World Wide Minerals v. Republic of Kazakhstan

• Decision Date: 02 August 2002
• Docket Number: No. 00-7250.,00-7250.
• Citation: 296 F.3d 1154
• Parties: WORLD WIDE MINERALS, LTD., et al., Appellants, v. REPUBLIC OF KAZAKHSTAN, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

296 F.3d 1154

WORLD WIDE MINERALS, LTD., et al., Appellants, v. REPUBLIC OF KAZAKHSTAN, et al., Appellees.

No. 00-7250.

United States Court of Appeals, District of Columbia Circuit.

Argued November 8, 2001.

Decided August 2, 2002.

COPYRIGHT MATERIAL OMITTED

Appeal from the United States District Court for the District of Columbia (No. 98cv01199).

Anson M. Keller argued the cause for appellants. With him on the briefs was Marshall Lee Miller.

Waller T. Dudley argued the cause for appellees Republic of Kazakhstan and State Committee of the Republic of Kazakhstan on the Management of State Property. M. Melissa Glassman was on the brief. Stephen M. Colangelo entered an appearance.

Jared A. Goldstein argued the cause for appellee National Atomic Company Kazatomprom. With him on the brief was Thomas B. Wilner.

Carolyn B. Lamm argued the cause for appellee Nukem, Inc. With her on the brief were Francis A. Vasquez Jr. and Eric Grannon. Judd C. Lawler entered an appearance.

Before: GINSBURG, Chief Judge, ROGERS and GARLAND, Circuit Judges.

GARLAND, Circuit Judge:

In 1996 and 1997, World Wide Minerals Ltd., a Canadian corporation, entered into a series of agreements with the Republic of Kazakhstan. Pursuant to those agreements, World Wide took over the management of one of Kazakhstan's major uranium complexes and loaned Kazakhstan several million dollars to fund the restoration of the facility. World Wide contends that, in return, Kazakhstan agreed (inter alia) to permit World Wide to export Kazakhstan uranium. World Wide alleges that Kazakhstan breached its agreements by failing to issue World Wide a uranium export license and by seizing its assets in Kazakhstan. World Wide further alleges fraudulent inducement, tortious interference, conversion, conspiracy, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq.¹

The defendants in this case are Kazakhstan and two of its instrumentalities, as well as Nukem, Inc., a New York corporation that World Wide contends conspired with Kazakhstan in committing wrongful acts against World Wide. The district court concluded that Kazakhstan and its instrumentalities had waived sovereign immunity against suit, and that the court therefore had jurisdiction over the claims against these defendants under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1330, 1605(a)(1). The court nonetheless dismissed those claims pursuant to the act of state doctrine. The court also dismissed World Wide's claims against Nukem, holding that it did not have personal jurisdiction over that New York corporation because World Wide's injuries did not arise out of any act that took place in the District of Columbia.

We affirm the dismissal of World Wide's claims against the Kazakhstan entities, albeit on somewhat different grounds. Although we agree that Kazakhstan waived sovereign immunity for some of World Wide's claims, we conclude that it did not waive immunity for all of the claims. As to those claims where there was no waiver, we affirm dismissal for lack of subject matter jurisdiction. As to the remaining claims against Kazakhstan and one of its instrumentalities, we agree with the district court that the act of state doctrine is fatal to World Wide's suit. This conclusion also removes any substantial federal question with respect to identical claims against the other instrumentality, a corporation wholly owned by Kazakhstan. Finally, because the dismissal of the claims against Nukem was based on a misunderstanding regarding the date upon which World Wide alleges that officials of Nukem and Kazakhstan met in the District of Columbia to conspire against it, we remand those claims to permit the district court to determine whether the facts are sufficient to establish personal jurisdiction.

I

In 1995, the Republic of Kazakhstan issued a decree announcing the privatization of the country's uranium industry and its intention to contract with foreign investors for the management of previously state-run facilities. Am. Compl. ¶ 40.² Shortly thereafter, World Wide submitted a proposal to take over the management of Tselinny Gorno-Khimicheskii Kombinat (TGK), a state holding company that operated a uranium complex located in the area of Kazakhstan's Northern Mines. After a period of negotiation, the parties entered into the four agreements that are at issue in this case.

