Renato E. Corzo Dc Ltd. v. Banco Central De Reserva Del Peru

physical pres- calculating the continuous requirement, ence time accumulated after of an OSC cannot be considered.

service DENIED.

PETITION CORZO; Ltd., E.

Renato DC

Plaintiffs-Appellants, DE

BANCO CENTRAL RESERVA PERU,

DEL Defendant-

Appellee.

No. 00-55084. Appeals,

United States Court of

Ninth Circuit.

Argued and Submitted Feb.

Filed March Moneymaker, Firm of

Vincent B. Law Angeles, Moneymaker, Richard M. Los California, plaintiffs-appellants. for the Gibson, Floyd, Dunn & Daniel S. California, LLP, Angeles, Crutcher Los defendant-appellee. for the foster nontraditional Peruvian industries. However, underlying lawsuit in this nothing case had to do with the FENT Rather, LEAVY, TROTT, Fund. it was based on the Before: SILVERMAN, denial in 1989 of an for com- Judges. pensation for losses Novotec had suffered TROTT; Opinion Judge Concurrence exchange when the rate between Peruvian Judge SILVERMAN and currency unfavorably. U.S. shifted exported goods Because Novotec assem- TROTT, Judge: imported from components, bled it suf- Renato Plaintiffs DC Ltd. significant fered losses when the value of “Corzo”) (collectively, appeal judgment the currency Peruvian declined between the dismissing of the district court their case purchased imported time it the compo- against the Banco Central de Reserva del exported nents and the time it the com- (“the BCRP”) jurisdiction. Peru for lack of pleted goods. Recognizing that the deval- that, judge The district determined as an money uation of adversely Peru’s affected government, arm of the Peruvian Novotec, companies such as BCRP presumptively BCRP was entitled to sov- policy by 1988 instituted a exporters which ereign immunity Foreign under the Sover- who suffered exchange rate related losses Act, eign Immunities 28 U.S.C. 1602- apply compensation. could to receive If (“the FSIA”), and that none of the granted the BCRP an for ex- exceptions sovereign immunity FSIA’s change compensation, exporter rate applicable. were The district court ac- would receive the difference between the cordingly dismissed the case for lack of price paid imported for the goods and the jurisdiction. price exports. for received jurisdiction appellate pursuant We have however, policy, This lasted than a less 1291. agree 28 U.S.C. We with the year. Just one month before it was dis- decision, district court’s and therefore AF- continued, applica- Novotec an submitted FIRM. compensation, tion for claiming that it had $400,000 April from nearly lost to Novem- BACKGROUND exchange ber of 1988 as a result of rate brought This case arises out of a lawsuit fluctuations. The BCRP denied Novotec’s (“Novotec”), in Peru Novotec S.A. Cor- application. Novotec then sued the BCRP interest, predecessor against zo’s Peru, recovery seeking original company denied, BCRP. Novotec is compensation plus it in- had been exports computers that assembles and damages. prevailed terest and Novotec largely components imported court, made from a Peruvian trial and the case made from the United States. The BCRP is the way through appellate its the Peruvian monetary authority parties of Peru. The system. Eventually, the case reached the it agree Peru, arm of the Peruvian Supreme Court of which affirmed government presumptively immune from May favor of Novotec on jurisdic- 14,1997. suit the United States unless excep-

tion lies under one of the FSIA’s Supreme After the Court had affirmed foreign sovereign immunity. tions to judgment, assigned Novotec its inter- lawsuit, However, Before the Peruvian Novotec est in it to Corzo. this transac- particularly and the BCRP had a com- longstanding tion turned out to be bad Corzo, relationship, January mercial with much deal for because on money operations coming for Novotec’s the Peruvian Court de- Fund,” previous judgment from the so-called “FENT a line of clared its favor of “null and indi- credit which the BCRP had established to Novotec void.” court arguments for the reasons reject that the these thought BCRP cated first process. It also is- below. due discussed been denied had perplexing explanation admittedly sued the had been issued original

