Edwards v. Federal Goverment of Nigeria et al

Filing 70

Judge F. Dennis Saylor, IV: ORDER entered. MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS (Halley, Taylor)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
_______________________________________

)
DR. TED ISEGHOHI EDWARDS,
)
)
Plaintiff,
)
)
v.
)
)
FEDERAL GOVERNMENT OF NIGERIA, )
et al.,
)
)
Defendants.
)
_______________________________________)

Civil Action No.
18-11133-FDS

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS TO DISMISS
SAYLOR, J.
This is an action to enforce a judgment of the Federal High Court of Nigeria. Plaintiff
Dr. Ted Iseghohi Edwards seeks $318 million in contingency fees that he contends were awarded
by the Federal High Court for representing local Nigerian governments in a suit against the
federal government of Nigeria. Defendants, a group of eleven Nigerian government entities and
officials, have filed two motions to dismiss the complaint. For the following reasons, both
motions to dismiss will be granted.
I.

Background
A.

Factual Background

The facts are set forth as alleged in the complaint.
According to the complaint, on June 11, 2013, a consultancy company and 235 local
Nigerian governments filed an action in the Federal High Court of Nigeria to recover money

allegedly owed to them by the federal government of Nigeria. (Pl. Ex. 2). 1 Edwards alleges that
he provided legal consultation to the local governments in that suit. (Pl. Ex. 3). On December
13, 2013, the Federal High Court issued a judgment in favor of the company and local
governments for approximately $3.18 billion. (Pl. Ex. 2).
On July 4, 2015, Edwards filed an action in the Federal High Court against the
Incorporated Trustees of Association of Local Governments of Nigeria. (Pl. Ex. 3). Edwards
sought to recover a ten percent “contingency fee” he contended he was owed for the legal work
he had performed for the local governments as part of their 2013 case. (Id.). On October 30,
2015, the Federal High Court issued Edwards a judgment for approximately $3.18 million. (Id.).
The judgment also provided that Edwards was “entitled to be paid . . . 10% of any recovery made
and or of proceeds from any source whatsoever of the [2013] Judgment.” (Id.).
On November 18, 2015, Edwards brought an action seeking to recover the ten percent
($3.18 million) from the Central Bank of Nigeria. (Pl. Ex. 6). On October 3, 2016, the Federal
High Court issued an order directing the Central Bank of Nigeria to pay Edwards that amount.
(Id.).
On October 28, 2016, Edwards filed an action in the Federal High Court against the
Central Bank of Nigeria, the federal government of Nigeria, and nine entities and officials of the
federal government. (Pl. Ex. 1). Among other things, the suit sought (1) a declaration that, by
virtue of the Federal High Court’s 2013 decision, the Central Bank of Nigeria was not to
“disburse any sum of money to anyone . . . without first deducting and paying . . . $318
million . . . to Edwards,” and (2) “[a]n [o]rder directing the Central Bank of Nigeria to deduct
and pay . . . $318 million to Edwards” pursuant to the Federal High Court’s 2016 decision. (Id.).
In addition to the federal government, the action named three federal Nigerian government officials as
defendants.
1

2

On February 16, 2018, the Federal High Court issued an order granting all the relief
requested, except as to one defendant, the Economic and Financial Crimes Division, which it
held had not been notified of the action. (Pl. Ex. 1a).
B.

Procedural Background

On April 17, 2018, Edwards attempted to register the Federal High Court’s February
2018 judgment with this Court. (Registration of Foreign Judgment, Dr. Ted Iseghohi-Edwards v.
Fed. Gov’t of Nigeria, No. 18-mc-91146-FDS (D. Mass. Apr. 17, 2018)). Because Edwards did
not serve any of the defendants, the case was dismissed without prejudice.
On May 30, 2018, Edwards filed a civil action against the alleged judgment debtors seeks
to have the Nigerian judgment recognized by a court in the United States. Instead of serving the
defendants, however, Edwards filed a motion for service by the clerk and a motion for summary
judgment. The Court denied both motions on June 4, 2018. Edwards then served the eleven
defendants on June 7 and June 8.
On August 30, 2018, the Central Bank of Nigeria filed a motion to dismiss the complaint.
The other ten defendants filed a motion to dismiss on September 28, 2018. The two motions will
be considered together.
II.

