District of Columbia enforced an arbitral award issued by the International Chamber of Commerce, Paris, against the Federal Republic of Nigeria on April 25, 1978, under an arbitration provision in a commercial contract for purchase and sale of cement. The Federal Republic of Nigeria had refused to participate in the arbitration proceeding, relying on the legal defense of sovereign immunity, and had also failed to make payment upon the demand of Ipitrade International (Ipitrade) following the arbitral award.

Under the provisions implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. 201 et seq., Ipitrade sought an order (1) confirming the arbitration award of April 25, 1978, and (2) directing entry of judgment thereon against the Federal Republic of Nigeria. Service of the petition was made pursuant to the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. 1608 (a), and by order of the Court, upon the Embassy of the Federal Republic of Nigeria at Washington. Upon the respondent's failure to appear, District Judge Oliver Gasch ordered entry of a default judgment against the respondent on September 25, 1978, granting the petition to confirm the arbitration award. A portion of the memorandum opinion accompanying his order follows:

By entering into the contract, Nigeria expressly agreed that the construction, validity, and performance of the contract would be governed by the laws of Switzerland and that any disputes arising under the contract would be submitted to arbitration by the International Chamber of Commerce, Paris, France. During 1975 and 1976 various disputes arose with respect to the contract and on May 12, 1976, petitioner filed a demand for arbitration with the Secretariat of the Court of Arbitration of the International Chamber of Commerce. Thereafter, an arbitration proceeding was conducted in which the Federal Republic of Nigeria refused to participate, relying on the legal defense of sovereign immunity. The arbitrator, Dr. Max Brunner of Basel, Switzerland, found that under Swiss law respondent was bound by the obligations it voluntarily entered into and proceeded with the arbitration. On April 25, 1978, the arbitrator issued his written decision (the award), granting some of petitioner's claims but rejecting others. Under Swiss law the award of April 25, 1978 is final and binding on respondent. Petitioner has made demand upon respondent for payment pursuant to the terms of the award but respondent has not made such payment.

The award is subject to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which the United States, France, Nigeria, and Switzerland are each signatories. Article V of the Convention specifies the only grounds on which recognition and enforcement of a foreign arbitration award may be refused. 9 U.S.C. 201. None of the enumerated grounds exists in the instant case. The Foreign Service Immunities Act,

which codifies existing law with respect to suits against foreign states in United States courts, gives Federal district courts original jurisdiction against a foreign state as to "any claim for relief in personam with respect to which the foreign state is not entitled to immunity under sections 1605-1607 of this title or any applicable international agreement." 28 U.S.C. 1330. The Act specifies that there is no immunity in any case "in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver." 28 U.S.C. 1605(a)(1). The legislative history of this section expressly states that an agreement to arbitrate or to submit to the laws of another country constitutes an implicit waiver. H. Rep. No. 94-1487, 94th Cong., 2d Sess., reprinted in [1976] U.S. Code Cong. & Admin. News, at 6604, 6617. Consequently, respondent's agreement to adjudicate all disputes arising under the contract in accordance with Swiss law and by arbitration under International Chamber of Commerce Rules constitutes a waiver of sovereign immunity under the Act. This waiver cannot be revoked by a unilateral withdrawal.

*

No judgment by default shall be entered by a Federal district court against a foreign state unless the claimant establishes his right to relief by evidence satisfactory to the Court. 28 U.S.C. 1608 (e). In the instant case, petitioner is entitled to such relief because the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and of the Foreign Sovereign Immunities Act are satisfied.

465 F. Supp. 824, 826–827.

A notice of satisfaction of docket was filed Nov. 8, 1978.

For the (United Nations) Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958, see TIAS 6997, 21 UST 2517 (entered into force for the United States Dec. 29, 1970, subject to declarations).

P.L. 91-368, approved July 31, 1970 (effective Dec. 29, 1970), 84 Stat. 692, 9 U.S.C. 201 et seq., set forth provisions for enforcement of the Convention in U.S. Courts.

