Triple A International, Inc. v. The Democratic Republic of the Congo

Filing 25

OPINION AND ORDER REGARDING DEFENDANT'S 19 MOTION to Dismiss. Signed by District Judge Gerald E. Rosen. (RGun)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
TRIPLE A INTERNATIONAL, INC.,
Plaintiff,

Case No. 10-15137

vs.

Hon. Gerald E. Rosen

THE DEMOCRATIC REPUBLIC OF
THE CONGO,
Defendant.
/
OPINION AND ORDER REGARDING
DEFENDANT’S MOTION TO DISMISS
At a session of said Court, held in
the U.S. Courthouse, Detroit, Michigan
on
February 10, 2012
PRESENT: Honorable Gerald E. Rosen
Chief Judge, United States District Court
I. INTRODUCTION
In this case, Plaintiff Triple A International, Inc., a Michigan corporation, seeks to
collect on a debt allegedly owed to it by the Defendant Democratic Republic of the Congo
(“DRC”), a nation located in central Africa. This debt arises from a contract entered into
by Plaintiff and the DRC’s predecessor, Zaire, in late 1993, under which Plaintiff procured
light equipment for Zaire’s military. According to Plaintiff’s complaint, the DRC has
repeatedly acknowledged its indebtedness to Plaintiff over the years, but has nonetheless
failed to pay this debt, which allegedly amounts to over $14 million.

Through the present motion, the DRC seeks the dismissal of Plaintiff’s complaint
on four separate grounds. First, the DRC asserts that it is protected by sovereign
immunity, and that the “commercial activity” exception to this immunity set forth in the
Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq., is not triggered by
the allegations of Plaintiff’s complaint. Next, even if the FSIA confers jurisdiction over
this suit, the DRC contends that the Court should refrain from exercising this jurisdiction
under the doctrine of forum non conveniens. Third, the DRC argues that Plaintiff has
forfeited its right to seek judicial redress arising from the parties’ dispute, by virtue of a
provision in a 2009 memorandum of understanding that the DRC construes as a covenant
not to sue. Finally, the DRC contends that Plaintiff’s claims are barred by Michigan’s sixyear statute of limitations for breach-of-contract suits.
The DRC’s motion has been fully briefed by the parties. Having reviewed the
parties’ written submissions in support of and opposition to this motion, as well as the
accompanying exhibits and the remainder of the record, the Court finds that the pertinent
facts, allegations, and legal issues are sufficiently presented in these materials, and that
oral argument would not assist in the resolution of the DRC’s motion. Accordingly, the
Court will decide this motion “on the briefs.” See Local Rule 7.1(f)(2), U.S. District
Court, Eastern District of Michigan. This opinion and order sets forth the Court’s rulings
on the DRC’s motion.

II. FACTUAL BACKGROUND
2

Plaintiff Triple A International, Inc. is “in the business of conducting and
facilitating international business transactions throughout the world.” (Complaint at ¶ 6.)
The company was formed in 1991, is incorporated under Michigan law, and maintains its
principal place of business in Dearborn, Michigan. At various times, Plaintiff has
maintained satellite offices in Sierra Leone and the DRC.1
In late 1993, the government of the African country then known as Zaire2 solicited
Plaintiff to procure supplies for its military, including such items as uniforms, boots, and
sleeping bags. According to Plaintiff’s complaint, the company worked from its office in
Michigan to identify a supplier for the goods sought by the DRC. Plaintiff’s president, Ali
Sulaiman, asserts in his affidavit that the DRC was aware that Plaintiff would carry out its
obligations in the United States, and that the DRC “purposefully retained Triple A because
it was a United States company with the appropriate expertise to broker an international

1

In 1992, the president of the Plaintiff corporation, Ali Sulaiman, formed a limited
liability company in the DRC called “Triple A International, LLC.” According to Mr. Sulaiman,
this DRC-based limited liability company played no role in the underlying transaction with the
DRC that gives rise to this suit, and the DRC instead dealt solely with the Michigan-based
Plaintiff corporation. (See Plaintiff’s Response, Ex. O, Sulaiman Decl. at ¶ 4.) Although the
DRC disputes this, stating that its government “all along believed that it was dealing with a DRC
entity,” (Defendant’s Motion, Br. in Support at 6), the documents exchanged between the parties
in the course of their dealings consistently identified the contracting party as “Triple A
International, Inc.,” the Michigan-based Plaintiff corporation. (See Complaint, Exs. A-G.) To
be sure, certain of these documents refer to a corporate office located in the DRC’s capital city,
Kinshasa. (See, e.g., Complaint, Exs. A, B.) Yet, this evidently was the address of Plaintiff’s
satellite office in the DRC; Plaintiff’s initial proposal, for example, was sent on corporate
letterhead that lists offices located in both Michigan and the DRC. (See Complaint, Ex. A.)
2

