Tag Archives: Saudi Arabia v. Nelson

OBB v. Sachs: A Smart Result

December 1, 2015 By in Commercial Activity Exception Tags: , , , , , , Leave a comment

Over two months ago, I argued that OBB v. Sachs was “an easy call” with regard to the commercial activity exception.  I contended that the case was controlled by Saudi Arabia v. Nelson, 507 U.S. 349 (1993), and that “the Supreme Court should simply apply Nelson . . . and order the dismissal of Sachs’ lawsuit.”  Today, a unanimous Court did just that.  The Court applied Nelson and reversed the judgment of the Ninth Circuit.  The Court got it right.

The Court not only got it right, but it also cleaned up a key part of FSIA jurisprudence.  In my post a few months ago, I stated the following with regard to the gravamen vs. elements approach in Nelson:

[W]hile Nelson contained sloppy language that could be interpreted to support an elements approach (Nelson, 507 U.S. at 357), the Nelson Court clearly used a gravamen approach.  It did not methodically review Nelson’s sixteen causes of action to determine whether some of the claims contained elements that required proof of commercial activity in the United States.  Instead, Nelson used a gravamen analysis, as reflected by its discussion of the failure to warn claim . . . . In other words, with regard to Nelson, one should do as the Court did, and not as the Court said.  Its actual holding makes clear that gravamen is the proper method of analysis.  However, the sloppy “elements” language in Nelson has indeed caused confusion in FSIA jurisprudence over the years, and Sachs is the perfect opportunity to clean it up.

In its opinion today, the Court echoed this analysis:

The Ninth Circuit apparently derived its one-element test from an overreading of one part of one sentence in Nelson, in which we observed that “the phrase [‘based upon’] is read most naturally to mean those elements of a claim that, if proven, would entitle a plaintiff to relief under his theory of the case.” 507 U. S., at 357. . . . [O]ur analysis in Nelson is flatly incompatible with a one-element approach. A one-element test necessarily requires a court to identify all the elements of each claim in a complaint before that court may reject those claims for falling outside §1605(a)(2). But we did not undertake such an exhaustive claim-by-claim, element-by-element analysis of the Nelsons’ 16 causes of action, nor did we engage in the choice-of-law analysis that would have been a necessary prelude to such an undertaking. . . .  Nelson instead teaches that an action is “based upon” the “particular conduct” that constitutes the “gravamen” of the suit.

Accordingly, the Supreme Court has now “cleaned up” the gravamen vs. elements issue, and has made it clear that a gravamen approach constitutes the governing mode of jurisdictional analysis under the FSIA.  Its conclusion is correct under Nelson, and is also a good result for all of the reasons I have previously identified.

Finally, the Court declined to reach the attribution issue in Sachs.  Since the commercial activity issue resolved the case, the Supreme Court’s decision was wise.  The attribution issue was complicated, and had the potential to yield a host of unintended consequences in FSIA jurisprudence.  The Court will eventually need to revisit attribution under the FSIA, but sidestepping the issue here was a sensible exercise of judicial restraint.

With Respect to the Agency Issue in OBB v. Sachs, the Supreme Court Should Stick with Bancec

September 29, 2015 By in Agency Tags: , , , , , , , , Leave a comment

While the commercial activity issue in OBB v. Sachs is a cinch (as I discussed here and here), the agency issue is more complicated – and could have far-reaching consequences for FSIA jurisprudence.  However, at the end of the day, the Court should reject the parties’ arguments and simply stick with Bancec.  That is the wisest and safest choice.

Until the Ninth Circuit’s panel and en banc decisions in Sachs v. OBB, FSIA case law was relatively clear with regard to the appropriate agency analysis in cases involving separate juridical entities.  When a plaintiff sought to establish jurisdiction over a foreign state based upon the conduct of a separate juridical entity, courts applied the standard set forth in the Supreme Court’s seminal decision in First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba (“Bancec ”), 462 U.S. 611 (1983).  Under Bancec, there is a presumption that the conduct of a separate juridical entity cannot be imputed to the foreign state.  See Bancec, 462 U.S. at 626-27 (stating that “government instrumentalities established as juridical entities distinct and independent from their sovereign should normally be treated as such”); id. at 627 (discussing the “presumption of independent status”); see also, e.g., Doe v. Holy See, 557 F.3d 1066, 1077-80 (9th Cir. 2009); Transamerica Leasing v. La Republica de Venezuela, 200 F.3d 843, 848 (D.C. Cir. 2000).  In cases not involving fraud or injustice through the use of the corporate form, the presumption of separateness means that a plaintiff must allege facts (and later prove) that the foreign state exercises day-to-day control over the separate corporation.  See, e.g., Dale v. Colagiovanni, 443 F.3d 425, 429 (5th Cir. 2006); see also Walter Fuller Aircraft Sales, Inc. v. Republic of Philippines, 965 F.2d 1375, 1381 (5th Cir. 1992).  Only in these circumstances will the conduct of the separate juridical entity be imputed to the foreign state.  See, e.g., Transamerica Leasing, 200 F.3d at 850-53.

