The Direct-Effect Clause in the FSIA
In Atlantica Holdings, Inc. v. Sovereign Wealth Fund Samruk-Kazyna JSC, the United States Court of Appeals for the Second Circuit in New York City confirmed subject-matter jurisdiction of the district court over a foreign government-owned sovereign wealth fund under the direct-effects clause of the Foreign Sovereign Immunities Act, quoting the Supreme Court in Republic of Argentina v. Weltover, 504 U.S. 607, (1992):
Under the direct‐effect clause, a foreign state is not immune from jurisdiction if the plaintiff's "lawsuit is (1) 'based upon … an act outside the territory of the United States'; (2) that was taken 'in connection with a commercial activity' of [the foreign state] outside this country; and (3) that 'cause[d] a direct effect in the United States.'""The required facts for the direct effect of foreign acts in the United States are often disputed, but in this matter involving commercial notes, securities, a bankrupt foreign bank and representations to investors, the facts clearly pointed to effects in the United States where investors obtained interests in the securities and suffered the alleged harm. The February 3, 2016 decision rests in part on the recent Supreme Court precedent in OBB Personenverkehr AG v. Sachs, 136 S.Ct. 390 (2015). -- Clemens Kochinke, partner, Berliner Corcoran & Rowe LLP, Washington, DC.
Thu, / Embassy Law Link