In 1997, Zaire was renamed the DRC following the collapse of a dictatorship and a
lengthy period of war. Throughout the balance of this opinion, the Defendant nation will be
referred to as the DRC.
3

transaction legitimately and expeditiously.” (Plaintiff’s Response, Ex. O, Sulaiman Decl.
at ¶ 6.)
After consulting catalogs and communicating with potential suppliers from its
office in Dearborn, Michigan, Plaintiff ultimately selected a South Korean manufacturer to
provide the goods sought by the DRC. A representative of the Plaintiff corporation then
traveled to the DRC and to South Korea to make the necessary arrangements, culminating
in Plaintiff’s submission of a January 5, 1994 proposal to the DRC. (See Complaint, Ex.
A.)3 Following an inspection of a sample of the goods to be produced by the South
Korean supplier, a senior DRC government official accepted Plaintiff’s proposal and
approved the purchase of military supplies at a cost of just over $14 million. (See
Complaint, Ex. B.) Plaintiff’s proposal called for payment to be made into an account at
the Bank of Zaire, (see Complaint, Ex. A), and the DRC’s acceptance, in turn, called for
this payment to be made in the currency of Zaire, with delivery of the goods to be made at
a location in the DRC’s capital city of Kinshasa, (see Complaint, Ex. B).
According to the complaint, Plaintiff fulfilled all of its obligations under the
parties’ contract, and a DRC government official issued instructions in October of 1994 to
pay Plaintiff for the goods it had procured on the DRC’s behalf. (See Complaint, Ex. C.)
No payment was forthcoming, however. In early 1997, Plaintiff again secured a

3

The documents exchanged between the parties were written in French, but Plaintiff has
provided English translations of these documents, and the parties apparently agree upon the
accuracy of these translations.
4

commitment from a DRC government official to pay the debt owed to the company, (see
Complaint, Ex. D), but the DRC once again failed to make this payment.
From 1997 until 2003, the DRC was beset by war and its government was
overthrown. After hostilities ceased in 2003, Plaintiff renewed its efforts to secure
payment of the debt owed by the DRC, and in January of 2004, a DRC government
official issued a certificate acknowledging the country’s indebtedness to Plaintiff. (See
Complaint, Ex. E.) Similarly, a government official requested in September of 2007 that
the DRC pay the debt owed to Plaintiff. (See Complaint, Ex. F.) Most recently, the
parties entered into negotiations in the spring of 2009, resulting in the execution of a
memorandum of understanding in which the DRC acknowledged its debt to Plaintiff and
agreed to repay this debt through fourteen monthly payments of just over $1 million each.
(See Complaint, Ex. J.)4 To date, however, no such payments have been made. This
lawsuit followed, with Plaintiff seeking to recover the debt of over $14 million allegedly
owed to it by the DRC.

4

One provision of this memorandum of understanding states that “[a]ny dispute related to
this contract will be settled by friendly arrangement, while excluding all other legal
proceedings.” (Complaint, Ex. J, Memorandum of Understanding at 2.) The DRC reads this
provision as a covenant not to sue, and it relies on this provision as one of the grounds for
seeking the dismissal of this action.
5

III. ANALYSIS
A.

The Standards Governing Defendant’s Motion
Through the present motion, the Defendant DRC seeks the dismissal of Plaintiff’s

complaint on a number of grounds. First and foremost, the DRC contends that this Court
lacks subject matter jurisdiction in light of the sovereign immunity conferred upon foreign
states under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602 et seq. In
addressing this jurisdictional challenge brought under Fed. R. Civ. P. 12(b)(1), the Court
“takes the allegations in the complaint as true,” inquiring whether these allegations
establish a basis for the exercise of subject matter jurisdiction. Gentek Building Products,
Inc. v. Steel Peel Litigation Trust, 491 F.3d 320, 330 (6th Cir. 2007).5 Yet, “conclusory
allegations or legal conclusions masquerading as factual conclusions will not suffice” to
withstand a properly supported Rule 12(b)(1) motion to dismiss. O’Bryan v. Holy See,
556 F.3d 361, 376 (6th Cir. 2009) (internal quotation marks and citation omitted).