that the DISCUSSION mistake, justices having without “by provides the sole The FSIA they were the document aware that been which courts of the United means oppo- with the included a decision signing can over assert judg- they wished for outcome site Nelson, Arabia v. sovereigns. See Saudi ment.” 349, 354, 113 S.Ct. U.S. experts, the Per- According to (1993). The Act conflates the L.Ed.2d X” “King’s was Supreme Court’s uvian sovereign im usually questions distinct extra-legal under Per- unprecedented jurisdiction, munity, subject matter ap- actions also The court’s uvian law. See, Randolph personal jurisdiction. e.g., a scandal in the quite parently caused Rent-A-Car, 319, 323 Budget v. 97 F.3d by as evidenced government, Cir.1996). (9th if only exists Jurisdiction in record called “Reso- a document the immunity does not. See id. Under the Council of the Ju- lution of the National FSIA, sovereigns presumptive are foreign alleged that diciary.” This Resolution States, ly from suit in the United immune justices the Peruvian the exceptions applies. one of several unless grave act that Court had “committed The 28 U.S.C. 1604. existence sover post compromises dignity the of their jurisdic immunity subject and matter eign posi- of their demerits the exercise and law questions tion under the FSIA are they fact that have issued a by tion Budget Rent- which we review de novo. and called for “dis- judgment,” fraudulent A-Car, 97 F.3d at 323. penal and “eventual ciplinary sanctions” “presumed com- responsibility” for the A. Waiver prevarication.” the crime of mission of exception The FSIA’s waiver reads in Despite outcry, the drama Peru as follows: to apparently play did not out Corzo’s A immune foreign state shall not be 1999, in he filed a liking, because March of jurisdiction from the of courts of the “Complaint Foreign to Domesticate any or of in United States the States Judgment” in District Court United States (1) foreign case in which the state has complaint The Angeles, in Los California. immunity explicitly waived its either or Novotec, Corzo, alleged that and therefore by implication, notwithstanding any against the had a valid and final withdrawal of the waiver which the for- Peru, attach the sought BCRP in and except eign may purport state to effect BCRP’s assets the United States. with the accordance terms objected, claiming it was immune BCRP waiver. FSIA, and that from suit under the 1605(a)(1). jurisdiction argues had no 28 Corzo district court therefore U.S.C. impli- briefing expressly and a the BCRP has either or over it. After extensive edly immunity concluded that waived its from suit hearing, judge the district support To claim that in fact entitled to United States. his BCRP was explicitly lack has waived its immunity and the case for the BCRP sover- dismissed jurisdiction. appeals, eign immunity, claim- submitted several now Corzo (1) that, un- ing expert opinions lies under which concluded (2) and the activity” “waiver” “commercial ex- der the Peruvian Constitution Law, the was ceptions sovereign immunity, Organic BCRP’s own BCRP support immune from suit. In of his comity requires and also that us to enforce not implied argument, argues waiver of the courts of Peru. We here, litigation uniformly submission to and have concluded that that the BCRP’s it implied constitutes waiver example, Peru does not. For in Arriba Ltd. v. immunity may it have had with Mexicanos, Petroleos 962 F.2d case, immunity including to this respect (5th Cir.1992), Fifth rejected in the United States. Because from suit provision the notion that a in a sovereign implicit argu- waiver explicit both the entity’s corporate charter stating faulty prem- on the same ments are based implied could “sue and be sued” a waiver discussed, ise, rejected, at they can be immunity of sovereign in United States time. the same addition, Eighth courts. and Sev rejected court waiv- The district Circuits, enth as well as several district concluding that “submission arguments, er courts, have that a held waiver of sover foreign sovereign of a to its own courts eign immunity domestic courts does not other than the the courts of nations United part itself evidence an intent on the does not itself evidence an intent the sovereign entity immunity to waive im- to waive its from suit the United States. See Gener munity from suit the United States.” Grossman, al Capital Corp. Elec. Corzo, hand, argues on the other that the (8th Cir.1993); F.2d Frolova v. only that recognize FSIA was intended to U.S.S.R., (7th Cir.1985); 761 F.2d foreign sovereign enjoys which a Eaglet Corp. Ltd. v. Banco Central De in and that country, its home the district 232, Nicaragua, F.Supp. 839 234-36 judge’s recognize principle failure to this (2d (S.D.N.Y.1993), 23 F.3d 641 Cir. aff'd. dichotomy.” agree a “false We created 1994); Intercontinental Dictionary Series ar- with the district court. While Corzo’s 662, DeGruyter, F.Supp. 822 blush, gument appeal has some at first (C.D.Cal.1993); Dayton v. Czechoslovak law, structure, relevant case as well as the Republic, F.Supp. Socialist 10-11 purpose, legislative history (D.D.C.1986). wrong. all indicate that it is FSIA In to authority, addition this the House precise presented by The issue Report on the states that agencies FSIA sovereign’s amenability to case—whether foreign or of which instrumentalities states in country suit the courts of its own auto- “a immunity corpo- are entitled to include matically subjects jurisdiction it to in the ration, association, foundation, oth- or impression United States —is one first which, However, entity er under the law of the for- in this circuit. we have re- created, exception eign state where it was can sue or peatedly stated the waiver immunity narrowly Rep. must be be sued in its own name.” H.R. No. sovereign to See, (1976), e.g., de Blake v. reprinted construed. Siderman 1487 at 15 in 1976 Argentina, 965 F.2d 720- Republic lan- U.S.C.C.A.N. 6613-14. This (9th Cir.1992). have also stated We strongly suggests that while an enti- guage foreign sovereign that a cannot be sued ty may amenable to suit in its home be it have the United States unless could circumstances, country it does under some subject contemplated that its actions would necessarily that it sover- not follow lacks it to here. id. at 721. It is suit See eign immunity from suit the United difficult to see how the BCRP could have Finally, the fact that the FSIA States. contemplated that a run-of-the-mill lawsuit encompasses only concept not of sub- litigate in Peru result in to having could its ject jurisdiction, matter but also that of in the United States. personal jurisdiction, brings home the argument. weakness of Corzo’s Submit- ad-