Minimum Jurisdictional Contacts

In Carey v. National Oil Corporation, 453 F. Supp. 1097 (S.D. N.Y., 1978), the New England Petroleum Corporation (NEPCO) and Carey, as assignee of two NEPCO Bahamian subsidiaries, brought suit against National Oil Corporation (NOC), a Libyan state-owned corporation engaged primarily in production and sale of crude oil, and against the Libyan Arab Republic, to recover (1) damages for breach of supply contracts entered into between one NEPCO subsidiary and NOC on September 10 and 12, 1973, and (2) excess charges under a subsequent contract between that subsidiary and NOC, executed on January 29, 1974, allegedly under duress, and also under

tanker charter contracts entered into on December 9, 1973, allegedly also under duress, between the second NEPCO subsidiary and another Libyan state-owned corporation, General Maritime Transport Organization (GMTO), the predecessor of General National Maritime Transport Company (GNMTC).

The background to execution of the September 1973 contracts was the nationalization by Libya on September 1, 1973, of 51 percent of a number of foreign-owned oil concessions, including that of the NEPCO subsidiary's original, ultimate supplier, whereupon its intermediary supplier had terminated its contractual obligations to the NEPCO subsidiary for "force majeure." After the NEPCO subsidiary had executed the September 1973 contracts with NOC, the "Yom Kippur War" had broken out in October 1973; this had led to imposition by oil-producing nations, including Libya, of an embargo on petroleum exports to the United States, the Netherlands, and the Bahamas. Oil production had been cut back, and prices had risen. NOC had invited submission of bids for new contracts, to supersede those then in force; the NEPCO subsidiary had executed a new contract on January 29, 1974, which called for a higher per barrel price for the first quarter of 1974 and for subsequent adjustments. Contract relations between both NEPCO subsidiaries and their respective Libyan state-owned contracting partners deteriorated, with disputes about past due payments and future deliveries, as to NOC, and about rate reductions on the tanker charters, as to GNMTC. After the action in question was commenced in the United States, NOC petitioned in the Bahamas to have the affairs of its NEPCO subsidiary trading partner wound up. The other NEPCO subsidiary had surrendered the tankers at Curacao, and GNMTC instituted liquidation proceedings against it in the Bahamas.

In the action, the plaintiffs alleged that the January 1974 supply contract had been conditioned upon performance of the anterior September 1973 supply agreements, which NOC had never carried out. Carey, as assignee, claimed damages for their breach from Libya and NOC, and recovery from both of excessive amounts under the January 1974 contract and under the December 1973 tanker charter contracts, joining NOC on the grounds that it had "extorted" these payments as the price of its own performance. NEPCO claimed that Libya and NOC had intentionally frustrated the 1973 agreements of which it was, allegedly, a known beneficiary. NEPCO and Carey both charged Libya with having deliberately induced NOC to breach those agreements. The final claim in the action accused both Libya and NOC (which Libya had created in March 1970) with having deliberately caused the circumstances in which the original (1968) supply con

tracts between the NEPCO subsidiary and its non-Libyan Government supplier could no longer be fulfilled.

District Judge Kevin Thomas Duffy granted the defendants' motion to dismiss the action on the grounds that they were protected both under the general law of sovereign immunity and under the Court's interpretation of the exception to that immunity set out in 28 U.S.C. 1605(a)(2), in the light of the legislative history of the Foreign Sovereign Immunities Act of 1976. Judge Duffy's decision of June 15, 1978, read in part:

A. Claims 1-4

The only exception to immunity that could even arguably apply to the transactions here is that found in 28 U.S.C.A. 1605(a)(2): "an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere. . . [which] act causes a direct effect in the United States."

It is plain from the legislative history of the Foreign Sovereign Immunities Act that "[t]he requirements of minimum jurisdictional contacts and adequate notice are embodied" in the Act. "Cf. International Shoe Co. v. Washington, 326 U.S. 310 [66 S.Ct. 154, 90 L.Ed. 95] (1945) . . . ." H.Rep.No.94-1487, 94th Cong., 2d Sess. 13 (1976). The language of 28 U.S.C.A. 1605 (a) (2) must therefore be read in light of International Shoe and "minimum contacts."