5

The Court views the DRC’s motion as mounting a facial rather than a factual challenge
to the existence of subject matter jurisdiction. See Gentek Building Products, 491 F.3d at 330
(distinguishing between these two types of jurisdictional challenges). In particular, the DRC’s
jurisdictional arguments rest almost exclusively on the allegations of Plaintiff’s complaint, and
generally accept these allegations as true. The sole exception is the DRC’s suggestion in its
motion that it did business with — or at least “believed it was doing business with,”
(Defendant’s Motion, Br. in Support at 5 n.1) — an entity formed in the DRC, “Triple A
International, LLC,” rather than the Michigan-based Plaintiff corporation, “Triple A
International, Inc.” As noted earlier, however, the documents accompanying Plaintiff’s
complaint uniformly support the complaint’s allegations that the DRC dealt with the Michiganbased Plaintiff corporation, rather than a DRC-based entity, and the DRC has not cited any
evidence to support the contrary assertion advanced in its motion. Accordingly, the Court may
accept as true the complaint’s allegations as to the identity of the contracting party, and there is
no need for the Court to address any factual disputes in order to resolve the DRC’s jurisdictional
challenge.
6

As the Sixth Circuit has observed, “[a]pplying the standards under [Rule] 12(b)(1)
to the FSIA context is complicated by FSIA’s burden-shifting process.” O’Bryan, 556
F.3d at 376. “The party claiming FSIA immunity bears the initial burden . . . of
establishing a prima facie case that it satisfies the FSIA’s definition of a foreign state; once
this prima facie case is established, the burden of production shifts to the non-movant to
show that an exception [to FSIA immunity] applies.” O’Bryan, 556 F.3d at 376 (internal
quotation marks and citation omitted). Yet, “[t]he party claiming immunity under FSIA
retains the burden of persuasion throughout this process.” 556 F.3d at 376. When
addressing a facial jurisdictional challenge, such as the DRC is pursuing here, the Court
must accept the complaint’s allegations as true, and then — assuming the moving party
has met its threshold burden of establishing its entitlement to immunity under the FSIA as
a foreign state — inquire whether these allegations “bring the case within any of the FSIA
exceptions to immunity invoked by the plaintiff.” 556 F.3d at 376 (internal quotation
marks, alteration, and citations omitted). With these standards in mind, the Court turns to
the DRC’s claim of sovereign immunity.6
B.

The DRC’s Sovereign Immunity Is Not Overcome by the “Commercial
Activity” Exception Set Forth in the FSIA.
Under the FSIA, “a foreign state is presumptively immune from the jurisdiction of

United States courts,” and “unless a specified exception applies, a federal court lacks

6

In light of the Court’s resolution of this jurisdictional challenge, there is no need to
address the standards that govern the remaining arguments advanced in the DRC’s motion as
grounds for the dismissal of this suit.
7

subject-matter jurisdiction over a claim against a foreign state.” Saudi Arabia v. Nelson,
507 U.S. 349, 355, 113 S. Ct. 1471, 1476 (1993); see also 28 U.S.C. § 1604 (providing
that “a foreign state shall be immune from the jurisdiction of the courts of the United
States and of the States except as provided in sections 1605 to 1607 of this chapter”). In
this case, the parties agree that the Defendant DRC qualifies as a “foreign state” as this
term is defined in the FSIA. It follows that subject matter jurisdiction is lacking here
unless the allegations of Plaintiff’s complaint trigger one of the exceptions set forth in the
FSIA.
In this case, Plaintiff appeals to the FSIA’s “commercial activity” exception. In
particular, the pertinent FSIA provision withholds a foreign state’s usual immunity from
suit where
. . . [an] 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). The jurisdictional allegations of Plaintiff’s complaint invoke the
first and third clauses of this provision. (See Complaint at ¶ 3.) In its response to the
DRC’s motion, however, Plaintiff expressly disavows any reliance on the third clause of §
1605(a)(2), and instead rests its claim of subject matter jurisdiction solely upon the first
clause. (See Plaintiff’s Response Br. at 9-11.)
Accordingly, the existence of subject matter jurisdiction here turns on the question

8

whether Plaintiff’s claims are “based upon a commercial activity carried on in the United
States by” the DRC.7 If this statutory language were applied in strict accordance with its
literal terms, jurisdiction would surely be lacking. Plaintiff does not allege that the DRC
engaged in any activity, commercial or otherwise, in the United States. Rather, the only
activities identified in the complaint, or elsewhere in the record, as conducted in the
United States were carried out by Plaintiff from its Michigan offices. As evidenced by the
language of the statute itself, and as the courts have recognized, § 1605(a)(2) mandates an
inquiry into the commercial activity conducted “by the foreign state,” and not by the
person or entity with which the foreign state enters into a commercial relationship. See,
e.g., Riedel v. Bancam, S.A., 792 F.2d 587, 591 (6th Cir. 1986) (observing that Ҥ
1605(a)(2) applies only when a foreign state’s ‘commercial activity’ has the requisite
jurisdictional nexus with the United States”); Santos v. Compagnie Nationale Air France,
934 F.2d 890, 893 n.3 (7th Cir. 1991) (“The commercial activity to which the statute refers
is the activity of the defendant foreign government.”); de Sanchez v. Banco Central de
Nicaragua, 770 F.2d 1385, 1391 (5th Cir. 1985) (explaining that the inquiry under §
1605(a)(2) “focus[es] on the acts of the named defendant, not on other acts that may have
had a causal connection with the suit”).
7