Additionally, several courts have jurisdiction in the courts of one ting to question dressed the of whether amenabili- way put foreign nation should in no ty automatically country to suit one subjects sovereign thereby on notice that it has foreign sovereign “activity” points he to is the jurisdiction in tions. personal

subjected itself in the ownership of assets United States. United upon” this His action is “based States. discussion, foregoing light activity, argues, because he is seek- may that the BCRP irrelevant legally it is argument to attach those assets. This ing impliedly waived its sov explicitly or have plaintiff A must do persuasive. not courts. Cor immunity ereign has say than more “the no evidence presented zo has here, avail I want them” to assets explicitly impliedly either BCRP has excep- activity himself of the commercial immunity from suit sovereign waived its to strike a designed tion. The FSIA was reasons, For these we the United States. foreign interests of balance between the that a court’s decision affirm the district rights plaintiffs, governments and the entity’s immunity waiver of its comity and principles obliterate not to with country nothing has to do home immunity. suit waived from whether has in the United States. Activity Third 2. The Commercial Exception Activity” Excep- B. The “Commercial attempts advantage to take also tions 1605(a)(2), claiming the third clause of exceptions dis- In addition to the waiver ... upon action an act that his is “based above, provides also cussed FSIA territory of the United States outside will not be immune to foreign sovereigns activity of in connection with a commercial for actions which suit the United States that act state elsewhere and upon certain commercial activi- are based a direct effect in the United causes 1605(a)(2), which describes ties. Section 1605(a)(2). ar- This States.” U.S.C. activity” exception, actu- this “commercial fails, because the relevant BCRP gument ally provides for three distinct exclusions and caused at activity was not commercial immunity in in which: from cases in an indirect effect the United best upon a commer States. [1] the action is based in activity

cial carried on the United Activity a. Commercial state; upon by foreign the or [2] in performed matter, an act in the United States must deter- As a threshold we activity present connection with a commercial of activity gave mine what rise to the the foreign state elsewhere; or ^[3] upon suit, order to decide whether it is “based activity of Al- territory of the Unit on” commercial the BCRP. act outside the parties disagree point, the on this though with a commer ed States connection argument of we will assume for the sake activity foreign cial the else of state fact that is Novotec’s suc- that the Corzo that act causes a direct effect where and him to en- cessor in interest would allow in the United States. underlying judgment exactly force 1605(a)(2). that argues Corzo U.S.C. could, manner as Novotec the same exceptions the first and third of these are therefore, activity that the relevant BCRP applicable complaint against to his original gave is that which rise to the reject arguments. BCRP. We his Second, in Peru. while Novotec and lawsuit Activity 1. The Ex- First Commercial engage the BCRP did numerous com- ception transactions, expert Corzo’s own mercial argues first that his action to arose underlying litigation that the stated a upon “payment domesticate the is “based sought [its] when Novotec Ex- activity compensation commercial carried on the Unit claim for under [the] ... ruling, damages under Rate by foreign sovereign” change ed States a denial of claim.” activity excep- [its] the first of commercial based on the BCRP’s Therefore, underlying subsidy arms-length that the than an it is clear commercial transaction, such, and as nothing had to do with the FENT was lawsuit credit, It act. would be for a citizen everything or line of unthinkable Fund country to for sue United States do with the denial of the court, government in Peruvian alleging differ- exchange-rate compensation. The denied, critical, illegally that he had been for of the ex- ence is because denial ample, farming welfare benefits or a subsi- application was not com- exchange-rate dy. request Corzo’s that United States activity, but a act. mercial assert over the courts BCRP is “commercial activity” The FSIA defines unconvincing. regular as “either a course commercial trans- particular conduct or a commercial b. Direct Effect act. The commercial character action or Because we have concluded that activity by of an shall be determined refer- activity the relevant not commercial in was ence to the nature of the course conduct nature, a determination of whether that act, particular transaction or rather activity had a “direct effect” the United purpose.” than reference to the States is not critical to the outcome of this 1602(d). Supreme The Court has U.S.C. note, however, case. do We Corzo’s definition, opaque refined this rather stat- argument activity that the had a acts, government ing foreign “when direct effect the United ex States is market, of a but in the regulator not as nutshell, tremely tenuous. In a ar it, private player within manner of a gues pay that the ex BCRP’s refusal are ‘commer- foreign sovereign’s actions change-rate compensation caused a cutoff cial’ within the meaning FSIA.” of cash-flow which forced Notovtec to Weltover, Inc., Republic Argentina v. computer companies breach with contracts 607, 614, 504 U.S. S.Ct. States, in the United and claims that the (1992). L.Ed.2d 394 went on to Court companies on effect U.S. was “direct” for particular state: “the issue is whether the purposes activity of the third commercial performs state actions exception. (whatever them) motive behind are the type private party of actions which a argument The ill-effects fails. engages in trade and traffic or commerce.” companies in suffered the United States (internal omitted). quotations id. See as a result of Novotec’s contract breaches did not follow “as an immediate conse- light Court’s Weltover, quence activity,” of [the BCRP’s] Weltover, holding in act of 618, 2160; rather, 504 U.S. at 112 S.Ct. granting denying exchange rate com they secondary were at best or incidental pensation clearly sovereign activity, is See, e.g. results of the BCRP’s actions. subject in the and is therefore not to suit Republic Nigeria, Adler v. Federal particular A United States on this claim. (9th Cir.1997) 720, (holding F.3d 726-27 private party power not have the does that mere financial loss the United exchange regulate currency rates. See effect); not constitute a direct States does Weltover, 614, 112 504 U.S. at S.Ct. 2160 v. Australian Govt. Factories Aircraft (“A foreign government’s regu issuance of (9th Cir.1984) 672, F.2d 673-75 Lynne, 743 limiting foreign currency exchange lations (concluding that where American was sovereign activity, is a because such au abroad, airplane crash losses killed an thoritative control of commerce cannot be in the by family suffered his members private party”). Nor do exercised States as a result of his death were United private normally financial institutions com purposes not direct effects for of the pensate they businesses for the losses sus FSIA). fluctuating exchange tain due to rates. policy granting exchange Additionally, The BCRP’s the FSIA re activity compensation quires akin to a a nexus between the of the rate was more courts, instrumentality from United States plaintiffs and the cause See, Nat’l. e.g., Security but from its oim courts. This lawsuit was action. Pacific 281, Derderian, F.2d 286-87 already judgment Bank v. to enforce a brought Cir.1989) (direct (9th requirement effect the Peruvian Central against rendered minimum contacts standard incorporates Bank, Peru, by of Peru. The courts forth in Inter jurisdiction set personal for Washington, 326 U.S. v.