There are at least two reasons to apply the Bancec standard to the FSIA jurisdictional inquiry.  First, Bancec’s presumption of separateness serves the principle of comity.  “’If U.S. law did not respect the separate juridical identities of different agencies or instrumentalities, it might encourage foreign jurisdictions to disregard the juridical divisions between different U.S. corporations or between a U.S. corporation and its independent subsidiary.’”  Bancec, 462 U.S. at 628, quoting H.R. Rep. No. 94-1487, at 29-30 (1976).  At the jurisdictional stage, that could result in the United States being pulled into foreign court based upon conclusory allegations that a separate corporation is its “agent,” even though the corporate form was respected and even though the United States did not dominate the corporation’s day-to-day operations.

Second, the presumption of separateness provides a critical check against plaintiffs’ attempts to pierce the corporate veil at the jurisdictional stage.  If the actions of separate corporations acting in the United States could be freely imputed to foreign states, foreign sovereigns would be much more frequently drawn into highly burdensome litigation in United States courts based upon a mere allegation of agency.  Plaintiffs’ attorneys are often looking for the deepest pockets, and there would be no presumption of separateness to prevent counsel from alleging that a corporation in the United States is an “agent” of the foreign state.  By drawing the foreign state into litigation, plaintiffs’ counsel would profoundly undermine the benefits of the corporate form, drive up the settlement values of cases, and get their foot in the door to obtain intrusive discovery from foreign sovereigns – which would vitiate a core protection afforded by foreign sovereign immunity, increase litigation costs and cause significant tensions with foreign states.

Even though Bancec has repeatedly proved to be a workable standard over the past thirty years, the parties and the United States government in OBB v. Sachs have urged the Court to effectively abandon Bancec’s presumption of separateness at the jurisdictional stage.  While OBB raises the Bancec issue, its chief argument is that the Court should use 28 U.S.C. section 1603 to determine whether the acts of an entity can be imputed to a foreign state – a meritless argument that I have addressed before. 

Sachs and the government, in turn, argue that the Court should apply the standards set forth in the Restatement of Agency (Third).  The basic argument of Sachs and the government is that Bancec is an alter ego case, and that it did not supplant the traditional common law agency principles set forth in the Restatement.   See, e.g., Brief of the United States as Amicus Curiae 17-18.  That contention does not withstand scrutiny.

Let’s start with some basic principles – which are not mentioned in the briefs of the parties and amici in OBB v. Sachs.  Under traditional rules governing corporations, corporate entities are presumed to be separate and distinct from their creators or owners.  1 William Meade Fletcher et al., Cyclopedia of the law of private corporations § 25 (rev. ed. 1999).  Corporate acts “are the acts of the . . . corporation, and are not the acts of the shareholders composing it, and their powers and duties pertain to them respectively and not to each other[.]”  Id. at § 28. 

In “no particular is the distinction between the corporation and its members more marked and important than in suing and being sued.”  Id. at § 36.  Indeed, “limited liability is one of the principal purposes for which the law has created the corporation.”  Id. at § 41.20.  The rule of limited liability protects the owner or parent of a corporation from being sued for the corporation’s acts.  See, e.g., United States v. Bestfoods, 524 U.S. 51, 61 (1998) (“It is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation . . . is not liable for the acts of its subsidiaries.”).  The presumption of separateness requires courts to “start from the general rule that the corporate entity should be recognized and upheld, unless specific, unusual circumstances call for an exception.  Care should be taken on all occasions to avoid making the entire theory of the corporate entity . . . useless.”  Zubik v. Zubik, 384 F.2d 267, 273 (3d Cir. 1967).

