Global Index, Inc. v. Mkapa, CIV.A.02-01485(HHK).

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Citation290 F.Supp.2d 108
Docket NumberNo. CIV.A.02-01485(HHK).,CIV.A.02-01485(HHK).
PartiesGLOBAL INDEX, INC., Plaintiff, v. The Honorable H.E. Benjamin W. MKAPA, et al., Defendants.
Decision Date04 November 2003

Steve Larson-Jackson, Law Firm of Larson-Jackson, P.C., Washington, DC, for Plaintiff.

Lawrence Hedrick Martin, Paul Stuart Reichler, Foley Hoag LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

KENNEDY, District Judge.

Plaintiff, Global Index, Inc. ("Global Index"), brings this action against defendants, Benjamin W. Mkapa, President of Tanzania, Amani A. Karume, President of Zanzibar, and Suleiman O. Nyanga, Zanzibar's Minister of Finance and Economic Affairs, for their failure to honor promissory notes issued by the government of Zanzibar. Before this court is defendants' motion to dismiss. Upon consideration of the motion, plaintiff's opposition thereto, and the record of this case, the court concludes that the motion must be granted.

I. FACTUAL BACKGROUND

In July 1994, plaintiff, a private company incorporated in Maryland and headquartered in New York, allegedly received $400 million in promissory notes from the government of Zanzibar, a geopolitical entity that is part of the United Republic of Tanzania.1 Plaintiff maintains that the promissory notes were to provide "funding and other means necessary to facilitate various infrastructure enhancements in Zanzibar," and that Tanzania "promised to pay [Global Index] the [face value of the notes] with interest thereon at the rate of six percent (6%) per annum." Compl. ¶¶ 7, 24. In August 1994, Westminster Bank in London informed plaintiff that it had received four $100 million promissory notes from the Tanzanian Ministry of Finance and that the bank was putting them in a sealed envelope in security deposit. In June 2002, plaintiff's counsel sent a letter demanding payment on the promissory notes to the Tanzanian Embassy. Plaintiff's letter indicated that the notes matured on July 28, 1997, and that Tanzania owed accrued interest after the maturity date, which plaintiff eventually claimed to be $125,704,329.

In July 2002, Zanzibar's Minister of Finance sent plaintiff a response which observed that "the Promissory Notes were issued in the name of the Government of Zanzibar by the Signatories" without acknowledging Zanzibar's obligation to pay. Pl.'s Ex. E at 1 (Raphael Ltr. to Larson-Jackson, July 16, 2002). Indeed, the letter asserted that there was "no evidence whatsoever that Zanzibar enjoyed any financial benefits from the issued Promissory Notes" and that the $400 million issuance had far exceed the statutory limit that Zanzibar's law allowed the Minister of Finance to raise. See id. At 1-2. The Finance Minister then requested that plaintiff "assist in identifying types of benefits that [Zanzibar] enjoyed from the issued Promissory Notes ... and any other evidence that will help the Government consider further this request." Id. at 2. Plaintiff, without answering the letter, filed this action shortly after, claiming a loss of $525,704,329, including accrued interest, as a result of defendants' non-payment.

II. ANALYSIS
A. Defendants as Foreign Sovereigns

Plaintiff brings this action against President Mkapa, President Karume, and Minister Nyanga in their official capacities and as representatives of a foreign sovereign. Consequently, the exclusive basis for this court to exercise jurisdiction over this suit is the Foreign Sovereign Immunity Act (FSIA), 28 U.S.C. § 1602 et seq. See Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) ("We think that the text and structure of the FSIA demonstrate Congress' intention that the FSIA be the sole basis for obtaining jurisdiction over a foreign state in our courts.").

The FSIA's definition of "foreign state" includes (1) a political subdivision of a foreign state, (2) an organ, agency, separate legal person or corporate instrumentality of a foreign state, or (3) a political subdivision. 28 U.S.C. § 1603(a)-(b). However, it is well-settled that individuals who act in their official capacities on behalf of a foreign sovereign "are considered agencies or instrumentalities of a foreign state." Jungquist v. Sheikh Sultan Bin Khalifa, 115 F.3d 1020, 1027 (D.C.Cir.1997) (internal citations and quotations omitted); Park v. Shin, 313 F.3d 1138, 1144 (9th Cir.2002) ("`[A] suit against an individual acting in his official capacity is the practical equivalent of a suit against the sovereign directly.'") (quoting Hilao v. Estate of Marcos (In re Estate of Marcos), 25 F.3d 1467, 1472 (9th Cir.1994)).

