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Direct Effect Exception Under FSIA
The United States Court of Appeals for the Tenth Circuit upheld a prior ruling of the United States District Court of Utah on July 15, 2008 in Big Sky v. Sichuan Provincial Government et al., docket number 07-4014. Big Sky, a British Virgin Islands corporation, and a Chinese company had entered into a joint venture which was dissolved due to subsequently issued Chinese government mandates.
When no financial compensation was forthcoming, Big Sky brought suit against two provincial governments. While the court's first decision of enlarging the FSIA removal period was affirmed, the substantive issue of subject-matter jurisdiction of the Utah court under the exceptions to the FSIA remained unresolved. Big Sky claimed that the Chinese governments' actions directly affected commercial activity in the United States. The company claimed the application of the commercial activity exception clause in 28 U.S.C. §1441(d).
The Court held, however, that the mere financial loss to Big Sky's American mother company, though real, was felt prominently overseas and does not constitute a direct effect on American commerce. -- Stephanie Petrew, legal assistant, Berliner, Corcoran & Rowe, LLP, Washington, DC.
Fri, / Embassy Law Link