There are two exceptions to the general rule of limited corporate liability.  The first is alter ego, which requires a plaintiff to “show that the corporate form has been abused to the injury of a third person.”  1 Fletcher, supra, § 41.10.  Alter ego is employed “where the corporate entity has been used as a subterfuge and to observe it would work an injustice.”  Id. at § 41.10; see also, e.g., Black’s Law Dictionary (10th ed. 2014) (defining the alter-ego rule as the “doctrine that shareholders will be treated as the owners of a corporation’s property, or as the real parties in interest, whenever it is necessary to do so to prevent fraud, illegality, or injustice”).  The “rationale behind the theory is that, if the shareholders or the corporations themselves disregard the proper formalities of a corporation, then the law will do likewise as necessary to protect individual and corporate creditors.”  1 Fletcher, supra, § 41.10.

The second exception is the existence of a principal-agent relationship.  As the Supreme Court has stated, “'[d]ominion may be so complete, interference so obtrusive, that by the general rules of agency the parent will be a principal and the subsidiary an agent.’”  NLRB v. Deena Artware, Inc., 361 U.S. 398, 403 (1960), quoting Berkey v. Third Ave. Ry. Co., 244 N.Y. 84, 95 (1926) (Justice Cardozo).

It is wrong to state that Bancec is only an alter ego case.  Instead, the Supreme Court in Bancec set forth both exceptions to the rule of limited corporate liability:

In discussing the legal status of private corporations, courts in the United States and abroad have recognized that an incorporated entity . . . is not to be regarded as legally separate from its owners in all circumstances.  Thus, where a corporate entity is so extensively controlled by its owner that a relationship of principal and agent is created, we have held that one may be held liable for the actions of the other.  In addition, our cases have long recognized the broader equitable principle that the doctrine of corporate entity, recognized generally and for most purposes, will not be regarded when to do so would work fraud or injustice.

Bancec, 462 U.S. at 628-29 (citations and quotations omitted) (emphasis added).  The first exception identified by Bancec is explicitly an agency relationship.  Bancec, 462 U.S. at 629, citing Deena Artware, Inc., 361 U.S. at 402-04 (“a relationship of principal and agent”).  The second Bancec exception is alter ego.  Id. (“work fraud or injustice”); see also 1 Fletcher, supra, § 41.10; Berkey, 244 N.Y. at 95.  In other words, contrary to the argument advanced by Sachs and the government, Bancec is not simply an alter ego case.  Bancec set forth the standard for both agency and alter ego in cases involving separate corporate entities and foreign sovereigns.

The real question, then, is whether it makes sense to apply Bancec at the jurisdictional stage under the FSIA.  As stated above, courts have done so for many years, and Bancec provides a workable standard through which to resolve the imputation issue.  Moreover, absent Bancec’s presumption of separateness applied to the jurisdictional inquiry, the floodgates would open to lawsuits against foreign states based upon conclusory allegations of “agency” and “authorization.”  As someone who has litigated Bancec at the jurisdictional stage in five separate FSIA cases, I know that Bancec affords a critical protection for foreign sovereigns from frivolous lawsuits and burdensome discovery (a point not mentioned in the briefs of the parties and amici).  If the Bancec jurisdictional protection is taken away by the Court, the result will be a major increase in (meritless) lawsuits against foreign sovereigns.  There is no reason to go down that path. 

In sum, OBB v. Sachs is a piece of cake – if the Court applies its own precedent.  The Court should apply Nelson with respect to the commercial activity inquiry, and should apply Bancec with regard to the agency issue.  If the Court takes that approach, it would avert a major upheaval in this sensitive area of the law – since Nelson and Bancec have been bulwarks of FSIA jurisprudence for decades.  The Court would also be avoiding a host of unintended consequences, including increased jurisdiction over foreign torts (in contravention to international law), disregard for the corporate form (with potentially serious comity and foreign relations consequences), and vitiation of several of the core protections afforded by the doctrine of foreign sovereign immunity.  The Court got these issues right before in Nelson and Bancec, and the Court could get them right again – simply by following the principle of stare decisis.

With Regard to the Commercial Activity Exception, OBB v. Sachs is an Easy Call

September 26, 2015 By in Commercial Activity Exception Tags: , , , , Leave a comment

The commercial activity portion of OBB v. Sachs should be easy for the Supreme Court to resolve – as long as the Court follows its own precedent.

