McDonnell Douglas Corp. v. Islamic Republic of Iran

McDonnell Douglas Corp. v. Islamic Republic of Iran

Opinion

 [*343]  HEANEY, Circuit Judge.

The Islamic Republic of Iran, Ministry of Defense of the Islamic Republic of Iran, and Islamic Republic of Iran Air Force (collectively, Iran) appeal from an order of the United States District Court ² granting McDonnell Douglas Corporation's motion for summary judgment in its declaratory judgment action against Iran. 591 F. Supp. 293. For reversal, Iran argues that the district court erred in (1) failing to hold that it lacked jurisdiction because of a forum selection clause in the contract between Iran and McDonnell Douglas which provides that contract disputes "should" be resolved through the Iranian courts; (2) denying Iran's motion to strike the affidavit of Lewis M. Johnson, Esq., McDonnell Douglas's [**2]  expert on current legal conditions in Iran, on the ground the affidavit was not based on personal knowledge and did not set forth such facts as would be admissible in evidence; and (3) granting McDonnell Douglas summary judgment because there allegedly are material facts in dispute. In a supplemental brief, Iran claims that sovereign immunity bars McDonnell Douglas's suit. For the reasons set forth below, we affirm.

I. BACKGROUND 

In November, 1975, plaintiff-appellee McDonnell Douglas entered into a "Basic Ordering Agreement" (BOA) with the Imperial Iranian Air Force (IIAF) for the sale of certain parts for damaged F-4 aircraft. ³ The agreement extended for one year, and was subsequently renewed for three additional one-year periods in 1976, 1977 and 1978. It expired by its own terms in November 1979. Article XV of the BOA, entitled "Negotiation," states that: "Any difference or disputes [**3]  from the execution of the contract that may not be settled amicably should be settled through Iranian courts." Article XVIII, however, specifies that the agreement is subject to United States laws, particularly those governing the export of arms. Article XIII, entitled "Force Majeure," provides that McDonnell Douglas is excused from any failure to perform or delay in performance arising from causes beyond its control, including acts of the United States Government and embargoes. Article X specifies that the IIAF shall bear the risk of loss of any ordered parts. Article XII stipulates that McDonnell Douglas's liability is limited to repair or replacement of defective parts and that "in no event will McDonnell Douglas Corporation be liable for consequential damages."

 [**4]   [*344]  Article VII provides that payments under the BOA shall be guaranteed by an irrevocable letter of credit established by the IIAF in the sum of at least $250,000, payable at First National Bank in St. Louis, Missouri. On November 22, 1978, the letter of credit expired and was never renewed. Thereafter, the First National Bank in St. Louis refused to make payments on McDonnell Douglas's invoices presented under the provisions of the BOA. ⁴ 

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