The parties are in agreement that the DRC qualifies as a “foreign state” under the FSIA.
They further agree that the DRC’s entry into a contractual relationship with Plaintiff for the
acquisition of military supplies constitutes “commercial activity” under the statute. See, e.g.,
McDonnell Douglas Corp. v. Islamic Republic of Iran, 758 F.2d 341, 348-49 (8th Cir. 1985)
(holding that a foreign state’s purchase of equipment for use by its military qualified as
“commercial activity” under the FSIA). The sole point of contention, then, is whether this
commercial activity was “carried on in the United States by” the DRC.
9

Yet, this seemingly straightforward inquiry into the locus of the DRC’s activities is
complicated by another FSIA provision, which broadens the definition of “commercial
activity carried on in the United States by a foreign state” to encompass “commercial
activity carried on by such state and having substantial contact with the United States.” 28
U.S.C. § 1603(e). Under this definition, then, a foreign state evidently need not conduct
any commercial activity in the United States, so long as its commercial activity carried on
elsewhere has “substantial contact” with the United States. As stated in the FSIA’s
legislative history:
As paragraph (d) of section 1603 indicates,[8] a commercial activity
carried on in the United States by a foreign state would include not only a
commercial transaction performed and executed in its entirety in the United
States, but also a commercial transaction or act having a ‘substantial contact’
with the United States. This definition includes cases based on commercial
transactions performed in whole or in part in the United States, importexport transactions involving sales to, or purchases from, concerns in the
United States, . . . and an indebtedness incurred by a foreign state which
negotiates or executes a loan agreement in the United States, or which
receives financing from a private or public lending institution located in the
United States — for example, loans, guarantees or insurance provided by the
Export-Import Bank of the United States. It will be for the courts to
determine whether a particular commercial activity has been performed in
whole or in part in the United States. This definition, however, is intended
to reflect a degree of contact beyond that occasioned simply by U.S.
citizenship or U.S. residence of the plaintiff.
H.R. Rep. No. 94-1487, at 17 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6615-16.
In Plaintiff’s view, the activity in which the DRC engaged is comparable to at least

8

At the time this congressional report was issued, the FSIA’s definition of “commercial
activity carried on in the United States by a foreign state” appeared at § 1603(d). Following
more recent amendments to the statute, this definition is now set forth at § 1603(e).
10

two of the examples cited in this passage of the FSIA’s legislative history as illustrative of
commercial activity having a “substantial contact” with the United States. First, Plaintiff
contends that the parties engaged in an “import-export transaction[]” within the meaning
of this passage. While the goods purchased by the DRC in the parties’ transaction were
manufactured in South Korea and shipped directly from this South Korean supplier to the
DRC, (see Plaintiff’s Response, Ex. Q), Plaintiff notes that it made the arrangements for
this purchase and shipment from its offices in the United States. These U.S.-based
activities, according to Plaintiff, serve as the “substantial contact” required under the
statute to trigger the “commercial activity” exception to sovereign immunity.
The case law cited by Plaintiff in support of this “import-export” theory of
jurisdiction, however, is readily distinguishable and not especially helpful. First, Plaintiff
points to the court’s observation in Zedan v. Kingdom of Saudi Arabia, 849 F.2d 1511,
1513 (D.C. Cir. 1988), that “a contractual arrangement, one part of which is to be
performed in the United States, constitutes a substantial contact with the United States.”
Yet, this statement in Zedan is pure dicta, reflecting the court’s broad characterization and
general understanding of the above-quoted passage from the FSIA’s legislative history. In
fact, the court in Zedan determined that the first clause of § 1605(a)(2) did not apply in
that case, where the sole contact with the United States by the foreign state, Saudi Arabia,
was a telephone call recruiting the American plaintiff to travel to Saudi Arabia and work
on a road construction project. See Zedan, 849 F.2d at 1513-14. Because this phone call
did not itself result in a contract, but was simply a “preliminary step in a chain of events”
11

