Wye Oak Technology, Inc. v. Republic of Iraq, 24 F.4th 686

Background

Wye Oak (PA defense contractor) contracted with Iraq’s Ministry of Defense in 2004 under a Broker Services Agreement to inventory, refurbish, and broker scrap sales of military equipment; compensation payable in U.S. dollars.
Wye Oak submitted pro forma invoices in October 2004 totaling about $24.7 million; Iraq did not pay. Wye Oak pursued collection via meetings (in Baghdad) and third-party financiers; U.S. personnel withdrew after Wye Oak’s CEO was killed in Iraq and operations ceased.
Wye Oak sued the Republic of Iraq in EDVA in 2009 for breach of contract; EDVA found the FSIA commercial-activities exception plausibly applied and transferred the case to D.C. for improper venue.
The Fourth Circuit, on interlocutory review of the EDVA ruling, held the complaint plausibly alleged acts performed in the U.S. in connection with Iraq’s commercial activity (invoking the second clause of 28 U.S.C. § 1605(a)(2)), allowing litigation to proceed.
After an eight-day bench trial in DDC, the district court relied on the Fourth Circuit and Clause Two to find jurisdiction and awarded Wye Oak ~$88.9 million; both parties appealed to the D.C. Circuit.
The D.C. Circuit (this opinion) rejects Wye Oak’s implied-waiver theory, holds law-of-the-case does not bind it to the Fourth Circuit’s pleading-stage ruling, concludes Clause Two was misapplied (it requires an act by the foreign state in the U.S.), and remands for the district court to determine in the first instance whether Clause Three (act abroad causing a direct effect in the U.S.) supplies jurisdiction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Iraq implicitly waived FSIA immunity by participating in trial and not pressing immunity at trial	Iraq’s trial participation and limited post‑trial briefing amounted to implied waiver under §1605(a)(1)	Iraq timely asserted immunity in its responsive pleadings and litigated the EDVA dismissal; no intent to waive	No waiver: implied waiver requires sovereign intent to be amenable to suit; Iraq preserved and litigated immunity earlier.
Whether the Fourth Circuit’s pleading‑stage ruling is law of the case and binds later jurisdictional review	The Fourth Circuit’s ruling that Clause Two plausibly applied is binding	Law‑of‑the‑case is discretionary; jurisdictional questions may be reexamined on a developed trial record	Not binding here: pleadings‑stage plausibility differs from post‑trial jurisdictional review; courts must reassess jurisdiction at each stage.
Whether §1605(a)(2) Clause Two (action “based upon … an act performed in the United States in connection with a commercial activity of the foreign state elsewhere”) applies given Wye Oak’s U.S. acts	Wye Oak’s in‑U.S. acts (software, e‑mail/admin) are the acts “performed in the United States” triggering Clause Two	Clause Two looks to conduct of the foreign state in the U.S.; plaintiff’s acts do not satisfy the clause	Clause Two inapplicable: the “act performed” must be by the foreign state; plaintiff’s U.S. acts cannot alone abrogate immunity under Clause Two.
Whether §1605(a)(2) Clause Three (act abroad that causes a direct effect in the U.S.) supports jurisdiction	Wye Oak: Iraq’s nonpayment (an act abroad) caused direct effects in U.S. (payments to U.S. bank, lost revenue affecting U.S. personnel/companies)	Iraq disputes factual showing of direct U.S. effects and contests sufficiency of findings	Plausible basis exists for Clause Three; remanded to district court to determine (and fact‑find as necessary) whether Iraq’s breach caused direct effects in the U.S. and thus abrogated immunity.

Key Cases Cited

Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428 (establishes FSIA as sole basis for jurisdiction over foreign states)
Samantar v. Yousuf, 560 U.S. 305 (FSIA’s relationship to claims against foreign officials)
Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (commercial‑acts doctrine; private commercial acts may negate immunity)
OBB Personenverkehr AG v. Sachs, 577 U.S. 27 (focus on the gravamen of the suit when asking what an action is "based upon")
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (federal courts’ duty to confirm subject‑matter jurisdiction)
Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36 (D.C. Cir. discussion of implied waiver via participation)
Foremost‑McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438 (implied waiver requires indication of amenability to suit)
Odhiambo v. Republic of Kenya, 764 F.3d 31 (interpretation of commercial‑activity exception and “based upon” analysis)
Jam v. International Finance Corp., 139 S. Ct. 759 (requirement that commercial‑activity exception shows sufficient connection to U.S.)
Ivanenko v. Yanukovich, 995 F.3d 232 (clause‑three prerequisites: action based on an act abroad coupled with direct effect in U.S.)
EIG Energy Fund XIV, L.P. v. Petroleo Brasileiro, S.A., 894 F.3d 339 (direct‑effects analysis under FSIA Clause Three)