The parties agree that the present action is maintained against defendants in their official roles as the highest members of the Tanzanian government. See Pl.'s Opp'n to Defs.' Mot. to Dismiss Compl. ("Pl.'s Opp'n") at 9 ("[T]he purpose of this lawsuit is to hold the responsible government entities responsible [sic] for breach of contract and not the parties in their individual capacities."); Defs.' Mot. to Dismiss Compl. ("Defs.' Mot.") at 5 ("Given that Global Index complains of actions taken by the Defendants in their official capacities as agents of a foreign sovereign, the Defendants are entitled to be treated as foreign states, and are presumptively immune from the jurisdiction of this Court."). There is little question, therefore, that defendants are a "foreign state" for purposes of analysis under the FSIA.

B. Standard for Motion to Dismiss

Usually, a motion to dismiss for lack of jurisdiction should not prevail "unless plaintiffs can prove no set of facts in support of their claim which would entitle them to relief." Kowal v. MCI Commun. Corp., 16 F.3d 1271. And, at the dismissal stage, the plaintiff's complaint must be construed liberally, and the plaintiff should receive the benefit of all favorable inferences that can be drawn from the alleged facts. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C.Cir. 1997).2 Because the FSIA immunizes states from suit, not just liability, however, a different standard applies to a motion to dismiss for lack of jurisdiction in FSIA cases. In a FSIA case, after the defendant has produced prima facie evidence supporting its entitlement to immunity, "the burden of going forward ... shift[s] to the plaintiff to produce evidence establishing that the foreign state is not entitled to immunity." H.R.Rep. No. 94-1487, at 17 (1976). The defendant then has the ultimate burden of proving immunity. See, e.g., Transamerican S.S. Corp. v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985). When a defendant "challenges only the legal sufficiency of the plaintiff's jurisdictional allegations, then the district court should take the plaintiff's factual allegations as true and determine whether they bring the case within any of the exceptions to immunity invoked by the plaintiff." Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C.Cir. 2000). However, if a defendant challenges the factual basis of jurisdiction, "the court may not deny the motion to dismiss merely by assuming the truths of the facts as alleged by plaintiff;" rather, the court must "go beyond the pleadings and resolve any disputed issue of fact the resolution of which is necessary to a ruling upon the motion to dismiss." Id. (citing Jungquist, 115 F.3d at 1027-28; Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 448-49 (D.C.Cir.1990)).

While the court has "considerable latitude in devising procedures ... to ferret out the facts pertinent to jurisdiction," id., it must carefully control and limit jurisdictional discovery, "lest the evaluation of immunity itself encroach unduly on the benefits the immunity was to ensure." In re Papandreou, 139 F.3d 247, 253 (D.C.Cir.1998). As a result, throughout this analysis of the motion to dismiss for lack of jurisdiction under the FSIA, the court must attempt to resolve any factual disputes between the parties.

C. Subject Matter Jurisdiction under FSIA

Because jurisdiction in this case3 is premised exclusively on the FSIA, 28 U.S.C. § 1602 et seq., defendants are presumptively immune from suits brought against them in the United States. See Amerada Hess, 488 U.S. at 434, 109 S.Ct. 683. There are several exceptions to this general grant of immunity, see 28 U.S.C. §§ 1605-1607, however, and a court has jurisdiction over a suit against a foreign state if an exception to the FSIA applies. See 28 U.S.C. § 1605.

In this case, plaintiff does not dispute that defendants have established, prima facie, their immunity under the FSIA. To avoid dismissal, plaintiff invokes the "commercial activity" exception in § 1605(a)(2). In pertinent part § 1605(a)(2) states that

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or 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). Specifically, plaintiff invokes only the third clause, or "direct effect" exception.

In order to determine whether this court may exercise jurisdiction over this suit under the third clause of § 1605(a)(2), it must make two discrete inquiries. First, the court must determine whether this action is based upon a commercial activity of a foreign state outside of the United States. See Virtual Def. & Dev. Int'l, Inc. v. Republic of Moldova, 133 F.Supp.2d 1, 3 (D.D.C.1999). Second, the court must determine whether the commercial activity alleged caused a direct effect in the United States. See Virtual Def., Dev. Int'l, Inc., 133 F.Supp.2d...

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