culminating in a contractual relationship, the court held that this “mere[] precursor[]” to a
commercial transaction did not rise to the level of commercial activity having “substantial
contact” with the United States. Zedan, 849 F.2d at 1513. More generally, despite its
suggestion that partial performance of a contract in the United States would qualify as
“substantial contact,” the court recognized that “isolated or transitory contacts with the
United States do not suffice.” 849 F.2d at 1513.
The second case cited by Plaintiff, while more on point, is nonetheless factually
distinguishable. In Gibbons v. Udaras na Gaeltachta, 549 F. Supp. 1094, 1115 (S.D.N.Y.
1982), the court found that a transaction between the plaintiffs, two American citizens, and
the defendant instrumentality of the Republic of Ireland (Gaeltarra Eireann, or “GE”) had
the requisite “substantial contact” with the United States, where the parties’ agreement
encompassed “an export transaction whereby GE agreed to purchase goods (to be acquired
by plaintiffs) and services (to be provided by plaintiffs) for delivery in Ireland.” In so
ruling, the court observed that the parties’ agreement “resulted from substantial contractual
negotiations conducted by GE in the United States,” and it reasoned that this alone would
“permit a conclusion that GE carried on a commercial activity in the United States.”
Gibbons, 549 F. Supp. at 1113-14. In addition, the court cited the plaintiffs’ allegations
that GE’s participation in the contractual relationship “was conditioned on plaintiffs’
promise to perform a substantial part of the contract in the United States,” including the
“purchase [of] hundreds of thousands of dollars[’] worth of machinery in the United States
for delivery to” an Irish company. 549 F. Supp. at 1114-15.
12

The facts here are different in two respects. First, the parties’ contract negotiations
evidently were held exclusively in the DRC, with no portion of these negotiations
conducted in the United States. Indeed, as noted earlier, the DRC engaged in no activities
whatsoever in the United States in connection with its contractual relationship with
Plaintiff. Next, there is nothing in the parties’ contract that reflects any promise or shared
understanding that a substantial portion of Plaintiff’s obligations would be performed in
the United States. So far as the record reveals, the DRC was indifferent as to the location
from which Plaintiff would obtain and ship the requested military supplies — and, of
course, these goods ultimately were manufactured in and shipped from South Korea, not
the United States. In addition, Plaintiff’s proposal called for payment to be made into an
account at the Bank of Zaire, (see Complaint, Ex. A), and the DRC’s acceptance stipulated
that this payment would be made in the currency of Zaire, (see Complaint, Ex. B). In
short, then — and in contrast to the facts presented in Gibbons — the bulk of the parties’
contractual obligations were to be performed in the DRC (or at other, unspecified
locations), rather than in the United States.
To be sure, Plaintiff carried out some of its contractual obligations — including
identifying possible sources for the military supplies sought by the DRC, and arranging for
the manufacture and shipment of these goods from a South Korean supplier to the DRC —
from its office in Michigan, and the above-quoted passage from the FSIA’s legislative
history references commercial transactions performed “in whole or in part” in the United
States. Yet, in the various documents exchanged between the parties leading up to their
13

contractual relationship, there is no indication that the DRC sought this U.S.-based
performance, or placed any importance on the likelihood that Plaintiff might undertake
some of its contractual duties from its Michigan office. Indeed, this documentary record
leaves open the possibility that the DRC was not even aware of the place of Plaintiff’s
performance. Most notably, Plaintiff presented its proposal on company letterhead that
listed its offices in Michigan and the DRC, (see Complaint, Ex. A), and nothing in the
record evidences the DRC’s understanding or belief that Plaintiff would operate
exclusively (or even primarily) out of its Michigan office as it procured the military
supplies referenced in its proposal. From this record, then, it appears that Plaintiff’s
performance of some of its contractual duties in Michigan was largely a product of
happenstance or Plaintiff’s own choice or convenience, rather than a result of the DRC’s
deliberate engagement in commercial activity having “substantial contact” with the United
States. As noted in the above-quoted congressional report, and as is clear from the
statutory requirement of “substantial” contact arising from the commercial activity of the
foreign state, to satisfy the first clause of the FSIA’s “commercial activity” exception,
there must be a “degree of contact beyond that occasioned simply by U.S. citizenship or
U.S. residence of the plaintiff.” H.R. Rep. No. 94-1487, at 17, reprinted in 1976
U.S.C.C.A.N. at 6616.9
9

In an affidavit accompanying Plaintiff’s response to the DRC’s motion, Plaintiff’s
president, Ali Sulaiman, asserts that the DRC “purposefully retained” his company “because it
was a United States company with the appropriate expertise to broker an international
transaction legitimately and expeditiously.” (Plaintiff’s Response, Ex. O, Sulaiman Decl. at ¶ 6.)
Even assuming, however, that Mr. Sulaiman has personal knowledge as to why the DRC selected
14

