United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 14, 2006 Decided June 22, 2007
No. 05-7178
HIWOT NEMARIAM ET AL.,
APPELLANTS
v.
THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA AND
THE COMMERCIAL BANK OF ETHIOPIA,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 00cv01392)
Donald F. Donovan argued the cause for the appellants.
Caroline H. Moustakis, and Colby A. Smith were on brief.
Katherine B. Wilmore entered an appearance.
Knox Bemis argued the cause for the appellees. W. DeVier
Pierson and Thomas R. Snider were on brief.
Before: HENDERSON and TATEL, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: The
appellants—six individuals of Eritrean origin, descent or
2
nationality and the class they seek to represent—challenge the
district court’s dismissal of their unlawful takings claims against
the Federal Democratic Republic of Ethiopia (Ethiopia) and the
Central Bank of Ethiopia (CBE) for lack of subject matter
jurisdiction under the Foreign Sovereign Immunities Act (FSIA
or Act), 28 U.S.C. §§ 1330, 1602-1611. The court held that the
appellants’ claims failed to satisfy both the “rights in property”
and the “owned or operated” requirements of 28 U.S.C.
§ 1605(a)(3). As detailed below, we affirm the district court’s
dismissal on alternative grounds.
I.
In May 1998, a long-standing border dispute between Eritrea
and Ethiopia erupted into armed conflict. Approximately one
month later, Ethiopia announced that a vast number of Eritreans
living in the country “were engaged in spying and mobilizing
financial and other resources to support the Eritrean aggression.”
First Amended Class Action Compl. ¶ 46 (Compl.), reprinted
in Joint Appendix (JA) at 599 (internal quotation omitted). As
a result, the appellants claim that they, along with thousands of
other Eritreans, were expelled from the country “without notice
or due process.” Id. at 600.
In conjunction with their expulsions, the appellants claim
that Ethiopia seized their bank accounts and other property.
Specifically, they assert that Ethiopia issued an order freezing
their CBE accounts “which prevented any access to or
withdrawal of funds.” Id. at 602-03. The CBE allegedly
“retained the funds from these accounts or . . . exchanged them
for other assets.” Id. at 603. Although Ethiopia and the CBE
contend that the funds in the accounts remain accessible, the
appellants maintain that, having been expelled, they can never
access the funds in their accounts because under Ethiopian
banking law, holders of bank accounts must appear in person to
withdraw funds—in Ethiopia there are no automated tellers,
3
wire transfers are not permitted and checking accounts are
illegal.
The appellants also claim that their businesses, houses,
automobiles and other property1 were seized and in many cases
sold substantially below their market value at auction “by CBE
for the benefit of CBE and Ethiopia.” Many of the sales
allegedly occurred under the pretext that the property was
burdened by a tax debt or that a mortgage was in default. Some
sales proceeds may have been deposited into CBE bank accounts
in the appellants’ names. Corrected Mem. of P. & A. in Opp’n
to Defs.’ Refiled Mot. to Dismiss 16 (Corrected Mem.).
On December 12, 2000, Ethiopia and Eritrea signed a Peace
Agreement (Agreement) providing for the permanent
termination of military hostilities. One provision of the
1
Appellant Sertzu Gebremeskel alleges that the CBE and Ethiopia
seized and auctioned machinery and other immovable assets from his
construction business. He also alleges that he lost his personal
residence and household goods. Compl., supra, at JA 610-11.
Appellant Belay Redda alleges that the CBE and Ethiopia seized
and auctioned his dry cleaning business. Id. at 605.
Appellant Tedros Asfaha alleges that “the Ethiopian Government”
expropriated and sold his two shops. Id. at 613. He also alleges that
he lost his household effects and two cars. Id.
Appellant Fekadu Andemeskal alleges that his businesses were
confiscated. Id. at 615. He also alleges that he lost his family home,
another house, cars, household possessions and “business imports
waiting to clear customs.” Id. at 615-16.
Appellant Mebrahtu Gebremedhin claims to have lost his house,
a car and household goods. Id. at 619.
Appellant Hiwot Nemariam was married to appellant Belay
Redda, who is deceased, and thus “shares in the losses suffered by her
husband.” Id. at 608.
4
Agreement created a Claims Commission (Commission) to
adjudicate claims for loss, damage or injury related to the
conflict and resulting from a violation of international law.
Although the Agreement established the Commission as the
exclusive forum for adjudicating claims arising from the
conflict, it specifically provided for the continuance of claims
filed in other fora before December 12, 2000.
The appellants brought suit in the district court on June 12,
2000. On August 12, 2001, the district court granted Ethiopia’s
and the CBE’s motion to dismiss for lack of subject matter
jurisdiction and lack of personal jurisdiction on the basis of
forum non conveniens in favor of the Commission. We
overturned the dismissal, however, concluding that “the
Commission’s inability to make an award directly to [the
appellants], and Eritrea’s ability to set off [the appellants’]
claim[s], against claims made by . . . Ethiopia, render the
Commission an inadequate forum.”2 Nemariam v. Fed.
