First American Corporation v Al-Nahyan [United States District Court, District of Columbia.]

• Court: U.S. District Court — Southern District of New York
• Date: 26 November 1996

United States District Court, District of Columbia.

(Green, District Judge)

First American Corporation and Others

and

Al-Nahyan and Others1

State immunity Subject-matter jurisdiction Foreign Sovereign Immunities Act 1976 (FSIA) Doctrine of Head of State immunity Act of State doctrine Whether court having subject-matter jurisdiction over defendants Whether President of United Arab Emirates entitled to immunity Whether estate of former ruler of Emirate of Dubai entitled to immunity Whether brother of current ruler of Dubai entitled to immunity Whether Dubai defendants' personal holding companies entitled to immunity Whether court having personal jurisdiction over Dubai defendants

States Whether Dubai independent State Whether Dubai having defining characteristics of independent State under international law Whether recognized by United States of America Whether political subdivision of United Arab Emirates The law of the United States of America

Summary:The facts:The plaintiff banks, First American Corporation and First American Bankshares (collectively First American), brought an action against the defendants claiming, inter alia, that they had violated the Racketeer Influenced and Corrupt Organizations Act in illegally and secretly attempting to acquire the ownership and maintain control of First American.

The defendants included His Highness Sheikh Zayed Bin Sultan Al-Nahyan (H. H. Sheikh Zayed), who was President of the United Arab Emirates (UAE), and also the Dubai defendants. The Dubai defendants were members of the ruling family of the Emirate of Dubai, the Estate of Sheikh Rashid Bin Said Al-Maktoum, who ruled Dubai from 1958 until his death in 1990, the brother of the current ruler of Dubai, Sheikh Mohammed Bin Rashid Al-Maktoum, or their alleged alter egos, the Stock Holding Company and the Crescent Holding Company. The Dubai defendants moved to dismiss First American's complaint. They claimed that the Court lacked subject-matter jurisdiction on a variety of grounds: because they were foreign sovereigns with no applicable exception to the Foreign Sovereign Immunities Act 1976 (FSIA), they were immune from suit under the doctrine of Head of State immunity and the action was barred by the act of State doctrine.

Held:The motion was denied.

(1) H. H. Sheikh Zayed was entitled to immunity from the Court's jurisdiction as he was the head of State of the UAE. The State Department, which had the power to assert immunity for Heads of State or for diplomatic or consular personnel on behalf of the President as Chief Executive, had done so with respect to H. H. Sheikh Zayed. This power was unaffected by the enactment of the FSIA and United States courts were bound to accept such determinations as conclusive (p. 586).

(2) The FSIA was the sole basis for obtaining jurisdiction over a foreign State in the United States. Although its focus was towards corporate and government entities, reason dictated that it also extended to natural persons acting as agents of the sovereign as FSIA immunity was based upon the nature of the act for which the person or entity was claiming immunity. As the Dubai defendants were being sued for acts directing their personal holding companies and alter egos, the activities in which they engaged were presumably commercial or private, rather than sovereign or governmental, in nature. As such the FSIA had no application (p. 587).

(3) The act of State doctrine did not apply as the allegations against the Dubai defendants did not implicate official acts of a foreign sovereign (p. 588).

(4) The Dubai defendants were not entitled to Head of State immunity as members of the ruling family of Dubai. The State Department had not suggested immunity on their behalf and, in any event, the Emirate of Dubai was not recognized by the United States as an independent State but viewed as a political subdivision of the UAE. Even if there had not been considerable doubt as to whether Dubai had the defining characteristics of an independent State under international law, the Dubai defendants would still not have been entitled to Head of State immunity as none was a sitting Head of State (p.588).

(5) The Court had personal jurisdiction over the Dubai defendants. The requisite transaction of any business in the District of Columbia was satisfied in accordance with the District of Columbia long arm statute and could be reached without offending the due process clause. There was also sufficient evidence to establish a prima facie case (p. 588).

The following is the text of the judgment of the Court:

The central issue in this case involves an allegation that the defendants, as senior officers, managers, agents and nominees for the Bank of Credit and Commerce International (BCCI1), illegally and secretly sought to acquire ownership and maintain control of First American Corporation (FAC) and First American Bankshares (FAB), collectively known as First American. The 282-page, 687-paragraph Complaint charges 30 defendants with violations of the Racketeer Influenced Corrupt Organizations Act (RICO), codified at 18 U.S.C. 1962, common law fraud, breach of fiduciary duty, other tortious conduct, and civil conspiracy.