Against this backdrop, the Court finds that one of the decisions cited by the DRC,
Tubular Inspectors, Inc. v. Petroleos Mexicanos, 977 F.2d 180 (5th Cir. 1992), is
particularly instructive here. In that case, Mexico’s national oil company, defendant
Petroleos Mexicanos (“Pemex”), agreed to purchase 19 valves from the plaintiff
corporation’s Mexican subsidiary, Tubular Mexico. Pemex paid for 15 of these valves,
and claimed that it paid the remaining balance by presenting a check to two men who
identified themselves as Tubular Mexico employees. The plaintiff corporation, Tubular
USA, asserted that these men were not authorized to accept payment on its behalf, and it
brought suit in a federal district court to collect the unpaid balance of Pemex’s debt. The
district court determined that it could exercise subject matter jurisdiction under the first
clause of § 1605(a)(2), but the Fifth Circuit reversed, finding that Pemex had

his company, he does not make the further claim that the DRC’s choice of a U.S.-based
contracting partner was informed by its preference or understanding that this company would
perform a substantial portion of its contractual duties in the United States. Rather, Mr. Sulaiman
states only that the DRC “knew” — based, presumably, on its allegedly purposeful retention of a
U.S. company — that Plaintiff “would have to perform its obligations . . . from the United
States.” (Id.) Again, even assuming this is so — a dubious assumption, given that Plaintiff also
had an office in the DRC, and presumably was capable of “consult[ing] catalogs” and
“communicat[ing] by fax and by telephone” from this DRC-based office as it attempted to
procure the military supplies sought by the DRC, (see id. at ¶ 7) — the Supreme Court has
expressly “reject[ed] the suggestion that § 1605(a)(2) contains any unexpressed requirement of .
. . ‘foreseeability.’” Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 618, 112 S. Ct. 2160,
2168 (1992). Accordingly, even if the DRC deliberately selected a U.S.-based company to
procure military supplies on its behalf, and even if it was aware, in light of this selection, that
this company was likely to carry out at least some of its contractual duties in the United States,
this by itself would not establish that the DRC carried on commercial activity having “substantial
contact” with the United States. Otherwise, any foreign state that chose a U.S.-based partner for
its commercial activity would be subject to suit under the FSIA, based solely on the
foreseeability that this American company would likely perform some of its contractual
obligations in the United States.
15

“purposefully structured” the parties’ transaction to “anchor it in Mexico,” and that
“Pemex’s contacts with Tubular USA in Texas were sufficiently isolated to deny subject
matter jurisdiction.” Tubular Inspectors, 977 F.2d at 185-86.
In so ruling, the court acknowledged that the “case presents a close[] FSIA
jurisdictional issue.” 977 F.2d at 185 (footnote omitted). In particular, Pemex’s
transaction had a number of connections with the United States, including (i) the valves,
which were of U.S. origin and were obtained by Tubular USA in the United States, (ii) the
purchase orders issued by Pemex, which were addressed to “Tubular Mexico ‘and/or’
Tubular USA,” and (iii) a visit by Pemex officials to Houston, Texas to inspect the valves
and accept them for delivery to Mexico. 977 F.2d at 183-84. Nonetheless, the court found
that the record evidenced Pemex’s consistent “attempt to craft a Mexican transaction,”
where (i) Pemex’s purchase orders were written in Spanish and addressed to Tubular
Mexico’s office, (ii) Pemex took no action in response to invoices issued by Tubular USA,
but instead began making its payments — in pesos, and in checks “directed to Tubular
Mexico through its Mexican banks” — in response to invoices issued by Tubular Mexico
several months later, and (iii) Pemex representatives had traveled to Texas only at the
insistence of Tubular USA, as a precondition to the shipment of the valves to Mexico. 977
F.2d at 184-85. Under this record, the court reasoned that dismissal was appropriate to
“prevent[] Tubular USA from jurisdictionally having its cake and eating it, by doing
business through a Mexican subsidiary as Mexican law requires but seeking to avoid the
consequences of that choice when it comes time to sue for the purchase price of the
16