Democratic Republic of Ethiopia, 315 F.3d 390, 395 (D.C. Cir.
2003).
Following our remand, jurisdictional discovery commenced
in September 2003. Discovery disputes stalled its completion
but the district court nevertheless directed Ethiopia and the CBE
to file a renewed motion to dismiss. On the retirement of the
district judge who originally dismissed the action, the judge to
2
On December 12, 2001, Eritrea filed 32 claims with the
Commission, including the claims at issue here. Three years later, on
December 17, 2004, the Commission issued a “Partial Award”
representing its final determination on liability regarding several of the
claims. See Partial Award, Civilians Claims, Eritrea’s Claims 15, 16,
23 & 27-32, Claims Commission ¶¶ 145-46, reprinted in JA at 1222-
23). The award was “partial” in that it determined liability without
calculating damages. The record does not indicate whether the
Commission has since awarded damages.
5
whom it was assigned ordered the CBE and Ethiopia to refile
memoranda in support of their renewed motion to dismiss and
ordered the appellants to refile a response. In an Order dated
November 8, 2005, the district court again dismissed the
complaint for lack of subject matter jurisdiction. Nemariam v.
Fed. Democratic Republic of Ethiopia, 400 F. Supp. 2d 76, 86
(D.D.C. 2005). This appeal followed.
II.
FSIA is “the sole basis for obtaining jurisdiction over a
foreign state in our courts.” Argentine Republic v. Amerada
Hess Shipping Corp., 488 U.S. 428, 434 (1989). It gives the
district court “jurisdiction over a civil action against a foreign
sovereign for any claim ‘with respect to which the foreign state
is not entitled to immunity.’” Peterson v. Royal Kingdom of
Saudi Arabia, 416 F.3d 83, 86 (D.C. Cir. 2005) (quoting 28
U.S.C. § 1330(a)3). A foreign state enjoys sovereign immunity
under the Act “unless an international agreement or one of
several exceptions in the statute provides otherwise.” Id.
(internal citations omitted). Thus, “[i]n the absence of an
applicable exception, the foreign sovereign’s immunity is
‘complete’—‘[t]he district court lacks subject matter jurisdiction
over the plaintiff’s case.’” Id. (quoting Phoenix Consulting, Inc.
v. Republic of Angola, 216 F.3d 36, 39 (D.C. Cir. 2000) (2d
alteration in original)).
3
Section 1330(a) provides:
The district courts shall have original jurisdiction without
regard to amount in controversy of any nonjury civil action
against a foreign state . . . as to any claim for relief in
personam with respect to which the foreign state is not
entitled to immunity either under sections 1605-1607 of [title
28] or under any applicable international agreement.
28 U.S.C. § 1330(a).
6
The appellants seek to establish jurisdiction pursuant to 28
U.S.C. § 1605(a)(3)—FSIA’s so-called “expropriation
exception”—alleging that Ethiopia and the CBE illegally
expropriated their bank accounts (bank account claims) and
other property (non-bank account claims). Section 1605(a)(3)
provides:
(a) A foreign state shall not be immune from the
jurisdiction of courts of the United States or of the States
in any case—
(3) in which rights in property taken in violation
of international law are in issue and that property or
any property exchanged for such property is present
in the United States in connection with a
commercial activity carried on in the United States
by the foreign state; or that property or any property
exchanged for such property is owned or operated
by an agency or instrumentality of the foreign state
and that agency or instrumentality is engaged in a
commercial activity in the United States.
28 U.S.C. § 1605(a)(3). For the exception to apply, therefore,
the court must find that: (1) “rights in property are at issue;” (2)
“those rights were taken in violation of international law;” and
(3) “a jurisdictional nexus [exists] between the expropriation and
the United States.” Peterson v. Royal Kingdom of Saudi Arabia,
332 F. Supp. 2d 189, 196, 197 (D.D.C. 2004), aff’d, 416 F.3d 83
(D.C. Cir. 2005). A jurisdictional nexus is established if: (a) the
property “‘is present in the United States in connection with a
commercial activity carried on in the United States by the
foreign state’” or (b) the property “‘is owned or operated by an
agency or instrumentality of the foreign state and that agency or
instrumentality is engaged in a commercial activity in the United
States.’” Id. at 197-98 (quoting 28 U.S.C. § 1605(a)(3)). The
appellants contend that both their bank account and non-bank
7
account claims satisfy the latter jurisdictional nexus
requirement.