With respect to the commercial activity exception, OBB v. Sachs is indistinguishable from Saudi Arabia v. Nelson, 507 U.S. 349 (1993).  In the Nelson case, Saudi Arabia recruited Nelson in the United States for employment as a monitoring systems engineer at a hospital in Saudi Arabia.  Id. at 351-52.  After Nelson began his new job in Saudi Arabia and discovered safety defects in the hospital’s oxygen and nitrous oxide lines, he was falsely imprisoned and beaten by agents of the foreign state. Id. at 352.  Upon his return to the United States, Nelson filed suit against Saudi Arabia for a range of intentional torts and for the failure to warn Nelson about the dangers of the employment position.  Id. at 352-53.  Nelson sought to establish jurisdiction under the first clause of the commercial activity exception.  Id. at 354.

In short, Nelson involved a plaintiff who sought to establish jurisdiction over torts occurring overseas under the first clause of the commercial activity exception, on the theory that the action was “based upon” the preceding commercial activity (the recruitment) in the United States.  That is exactly what Sachs is trying to do – she is seeking to establish jurisdiction over alleged tortious conduct occurring overseas under the first clause of the commercial activity exception, based upon the argument that the lawsuit is “based upon” the preceding commercial activity (the ticket sale) in the United States.

The Supreme Court in Nelson rejected the plaintiff’s jurisdictional theory:

In this case, the Nelsons have alleged that petitioners recruited Scott Nelson for work at the hospital, signed an employment contract with him, and subsequently employed him. While these activities led to the conduct that eventually injured the Nelsons, they are not the basis for the Nelsons’ suit. Even taking each of the Nelsons’ allegations about Scott Nelson’s recruitment and employment as true, those facts alone entitle the Nelsons to nothing under their theory of the case. The Nelsons have not, after all, alleged breach of contract, . . . but personal injuries caused by petitioners’ intentional wrongs and by petitioners’ negligent failure to warn Scott Nelson that they might commit those wrongs. Those torts, and not the arguably commercial activities that preceded their commission, form the basis for the Nelsons’ suit.

Nelson, 507 U.S. at 358.  As OBB persuasively argued in its merits brief, this paragraph from Nelson should control the result in Sachs.  It’s an easy call.

There is one additional issue relating to the applicability of Nelson.  With regard to when a lawsuit is “based upon” commercial activity, the parties dispute at some length whether Nelson requires a gravamen approach or an elements approach to a plaintiff’s complaint.  Yet while Nelson contained sloppy language that could be interpreted to support an elements approach (Nelson, 507 U.S. at 357), the Nelson Court clearly used a gravamen approach.  It did not methodically review Nelson’s sixteen causes of action to determine whether some of the claims contained elements that required proof of commercial activity in the United States.  Instead, Nelson used a gravamen analysis, as reflected by its discussion of the failure to warn claim:

In addition to the intentionally tortious conduct, the Nelsons claim a separate basis for recovery in petitioners’ failure to warn Scott Nelson of the hidden dangers associated with his employment. The Nelsons allege that, at the time petitioners recruited Scott Nelson and thereafter, they failed to warn him of the possibility of severe retaliatory action if he attempted to disclose any safety hazards he might discover on the job.  In other words, petitioners bore a duty to warn of their own propensity for tortious conduct. But this is merely a semantic ploy. For aught we can see, a plaintiff could recast virtually any claim of intentional tort committed by sovereign act as a claim of failure to warn, simply by charging the defendant with an obligation to announce its own tortious propensity before indulging it. To give jurisdictional significance to this feint of language would effectively thwart the Act’s manifest purpose to codify the restrictive theory of foreign sovereign immunity.

Nelson, 507 U.S. at 363.  In other words, with regard to Nelson, one should do as the Court did, and not as the Court said.  Its actual holding makes clear that gravamen is the proper method of analysis.  However, the sloppy “elements” language in Nelson has indeed caused confusion in FSIA jurisprudence over the years, and Sachs is the perfect opportunity to clean it up.