valves.” 977 F.2d at 186 (footnote omitted).
Tubular Inspectors arguably could be viewed as demarcating the outer limit of
decisions in which a foreign state’s contacts with the United States are deemed
insufficiently “substantial” to satisfy the first clause of § 1605(a)(2), and this Court cannot
say whether it would have decided that case the same way. The transaction at issue here,
however, entailed far more limited contacts with the United States. The goods purchased
by the DRC were not manufactured in or shipped from the United States, nor did the
parties’ agreement call for the DRC to make payment in the United States or in U.S.
currency. Moreover, no DRC officials traveled to the United States (or even left their own
country) in connection with the parties’ transaction, whether to negotiate the parties’
agreement, inspect the goods that Plaintiff proposed to provide, or address the repayment
of the DRC’s outstanding indebtedness. Under this record, the only connection between
the DRC’s commercial activity and the United States was the DRC’s decision to retain a
U.S.-based company to find and procure supplies for its military. Even then, however, the
DRC (i) selected a company with an office in the DRC, (ii) agreed to make payment to a
local bank in the country’s own currency, and (iii) sent correspondence addressed to
Plaintiff’s office in Kinshasa and written in the DRC’s official language, French. (See
Complaint, Exs. B, E.) As in Tubular Inspectors, then, the DRC “attempt[ed] to craft a
[DRC-based] transaction,” Tubular Inspectors, 977 F.2d at 185, never reaching beyond its
borders in its dealings with Plaintiff. Under this record, the mere fact that the DRC
contracted with a U.S.-based company that carried out some of its duties from its
17

Michigan office does not give rise to “commercial activity carried on by [the DRC] and
having substantial contact with the United States.” 28 U.S.C. § 1603(e).
Further support for this conclusion is found in the statutory requirement that to
overcome the sovereign immunity enjoyed by the defendant foreign state, a plaintiff’s suit
must be “based upon” the defendant’s commercial activity carried on in the United States.
28 U.S.C. § 1605(a)(2). As the Supreme Court has explained, this statutory language is
satisfied only if the foreign state’s commercial activity in the United States forms the basis
for one or more of “those elements of a claim that, if proven, would entitle a plaintiff to
relief under his theory of the case.” Nelson, 507 U.S. at 357, 113 S. Ct. at 1477. The
“based upon” language of § 1605(a)(2) “calls for something more than a mere connection
with, or relation to, commercial activity.” Nelson, 507 U.S. at 358, 113 S. Ct. at 1478.
Rather, to exercise jurisdiction under the FSIA’s “commercial activity” exception, “there
must be a significant nexus between the commercial activity in this country upon which
the exception is based and a plaintiff’s cause of action.” Reiss v. Société Centrale du
Groupe des Assurances Nationales, 235 F.3d 738, 747 (2d Cir. 2000) (internal quotation
marks, alteration, and citation omitted); see also Tubular Inspectors, 977 F.2d at 185
(noting that although officials from defendant Pemex had traveled to the United States,
there was “no direct nexus between Pemex’s meetings in this country and the [plaintiff’s]
breach of contract or conversion claims”); de Sanchez, 770 F.2d at 1391 (construing §
1605(a)(2) as requiring a court to “isolate those specific acts of the named defendant that
form the basis of the plaintiff’s suit”); Callejo v. Bancomer, S.A., 764 F.2d 1101, 1110 n.8
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(5th Cir. 1985) (explaining that the defendant’s “commercial activities in the United States
must have a nexus with the act complained of in this lawsuit”).
In this case, there is only a tenuous connection between the fairly limited
commercial activity carried out in the United States — solely by Plaintiff, and not the
DRC — and Plaintiff’s breach-of-contract claim. First, it is immaterial to the DRC’s
alleged breach of its contractual obligation that Plaintiff conducted some of its activities in
the United States. Whether Plaintiff consulted catalogs and communicated with potential
suppliers from its Michigan office, its office in the DRC, or elsewhere, the DRC’s
contractual obligation, and its alleged breach of this obligation, would remain precisely the
same. See Kensington International Ltd. v. Itoua, 505 F.3d 147, 156 (2d Cir. 2007)
(finding that the “requisite nexus does not exist between [the defendant foreign state’s]
commercial activity in the United States . . . and the gravamen of [the plaintiff’s]
complaint,” where the defendant’s “acts in the United States had no bearing on [the
plaintiff’s] ability or inability to recover the money owed by” the defendant); Gerding v.
Republic of France, 943 F.2d 521, 527 (4th Cir. 1991) (holding that the FSIA’s
“commercial activity” exception did not apply where the defendant foreign state’s limited
contacts with the United States had “no material connection with the [plaintiffs’] cause of
action”).
Moreover, because the parties’ contract called for the DRC to issue payment to an
account at the Bank of Zaire, the breach of this obligation occurred in the DRC, and this
was the principal locus of the harm felt by Plaintiff as a result of the DRC’s failure to pay.
19