In their motion to dismiss, the CBE and Ethiopia did not
dispute the appellants’ factual allegations. See Defs.’ Reply
Mem. of Law in Supp. of Refiled Mot. to Dismiss for Lack of
Jurisdiction 3 (“[G]rounds for dismissal are based upon issues
of law, and underlying facts sufficient to support dismissal are
not in dispute.” (emphasis added)). Accordingly, we must “take
the [appellants’] factual allegations as true and determine
whether they bring the case within any of the exceptions to
immunity invoked by the [appellants].” Phoenix Consulting,
216 F.3d at 40. We review “de novo whether [the] facts are
sufficient to divest the foreign sovereign of its immunity.” Price
v. Socialist People’s Libyan Arab Jamahiriya, 389 F.3d 192, 197
(D.C. Cir. 2004).
A. Bank Account Claims
The district court dismissed the appellants’ bank account
claims because they failed to satisfy both the “rights in property”
and the “owned or operated” requirements of section 1605(a)(3).
See Nemariam, 400 F. Supp. 2d at 83-84, 85. Specifically, the
district court held that a bank account constitutes an intangible
contract right to receive funds from the bank, id. at 83-84, the
expropriation exception does not apply to intangible property,
id. at 82, and the appellants failed to demonstrate that the CBE
benefitted from its alleged control over the bank accounts, id. at
84-86.4 Although we disagree with the district court’s
4
Relying on the holdings in Vencedora Oceanica Navigacion, S.A.
v. Compagnie Nationale Algerienne de Navigation, 730 F.2d 195 (5th
Cir. 1984), and Greenpeace, Inc. v. State of France, 946 F. Supp. 773
(C.D. Cal. 1996), the district court concluded from FSIA’s legislative
history that the “owned or operated” language has a benefit element.
See infra pp. 15-16; Nemariam v. Fed. Democratic Republic of
Ethiopia, 400 F. Supp. 2d 76, 84-85 (D.D.C. 2005).
8
interpretation of the “rights in property” and the “owned or
operated” requirements of section 1605(a)(3), we nevertheless
agree with the district court that the CBE neither owns nor
operates the appellants’ bank accounts within the meaning of
section 1605(a)(3).
1. “Rights In Property” Requirement
As an initial matter, the appellants’ bank accounts constitute
intangible property under Ethiopian banking law. Article 896 of
the Ethiopian Commercial Code states, “The contract of deposit
of funds renders the bank owner of the funds deposited,
irrespective of the mode of deposit. The bank may dispose of
these funds in respect of its professional activity, subject to their
repayment under the conditions provided in the contract . . . .”
Excerpt From Ethiopian Commercial Code of 1960, reprinted in
JA at 1232 (emphasis added); see also Hardee v. George H.
Price Co., 89 F.2d 497, 499 (D.C. Cir. 1937) (“[I]t is the law
that when money is deposited generally in a bank its ownership
passes to the bank and the relation of debtor and creditor is at
once created.”). Thus, as the district court noted, “once funds
are deposited into a holder[’s] account, the holder simply has a
contractual right to receive the funds upon request, not physical
possession or even control of the actual funds.” Nemariam, 400
F. Supp. 2d at 83; see also Citizens Bank of Md. v. Strumpf, 516
U.S. 16, 21 (1995) (bank account “consists of nothing more or
less than a promise to pay, from the bank to the depositor”). A
contractual right to receive payment constitutes intangible
property. West v. Multibanco Comermex, S.A., 807 F.2d 820,
830 (9th Cir. 1987) (“certificates of deposit may be
characterized as intangible property or contracts”); de Sanchez
v. Banco Central de Nicaragua, 770 F.2d 1385, 1395 (5th Cir.
1985) (contractual right to receive payment constitutes
intangible property right).
We have yet to address whether the expropriation exception
applies to intangible property. See Peterson, 416 F.3d at 88
9
(“[W]e have not decided the question and need not do so
today.”). In fact, no circuit court has directly addressed the
issue. See, e.g., Zappia Middle East Constr. Co. v. Emirate of
Abu Dhabi, 215 F.3d 247, 251 (2d Cir. 2000) (“We need not
determine whether intangible contract rights are property under
the statute . . . .”); de Sanchez, 770 F.2d at 1395 (“We need not
decide here, however, whether Mrs. Sanchez’s contractual right
to receive payment on Banco Central’s check is a ‘right in
property’ within the meaning of Section 1605(a)(3).”).5 Some
district courts—including our own—have held, based on the
reasoning of a decision from the Southern District of New York,
see Canadian Overseas Ores Ltd. v. Compania de Acero Del
Pacifico S.A., 528 F. Supp. 1337 (S.D.N.Y. 1982), aff’d., 727
F.2d 274 (2d Cir. 1984), that the expropriation exception applies
only to tangible property.6
5
In Brewer v. Socialist People’s Republic of Iraq, 890 F.2d 97,
101 (8th Cir. 1989), the Eighth Circuit affirmed the district court’s
denial of default judgment on a breach of contract claim brought
against Iraq. It noted that “[s]ome courts have interpreted [section
1605(a)(3)] to exclude claims involving intangible property, such as
contracts.” The court further explained, however, that the contract
rights at issue “were not expropriated—rather, the contract itself was
repudiated by defendants. We find that such a repudiation is not
equivalent to expropriation.” Id. (citing Kalamazoo Spice Extraction
Co. v. Provisional Military Gov’t of Socialist Ethiopia, 616 F. Supp.
