the same time.

The district court rejected Corzo's waiver arguments, concluding that "submission of a foreign sovereign to its own courts or the courts of nations other than the United States does not by itself evidence an intent by the foreign sovereign to waive its immunity from suit in the United States." Corzo, on the other hand, argues that the FSIA was intended to recognize only that immunity which a foreign sovereign enjoys in its home country, and that the district judge's failure to recognize this principle created a "false dichotomy. " We agree with the district court. While Corzo's argument has some appeal at first blush, the relevant case law, as well as the structure, purpose, and legislative history of the FSIA all indicate that it is wrong.

The precise issue presented by this case--whether a sovereign's amenability to suit in the courts of its own country automatically subjects it to jurisdiction in the United States--is one of first impression in this circuit. However, we have repeatedly stated that the waiver exception to sovereign immunity must be narrowly construed. See, e.g. , Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 720-21 (9th Cir. 1992). We have also stated that a foreign sovereign cannot be sued in the United States unless it could have contemplated that its actions would subject it to suit here. See id. at 721. It is difficult to see how the BCRP could have contemplated that a run-of-the-mill lawsuit in Peru could result in its having to litigate in the United States.

Additionally, several courts have addressed the question of whether amenability to suit in one country automatically subjects a foreign sovereign to jurisdiction here, and have uniformly concluded that it does not. For example, in Arriba Ltd. v....