See United World Trade, Inc. v. Mangyshlakneft Oil Production Ass’n, 33 F.3d 1232, 1239
(10th Cir. 1994) (“The fact that [the plaintiff], had it received additional funds in London
pursuant to the contract, would have then transferred those funds to the United States does
not allow us to conclude that the loss suffered by [the plaintiff] was sufficiently ‘in the
United States’ to warrant jurisdiction under § 1605(a)(2).”). In addition, out of the over
$14 million in damages sought by Plaintiff, surely only a small fraction of this amount
could possibly be attributable to Plaintiff’s fairly modest activities in the United States,
while the bulk of this requested award is likely based on the underlying cost of the military
supplies identified through Plaintiff’s efforts — supplies which were manufactured in and
shipped from South Korea, and not the United States. Finally, while Plaintiff recognizes
that a breach-of-contract suit arising from the DRC’s initial failure to pay its debt back in
1994 would surely be barred by the statute of limitations, it alleges that this otherwise
time-barred claim has been revived by virtue of the DRC’s repeated acknowledgment of
its debt over the years. See Mich. Comp. Laws § 600.5866 (providing for the revival of an
otherwise time-barred breach-of-contract claim through “the acknowledgment or promise
of the party to be charged”). These acknowledgments, as well as the negotiations leading
up to them, occurred in the DRC.
In a final effort to support its appeal to the first clause § 1605(a)(2) as a basis for
overcoming the DRC’s sovereign immunity, Plaintiff points to another passage in the
above-quoted legislative history indicating that the “commercial activity” exception
applies where the foreign state “receives financing from a private or public lending
20

institution located in the United States.” H.R. Rep. No. 94-1487, at 17, reprinted in 1976
U.S.C.C.A.N. at 6615-16. Because the parties’ contract evidently called for the DRC to
pay for the requested supplies at or after the time of delivery,10 Plaintiff states that it was
required to “finance the transaction on behalf of” the DRC in order to procure the desired
supplies from the South Korean manufacturer, with a “substantial portion of these funds . .
. raised from sources in the United States.” (Plaintiff’s Response Br. at 9.) It follows, in
Plaintiff’s view, that the FSIA’s “commercial activity” exception applies in light of the
“financing” received by the DRC from a U.S.-based business.
The Court does not believe that the parties’ transaction can fairly be characterized
as entailing “financing from a . . . lending institution located in the United States.” First,
nothing in the record suggests that Plaintiff qualifies as a “lending institution,” or that it
generally (or even occasionally) engages in lending. Next, and more importantly, there
was no “financing” component to the parties’ transaction, at least as that term is commonly
understood. The parties’ agreement did not include any provisions for payment in
installments, the accrual of interest, or any other terms that one would typically expect to
see in a financing arrangement. Rather, so far as the record reveals, the DRC was
expected to make a single lump-sum payment upon receipt of the requested military

10

To be accurate, the documents accompanying Plaintiff’s complaint are not altogether
clear as to when the DRC was to make its payment, but there is no indication that the parties
contemplated payment in advance of delivery.
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supplies.11 The fact that the DRC failed to make this payment, or that Plaintiff necessarily
had to raise the funds needed to purchase the desired supplies from their South Korean
manufacturer in anticipation of prompt reimbursement by the DRC, does not convert the
parties’ agreement into a “financing” transaction within the meaning of the FSIA’s
legislative history. Certainly, Plaintiff has not identified any case law support for invoking
this theory of jurisdiction under the facts presented here, and neither has the Court’s own
research uncovered any. Accordingly, the Court finds that the allegations of Plaintiff’s
complaint fail to establish a basis for applying the “commercial activity” exception to the
sovereign immunity otherwise conferred upon the DRC under the FSIA.12
IV. CONCLUSION
For the reasons set forth above,
NOW, THEREFORE, IT IS HEREBY ORDERED that Defendant’s April 11, 2011
motion to dismiss (docket # 19) is GRANTED as to Defendant’s appeal to sovereign
immunity, and is otherwise DENIED AS MOOT.

s/Gerald E. Rosen
Chief Judge, United States District Court
Dated: February 10, 2012
11

To be sure, in the most recent memorandum of understanding negotiated by the parties
in 2009, the DRC agreed to pay its debt in 14 equal monthly installments of just over $1 million
each. (See Complaint, Ex. J.) Even then, however, the DRC was not called upon to pay any
interest or penalties, as might be expected if a party had defaulted on a financing transaction.
12

In light of this conclusion, the Court need not address the other arguments advanced in
the DRC’s motion to dismiss.
22

I hereby certify that a copy of the foregoing document was served upon counsel of record
on February 10, 2012, by electronic and/or ordinary mail.
s/Ruth A. Gunther
Case Manager

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