660, 663 n.5 (W.D. Mich. 1985)). In distinguishing between
expropriation and repudiation, the court suggested that a different
result might have been reached had the contract rights been
expropriated.
6
See Gutch v. Fed. Republic of Germany, 444 F. Supp. 2d 1, 10
(D.D.C. 2006); Yang Rong v. Liaoning Provincial Gov’t, 362 F. Supp.
2d 83, 101 (D.D.C. 2005); Peterson v. Royal Kingdom of Saudi
Arabia, 332 F. Supp. 2d 189, 197 (D.D.C. 2004), aff’d, 416 F.3d 83
(D.C. Cir. 2005); see also Daventree Ltd. v. Republic of Azerbaijan,
10
In Canadian Overseas, the district court dismissed a claim
brought under section 1605(a)(3) of FSIA seeking payment “for
spare parts and related equipment allegedly delivered” to a
company acquired by the defendant and “to recover for loans
allegedly made” to that company by its predecessor. Id. at 1338.
Focusing on FSIA’s legislative history, the court concluded that
the claim did not involve “rights in property.” It relied on the
Foreign Sovereign Immunities Act of 1976 House Report
(House Report), which stated that the expropriation exception
was “in no way [to] affect[] existing law on the extent to which,
if at all, the ‘act of state’ doctrine may be applicable.”7 H.R.
Rep. No. 94-1487, at 20 (1976). The House Report
cited—without further explanation—22 U.S.C. § 2370(e)(2).
That statute—known as the Hickenlooper
Amendment—provides:
Notwithstanding any other provision of law, no court in
the United States shall decline on the ground of the
federal act of state doctrine to make a determination on
the merits giving effect to the principles of international
law in a case in which a claim of title or other right to
349 F. Supp. 2d 736, 751 (S.D.N.Y. 2004); Lord Day & Lord v.
Socialist Republic of Vietnam, 134 F. Supp. 2d 549, 560 (S.D.N.Y.
2001); Sampson v. Fed. Republic of Germany, 975 F. Supp. 1108,
1117 (N.D. Ill. 1997); Intercontinental Dictionary Series v. de
Gruyter, 822 F. Supp. 662, 678 (C.D. Cal. 1993).
7
The act of state doctrine “precludes the courts of this country
from inquiring into the validity of the public acts a recognized foreign
sovereign power committed within its own territory.” Banco Nacional
de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964). The doctrine is
“derived from a policy of mutual respect for other nations’ sovereignty
and the appropriate roles of the judicial and executive branches of
government.” Daventree, 349 F. Supp. 2d at 754 (citing Underhill v.
Hernandez, 168 U.S. 250, 252 (1897)).
11
property is asserted by any party including a foreign
state (or a party claiming through such state) based upon
(or traced through) a confiscation or other taking after
January 1, 1959, by an act of that state in violation of the
principles of international law . . . .
22 U.S.C. § 2370(e)(2).8 The district court in Canadian
Overseas reasoned that, because the “claim of title or other right
to property” language in the Hickenlooper Amendment “has
been interpreted to apply only to takings of tangible property
[and] not to include intangible interests like [a] contractual right
to payment,” it had to interpret the similar language in section
1605(a)(3) as applying only to tangible property.9 Canadian
Overseas, 528 F. Supp. at 1346. Otherwise, “[w]ere the phrase
‘rights in property taken in violation of international law’ in the
FSIA interpreted more broadly than the similar phrase utilized
in the Hickenlooper Amendment, Congress would have
conferred jurisdiction for suits only to have them dismissed in
accordance with the act of state doctrine.” Id. The court also
8
Through the Hickenlooper Amendment,
Congress . . . adopted a specific statutory provision requiring
federal courts to examine the merits of controversies
involving expropriation claims. [It] overrides the judicially
developed doctrine of act of state. Hickenlooper was passed
in response to the Supreme Court’s decision in [Sabbatino,
376 U.S. 398], which barred adjudication of an expropriation
claim on act of state grounds.
West v. Multibanco Comermex, S.A., 807 F.2d 820, 829 (9th Cir.
1987).
