By Louis M. Solomon
Inc., et al. v. State of Pohnpei, et al.,
No. 09-17871 (9th Cir. Jun. 2011) (unpublished) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law], addresses several common issues that arise in the
context of international litigation practice involving non-U.S. sovereigns but
in an uncommon geographical and factual setting.
In this case the non-U.S. sovereign
is Pohnpei, the name of one of the four states in the Federated States of
Micronesia (FMA). It is situated among the Senyavin Islands, part of the
Caroline Islands. The issue in the case related to exporting peppercorns
and trochus buttons, which occurred in the FMA and "had no direct effect on
the" U.S. Pohnpei is formerly known as Ponape and is not to be confused
with Pompeii, which may or may have maintained thriving markets in peppercorns
and trochus buttons.
AHPW is a business evidently run in
Pohnpei. AHPW sued Pohnpei in federal court in the U.S. under a variety
of statutes and treaties, including several we have not discussed before:
The Compact of Free Association and the Agreement Regarding the Investment
Development Fund. The Ninth Circuit affirmed the District Court's determination
that neither instrument granted a private right of action - the same result
reached by the Court when examining various (unmentioned) treaty provisions.
Additionally, the Ninth Circuit
affirmed the District Court's determination that the Foreign Sovereign
Immunities Act (FSIA) would immunize Pohnpei given the allegations of the
pleading. The difficulty with the pleading was that the activity at issue
occurred fully within the FMA, not in the U.S. Applying settled law, the
Ninth Circuit ruled that the two exceptions to FSIA immunity - the commercial
activity exception and the tortious acts exception - required more activity or
direct affects than were pleaded to occur in or affect the U.S.
With respect to the commercial
activities exception, there must be either "commercial activity carried on in
the United States" or "commercial activity in a foreign state that causes a
direct effect in the United States". The tortious conduct exception requires
"damage to or loss or property, occurring in the United States and caused by
the tortious act or omission of that foreign state".
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