Manuel Terenkian v. The Republic of Iraq

ORDER

The opinion filed on July 16, 2012, and appearing at 686 F.3d 1061 is withdrawn. The superseding opinion will be filed concurrently with this order. The parties may file an additional petition for rehearing or rehearing en banc. All other pending motions are denied as moot.

OPINION

Pentonville Developers, Ltd., and Marblearch Trading, Ltd., two Cyprus oil brokerage companies, sued the Republic of Iraq for unilaterally terminating two contracts for the purchase and sale of Iraqi oil. The district court held it had subject matter jurisdiction to hear this action notwithstanding Iraq’s assertion of sovereign immunity under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. § 1602 et seq., because the lawsuit fell within the “commercial exception” to that immunity. *1126 Because the lawsuit is not based upon commercial activity by Iraq in the United States nor upon an act in connection with such commercial activity having a direct effect in the United States, see 28 U.S.C. § 1605 (a)(2), we hold that the district court erred in denying Iraq’s motion to dismiss for lack of subject matter jurisdiction.

I

Pentonville Developers, Ltd., and Marblearch Trading, Ltd., are oil…

dissenting:

Iraq, run by the dangerous despot, Saddam Hussein, entered into two contracts to

*1140 buy oil from two companies owned by a United States citizen M.K. Terenkian. The contracts were executed in New York City. Terenkian was to pay for the oil by letters of credit drawn on a bank in New York City. The contracts were approved in New York City by the committee of the United Nations managing its Oil for Food Program. Formed in New York, the contracts were to be paid for in New York. The contracts received necessary approval in New York. It is very difficult to see why these were not all significant steps linking the contracts to the United States.

The majority suggests that the place of formation of the contracts was not significant because their formation is not at issue. Formation was the first essential element for the plaintiffs to establish in order to establish jurisdiction. The plaintiffs established that formation occurred in New York City. The majority finds that the place where payment was to be made was not significant. In our case, as in most cases, the place of performance of a promise to pay is significant. Terenkian would not have wanted payment to be made…

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MANUEL KEVORK TERENKIAN; 

PENTONVILLE DEVELOPERS, LTD.;

No. 10-56708

MARBLEARCH TRADING, LTD.,

Plaintiffs-Appellees, D.C. No. v.  2:03-cv-05485-

CBM-SH

THE REPUBLIC OF IRAQ; THE

ORDER AND

REPUBLIC OF IRAQ, by and through

OPINION

State Oil Marketing Organization, Defendants-Appellants.  Appeal from the United States District Court for the Central District of California Consuelo B. Marshall, Senior District Judge, Presiding

Argued and Submitted December 6, 2011—Pasadena, California

Filed September 18, 2012

Before: John T. Noonan, Ronald M. Gould, and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Ikuta; Dissent by Judge Noonan

11373 TERENKIAN v. REPUBLIC OF IRAQ 11377

COUNSEL

Edward L. Powers (argued), Zukerman Gore Brandeis & Crossman, LLP, New York, New York; Susan L. Hoffman, Robert A. Brundage, Bingham McCutchen, LLP, Los Ange- les, California, for appellant Republic of Iraq.

Melinda W. Ebelhar (argued), Edward D. Vaisbort, G. David Rubin, Litchfield Cavo LLP, Pasadena, California; Alan Gura, Gura & Possessky, PLLC, Alexandria,…