9
The Court of Appeals of New York first interpreted the
Hickenlooper Amendment as applying to tangible property only. See
French v. Banco Nacional de Cuba, 23 N.Y.2d 46 (1968). The
Second Circuit adopted that interpretation in Menendez v. Saks & Co.,
485 F.2d 1355 (2d Cir. 1973).
12
noted that “the further requirements in § 1605(a)(3) that ‘the
property taken in violation of international law’ or ‘any property
exchanged therefor’ be ‘present in the United States in
connection with a commercial activity carried on in the United
States by a foreign state’ or be ‘owned or operated by an agency
or instrumentality of the foreign state . . . engaged in commercial
activity in the United States’” suggested that section 1605(a)(3)
is “applicable to tangible property [and] is on its face
inapplicable to a contractual right to be paid.” Id. (ellipsis in
original).10
The appellants contend that Canadian Overseas is
“inapposite” because it “involved unvested rights of a
fundamentally different nature than bank accounts.” Appellants’
Br. at 20. They maintain that two other district court
decisions—Kalamazoo Spice Extraction Co. v. Provisional
Military Government of Socialist Ethiopia, 616 F. Supp. 660
(W.D. Mich. 1985) and de Sanchez v. Banco Central de
Nicaragua, 515 F. Supp. 900, 910 (E.D. La. 1981), aff’d on
other grounds, 770 F.2d 1385 (5th Cir. 1985)—support their
claim that section 1605(a)(3) applies to intangible property,
10
The Southern District of New York subsequently had second
thoughts. In Zappia Middle East Construction Co. v. Emirate of Abu
Dhabi, No. 94 CIV.1942, 1996 WL 413680 (S.D.N.Y. July 24, 1996),
it appeared to doubt the tangible/intangible distinction, id. at *8 n.8.
It noted that in Banco Nacional de Cuba, 822 F.2d 230 (2d Cir. 1987),
the Second Circuit declared that “[a]s defined in international law,
property commonly includes intangible assets and ‘any interest in
property if such interest has a reasonably ascertainable value.’”
Zappia, 1996 WL 413680, at *8 n.8 (quoting Banco Nacional de
Cuba, 822 F.2d at 238) (alteration in original). Although the Second
Circuit was not interpreting FSIA in Banco Nacional de Cuba, the
Zappia court noted that “[i]t appears anomalous that taking of
intangible property constitutes a violation of international law, but lies
outside of the expropriation exception of FSIA.” Id.
13
including their accounts. Appellants’ Br. at 15-16. In
Kalamazoo, the district court held that the seizure of the
controlling stockholder’s interest in a corporation triggered the
expropriation exception. 616 F. Supp. at 663. The Kalamazoo
court, however, did not characterize the property right as
intangible property. See id. (“The rights in property that are at
issue are the assets of [the corporation].” (emphasis added)).
Rather, it determined that a controlling interest in the
corporation’s stock was no different from the corporation’s
physical assets under section 1605(a)(3) because “[i]n either
case, the foreign state has expropriated control of the assets and
profits of the corporation.” Id.11 Unlike a controlling interest in
corporate stock, however, a bank account does not represent
control of a tangible asset—instead it constitutes a contractual
right to receive payment from funds owned by the bank. See
Hardee, 89 F.2d at 499.12
Despite the popularity of the Canadian Overseas decision in
the district courts, see, e.g., Peterson, 332 F. Supp. 2d at 197, we
find its reasoning unpersuasive. Neither the plain language of
11
In fact, the Kalamazoo court distinguished Canadian Overseas,
declaring, “[Canadian Overseas] is not to the contrary. That case did
not involve an expropriation but the simple repudiation of a
contractual obligation. In this case, no one disputes that the [foreign
sovereign] expropriated some kind of property, whether stock or
assets.” Kalamazoo, 616 F. Supp. at 663 n.5 (internal citations
omitted).
12
In the other district court decision relied on by the appellants, de
Sanchez, the district court applied the expropriation exception to a
certificate of deposit without discussing the tangible/intangible
property distinction. 515 F. Supp. 900, 910 (E.D. La. 1981), aff’d on
other grounds, 770 F.2d 1385 (5th Cir. 1985). The de Sanchez
decision predated Canadian Overseas and included no explanation of
the applicability of section 1605(a)(3) to a certificate of deposit. See
id.
14
section 1605(a)(3) nor its legislative history expressly states that
the expropriation exception applies only to tangible property.
Moreover, “the tangible/intangible characterization of property
interests . . . is a distinction without a difference” and “is not
generally recognized in international, federal, or state law.”