There are several final important points with regard to the gravamen issue that neither the parties nor the amici mentions in their briefs – but that the Supreme Court would be well-served to consider.  First, the gravamen approach has a long history under the FTCA.  See, e.g., United States v. Neustadt, 366 U.S. 696 (1961).  Given the general principle that courts should treat foreign sovereigns how the United States government itself is treated in its own courts (see, e.g., Von Mehren, The Foreign Sovereign Immunities Act of 1976, 17 Colum. J. Transnat’l L. 33, 45 (1978)), it makes sense to apply the gravamen rule under the FSIA.  See Nelson, 507 U.S. at 363 (citing United States v. Shearer, 473 U.S. 52, 54-55 (1985), in support of its gravamen approach).

Second, the gravamen analysis has been employed by courts in FSIA cases for thirty years.  See, e.g., De Sanchez v. Banco Central de Nicaragua, 770 F.2d 1385, 1398 (5th Cir. 1985); Garb v. Republic of Poland, 440 F.3d 579, 588 (2d Cir. 2006); O’Bryan v. Holy See, 556 F.3d 361, 379-80 (6th Cir. 2009).  It makes little sense to overturn that precedent now, both because the gravamen approach has worked well and because it would create unnecessary confusion in this sensitive area of the law.

Third, an abandonment of the gravamen approach would invite gamesmanship by plaintiffs’ counsel.  To provide an example, I once litigated a personal injury tort case where the plaintiff included a meritless breach of contract cause of action to establish jurisdiction under the commercial activity exception.  There was no colorable breach of contract claim, but the alleged claim could have been enough – in the absence of the gravamen approach – for the court to take jurisdiction and order discovery.  With the gravamen approach, I was able to make a strong argument that the case should be analyzed under the tort exception rather than the commercial activity exception.  That case – and others like it – shows that the gravamen analysis prevents jurisdiction from being based upon clever tactical ploys, and thereby serves to protect the integrity of the FSIA’s jurisdictional provisions.

Despite some sloppy language that can easily be fixed, Nelson was correctly decided.  It has been a bulwark of FSIA jurisprudence for over twenty years.  With regard to the commercial activity issue in OBB v. Sachs, the Supreme Court should simply apply Nelson – and order the dismissal of Sachs’ lawsuit.

The FSIA’s Recurring Burden Problem

November 19, 2013 By in Burden-Shifting Regimen Tags: , , , , , , , Leave a comment

The FSIA has a burden problem, and it is not going away.

The trouble began with loose language in the House Report at the time of the FSIA’s passage.  The Report characterized the FSIA’s burden-shifting regimen as follows:

Evidence must be produced to establish that a foreign state or one of its subdivisions, agencies or instrumentalities is the defendant in the suit and that the plaintiff’s claim relates to a public act of the foreign state – that is, an act not within the exceptions in sections 1605-1607.  Once the foreign state has produced such prima facie evidence of immunity, the burden of going forward would shift to the plaintiff to produce evidence establishing that the foreign state is not entitled to immunity.  The ultimate burden of proving immunity would rest with the foreign state.

H.R. Rep. No. 94-1487, at 17 (1976) (emphasis added).

The House Report’s description of the foreign state’s initial burden was inconsistent with the FSIA’s statutory scheme.  Indeed, a foreign state’s claim of immunity can rest on the contention that a plaintiff’s claim arises out of a private act.  For example, if a foreign state employee has a car accident after work, the foreign state is likely to claim that the employee was engaged in private, personal conduct that is outside the scope of employment – and therefore not within the scope of the FSIA’s tort exception to immunity.  See, e.g., Randolph v. Budget Rent-A-Car, 97 F.3d 319, 326-28 (9th Cir. 1996); Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 173-74 (5th Cir. 1994); see also 28 U.S.C. § 1605(a)(5).  Similarly, a foreign state may concede that a plaintiff’s commercial claim arises out of private conduct, but contend that there is no jurisdiction under the commercial activity exception because the actions are not attributable to the sovereign or because the specific requirements of section 1605(a)(2)’s clauses are not met.  See 28 U.S.C. § 1605(a)(2).  In other words, whether or not a claim arises out of a public act is not coextensive with a foreign state’s entitlement to immunity under the FSIA, and it thus makes no sense to require a foreign state to make a prima facie showing that a plaintiff’s claim arises out of a public act.