If anything is apparent about the nature of the contacts between Libya and the United States in 1973-74, it is that Libya consciously sought to reduce those contacts to nothing, if at all possible. None of the contracts at issue involved any United States corporations

Even with respect to the non-embargo period, it is evident that nothing Libya or NOC did concerning the 1968, 1973 or 1974 contracts could possibly have had a direct effect in the United States of a kind that would satisfy International Shoe. Even if, as plaintiffs allege, the Libyan Government was aware that the Bahamian subsidiaries were being used merely as conduits to supply NEPCO and its customers, and even if-as seems likely-the 1974 embargo was designed to have a direct effect of a sort on the United States, the effect in question (deprivation of oil to Bahamian corporations) is not one that creates the requisite minimum contacts. There has been absolutely no attempt by Libya or NOC to avail itself of any of the protections or privileges afforded by the United States-rather, in fact, the reverse. See Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1953). Accordingly, claims 1-4 must be dismissed against both Libya and NOC.

B. Claim 5

While its specific context differs from that of claims 1-4, claim 5 presents only the same legal question as do those claims: Did the alleged misconduct with respect to the charter contracts have a direct effect in the United States? Naturally, the answer, as well, is the same: No.

The due process standard embodied in 28 U.S.C.A. 1605 (a) (2) bars this claim against both Libya and NOC.

C. Claims 6 and 7

These claims, asserted against Libya alone, allege in effect that Libya induced NOC's breach of the 1973 oil contracts. This refers, presumably, to the orders that franchisees cut back their production. It is beyond cavil that these actions by Libya were no part of a commercial undertaking; rather, they were deliberate weapons of foreign policy, aimed at influencing the conduct of other nations, or at least punishing undesirable conduct.

The structure of the Foreign Sovereign Immunities Act leaves no question that non-commercial activities of a foreign state will be treated with the same deference to which they were entitled before 1976.... Therefore, I conclude that this was not the kind of act to which the exceptions in 28 U.S.C.A. 1605 were meant to apply.

Furthermore, even if the relevant alleged acts by Libya are not viewed as sovereign in nature, they constitute at most a tortious interference with contract rights. This category of claims is specifically excluded from the scope of exceptions to the Foreign Sovereign Immunities Act, 28 U.S.C.A. 1605 (a) (5) (B). Viewed in any possible light, claims 6 and 7 must be dismissed.

D. Claim 8

Claim 8 appears to be an omnibus claim, in which plaintiffs attempt to hold both Libya and NOC responsible for the entire series of events described in Part I supra, from 1968 to the present. Its contours, therefore, are somewhat nebulous.

Since all of claim 8 appears to turn on the nationalizations in 1973..., I must determine whether either Libya or NOC may be questioned in this Court with respect to those nationalizations. The answer is no, for a combination of all of the reasons discussed above. First, nationalization is the quintessentially sovereign act, never viewed as having a commercial character. . . . Second, the activity complained of constitutes, if anything actionable, an interference with contract rights. Finally, I can again discern no direct effect in the United States flowing from any act of Libya or NOC. Claim 8 must join claims 1-7 in dismissal.

* The one exception appears in 28 U.S.C.A. 1605 (a) (3) and involves expropriation of property physically located in the United States, an exception plainly irrelevant here.

453 F. Supp. 1097, 1101-1102.

The decision was affirmed per curiam by the Second Circuit. 592 F.2d 673 (1979).

In regard to Libyan expropriations, see, further, the 1973 Digest, pp. 334–335, the 1974 Digest, pp. 275-278, the 1975 Digest, pp. 489 491, and the 1977 Digest, pp. 675-680.

In Upton et al. v. Empire of Iran et al., 459 F. Supp. 264 (D.D.C. 1978), the plaintiffs brought an action for wrongful death and personal injuries, caused by the collapse of the roof of an airport termi