West, 807 F.2d at 830 (“‘The relationship between a depositor
and bank arises only out of contract[,] . . . a contract right is
property.’” (quoting Panel Opinion No. 1, (revised), Fourteenth
Semiannual Report to the Congress for the Period Ending June
30, 1961, 124, 125 (Foreign Claims Settlement Comm’n)
(alterations in original) (alteration omitted))); see also Banco
Nacional de Cuba v. Chem. Bank N.Y. Trust Co., 822 F.2d 230,
238 (2d Cir. 1987). The Canadian Overseas court’s conclusions
rest instead on (1) section 1605(a)(3)’s link to the Hickenlooper
Amendment and (2) the Hickenlooper Amendment’s
applicability to tangible property only. We believe the first
conclusion is erroneous and we therefore do not opine on the
Hickenlooper Amendment’s reach.
At least two obstacles prevent a federal court from
adjudicating on the merits a claim against a foreign sovereign:
foreign sovereign immunity and the act of state doctrine.
Section 1605(a)(3) and the Hickenlooper Amendment operate to
remove these obstacles for a claim involving the expropriation
of “property” in violation of international law. That is, section
1605(a)(3) provides subject matter jurisdiction by creating an
exception to foreign sovereign immunity for a claim involving
the expropriation of “rights in property.” 28 U.S.C.
§ 1605(a)(3). And the Hickenlooper Amendment creates an
exception to the act of state doctrine for a claim involving the
expropriation of a “claim of title or other right to property.” 22
U.S.C. § 2370(e)(2).
The Canadian Overseas court reasoned that because both the
expropriation exception and the Hickenlooper Amendment serve
a similar purpose, the statutes must be interpreted consistently.
15
Neither the text nor the legislative history of section 1605(a)(3),
however, supports such a reading. In fact, the House Report
relied on in Canadian Overseas suggests that the statutes were
not to operate in tandem. It declared that section 1605(a)(3)
“deals solely with issues of immunity” and that “it in no way
affects existing law on the extent to which, if at all, the ‘act of
state doctrine’ may be applicable.” H.R. Rep. No. 94-1487, at
20 (emphases added). In other words, the House Report
indicates that the Congress intended that the expropriation
exception to foreign sovereign immunity operate independently
from the Hickenlooper Amendment’s exception to the act of
state doctrine. In a footnote following a citation to the
Hickenlooper Amendment, the House Report further explained:
The committee has been advised that in some cases,
after the defense of sovereign immunity has been denied
or removed as an issue, the act of state doctrine may be
improperly asserted in an effort to block litigation. . . .
The committee has found it unnecessary to address the
act of state doctrine in this legislation since decisions
such as that in [Alfred Dunhill of London, Inc. v.
Republic of Cuba, 425 U.S. 682 (1976)] demonstrate that
our courts already have considerable guidance enabling
them to reject improper assertions of the act of state
doctrine.
Id. at 20 n.10 (emphases added). Thus, instead of limiting the
expropriation exception to tangible property, the Congress
expressed confidence that federal courts would not apply the act
of state doctrine too broadly—that is, to “improperl[y]” prevent
adjudication on the merits after jurisdiction had been
established.
We are therefore free to interpret section 1605(a)(3)
independent of the Hickenlooper Amendment—and more
important, we believe this interpretation to be the correct one.
The plain language of section 1605(a)(3)—as well as its
16
legislative history—does not limit its application to tangible
property. Moreover, there seems to us to be no reason to
distinguish between tangible and intangible property when the
operative phrase is “rights in property.” We therefore conclude
that the expropriation exception applies to the appellants’ bank
accounts. We next consider whether the CBE “own[s] or
operate[s]” those accounts.
2. “Owned or Operated” Requirement
The district court concluded that the “owned or operated”
language of section 1605(a)(3) requires a showing that the
property benefitted the government which allegedly
expropriated it. Nemariam, 400 F. Supp. 2d at 84-85. In so
holding, it relied on the only two reported decisions addressing
the issue—Vencedora Oceanica Navigacion, S.A. v. Compagnie
Nationale Algerienne de Navigation, 730 F.2d 195 (5th Cir.
1984), and Greenpeace, Inc. v. State of France, 946 F. Supp.
773 (C.D. Cal. 1996). Unlike the district court, we are not
persuaded by the reasoning of those decisions.
In Vencedora, the Fifth Circuit dismissed a claim that an
Algerian corporation had tortiously deprived the appellant of its
wrecked oil tanker following a salvage operation. 730 F.2d at
196, 197. The court held that the expropriation exception did
not apply because “owned or operated” means more than
“‘possess[ed]’ or ‘controll[ed].’” Id. at 204. Citing FSIA’s
House Report, the court explained:
[S]ection 1605(a)(3) was intended to subject to United
States jurisdiction any foreign agency or instrumentality
that has nationalized or expropriated property without
compensation, or that is using expropriated property
taken by another branch of the state. The vessel in this
case thus would have been owned or operated under
section 1605(a)(3) if . . . some Algerian agency had
17
assumed control of the vessel and had used it to carry oil
for the benefit of the Algerian government.