Nevertheless, the legislative history’s “public act” language found its way into important early FSIA cases.  See, e.g., Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 708 n.9 (9th Cir. 1992); Gould, Inc. v. Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 n.5 (6th Cir. 1988); Alberti v. Empresa Nicaraguense De La Carne, 705 F.2d 250, 256 (7th Cir. 1983).  And although the majority of courts now do not identify the public act requirement as part of a foreign sovereign’s initial burden, the problem persists in recent jurisprudence.  See, e.g., Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Malewicz v. City of Amsterdam, 517 F. Supp. 2d 322, 327 (D.D.C. 2007); see also O’Bryan v. Holy See, 549 F.3d 431 (6th Cir. 2008), opinion amended and superseded by O’Bryan v. Holy See, 556 F.3d 361 (6th Cir. 2009).

To the extent that a plaintiff or a court relies upon a public act requirement, defense counsel in FSIA cases would be well-served to argue that a foreign state need not make that initial showing to shift the burden of production to the plaintiff.  Such an argument should include three basic points.

First, as set forth above, the public act requirement is inconsistent with the statutory scheme since a foreign sovereign can be immune for private conduct.  See, e.g., Phaneuf v. Republic of Indonesia, 106 F.3d 302, 306 (9th Cir. 1997) (holding that requiring a foreign state “to prove a public act conflicts with the plain language of the statute: a foreign state is immune from suit unless one of the enumerated exceptions applies.  There is no exception for non-public acts.”)

Second, if the legislative history opened the door to a public act requirement, it was closed by the Supreme Court’s decision in Saudi Arabia v. Nelson, 507 U.S. 349 (1993).  The Nelson Court held that “a foreign state is presumptively immune from the jurisdiction of United States courts” under 28 U.S.C. section 1604.  Id. at 355.  Since a presumption “imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption,” Fed. R. Evid. 301, the presumption of immunity based upon sovereign status automatically shifts a burden of production to the plaintiff.  In fact, since Nelson was decided, courts have generally determined that the party claiming FSIA immunity bears only the initial burden of establishing prima facie that it satisfies the FSIA’s definition of a foreign state.  See Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1016 (2d Cir. 1993) (relying on Nelson in describing burden-shifting regimen under FSIA with no public act requirement); Orient Mineral Co. v. Bank of China, 506 F.3d 980, 991-92 (10th Cir. 2007) (same); Good v. Aramco Serv. Co., 971 F. Supp. 254, 256 (S.D. Tex. 1997) (same); see also Mann v. Hanil Bank, 900 F. Supp. 1077, 1087 (E.D. Wis. 1995) (stating that the public act requirement “violated the . . . notion of presumptive immunity as articulated” by the Nelson Court).

Third, while there were early FSIA cases that followed the public act requirement, the overwhelming majority of circuit courts now describe the foreign sovereign’s initial burden as requiring only that a defendant make a prima facie showing that it qualifies as a foreign state under the FSIA.  See BP Chemicals Ltd., an English Corporation v. Jiangsu SOPO Corp., 420 F.3d 810, 816 (8th Cir. 2005);  Int’l Ins. Co. v. Caja Nacional De Ahorro y Seguro, 293 F.3d 392, 397 (7th Cir. 2002); Keller v. Central Bank of Nigeria, 277 F.3d 811, 815 (6th Cir. 2002); S & Davis Intern., Inc. v. The Republic of Yemen, 218 F.3d 1292, 1300 (11th Cir. 2000); Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 388 (5th Cir. 1999); Fed. Ins. Co. v. Richard I. Rubin & Co., 12 F.3d 1270, 1285 (3d Cir. 1993).  While the D.C. Circuit left the issue open in 2004 (Kilburn v. Socialist People’s Libyan Arab Jamahiriya, 376 F.3d 1123, 1131 (D.C. Cir. 2004)), it now appears to follow the other circuits as well.  See Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, — F.3d —, 2013 WL 5853916, at *6 (D.C. Cir. Nov. 1, 2013); see also Recent Developments: The D.C. Circuit’s Latest FSIA Decision.

The Ninth Circuit’s holding in Phaneuf that a foreign state is not required to make an initial showing of a “public act” makes the recent re-emergence of the public act requirement in Terenkian – a case that cited the Phaneuf precedent (694 F.3d at 1131) – all the more baffling.  Terenkian and other recent cases show that counsel must remain vigilant to ensure that courts do not require a sovereign to meet a burden that is contrary to the statutory scheme, in violation of Nelson, and inconsistent with the vast majority of circuit cases.