Analysis
A.

FSIA Immunity Generally

All defendants contend that they are entitled to immunity under the Foreign
Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602, et seq.
The FSIA is “the sole basis for obtaining jurisdiction over a foreign state in [United
States] courts.” Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434 (1989).
“Under the FSIA, a foreign state is presumptively immune from the jurisdiction of the United

3

States Courts; unless a specified exception applies, a federal court lacks subject matter
jurisdiction over a claim against a foreign state.” Saudi Arabia v. Nelson, 507 U.S. 349, 355
(1993) (citing Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488-89 (1983)).
A “foreign state,” as used in the FSIA, “includes . . . an agency or instrumentality of a
foreign state.” 28 U.S.C. § 1603(a).
1.

The Institutional Defendants

At the outset, it is clear that the Federal Government of Nigeria is a foreign state. See
Adler v. Federal Republic of Nigeria, 107 F.3d 720, 723 (9th Cir. 1997). Three other
defendants—the Nigeria Police Force, the State Security Services, and the Economic and
Financial Crimes Commission—are law-enforcement agencies that perform core government
functions. Accordingly, the Court has no difficulty concluding that each of them constitutes a
“foreign state” under the FSIA.
It is also clear that the Central Bank is an “instrumentality” of Nigeria. Indeed, Edwards
does not contest that the Central Bank is an instrumentality for purposes of the FSIA; in fact, the
complaint cites to § 1603(b) and refers to all of the defendants, including the Central Bank, as
“sovereign states within the definition and context of the [FSIA].” (Compl., Docket No. 1, §
II(A)(2)). 2 Other courts have also concluded that the Central Bank is an “instrumentality” of
Nigeria. See, e.g., Adler, 107 F.3d at 723 (“the Central Bank of Nigeria . . . [is an]

In his opposition to Central Bank’s motion to dismiss, Edwards contends for the first time that the Central
Bank has waived “any immunity it may have had” under the FSIA by “consent[ing]” to the orders of the Nigerian
Federal High Court. (Opp. at 10). The Central Bank has filed an affidavit of its Deputy Director that states the
Bank “has not waived its sovereign immunity rights with respect to this matter.” (Affidavit of Effiong Jack Uikitetu
at 1). Although it is true under 28 U.S.C. § 1605(a)(1) that a foreign state may be deemed to have waived its
sovereign immunity by “implication,” any implication need arise from “evidence” that a foreign state “inten[ds] to
waive sovereign immunity in United States courts.” SI Group Consort Ltd. V. Ukraine, Ivano-Frankivsk State
Admin, 2017 WL 398400, at *2 (S.D.N.Y. Jan. 30, 2017) (quoting Capital Ventures Int’l v. Argentina, 552 F.3d 289,
295 (2d Cir. 2009)). Edwards likewise contends that the other defendants have waived their sovereign immunity.
However, he has provided no evidence that the Central Bank, or any other entity, ever intended to waive its
sovereign immunity in the United States as to this matter. The claim of waiver will therefore be rejected.
2

4

instrumentalit[y] of the Federal Republic of Nigeria.”); Verlinden B.V. v. Central Bank of
Nigeria, 647 F.2d 320, 322, n.4 (2d Cir. 1981) (“[t]he Central Bank of Nigeria is an
instrumentality of the Federal Republic of Nigeria. It performs functions similar to the United
States Federal Reserve and the Bank of England.”), vacated on other grounds, 461 U.S. 480
(1983).
2.