Id. (internal citation omitted). The Greenpeace district court
adopted the Fifth Circuit’s reasoning. It held that a vessel
allegedly “impounded, inventoried and sealed,” 946 F. Supp. at
777, by the French Navy was not “owned or operated” by
France because neither “France [n]or some French agency had
assumed control of the vessel and had used it for the benefit of
the French government,” id. at 784.
We believe the Vencedora holding runs contrary to the
language and legislative history of section 1605(a)(3). The
phrase “owned or operated” plainly does not include a benefit
requirement. To “own” is to “have or hold as property or
appurtenance . . . [possess],”13 see Webster’s Third New
International Dictionary 1612 (3d ed. 1993), and to “operate” is
to “exert power or influence,” id. at 1580. Moreover, the
legislative history the Fifth Circuit cited, H.R. Rep. No. 94-
1487, at 19-20, did not impose such a requirement or even refer
to the “owned or operated” language. Rather, the House Report
defined the phrase “taken in violation of international law,”
stating, “The term ‘taken in violation of international law’ would
include the nationalization or expropriation of property without
payment of the prompt[,] adequate and effective compensation
required by international law.” H.R. Rep. No. 94-1487, at 19-
20. Even assuming the Report addressed the “owned or
operated” language, the plain meaning of “nationalization or
expropriation” dovetails with the plain meaning of “owned or
operated” and thus weighs against imposing a benefit
requirement. That is, to “expropriate” is to “transfer (the
property of another) to one’s own possession,” Webster’s,
supra, at 803, and to “nationalize” is to “invest in the central
13
To “possess” is to “seize or gain control of.” Webster’s Third
New International Dictionary 1770 (3d ed. 1993).
18
government of a nation the control or ownership of” property,
id. at 1505. “Where . . . the plain language of the statute is clear,
the court generally will not inquire further into its meaning, at
least in the absence of a clearly expressed legislative intent to
the contrary.” Qi-Zhuo v. Meissner, 70 F.3d 136, 140 (D.C. Cir.
1995) (internal quotation and citations omitted). Accordingly,
we decline to add a benefit element to the “owned or operated”
requirement and conclude instead that the phrase “owned or
operated” means “possessed or exerted control or influence
over” the property at issue.
We nonetheless agree with the district court’s dismissal of
the bank account claims for a different reason. Cf. Wilburn v.
Robinson, 480 F.3d 1140, 1148 (D.C. Cir. 2007) (“We can . . .
affirm a grant of summary judgment on alternative grounds, if
applicable.” (citing Wash.-Balt. Newspaper Guild, Local 35 v.
Wash. Post, 959 F.2d 288, 292 n.3 (D.C. Cir. 1992))). The
appellants have failed to demonstrate that the CBE “owned or
operated” their bank accounts. As explained supra, the CBE
owns the funds in the appellants’ accounts. Hardee, 89 F.2d at
499. The property right at issue, however, is the appellants’
contractual right to receive payment and the CBE has neither
taken possession of nor exerted control over that right. Instead,
accepting as true the appellants’ allegation that Ethiopia and the
CBE have in fact prevented them from accessing the funds in
the accounts, see Nemariam, 400 F. Supp. 2d at 85, we believe
the CBE has extinguished that contract right. See Strumpf, 516
U.S. at 21 (noting, in bankruptcy context, “[bank’s] refusal to
pay [depositor] was neither a taking of possession of
[depositor’s] property nor an exercising of control over it, but
merely a refusal to perform its promise.” (emphasis added)); cf.
Brewer v. Socialist People’s Republic of Iraq, 890 F.2d 97, 101
(8th Cir. 1989) (“[P]laintiffs’ contract rights were not
expropriated—rather, the contract itself was repudiated by
defendants. We find that such a repudiation is not equivalent to
expropriation.” (citation omitted)); Kalamazoo, 616 F. Supp. at
19
663 n.5 (“[Canadian Overseas] did not involve an expropriation
but the simple repudiation of a contractual obligation.”);
Canadian Overseas, 528 F. Supp. at 1346-47 (“Neither [the
defendant] nor any other party claims ownership of the right to
be paid under the contracts which [the plaintiff] asserts.”). That
is, the CBE did not assume the appellants’ contractual right to
performance—instead it declined to perform its own contractual
obligations.
Because the appellants have failed to satisfy the “owned or
operated” requirement of section 1605(a)(3) with respect to their
bank account claims, Ethiopia and the CBE are immune from
suit on those claims. See 28 U.S.C. § 1330. Accordingly, we
affirm the district court’s dismissal of the claims under Federal
Rule of Civil Procedure 12(b)(1).
