406 F.Supp.3d 1
D.D.C.2019Background
- Plaintiffs (Turan Petroleum, Energyfund, Trustees for Trek Resources) sued the Ministry of Oil and Gas of Kazakhstan alleging breach of concession agreements (Aral and Arys), treaty violations, fiduciary breaches, unjust enrichment, misrepresentation, negligence, and seeking declaratory relief. Case filed Dec. 9, 2010.
- Ministry allegedly suspended and later terminated the Aral concession (2005) and unilaterally terminated the Arys concession (2010); plaintiffs claim these acts deprived investors of property and caused damages in the U.S.
- Turan Petroleum, Inc. (Nevada) intervened nunc pro tunc for the sole purpose of filing a motion to dismiss and moved to dismiss for lack of subject-matter jurisdiction under the FSIA and other grounds.
- Plaintiffs sought to supplement and amend their complaint (including RICO, fraud, and conspiracy claims) to cure jurisdictional defects; Turan Nevada opposed and argued FSIA immunity applied.
- The Court considered whether any FSIA exception (waiver, commercial-activity, expropriation) applied and whether amendment could cure jurisdictional defects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kazakhstan waived sovereign immunity (FSIA §1605(a)(1)) | Ministry’s promotion of concessions, registration of U.S. parent entities, treaty/contract language (BIT, concession docs) show express or implied waiver | Actions do not clearly and unambiguously waive immunity; no responsive pleadings, arbitration, or choice-of-law showing implied waiver; plaintiffs not privy to concessions | Court: No waiver—plaintiffs failed to show explicit or implicit waiver of immunity |
| Whether commercial-activity exception applies (FSIA §1605(a)(2)) | Ministry engaged in substantial commercial activity in U.S. (investment forums, contracts with U.S. firms, loans, attracting U.S. companies) and causes direct U.S. effects | Granting/exercising concessions and terminating them are sovereign acts (regulation of natural resources); central claims arise from sovereign prerogatives not commercial acts | Court: No commercial-activity exception—claims rest on sovereign acts over natural resources |
| Whether expropriation/takings exception applies (FSIA §1605(a)(3)) | Termination/confiscation of concession rights was a taking in violation of international law causing U.S. investor losses | Even if a taking alleged, plaintiffs fail to show required U.S. nexus or that Ministry engaged in commercial activity in U.S. | Court: No expropriation exception—jurisdictional nexus and commercial-activity element unmet |
| Whether proposed amendments (including RICO) cure jurisdictional defects | New claims (fraud, civil conspiracy, RICO) alter factual posture and deprive sovereigns of FSIA defenses, allowing suit to proceed | New claims still derive from sovereign reallocation/termination of concessions (sovereign acts); amendments thus futile | Court: Denied leave to amend—amendments would be futile because FSIA jurisdictional defects remain |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (court’s limited jurisdiction principle)
- Saudi Arabia v. Nelson, 507 U.S. 349 (FSIA is exclusive basis for jurisdiction over foreign states)
- World Wide Minerals, Ltd. v. Republic of Kazakhstan, 296 F.3d 1154 (waiver of immunity construed narrowly; sovereign acts re natural-resources licensing)
- Millen Indus., Inc. v. Coordination Council for N. Am. Affairs, 855 F.2d 879 (distinguishing commercial from sovereign acts; licenses to exploit natural resources are sovereign)
- Republic of Argentina v. Weltover, 504 U.S. 607 (character of government act—commercial vs sovereign—depends on nature of action)
- Nemariam v. Federal Democratic Republic of Ethiopia, 491 F.3d 470 (elements for expropriation exception and U.S. nexus requirement)
- Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (signing an international agreement lacking explicit waiver does not waive FSIA immunity)
- Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438 (examples of implied waiver situations)