The Individual Defendants

The six other defendants—the Attorney General of the Federation, the Accountant
General of the Federation, the Minister of Finance, the Secretary to the Government of the
Federation, the Inspector General of Police, and the Director General of State Security
Services—are high-ranking officials of the Nigerian federal government.
“[T]o determine whether a suit against a foreign official is governed by the FSIA,” a
court “must look to whether the suit is against the official personally or whether the state is ‘the
real party in interest.’ If the suit is against the official personally, then the common law regarding
sovereign immunity applies, but if the state is ‘the real party in interest,’ then the suit should be
treated as an action against the foreign state itself to which the FSIA would apply.” Odhiambo v.
Republic of Kenya, 930 F. Supp. 2d 17, 34 (D.D.C. Mar. 13, 2013) (quoting Samantar v. Yousuf,
560 U.S. 305, 324 (2010)).
The suit here is essentially against the Nigerian government, not the officials personally.
Indeed, the complaint identifies the officials only by their official titles and does not anywhere
mention their names. Furthermore, the complaint refers to each defendant as a “sovereign state.”
Finally, the complaint states that the underlying action in Nigerian court was brought to “secur[e]
refunds from the Federal Government of Nigeria . . .” and that the debts sought were “owed by
the Federal Government.” (Compl., Docket No. 1, at § III). Accordingly, the “real party in

5

interest” is plainly the foreign state of Nigeria, and the FSIA applies to the officials named as
defendants.
Accordingly, the Court concludes that all defendants constitute a “foreign state” within
the meaning of the FSIA.
B.

Exceptions to the FSIA

The next question is whether any statutory exception to the FSIA applies. Edwards
invokes three of the exceptions under 28 U.S.C. § 1605(a).
1.

The “Commercial Activity” Exception

Edwards first invokes the FSIA’s “commercial activity” exception, 28 U.S.C. §
1605(a)(2).
a.

The Central Bank

Under the first clause of § 1605(a)(2), a foreign state may lose immunity for “commercial
activity carried on in the United States.” Similarly, under the second clause of §1605(a)(2), a
foreign state may lose immunity for an “act performed in the United States in connection with a
commercial activity of the foreign state elsewhere.” Edwards makes no allegation that any
acts—commercial or otherwise—were performed by the Central Bank in the United States.
Without evidence of such acts, the first two clauses cannot apply.
The third clause of § 1605(a)(2) abrogates immunity for acts a foreign state performed
“outside” the United States, “in connection with a commercial activity of [a] foreign state
elsewhere,” that “cause[d] a direct effect” in the United States.
Edwards contends that the Central Bank’s failure to pay his legal fees had the direct
effect of denying him “taxable income,” which in turn prevented the Internal Revenue Service
from collecting “approximately fifty (50) million dollars in tax revenue for the United States

6

Government.” (Compl., Docket No. 1, at § IV(2)). However, courts have consistently held that
“[a] financial loss in the United States, when all the acts giving rise to the claim occurred outside
this country, is insufficient to show the ‘direct effect’ in the United States that FSIA requires.”
BPA Int’l, Inc. v. Sweden, 281 F. Supp. 2d 73, 81 (D.D.C. Sept. 5, 2003). In other words, “the
fact that an American individual or firm suffers some financial loss from a foreign tort,” does
not, “standing alone, suffice to trigger the exception” provided by the third clause of §
1605(a)(2). Antares Aircraft, L.P. v. Federal Republic of Nigeria, 999 F.2d 33, 36 (2d Cir.
1993).
Accordingly, Edwards has not shown that any activity conducted by the Central Bank
caused a direct effect in the United States, and thus the third clause of § 1605(a)(2) does not
apply.
b.

Other Defendants

As to the remaining defendants, Edwards relies only on the third clause of § 1605(a)(2).
As with his claims against the Central Bank, Edwards contends that his lost income —and the
IRS’ corresponding lost tax revenue— constitutes a “direct effect” in the United States.
However, as stated above, “[a] financial loss in the United States . . . is insufficient to show [a]
‘direct effect’ in the United States . . . .” BPA Int’l, Inc., 281 F. Supp. at 81.
Edwards also urges the Court to rely on principles of equity to conclude that the
commercial activity exception applies. In support, he cites to the Supreme Court’s opinion in
First Nat. City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983). In that
case, the Court relied upon principles of equity to allow a private American bank to assert a
counterclaim against a foreign sovereign who had brought suit against it in a United States court.
Id. at 630. Here, however, none of the defendants here have brought any claims against

7

Edwards, and there is no other basis to suggest, much less conclude, that principles of equity
should override the clear requirement of the statute.
Accordingly, the Court concludes that the commercial-activity exception to the FSIA, 28
U.S.C. § 1605(a)(2) does not apply.
2.