B. Non-Bank Account Claims
In a footnote, the district court also dismissed the appellants’
non-bank account claims. Following its conclusion that the
appellants’ “intangible” bank accounts do not constitute “rights
in property,” the district court declared:
The papers submitted by both parties focus solely on the
bank accounts as the property that has allegedly been
taken and remains in that status. Despite allegations in
the complaint that the plaintiffs’ real property, i.e., their
homes and businesses, were also illegally taken, there is
no discussion of whether these tangible properties
provide[] the basis for FSIA jurisdiction. Presumably
these properties have not been discussed by the plaintiffs
because they have been sold, and the proceeds from the
sales have been placed in the plaintiffs’ bank accounts,
thereby making the taking of the bank accounts as [sic]
the only property that would form the basis for this
Court to have FSIA jurisdiction.
20
Nemariam, 400 F. Supp. 2d at 84 n.4. In other words, the
district court dismissed the appellants’ non-bank account claims
because it “presumed”—based on the appellants’ opposition to
the motion to dismiss—that the bank account claims
encompassed all property allegedly expropriated.
The appellants argue on appeal that the district court had “no
basis” to so presume. Appellants’ Br. at 43. They maintain that
they raised their non-bank account claims both in their
complaint14 and in the “Statement of the Case” section of their
opposition to the motion to dismiss.15 Moreover, they contend
that Ethiopia and the CBE failed to allege that “all of [the] non-
bank-account property had been sold” and that “there was no
support in [their] allegations or in the evidence presented for
such a conclusion.” Id. Finally, they argue that the appellees’
taking of their non-bank account property satisfies the “owned
or operated” requirement of section 1605(a)(3).
As the district court noted, Nemariam, 400 F. Supp. 2d at 84
n.4, the appellants failed to expressly argue that the non-bank
account property establishes an independent basis for FSIA
jurisdiction. In their motion to dismiss, Ethiopia and the CBE
plainly sought dismissal of all of the appellants’ claims, arguing,
inter alia, that section 1605(a)(3) does not apply to intangible
property, see Defs.’ Mem. of Law in Supp. of Refiled Mot. to
Dismiss for Lack of Jurisdiction 12 (“The Expropriation
Exception of the FSIA Does Not Apply, and Therefore This
Court Lacks Subject Matter Jurisdiction.”), 16, and suggesting
that the proceeds from the sales of the non-bank account
property were deposited into the appellants’ bank accounts, id.
14
See supra note 1.
15
They asserted: “Ethiopia and CBE subsequently foreclosed upon,
or otherwise seized and auctioned off, deportees’ homes, businesses,
and other property.” Corrected Mem., supra, at 8.
21
at 11 (“The Commission ruled that it was lawful for Ethiopia to
deposit the proceeds of deportees’ property sales in their CBE
accounts even where those accounts were restricted in a way that
effectively foreclosed fund transfers abroad.” (citing Partial
Award, Civilians Claims, Eritrea’s Claims 15, 16, 23 & 27-32,
Claims Commission ¶ 146, reprinted in JA at 1222)). Indeed,
the motion to dismiss recited, “The only property at issue is
Plaintiffs’ CBE accounts.” Id. at 21. In their opposition, the
appellants did not challenge the assertion that the bank accounts
were the only property at issue. Although they disputed that
section 1605(a)(3) applies only to tangible property, see
Corrected Mem., supra, at 21, they failed to argue in the
alternative that tangible, non-bank account property had also
been expropriated. Moreover, the appellants noted that Ethiopia
and the CBE did not deny “that their bank accounts, including
proceeds from involuntary sales of other property, have
remained with CBE.” Id. at 16 (emphasis added). They
subsequently failed to challenge the district court’s
“presumption” noted in its dismissal order that the bank account
claims encompassed all property allegedly expropriated. Instead
of moving the district court to reconsider, see Fed. R. Civ. P.
59(e), the appellants raised the issue for the first time on appeal.
Nonetheless, “‘[a]bsent exceptional circumstances, the court of
appeals is not a forum in which a litigant can present legal
theories that it neglected to raise in a timely manner in
proceedings below.’” Grant v. U.S. Air Force, 197 F.3d 539,
542 (D.C. Cir. 1999) (quoting Tomasello v. Rubin, 167 F.3d 612,
618 n.6 (D.C. Cir. 1999)). “Exceptional circumstances” include
“cases involving uncertainty in the law; novel, important, and
recurring questions of federal law; intervening change in the
law; and extraordinary situations with the potential for
miscarriages of justice.” Flynn v. Comm’r, 269 F.3d 1064, 1069
(D.C. Cir. 2001). The appellants have offered no explanation
for their failure to pursue their non-bank account claims in the
22
district court. Accordingly, we decline to address their non-
bank account claims.
For the foregoing reasons, we affirm the district court’s
dismissal of the complaint for lack of subject matter jurisdiction.
See Fed. R. Civ. P. 12(b)(1).
So ordered.