To resolve longstanding confusion over the scope of foreign countries' sovereign immunity in U.S. courts, Congress in 1976 passed the Foreign Sovereign Immunity Act ("FSIA"). The FSIA draws a bright line: "foreign states and their instrumentalities are immune from suit unless one of the statute's enumerated exceptions applies." But what happens if an FSIA exception applies, but the foreign actor lacks the "minimum contacts" traditionally required by the Supreme Court's personal jurisdiction cases? In CC/Devas (Mauritius) Limited v. Antrix Corp. Ltd., the Supreme Court held that, under the FSIA, as long as a statutory immunity exception applies, and service of process is proper, personal jurisdiction is possible.
Devas involved two Indian corporations in a dispute over the cancellation of a satellite-leasing agreement. Antrix Corporation Ltd., owned by the Republic of India, terminated the agreement with Devas. Subsequent arbitration resulted in a finding that Antrix breached the contract and a corresponding award to Devas for $562.5 million in damages. Devas successfully petitioned the United States District Court for the District of Washington to confirm the award, and the court entered a $1.29 billion judgment in favor of Devas.
The Ninth Circuit reversed the judgment, holding that the FSIA requires plaintiffs to establish personal jurisdiction through the "traditional minimum contacts analysis" established in International Shoe Co. v. Washington. Upon review, the Ninth Circuit found that Antrix lacked sufficient contacts to establish personal jurisdiction.
The Supreme Court, contrary to the Ninth Circuit, dispensed with the traditional minimum contacts requirement on the grounds that the FSIA's text and structure do not require it. Rather, the Court opined that the contacts already required by the FSIA's enumerated exceptions to foreign sovereign immunity are sufficient to extend jurisdiction over the defendant. Specifically, the Court interpreted the FSIA's jurisdictional provision, 28 U.S.C. §1330, to grant personal jurisdiction to "every claim for relief" subject to the immunity exception of the statute—provided the plaintiff properly effects service of process under section 1608. Those exceptions can encompass a broad amount of conduct and include "rights in immovable property situated in the United States;" "commercial activity carried on in the United States by a foreign state;" and "commercial activity of the foreign state elsewhere" that "causes a direct effect in the United States." See 28 U.S.C. § 1605(a).
Though arising from a tangled and "complex" factual posture, the effect of Devas should not be understated. The ruling applies to all cases implicating the FSIA and one of its statutory exceptions, including cross-border arbitral awards that may expose clients to billions in liability, as was the case here. See 28 U.S.C. § 1605(a)(6). After Devas, any suit brought pursuant to one of the immunity exceptions may proceed in federal court, provided service of process is proper and no additional jurisdictional hurdle jumping is needed.
Notably, though, the Court left open the issue of whether the Fifth Amendment's Due Process Clause "itself requires a showing of minimum contacts." As a result, that constitutional question will be answered first by the lower courts. If those courts conclude that minimum contacts are required, it sets up an even broader and more important issue for the Supreme Court to resolve in the future.
Venable continues to monitor legal developments from the Supreme Court and around the country that affect our clients and stakeholders, including those involved in cross-border disputes.
* The authors would like to thank Matthew Kowal, a summer associate in our Washington, DC office, for his assistance writing this article.