The “Taking” Exception

Edwards further alleges that the FSIA’s “taking” exception, 28 U.S.C. § 1605(a)(3),
applies. That section provides that a foreign state is not immune in any case
in which rights in property taken in violation of international law are in
issue and that property or any property exchanged for such property is present
in the United States in connection with a commercial activity carried on in the
United States by the foreign state; or that property or any property exchanged for
such property is owned or operated by an agency or instrumentality of the foreign
state and that agency or instrumentality is engaged in a commercial activity in
the United States.
Id.
Edwards contends that the Central Bank’s failure to pay his legal fees “translates to an
illegal conversion . . . [and a] taking . . . in violation of International law because the Central
Bank of Nigeria has liquid assets in various banks within the jurisdiction of this court [and]
engages in commercial transactions with other banks and institutions within the jurisdiction of
this court.” (Opp. at 16).
Edwards has provided no authority to support his contention that the Central Bank’s
actions constitute a taking in violation of international law. Nor has he established that the other
requirements of the statute apply. He has made no contention that the property allegedly taken
from him (or any property exchanged for that property) is “present in the United States,” nor has
he contended that such property is “owned or operated” by an “agency or instrumentality” of a
foreign state “engaged in a commercial activity in the United States.”

8

Accordingly—and with the additional understanding that a United States court is
“forbid[den]” from “examin[ing] . . . ‘taking[s] by a foreign sovereign of property within its
own territory” under the “act of state doctrine”—the “taking exception” to the FSIA clearly does
not apply to the Central Bank. Villoldo v. Castro Ruz, 113 F. Supp. 3d 435, 438-39 (D. Mass.
July 7, 2015) (quoting Republic of Iraq v. First Nat. City Bank, 353 F.2d 47, 51 (2d Cir. 1965)).
As to the remaining defendants, Edwards cites to the “taking” exception only in the
complaint and not in his opposition to their motion to dismiss. In any event, the argument fails
as to those defendants for the same reasons. Putting aside the question of whether the defendants
committed a taking in violation of international law, Edwards has provided no evidence that the
property allegedly taken from him (or any property exchanged for that property) is “present in
the United States,” as required by § 1605(a)(3).
Accordingly, the Court concludes that the “taking” exception to FSIA, 28 U.S.C. §
1605(a)(3), does not apply.
3.

The “Tortious Activity” Exception

Finally, Edwards seeks to apply the “tortious activity” exception under 28 U.S.C. §
1605(a)(5). That section provides an exception to immunity for instances where “money
damages are sought against a foreign state for personal injury or death, or damage to or loss of
property, occurring in the United States and caused by the tortious act or omission of that foreign
state or of any official or employee of that foreign state while acting within the scope of his
office or employment.” Id.
“The tortious activity exception contained in § 1605(a)(5) applies only when [the] alleged
injury and the foreign state’s tortious conduct occurred within the United States.” In re ChineseManufactured Drywall Products Liability Litigation, 168 F. Supp. 3d 918, 934 (E.D. La. Mar.

9

10, 2016) (citing Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 439-41
(1989)). Even if the withholding of Edwards’ fees was tortious—a question the Court does not
answer here—any such conduct occurred in Nigeria, not the United States. Accordingly, the
tortious-activity exception, 28 U.S.C. § 1605(a)(5), does not apply.
In short, all defendants are immune from suit under the FSIA. Accordingly, their
motions to dismiss will be granted.
III.

Conclusion
For the foregoing reasons,
1.

The motion to dismiss of the Central Bank of Nigeria is GRANTED.

2.

The motion to dismiss of the Federal Government of Nigeria; the Attorney
General of the Federation; the Accountant General of the Federation; the Minister
of Finance; the Secretary to the Government of the Federation; the Inspector
General of Police; the Nigeria Police Force; the Director General of State Security
Services; the State Security Services; and the Economic and Financial Crimes
Commission is GRANTED.

So Ordered.

/s/ F. Dennis Saylor IV
F. Dennis Saylor, IV
United States District Judge

Dated: December 18, 2018

10