The first agreement was the Management Agreement. That agreement, signed by World Wide and the State Committee of the Republic of Kazakhstan on the Management of State Property (Kazakhstan State Committee) on October 7, 1996, granted World Wide the right to manage and control the assets of TGK. Id. ¶ 56; Management Agreement ¶ 2.11. In return, World Wide agreed to satisfy TGK's outstanding debts and to implement a restructuring program for the uranium complex. Management Agreement ¶¶ 2.11(b), 2.22. The agreement listed a number of additional points "which have not been concluded in this Agreement" but which were to be "addressed in good faith negotiations," including the granting of a license to World Wide to export TGK uranium for international sale. Id. ¶ 2.17, Sched. 2 ¶ 2.3. World Wide was entitled to terminate the agreement if Kazakhstan did not grant it the license by December 16, 1996. Id. ¶ 2.18. Although World Wide never received the license, it did not suspend performance under the contract until April 30, 1997. Am. Compl. ¶ 73.

On November 14, 1996, World Wide, the Kazakhstan State Committee, and TGK executed a second agreement, the Loan Agreement. Under that agreement, World Wide agreed to lend TGK at least $5 million to fund the restoration and operation of the uranium complex. In the same month, World Wide took over management of the TGK complex and began to make loans under the Loan Agreement. Id. ¶¶ 58, 59, 61.

The third agreement was the Strategic Alliance Agreement, which World Wide entered into with Kazatomprom on February 28, 1997. Kazatomprom is a corporation, wholly owned by the Republic of Kazakhstan that is charged with managing nuclear energy complexes and promoting the development of uranium production in Kazakhstan. Id. ¶ 60. In the Strategic Alliance Agreement, the parties agreed to form a joint venture to explore, develop, and mine several other uranium sources, including deposits in Kazakhstan's Southern Mines, and to market uranium from those sources. Id. ¶ 69. Kazatomprom also agreed to "assist" World Wide in obtaining a uranium export license from Kazakhstan. Strategic Alliance Agreement ¶ 8.2.

Finally, on March 25, 1997, World Wide, TGK, and the Kazakhstan State Committee entered into a fourth agreement, the Pledge Agreement. This agreement gave World Wide a security interest in the assets and shares of TGK as collateral for its loans. The Pledge Agreement also prohibited the transfer of any of the pledged assets or shares. Am. Compl. ¶¶ 70, 85; Pledge Agreement ¶ 5.1.3.

On March 27, 1997, following execution of the Pledge Agreement, World Wide entered into a contract with Consumers Energy Company, a Michigan utility, to deliver approximately $4.1 million worth of Kazakhstan uranium. In order to fulfill this contract, World Wide needed to receive an export license by May 30, 1997. By the end of April, however, World Wide had not received the necessary license, and, on April 30, it suspended mining operations at the TGK complex. Am. Compl. ¶¶ 71-73.

In May 1997, in response to its requests for an export license, a Kazakhstan official told World Wide that Kazakhstan had previously given another company, Nukem, exclusive rights to the entire quota of uranium that Kazakhstan was permitted to export to the United States. That quota was determined by a Suspension Agreement between the two countries. Id. ¶¶ 77, 78.³ Although World Wide continued to seek an export license from Kazakhstan, and negotiated several extensions of its contract with Consumers Energy pending the grant of such a license, its final extension ran out on July 4, 1997. On July 10, the contract between World Wide and Consumers Energy was terminated. World Wide alleges that, during the period in which it was trying to obtain a license, Nukem approached Consumers Energy with an offer to sell it uranium in the event that World Wide failed to obtain the license, and that subsequently Nukem did sell Kazakhstan uranium to Consumers Energy. Id. ¶¶ 82-84.

Thereafter, what was left of World Wide's relationship with Kazakhstan quickly deteriorated. On August 1, Kazakhstan terminated the Management Agreement, declaring that World Wide had failed to fulfill its obligations. It then allegedly seized $1 million worth of World Wide's uranium and other property located at the TGK complex, and forced World Wide's employees to leave the country. Id. ¶¶ 86-87. Finally, on October 2, 1997, Kazakhstan issued a decree transferring all of the assets and shares of TGK to Kazatomprom. Id. ¶ 17; Republic of Kazakhstan Ministry of Finance, Resolution No. 317 (Oct. 2, 1997) (J.A. at 431).

In May 1998, World Wide sued Kazakhstan, the Kazakhstan State Committee, Kazatomprom, and Nukem in the United States District Court for the District of Columbia. In its eleven-count amended complaint, World Wide alleged that Kazakhstan and the Kazakhstan State Committee (collectively Kazakhstan) breached their agreements with World Wide, fraudulently induced World Wide to enter into several of the agreements, wrongfully converted its property, tortiously interfered with its contracts, unlawfully conspired against it, and committed acts that violated RICO. In addition to damages for these violations, World Wide sought a declaratory judgment establishing its "right to market Kazakhstan uranium under the Suspension Agreement or otherwise." Am. Compl. ¶ 161. World Wide joined Kazatomprom in most of these counts, and joined Nukem as a defendant in the counts for tortious interference, conspiracy, and violation...