Presently pending are the following motions: (1) Defendants Clark M. Clifford and Robert A. Altman's Motion for Reconsideration of this Court's August 25, 1995 Memorandum Opinion and Order or, in the Alternative, for Certification Pursuant to 28 U.S.C. 1292(b) (C & A's Motion for Reconsideration); (2) Motion of Abdul Raouf Khalil to Dismiss Crossclaim; (3) Motion of Ali Mohammed Al-Shorafa to Dismiss the Cross-claims Filed by Defendants Clark M. Clifford and Robert A. Altman; (4) Joint Motion of Sheikh Kamala Adham, Sayed Jawhary and Adham Corporation to Dismiss the Third-Party Complaint (Joint Motion); (5) Motion of Defendants Estate of Sheikh Rashid Bin Said Al-Maktoum, Sheikh Mohammed Bin Rashid Al-Maktoum, Stock Holding Company, and Crescent Holding Company (the Dubai Defendants) to Dismiss the CrossClaims of Defendants/CrossClaimants Clifford and Altman; (6) Motion of the Abu Dhabi Sovereigns to Dismiss Clifford and Altman's Third Party Complaint in its Entirety or, in the Alternative, to Strike it in the Interests of Justice and Judicial Economy and Request for Oral Hearing; (7) Motion of the Dubai Defendants to Dismiss the Complaint; and (8) Defendants' Motion for Reconsideration of Magistrate Judge Attridge's Order Denying Defendants Clifford and Altman's Motion for a Protective Order.

I. Background

There are two plaintiffs in this case, FAC and FAB. FAC is a Virginia corporation with its principal place of business in Washington, D.C. At all times relevant to the Complaint, FAC was a privately-held bank holding company, see 12 U.S.C. 1841 et seq., which was wholly owned by Credit and Commerce American Investment, B.V. (CCAI), a Netherlands corporation which in turn was wholly owned by Credit and Commerce American Holdings, N.V. (CCAH), a Netherlands Antilles corporation. The only substantial asset of both CCAI and CCAH was the stock they held. Similarly, at all relevant times, FAB was a Virginia corporation and a registered bank holding company with its principal place of business in Washington, D.C. FAB, which was wholly owned by FAC, owned several regional banking companies, which owned subsidiary banks in the states of Florida, Georgia, Maryland, New York, Tennessee and Virginia.

The Complaint names 30 defendants:

• 1. His Highness Sheikh Zayed Bin Sultan Al-Nahyan (H.H. Sheikh Zayed), President of the United Arab Emirates (UAE) and Ruler of the Emirate of Abu Dhabi.2 H.H. Sheikh Zayed is also the Chairman of the Supreme Council of Rulers of the UAE, which is

  the UAE authority responsible for making policy decisions and promulgating and implementing UAE laws;

• 2. His Highness Sheikh Khalifa Bin Zayed Al-Nahyan (H.H. Sheikh Khalifa), the eldest son of Sheikh Zayed and Crown Prince and Deputy Ruler of the Emirate of Abu Dhabi. H.H. Sheikh Khalifa is the designated successor to H.H. Sheikh Zayed as the Ruler of Abu Dhabi. H.H. Sheikh Khalifa was appointed Prime Minister of Abu Dhabi in 1971 and is currently the Chairman of the Abu Dhabi Investment Authority, Chairman of the Supreme Petroleum Council and Deputy Supreme Commander of the UAE Armed Forces;

• 3. High Highness Sheikh Sultan Bin Zayed Al-Nahyan (H.H. Sheikh Sultan), the second eldest son of H.H. Sheikh Zayed and the Deputy Prime Minister of the UAE;

• 4. His Excellency Ghanim Faris Al-Mazrui (H.E. Mazrui) the principal financial advisor to the Ruling Family of Abu Dhabi. This defendant is also the Secretary General of the Abu Dhabi Investment Authority, Chairman of the Department of Private Affairs of Sheikh Zayed, Chairman of the Committee for the Follow-Up and Supervision of Private Investments (Investment Committee) and holds various positions in several Abu Dhabi banks, including BCCI Holdings, BCCI Overseas and BCCI S.A.;

• 5. Department of Private Affairs of Sheikh Zayed Bin Sultan Al-Nahyan (DPA), an organization which managed the private affairs of the Ruling Family of Abu Dhabi;

• 6. Abu Dhabi Investment Authority (ADIA), the corporate entity responsible for coordinating the commercial investment policy of Abu Dhabi;

• 7. Abdullah Darwaish (Darwaish), Chairman of the DPA and former Chairman of the Investment Committee, Chairman of the ADIA and UAE Ambassador to Pakistan;

• 8. Ali Mohammad Shorafa (so named in the Complaint, but in actuality is H.E. Ali Mohammad Al-Shorafa) (H.E. Al-Shorafa), the former Grand Chamberlain (Director) of the President's Court of the UAE and Director of Presidential Affairs for the UAE;

• 9. Sheikh Humaid Bin Rashid Al-Nuaimi (Sheikh Humaid), Ruler of the Emirate of Ajman, UAE;

• 10. Estate of Sheikh Rashid Bin Said Al-Maktoum (Sheikh Rashid), the former Ruler of the Emirate of Dubai who died in 1990. Until his death, he served as Vice President and Prime Minister of the UAE and as a member of the Supreme Council of...