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Verlinden B.V. v. Cent. Bank of Nig. - 461 U.S. 480, 103 S. Ct. 1962 (1983)

Rule:

The Foreign Sovereign Immunities Act of 1976 expressly provides that its standards control in the courts of the United States and of the states, 28 U.S.C.S. § 1604, and thus clearly contemplates that such suits may be brought in either federal or state courts. However, the Act guarantees foreign states the right to remove any civil action from a state court to a federal court, 28 U.S.C.S. § 1441(d). The Act also provides that any claim permitted under the Act may be brought from the outset in federal court, 28 U.S.C.S. § 1330(a). If one of the specified exceptions to sovereign immunity applies, a federal district court may exercise subject-matter jurisdiction under § 1330(a); but if the claim does not fall within one of the exceptions, federal courts lack subject-matter jurisdiction. In such a case, the foreign state is also ensured immunity from the jurisdiction of state courts by 28 U.S.C.S. § 1604

Facts:

Plaintiff Verlinden B. V. (Verlinden), a Dutch corporation, brought suit against defendant Central Bank of Nigeria (Bank), an instrumentality of Nigeria, in the United States District Court for the Southern District of New York, for an anticipatory breach of a letter of credit. Verlinden alleged jurisdiction of the federal district court under section 2 of the Foreign Sovereign Immunities Act (Act). The Bank filed a motion to dismiss for, among other reasons, lack of subject matter jurisdiction. The district court dismissed the complaint, holding that under the Act, a foreign instrumentality was entitled to sovereign immunity and that none of the exceptions applied. On appeal, the United States Court of Appeals for the Second Circuit affirmed, holding that Congress lacked power to grant federal courts jurisdiction under either the Diversity Clause or the "Arising Under" Clause of Article III of the United States Constitution.

Issue:

Didd the federal district court have jurisdiction to hear the case?

Answer:

Yes.

Conclusion:

The Supreme Court of the United States reversed and remanded, holding that if an action satisfied the substantive standards of the Act, it could be brought in federal court regardless of the citizenship of plaintiff, and that the "Arising Under" Clause of art. III provided an appropriate basis for the statutory grant of subject-matter jurisdiction to actions by foreign plaintiffs under the Act.

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