MMA Consultants 1 v. Republic of Peru
17-1157
| 2d Cir. | Dec 19, 2017Background
- MMA Consultants holds fourteen bearer bonds issued by the Republic of Peru in 1875 and sued Peru in 2015 for breach of contract after demands for payment went unanswered.
- MMA filed suit in the Southern District of New York; the district court dismissed for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA) and failure to state a claim.
- Peru presented a 1901 Arbitration Tribunal Award and pre-1898 documentary evidence showing (1) the designated New York payee, Hobson Hurtado, ceased to exist long ago, (2) the Consignee Company for the Guano (CCG) held and accounted for the bonds internally rather than issuing them publicly, and (3) Peru’s debt on the bonds effectively disappeared by the 1880s.
- The district court relied on the Award and historical documents (admissible as ancient documents) to resolve factual disputes on jurisdiction without an evidentiary hearing.
- On appeal, the Second Circuit affirmed, ruling the Award was properly considered, the district court’s factual findings were not clearly erroneous, and MMA failed to prove an FSIA exception applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court properly considered the 1901 Arbitration Award in deciding FSIA jurisdiction | MMA: Award only allocated Bank of England proceeds; Peru is estopped from invoking it | Peru: Award is authentic historical evidence relevant to jurisdictional facts | Court: Proper to consider Award (ancient-doc exception); used for factual findings, not collateral estoppel |
| Whether district court’s factual findings (Hobson Hurtado ceased, CCG practices, debt extinguished) were clearly erroneous | MMA: Findings are erroneous; documents are hearsay and court should have held a hearing | Peru: Documents are ancient and admissible; evidence supports findings; hearing unnecessary | Court: Findings not clearly erroneous; documents admissible; no abuse of discretion declining hearing |
| Whether FSIA commercial-activity exception clause 1 (activity carried on in U.S.) applies | MMA: Peru’s failure to pay and embassy contacts create U.S. nexus | Peru: Decision not to pay occurred abroad; embassy contacts insufficient | Court: Clause 1 does not apply; failure to pay is an act abroad (Rogers controlling) |
| Whether FSIA commercial-activity exception clause 3 (foreign act causes direct effect in U.S.) applies | MMA: Bonds’ place of performance is U.S.; nonpayment caused direct U.S. effect | Peru: Place of performance no longer localized to U.S. because Hobson Hurtado ceased and payment could be made elsewhere | Court: MMA failed to show a U.S. place of performance or a direct effect in U.S.; clause 3 does not apply |
Key Cases Cited
- Rogers v. Petroleo Brasileiro, S.A., 673 F.3d 131 (2d Cir.) (foreign sovereign's decision not to perform occurs abroad and is not an act "in the United States")
- Weltover, Inc. v. Republic of Argentina, 504 U.S. 607 (1992) (debt-instrument actions are commercial activity under FSIA; direct effect test explained)
- Helmerich & Payne Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 137 S. Ct. 1312 (2017) (district courts may resolve factual disputes when considering FSIA jurisdiction)
- Atlantica Holdings v. Sovereign Wealth Fund Samruk-Kazyna JSC, 813 F.3d 98 (2d Cir.) (FSIA is sole basis for jurisdiction over foreign states; gravamen analysis for §1605(a)(2))
- OBB Personenverkehr AG v. Sachs, 136 S. Ct. 390 (2015) (defines "based upon" and gravamen inquiry for §1605(a)(2))
- Chettri v. Nepal Rastra Bank, 834 F.3d 50 (2d Cir.) (articulates three elements of clause three: act outside U.S., in connection with foreign commercial activity, causing direct effect in U.S.)
- Kensington Int’l Ltd. v. Itoua, 505 F.3d 147 (2d Cir.) (place of performance governs whether breach causes a direct effect in U.S.)