national Shoe purposes at cross these circumstances is (1945), and 90 L.Ed. 95 66 S.Ct. comity respect with international and for dealings between the progeny). nations, very principles un- created no “minimum and Novotec BCRP sovereign immunity in the derlying foreign Novo- with the United States. contacts” v. Bank place. first Verlinden Central entirely within of action arose tec’s cause 480, 486, 103 Nigeria, 461 U.S. S.Ct. comput that The fact United States Peru. (1983). 76 L.Ed.2d 81 companies might have been affected er today We need not decide how resolve jurisdictionally irrel Novotec’s breaches is principles tension between those evant. Im- language Foreign Sovereign munity involving nothing Act in cases Comity C. existing of an more than the domestication despite Finally, argues foreign judgment. my colleagues As Supreme Court’s orders de the Peruvian out, majority point judg- the Peruvian null and original judgment claring plaintiffs ment seek to enforce void, judgment nonetheless has valid he null was declared and void the Peruvian spirit which of inter against the BCRP Supreme It for that Court 1998. comity requires recognize us to national I affirm reason that would the district disagree. and enforce. We complaint court’s dismissal of the to do- fact, a final appears not to have judgment. mesticate the valid Peruvian United may courts feel comfortable enforc- may right that the ing. experts be un- orders were Court’s That,

precedented extra-legal. howev- er, to decide. Even if we is not for us HEADWATERS, INC., Oregon an not to conclude that the Peruvian Su- were corporation; Oregon profit Natu for preme nullifying previ- its Court’s orders (ONRC) Action, ral Resources Council illegal, comity were would ous Oregon profit corporation, an for not prevent enforcing original us from Plaintiffs-Appellants, repug- judgment. Nothing would be more principle comity nant to the than for DISTRICT, TALENT IRRIGATION courts to allow a defendant’s United States Oregon municipal corporation, attached to enforce a Peruvian assets to be Defendant-Appellee. judgment highest when the court of Peru declared that null and void. has No. 99-35373. CONCLUSION of Appeals, United States Court Ninth Circuit. reasons, foregoing For the AFFIRMED. Argued Aug. and Submitted March Filed SILVERMAN, Judge, concurring: case, invoked, protect

has been not to

Case Details

Case Name: Renato E. Corzo Dc Ltd. v. Banco Central De Reserva Del Peru

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Mar 1, 2001

Citation: 243 F.3d 519

Docket Number: 00-55084

Court Abbreviation: 9th Cir.